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The American Insurance Company v. Medical Protective Company
December 5, 2011
THE AMERICAN INSURANCE COMPANY,
MEDICAL PROTECTIVE COMPANY, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge
ORDER GRANTING DEFENDANT'S MOTION FOR RECONSIDERATION
In this action for equitable contribution and indemnity, Defendant The Medical Protective Company ("MPC") filed a motion for reconsideration of the September 8, 2011 Order Granting Plaintiff's Motion for Partial Summary Judgment, which Plaintiff The American Insurance Company ("American") opposed. For the reasons which follow, MPC's motion for reconsideration is GRANTED.
American and MPC issued professional liability policies to Shervin Erfani, DMD. Dr. Erfani was a named defendant in several lawsuits charging him with fraudulent billing practices and professional negligence. He allegedly demanded American and MPC to defend him in these actions. Although MPC initially participated in Dr. Erfani's defense, it stopped participating in May 2011.
MPC filed an action against Dr. Erfani to rescind the extension contract endorsement to the professional liability policy it issued to Dr. Erfani, which allegedly covers Dr. Erfani's claims underlying this action. Subsequently American filed this action against MPC for equitable contribution and indemnity. American alleged MPC had a duty to contribute to Dr. Erfani's defense and the settlement or judgment of the lawsuits, and should reimburse American for taking on more than its share of these expenses. MPC asserted a defense of rescission, claiming it is not obligated to contribute because its underlying contract with Dr. Erfani should be rescinded.
American filed a motion for partial summary judgment requesting a finding that MPC cannot assert the rescission defense under the circumstances of this case. The motion was granted by order filed September 8, 2011. MPC seeks reconsideration of that order.
Because there are genuine issues of material fact (1) whether Dr. Erfani's misrepresentations were material in light of the guarantee in MPC's policy to offer an extension contract; and (2) whether MPC complied with its contractual obligation to offer an extension contract to Dr. Erfani, and for the reasons stated in the Order Denying Plaintiff's Ex Parte Application for Default Judgment and Its Motion for Reconsideration, filed concurrently herewith in related case, The Med. Protective Co. v. Erfani, U.S. Dist. Ct. S.D. Cal. case no. 09cv2833-DMS(CAB), MPC's motion for reconsideration is GRANTED. Accordingly, the September 8, 2011 order is hereby amended and American's motion for partial summary judgment on MPC's rescission defense is DENIED.
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