Clarendon America Insurance v. General Security Indemnity Co. of Arizona
193 Cal. App. 4th 1311
| Cal. Ct. App. | 2011Background
- Clarendon insured Hilmor under a CGL policy July 1, 2000–July 1, 2001; General Security insured Hilmor July 1, 2001–July 1, 2002.
- Hilmor contracted to build a custom single-family home for the Revahs; completion required events like notice of completion and occupancy rights.
- Hilmor was terminated from the Revah project on May 18, 2001; unfinished work remained and a new contractor completed the project.
- The Revahs filed a defect action against Hilmor and others in November 2004; Clarendon defended Hilmor, later withdrew and reentered defense personnel.
- Hilmor’s defense was tendered to General Security in 2004; General Security withdrew its defense in 2006 arguing no coverage under its policy.
- Clarendon settled with the Revahs in 2008–2009 and sought contribution from General Security for defense and indemnity costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does products-completed operations hazard apply? | Clarendon: coverage exists because Revah damages flow from Hilmor’s work. | General Security: work not completed or abandoned; hazard not triggered. | No coverage under products-completed operations hazard. |
| Do faulty-workmanship exclusions bar coverage? | Clarendon: exclusions should not bar all coverage. | General Security: exclusions j(5) and j(6) remove coverage for defective work. | Exclusions j(5) and (6) preclude coverage. |
| Does the claims-in-progress exclusion apply? | Clarendon: damage began after Hilmor’s involvement; exclusion unclear. | General Security: damage began before coverage; exclusion controls. | Claims-in-progress exclusion precludes coverage. |
Key Cases Cited
- Powerine Oil Co., Inc. v. Superior Court, 37 Cal.4th 377 (Cal. 2005) (insurance-coverage interpretation governs only when policy language clear)
- Maryland Casualty Co. v. Reeder, 221 Cal.App.3d 961 (Cal. App. 1990) (faulty workmanship generally not 'property damage' under GL policies)
- McGowan v. State Farm Fire & Casualty Co., 100 P.3d 521 (Colo.App. 2004) (completed work not achieved; harm not within completed operations)
- Century Indemnity Co. v. Golden Hills Builders, Inc., 561 S.E.2d 359 (S.C. 2002) (products-completed operations not triggered when work not completed)
- Vintage Contracting, L.L.C. v. Dixie Building Material Co., 858 So.2d 22 (La. Ct. App. 2003) (completed-operations clause clear; no coverage where work not complete)
- Laidlaw Environmental Services (TOC), Inc. v. Aetna Casualty & Surety Co., 524 S.E.2d 847 (S.C. Ct. App. 1999) (abandonment of work can invoke completed-operations coverage)