Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

St. Paul Mercury Insurance Co. v. American Safety Indemnity Co.

United States District Court, N.D. California, San Jose Division

May 21, 2014

ST. PAUL MERCURY INSURANCE COMPANY, a Minnesota corporation Plaintiff,
v.
AMERICAN SAFETY INDEMNITY COMPANY, et al., Defendants.

ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND GRANTING DEFENDANTS' JOINT MOTION FOR SUMMARY JUDGMENT

LUCY H. KOH, District Judge.

Plaintiff St. Paul Mercury Insurance Company ("St. Paul") initiated this litigation against Navigators Specialty Insurance Company ("NSIC"), Virginia Surety Company ("Virginia"), Lexington Insurance Company ("Lexington"), and Gemini Insurance Company ("Gemini") (collectively, "Defendants"), for declaratory judgment and equitable contribution. See First Am. Compl., ECF No. 160. St. Paul claims that Defendants had a duty to defend and/or indemnify Shapell Industries, Inc. ("Shapell") regarding claims alleged in an underlying proceeding, Eagle Ridge HOA v. Shapell Industries, Inc. dba Eagle Ridge Development Company, LLC ("Calderon proceeding"). The Eagle Ridge Homeowners Association ("Eagle Ridge HOA" or "HOA") brought the underlying action for construction defects in the Eagle Ridge Community Center and pool area located in Gilroy, California (the "Community Center"). Id. ΒΆ 61.

Both parties have cross-moved for summary judgment. St. Paul filed a Motion for Partial Summary Judgment, in which St. Paul contends that Defendants had a duty to defend Shapell in the underlying action as an "additional insured" under insurance policies issued by Defendants to several of Shapell's subcontractors. See ECF No. 238 ("Pl. Mot."). Defendants filed a joint Opposition, see ECF No. 242, and St. Paul filed a Reply, see ECF No. 245. Additionally, Defendants filed a Joint Motion for Summary Judgment or, in the alternative, partial summary judgment, in which they contend that Shapell is not an additional insured and that therefore the Defendant insurers had neither a duty to defend nor a duty to indemnify Shapell as to the underlying action. See ECF No. 239-1 ("Joint Mot."). Plaintiff filed an Opposition, see ECF No. 243, and Defendants filed a joint Reply, see ECF No. 246.

The Court finds the Motions suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b), and therefore VACATES the hearing on these Motions and the Case Management Conference set for May 22, 2014. Having considered the briefing, the record in this case, and applicable law, the Court GRANTS Defendants' Motion for Summary Judgment and DENIES St. Paul's Motion for Partial Summary Judgment.[1]

I. BACKGROUND

A. The Eagle Ridge Development

This action and the underlying Calderon proceeding in state court arise out of alleged construction defects at a housing development in Gilroy, California, known as Eagle Ridge. Pl. Mot. at 1. Shapell served as the owner/developer and general contractor for the Eagle Ridge project, and built five of the nine developments in Eagle Ridge, as well as a Community Center and community pool. See id.; Joint Mot. at 1. Shapell employed several subcontractors to perform construction services at the Eagle Ridge development, first on homes at the site and later on the Community Center. See Pl. Mot. at 1; Joint Mot. at 1-3. Defendants provided insurance to those subcontractors, as described below.

1. Padilla Construction

In 2002, Shapell employed Padilla Construction ("Padilla"), insured by Defendant NSIC, to perform construction services for homes at "The Glens at Eagle Ridge, " one of the developments at Eagle Ridge. See ECF No. 240-2, Ex. 31 ("Padilla Contract"). Shapell also subsequently hired Padilla to perform additional work on the Community Center. Shapell and Padilla entered two agreements at issue here.

First, the parties executed a contract dated October 22, 2002 regarding construction on homes at Eagle Ridge. Id. at SPM 01238. The contract specifies that Padilla was to work on "Models" (individual homes) and to "furnish the labor, management, materials... and services in connection with the ["Glens at Eagle Ridge"] Project, as applicable, ... more fully described in the Scope of Work' attached hereto as Exhibit 1." Id. The "Scope of Work" described in Exhibit 1 is stated as "Lath & Plaster" work at "The Glens, " with various provisions setting out the "Work Included, " such as "Installing one layer one hour grade D' building paper, " "Brush/scrub coat at foundation, " and "Supply scaffold." Id. at SPM 01248-50. Various addenda to the contract specify additional "Lath & Plaster" work at "The Glens at Eagle Ridge, " with the prices at which Shapell would pay for work on different plans. See, e.g., id. at SPM 01233. The addenda explicitly identify the contract to which they pertain by identifying the contract date, and state that the reason for the addendum is to incorporate the newer releases into the prior contract. Id. ("Addendum #4 to Contract Dated 10/22/02").

Exhibit 4 to the contract is the "Insurance Summary, " which required Padilla to obtain a liability policy identifying Shapell as an additional insured. Id. at SPM 01254. While the pre-printed contract originally required Padilla to obtain insurance covering "All Northern California Operations, " the parties struck this language and specifically limited the requirement to "The Glens at Eagle Ridge." Id. Padilla duly obtained a liability policy from NSIC which, through an endorsement, provided additional insured coverage where "obligated by virtue of a written contract." ECF No. 240-3, Ex. 36 ("NSIC Policy") at NAVI-PCC000449; see also ECF No. 240-3, Ex. 37 at NAVI-PCC000503.

