This is a dispute between insurers. Under Insurance Code section 11580 ( section 11580 ), when a judgment is obtained against an insured based upon property damage, the judgment creditor may bring an action on the policy against the insurer, to recover on the judgment. Here, plaintiff's insured (a general contractor) secured a default judgment against defendant's insured (a subcontractor), after a homeowner obtained an arbitration award of more than $1.1 million against the general contractor.
Plaintiff indemnified the general contractor for the arbitration award. Defendant refused to indemnify the subcontractor for the amount of the default judgment. In this lawsuit, plaintiff (as subrogee of its insured) sought recovery from defendant under section 11580 of the amount of the default judgment against the subcontractor.
Both parties filed summary judgment motions, and the trial court granted summary judgment for plaintiff. Defendant appeals on three principal bases. Defendant contends the default judgment was void because the underlying complaint failed to specify the amount of damages sought. ( Code Civ. Proc., § 580.) Defendant further contends the default judgment was an award for economic loss rather than property damage, and therefore not recoverable under section 11580. And, defendant contends plaintiff did not prove the default judgment was covered under any of defendant's policies. Defendant also raises other points not presented to the trial court before it granted summary judgment.
We find no merit in defendant's principal contentions, and do not consider claims not presented to the trial court until after it heard and ruled on the summary judgment motions. Accordingly, we affirm the judgment.
1. The Parties and the Background
Plaintiff is The Insurance Company of the State of Pennsylvania. Plaintiff was the excess liability insurer for New Millennium Homes LLC and NM Homes One, Inc. (collectively, NMH).
Defendant is American Safety Indemnity Company. Defendant was the commercial general liability insurer for Camarillo Engineering, Inc. (Camarillo). Defendant issued six different policies to Camarillo covering annual periods that began on December 1, 2003, and ended on August 1, 2009. Each of the policies provides that defendant will pay "those sums that the insured becomes legally obligated to pay as damages because of ... 'property damage' to which this insurance applies." Property damage is defined as "[p]hysical injury to tangible property, including all resulting loss of use of that property."
In 2004, Camarillo performed "mass grading, compacting, and finish grading" of the soils at the Moghadam property under a November 2004 subcontract with NMH. The subcontract required Camarillo to indemnify and hold NMH harmless from claims (including attorney fees "incurred as a result thereof") for property damage "arising out of or resulting from the activities of or work performed" by Camarillo.
In early 2009, the Moghadams " 'began to notice drywall and stucco cracks, separation and cracking of interior tiles, and lifting of exterior flagstones' " on their property. They complained to NMH " '[i]n approximately May 2009.' " An ensuing geotechnical investigation found the distress
In September 2011, the Moghadams filed a claim in arbitration against NMH for defective construction, alleging their total current damages were "at least $2,347,592." Their claim alleged most of the stress features (the cracks and separations mentioned above) had occurred on the southeastern portion of the house, where the fill was deepest. The claim also described a floor tilted downward, as well as hairline wall and ceiling cracks throughout the house.
In December 2011, while the arbitration was pending, NMH sued Camarillo and two other defendants for contractual and equitable indemnity, contribution and related causes of action.
Camarillo did not answer NMH's complaint or otherwise appear in the NMH lawsuit, and its default was entered in March 2012.
In October 2012, after hearings in June and July, the arbitrator in the Moghadam arbitration entered an award against NMH. The arbitrator stated that, "[g]iven the various testing that was conducted, it is undisputed that the house is damaged due to differential settling resulting from improper soil compaction."
The award was confirmed in December 2012, in the principal sum of $1,140,590.38, plus prejudgment interest of $28,417.84, for a total award of $1,169,008.22. The Moghadams recovered an additional $7,625 for attorney fees and costs incurred in preparation and filing of the petition to confirm the award, bringing their total recovery to $1,176,633.22.
Plaintiff fully indemnified NMH for the arbitration award to the Moghadams.
On August 7, 2013, NMH obtained a final default judgment against Camarillo in the amount of $1,532,973.87, consisting of damages of $1,176,633.22 and attorney fees of $356,340.65.
