Westrec Marina Mgmt., Inc. v. Arrowood Indemn. Co., 163 Cal. App. 4th 1387 (2008)

Westrec sued its insurance carrier, Arrowood, after the carrier refused to provide a defense to an employment discrimination lawsuit on the ground that Westrec had failed to timely report the third-party claim as required under the terms of two successive directors and officers liability insurance policies issued by Arrowood. Bette Clark filed a complaint with the California Department of Fair Employment and Housing on April 14, 2003, alleging gender bias by Westrec and requesting a right-to-sue letter. On June 23, 2003, Clark’s attorney sent a letter to Westrec “alleging discriminatory and demeaning treatment by male employees based upon sex.” Westrec failed to notify Arrowood of the DFEH filing or the attorney’s letter within 30 days after the expiration of the policy. Clark filed her lawsuit on December 19, 2003, and Westrec notified Arrowood of the action on January 30, 2004, tendered its defense and requested indemnity. Arrowood declined to defend or indemnify on the ground that Westrec had not timely notified it of the “claim,” which it deemed to be the DFEH filing and/or the attorney’s letter. Arrowood prevailed following a nonjury trial on Westrec’s breach of contract claim. The Court of Appeal affirmed, holding that Westrec had failed to timely report the claim to its insurance carrier and thereby waived coverage.