Central Mutual Ins. Co. v. Del Mar Beach Club Owners Assn.

• Decision Date: 24 September 1981
• Citation: Central Mutual Ins. Co. v. Del Mar Beach Club Owners Assn., 123 Cal.App.3d 916, 176 Cal.Rptr. 895 (Cal. App. 1981)
• Parties: CENTRAL MUTUAL INSURANCE COMPANY, Plaintiff, Cross-Defendant and Respondent, v. DEL MAR BEACH CLUB OWNERS ASSOCIATION, INC., Defendant, Respondent and Appellant, Rebma California Nine, Inc., et al., Defendants, Cross-Complainants, Cross- Defendants and Appellants. Insurance Company of North America, Defendant, Cross-Defendant and Respondent, Reliance Insurance Company, Cross-Defendant and Respondent, CNA Casualty of California, Defendant, Cross-Defendant and Respondent. Civ. 22170.
• Court: California Court of Appeals

Page 895

176 Cal.Rptr. 895

123 Cal.App.3d 916

CENTRAL MUTUAL INSURANCE COMPANY, Plaintiff, Cross-Defendant and Respondent, v. DEL MAR BEACH CLUB OWNERS ASSOCIATION, INC., Defendant, Respondent and Appellant Rebma California Nine, Inc., et al., Defendants, Cross-Complainants, Cross- Defendants and Appellants Insurance Company of North America, Defendant, Cross-Defendant and Respondent Reliance Insurance Company, Cross-Defendant and Respondent CNA Casualty of California, Defendant, Cross-Defendant and Respondent.

Civ. 22170.

Court of Appeal, Fourth District, Division 1, California.

Sept. 24, 1981.

Belcher, Henzie, Biegenzahn, Chertok & Walker, William I. Chertok, Uzzell S. Branson III, Los Angeles, Scales, Patton, Ellsworth & Corbett, Michael H. Wexler, San Diego, and George C. Lazar, Keene, for appellants.

Clausen, Harris & Campbell, Kenneth H. Clausen, Arthur E. Schwimmer, Los Angeles, McInnis, Fitzgerald, Rees, Sharkey & McIntyre, Thomas E. Sharkey, San Diego, William R. Warhurst, McKay & Byrne, Michael A. Byrne, Los Angeles, Stutz, McCormick, Mitchell & Verlasky, Carlye Christianson, San Diego, for respondents.

COLOGNE, Acting Presiding Justice.

Five insurance companies ¹ (carriers) which had issued comprehensive liability policies to the entities involved in the development of a residential complex are plaintiffs and cross-complainants in this action for declaratory relief. The carriers seek a judicial determination of their liability to defend or indemnify their insureds ² for any judgments which might be entered against them in an underlying action. ³ After summary judgment was entered in favor of the carriers, the insured contractors and developers, principals in the underlying action, appeal. We address the propriety of the summary judgment in this complex multiparty setting.

In 1970, Imperial and Rebma formed a joint venture known as the Del Mar Venture to acquire certain real property for the purpose of constructing a planned development consisting of over 190 units pursuant to Business and Professions Code section 11003. The residential units overlook the Pacific Ocean in Solana Beach and were sold to the general public. Imperial was to be the general contractor for the development. Kelly ⁴ and Adcock were the principals and major shareholders in Imperial and were active in their individual capacities in the sale of units to the general public. In the early stages of the project, they were the principal officers in the Owners Association, but as the units were sold they relinquished those positions. Certain other parties participated in the development, including Wolfe-Woods as architects, Arevalo & Safino, structural engineers, and Krooskos, soil engineer.

The project included certain common areas such as the tennis courts, a swimming pool, club house and parking areas, which the Del Mar Venture deeded to the Owners Association in the early stages and the Association served as the management agent for this property. The owners of the individual units became members of the Association and controlled its activities.

The project was completed in three phases, the first two of which were located on the bluff overlooking the ocean and the third of which was constructed on the east side of the property inland from the bluffs. Units were sold to the general public between 1971 and 1974. In 1975, the Owners Association filed the underlying action against Del Mar Venture and others, in its fourth amended version alleging certain defects in construction of the common areas and certain natural and unnatural soil erosion to the western edge of the property and the bluffs.

During the pendency of this action, on July 1, 1977, Central Mutual brought the within action for declaratory relief to determine whether it had a duty to defend or to indemnify its insureds. The other insurance companies cross-complained for similar declaratory relief on their respective policies.