2. The Complaint
In July 2015, plaintiff brought this lawsuit against defendant. Plaintiff alleged causes of action for declaratory relief, subrogation, recovery of the judgment under section 11580, and breach of contract. The complaint alleged defendant's policies provided coverage for the entire amount of the default judgment; defendant had a
3. The Motions for Summary Judgment
Both parties moved for summary judgment.
Defendant contended, in opposition to plaintiff's motion, that plaintiff could not prove all the elements of any cause of action against defendants.
Defendant's own summary judgment motion was based on the first two of defendant's three contentions.
Plaintiff argued that the default judgment was not void because the NMH complaint attached and incorporated by reference the Moghadam arbitration claim, specifying the damages sought from NMH for which NMH sought indemnity from Camarillo. Further, the arbitration award based on diminution in value was not an award for economic loss, because diminution in value was merely the measure of damages, and did not change the fact that the damages awarded arose from claims the home suffered property damage as defined in defendant's policies. As for the coverage issues, defendant pointed out property damage was observed in May 2009, and argued expert testimony "indicated damages in other areas of the residence were likely occurring prior to that time, all of which was within the effective dates of [defendant's] polices, and at the very least, during the effective dates of [the policy], effective August 1, 2008 to August 1, 2009." Plaintiff argued the SIR and deductible provisions required defendant to request payment from its insured and there was no evidence defendant did so. Further, the 2008-2009 policy contained a deductible, not an SIR, and, plaintiff argued, under California law a deductible does not require payment "prior to an insurer providing coverage."
On November 22, 2016, the trial court entered an order denying defendant's motion and granting plaintiff's motion.
4. Proceedings After the Summary Judgment Ruling
Plaintiff served defendant with a proposed judgment that awarded plaintiff damages of $1,532,973.87 (the amount of the default judgment). Defendant
On May 8, 2017, the court entered judgment "in favor of Plaintiff and against Defendant in the amount of $1,532,973.87 plus prejudgment interest at a rate of 10% per annum calculated from August 7, 2013."
On May 23, 2017, defendant filed a motion for a new trial, or alternatively to vacate the ruling and judgment. Defendant asserted irregularities and abuse of discretion preventing defendant from having a fair trial; excessive damages; insufficient evidence; and error in law. Defendant complained the court's ruling failed to address or make any findings on the property damage and coverage issues defendant raised, failed to specify the reasons for granting summary judgment or specifically refer to any evidence supporting that determination, and failed to rule on material evidentiary objections. Defendant's motion repeated all the arguments previously made (both before and after the summary judgment ruling), and added an argument that a "wrap-up" exclusion in its policies excluded coverage.
Plaintiff's response addressed defendant's substantive claims, and also contended that defendant's arguments had already been adjudicated or were waived by the failure to raise them during the extensive briefing and oral argument on the summary judgment motions.
The trial court denied defendant's motion, concluding "there was no error of fact or law, and no incorrect or erroneous legal basis for the decision, either as a matter of dispositive procedure, or of substantive law." The court observed that it "general[ly] concurs with the opposing memorandum on the various substantive issues raised, and an exhaustive addressing of the issues in a ruling[ ] is not required."
Defendant filed a timely appeal from the judgment.
1. The Standard of Review
A plaintiff moving for summary judgment "has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff ... has met that burden, the burden shifts to the defendant ... to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto." ( Code Civ. Proc., § 437c, subd. (p)(1).) Summary judgment is appropriate where "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Id., subd. (c).)
Our Supreme Court has made clear that the purpose of the 1992 and 1993 amendments to the summary judgment statute was " 'to liberalize the granting of [summary judgment] motions.' " ( Perry v. Bakewell Hawthorne, LLC (2017)
2. Contentions and Conclusions
Section 11580 requires policies insuring against loss or damage resulting from liability for injury suffered by another person to contain certain provisions. (Id., subd. (a)(1).) One of these is a provision "that whenever judgment is secured against the insured ... in an action based upon bodily injury, death, or property damage, then an action may be brought against the insurer on the policy and subject to its terms and limitations, by such judgment creditor to recover on the judgment." (Id., subd. (b)(2).)
Defendant contends plaintiff did not establish any of the elements required by section 11580, because the default judgment NMH obtained was void; the underlying action was not based on property damage; and defendant's policies did not provide coverage of the underlying claims. We disagree.
