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Lorna Kuhar and Mark Kuhar


Facts and Background:
A twenty-two year old, killed 6-year old Amanda Kuhar while driving a heavily modified Mustang GT owned by his friend. He was driving the Mustang GT as part of his effort to make the vehicle meet California’s smog emission standards.

At the time of the accident, the Mustang GT was insured under a primary policy of automobile insurance issued by Insurance Company A, and an excess policy of insurance issued by sister company, Insurance Company B. Each policy had “bodily injury” limits of $1,000,000. Defendant insurers flatly refused to defend or indemnify the driver against the wrongful death and emotional distress claims of Amanda’s parents, and rejected the Kuhars’ reasonable offers to the faulty assumption that the young driver drove the Mustang GT while he was “working in a business of servicing or repairing automobiles” and therefore excluded from coverage under the policies. The refusal to defend the driver ultimately exposed him to an “excess” judgment in the amount of $6,750,000. On August 12, 1999, defendant insurers filed a Complaint for Declaratory Relief; Demand for Jury Trial naming Mark Kuhar and Lorna Kuhar as Real Parties in Interest. The Kuhars counterclaimed, pleading a direct cause of action as a judgment creditor, and also causes of action for insurance bad faith.

Plaintiffs’ Contentions:
The driver was a Mustang hobbyist who was not working in the business of servicing and repairing automobiles, but rather helping out a friend on the day of the accident. Defendants wrongfully refused to defend the underlying wrongful death action, exposing the driver to an excess verdict.

Defendants denied the claim before they knew the exclusion applied, and failed to conduct a proper investigation of the claim at any point in time. Defendants ignored a large number of allegations and facts which created a potential of coverage under the subject insurance policy.

Defendants’ Contentions:
The driver worked out of an automobile shop, that performed mechanical work for pay on numerous occasions before the accident, including mechanical work for pay for the owner of the Mustang GT. At the time of the accident, the driver was performing mechanical work, under a sort of warranty arrangement with the owner of the Mustang GT. Accordingly, the driver was working in the business of servicing and repairing automobiles and the subject exclusion applied.

Wrongful death of Amanda Kuhar.