The City then filed a cross-complaint against DSI, RLI, and several other contractors and their insurers, asserting claims for breach of contract, declaratory relief, and insurance bad faith, among others. RLI pushed back with a demurrer, arguing that under a well-known 1979 California Supreme Court decision – Royal Globe Ins. Co. v. Superior Court – a plaintiff cannot sue both the insurer and the insured in the same lawsuit. The concern behind that rule is straightforward: if a jury knows the defendant has insurance, it might be more inclined to find liability or award higher damages. California’s Evidence Code section 1155 exists to prevent exactly that kind of prejudice by keeping evidence of insurance out of negligence trials.
