United States District Court, N.D. California
ASSOCIATED INDUSTRIES INSURANCE COMPANY, INC., a Florida corporation, Plaintiff,
MT. HAWLEY INSURANCE COMPANY, an Illinois corporation, Defendant.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
action for insurance declaratory relief, the question is
whether or not a subcontractor's insurer must defend a
suit against the general contractor arising out of an
accident at the worksite where the subcontractor was
performing its work for the general contractor. This order
holds that the subcontractor's insurer violated its duty
to defend the general contractor.
Associated Industries Insurance Company, Inc., and defendant
Mt. Hawley Insurance Company are both issuers of commercial
general-liability insurance. Associated issued a policy to
Imac Construction, Inc., effective February 12, 2013 to
February 12, 2014. In 2013, Imac contracted to build
structural concrete on “The View, ” an
affordable-housing construction project in Downey,
California. On May 21, 2013, before beginning work on The
View, Imac hired J. Ginger Masonry, LP, as a subcontractor
for “Masonry and Masonry Reinforcement” work.
Imac also hired Hof & Yates Rebar as a subcontractor for
“Rebar Supply and Installation” work.
3 of the subcontract agreement between Imac and J. Ginger
required in relevant part that J. Ginger carry
general-liability insurance with a one million dollar limit
per “occurrence” and a provision or endorsement
naming Imac “as an additional insured as respects
liabilities arising out of [J. Ginger's] performance of
the work under this contract, and providing that such
insurance is primary insurance as respects the interests of
[Imac] and that any other insurance maintained by [Imac] is
excess and not contributing insurance with the insurance
required hereunder” (see Dkt. No. 14-1 at 5).
Section 16 further provided that J. Ginger would indemnify
and hold Imac harmless “from any and all claims,
demands, liabilities, judgments liens, encumbrances, costs
and expenses . . . arising out of or in connection with the
obligations herein made and undertaken by [J. Ginger], or the
operations and work conducted by [J. Ginger].” J.
Ginger would not, however, provide indemnity
“against liability or loss caused by the sole
negligence or sole willful misconduct of [Imac]”
(id. at 9).
to Section 3 of the subcontract agreement, J. Ginger obtained
a policy from Mt. Hawley effective July 23, 2013, to July 23,
2014. Section I(1) of the coverage form stated Mt. Hawley
“will pay those sums that the insured becomes legally
obligated to pay as damages because of ‘bodily
injury' or ‘property damage' to which this
insurance applies” and “will have the right and
duty to defend the insured against any ‘suit'
seeking those damages” (Dkt. No. 14-2 at 42). The scope
of commercial general-liability coverage under the policy was
modified by “Form C, ” an endorsement that listed
as additional insured “[a]ll persons or organizations
where required by written contract.” Coverage extended
to such additional insured under Form C only with respect to
liability arising out of work and operations performed by J.
Ginger or on its behalf, as well as the materials, parts, or
equipment furnished in connection with such work or
operations (see Id. at 58, 72). Form C also
provided, “To the extent required under contract, this
policy will apply as primary insurance to additional insureds
. . . and other insurance which may be available to such
additional insureds will be non-contributory”
(id. at 72).
scope of commercial general-liability coverage under the
policy was also modified by “Form B, ” a narrower
endorsement that listed as additional insured “any
person or organization for whom [J. Ginger is] performing
operations when [J. Ginger] and such person or organization
have agreed in writing in a contract or agreement that such
person or organization be added as an additional insured on
[J. Ginger's] policy.” Form B provided in part
(id. at 78):
Such person or organization is an additional insured only
with respect to liability for “bodily injury, ”
“property damage” or “personal and
advertising injury” caused, in whole or in part, by:
1. [J. Ginger's] acts or omissions; or
2. The acts or omissions of those acting on [J. Ginger's]
in the performance of [J. Ginger's] “ongoing
operations” for the additional insured.
distinction between Form C and Form B for our purposes, as
discussed further below in the context of the parties'
arguments, is that Form C generally covered liability
arising out of work and operations performed by J.
Ginger or on its behalf whereas Form B covered only liability
caused by acts or omissions performed by J. Ginger
or on its behalf.
IV(4) of the coverage form stated the insurance provided by
Mt. Hawley would be primary unless it was “excess over,
” among other things, “[a]ny other primary
insurance available to [J. Ginger] covering liability for
damages arising out of the premises or operations, or the
products and completed operations, for which [J. Ginger has]
been added as an additional insured by attachment of an
endorsement” (id. at 53). If the insurance
provided by Mt. Hawley was “excess, ” then Mt.
Hawley would have “no duty . . . to defend [J. Ginger]
against any ‘suit' if any other insurer has a duty
to defend [J. Ginger] against that ‘suit'”
(ibid.). The foregoing provision, however, was
amended by another endorsement, which added language that
stated, “This insurance is excess over ...