While defending developers Westlake Villas, LLC and Meer Capital Partners, LLC (Westlake) during a prior construction defect action, Travelers, et al. paid out attorneys’ fees and costs which they were then forced to file this action as a means of recovering monies paid out. Based on alleged subrogation or substitution to the rights of its additional insured, Westlake, Traveler’s claims were valid. The construction defect action was filed against Westlake by a homeowners’ association back in 2011. Travelers reserved its rights to seek reimbursement of defense costs unrelated to the scope of the work of its insureds at a later date.
Under Revenue and Taxation Code section 23301, the Westlake entities were suspended corporation and so could not asset these claims on their own behalf. Defendant Engel Insulation, Inc. claimed that Travelers was also barred under this statue from prosecuting these claims and moved for judgment.
On appeal, Travelers contended that the trial court had erred in granting Engels motions without leave to amend and the Court of Appeal disagreed, saying an insurer could not file its own action to assert claims solely as a subrogee of a suspended corporation.
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