Under Code of Civil Procedure section 580 ( section 580 ), the relief granted to a plaintiff in a default judgment "cannot exceed that demanded in the complaint ...." (Id., subd. (a).) The Supreme Court tells us that " section 580 is to be interpreted, in accordance with its plain language, to deprive a trial court of jurisdiction to enter a judgment against a defaulting defendant which awards greater relief than that sought in the plaintiff's complaint." ( In re Marriage of Lippel (1990)
Becker further tells us that "a prayer for damages according to proof passes muster under section 580only if a specific amount
In this case, the prayer for judgment in the NMH complaint does not state a specific amount of damages. (The prayer for judgment does not specify damages "according to proof," either.) And, as defendant points out, in the body of the complaint, NMH refers several times to damage in an amount "according to proof" or the like. The complaint states, for example, that because of the defects and damages at the Moghadam property caused by defendants, NMH "[has] incurred and continue[s] to incur costs, the sum of which [is] not currently known"; that as a direct result of the defendants'
But in addition, as noted at the outset, NMH alleged in the body of the complaint that the Moghadams "served a Claim in Arbitration for Defective Construction ..., attached hereto as Exhibit 'A' and incorporated herein by this reference, against [NMH] regarding alleged defects and/or deficiencies and related damages as to the Moghadam Property." The Moghadam claim that was attached and incorporated by reference alleged the Moghadams' "total current damages are at least $2,347,592."
Despite all these factual allegations, defendant asks us to conclude the NMH default judgment was void for failure to allege "a specific amount of damages ... in the body of the complaint" ( Becker, supra,
Defendant does not dispute that "a copy of the Moghadam Claim was attached to NMH's Complaint and incorporated therein by reference." Instead, defendant contends
After the briefs in this case were filed, the Fourth Appellate District decided the only case of which we are aware that concerns the principles of incorporation by reference in the context of section 580, Yu v. Liberty Surplus Ins. Corp. (2018)
As in this case, Yu involved a judgment creditor's action under section 11580 to collect a default judgment against certain subcontractors (the Fitch entities) from their insurers. The question was whether a cross-complaint on which the Fitch entities defaulted incorporated by reference the amount of damages claimed in the initial complaint. The facts, briefly, were these.
The plaintiff sued the general contractor for construction defects, and asserted damages of not less than $10 million. The general contractor filed a
When the plaintiff in Yu sued the insurers to collect on her default judgment, the trial court voided the judgment, because the cross-complaint did not state an amount of damages. ( Yu,
The Yu court explained that "[a]lthough widely accepted," there were no "formal requirements" for " ' "permissible incorporation by reference " ' " in a cross-complaint of the pleadings in the original action. ( Yu,
The Yu court pointed out the cross-complaint repeatedly stated that its damage demand was "according to proof" or " 'in an amount precisely unknown,' " and that was at odds with "the purported demand in [the plaintiff's] complaint" asking for not less than $10 million in damages. ( Yu,
Finally, in a two-paragraph argument, defendant asserts that the Moghadam arbitration claim "only sought unspecified attorneys' fees, costs and interest"; the default judgment against Camarillo "included an award for these items"; and "[c]onsequently" the default judgment is void for violating section 580 's notice requirements. Again, there is no authority for defendant's assertion. The default judgment entered against Camarillo was far less than the amount of damages identified in the arbitration claim, so there can be no legitimate claim of inadequate notice of Camarillo's maximum liability.
b. The property damage issue
Defendant contends the judgment against Camarillo is not recoverable under section 11580 because it was not a judgment "based upon ... property damage" within the meaning of section 11580. We disagree. To reach that conclusion would require us to ignore the facts and interpret the law in an irrational fashion.
In the arbitration, it was "undisputed that the house is damaged due to differential settling resulting from improper soil compaction." The arbitrator explained: "The Property is settling toward the area where soil compaction depth was near 50 [feet]. The post-tension slab is cracked entirely through near the mid section of the home at the approximate point of the fill transition. Floor level surveys demonstrated a differential from high to low of 1.8 [inches] in 2009, 2.4 [inches] in 2010 and 3.3 [inches] in 2012, contrasted
The law is equally clear. Under section 11580, when a judgment is secured against the insured (here, Camarillo) "in an action based upon ... property damage," the judgment creditor (here, plaintiff as NMH's subrogee) may bring an action on the policy "to recover on the judgment." (Id., subd. (b)(2).)
