Opinion
The primary issue presented by this appeal is whether insurers that have issued commercial general liability (CGL) policies to subcontractors, including completed operations coverage as to projects completed
before their inception, owe a duty to defend the additionally insured general contractor in third party litigation asserting its vicarious liability for their acts. Here, where the insurers acknowledge the subcontractors had such completed operations coverage for the project that gave rise to the underlying litigation, we conclude that absent language excluding such
Pardee Construction Company (Pardee) appeals judgments for four insurers, Liberty Mutual Insurance Company (Liberty), Insurance Company of the West (ICW), Nationwide Mutual Insurance Company (Nationwide) and U.S. Fire Insurance Company (U.S. Fire), dismissing its claims against them for breach of contract, bad faith, fraud and indemnity. The judgments were entered after the trial court declared the insurers did not owe a duty to defend Pardee, an additional insured under
As we shall explain, we conclude the clear and unambiguous language of the policies, certificates and endorsements of ICW, Nationwide and U.S. Fire provide Pardee completed operations coverage as to the named insured subcontractors and thus a duty to defend this Heritage II action. Accordingly, we reverse the judgments for those insurers. However, as to Liberty, we conclude the trial court correctly found the allegations in the complaint regarding its insured subcontractor, supplemented by the surrounding extrinsic evidence, do not give rise to any potential for coverage. Therefore, we reverse the judgments in their entirety as to ICW, Nationwide and U.S. Fire and direct the trial court to grant Pardee’s motions for summary adjudication as to their duty to defend as to ICW and Nationwide. With regard to U.S. Fire, the trial court is directed to address whether Pardee complied with any self-insured retention obligation in reexamining the parties’ motions for summary adjudication. The judgment on behalf of Liberty is affirmed.
I
Factual and Procedural Background
In the mid to late 1980’s, Pardee as developer and general contractor built the multiphase Heritage Concord Villas project (Heritage project) in the Mira Mesa area of San Diego. It hired subcontractors to construct and install each component of the project, including the stucco, landscaping, concrete, insulation and mechanical components, generally pursuant to one subcontract that remained in force during the six phases of construction. As the construction was completed on the various phases, three separate homeowners associations were formed. The underlying construction defect litigation here was brought by the second of the three associations, the Association, regarding the third and fourth phases of the Heritage projeсt (Heritage II project).
Pardee subcontracted with Schmid Insulation (Schmid) to install all insulation pursuant to a subcontract dated October 1, 1985. In the same year, Pardee hired Strang Heating and Air Conditioning (later renamed Strang Mechanical, Inc. (Strang)) pursuant to two separate subcontracts to supply and install all sheet metal and heating/air conditioning systems. By contract dated October 1, 1985, Pardee contracted with Coast Plastering, Inc. (Coast) to complete the stucco and plastering work on the project. R. E. Hazard Contracting Company (Hazard) was responsible for the asphalt paving and concrete installation under a December 19, 1985, subcontract agreement, signed by Hazard in January, 1986. Finally, Pardee contracted with Doose Landscape (Doose) to supply and install landscaping, hardscape, drainage, backfill, retaining walls and irrigation, as well some fine grading and exterior site electrical work pursuant to several contracts dated from December 27, 1985, through August 20, 1987.
Each subcontract required that the subcontractor obtain general liability insurance naming Pardee as an additional insured
ICW insured Coast and Strang. However, neither Coast nor Strang was insured by ICW in 1985 when their subcontracts with Pardee were executed. In fact, when the Heritage project was completed on March 15, 1988, no ICW policy had yet been issued to them. ICW issued a CGL policy to Strang on July 1, 1988, which continued in effect until July 1, 1990. Pardee was named an additional insured under the policy. ICW also issued a CGL policy to Coast for the period April 21, 1992, through April 21, 1993. Although no additional insured endorsement naming Pardee was issued by ICW under the policy, Pardee did receive a certificate of insurance, dated May 13, 1992, naming it as an additional insured for all operations and all jobs. 2
Nationwide insured Doose and Coast. Again, however, neither Doose nor Coast was insured by Nationwide at the time the subcontracts wеre entered into or before completion of all work required of Doose and Coast. Nationwide insured Doose from December 31, 1990, through December 31, 1993. Pardee was named as an additional insured under endorsements issued for each of the three years the policy was in effect, which provided Pardee coverage to the extent it is held liable for Doose’s acts or omissions arising out of and in the course of operations performed for Pardee. Nationwide insured Coast from February 1, 1988, through February 1, 1989, and from March 1, 1989, through March 1, 1990. Pardee was named as an additional insured for the two years of coverage, but only for liability arising out of Coast’s work performed for Pardee.
