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statutory provision.” However, the Downey court recognized that coverage could be afforded for malicious prosecution claims based on vicarious liability. It stated: Although section 533 bars indemnity


of an insured who personally commits an act of malicious prosecution, the statute does not bar indemnity of an insured who does not personally commit the act but who is vicariously liable for another person’s act of malicious prosecution.


(Id. at 512.) It further explained that a principal


who personally engages in no misconduct may be vicariously liable for an act of malicious prosecution committed by an agent within the course and scope of the agency. (See Lujan v. Gordon (1977) 70 Cal.App.3d 260, 262 [138 Cal.Rptr. 654] [all partners in law firm exposed to liabili- ty for malicious prosecution as the result of malicious action filed by one partner].) Likewise, a corporation may be liable for an act of malicious prosecution commit- ted within the scope of its agent’s authority to act for and on behalf of the corporation. Where a principal is held vicariously


liable for an agent’s act of malicious pros- ecution, section 533 poses no obstacle to indemnifying the principal. (Id. at 513, citing Dart, Fireman’s Fund, and Lisa M.). Two federal courts have more recent-


ly followed this approach. In UMG Recordings Inc. v. American Home Assurance Co., No. CV 04-04756 (C.D. Cal. Nov. 8, 2004), various members of the AIG group of insurance companies sought to have New York law applied to the question of coverage for a punitive damages award. The court found that New York law gener- ally barred coverage for punitive dam- ages, even if imposed on a vicarious liability basis. However, the court gave deference to


a choice of law clause and held that California law would govern the insurabili- ty of punitive damages. It noted that vari- ous insurance companies “acknowledge that California law suggests that, under some circumstances, a narrow exception to the rule against the indemnification of punitive damages exists when a company is held vicariously liable.” It then concluded:


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” Quote from 2006 Consumer Lawyers Evaluations PH 805.565.1487 FAX 805.565.3187 ratc@cox.net 565 SHEFFIELD, SANTA BARBARA, CALIFORNIA 93108 JUNE 2011 The Advocate Magazine — 79


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