California Food Service Corp v. Great American Ins Co

In California Food Service Corp. v. Great American Ins. Co. (1982) 130 Cal.App.3d 892, a corporation (Sandy's) operated a restaurant under a lease requiring it to obtain fire insurance on the building. Sandy's insured the building through its insurer (Highlands). Sandy's later agreed to sell the restaurant to CFS, which also obtained fire insurance on the building for the benefit of the building's owners, through Great American. (Id. at pp. 895-896.) Before the sale of the restaurant consummated, there was a fire. The owner of the building looked to Sandy's, whose insurer, Highland, paid the claim. (Id. at p. 896.) Highlands sought recovery in subrogation from CFS's insurer, Great American. (Ibid.) Viewing the Highlands contract and the CFS contract on equal footing, the court held that Highlands could not obtain equitable subrogation from CFS's insurer, Great American. (Id. at pp. 895, 901.) The court nonetheless found that the insurers should split the loss under the doctrine of equitable contribution. (Id. at p. 895.)