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Westchester Surplus Lines Insurance Co. v. Liberty Mutual Insurance Co.

United States District Court, N.D. California

February 22, 2018

WESTCHESTER SURPLUS LINES INSURANCE COMPANY, Plaintiff,
v.
LIBERTY MUTUAL INSURANCE COMPANY, Defendant.

          ORDER REGARDING MOTIONS FOR SUMMARY JUDGMENT

          WILLIAM H. ORRICK, UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         Plaintiff Westchester Surplus Lines Insurance Co. (“Westchester”) brings an action against defendant Liberty Mutual Insurance Co. (“Liberty Mutual”) for equitable contribution stemming from Westchester's defense and indemnity of Tractel, Inc. (“Tractel”) following an accident occurring on August 4, 2011 at a residential building located at 300 Berry Street in San Francisco, California. Westchester, which insured Tractel as part of a “wrap up” insurance program, argues that it is entitled to equitable contribution from Liberty Mutual because both parties previously issued a primary insurance policy to Tractel, while Liberty Mutual contends that its policy carves out coverage when a wrap up insurance program applies and that it had no obligation, equitable or otherwise, to defend Tractel in that circumstance. Both parties moved for summary judgment. For the reasons discussed below, Westchester is not entitled to equitable contribution from Liberty Mutual. I grant Liberty Mutual's motion and deny Westchester's.

         BACKGROUND

         I. FACTUAL BACKGROUND

         A. The Owner Controlled Insurance Program

         In 2006, Arterra Mission Bay, LLC began work on the construction of 268 mid-level condominiums and townhome units in the Mission Bay area of San Francisco (the “Arterra Project”). See Declaration of Nancy Adams (“Adams Decl.”), Ex. 1, Tractel/Bovis Subcontract, at Ex. B.1 at 1 (Dkt. No. 35-1). As a part of the Arterra Project, the owner created an owner controlled insurance program (“OCIP”) in order to provide insurance coverage to contractors working on the project. See Adams Decl., Ex. 2, OCIP Manual at 5 (Dkt. No. 35-2). Enrollment and participation in the OCIP were mandatory for all the contractors working on the project. Id. Westchester issued the wrap up insurance policy, providing primary general liability coverage under the OCIP. See Adams Decl., Ex. 3, Westchester Policy at Endorsement No. 1 (ECF p. 7) (Dkt. No. 35-3).

         Tractel was awarded a subcontract with Bovis Lend Lease as a part of the Arterra Project, related to the construction and installation of the Exterior Building Maintenance System that facilitates window washing and other exterior building maintenance. See Adams Decl., Ex. 1, Tractel/Bovis Subcontract, at 1, Ex. B.1 at 2 (Dkt. No. 35-1). The Tractel/Bovis Subcontract incorporates the OCIP Manual by reference. See id. at 15 (listing “Exhibit C.1 (Wrap-Up Manual)” as a contract document). Even though Tractel was already insured by Liberty Mutual, per the terms of the subcontract Tractel was obligated to enroll in the OCIP and pay premiums to Westchester, which it did. See Adams Decl., Ex. 4, Lockton Insurance Brokers OCIP Enrollment Spreadsheet (Dkt. No. 35-4) (listing Tractel as an “enrolled contractor”).

         B. The Westchester Policy

         Westchester issued a general liability policy to Mission Bay LLC, effective from May 1, 2006 to March 1, 2009. Corona Decl., Ex. 3, Westchester Policy (Dkt. No. 32-6). By endorsement, Mission Bay LLC and “all subcontractors that are enrolled in the [OCIP]” were the “Named Insured” for the Westchester policy. Id. ¶ 12; Adams Decl., Ex. 3, Westchester Policy at Endorsement No. 1 (ECF p. 7).

         Relevant to this action, the Westchester Policy contains an “Other Insurance” provision that states:

4. Other Insurance

If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:
a. Primary Insurance
This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below.
b. Excess Insurance
This insurance is excess over:
(1) Any of the other insurance, whether primary, excess, contingent or on any other basis:
(a) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for “your work”. . .;
(2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement.

c. Method of Sharing

If all of the other insurance permits contribution by equal shares, we will follow this method unless the insured is required by contract to provide insurance that is primary and non-contributory, and the “insured contract” is executed prior to any loss. Where required by a contract, this insurance will be primary only when and to the extent as required by that contract. However, under the contributory approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit ...

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