United Specialty Insurance Company v. Bani Auto Group, Inc.

Background

United Specialty Insurance Company sued Bani Auto Group, Inc., Club Sportiva, Inc., and Siavosh Banihashemi to recover the $1,000,000 policy-limit settlement United paid under a reservation of rights in a wrongful-death action. The underlying action concerned David Wright’s death in a Ferrari crash during an Exotic Car Tour organized by the Bani Defendants. The underlying plaintiffs alleged negligence in selecting and inspecting the tour route and in maintaining the Ferrari.

In an earlier round of this case, the court ruled that the underlying claims were not covered by the policy and entered judgment requiring Bani, Bani Auto Group, and Club Sportiva to reimburse United jointly and severally for $1,000,000 plus prejudgment interest. On appeal, the court of appeals vacated the ruling as to Banihashemi and ordered further proceedings concerning allocation of the settlement and whether Banihashemi was jointly liable as a joint tortfeasor or as an alter ego of the companies. Bani Auto Group and Club Sportiva did not appeal their liability for reimbursement.

Summary-judgment standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. Each cross-motion was considered separately, with reasonable inferences drawn for the party opposing that particular motion.

United’s motion: joint-tortfeasor theory

California law permits an insurer seeking reimbursement of settlement costs to recover from an insured who benefited from the settlement, but only to the extent of that benefit. The court found that United showed Banihashemi benefited because the underlying negligence claims exposed him to potential personal liability. Evidence included his deposition testimony that he selected the tour route and attended an operations meeting at which the condition of the Ferrari’s right rear tire would have been discussed.

The court rejected the Bani Defendants’ argument that Banihashemi would have been found not liable if the underlying case had continued. The relevant question was whether the claims exposed him to potential liability, not what the eventual result of the underlying case would have been. The court also ruled that paragraphs 5 through 8 of Banihashemi’s opposition declaration were a sham because they clearly and unambiguously contradicted his earlier deposition testimony, and it sustained United’s objection to those paragraphs.

The court further found that Banihashemi received the full benefit of the settlement. Evidence showed potential economic damages exceeding the $1,000,000 policy limit, including estimates of approximately $3,700,000 for lost financial support. Because Banihashemi faced potential joint and several liability for the economic damages, the court concluded that allocating the full $1,000,000 settlement to him was appropriate and that failing to do so would result in unjust enrichment.

United’s motion: alter-ego theory

United separately argued that Banihashemi was the alter ego of Bani Auto Group and Club Sportiva. Under California law, alter ego requires both a unity of interest and ownership such that the company and its owner do not function as genuinely separate entities, and an inequitable result if the company alone is treated as responsible.

The court found that United met its initial burden on both requirements. But the parties presented conflicting opinions from forensic accounting experts about whether there was a unity of interest and ownership. That conflict created a factual issue for trial, so United was not entitled to summary judgment on its alter-ego theory. The court nevertheless granted United summary judgment based on the joint-tortfeasor theory.

Bani Defendants’ motion

The Bani Defendants sought partial summary judgment on two issues: whether United had evidence supporting allocation of the settlement and whether Banihashemi was jointly and severally liable for reimbursement. The court found that their cited discovery responses did not establish that United lacked evidence of allocation. It also found that additional discovery after the appeal produced evidence concerning Banihashemi’s potential personal liability and the extent of his exposure.

The Bani Defendants’ motion for partial summary judgment was DENIED. United’s motion for summary judgment was GRANTED. The court directed United to submit a proposed judgment consistent with the order by October 6, 2025, and terminated the two motions addressed in the order.