241 Cal. App. 4th 721
Cal. Ct. App.2015Background
- Underwriters issued a CGL policy (10/23/01–10/23/03) and defended Pacific Trades in the Aceves construction‑defect suit; ProBuilders issued overlapping CGL primary policies (12/9/02–12/9/04) but declined to fund Pacific Trades’ defense.
- ProBuilders’ policy contained an “other insurance” clause stating ProBuilders had a right and duty to defend only if “no other insurance affording a defense … is available to you” (an asserted escape clause).
- Underwriters paid defense costs and continued funding through settlement activity (settlement ~ $1M; ProBuilders later contributed $270,000 to settlement).
- After the Aceves case concluded, Underwriters sued ProBuilders for equitable contribution for a portion of the defense costs; both parties moved for summary judgment.
- Trial court granted summary judgment for ProBuilders, enforcing the escape clause and finding ProBuilders excused from sharing defense costs. Underwriters appealed.
Issues
| Issue | Plaintiff's Argument (Underwriters) | Defendant's Argument (ProBuilders) | Held |
|---|---|---|---|
| Whether ProBuilders’ “other insurance” clause excuses its duty to defend and bars equitable contribution | The escape clause is unenforceable; courts require pro rata contribution from all primary insurers and escape clauses are disregarded | The policy language unambiguously conditions ProBuilders’ duty to defend on absence of other insurance; clause should be enforced | Court reversed: escape clause cannot be enforced to bar Underwriters’ equitable contribution claim; pro rata contribution principle applies |
| Whether failure to satisfy Contractors Special Conditions (CSC) negates ProBuilders’ duty to defend/indemnify | CSC is inapplicable or ambiguous as to some claims; triable issues exist whether Pacific Trades satisfied CSC | Pacific Trades failed the CSC condition precedent (no written indemnities/COIs for many subs), so no coverage | Court rejected summary judgment on this ground: CSC did not conclusively eliminate coverage and factual disputes remained |
| Whether Underwriters’ equitable contribution claim is time‑barred by the 2‑year statute of limitations | Claim was timely because the limitations period is tolled until the underlying action concludes and last defense payment is made | Action accrued when ProBuilders first refused to contribute; Underwriters filed too late | Court held statute accrues at refusal but is tolled until termination of the underlying action; Underwriters’ suit timely as filed within two years of final payments/dismissal |
| Whether Underwriters’ alleged refusal to produce billing invoices justified summary judgment for ProBuilders | Underwriters produced payment records and sought protective terms for producing invoices; discovery dispute did not justify terminating the action | Underwriters’ refusal to produce invoices prevented ProBuilders from defending against monetary claim | Court held discovery remedies are separate; alleged discovery nonproduction did not warrant summary judgment for ProBuilders |
Key Cases Cited
- Dart Indus. v. Commercial Union Ins. Co., 28 Cal.4th 1059 (Cal. 2002) (escape clauses viewed with distrust; modern trend favors pro rata contribution among primary insurers)
- Travelers Cas. & Surety Co. v. Century Surety Co., 118 Cal.App.4th 1156 (Cal. Ct. App. 2004) (primary insurer defending may obtain equitable contribution from nonparticipating primary insurer despite excess/escape wording)
- Century Surety Co. v. United Pac. Ins. Co., 109 Cal.App.4th 1246 (Cal. Ct. App. 2003) (refusal to enforce escape/excess clause where equitable contribution required)
- Fireman's Fund Ins. Co. v. Maryland Cas. Co., 65 Cal.App.4th 1279 (Cal. Ct. App. 1998) (equitable contribution permits pro rata sharing of defense/indemnity among insurers)
- CSE Ins. Group v. Northbrook Prop. & Cas. Co., 23 Cal.App.4th 1839 (Cal. Ct. App. 1994) (escape clauses discouraged and generally not enforced in contribution actions)
- Lambert v. Commonwealth Land Title Ins. Co., 53 Cal.3d 1072 (Cal. 1991) (statute of limitations tolled until underlying action terminates for duty‑to‑defend claims)