For various terms during the period of time in question, the following policies had been issued: Central Mutual insured Del Mar Venture, the joint venture consisting of Imperial and Rebma; CNA issued two insurance policies which insured Del Mar Venture, Imperial, Imperial Real Estate Company, Kelly, Gary M. Adcock Real Estate Sales Co.; INA issued five insurance policies, some "excess" policies, two of which insured Imperial, Imperial Real Estate Company, Kelly and Gary M. Adcock Real Estate Company, and three of which were policies insuring the Owners Association, and all condominium owners with two of these also covering Del Mar Venture; Reliance insured Imperial, Imperial Real Estate Company, Kelly and Gary M. Adcock Real Estate Company; and Maryland insured Owners Association and Imperial. ⁵ All of the policies can be described as general comprehensive liability policies. They contain certain exclusions of coverage in various forms for product liability generally, as where there is (1) property damage to products owned, used, or in the care, custody or control of the insured, (2) property damage to premises alienated by the insured, (3) property damage arising out of the work performed or materials furnished by the insured, or (4) property damage from deficiency or mistake in design, plan (etc.) prepared or developed by the insured. ⁶ The trial court ruled the entire project developed here constituted a "product" and was within the language of the specific exclusions.

At the outset, we summarize the well established rules governing the summary judgment procedure.

" 'The matter to be determined by the trial court in considering such a motion is whether the defendant (or the plaintiff) has presented any facts which give rise to a triable issue. The court may not pass upon the issue itself. Summary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his favor (fn. omitted) and his opponent does not by affidavit show such facts as may be deemed by the judge hearing the motion sufficient to present a triable issue. The aim of the procedure is to discover, through the media of affidavits, whether the parties possess evidence requiring the weighing procedures of a trial. In examining the sufficiency of affidavits filed in connection with the motion, the affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. Such summary procedure is drastic and should be used with caution so that it does not become a substitute for the open trial method of determining facts.' (Stationers Corp. v. Dun & Bradstreet, Inc. (1965) 62 Cal.2d 412, 417 (42 Cal.Rptr. 449, 398 P.2d 785) ....)" (Corwin v. Los Angeles Newspaper Service Bureau, Inc., 4 Cal.3d 842, 851-852, 94 Cal.Rptr. 785, 484 P.2d 953.)

The substance Code of Civil Procedure section 437c applicable at the time summary judgment was granted reads as follows:

"In superior courts and municipal courts if it is claimed the action has no merit, or that there is no defense to the action, on motion of either party, after notice of the time and place thereof in writing served on the other party at least 10 days before such motion, supported by affidavit of any person or persons having knowledge of the facts, the answer may be stricken out or the complaint may be dismissed and judgment may be entered, in the discretion of the court unless the other party, by affidavit or affidavits shall show such facts as may be deemed by the judge hearing the motion sufficient to present a triable issue of fact. A judgment so entered is an appealable judgment as in other cases. The word 'action' as used in this section shall be construed to include all types of proceedings. The word 'complaint' as used in this section shall be construed to include a cross-complaint. The phrase 'plaintiff's claim' as used in this section includes a cause of action, asserted by any party, in a cross-complaint. The filing of a motion under this section shall not extend the time within which a party must otherwise file an answer, demurrer, cross-complaint, or motion to strike.

"The affidavit or affidavits in support of the motion must contain facts sufficient to entitle plaintiff or defendant to a judgment in the action, and the facts stated therein shall be within the personal knowledge of the affiant, and shall be set forth with particularity, and each affidavit shall show affirmatively that affiant, if sworn as a witness, can testify competently thereto.

"The affidavit or affidavits in opposition to said motion shall be made by the plaintiff or defendant, or by any other person having knowledge of the facts, and together shall set forth facts showing that the party has a good and substantial defense to the plaintiff's claim (or to a portion thereof) or that a good cause of action exists upon the merits. The facts stated in each affidavit shall be within the personal knowledge of the affiant, shall be set forth with particularity, and each affidavit shall show affirmatively that the affiant, if sworn as a witness, can testify competently thereto.

When the party resisting the motion appears in a representative capacity, such as a trustee, guardian, executor, administrator, or receiver, then the affidavit in opposition by such representative may be made upon his information and belief.

"If it appears that such defense applies only to a part of the plaintiff's claim, or that a good cause of action does not exist as to a part of the plaintiff's claim, or that any part of a claim is admitted or any part of a defense is conceded, the court shall, by order, so declare, and the claim or defense shall be deemed established as to so much thereof as is by such order declared and the cause of action may be severed accordingly, and the action may proceed as to the issues remaining between the parties. No judgment shall...