## Facts

- Landlords Frank and Margaret Greinke leased rental property to tenants K.R. and Patricia Trefts.
- The lease required the tenants to obtain a general liability insurance policy for the mutual benefit of landlord and tenant.
- Omaha Indemnity Company issued a general liability policy to the tenants.
- The landlords later alleged the property was damaged by an oil spill during the tenants’ tenancy and demanded coverage; Omaha denied coverage.
- The landlords sued the tenants for negligence and sued Omaha for declaratory relief, alleging rights under the policy as third-party beneficiaries.
- Omaha demurred to the declaratory relief claim and, alternatively, moved to sever the declaratory relief claim against it from the negligence claim; the trial court overruled the demurrer and denied severance.
- Omaha sought writ relief compelling severance.

## Issues

1. Whether the trial court abused its discretion under Code of Civil Procedure § 1048(b) by refusing to sever the insurer coverage/declaratory relief claim from the negligence action, given Evidence Code § 1155’s bar on using liability insurance evidence to prove negligence or wrongdoing.
2. Whether extraordinary writ relief was available to correct the denial of severance, or whether an appeal provided an adequate remedy.

## Decision

- The Court of Appeal issued a peremptory writ of mandate directing the superior court to grant Omaha’s motion to sever.
- The court held the trial court abused its discretion by keeping the declaratory relief claim against the insurer joined with the negligence action against the insured tenants.
- The court concluded that trying both claims together would violate the letter and spirit of Evidence Code § 1155 by injecting the fact of liability insurance into the negligence trial.
- The court determined writ relief was proper because disclosure of insurance to the jury would create prejudice not readily curable on appeal.

## Legal Principles

- Under Code of Civil Procedure § 1048(b), a trial court must order separate trials or severance when necessary to avoid undue prejudice, and denial may constitute an abuse of discretion.
- Evidence Code § 1155 bars admission of liability insurance evidence to prove negligence or other wrongdoing; procedures that effectively reveal insurance to the jury in the negligence phase defeat the statute’s purpose.
- Joining an insurer as a party in a negligence trial on a related declaratory relief/coverage claim creates a substantial risk the jury will learn of insurance and be improperly influenced.
- Writ relief may be appropriate when a refusal to sever risks prejudice that cannot be meaningfully remedied after verdict, even though ordinary appeal is generally the usual route for review.

## Conclusion

The court required severance of the landlords’ declaratory relief claim against the tenants’ insurer from the underlying negligence action because joint trial would expose the jury to the fact of insurance, contravening Evidence Code § 1155 and creating prejudicial harm warranting immediate mandate relief.


Omaha Indem. Co. v. Superior Ct., 209 Cal. App. 3d 1266, 258 Cal. Rptr. 66 (Ct. App. 1989)