Liberty insured Schmid, naming Pardee as an additional insured in its policies for the policy periods June 1, 1986, through June 1, 1988.
U.S. Fire insured Hazard. Approximately four years after the Heritage project was completed and while Hazard was working on a different construction project for Pardee, U.S. Fire in 1992 began to provide Hazard with liability insurance coverage, naming Pardee as an additional insured. It continued to do so for five policy periods from May 8, 1992, through May 8, 1997.
On December 27, 1995, the Association sued Pardee for breach of implied warranties, strict liability and negligence, seeking to recover damages from it arising out of its subcontractors’ work and/or materials in connection with the construction of the
On April 18, 1997, Pardee sued ICW, Nationwide, Liberty and U.S. Fire, among other defendants. The fourth amended (and operative) complaint alleged breach of contract, breach of the duty of good faith and fair dealing, fraud and declaratory relief as to the duty to defend and the duty to indemnify. The complaint alleged these causes of action within the context of the refusal of each insurer to defend and indemnify Pardee in the underlying action. The trial court sustained the demurrers of ICW and U.S. Fire to the fraud cause of action without leave to amend because Pardee had failed to properly allege damages. In late February 1998, Pardee moved for summary adjudication as to the insurers’ duty to defend it under the circumstances. The parties filed cross-motions for summary adjudication on the declaratory relief cause of action regarding the duty to defend. On April 10, the trial court telephonically granted the insurers’ motions for summary adjudication, reasoning the policies did not incept until after construction of the project was complete and thus were not issued to provide Pardee coverage as to it. However, as to Liberty, the trial court granted its motion, ruling the allegations in the complaint as to Schmid, supplemented by extrinsic evidence, do not give rise to the possibility or potential for coverage. At Pardee’s request, the trial court heard oral argument on the cross-motions and confirmed its ruling. Pardee unsuccessfully sought writ of mandamus relief and a new trial. The insurers then successfully moved for judgment on the pleadings, claiming the ruling of no defense obligation necessarily required dismissal of the remaining causes of action. After entry of separate judgments for each of the insurers, Pardee timely appealed from each of the four judgments entered.
H
Whether the Trial Court Correctly Ruled the Insurers Had No Duty to Defend 3
The Duty to Defend
Preliminarily, it is firmly established the duty to defend is broader than the obligation to indemnify. The former arises whenever an insurer ascertains facts that give rise to the possibility or the potential of liability to indemnify. Unlike the duty to indemnify which arises only when the insured’s underlying liability is established, the duty to defend must be assessed at the very outset of a case. The determination whether an insurer owes a duty to defend is made in the first instance by comparing the terms of the policy with the allegations of the complaint. Facts extrinsic to the complaint give rise to a duty to defend when they reveal the possibility the claim may be covered by the policy. Conversely, where such facts eliminate the potential for coverage, the insurer may decline to defend even where the bare allegations of the complaint suggest
Equally established is that “when a suit against an insured alleges a claim that potentially or even possibly could subject the insured to liability for covered damages, an insurer must defend unless and until the insurer can demonstrate, by reference to undisputed facts, that the claim
cannot
be covered.”
(Borg v. Transamerica Ins. Co., supra,
General Principles of Interpreting Insurance Policies
“When determining whether a particular policy provides a potential for coverage and a duty to defend, we are guided by the principle that interpretation of an insurance policy is a question of law. [Citation.] The rules governing policy interpretation require us to look first to the language of the contract in order to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it. [Citations.]”
