Underwriters of Interest Subscribing to Policy No. A15274001 v. Probuilders Specialty Ins. Co.

• Decision Date: 23 October 2015
• Docket Number: D066615
• Citation: 241 Cal.App.4th 721,193 Cal.Rptr.3d 898
• Parties: UNDERWRITERS OF INTEREST SUBSCRIBING TO POLICY NUMBER A15274001, Plaintiff and Appellant, v. PROBUILDERS SPECIALTY INSURANCE COMPANY, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

241 Cal.App.4th 721

193 Cal.Rptr.3d 898

UNDERWRITERS OF INTEREST SUBSCRIBING TO POLICY NUMBER A15274001, Plaintiff and Appellant,

v.PROBUILDERS SPECIALTY INSURANCE COMPANY, Defendant and Respondent.

D066615

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

Filed October 23, 2015

As Modified on Denial of Rehearing November 13, 2015

Wolkin Curran, Brandt L. Wolkin, Amy K. Thomas, San Francisco, and Dawn A. Silberstein, Piedmont, for Plaintiff and Appellant.

Berger Kahn, David B. Ezra and Erin R. Mindoro, Irvine, for Defendant and Respondent.

McDONALD, J.

Pacific Trades Construction & Development, Inc. (Pacific Trades) was a defendant in a lawsuit that alleged, in part, that Pacific Trades was liable for damages for construction defects caused by Pacific Trades's negligent acts or omissions. Underwriters of Interest Subscribing to Policy Number A15274001 (Underwriters) undertook Pacific Trades's defense in that action under its Commercial General Liability (CGL) policy insuring Pacific Trades. ProBuilders Specialty Insurance Company (ProBuilders), which also insured Pacific Trades, declined to participate in funding Pacific Trades's defense, claiming (among other things) that a clause in its policy relieved ProBuilders of any duty to defend Pacific Trades when another insurer was doing so.

In this current action, Underwriters sought equitable contribution from ProBuilders for a portion of the defense costs. The parties filed cross-motions seeking summary adjudication of ProBuilders's liability for a portion of the defense costs. The trial court agreed with ProBuilders that a clause in its policy relieved it of any duty to defend Pacific Trades when (as here) another insurer was defending Pacific Trades, and entered summary judgment in favor of ProBuilders. Underwriters appeals that determination.

We conclude the trial court erred in enforcing the clause in ProBuilders's policy and, because the other arguments raised by ProBuilders in support of its summary judgment motion on Underwriters's claim for equitable contribution do not support the judgment, we reverse the judgment.

IFACTS

A. The Policies

Underwriters issued a Commercial General Liability (CGL) policy insuring Pacific Trades, among others, in effect between October 23, 2001, and October 23, 2003 (Underwriters's policy). ProBuilders also issued policies insuring Pacific Trades, in effect between December 9, 2002, and December 9, 2004 (ProBuilders's policies), providing for indemnification against liability for many of the same risks encompassed by Underwriters's policy.

ProBuilders's policies contained an "other insurance" clause that stated ProBuilders had "the right and duty to defend [Pacific Trades] against any suit seeking ... damages [to which the insurance applied] provided that no other insurance affording a defense against such a suit is available to you ." Underwriters's policy also included other insurance provisions that provided, under certain conditions, Underwriters would also be excused from any duty to defend Pacific Trades.¹

B. The Lawsuit

Pacific Trades was named as a defendant in a lawsuit (the Aceves lawsuit) that alleged, in part, that Pacific Trades was liable for damages to multiple separate single family homes caused by construction defects allegedly due to its negligent acts or omissions.² In April 2007 ProBuilders was notified of the Aceves action, which it subsequently acknowledged in November 2007 included claims giving rise to a "potential for indemnity exposure of a covered form of loss." However, in that same November 2007 communication, ProBuilders informed Pacific Trades that, although there was a potential for indemnity coverage under its policies, ProBuilders would not participate in providing a defense to Pacific Trades because Pacific Trades was "currently being defended by another carrier."

The carrier that provided that defense, Underwriters, had hired counsel to defend Pacific Trades (along with other named defendants) in the underlying action by July 2007. As early as 2009, Underwriters demanded that ProBuilders participate in funding the defense of the Aceves action. ProBuilders never contributed to funding the defense.

In 2010, the parties to the Aceves action negotiated a settlement amounting to approximately $1 million to be paid to the plaintiffs, and ProBuilders ultimately contributed $270,000 to that settlement. The settlement was confirmed as a good faith settlement in October 2010. However, the insurers' payments to fund that settlement, along with execution of the necessary settlement agreements by the numerous parties to the Aceves action and final dismissal of the suit, lingered into 2011. Underwriters continued to pay Pacific Trades's defense counsel for services connected to the Aceves lawsuit until at least March 2011.