Second, on May 23, 2006, Shapell entered into a purchase order with Padilla to "supply all material and labor for the Eagle Ridge community center per plan." ECF No. 240-2, Ex. 33 ("Padilla Purchase Order") at SPM01546. This work relates to the Community Center, not the homes described above. The "plans" to which the Padilla Purchase Order refers are proposals and/or quotes submitted by Padilla, which set forth the scope of the work to be done at the Community Center and the costs to be paid by Shapell. See ECF No. 240-2, Ex. 32 at NAVI-PCC000153-57. The Padilla Purchase Order was based on a pre-printed form created by Shapell, which had blanks for the parties, scope of work, terms, signatures, and dates. See Padilla Purchase Order at SPM01546.

In the Padilla Purchase Order, the following fields were completed: two "Date" fields (corresponding to the dates the Purchase Order was prepared and executed), "Ship to Tract, " "Date Required, " "Confirming To, " and the "Owner and/or subcontractor" signature field. Id. The form also included a field entitled "Subject to the conditions stated on the face and back hereof, please deliver the following materials and/or labor, " which was filled out with the following: "Cost Code: XXXXX-XX-XXX, " "Supply all material and labor for the Eagle Ridge Community Center per plan, " "Total Purchase Order. $37, 420.00." Id. The total cost figure was stricken, and below the following was written by hand: "$26, 380 16/20 Sand OK BbM." Id. The following fields were left blank: "F.O.B., " "Terms, " "Unit or Lot No., " "Time, " and the "Subcontractor and/or supplier" signature field. Id.

Critically, the pre-printed purchase order form has a standard provision at the bottom:

All work performed under this Purchaser Order is to be performed in accordance with the Terms and Conditions of the contract between you and Shapell Industries of Northern California, Inc., dated the _____ day of _____, to cover the above referenced tract.

Id. In the Padilla Purchase Order, the dates were left blank. Id. Shapell's pre-printed form does not itself include any insurance requirement, and the Padilla Purchase Order does not otherwise include such a requirement.

Padilla performed its work on the Community Center between September 15, 2006 and November 10, 2006. See ECF No. 240-2, Ex. 35.

2. CBC Framing

In 2005, Shapell employed CBC Framing, Inc. ("CBC"), insured by Defendant Virginia, to perform construction services for homes at "The Creekside at Eagle Ridge, " one of the developments at Eagle Ridge. See ECF No. 240-4, Ex. 38 ("CBC Contract"). Shapell also subsequently hired CBC to perform additional work on the Community Center. As with Padilla, Shapell and CBC entered two agreements relevant here.

First, the parties executed a contract dated December 19, 2005 regarding construction on homes at Eagle Ridge. Id. at VS000001. The contract specifies CBC was to work on individual homes and "furnish the labor, management, materials... and services in connection with the ["Creekside at Eagle Ridge"] Project, as applicable, ... more fully described in the Scope of Work' attached hereto as Exhibit 1." Id. The "Scope of Work" described in Exhibit 1 is stated as "Rough Carpentry" work at "Creekside at Eagle Ridge, " with various provisions setting out the "Work Included, " such as "Supply and install all roof trusses, floor trusses and glue laminated beams, " "Install vents and sheetmetal..., " and "Caulking all wood to wood joints at siding and trim." Id. at VS000012-15.

Exhibit 4 to the contract is the "Insurance Summary, " which required CBC to obtain a liability policy identifying Shapell as an additional insured. Id. at VS000018-19. Unlike the Padilla Contract, which was modified to be limited to the development, the CBC Contract's insurance requirement compelled CBC to obtain a liability policy for which the "project/job description or description of operations" would be "All California Operations." Id. at VS000019.

Second, on June 6, 2006, Shapell entered into a purchase order[2] with CBC to "supply all material and labor for the Eagle Ridge community center per plan." ECF No. 240-4, Ex. 39 ("CBC Purchase Order") at SPM 01500. The Padilla and CBC Purchase Orders are substantially identical: both have the same blank fields, and both were completed in the same way but with different names for Padilla and CBC, and with different costs for each. See Padilla Purchase Order; CBC Purchase Order. The CBC Purchase Order contains the same standard provision at the bottom that states: "All work performed under this Purchase Order is to be performed in accordance with the Terms and Conditions of the contract between you and Shapell Industries of Northern California, Inc., dated the _____ day of _____, to cover the above referenced tract." CBC Purchase Order at SPM 01500. As with the Padilla Purchase Order, the dates were left blank on the CBC Purchase Order, and the CBC Purchase Order itself includes no insurance requirement. See id.

The parties do not state when CBC completed all of its work at the Community Center, but all subcontractors completed their work at the Community Center by March 2007. See ECF No. 239-5, Ex. 9, at 6.

3. Perma-Green

Shapell employed Perma-Green Hydroseeding, Inc. ("Perma-Green, " who is not a party here), insured by St. Paul, to perform construction services at the "Eagle Ridge-Creekside Recreation Complex." See ECF No. 239-4, Ex. 1. The Shapell-Perma-Green contract, dated August 3, 2006, specifies that Perma-Green was to perform landscaping services for areas around the recreation complex, including work at the Community Center. Id. at SPM 01261, 01269. Exhibit 4 to the contract is the "Insurance Summary, " which required Perma-Green to obtain a liability policy identifying Shapell as an additional insured. Id. at SPM 01274. Like the CBC Contract, but unlike the Padilla Contract, the insurance ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.