Defendant contends the judgment here was not for property damage, but rather was for indemnity of an arbitration award that awarded "economic loss for diminution in property value," and that, "[a]s a matter of law, diminution in value is economic loss, not property damage." We decline to adopt this constricted view of section 11580.
First, NMH's action against Camarillo for indemnity was plainly "based upon ... property damage" ( § 11580, subd. (b)(2) ), because NMH sought indemnity "for the claims made in the Moghadam Claimants' Arbitration Complaint," and those were claims for property damage, as we have just described above. (Defendant's policies define property damage as: "Physical injury to tangible property, including all resulting loss of use of that property.")
Second, the fact that the arbitrator measured the damages by diminution in value, rather than by the cost of repair, changes nothing. In statutory actions for construction defects ( Civ. Code, § 895 et seq. ), the homeowner's "right to the reasonable value of repairing any nonconformity is limited to the repair costs, or
Defendant's insistence to the contrary is based on cases stating that diminution in value is not property damage. (E.g., New Hampshire Ins. Co. v. Vieira (9th Cir. 1991)
Third, defendant points out that the default judgment includes attorney fees and costs awarded to the Moghadams, and "these components of the default judgment also cannot satisfy the 'property damage' requirement of section 11580 (b)(2)." Defendant misreads section 11580, which allows a judgment creditor to recover on the judgment when the judgment was secured "in an action based upon ... property damage." The statute on its face does not require every element of the damages in that judgment to be property damage; it requires the judgment to be "in an action based upon ... property damage." Here, all the components of the Moghadam arbitration award - the "diminution in value," the attorney fees, the costs, the interest - were the result of property damage that was "due to differential settling resulting from improper soil compaction."
In short, we are in no doubt that the NMH default judgment was secured "in an action based upon ... property damage," and none of the authorities defendant cites requires a contrary conclusion.
c. The coverage issues
A judgment creditor's direct action against the insurer under section 11580 is "on the policy and subject to its terms and limitations." (Id., subd. (b)(2).) Defendant contends plaintiff did not prove the default judgment was covered under any of defendant's policies. In the trial court, defendant asserted two bases for the claimed lack of coverage. We conclude defendant is mistaken on both points.
Defendant first contends plaintiff did not prove when property damage first occurred at the Moghadam property, and therefore the damage is not covered by any of the policies. We disagree with defendant's construction of the
(1) The policy language
Defendant issued six successive policies to Camarillo.
There is very little substantive difference in the six policies, but the sixth is slightly different from the others in the placement of some provisions. Where provisions differ, we use those in the sixth policy, since that is the one that definitively covers the property damage suffered by the Moghadams.
The sixth policy defines "occurrence" to mean:
"an accident, including continuous or repeated exposure to substantially the same general harmful conditions that happens during the term of this insurance."
For sake of clarity, we note at the outset that there is no dispute that the property damage was "caused by an 'occurrence' that takes place in the 'coverage territory' " (the United States) and that the causal act (Camarillo's improper grading) need not have taken place during the term of the insurance policy that covers the damage. "Occurrence" in this context is construed to mean that what must happen "during the policy year to trigger coverage" is "damage to property, not the causal conduct." ( Pennsylvania General Ins. Co. v. American Safety Indemnity Co. (2010)
The endorsement in the sixth policy (amending the definition of "occurrence" to read as just quoted) also added the following language to the coverage section of the policy (the language was previously a part of the definition of "occurrence"):
" 'Property damage' ... which commenced prior to the effective date of this insurance will be deemed to have happened in its entirety prior to, and not during, the term of this insurance."
The endorsement further states:
"We will have no duty to defend or indemnify the insured against any 'suit' against an insured or any additional insured if such 'suit' does not allege an 'occurrence' as defined and meet the timing conditions as to both 'occurrence' and 'property damage' ... of this policy."14
Defendant tells us that, because none of the policies provides coverage "for property damage which commenced prior to the
No "[p]hysical injury" to the Moghadams' residence occurred until May 2009, and they advised NMH at that time, during the term of the sixth policy. Defendant's contention is based, in effect, on plaintiff's argument that all the policies cover the property damage (a point we need not decide), and on defendant's own mistaken view that, even if property damage first "manifested" during the policy period, the insured must also prove that the damage did not "first commence" at some earlier time. Defendant's contention is contrary to the policy's definition of property damage, without support in legal authority, and an unreasonable construction of the insured's burden of proof.
