Advent, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh

6 Cal.App.5th 443

211 Cal.Rptr.3d 685

ADVENT, INC., Plaintiff,

v.NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendant and Respondent;

Topa Insurance Company, Intervener and Appellant.

H041934

Court of Appeal, Sixth District, California.

Filed December 6, 2016

Murchison & Cumming, Philip H. Thompson, Los Angeles, for Intervener/Appellant Topa Insurance Company.

McCurdy & Fuller, Rosemary J. Springer, Kevin G. McCurdy, Menlo Park, for Defendant/Respondent National Union Fire Insurance Company of Pittsburgh, PA.

Premo, J. Advent, Inc. (Advent) was hired as the general contractor for the Aspen Family Village project in Milpitas, California. Advent subcontracted with Pacific Structures, Inc. (Pacific). In turn, Pacific subcontracted with Johnson Western Gunite (Johnson). Advent was covered by an insurance policy issued by Landmark American Insurance Company (Landmark) and an excess insurance policy issued by appellant Topa Insurance Company (Topa). Johnson was covered by primary and excess insurance policies issued by respondent National Union Fire Insurance Company of Pittsburgh, PA (National Union).

While construction on the project was underway, a Johnson employee, Jerry Kielty, fell down an unguarded stairway shaft at the project site and sustained serious injuries. Kielty sued Advent, and Advent tendered its defense to its various insurance companies and to National Union. National Union initially refused the tender but later accepted it under a reservation of its rights. Kielty settled his action for a sum of $10 million. Various insurers, including Topa and National Union (under its primary policy), contributed to the settlement. National Union continued to reserve its rights during the settlement process, and it did not provide coverage under its excess policy.

Advent initiated this underlying action when it sued National Union, seeking a declaration that it was an "additional insured" under National Union's excess policy. Topa successfully intervened in the action, seeking declaratory relief, equitable contribution from National Union, and equitable subrogation. Advent moved for summary judgment, which was denied. Advent then dismissed its complaint against National Union with prejudice. Subsequently, Topa and National Union filed cross-motions for summary judgment. The trial court denied Topa's motion and granted National Union's motion. Judgment was entered in favor of National Union, and Topa appealed. As we explain below, we find that the trial court did not err when it granted National Union's motion for summary judgment. We affirm.

BACKGROUND

A. The Contractor and Subcontractors

Advent was hired by Global Premier Development, Inc. and Aspen Construction Management, Inc., to be the general contractor for the Aspen Family Village project in Milpitas, California. Advent subcontracted with Pacific. In turn, Pacific subcontracted with Johnson to furnish and install shotcrete for the perimeter walls of the project.

B. The Subcontracts

i. The Advent/Pacific Subcontract

Advent subcontracted with Pacific on January 14, 2008 (Advent/Pacific subcontract). The subcontract set forth certain definitions. "Contractor" referred to Advent. "Subcontractor" referred to Pacific. "Sub-subcontractor" was defined as any subcontractor, architect, engineer, surveyor, laborer, or material man hired or employed by the subcontractor (Pacific). The term "Subcontract" or "Contract" referred to "this Subcontract [meaning the Advent/Pacific subcontract], including all Plans, Specifications, General Conditions, Supplemental General Conditions, Special Conditions, Amendments and all other documents issued by the Contractor and/or prepared by the Architect for the Project." Pacific was to be paid $6,275,000 for its work under the subcontract.

The Advent/Pacific subcontract contained a provision regarding insurance. The provision stated, "Minimum insurance requirements are: General Liability of $1,000,000 ... Workers Compensation. General Liability ... must have endorsements showing the Owner, Contractor [Advent] and Lender as Additional Insured, primary as to any and all claims, and any insurance maintained by Contractor shall be excess and noncontributory."

ii. The Pacific/Johnson Subcontract

Pacific entered into a subcontract with Johnson on February 7, 2008 (Pacific/Johnson subcontract). The Pacific/Johnson subcontract referred to Johnson as the "subcontractor." It also provided that Johnson would be working on structural shotcrete for the Aspen Family Village project and would be paid $289,000. Further, it referenced the Advent/Pacific subcontract as the "original Contract" or just the "Contract."

