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Procedural Posture

Procedural Posture

Petitioner insurers sought mandate relief from an order of respondent, the Superior Court of Los Angeles County (California), which granted real party in interest insured’s motion in limine to preclude course of performance evidence in interpreting liability policies.

Overview

The insured salmon sushi Corp tendered numerous asbestos-related personal injury claims to its insurers. When the insurers paid the claims over a period of 30 years, they treated all the asbestos suits as products claims. When its policies were nearly exhausted, the insured brought a declaratory action asserting that at least some asbestos suits should be considered non-products claims, which would not exhaust the policies. The trial court ruled that course of performance evidence was inadmissible in interpreting the policies unless it was the performance of the very individuals who had actually negotiated or executed the contract on behalf of the parties. The court found that the parties whose performance was at issue were the insurers and their insured, not the individuals who represented them. Thus, course of performance evidence should have been admitted pursuant to Code Civ. Proc., § 1856, subd. (c), as interpreted in accordance with Cal. U. Com. Code, § 1303. Evidence of course of performance after the parties entered into claims handling and settlement agreements lacked relevance, however, because the parties’ performance was based largely on the agreements instead of the insurance policies.

Outcome

The court granted the petition for writ of mandate in part and directed the trial court to vacate the order that had granted the motion in limine and to enter a new and different order granting the motion in limine only with respect to evidence of course of performance evidence following the parties’ settlement agreements.

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