(Waller v. Truck Ins. Exchange, Inc., supra,
The fundamental rules governing the interpretation of contracts apply equally to the construing of insurance contracts. They are premised on the primary
“ ‘A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable.’ [Citations.] The fact that a term is not defined in the policies does not make it ambiguous. [Citations.] Nor does ‘[disagreement concerning the meaning of a phrase,’ or ‘ “the fact that a word or phrase isolated from its context is susceptible of more than one meaning.” ’ [Citation.] ‘ “[Ljanguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract.” ’ [Citation.] ‘If an asserted ambiguity is not eliminated by the language and context of the policy, courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.е., the insurer) in order to protect the insured’s reasonable expectation of coverage.’ [Citation.]”
{Foster-Gardner, Inc.
v.
National Union Fire Ins. Co., supra,
However, before doing so, in order to protect the objectively reasonable expectations of the insured, the courts endeavor to interpret the ambiguous language in the sense in which the insurer believed, at the time of making it, the insured understood it. Only if this approach does not resolve the ambiguity, do the courts then resolve it against the insurer.
{Bank of the West
v.
Superior Court
(1992)
ICW, Nationwide and U.S. Fire Owed Pardee a Duty to Defend Under Their Policies
In ruling on behalf of ICW, Nationwide and U.S. Fire, the trial court reasoned the insurers had no duty to defend Pardee under the policies because they incepted well after completion of the Heritage II project. The court noted each subcontractor entered into similar subcontracts with Pardee requiring it to obtain liability insurance naming Pardee as an additional insured before starting work on the project, and that failure to deliver such certificates of insurance at that time constituted default under the subcontract. However, all of the tendered policies at issue here incepted well after the Heritage II project was completed on March 15, 1988. The court concluded the policies naming Pardee as an additional insured could not be construed to provide coverage for the Heritage II project, which was completed well before the effective dates of the policies. The court found that while the subcontracts clearly required insurance, the tendered policies were not issued to provide such coverage for the project. 6
ICW issued a CGL policy to Strang on July 1, 1988. The 1988-1989 additional insured endorsement, a form 2010 endorsement, specifically identified Pardee as an additional insured for “Heritage IV, V and VI.” The endorsement provided: “This endorsement modifies insurance provided under the following: Commercial General Liability Coverage Part. Schedule Name of Person or Organization: Pardee Construction [address] HQ Who Is an Insured (Section II) is amended to include as an insured the person or organization shown in the Schedule [Pardee Construction], but only with respect to liability arising out of ‘your [Strang’s] work’ for that insured by or for you.” 7 Because the Heritage II project is comprised of the production units built as phases or units III and IV, the references to Heritage IV, V and VI described phases of development IV, V and VI of the Heritage project. The Association’s complaint in the underlying action alleged the following defects in Strang’s work: “The . . . sheet metal . . . [and the] . . . mechanical. . . systems ... are defective, unsound, and are failing; they leak, and are staining, corroding, cracking, breaking down and deteriorating due to defective design, workmanship and materials, causing property damage[, and the] [H] ventilation systems at the project are defective, have failed, and are failing, causing property damage.” 8
ICW also issued a CGL policy to Coast for the period April 21, 1992, through April 21, 1993. Although no additional insured endorsement naming Pardee was issued by ICW under the policy, Pardee did receive a certificate of insurance, dated May 13, 1992, naming it as an additional insured for “all operations and all jobs.” The Association’s complaint similarly alleged the stucco was failing and causing property damage. It specifically alleged that the “. . . waterproofing stucco . . . [is] defective, unsound, and [is] failing; [it] leak[s] and [is] staining, corroding, cracking, breaking down and deteriorating due to
Nationwide insured Coast and Doose. As to the Coast February 1, 1988-1989, and March 1, 1989-1990, CGL policies, Nationwide insured Pardee as an additional insured under form 2010 additional insured endorsements, similar to ICW’s usage as to Strang, for liability arising out of Coast’s work for Pardee. The endorsements did not restrict coverage to any particular project and the certificates of insurance referred to “[a]ll [operations.” Under the December 31, 1990-1993, Doose policies, Nationwide issued form 4190 additional insured endorsements naming Pardee as an additional insured. The endorsements read: “Who Is an Insured (Section II) is amended to include as an insured the Person or Organization in the Schedule, but this insurance with respect to such Person or Organization appliеs only to the extent that such Person or Organization is held liable for your acts or omissions arising out of and in the course of operations performed for such Person or Organization by you or your subcontractor.” The certificates of insurance further refer to “all operations.” Neither Nationwide’s policies, nor their endorsements, exclude “completed operations” of its named insureds as to either them or any additional insureds. The certificates for Coast include limits of coverage of $1 million for products-completed operations, while the certificates for Doose include limits of coverage of $2 million for products-completed operations.
