The Year 2010 In Review: Construction Insurance Issues

by Sheppard Mullin Richter & Hampton LLP

This article is the seventh in a series summarizing construction law developments for 2010.

1. Forecast Homes, Inc. v. Steadfast Insurance Co., 181 Cal. App. 4th 1466 (4th Dist. Jan. 2010), rev. denied, 2010 Cal. LEXIS 4356

A home developer, acting as a general contractor, hired subcontractors to build homes. The subcontracts all required the subcontractors to defend and hold the developer harmless against any liability arising out of their work and to add the developer to their commercial general liability policies as an additional insured. A construction defect litigation was brought against the developer, but not against the subcontractors......

2. Interstate Fire and Casualty Insurance Co. v. Cleveland Wrecking Co., 182 Cal. App. 4th 23 (1st Dist. Feb. 2010)

A general contractor entered into subcontracts with Delta and Cleveland, pursuant to which each subcontractor agreed (i) to indemnify the general contractor for liability arising out of its work and to (ii) procure general liability insurance to which the general contractor would be an additional insured. Only Delta complied with the latter obligation, obtaining a commercial general liability policy from Interstate Fire and Casualty Insurance Company. During the performance of work, one of Delta's employees was injured by falling debris dislodged by Cleveland's operations. The employee filed suit against Delta, Cleveland and the general contractor.....

3. PMA Capital Insurance Co. v. American Safety Indemnity Co., 695 F. Supp. 2d 1124 (E.D. Cal. March 2010)

PMA Capital Insurance Company sued coinsurer American Safety Indemnity Company ("ASIC") for equitable contribution on the grounds that the coinsurer had a concurrent duty to defend a mutual insured in an underlying construction defect case. The parties cross-moved for summary judgment. The primary issue in the case was the definition of the term "occurrence" in the liability policy issued by the coinsurer....

4. Scottsdale Insurance Co. v. Century Surety Co., 182 Cal. App. 4th 1023 (2d Dist. March 2010)

Two insurers shared multiple construction subcontractors as mutual insureds. Frequently, Century Surety Co. would decline to participate in the defense and indemnity of the mutual insureds. Scottsdale Insurance Co. filed suit seeking equitable contribution with respect to over 300 underlying actions involving the mutual insureds. In allocating responsibility between the insurers, the trial court applied the following standard: "where someone's wrong has made it difficult to provide exact numbers as to loss or damage, plaintiff does not bear the burden of exactitude." The trial court concluded that Scottsdale could recover one-half of the amounts it paid on approximately 80 underlying claims....

5. Pennsylvania General Insurance Co. v. American Safety Indemnity Co., 185 Cal. App. 4th 1515 (4th Dist. June 2010), rev. denied, 2010 Cal. App. LEXIS 11011

A framing subcontractor was insured by Pennsylvania General Insurance Company under a commercial general liability policy while performing work on an apartment construction project ("Project"). At the conclusion of the policy period, and after the subcontractor's work was completed, the subcontractor was issued a new commercial general liability policy by American Safety Indemnity Company ("ASIC"). The subcontractor was then sued in a construction defect suit involving the Project....

6. Clarendon America Insurance Co. v. North American Capacity Insurance Co., 186 Cal. App. 4th 556 (4th Dist. June 2010), reh'g denied, 2010 Cal. LEXIS 9459

A homebuilder was insured by two insurance companies, Clarendon America Insurance Company and North American Capacity Insurance Company ("NAC"). Clarendon sued NAC seeking proportionate or equitable share of sums Clarendon expended to defend the homebuilder in a construction defect class action...

7. Clarendon America Insurance Co. v. StarNet Ins. Co., 186 Cal. App. 4th 1397 (4th Dist. Oct. 2010), rev. granted, 2010 LEXIS 11395

The developer of a residential housing development was served by the homeowners association with a Calderon Notice commencing an alternative dispute process which was a prerequisite to filing a complaint for construction defects....

8. Arrowood Indemnity Company v. Travelers Indemnity Company of Connecticut, 188 Cal. App. 4th 1452 (2d Dist. Oct. 2010)

A general contractor held two CGL policies for different periods. The contractor was sued for negligence allegedly committed during the second policy period and the second insurer provided both defense and indemnity....

9. Ameron International Corp. v. Insurance Co. of the State of Penn., 50 Cal. 4th 1370 (Nov. 2010)

The insured was a subcontractor who manufactured and installed concrete siphons for an aqueduct project being performed for the US Dept. of the Interior Bureau of Reclamation....

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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