Weekly Law Resume - May 17, 2012: Insurance Coverage – Contribution Action – Self Insured Retention


Axis Surplus Insurance Company v. Glenco Insurance Ltd Court of Appeal, Fourth District (April 11, 2012)

When an action for equitable contribution is brought by a settling insurer against a non-participating carrier, the settlement is presumptive evidence of the non-settling insurer’s liability and the amount thereof. This case considered the effect of a Self-Insured Retention (“SIR”) on the non-settling carrier’s exposure to a contribution claim.

This case arose out of a construction defect lawsuit. Pacifica Point L.P. purchased the Carmel Pointe apartments in 2004 and subsequently converted them to condominiums. After their completion, the homeowners association brought a construction defect suit against Pacifica. The homeowners’ experts came up with a preliminary defects list with a total cost of repair of $13,976,250. The defense experts’ preliminary repair estimate totaled $1,466,747.50. The Association made a time limited settlement demand of $1,000,000.

Pacifica was insured in 2004-2005 and 2005-2006 by a commercial general liability policy issued by Axis Surplus Insurance Company. It also had obtained a specific wrap-up/owners controlled insurance policy (“OCIP”) for the Carmel Pointe Project from Glenco Insurance Ltd. with a policy period from 2004-2007. Glenco’s policy had a $250,000 SIR, and it provided that Glencoe had no duty to investigate or defend any claim until Pacifica satisfied the SIR. Axis agreed to defend under a reservation of rights. Because of the unsatisfied SIR, Glenco did not accept the tender, but reserved its rights and “monitored” the claim, requesting notification once Pacifica satisfied its SIR.

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