The Association’s complaint in the underlying action alleged defects regarding the work of both Coast and Doose that caused property damage. Specifically, as to Coast’s work, the allegations in the complaint are summarized above. As to the work of Doose, the complaint alleged the “. . . elеctrical systems and other systems and components throughout the project are defective, unsound, and are failing; . . . causing property damage” and further that “[t]he plumbing, piping, and ventilation systems at the project are defective, have failed, and are failing, causing property damage.” 10
U.S. Fire insured Hazard under five successive CGL policies from May 8, 1992 through May 8, 1997. Pardee was named an additional insured under each policy by a form 2010 endorsement, as well as under a blanket endorsement providing coverage for Pardee “but only with respect to liability arising out of operations performed for [it] by or on behalf of the named insured.” The policies also included a self-insured retention (SIR) for each year that U.S. Fire was on the risk, to wit $25,000 for the first year and $50,000 for each year of coverage thereafter. Again, the allegations in the complaint in the underlying action specifically listed defects and deficiencies in Hazard’s work, including asphalt cracking, concrete swales sinking, water intrusion and pavement/swale interface and the lack of proper compaction of the asphalt and/or base and subgrade, that had caused damage to the components of the project. 11
The unambiguous language of the policies and endorsements provides Pardee with coverage for the completed
The endorsements adding Pardee as an insured combined with the insuring clauses of the policies provide the general grant of coverage for completed projects or operations to Pardee. The form 2010 endorsements issued by ICW, Nationwide and U.S. Fire provide coverage limited only by the phrase, “liability arising out of ‘your [the named insured’s] work’ for [the additional insured] by or for you.” Given the products-completed operations hazard definition specifically utilizes the language “arising out of ‘your product’ or ‘your work’ ” and that “your work” is defined as meaning “[w]ork or operations performed by you or on your behalf,” 12 it is apparent that completed opеrations as referred to in these policies was intended to be included in the type of liability referred to in the form 2010 endorsements. The insurers, including amicus curiae Golden Eagle Insurance Company, suggest the aforementioned clear language demonstrates an intent to cover Pardee for the subcontractor’s work for only the Pardee project that subcontractor was about to work on when it obtained the insurance. To the contrary, there is no language in this pre-1993 form 2010 endorsement expressly limiting the time frame of the additional insured coverage to the time of the ongoing operations of the named insured. (Oonk, The Construction Industry: Coverage Issue Created by Claims Against Additional Insureds (Summer 1999) 28 Briefcase 8, 11.) Had the insurers wished to limit coverage to “work in progress,” they could have easily done so by defining “your work” as work “now being performed or to be performed during the term of this policy.” Indeed, “your work” is further defined in the policies as including warranties and representations. Liability arising out of such inherently involves completed work, not work in progress. Simply stated, the insurers failed to expressly limit covered completed operations as to time or particular project in their policy and endorsement language.
