APPEAL from a judgment of the Superior Court of San Diego County, Richard E.L. Strauss, Judge. Reversed. (Super. Ct. No. GIC873672).
The opinion of the court was delivered by: McDONALD, J.
pub. order 06/28/2010 (see end of opn.)
D. A. Whitacre Construction, Inc., (Whitacre), a framing subcontractor on a construction project, was insured under a commercial general liability (CGL) insurance policy issued by plaintiff Pennsylvania General Insurance Company (Pennsylvania General) for the period October 1998 through December 2001. While insured by Pennsylvania General, Whitacre entered into a subcontract to perform work on a project and completed that work. At the conclusion of Pennsylvania General's coverage period, and after Whitacre's work on the project was completed, Whitacre was insured by a CGL policy issued by defendant American Safety Indemnity Company (ASIC), for the period December 2001 through December 2002.*fn1
In an ensuing construction defect lawsuit involving Whitacre (the construction defect litigation), various parties alleged that Whitacre's work on the project was improperly done and had created various problems with the project. Whitacre tendered its defense to both Pennsylvania General and ASIC. Pennsylvania General accepted Whitacre's tender of the defense under a reservation of rights and ultimately paid the defense and settlement costs for Whitacre. ASIC declined Whitacre's tender, asserting there was no possibility of coverage under its policy, and did not participate in defending or indemnifying Whitacre.
After the underlying construction defect litigation was settled, Pennsylvania General filed the present lawsuit against ASIC seeking equitable contribution from ASIC for a portion of the defense and indemnity costs paid by Pennsylvania General. The trial court, ruling on cross-motions for summary judgment, concluded ASIC had no responsibility to pay any portion of the defense or indemnity costs because there was no potential coverage under ASIC's policy for the claims asserted against Whitacre in the construction defect litigation and entered summary judgment for ASIC. Pennsylvania General timely appealed.
Whitacre was a framing subcontractor. Pennsylvania General insured Whitacre under a CGL policy for the period October 7, 1998, through December 31, 2001. ASIC insured Whitacre under a CGL policy for the period December 31, 2001, through December 31, 2002. National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National), a cross-defendant, insured Whitacre under a CGL policy for the period December 31, 2002, through October 1, 2005.
In the summer of 1999 an entity known as "900 F Street Partners" (owners) retained GAFCON/Taylor Ball, Joint Venture (GAFCON) as general contractor for a construction project. In December 1999, GAFCON entered into a subcontract with Whitacre pursuant to which Whitacre agreed to provide framing and rough carpentry work for the project. Whitacre substantially completed its work by June 2001, although it performed some punchlist work after June 2001. The final inspection notice for the entire project was issued in March 2002.
C. The Third Party Lawsuits
In the construction defect litigation, involving a series of lawsuits commenced in April 2002 that ultimately consolidated, owners alleged there were numerous problems in the construction of the project. Among the claims asserted in the construction defect litigation was the allegation that Whitacre's work was deficient and had caused damage to the project.*fn2
D. The Defense and Settlement
Whitacre tendered the defense of the construction defect litigation to numerous insurers, including Pennsylvania General and ASIC. Pennsylvania General accepted the tender of the defense for Whitacre as well as for GAFCON as an additional insured under the policy under a reservation of rights.*fn3 ASIC declined Whitacre's tender of the defense (as well as GAFCON's tender of the defense as an additional insured under the ASIC policy), asserting various provisions of its policy excluded coverage for the claims asserted in the construction defect litigation, including a "pre-existing damage" exclusion in ASIC's policy.
Pennsylvania General funded the defense of Whitacre and GAFCON in the construction defect litigation and paid about $780,000 as defense costs. Pennsylvania General and its assignor paid an additional $775,000 to settle the claims asserted in the construction defect litigation against its insureds.*fn4
Pennsylvania General filed the present action seeking declaratory relief and equitable contribution from ASIC, asserting ASIC's policy provided coverage for some or all of the damages sought against Whitacre in the construction defect litigation and therefore ASIC should be required to contribute to the defense and settlement costs paid by Pennsylvania General. ASIC's answer denied its policy provided any potential for coverage and therefore asserted it owed no defense or indemnity obligations to Whitacre. ASIC filed a cross-complaint against a subsequent insurer (National) asserting that, if ASIC owed any obligation to share in the costs of ...