Stryker v. Steadfast Insurance CA3
C089374
| Cal. Ct. App. | Mar 7, 2022Background
- Homeowners obtained a >$4 million judgment against developer Cambridge after a bench trial; they sued Steadfast (Cambridge’s insurer) as assignees/judgment creditors seeking defense and indemnity under Cambridge’s policy.
- The policy contained a $1,000,000 per-occurrence self-insured retention (SIR) and defined SIR to include damages and litigation/defense costs.
- Steadfast moved for summary judgment, arguing Cambridge never paid the SIR and therefore Steadfast never had a duty to defend or indemnify.
- The trial court granted summary judgment, concluding the policy (and the inclusion of defense costs in the SIR) meant satisfaction of the SIR was a condition precedent to Steadfast’s duties.
- On appeal the homeowners argued the SIR was not a condition precedent; the Court of Appeal reversed, holding the policy language did not expressly condition Steadfast’s duty to defend or indemnify on prior payment of the SIR.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether satisfaction/payment of the self-insured retention was a condition precedent to Steadfast’s duty to defend or indemnify Cambridge | Stryker: Policy does not expressly make payment a condition precedent; language is more like a deductible, so duty to defend may arise upon tender even if SIR unpaid | Steadfast: Policy’s SIR (including defense costs) means insured must satisfy SIR before insurer has any duty to defend or indemnify | Reversed: Policy language did not expressly and clearly make SIR satisfaction a condition precedent to duty to defend or indemnify; ambiguity resolves against insurer |
| Whether homeowners lack standing (raised by insurer) | Homeowners: Standing was not litigated below; factual issues exist so appellate resolution is inappropriate | Steadfast: Standing was raised and may be addressed on appeal | Court declined to decide standing on appeal, leaving factual standing issues for trial court |
Key Cases Cited
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (summary judgment standard)
- Bank of the West v. Superior Court, 2 Cal.4th 1254 (contract/insurance interpretation principles)
- American Safety Indem. Co. v. Admiral Ins. Co., 220 Cal.App.4th 1 (SIR language that limits only indemnity duty may still allow duty to defend upon tender)
- Forecast Homes, Inc. v. Steadfast Ins. Co., 181 Cal.App.4th 1466 (SIR language that expressly conditions defense/indemnity on payment supports no duty until SIR satisfied)
- Legacy Vulcan Corp. v. Superior Court, 185 Cal.App.4th 677 (importance of actual policy language over labels for SIR/deductible)
- Deere & Co. v. Allstate Ins. Co., 32 Cal.App.5th 499 (distinguishing deductibles and SIRs; SIRs commonly cover defense costs)
- Vons Cos. v. United States Fire Ins. Co., 78 Cal.App.4th 52 (policy terms control over labels)
- Monster Energy Co. v. Schechter, 7 Cal.5th 781 (contract interpretation principles)