Insurance commentators have concurred. For example, one commentator writes: “Until recently, standard additional insured endorsements of the kind ordinarily used by contractors to add project owners as additional insureds were worded so as to cover completed operations. The coverage provided by these endorsements applied to losses arising out of ‘your [i.e., the contractor’s] work,’ and the CGL definition of ‘your work’ is broad enough to encompass work that has been completed and turned over to another party. ‘ “Your work” means work or operations performed by you or
Amicus curiae Golden Eagle Insurance Company contends this issue of policy interpretation cannot be resolved simply by reading the policies without reference to the subcontracts or the parties’ intent. It relies on policy language defining “your work” in the definition of “Completed Operations Liabilities” for its proposition the policies’ terms direct the court to the construction subcontracts pursuant to which the additional insurance was obtained. Pertinently, the definition provides that “your work” will be deemed completed at the earliest of (1) when the work called for in your contract has been completed, or (2) when all the work to be done at the site has been completed if your contract calls for work at more than one site. 13 Golden Eagle thus extrapolates that the references to “your contract” refer to the subcontract which required the obtaining of additional insurance coverage in the first place, not contracts pertaining to work already completed before the policy issued. Golden Eagle misses the mark. That definition only defines when “your work” is deemed completed to qualify within that coverage part. It does not limit the coverage afforded to an insured named by endorsement, nor does it require consideration of the contract to interpret the coverage in the policies. Indeed, the insurers (and the trial court) mistakenly focus on the terms of the subcontract. Neither the language of the endorsements nor that of the policies limits coverage to the work of the named insured subcontractor on a particular project or excludes completed operations.
Although Nationwide’s form 4190 additional insured endorsement and U.S. Fire’s blanket form endorsement contain slightly different language limiting coverage to liability “arising out of and in the course of operations performed” or simply “arising out of operations performed” by the named insured subcontractor, the interрretive result is the same. Granted, this language does not reference the phrase “your work”; however, it uses language that specifies past operations, i.e. “operations performed.” Moreover, “operations performed by you” is the cornerstone of the definition of “your work.” (See ante, fn. 12.) Consequently, by reasonable inference, the insurers’ use of the cited phrase similarly manifests intent to cover both past and ongoing operations.
The insurers could have limited coverage by express policy language that coverage was limited to claims arising from work performed during the policy period. However, they did not. Indeed, they acknowledge they intended to provide the named insureds completed operations coverage for projects completed before inception of policies. Similarly, the insurers could have used the form 2009 additional endorsement, which has been widely employed since the mid-1980’s to add a contractor as an additional insured under а subcontractor’s policy and which clearly excludes “completed operations.” 14 Again, they did not.
Consequently, the insurers’ failure to use available language expressly excluding completed operations coverage implies a manifested intent not to do so. Insurers have never been prohibited from issuing, and commonly have issued, additional insured endorsements that specifically limit
Because we conclude the clear and unambiguous language of the policies and endorsements provide Pardee with coverage here, it is unnecessary and improper for us to consider the extrinsic evidence proffered by the insurers. Simply stated, the clear and explicit language of the policies and endorsements govern. Coverage limitations as to an additional insured are not implied from a broad grant of coverage for completed operations to a named insured unlimited by time or project. The underlying subcontract may well explain why the subcontractor obtained CGL insurance naming Pardee as an additional insured in the first place, but it is not probative of the parties’ mutual intent manifested in the policy and endorsement language they finally agreed upon. Moreover, a party’s subjective intent cannot be used to create an ambiguity in otherwise clear and explicit language, as evidence of undisclosed subjective intent as to policy coverage is irrelevant to determining the meaning of contractual language.
(Havstad v. Fidelity National Title Ins. Co.
(1997)
However, in reaching our decision, we are not unaware of the commercial context from which this controversy arose. The insurers would have us believe a general contractor would seek additional insured coverage from its subcontractors solely in the event that there is a course of construction work site accident involving bodily injury or property damage. Thus, they assert the insurer would not intend to provide coverage to the additional insured general contractor after the named insured subcontractor’s work for that developer had been completed. This myopic spin ignores commercial reality. Damage resulting from a subcontractor’s work often does not arise for years. It is thus prudent for general contractors to obtain completed opеrations
coverage as additional insureds from their subcontractors’ insurers. Why would Pardee have required its subcontractors to maintain CGL coverage that included completed operations coverage and to name it as an additional insured on those policies unless it expected to be covered for the same completed operations as its subcontractors? Certainly that expectation is reasonable given that the additional insured coverage is intended by the insurance industry to cover vicarious liability that an additional insured may incur due to operations of the originally named insured. Nor is there any dispute the endorsements were purchased so as to protect the general contractor against potential construction defect litigation. Mindful such litigation is typically complex and expensive, it is reasonable to conclude the key motivation in procuring an additional insured endorsement is to offset the cost of defending lawsuits where a general contractor’s liability is claimed to be derivative. (See
Maryland Casualty Co. v. Nationwide Ins. Co.
