Trying Issues of Liability and Coverage Before the Same Jury

In State Farm etc. Ins. Co. v. Superior Court (1956) 47 Cal. 2d 428 304 P.2d 13, the insurer, State Farm, brought an action for declaratory relief against its insured, who was involved in an automobile accident, and relied on an exclusion in its policy applying to use of an automobile " 'for carrying persons for a charge.' " (Id. at p. 431). Subsequently, the riders in the insured's automobile filed actions for personal injury against him, alleging negligence and willful misconduct. The trial court consolidated the declaratory relief action and the personal injury actions for trial before the same jury. On appeal, the Supreme Court noted that the order of consolidation required State Farm to take apparently inconsistent positions before the jury: In the declaratory relief action, it would contend that the riders were passengers "for a charge" within its policy exclusion; in the personal injury actions, it would urge that the riders were guests within the meaning of the guest statute, so that the insured would be liable only for willful misconduct. The tests for determining the riders' status were not the same under the guest law and the policy exclusion. Moreover, the consolidated trial would require disclosure of the insured's liability insurance before the same jury that would consider the personal injury actions. Under these circumstances, the court held that the consolidation of the two actions was an abuse of the court's discretion. The decision in Omaha Indemnity Co. v. Superior Court (1989) 209 Cal. App. 3d 1266 258 Cal. Rptr. 66 bears a partial analogy to the portion of the present case involving Shade's suit against IPS and Northbrook. The plaintiff leased property to a tenant under a lease requiring the tenant to purchase general liability insurance. The tenant contaminated the property with oil spills. the plaintiff then sued the tenant for negligence and the tenant's insurer under a theory of third party beneficiary rights. The insurer moved to sever the liability and insurance coverage trials, relying on Evidence Code section 1155, which precludes the use of evidence of the tortfeasor's insurance in a negligence action. On appeal, the court held that the trial court abused its discretion in denying the insurer's motion to sever. (See also Pacific Estates, Inc. v. Superior Court (1993) 13 Cal. App. 4th 1561, 1566, fn. 5 17 Cal. Rptr. 2d 434; Rose v. Royal Ins. Co. (1991) 2 Cal. App. 4th 709, 718 3 Cal. Rptr. 2d 483; Zahn v. Canadian Indem. Co. (1976) 57 Cal. App. 3d 509, 514 129 Cal. Rptr. 286.) Other decisions involve direct actions by third parties against an insurer alleging unfair claims settlement practices during the nine-year period between Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal. 3d 880 153 Cal. Rptr. 842, 592 P.2d 329 which authorized such suits, and Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal. 3d 287 250 Cal. Rptr. 116, 758 P.2d 58, which reversed the Royal Globe decision. These decisions prohibited " 'a suit simultaneously against an insured for negligence and against an insurance company for bad faith refusal to settle . . . .' " ( Smith v. Interinsurance Exchange (1985) 167 Cal. App. 3d 301, 303 213 Cal. Rptr. 138; Industrial Indemnity Co. v. Mazon (1984) 158 Cal. App. 3d 862, 865 204 Cal. Rptr. 885.) This brief review of the case law suggests that, while it may be an abuse of discretion to try issues of liability and coverage before the same jury, the question must be decided on a case-by-case basis.