One Fluor Corp. assigned its rights under liability policies to another Fluor Corp. when they underwent complex corporate restructuring. In a declaratory relief action, the liability insurer objected that its approval was not given pursuant to a consent to assignment provision in the policy. Fluor contended the provision was void under an 1872 statute which provides: “An agreement not to transfer the claim of the insured against the insurer after a loss has happened, is void if made before the loss . . .” (Ins.Code § 520.) The trial court denied Fluor’s motion for summary adjudication, as well as its invitation to disregard the California Supreme Court’s holding in Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934 [129 Cal.Rptr.2d 828, 62 P.3d 69], and Fluor sought extraordinary relief. The appellate court was unimpressed with Fluor’s argument, stating: “During the 130 years since its enactment, the 1872 statute has been cited only once. No one raised it in Henkel. . . .There is a logical reason for this obscurity. The 1982 statute can have no bearing as a ‘clear’ or ‘controlling’ legislative expression on the assignability of liability insurance for the simple reason that liability insurance did not exist in 1872.” (Fluor Corp. v. Sup. Ct. (2012) 208 Cal.App.4th 1506 [146 Cal.Rptr.3d 527].) —SUPERSEDED BY GRANT OF REVIEW
The Current Decision:
Not only did the California Supreme Court reverse the Court of Appeal in this case, it reversed its own holding in Henkel Corp., supra, 29 Cal.4th 934 [129 Cal.Rptr.2d 828, 62 P.3d 69]. Henkel held that an assignment of policy benefits required the consent of the insurers, and since there was no consent, plaintiff was not entitled to coverage, which involved a successor corporation’s action against an insurance company for breach of its predecessor corporation’s policy. In Fluor, the present case, the Supreme Court stated: “We conclude that Insurance Code section 520 dictates a result different from that reached in Henkel, and accordingly we overrule the decision in Henkel to the extent it is inconsistent with the views expressed in the present opinion.” The high court explains no one cited Insurance Code section 520 in Henkel. That section, enacted in 1872, specifically restricts an insurer’s ability to limit an insured’s right to transfer or assign a claim for insurance coverage; it bars an insurer “after a loss has happened,” from refusing to honor an insured’s assignment of the right to invoke the insurance policy’s coverage for such a loss. (Fluor Corp. v. Sup. Ct. (Hartford) (Cal. Sup. Ct.; August 20, 2015) 61 Cal.4th 1175 [191 Cal.Rptr.3d 498, 354 P.3d 302].)Previously We Reported: Insurance Company Can Require Insured To Obtain Its Consent Before Assigning Interest In Policy.
One Fluor Corp. assigned its rights under liability policies to another Fluor Corp. when they underwent complex corporate restructuring. In a declaratory relief action, the liability insurer objected that its approval was not given pursuant to a consent to assignment provision in the policy. Fluor contended the provision was void under an 1872 statute which provides: “An agreement not to transfer the claim of the insured against the insurer after a loss has happened, is void if made before the loss . . .” (Ins.Code § 520.) The trial court denied Fluor’s motion for summary adjudication, as well as its invitation to disregard the California Supreme Court’s holding in Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934 [129 Cal.Rptr.2d 828, 62 P.3d 69], and Fluor sought extraordinary relief. The appellate court was unimpressed with Fluor’s argument, stating: “During the 130 years since its enactment, the 1872 statute has been cited only once. No one raised it in Henkel. . . .There is a logical reason for this obscurity. The 1982 statute can have no bearing as a ‘clear’ or ‘controlling’ legislative expression on the assignability of liability insurance for the simple reason that liability insurance did not exist in 1872.” (Fluor Corp. v. Sup. Ct. (2012) 208 Cal.App.4th 1506 [146 Cal.Rptr.3d 527].) —SUPERSEDED BY GRANT OF REVIEW
The Current Decision:
Not only did the California Supreme Court reverse the Court of Appeal in this case, it reversed its own holding in Henkel Corp., supra, 29 Cal.4th 934 [129 Cal.Rptr.2d 828, 62 P.3d 69]. Henkel held that an assignment of policy benefits required the consent of the insurers, and since there was no consent, plaintiff was not entitled to coverage, which involved a successor corporation’s action against an insurance company for breach of its predecessor corporation’s policy. In Fluor, the present case, the Supreme Court stated: “We conclude that Insurance Code section 520 dictates a result different from that reached in Henkel, and accordingly we overrule the decision in Henkel to the extent it is inconsistent with the views expressed in the present opinion.” The high court explains no one cited Insurance Code section 520 in Henkel. That section, enacted in 1872, specifically restricts an insurer’s ability to limit an insured’s right to transfer or assign a claim for insurance coverage; it bars an insurer “after a loss has happened,” from refusing to honor an insured’s assignment of the right to invoke the insurance policy’s coverage for such a loss. (Fluor Corp. v. Sup. Ct. (Hartford) (Cal. Sup. Ct.; August 20, 2015) 61 Cal.4th 1175 [191 Cal.Rptr.3d 498, 354 P.3d 302].)