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January 2013

Gemini Insurance Company v. Delos Insurance Company - Additional Insured Landlord Not An "Insured" For Purposes of Interinsured Claims Exclusion

Interinsured Claims Exclusion Did Not Exclude Coverage Where an Additional Insured Landlord Was Not Adverse to a Named Insured Tenant

(December 5, 2012) __Cal.App.4th __; 12 C.D.O.S. 13358

The California Court of Appeal, Second Appellate District, affirmed Gemini Insurance Co.’s motion for summary judgment in a lawsuit brought by Gemini seeking reimbursement of a paid property damage claim from Delos Insurance Co. The court held that coverage was owed to Gemini’s insured and that the Delos policy’s interinsured exclusion did not apply.

Delos issued a liability insurance policy (the “Policy”) to Bobby’s Foscle, a restaurant located in a building owned by Loch Lomond Marina. Pursuant to the rental agreement between Bobby’s owners and Loch Lomond, Loch Lomond was named in the Policy as an “additional insured.”

The Policy contained an “Interinsured Claims and Suits Exclusion,” which provided:

The liability coverage afforded by this policy does not apply to any claim or “suit” for damages by any “insured” against another “insured” because of “bodily injury ”, “property damage”, personal injury” or ”advertising injury”. We have no obligation to defend or indemnify any “insured” as to any such claim or “suit” by another “insured”.

The Policy also provided, "[I]f you are designated in the declarations as . . . an organization other than a partnership, joint venture, or limited liability company, you are an insured.” The Policy contained an endorsement titled “Additional Insured-Managers or Lessors of Premises,” which stated:

Who is an Insured (section II) is amended to include as an insured the person or organization shown in the Schedule but only with respect to such person or organization's liability which both (1) arises out of the ownership, maintenance or use of that part of the premises leased to you and shown in the Schedule, and (2) occurs on that part of the premises leased to you and shown in the Schedule, and (3) results from and by reason of your act or omission or an act or omission of your agent or employee in the course of your operations at that part of the premises leased to you and shown in the Schedule.

During Bobby’s lease with Loch Lomond, Bobby’s caught fire and caused damage to the leased property and the neighboring yacht business, Arena Yacht. Loch Lomond made a property damage claim to its insurer, Gemini, in the amount of $288,259, which Gemini paid. Gemini, also paid Arena Yacht’s claim of $65,088. Gemini then filed a subrogation action against Bobby’s, which Delos defended. The lawsuit resulted in a stipulated judgment, of which Delos paid Gemini $65,088 as reimbursement for Arena Yacht claim. Gemini then sued Delos under California Insurance Code section 11580 to recover reimbursement for the Loch Lomond claim. 

The appellate court rejected Delos’ argument that the “Interinsured Claims and Suits Exclusion” applied to Loch Lomand’s claim. The court reasoned that under the Policy’s plain terms, the exclusion exclusively applied to “insureds” who brought adverse claims against each other. The court found that Loch Lomond was not an “insured” within the exclusion’s definition because Loch Lomond did not bring a lawsuit against Bobby’s; the subrogation action was brought by Gemini against Bobby’s.

On these grounds, the court held Delos owed coverage to Loch Lomond and therefore, owed reimbursement to Gemini for Loch Lomond’s property damage claim.

Click here for the opinion. 

This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority in California state courts.

This and other case bulletins, as well as other publications of Gordon & Rees LLP, may be found at


Jordan S. Altura