Insurance Coverage Monitor: California Supreme Court Determines That Administrative Proceedings Can Be ?Suits?

In a closely watched case by the insurance bar, the California Supreme Court in Ameron Int?l v. Ins. Co. of the State of Pennsylvania ruled that a proceeding before the United States Department of the Interior Board of Contract Appeals (?IBCA?) constitutes a ?suit? that triggers insurance coverage under a commercial general liability policy. In its unanimous opinion published on November 18, 2010, the Supreme Court limited the reach of its prior Foster-Gardner v. National Union Fire Ins. Co. decision, which rigidly defined the term ?suit? as a court proceeding initiated by the filing of a complaint…

This case is significant because the Supreme Court showed a willingness to carve out an exception to the ?bright-line? standard set forth in Foster-Gardner that only a lawsuit filed in court could constitute a ?suit? as that term appears in most general liability policies. Foster-Gardner was decided by a sharply divided Supreme Court at the time with a critical dissenting opinion by Justice Kennard. In Ameron, Justice Kennard wrote a concurring opinion, wherein she reiterated her strong belief that Foster-Gardner was wrongly decided. Although Justice Kennard would prefer that Foster-Gardner be overruled, she believes that the Ameron decision ?is at least a step in the right direction.?

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