Insurer cannot Subrogate against Tenant who pays premiums for Landlord’s insurance policy

by Michael Papuc

Attorney at Law

44 Montgomery Street

Suite 2405

San Francisco, California 94104

415-773-1755

San Francisco Attorney Michael Papuc represents policy holders in lawsuits against insurance companies.

Very often, a landlord will require in a lease that the tenant will pay insurance premiums for the Landlord to purchase insurance for the property the tenant occupies.  When the tenant does this, the tenant becomes an implied co-insured with the landlord under the insurance policy.  If a loss occurs to the property negligently caused by the tenant, the landlord’s insurer will pay for the loss.  Typically the insurer would be entitled to subrogate against the person responsible for the loss.  However, the landlord’s insurer will not be able to subrogate against the tenant, who paid the premiums on the policy, through payments required in the lease.

“No right of subrogation can arise in favor of an insurer against its own insured since, by definition, subrogation exists only with respect to rights of the insurer against third persons to whom the insurer owes no duty.” (St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp. (1976) 65 Cal.App.3d 66, 75.)

Where a loss is caused by the tenant’s activities, no subrogation right exists against the tenant because the tenant be is treated as an implied in law co-insured.   (Liberty Mutual Fire Ins. Co. v. Auto Spring Supply Co. (1976) 59 Cal.App.3d 860, 865.)

Even if not named in the policy, the tenant is treated as an implied in law coinsured: “It is quite obvious … that the parties to the lease … all intended that the proceeds of … the fire insurance policy, maintained at [tenant’s] expense, were to constitute the protection of all parties to the lease document … It would also be inequitable to allow [insurance company] to transfer the risk wholly to [tenant]–the entity which paid [insurance company’s] premiums … to avoid this very risk.” (Liberty Mut. Fire Ins. Co. v. Auto Spring Supply Co., supra, 59 CA3d at 865.)

Evictions of Section 8 Tenants in San Francisco for Nuisance

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, CA 94104

415-773-1755

 

Michael Papuc represents landlords and tenants in San Francisco eviction proceedings.

Landlords in San Francisco who enter agreements with the San Francisco Housing Authority to provide a tenancy to low income tenants have to go through specified procedures to evict the tenant for nuisance. 

The landlord must serve a three day notice to quit, specifying the reasons for the eviction, provide a copy to the San Francisco Rent Control Board, and a copy to the San Francisco Housing Authority. 

After the three day period following service, the Landlord must bring an unlawful detainer action against the tenant, and again serve the tenant with the lawsuit.  The tenant has 5 days to respond to the Complaint.  If tenant fails to timely respond, the landlord can obtain a default judgment for possession, and begin eviction proceedings with the Sheriff.   If the tenant timely responds to the complaint, the landlord must submit a memorandum to set the case for trial, and trial is set within 20 days thereafter.  

It is often less expensive and less risky for the landlord and tenant to settle the case, providing the tenant a specified time to move out, with the landlord being able to enforce the settlement agreement as a judgment if the tenant does not leave pursuant to time-table agreed upon.

San Francisco Administrative Code, sec, 37.9(a)(3) states:

(a) A landlord shall not endeavor to recover possession of a rental unit unless:

(3) The tenant is committing or permitting to exist a nuisance in, or is causing substantial damage to, the rental unit, or is creating a substantial interference with the comfort, safety or enjoyment of the landlord or tenants in the building, and the nature of such nuisance, damage or interference is specifically stated by the landlord in the writing as required by Section 37.9(c).

These cases will need to be proven with testimony from other tenants, police reports, testimony from police officers, and anyone with knowledge of the conduct of the tenant causing the nuisance.  If the landlord cannot prove his or her case, the landlord can be subject to wrongful eviction proceedings under the San Francisco Rent Control Ordinance.

 

Constitutional Guarantee of Mechanics Lien

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, CA 94104

415-773-1755

        San Francisco Attorney Michael Papuc represents clients in mechanics lien, stop notice, notice of completion, notice of cessation, and similar matters.

The right to a mechanics lien is guaranteed by Cal. Const., art. XIV, sec. 3.  It provides that mechanics, persons furnishing materials, artisans, and laborers have a lien on property on which they bestowed labor or furnished materials.  The lien is for the value of the labor done and materials furnished.  (Cal. Const., art. XIV, sec. 3.)

Since the legislature must provide for the speedy and efficient enforcement of such a lien (Cal. Const., art. XIV, sec. 3), the constitutional right to a mechanics lien is not self-executing and must be supplemented by legislative action.  (Spinney v. Griffith (1893) 98 Cal. 149, 151-152.)  The constitutional guarantee is a two way street: the Legislature must balance the interests of both the lien claimants to receive their money as soon as possible after supplying labor or for materials.  At the same time, it must arrange for property owners, whose interests must also be protected, to have their titles cleared as soon as possible so that they will have some marketability.  (Borchers Bros. V. Buckeye Incubator Co. (1963) 59 Cal.2d. 234, 239.)  The Legislature is empowered to adopt legislation that will relieve the owner of the burden of the lien while at the same time affording the lien claimant reasonable assurance that the claim, if valid, will be paid in full.  (Frank Curran Lumber Co. v. Eleven Co. (1969) 271 Cal.App.2d 175, 183-184 (constitutionality of release bonds freeing property subject to mechanics lien.)

A statute exempting certain property from legal process (i.e., Govt. Code, sec. 31452 (county employees’ retirement association’s property) may not be applied so as to interfere with the constitutional right to mechanics liens (Parsons Brinckerhoff Quade & Douglas, Inc. v. Kern County Employees Ret. Assn. (1992) 5 Cal.App.4th 1264, 1269-1270.)