C. The Present Action

After the underlying Aceves action was finally settled and dismissed as to Pacific Trades, Underwriters filed this action in November 2012 against ProBuilders seeking equitable contribution from it for some of the defense costs paid by Underwriters in connection with defense of the underlying action. ProBuilders and Underwriters filed cross-motions for summary judgment and summary adjudication, respectively, seeking a determination of whether ProBuilders had any obligations to contribute to the defense of their mutual insured.

ProBuilders's motion for summary judgment asserted it had no obligation to pay any portion of the defense costs based, in part, on its argument that the terms of its policies excused it from any obligation to defend Pacific Trades once Underwriters undertook that defense. ProBuilders also asserted it had no obligation to pay any portion of the defense costs because (1) Underwriters's action for equitable contribution was time-barred, (2) Pacific Trades had not satisfied a condition precedent (contained in the "Contractors Special Conditions" endorsement to the ProBuilders's policies) to ProBuilders's obligation to indemnify Pacific Trades, and (3) Underwriters refused to supply ProBuilders with the billings from the attorneys that formed the basis of the monetary amounts it sought from ProBuilders. Underwriters opposed ProBuilders's motion, arguing the terms of the policies purporting to excuse ProBuilders's defense obligation constituted an "escape" clause, which is routinely disregarded by California courts. Underwriters also asserted the other grounds raised by ProBuilders in support of its summary judgment motion were inadequate to grant the motion, because (1) Underwriters's action was timely because it was filed less than two years after it made its final payment towards the attorney fees that formed the basis for its equitable contribution action, (2) the Contractors Special Conditions (CSC) argument did not support summary judgment,³ and (3) ProBuilders's argument that Underwriters's alleged refusal to turn over billing statements justified summary judgment was legally unsupported and factually erroneous.

Underwriters's motion sought summary adjudication that ProBuilders had the duty to defend Pacific Trades in the underlying Aceves lawsuit, arguing that lawsuit gave rise to a potential covered claim and therefore triggered ProBuilders's duty to defend Pacific Trades in the Aceves lawsuit, and reasserting the "other insurance" clause contained in ProBuilders's policies did not excuse that obligation because it is an unenforceable escape clause. Underwriters also asserted the CSC endorsement did not excuse ProBuilders from providing Pacific Trades with a defense, and no other provisions barred Underwriters's right to seek equitable contribution for the defense costs it paid. ProBuilders opposed Underwriters's motion on the same grounds it raised in support of its motion for summary judgment.

The trial court ruled in favor of ProBuilders, concluding the "other insurance" clause in its policies obligated ProBuilders to defend Pacific Trades only if no other insurance affording a defense was available to Pacific Trades, and because Underwriters provided other insurance affording a defense to Pacific Trades against the Aceves lawsuit, the express terms of the "other insurance" clause in ProBuilders's policies excused ProBuilders from paying for any part of the defense costs in the Aceves lawsuit. This appeal followed.

IIAPPLICABLE LEGAL PRINCIPLES

A. Summary Judgment Standards

The summary judgment procedure is directed at revealing whether there is evidence that requires the fact-weighing procedures of a trial. " ‘[T]he trial court in ruling on a motion for summary judgment is merely to determine whether such issues of fact exist, and not to decide the merits of the issues themselves.’ [Citation.] The trial judge determines whether triable issues of fact exist by reviewing the affidavits and evidence before him or her and the reasonable inferences which may be drawn from those facts." ( Morgan v. Fuji Country USA, Inc. (1995) 34 Cal.App.4th 127, 131, 40 Cal.Rptr.2d 249.) To prevail on a motion for summary judgment, a defendant must show that one or more elements of the plaintiff's cause of action cannot be established or that there is a complete defense to that cause of action. ( Code Civ. Proc., § 437c, subd. (o).) The evidence of the moving party is strictly construed and that of the opponent liberally construed, and any doubts as to the propriety of granting the motion are to be resolved in favor of the party opposing the motion. ( Branco v. Kearny Moto Park, Inc. (1995) 37 Cal.App.4th 184, 189, 43 Cal.Rptr.2d 392.)

Summary judgment should be granted only when a moving party is entitled to a judgment as a matter of law. ( Code Civ. Proc., § 437c, subd. (c).) Because a motion for summary judgment raises only questions of law, we independently review the parties' supporting and opposing papers and apply the same standard as the trial court to determine whether there exists a triable issue of material fact. ( City of San Diego v. U.S....