We agree, of course, that "[t]he burden is on an insured to establish that the occurrence forming the basis of its claim is within the basic scope of insurance coverage." ( Aydin Corp. v. First State Ins. Co. (1998)
Plaintiff made its required showing. The "basic scope of insurance coverage" in this case is as we have just described: the policy applies to "property damage" - "[p]hysical injury to tangible property" - that "occurs during the policy period." Plaintiff submitted the arbitration award as evidence. That award established that in 2009, the Moghadams noticed "drywall and stucco cracks, separation and cracking along the mortar joint of interior tiles ... and lifting of exterior flagstone work," and complained to NMH in May 2009. This is plainly evidence of property damage - "[p]hysical injury to tangible property" - that first appeared during the term of defendant's sixth policy. We do not see how any other conclusion is possible. Defendant's constant refrain that plaintiff "did not offer any evidence to establish when property damage first occurred at the Property" is simply wrong.
Defendant's challenge to this straightforward analysis draws upon plaintiff's argument that all the policies in effect "from the time Camarillo completed its work at the Moghadams' residence forward provide coverage for the damages in question." Defendant may well be correct when it
Despite the evidence that physical injury to the Moghadam residence occurred in 2009 (and the lack of any evidence that there was earlier physical injury to the home), defendant, relying on Pennsylvania General , asks us to conclude plaintiff did not present evidence "of when property damage first occurred at the Property." As just demonstrated, we cannot so conclude, and Pennsylvania General does not suggest otherwise.
Pennsylvania General involved defendant's policies, containing language identical to the policies defendant issued to Camarillo. But the issue in Pennsylvania General was different. There, defendant contended the language in its policies defining "occurrence" - requiring the occurrence to "happen[ ] during the term of this insurance" (see ante, at p. 324) - "excludes coverage where the causal conduct takes place before the inception of the policy regardless of when the resulting damage first occurs." ( Pennsylvania General, supra,
We have no disagreement with Pennsylvania General 's conclusion, but it does not relieve defendant of liability on the sixth policy. The evidence showed physical injury to the property in 2009 (and not before). In its reply brief, defendant tells us, in effect, that it does not matter that the property damage "manifested" in 2009, because "it is the 'occurrence' of property damage during the policy period that triggers liability coverage under the
In Pennsylvania General , the court described the issue as "whether the 'occurrence,' which must happen during the policy year to trigger coverage under [defendant's] policy, is the first manifestation of damage rather than [the insured's] causal conduct." ( Pennsylvania General, supra,
Thus, Pennsylvania General itself puts the lie to defendant's assertion that, despite the first appearance of actual property damage in 2009, plaintiff must prove something more. There is no legal support for that proposition. Defendant's policy "deem[s]" property damage that commenced before the policy's effective date (August 1, 2008) to have happened in its entirety before that date. The only reasonable construction of this clause is that it applies to circumstances where damage actually appeared before the effective date of the policy, in which case the damage "is deemed to have happened in its entirety" before that date. But once plaintiff showed property damage that first appeared in 2009, it was up to defendant to prove that property damage actually occurred before that date, and of course defendant did not and could not do so.
And so we return to first principles. In sum:
The parties agree, both of them citing and quoting Whittaker Corp. v. Allianz Underwriters, Inc. (1992)
Defendant's sixth policy by its terms covered the physical injury to the home in 2009, as well as any ensuing damage.
ii. The self-insured retention (SIR) claim
Defendant's second basis for asserting no coverage under its policies is that plaintiff offered no evidence the applicable self-insured retention (SIR) or deductible was satisfied under any of the policies. (The SIR's ranged from $15,000 to $50,000 per occurrence for various coverages, and the deductible in the sixth policy was $10,000 per occurrence.) Defendant says that satisfaction of the SIR's (in the first five policies) and the deductible (in the sixth policy) was a condition precedent to its coverage obligation, and plaintiff offered no proof the applicable SIR or deductible was satisfied under any of the policies.
