- Advent, Inc. v. National Union Fire Ins. Co. (6th Dist. Ct. App.2016) ---Cal. App. 4th ---, 2016 DJDAR 12038
- March 24, 2017
- Law Firm: McCormick Barstow Sheppard Wayte Carruth LLP - Fresno Office
Advent, Inc. was hired by Global and Aspen to be the general contractor on a project. Advent subcontracted with Pacific, which in turn subcontracted with Johnson to furnish and install shotcrete for perimeter walls. The Advent/Pacific subcontract required Pacific to obtain general liability insurance with an endorsement listing Advent as an additional insured. The subcontract between Pacific and Johnson did not designate anything with respect to insurance. Advent was insured by Landmark under a primary policy, and insured by Topa under an excess policy. Johnson was insured by National Union under both primary and excess policies. The primary policy included as additional insureds those as required by written contract. The excess policy covered those insured under the primary policy but not for broader coverage than under the primary policy.
Kielty, an employee of Johnson, was directed by his foreman to retrieve a piece of plywood which had been left outside between two buildings. Kielty was subsequently injured when he fell in the stairwell area of one of the buildings, even though Johnson was not performing any work inside. Kielty could not recall how the accident occurred. Kielty sued Advent alleging he was injured due to Advent's negligence in maintaining an unguarded stairwell. Kielty did not sue Johnson. Advent tendered its defense to its own insurers and to National Union arguing it was an additional insured under the National Union policies. National Union initially declined to defend but subsequently agreed to contribute to the defense under a reservation of rights. Advent cross-complained against Johnson, which cross-complaint was later dismissed after a summary judgment in favor of Johnson. The Kielty action partially settled for $10 million. Landmark paid its $1 million limit, Topa paid its $5 million limit, National Union paid its $1 million primary limit and the balance was paid by other insurers. National Union paid under a reservation of rights and on behalf of Johnson and its "alleged insureds Advent, Global and [Pacific.]" Kielty agreed to stay his action pending a determination of whether Advent was an additional insured under the National Union policies. If it was determined Advent was not insured by those policies, Kielty agreed to dismiss Advent, with prejudice. If Advent was determined to be covered by National Union, the stay would be lifted and the action would proceed against Advent only.
Advent initiated an action against National Union seeking a declaration that it was covered under the National Union excess policy. Advent's motion for summary judgment was denied on the grounds that its interpretation of the documents did not support its contention that it was entitled to coverage. Advent thereafter dismissed its complaint against National Union and Kielty dismissed his action against Advent. However, before the complaint against National Union was dismissed, Topa intervened seeking equitable contribution, equitable subrogation and declaratory relief against National Union. Topa and National Union filed cross-motions for summary judgment. National Union contended that the subcontract between Johnson and Pacific did not require Johnson to obtain additional insured coverage for Advent and that, even if it did, coverage would apply only if Johnson's acts or omissions caused Kielty's injuries and such injuries were suffered during the performance of Johnson's ongoing operations for Advent. Topa contended that Advent was an additional insured under the National Union policies by virtue of the Advent/Pacific and the Pacific/Johnson subcontract requirements, and that coverage applied because the facts demonstrated a potential that Johnson or Kielty contributed to the accident. The court agreed with National Union, finding the Pacific/Johnson subcontract could not be reasonably interpreted as including an insurance requirement. The court further noted that Kielty never alleged that Johnson was at fault in connection with the accident. Judgment was entered in favor of National Union and Topa appealed.
THE COURT OF APPEAL'S RULING
In affirming the trial court's decision, the court of appeal noted that for the National Union excess policy to apply,
it was necessary that the injuries were caused, in whole or in part, by Johnson's acts or omissions, or someone acting on Johnson's behalf, in the performance of its ongoing operations for Advent. The undisputed facts showed that, at the time of the accident, Johnson was not performing work in the interior of the building where the accident occurred. Furthermore, no one from Johnson had ordered Kielty into the building. Instead, he had been directed to retrieve some plywood outside the building. There was simply no evidence that, at the time of the accident, Kielty was engaged in an activity over which Johnson had control. Kielty alleged that various defendants were negligent but Johnson was not named in the lawsuit. The court determined that Johnson's mere presence at the jobsite was insufficient to find that the accident was caused by its acts or omissions. Furthermore, the allegations of negligence against Johnson in the cross-complaint filed by Advent did not create coverage as these allegations were not within the main Kielty action for which indemnity and coverage was sought. Therefore, Topa was not entitled to equitable contribution from National Union.
Finally, the court determined that even if Topa had established coverage under the National Union policy, the result would be the same as the Topa policy provided specific excess coverage while the National Union policy provided general excess coverage. The Topa policy provided it was excess to the Landmark policy while the National Union policy stated that it would not apply until all other insurance was exhausted. Based on the foregoing, the judgment was affirmed.
EFFECTS OF THE COURT'S RULING
This case merely reinforces California law that mere presence at a job site is not sufficient to show that injuries arose out of acts or omissions of the subcontractor. In this case, there was a complete absence of evidence that Johnson was somehow responsible for Kielty's injuries, other than mere speculation by Topa. It also reaffirms the idea that an excess policy specifically providing coverage immediately upon exhaustion of a particular primary policy will be considered specific excess and will apply before a general excess policy applying only after all other insurance has been exhausted.