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American International Underwriters Insurance Co. v. American Guarantee and Liability Insurance Co.

January 28, 2009


(Santa Clara County Super. Ct. No. CV057001) Trial Judge: Hon. James C. Emerson

The opinion of the court was delivered by: Elia, J.


After settling an action for personal injury, appellant American Guarantee and Liability Insurance Company (American) and respondent American International Underwriters Insurance Company (AIU) sought indemnification from each other, and each moved for summary judgment. The trial court denied American's motion, granted summary adjudication to AIU, and ultimately entered judgment for AIU. American appeals, contending that the parties responsible for the underlying plaintiff's injuries were not insureds under its liability policy. We agree and therefore must reverse the judgment.


A development project in San Jose required the excavation and removal of soil from the construction site, resulting in a series of subcontracting arrangements. O.C. Jones, the excavation contractor on the project, retained Allied Waste Management (Allied) to remove the soil and transport it to Allied's disposal facility. Allied then orally contracted with Denbeste Transportation, Inc. (Denbeste) to perform the hauling. Denbeste, using a written subhaul agreement, subcontracted with Double D Transportation Company (Double D) to assist Denbeste in the job. Double D in turn entered into a separate subhaul agreement with James D. Camara, owner of MJC Trucking. It was undisputed that both Double D and Camara were acting as independent contractors pursuant to their respective agreements.

Under the Denbeste-Double D subhaul agreement, Double D had the right to refuse transportation assignments requested by Denbeste, and Double D was required to maintain its own liability insurance and to make Denbeste an additional insured. Double D was insured under an umbrella policy issued by respondent AIU, while Denbeste was the named insured on two American policies: a comprehensive general liability (CGL) policy (which is not at issue in this appeal) and a commercial auto policy which included a "Trucker Coverage Form" (Trucker policy).

Pursuant to his subcontract with Double D, Camara drove his own MJC tractor connected to a Double D trailer. On October 8, 1999, while Camara was hauling soil from the project site to the disposal site, the tractor-trailer ran over Christopher Torgerson, severely injuring him. In September 2000 Torgerson brought a negligence action against Camara, Denbeste, Double D, and the general contractor on the development project, among others. Double D and Camara tendered their defense to Denbeste's insurer, American; but American rejected tender on the ground that neither was covered as an insured under the Trucker policy.

In November 2003, Torgerson settled with all defendants for $5,050,000. AIU (Double D's carrier) and American (Denbeste's carrier) each agreed to contribute $1,450,000 "on behalf of all of its insureds involved in the Action," while reserving their rights to pursue each other. American thereafter paid $1,000,000 under Denbeste's CGL policy and $450,000 under the Trucker policy. AIU likewise paid the promised amount pursuant to the settlement.*fn1

AIU then brought suit against American for equitable contribution, equitable subrogation, equitable indemnity, and declaratory relief. According to AIU, it was an excess insurer, while American was a primary insurer covering Camara and Double D as well as Denbeste. American denied these allegations and filed a cross-complaint, contending that neither Double D nor Camara was an insured under the American policy issued to Denbeste. American also called attention to an indemnity provision in Double D's subhaul agreement with Denbeste.*fn2 Each party sought recovery of the $1.45 million it had contributed to the settlement.

In January 2008 the parties filed cross-motions for summary judgment or alternatively, summary adjudication with respect to AIU's first amended complaint and American's cross-complaint. American argued that neither Double D nor Camara was an insured under Denbeste's Trucker policy. American maintained that the relationship between Denbeste and Double D was governed by the subhaul agreement and by the "routine contractual commercial relationship between themselves [sic]." That agreement, American noted, required Double D to name Denbeste as an additional insured in its liability policy.

AIU, on the other hand, contended that it had no duty to contribute to the Torgerson settlement because its policy was excess only, and American's primary policy, which had not been exhausted, covered Double D and Camara as well as Denbeste. In AIU's view, the indemnity provision of the subhaul agreement between Denbeste and Double D was inapplicable to the parties' dispute.

The superior court granted AIU's motion as to the complaint and denied American's motion in its entirety. As to American's cross- complaint, the court granted AIU summary adjudication as to all causes of action except the first, for "Subrogation/Equitable Indemnity."*fn3 At the request of American, the court subsequently clarified its order to articulate specifically its finding that Double D was an insured under the American Trucker policy "as the owner from whom Denbeste Transportation hired a covered 'auto' that is a 'trailer.' " In a judgment entered May 29, 2008, the court awarded AIU $1,450,000 plus prejudgment interest of $618,136.96 and costs.


In moving for summary judgment AIU advanced the theory that it had no duty to contribute to the settlement with Torgerson because its umbrella policy was excess, and the coverage of Denbeste's primary policy had not been exhausted. On appeal, American maintains that AIU "literally [sic] puts the cart before the horse," because it was obligated to pay only those amounts the insured was liable to pay as damages. Neither Double D nor Camara, American argues, was an insured under the Trucker policy. American ...

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