Assignment of Future Payments as a tool to Enforce Judgments

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, California 94104

415-773-1755

 

San Francisco Attorney Michael Papuc represents clients in collection and bankruptcy matters.

Very often judgment debtors will do all they can to hide their assets, and prevent collection efforts.  A judgment creditor can take a debtor’s examination to find out the types of assets the debtor has, and if the debtor has money coming to him or her from any source, the court can issue an order assigning future payments owed the debtor to the judgment creditor.   This works well if the debtor owns rental property or has accounts receivables.

Code Civ. Proc. § 708.510 states that the court may order the judgment debtor to assign rights to payments due (Code Civ. Proc. § 708.510(a)).   Other provisions of the statutory scheme indicate the assignment may be ordered directly by the court. For example, the statutes contain language such as “order an assignment,” “right to payment may be assigned,” “assignment of payments,” “order assigning the right to payments” and “reassignment of the right to payments” (see Code Civ. Proc.§§ 708.510(c),(d),(e) & (f), 708.530, 708.540, 708.560(b)).

Inter-related Acts Exclusion in Directors and Officers Liability Insurance Policies

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, California 94104

415-773-1755

email: Michel.Papuc

San Francisco Attorney Michael Papuc represents policyholders on insurance claims.

Directors and Officers in corporations sometimes get sued for a series of acts which occur during a course of time.  These acts are often covered by Directors and Officers Liability Policies, issued to the corporation.  These policies are usually “Claims Made” policies, which would cover the inter-related acts within the policy period, usually one year.  Sometimes, the interrelated acts sued upon occur during several years, placing different carriers are on the risk depending on the language of the varius policies.  Th directors or officers being sued has an incentive to bring in as much insurance coverage from different carriers as possible.  The carriers, on the other hand, have an incentive to limit the insurance to a single carrier on the risk during a single policy period.

A typical insuring clause, would state:

“1.  Insurer shall pay on behalf of the Directors and Officers Loss resulting from any Claim first made against the Directors and Officers during the policy period.”

The D&O policy would likely define wrong ful acts as follows:

“9.  Wrongful Act means any actual or alleged error, omission, misleading statement, neglect, breach of duty to act by:

“a) any of the Directors and Officers, while acting in their capacity as:

“(i) a director, officer or employee of the Company or the functional equivalent to a director or officer of the Company in the event the Company is incorporated or domiciled outside the United States; …”

For an interrelated claim to be deemed made during a prior policy period, all interrelated claims must have been made to the insured during the same prior policy period. (Homestead Ins. Co. v. American Empire Surplus Lines Ins. Co. (1996) 44 Cal.App.4th 1297, 1306.)

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The Homestead court stated:

“This policy definition of ‘claim’ remains subordinate to, and does not vary, the requirement in the insuring agreements that American Empire agrees to pay for loss which the insured shall become legally obligated to pay ‘from any claim made against the Insured during the Policy Period[.]’ To be covered by the policy, a claim-or a group or series of claims ‘treated as a single claim’-must still be made ‘during the Policy Period.’”(Id. at 1306; emphasis added.) 

Thus, even when there are different actions by directors during a course of time, during different insurance policy periods, each carrier on the risk during the separate policy period must pickup the liability claim and undertake its duty to defend the officer or director.

 

　

 

 

 

 

 

Insurer cannot Subrogate against its own insured

by Michael Papuc

Attorney at Law

44 Montgomery Street

Suite 2405

San Francisco, California 94104

415-773-1755

Fax: 415-723-9703

email:

Subrogation is an insurance company’s right to go after a person or entity responsible for a loss that the insurance company paid to its insured.  For example, when an insured is involved in a car accident, the insurance company pays for the damage to the insured’s car.  Under the insurance policy, the insurance company is entitled to stand in the shoes of its insured to attempt to recover the amount the insurance company paid to the insured against the person responsible for the accident.

Sometimes Homeowner Associations (“HOA”) vote to require the owners of the various condominiums to purchase liability insurance to cover property damage losses to the common areas of the complex, which are covered by the insurance policy issued to the HOA, which the owner/members pay a premium for through HOA dues, and who are beneficiaries under the policy.  The request or requirement by the HOA in such a case provides duplicative coverage, which is unnecessary, because the HOA policy will usually cover the property damage loss, and the insurer who issues the policy to the HOA cannot subrogate against the homeowners who are its own insureds.  

An insurer who has also issued liability insurance to the person responsible for causing an insured loss cannot enforce subrogation rights against its own insured: “For the insurer to recover from its insured for an insured loss or liability would undermine the insured’s coverage and would be inequitable.” (Truck Ins. Exch. v. County of Los Angeles (2002) 95 Cal.App.4th 13, 21; see McKinley v. XL Specialty Ins. Co. (2005) 131 Cal.App.4th 1572, 1575.)

Where an insurance policy expressly covers more than one insured, the insurer cannot subrogate against any insured covered by the policy: “No right of subrogation can arise in favor of an insurer against its own insured since, by definition, subrogation exists only with respect to rights of the insurer against third persons to whom the insurer owes no duty.” (St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp. (1976) 65 Cal.App.3d 66, 75.)

The paradigm case is where Tenant, named as an additional insured under Landlord’s property insurance policy, negligently causes the property to burn down. The insurer paying the fire loss acquires no right of subrogation against Tenant because Tenant is insured under the policy.

To allow subrogation in such cases would permit the insurer to pass on the loss from itself to its own insured, and thus avoid the coverage which the insured purchased. (St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp., supra, 65 Cal.App.3d at 76)