Notably, defendant refers us to the record containing its SIR and deductible endorsements, but does not quote the language of those provisions in its brief. The
"As a condition precedent to our obligations to provide ... indemnity, coverage or defense hereunder, the insured, upon receipt of notice of any 'suit', incident or 'occurrence' that may give rise to a 'suit', and at our request , shall pay over and deposit with us all or any part of the deductible amount as specified in the policy, requested by us , to be applied by us as payment toward any damages or supplementary payments ... incurred in the handling or settlement of any such incident, 'occurrence' or 'suit'." (Italics added and capitalization omitted.)
(The "condition precedent" language of the SIR's is substantively identical. We quote the deductible provision because it is the sixth policy that we have held otherwise provides coverage, as discussed in part 2.c.i., ante .)
There is a rather important caveat, however. "[C]ourts interpreting SIR's are all careful to note an SIR, like any insurance provision, must be enforced according to its plain terms." ( Forecast Homes, supra,
In its summary judgment papers, defendant presented no evidence that it ever requested Camarillo to "pay over and deposit with us all or any part of the deductible." Under the plain terms of the endorsements, defendant's request for payment is a part of the "condition precedent" to its indemnity obligation. Because there is no evidence defendant made a request for payment of the deductible, there is necessarily no merit to defendant's claim it has no indemnity obligation. The same is true of the SIR's.
In its reply brief, defendant cites Evanston Ins. Co. v. American Safety Indemnity Co. (N.D.Cal. 2011)
In Evanston , the insured tendered its defense to defendant, and defendant did request payment of the SIR. (
In short, Evanston does not involve the insurer's failure to demand payment of the SIR; quite the opposite. Nothing in Evanston in any way contradicts our construction of defendant's deductible and SIR endorsements.
iii. The wrap-up exclusion claim
Defendant contends coverage is also excluded under a "wrap-up" exclusion in its policies, which states the insurance does not apply to "any work insured under a consolidated (Wrap Up) Insurance Program."
We will not address this contention. It was not raised in defendant's opposition to plaintiff's summary judgment motion or in defendant's own summary judgment motion. It is a classic example of a claim that was not "factually presented, fully developed and argued to the trial court," and that we will not consider for the first time on appeal. ( Peart v. Ferro (2004)
Defendant protests that it briefed the issue in its motion for a new trial, and that in any event it is "strictly a question of law" that we may decide even if not raised in the trial court. First, defendant cites no authority for the claim that raising a new theory in a new trial motion preserves it for appeal. New theories that could have been raised, but were not, is not one of the causes that permits a new trial. (See Code Civ. Proc., § 657.) Second, while an appellate court may decide pure questions of law not
Next, defendant contends the award of $1,532,973.87 is excessive because "it exceeds the $1,000,000 per occurrence limits of each of [defendant's] Policies." (Under defendant's sixth policy, the limits of insurance include an "Each Occurrence Limit" of $1 million and a "Products-Completed Operations Aggregate Limit" of $2 million.)
Defendant's opposition to plaintiff's summary judgment motion did not raise policy limits as a defense to plaintiff's claim for indemnification in the entire amount of the default judgment. Defendant did not raise its policy limits/single occurrence argument until after the trial court's dispositive ruling on the summary judgment motions. There is some irony in defendant's complaint that, "[i]ndeed, the trial court's ruling does not make any finding with respect to the number of occurrence(s) in the Moghadam Claim." The court did not do so, because no one raised the issue before the court ruled on the summary judgment motions.
Defendant again cites no authority for its assertion that raising a new theory in its objections to the proposed judgment, or in its new trial motion, preserves it for appeal. In short, for the same reasons we have discussed in connection with defendant's wrap-up exclusion claim, we decline to review this new theory for reversal of the summary judgment.
e. NMH's attorney fees and costs
Defendant contends that plaintiff cannot recover the portion of the default judgment - $356,340.65 - that represents NMH's attorney fees and costs. Defendant offers two bases for this assertion.
