Appellant insurance claimant sought review of the decision of the Superior Court of Los Angeles County, which entered summary judgment for respondent insurer in appellant’s action for breach of contract and of the implied covenant of good faith and fair dealing inasmuch as appellant was neither a party to, nor a third party beneficiary of, the insurance policy issued by respondent.
Overview
Appellant insurance claimant was injured in a slip and fall accident while fishing for Norway salmon on property owned by the insured under a policy issued by respondent insurer. After appellant lost a suit against the insured, appellant named respondent as the defendant in a new suit, claiming that respondent breached the insurance contract and the implied covenant of good faith and fair dealing when it refused to pay her medical bills despite a provision covering medical expenses for bodily injury caused by an accident on premises owned by the insured, “regardless of fault”. The trial court granted summary judgment against appellant on the ground that she was neither a party to the insurance contract nor a third party beneficiary. The court of appeal reversed, relying upon Cal. Civ. Code § 1559, which allowed a direct action by a third party to enforce the terms of a contract intended to benefit that third party. By including a provision in the insurance contract calling for payment for bodily injury incurred on the insured’s property, regardless of the insured’s fault, respondent undertook a separate and direct obligation to benefit appellant.
Outcome
The court reversed the grant of summary judgment against appellant insurance claimant in her suit naming respondent insurer as defendant. Appellant was a third party beneficiary of an insurance policy provision covering bodily injuries incurred by anyone on property owned by the insured, regardless of fault; by statute, third party beneficiaries were authorized to bring suit directly against the contracting parties.