(1998)
III,IV *
V
The Judgments on the Pleadings 25
Relying on the trial court’s rulings regarding the duty to defend, each insurer moved for judgment on the pleadings. They argued the trial court’s ruling of no defense obligation required the dismissal of all of Pardee’s remaining causes of action for breach of contract, breach of the duty of good faith and fair dealing, fraud and declaratory relief as to the duty to indemnify. The trial court agreed and granted the motions for judgment on the pleadings.
Because we conclude the trial court erred in concluding ICW, Nationwide and U.S. Fire did not owe Pardee a duty to defend, the judgments on the pleadings for those insurers must be set aside. However, as to Liberty, the trial court correctly granted Liberty’s motion for judgment on the pleadings based on its correct cоnclusion Liberty owed Pardee no duty to defend under the circumstances. Absent a duty to defend, there can be no breach of the insurance contract for failing to defend
(.Rosen v. Nations Title Ins. Co.
(1997)
Disposition
The judgments are reversed in their entirety as to ICW, Nationwide and U.S. Fire, with directions that the trial court enter orders granting Pardee’s motions for summary adjudication as to the duty to defend as to ICW and Nationwide. With regard to U.S. Fire, on remand the trial court is directed to address whether Pardee was contractually required to comply with a SIR condition and, if so, whether it satisfied any SIR obligation, an issue presented but not addressed in U.S. Fire’s motion for summary adjudication. The judgment on behalf of Liberty is affirmed. Pardee is entitled to costs from ICW, Nationwide and U.S. Fire. Liberty is entitled to costs from Pardee.
Kremer, P. J., and McIntyre, J., concurred.
Petitions for a rehearing were denied February 23, 2000, and the opinion was modified to read as printed above. Respondents’ petition for review by the Supreme Court was denied April 26, 2000. Werdegar, J., and Chin, J., were of the opinion that the petition should be granted.
Notes
Subcontractors are often required contractually to name the project owner and/or the general contractor as additional insureds under their CGL policies. Compliance is confirmed by issuing policy endorsements to the additional insured parties. They often do not receive the actual endorsement, but rather are notified by way of a certificate of insurance. (O’Connor,
Commercial General Liability Coverage
(Apr. 1999) 19 Construction L., 5, 12-13.) “A certificate of insurance is merely evidence that a policy has been issued. (Ins. Code, § 384.) It is not a contract between the insurer and the certificate holder. [Citations.]”
{Empire Fire & Marine Ins. Co. v. Bell
(1997)
The parties agree the applicable standard of review here is de novo review.
(Reliance Nat. Indemnity Co.
v.
General Star Indemnity Co.
(1999)
To prevail on a motion for summary judgment, a defendant must show that one or more elements of the plaintiff’s cause of action cannot be established or that there is a complete defense to that cause of action.
(Bacon v. Southern Cal. Edison Co.
(1997)
Summary judgment should be granted only when a moving party is entitled to a judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) Mindful that summary judgment raises only questions of law, we independently review the parties’s supporting and opposing papers and apply the same standard as the trial court in determining whether there exists a triable issue of material fact.
(City of San Diego
v.
U.S. Gypsum Co.
(1994)
The first step in reviewing a summary judgment in favor of defendant is to “ ‘identify the issues framed by the pleadings since it is these allegations to which the motion must respond by establishing a complete defense or otherwise showing there is no factual basis for relief on any theory reasonably contemplated by the [complaint].’ ”
(Carleton v. Tortosa
(1993)
The insurers correctly reject Pardee’s assertion the central issue of this insurance coverage appeal is whether the precedent of
Montrose Chemical Corp. v. Superior Court
(1993)
For the purposes of this appeal, the insurers concede Pardee is an additional insured.
As to ICW and U.S. Fire, the trial court alternatively found that in the event the subcontracts and insurance policies contain any ambiguity, the reasonable and objective intent of the insurers and the insureds was not to provide coverage for the Heritage II project.