Both of defendant's contentions suffer from the same defect as defendant's claims about the wrap-up exclusion and policy limits: They were not made during the summary judgment proceedings. Defendant raised these assertions only after the trial court's summary judgment ruling. Moreover, defendant's claim
DISPOSITION
The judgment is affirmed. Plaintiff is to recover its costs on appeal.
WE CONCUR:
BIGELOW, P. J.
WILEY, J.
Notes
Plaintiff issued NMH a "follow form excess liability policy" that was subject to the same warranties, terms and conditions as the underlying coverage. The underlying commercial general liability policy was issued by Everest Indemnity Insurance to NMH. One of its provisions was that "[i]f the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring 'suit' or transfer those rights to us and help us enforce them."
The full definition of "property damage" is: "a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or [¶] b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the 'occurrence' that caused it."
Another of the defendants, Neblett & Associates, Inc. prepared grading and geotechnical recommendations for site development and foundations, and performed grading observations and testing during development.
In June 2012, after several tender letters from NMH to defendant, defendant advised NMH there was no "additional insured" coverage for NMH under the policies defendant issued to Camarillo.
The arbitrator described the parties' disputes as "whether the settling will continue and to what degree"; "what repairs are necessary"; and whether "overwatering" and alteration of the landscape and drainage by the Moghadams were factors contributing to the damage.
NMH also obtained a default judgment in the same amount against Neblett & Associates (see fn. 3, ante ). Both default judgments stated: "joint and severally liable."
Plaintiff tells us that because defendant chose not to defend Camarillo in the underlying action, and did not seek to vacate the default judgment NMH obtained, defendant cannot relitigate Camarillo's liability in this section 11580 action, citing Clemmer v. Hartford Ins. Co. (1978)
The Moghadam claim described the categories of damages it sought. These were all demolition and repair costs, relocation and storage expenses, lost home-business income, investigative costs, and other costs or fees, loss-of-use damages of at least $382,429, and at least $44,665 for expert fees in investigating and repairing the property.
Defendant relies on Schwab v. Southern California Gas Co. (2004)
Defendant states the Moghadam arbitration claim "also contained an allegation of 'inadequate design and construction of the post tension slab foundation system,' for which Camarillo could not be responsible because that claim does not fall within Camarillo's scope of work." That is correct, but defendant does not tell us why that is relevant to the notice issue. (The arbitrator ultimately rejected the Moghadams' claims that the posttension slab was not properly constructed.)
Defendant filed a letter informing the court of the Yu case under California Rules of Court, rule 8.254(a), permitting a party to inform the court of "significant new authority" not available before the party's last brief was filed.
Defendant also cites cases stating that property damage is not established "by the mere failure of a defective product to perform as intended," nor by "economic losses such as the diminution in value of the structure [citations] or the cost to repair a defective product or structure." (F & H Construction v. ITT Hartford Ins. Co. (2004)
The policies covered December 1, 2003 to December 1, 2004; December 1, 2004 to December 1, 2005; December 1, 2005 to December 1, 2006; August 1, 2006 to August 1, 2007; August 1, 2007 to August 1, 2008; and August 1, 2008 to August 1, 2009.
All the policies also have a damage exclusion endorsement stating the insurance does not apply to any occurrence "which first occurred prior to the inception date of this policy."
Plaintiff's contention that all the policies provide coverage relies on the "continuous injury trigger of coverage" the Supreme Court adopted in Montrose Chemical Corp. v. Admiral Ins. Co. (1995)
Defendant cites Pepperell v. Scottsdale Ins. Co. (1998)
The wrap-up exclusion states: "This insurance does not apply to any work insured under a consolidated (Wrap Up) Insurance Program and this insurance shall have no obligation to defend or indemnify for any claim or any project where such wrap-up insurance exists or has ever existed. This exclusion applies whether or not a claim is covered under such wrap-up insurance, the limits of such wrap-up insurance are exhausted, the carrier is unable or unwilling to pay or for any other reason. A consolidated (Wrap Up) insurance program as referred to herein includes any owner controlled insurance policy (OCIP) or similar insurance policy or program which insures most or all contractors and subcontractors involved in a project."
The other policies also have limits of $1 million each occurrence. The first four policies have a $1 million (and the fifth a $2 million) products-completed operations aggregate limit.