Ruling in favor of Markel unit overturned

A federal appeals court on Wednesday overturned a lower court ruling in favor of a Markel Corp. unit that was attempting to recoup a $1 million settlement from a policyholder in an automobile death.

The case was remanded to the lower court for further fact-finding.

Markel unit United Specialty Insurance Co. issued an auto dealer’s policy to San Jose, California-based Bani Auto Group Inc. and Sia Bani & Co. LLC, in 2016, according to the complaint in United Specialty Insurance Co. v. Siavosh Banihashemi, aka Sia Bani, and Bani Auto Group Inc. et al.  

In 2016, San Jose-based Club Sportiva Inc., which promotes exotic car tours, leased a Ferrari for a tour. David Wright was driving the auto when he lost control and was fatally injured.

Mr. Wright’s family sued Club Sportiva, Bani Auto Group and Siavosh Banihashemi, United Specialty accepted Bani Auto and Mr. Banihashemi’s defense, subject to a reservation of rights. 

United Specialty settled the case for $1 million, then sued Bani Auto Group, Mr. Banihashemi and others, seeking recission of the policy and recoupment of its defense and indemnity payments, stating they had not sought coverage for leasing, loaning or renting any vehicles.

The U.S. District Court in San Jose ruled in the insurer’s favor in November 2021, stating United Specialty had no duty to indemnify in the underlying Wright lawsuit and that Bani Auto, Club Sportiva and Mr. Banihashemi should jointly and severally reimburse United Specialty for the $1 million settlement, plus prejudgment interest.

Mr. Banihashemi and Bani Auto Group appealed the decision, which was overturned by a three-judge appeals court panel. 

 “On the record before the district court, United Specialty was not entitled to summary judgment as a matter of California law. … The burden of proving allocation is ‘squarely on insurers asserting claims for reimbursement,’” the ruling said, citing an earlier case.   

“Although a finding of joint and several liability may ultimately be appropriate for all three Bani Defendants the record before us reflects the existence of material issue of fact regarding allocation of the settlement amount among the insureds,” the ruling said, in vacating the district court’s award of summary judgment in United Specialty’s favor and remanding the case for further proceedings.

Attorneys in the case did not respond to requests for comment.