Exhibit D of the Pacific/Johnson referenced insurance. In a paragraph, it stated: "A. Insurance Requirements: All subcontractors must provide Insurance Certificates as designated in the Subcontract, naming parties listed on the attached sheet as additional insured. Original signatures are required on all insurance certificates. Insurance certificates must be submitted to Advent prior to commencement of work under this Subcontract." The attached sheet required Johnson to submit certificates of liability insurance to Advent and required that Advent be listed as an additional insured. Despite the language of exhibit D and its attached sheet, the Pacific/Johnson subcontract did not actually designate anything about insurance.

C. The Various Insurance Policies

i. The Landmark Policy

Advent was insured by Landmark under a $1 million general commercial liability policy, which was in effect at the time of the accident.

ii. The Topa Policy

Advent was also insured by Topa under a $5 million excess commercial general liability policy, which was in effect at the time of the accident.

The Topa excess policy provides that its excess liability indemnity extends to "indemnify the insured for the amount of loss which is in excess of the applicable limits of liability, whether collectible or not, of the Underlying Insurance inserted in Item 6 of the Declarations...." Item 6 of the declarations lists, as the general liability policy, the Landmark policy. "Loss" is defined as "the sum paid in settlement of losses for which the insured is liable after making deduction for all recoveries, salvages or other insurance (other than recoveries under the policy of the Underlying Insurance) whether recoverable or not, and shall include all expenses and ‘costs.’ "

iii. The National Union Policies

Johnson was insured by National Union under a $1 million primary general liability policy, which was in effect at the time of the accident. The policy was amended to include, as additional insureds, those "where required by written contract."

Johnson was also insured by National Union under a $15 million excess liability policy that was in effect at the time of the accident. The excess liability policy stated that "insured" meant "any person or organization, other than [Johnson], included as an additional insured under [the National Union primary policy], but not for broader coverage than would be afforded by [the primary policy]."

The National Union excess policy expressly states that National Union "will not make any payment under [the excess] policy unless and until: [¶] 1. the total applicable limits of Scheduled Underlying Insurance have been exhausted by the payment of Loss to which this policy applies and any applicable, Other Insurance have been exhausted by the payment of Loss...."

"Other Insurance" is defined as "a valid and collectible policy of insurance providing coverage for damages covered in whole or in part by this policy."

D. The Accident

The undisputed facts of the accident giving rise to this insurance coverage action are as follows: At around 11:40 a.m. on August 22, 2008, Jerry Kielty, who was employed by Johnson, was working as a cement pump operator. At around noon, the Johnson foreman directed Kielty to retrieve a piece of plywood that had been left outside between buildings 60 and 70. The path to retrieve the plywood was completely outside. Later, a driver of a cement truck reported that he had seen Kielty enter building 70. The driver did not see Kielty leave the building. Between noon and 1:00 p.m., the Johnson supervisor sent the foreman to find Kielty. The foreman searched the areas between buildings 60 and 70. He did not find Kielty. At approximately 1:15 p.m., two Helix Electric employees said that they heard something fall in the garage area. At around 1:35 p.m., while searching for a ladder inside building 70, a Pacific employee found that Kielty had fallen in the stairwell area of the building. At the time, Johnson was not performing any work in the interior of the building. Kielty suffered severe injuries as the result of the fall and could not remember how he fell.

E. The Kielty Action

On March 27, 2009, Kielty filed an action in Santa Clara County Superior Court (Kielty v . Advent , Inc . (Super. Ct. Santa Clara County, 2014, No. 2008-1-CV-122946), cause dism.) (Kielty Action) seeking damages for the injuries he had sustained in the accident. Kielty named, among others, Advent as a defendant. Kielty alleged that he fell down the unguarded stairwell as a result of the negligence of the named defendants, including Advent. Kielty did not name Johnson as a defendant.¹

Advent tendered its defense to its insurers and included National Union. Advent contended that it was an additional insured under the policies issued by National Union to Johnson. National Union initially refused the tender but later agreed to share the cost of defending Advent under a reservation of its rights.

Advent's answer alleged that Kielty was negligent and that other parties or third parties not a part of the action were responsible for the damages incurred by Kielty.

F. Advent's Cross-complaint

Advent and Global cross-complained against Johnson for express indemnity under the contract between Pacific and Johnson, breach of contract, equitable indemnity, contribution,...