Axis Surplus Insurance v. Glencoe Insurance
204 Cal. App. 4th 1214
| Cal. Ct. App. | 2012Background
- Pacifica tendered claims to Axis and Glencoe for a Carmel Pointe construction defect suit; Axis defended under reservation of rights while Glencoe reserved rights and monitored the case.
- Pacifica settled the underlying suit for $1,000,000; Axis paid $750,000 and Pacifica contributed $250,000 to satisfy Glencoe’s $250,000 SIR under its wrap‑up policy.
- Axis sought declaratory relief and equitable contribution from Glencoe for the $750,000 settlement; Glencoe did not defend but approved Pacifica’s SIR payment.
- Glencoe’s wrap‑up policy covered Pacifica’s Carmel Pointe project with a $5 million per occurrence limit and a $250,000 SIR; Axis and Glencoe policies contained “other insurance” provisions.
- Trial court found Axis showed potential coverage under Glencoe; allocated 60/40 in Axis’s favor ($450,000 to Axis) and Glencoe appealed.
- Court affirmed, rejecting Glencoe’s arguments about lack of potential coverage and misallocation, and created a limited exception to timing rules to allow equitable contribution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Axis prove potential coverage under Glencoe policy? | Axis—yes, potential coverage existed if SIR was satisfied. | Glencoe—no, no actual coverage supported until SIR paid. | Yes; Axis proved potential coverage. |
| Was the 60/40 allocation of settlement appropriate? | Axis—equitable factors support Axis receiving greater share. | Glencoe—equal shares required by policy. | No abuse of discretion; not required to divide equally. |
| Does timing of SIR satisfaction bar coverage? | Axis—timing should not defeat coverage given insured tender and notice. | Glencoe—timing precludes coverage until SIR satisfied. | Limited exception adopted; timing does not defeat coverage in these facts. |
Key Cases Cited
- Safeco Ins. Co. of America v. Superior Court, 140 Cal.App.4th 874 (Cal. Ct. App. 2006) (settling insurer bears burden to show potential coverage; burden shifts to nonparticipating insurer)
- American Continental Ins. Co. v. American Casualty Co., 86 Cal.App.4th 929 (Cal. Ct. App. 2001) (origin of equitable contribution obligation timing)
- Phoenix Ins. Co. v. United States Fire Ins. Co., 189 Cal.App.3d 1511 (Cal. Ct. App. 1987) (settlement evidence presumption of insured’s liability and settlement amount)
- Fire Ins. Exchange v. American States Ins. Co., 39 Cal.App.4th 653 (Cal. Ct. App. 1995) (equitable contribution principles among coinsurers)
- Truck Ins. Exchange v. Unigard Ins. Co., 79 Cal.App.4th 966 (Cal. Ct. App. 2000) (factors for equitable allocation among insurers)
- Hartford Casualty Ins. Co. v. Travelers Indemnity Co., 110 Cal.App.4th 710 (Cal. Ct. App. 2003) (allocation among primary vs. excess insurers; policy terms control)