Insurance Does Not Cover a Sure Thing

Underwriting Against a Certain Loss and Claim is Appropriate

See the full video at and at

The underwriting of an insurance policy requires evaluation of risks of loss faced by the proposed insured. When a proposed insured advises the underwriter that it has received an intent to sue from customers of the insured a prudent underwriter will exclude the  known risk faced by the Sunnyside Mobile Estate was excluded.

California Capital Insurance Company (CCIC) who defended and indemnified its insured Sunnyside Mobile Estates appealed from a judgment rendered in favor of Gotham Insurance Company (Gotham) on CCIC’s complaint for equitable contribution toward funds it paid and costs it incurred in defending and settling a claim against a mutual insured. Gotham defended based upon the underwriting of its policy that excluded the type of action CCIC defended because it specifically excluded the allegations having been told of an intent to sue served on the insured.

In California Capital Insurance Company v. Gotham Insurance Company, F084350, California Court of Appeals, Fifth District (November 6, 2023) the Court of Appeals interpreted the competing insurance policies.


CCIC and Gotham each provided commercial general liability (CGL) insurance for Sunnyside Mobile Estates, a mobilehome park located in Fresno, California during different policy periods. CCIC issued a number of CGL insurance policies for the mobilehome park commencing July 8, 2007, and ending July 19, 2016. The owner of the mobilehome park then switched his insurance carrier to Gotham which insured the park under a CGL insurance policy for the policy period July 19, 2016, to July 19, 2017 (the Gotham policy).


In July of 2016, several days before the Gotham policy was issued, residents of the mobilehome park sued the park’s owner, Peter M. Ormond (Ormond) and the Ormond Trust, which did business as Sunnyside Mobile Estates (the Alonso action). The Alonso action included claims for alleged failure to maintain and service the mobilehome park. Gotham had been made aware of the potential for such litigation during the insurance application process and issued its policy with an endorsement intended to exclude coverage for claims that might be raised in such litigation.

Ultimately, CCIC settled with the Alonso plaintiffs and brought the present action seeking equitable contribution from Gotham to pay its fair share of settlement funds expended, and defense costs incurred, by CCIC.


On April 8, 2016, mobilehome park residents, by and through one of the residents, sent Ormond a Notice of Intention to Commence Action dated March 1, 2016 (the “notice of intention to sue”) pursuant to the Mobilehome Residency Law (MRL).

The Ormond Insureds’ Insurance and Their Tender of Defense and Indemnity of the Alonso Action to CCIC and Gotham

Approximately five days after the Alonso complaint was filed, Gotham issued the Gotham policy to the Ormond insureds for the policy period July 19, 2016, to July 19, 2017. The Gotham policy contained an endorsement titled “Failure to Maintain Exclusion, Mobile Home Parks-California” (boldface &some capitalization omitted) (the “FTM exclusion”), which Gotham contends was intended to exclude coverage for matters addressed in the notice of intention to sue.

Ormond settled the Alonso action and some trip-and-fall claims. The matters were settled in a global agreement, which provided, among other things, for the payment of $925,000-$25,579 of which was allocated to the trip-and-fall claimant and the remainder to the Alonso plaintiffs, collectively.

Equitable Contribution

CCIC then sued Gotham for equitable contribution toward the funds it paid in settlement and its defense costs (the “equitable contribution complaint”). The trial court entered judgment against CCIC and in favor of Gotham.


Equitable contribution apportions costs among insurers sharing the same level of liability on the same risk as to the same insured and is available when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others.

Gotham Did Not Have a Duty To Defend the Ormond Insureds in the Alonso Action

The duty to defend is both separate from and broader than a duty to indemnify. In mixed action cases involving both claims potentially covered by the insurance policy and claims not potentially covered by the policy, California law generally provides the insurer has a duty to defend the entire mixed action prophylactically, as an obligation imposed by law in support of the policy.

There Was No Possibility of Coverage Under the Gotham Policy Insuring Provisions for the Alonso Complaint Allegations

The undisputed evidence demonstrated the Ormond insureds knew that “bodily injury” and “property damage” alleged in the Alonso complaint occurred prior to the Gotham policy period. It is indisputable that any such injury or damage that existed at the time the Alonso complaint was filed did not occur during the policy period since the filing of the Alonso complaint preceded issuance of the Gotham policy.

There was no possibility of coverage under the insuring provisions of the Gotham policy. Accordingly, Gotham was under no duty to defend the Ormond insureds from claims asserted in the Alonso complaint.

The FTM Exclusion Relied Upon By Gotham and the Statutes and Regulations

The Gotham policy contained an endorsement titled “Failure to Maintain Exclusion, Mobile Home Parks-California” (boldface &some capitalization omitted) (i.e., the “FTM exclusion”). The statutes and regulations referenced in the FTM exclusion are the very statutes and regulations expressly referenced in the notice of intention to sue and the Alonso complaint.

The FTM Exclusion Eliminated the Potential for Coverage

The complaint expressly alleged and commenced with the notice of intention to sue. Moreover, each and every cause of action asserted in the Alonso complaint was premised, at least in part, on provisions of the MRL and, to that extent at least, service of notice of intention to sue was required.

As the California Supreme Court has said, “where there is no duty to defend, there cannot be a duty to indemnify.” (Certain Underwriters at Lloyd’s of London v. Superior Court)

The judgment in favor of Gotham on CCIC’s complaint for equitable contribution is affirmed. Gotham is awarded its costs on appeal.


If Sunnyside Mobile Estates did not tell Gotham of the notice of intent to sue Gotham could have rescinded the policy for misrepresentation of material facts. Sunnyside did not and, as a result, Gotham excluded the type of loss that resulted in the Alonso suit. CCIC knew about the loss before its policy expired and Gotham knew of it before it happened and the Alonso suit was filed before the inception of the policy. There was no equity involved in this attempt at equitable indemnity and CCIC attempted to force Gotham to pay that which it did not owe.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to Excellence in Claims Handling  at my substack at

Go to

Follow me on LinkedIn:

Daily articles are published at Go to the podcast Zalma On Insurance at; Go to Barry Zalma videos at at; Go to Barry Zalma on YouTube-;  Go to the Insurance Claims Library –

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
This entry was posted in Zalma on Insurance. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.