Archer Western Contractors, Ltd. v. National Union Fire Insurance Co. of Pittsburgh
680 F. App'x 604
| 9th Cir. | 2017Background
- Archer Western Contractors (AWC) was the general contractor on an emergency water storage project for the San Diego County Water Authority.
- AWC settled a construction-defect suit brought by the Water Authority and then sued its insurer, National Union, seeking indemnity for portions of that settlement.
- National Union moved for summary judgment, arguing two policy exclusions (e(5) and e(6)) bar coverage for the alleged property damage tied to AWC’s work.
- The district court granted summary judgment for National Union; AWC appealed.
- The Ninth Circuit reviewed de novo and examined whether, under California law, the exclusions preclude indemnity for damage to parts of the project allegedly caused by the contractor’s defective work.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy exclusion e(5) (damage to "that particular part" on which contractor performed operations) bars coverage | AWC contended the exclusion is ambiguous and should not bar coverage for the settled claims | National Union argued the damage fell within the exclusion because it was to parts of the project where AWC performed work and arose out of those operations | Court held e(5) barred coverage: California courts broadly construe "that particular part" to include the entire project when a general contractor’s work caused the damage |
| Whether policy exclusion e(6) (damage to parts that must be restored because contractor’s work was incorrectly performed) bars coverage | AWC argued exclusion ambiguous and inapplicable to the settlement facts | National Union argued the damage required restoration because of AWC’s allegedly defective work, bringing it within e(6) | Court held e(6) barred coverage: damage requiring repair or replacement from defective work is a commercial risk not covered by liability insurance |
| Whether Eichler/Blackfield decisions create ambiguity in the exclusions | AWC relied on Eichler and Blackfield to argue the phrases are ambiguous and favor coverage | National Union argued those cases are distinguishable or outdated and that later California cases read the exclusions broadly | Court rejected AWC’s reliance on Eichler/Blackfield, finding them distinguishable or not controlling and concluding no ambiguity exists |
| Whether district court properly entered summary judgment for insurer | AWC argued factual/legal disputes precluded summary judgment | National Union argued the exclusions unambiguously precluded coverage as a matter of law | Court affirmed summary judgment for National Union; exclusions precluded indemnity based on the settlement facts |
Key Cases Cited
- Buss v. Superior Court, 16 Cal.4th 36 (California rule that duty to indemnify is determined by facts proved or, on settlement, by settlement facts)
- Reserve Ins. Co. v. Pisciotta, 30 Cal.3d 800 (exclusionary clauses construed narrowly against insurer)
- Maryland Cas. Co. v. Reeder, 221 Cal.App.3d 961 (replacement/repair of defective work is a commercial risk not insured)
- George F. Hillenbrand, Inc. v. Ins. Co. of N. Am., 104 Cal.App.4th 784 ("that particular part" construed broadly for general contractors)
- Clarendon Am. Ins. Co. v. Gen. Sec. Indem. Co. of Ariz., 193 Cal.App.4th 1311 (project-wide reading of exclusion language)
- Sentry Select Ins. Co. v. Royal Ins. Co. of Am., 481 F.3d 1208 (duty to indemnify on settlement is judged by settlement facts)
- Botosan v. Paul McNally Realty, 216 F.3d 827 (Ninth Circuit standard of review for summary judgment)