No Contribution For Defense Of Additional Insured
The duty to defend, in the context of a contribution lawsuit between insurers, and the right to pursue appeal after an unfavorable summary adjudication ruling, were the subjects of a decision from California’s Court of Appeal, Second Appellate District (Los Angeles).
In Monticello Insurance Company v. Essex Insurance Company (2008) __ Cal.App.4th __ (2008 WL 1851316), the court of appeal affirmed the trial court’s ruling that Monticello failed to prove on motion for summary adjudication/judgment that Essex had a duty to contribute to the defense of a general contractor (“GC”) in a construction defect case. Monticello was the direct insurer of the GC and Essex insured the GC as an additional insured under a policy issued to a drywall subcontractor. While the legal principles of equitable contribution may not be new, the case is an example of what evidence was found to be inadequate to substantiate the right to contribution. Both the trial and appellate courts (even though reviewing by different standards) found Monticello failed to show there was a potential that the drywaller’s work caused damage to other property.
(What the court does not address, and perhaps Monticello did not feature, was that Essex must have concluded there was a potential for coverage as it was defending its direct insured, the drywaller.)
The case suggests the insurer seeking contribution should consider: (1) continuing to provide additional information to the other insurer, which information may impact a decision on the duty to defend, and (2) filing an earlier declaratory relief action (while the defense is ongoing).
The court also addressed whether the parties had standing to appeal. The appeal followed a ruling on summary judgment/adjudication. There were still issues that could have been litigated further, but it did not make much sense to litigate in light of the court’s ruling. Therefore, the parties stipulated judgment would be entered against Monticello for purposes of concluding the case so Monticello could immediately appeal. The court found this appropriate under the circumstances.
