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A federal district court in California has ruled that an insurance company did not have to defend a real estate broker sued by sellers and buyers of a multi-million-dollar ocean-front home in California.

The Case

Gary Gill Martin, a self-employed broker in the residential real estate market in North San Diego County, California, sued his insurer, QBE Insurance Corporation, for refusing to defend him in a state court lawsuit filed against him by Brooks and Darlene Gifford (the “Gifford litigation” or “Gifford”). Gifford was the second state court lawsuit filed against Mr. Martin arising from his alleged dual representation of the Giffords, as sellers, and Eric and Lauren Schiermeyer, as buyers, in the sale of a multi-million-dollar ocean-front home in Solana Beach, California (the “Property”).

QBE, which had issued a real estate services errors and omissions liability insurance policy to Mr. Martin, denied coverage of the Gifford claim based on its finding that the Gifford litigation was related to the same real estate transaction at issue in an earlier lawsuit filed by the Schiermeyers (the “Schiermeyer litigation” or “Schiermeyer”).

Specifically, QBE’s denial letter stated that the Gifford claim “was not first made during the QBE policy period” because “the claims and damages asserted in [the Gifford litigation] arise out of the same real estate transaction, the same alleged failure to disclose unpermitted structures on the property that was sold, and the same commission you received as a dual agent for the transaction” that were at issue in the Schiermeyer litigation.

Mr. Martin asserted causes of action against QBE for breach of contract and tortious breach of the covenant of good faith and fair dealing. He contended that QBE’s wrongful refusal to defend him had forced him to settle Gifford for more than $500,000 of his own funds to avoid the risk of further litigation and trial.

QBE moved to dismiss, arguing there was no coverage under its policy. In particular, QBE argued that it did not have a duty to defend Mr. Martin because, under the policy’s terms, the Gifford lawsuit and the Schiermeyer lawsuit constituted the same “Claim” that was deemed made before the start of Mr. Martin’s QBE policy.

The QBE Policy

The QBE policy provided:

All Claims arising from the same Wrongful Act will be deemed to have been made at the earlier of the following times:

(1) The date the first of those Claims is made against any of You; or

(2) The first date We receive Your written notice of the Wrongful Act. The provisions of the Policy in effect on that date will apply.

The District Court’s Decision

The U.S. District Court for the Southern District of California granted QBE’s motion.

In its decision, the court first found that the Gifford litigation and the Schiermeyer litigation each constituted a claim under the QBE policy.

The court then reasoned that the complaints in Gifford and Schiermeyer involved the same alleged real estate transaction: the sale of the Property to the Schiermeyers for $5,100,000; that both claims were based on allegations regarding Mr. Martin’s role as the dual agent of the Giffords and Schiermeyer; and that both claims asserted that Mr. Martin was liable for negligent misrepresentations based on his alleged failure to make certain disclosures regarding the condition of the Property, such as the condition of a beach staircase attached to a seawall.

Therefore, the court ruled, because Gifford and Schiermeyer arose from the same alleged wrongful acts, Gifford was deemed to have been made at the same time as Schiermeyer under the policy. Because that was before the inception of the policy, and because coverage only was available for claims made during the policy period, there was no coverage for Gifford, the court concluded.

The case is Martin v. QBE Ins. Corp., No.: 18-CV-2439 W (BLM) (S.D. Cal. May 7, 2019). Attorneys involved include: For Gary Gill Martin, an individual, Plaintiff: Anthony Francis Witteman, LEAD ATTORNEY, Theodora Oringher, Costa Mesa, CA. For QBE Insurance Corporation, a California corporation, Defendant: Jordon Edward Harriman, Rebecca R. Weinreich, LEAD ATTORNEYS, Lewis Brisbois Bisgaard and Smith LLP, Los Angeles, CA.


Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Mr. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. He may be contacted at