The 1989 ICW endorsement slightly differed, specifically providing for additional insured coverage as to liability arising out of Strang’s sole negligence and resulting from its work for Pardee.
Pardee’s tender of its defense to ICW under the Strang policies on June 12 and July 3, 1996, based on the potential property damage arising from Strang’s work оn phases III and IV of the Heritage project was never responded to by ICW.
Pardee’s tender of its defense to ICW under the Coast policy on September 10, 1996, was denied on the basis ICW could not locate the endorsement naming Pardee as an additional insured.
Nationwide denied Pardee’s tender under the Coast policies on the basis the certificates and endorsements naming Pardee as an additional insured were issued after completion of the Heritage II project and thus did not cover damages arising from the alleged construction defense. Similarly, Nationwide denied Pardee’s tender under the Doose policies because the endorsements were not in effect at the time of construction and Doose was not insured with Nationwide until after construction of the project.
Pardee’s tender was denied by U.S. Fire.
The CGL coverage form provides that “products-completed operations hazard” includes property damage occurring away from premises you own or rent and arising out of “your product” or “your work.” “Your work” is defined as “[w]ork or operations performed by you or on your behalf. . . .” It includes “[w]arranties or representations made at any time with respect to the fitness, quality, durability, performance or use of ‘your work’ . . . .”
Precisely, the CGL coverage form provides: “ ‘Your work’ will be deemed completed at the earliest of the following times: (1) When all of the work called for in your contract has been completed. (2) When all the work to be done at the site has been completed if your contract calls for work at more than one site. (3) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. [^] Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.”
The form 2009 additional insured endorsement provides: “This insurance does not apply to: [1] . . . HD (2) ‘Bodily injury’ or ‘property damage’ occurring after: [ft] (a) All work on the project (other than service, maintenance, or repairs) to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or [H] (b) That portion of ‘your work’ out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.” (Turner, Insurance Coverage of Construction Disputes (Shepard’s/McGraw-Hill, Inc., 1992) appen. I, p. 526.)
“ISO is a nonprofit trade association that provides rating, statistical, and actuarial policy forms and related drafting services to approximately 3,000 nationwide property or casualty insurers. Policy forms developed by ISO are approved by its constituent insurance carriers and then submitted to state agencies for review. Most сarriers use the basic ISO forms, at least as the starting point for their general liability policies. [Citations.]”
{Montrose II, supra,
«when the ISO commercial general liability program was extensively revised in 1993, a number of additional insured endorsements were reworded to eliminate coverage of the completed operations hazard. Coverage under the revised endorsements applies, not to liability arising out of ‘your work,’ but to liability in connection with ‘your ongoing operations’—in other words, work in progress only. When the named insured’s operations for the additional insured are no longer ‘ongoing,’ the additional insured no longer has coverage, regardless of how long the endorsement is maintained as part of the policy. ISO explained this change in its additional insured endorsements by stating that it was never the intention of insurers to provide additional insureds with completed operations coverage, and that use of the term ‘your work’ inadvertently broadened the scope of additional insured coverage beyond its intended limits.” (Wielinski et al., Contractual Risk Transfer, supra, § XI.C, p. 20.)
As to U.S. Fire, the trial court assumed for purposes of ruling on the summary judgment motions that Pardee had satisfied the SIR requirement in the U.S. Fire policies. Pardee argues the assumption was unnecessary, because it was never informed of the SIR requirement as to one policy; it constitutes a question of fact as to who must satisfy the SIR condition; and, even if Pardee were required to satisfy the SIR, it did so. Although this court exercises de novo review of a summary judgment (examining the facts and independently determining their effect as a matter of law) and may affirm it on a basis not relied upon by the trial court
(Salazar
v.
Southern Cal. Gas Co.
(1997)
See footnote 1, ante, page 1340.
“A motion for judgment on the pleadings is tantamount to a general demurrer. ... On appeal from the granting of the motion, the standard of review is the same as for a judgment of dismissal following the sustaining of a general demurrer. [Citations.]”
{Orange Unified School Dist. v. Rancho Santiago Community College Dist.
(1997)