Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, Ct. No. BC401294, Alan S. Rosenfield, Judge.
Jerome M. Jackson for Plaintiff and Appellant.
Lindahl Beck, Kelley K. Beck for Defendant and Respondent.
BOREN, P.J.
This appeal involves a dispute between two insurance companies that insured the same parties for the same liability. One of the insurers, Associated Indemnity Corporation (Associated), provided coverage for the insured parties and ultimately paid the $640,000 settlement. The other insurance company, Peerless Insurance Company (Peerless), did not provide coverage or make any payment.
According to Associated, both its policy and the Peerless policy contain “other insurance” clauses, whereby both policies simultaneously appear to offer primary coverage, but in the face of a second policy, primary coverage from each policy disappears and becomes only excess coverage. Associated argues that as in other cases when such competing “other insurance” clauses exist, the dueling provisions must be ignored and both insurers must share in all defense and coverage obligations, resulting in equitable contribution on a pro rata basis. Associated’s argument, however, is unavailing because the actual language used in the clauses here did not create parallel efforts to escape primary liability. Based on the language in each of the policies, we find that the Associated policy is primary and the Peerless policy is excess, and that Associated is not entitled to contribution as a matter of law.
Thus, summary judgment was properly granted against Associated in its lawsuit seeking equitable contribution.
FACTUAL AND PROCEDURAL SUMMARY
The underlying lawsuit triggering this insurance matter occurred in 2005, when Alexis Olerio tripped over a low slung chain in the parking lot of Sebastian’s Restaurant where she worked. Stephen DiModica owned the restaurant that was on leased premises. Olerio filed a personal injury action naming the two owners of the leased premises, Gregory Varon and Robert Kunert, as well as the management company that leased the property to the restaurant, Burbank Boyz II. The property lease identified Burbank Boyz II as the lessor, and Varon signed the lease on behalf of Burbank Boyz II. The property owners tendered defense of the lawsuit to their insurance company, Peerless, which provided coverage under a general liability insurance policy.
Subsequently, in February of 2006, Varon and Kunert transferred legal title to the premises to the Burbank Boyz II management company, but they continued to maintain their same equal ownership interest, albeit through Burbank Boyz II.
The Peerless insurance policy included an “other insurance” clause. Pursuant to that clause, if other insurance is available to the insured for a covered loss, the obligation of Peerless is primary, except that the “insurance is excess over... [a]ny other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement. When this insurance is excess, we will have no duty... to defend the insured against any ‘suit’ if any other insurer has a duty to defend the insured against that ‘suit.’” (Italics added.)
Meanwhile, the restaurant owner, DiModica, was required under the terms of his commercial lease to maintain property and liability insurance and to include the lessor as an additional insured, and to indemnify the lessor for any injury to anyone occurring on the premises. Pursuant to that lease requirement, DiModica obtained an insurance policy through Associated, which listed as its only insureds Nichole and Sebastian DiModica dba Sebastian’s. However, as part of the optional coverage that DiModica purchased, the policy’s property and liability declarations page recited as follows: “additional insured – managers or lessors of premises... Gregory Varon, Bob Kunert, Burbank Boyz II.”
The Associated policy also contained an “other insurance” clause which expressly provided that in one particular instance its policy nonetheless would still be primary and other coverage noncontributory: “The insurance provided under this policy is primary if you are required by a written insured contract [which is defined elsewhere in the policy as including ‘a lease of premises’] to include any person or organization as an insured, but only with respect to that insured’s liability arising out of the ownership, maintenance, or use of that part of the premises owned by or rented to you, or your work for that insured by or for you. Any other insurance available to that person or organization is excess and noncontributory with this insurance.... [¶] Except for the circumstance described... above, the insurance provided under this policy is excess over any other liability insurance available to any insured....” (Italics added.)
After the property owners tendered the defense of the underlying negligence action to Peerless, it accepted the tender and reserved its right to seek indemnity from other insurers and to subrogate to its insured’s right to indemnity against DiModica. In March of 2007, Peerless tendered the defense of the negligence action to DiModica, pursuant to the indemnification agreement in the property lease. The tender letter quoted from the property lease agreement, enclosed a copy of the complaint and the lease, and recommended that DiModica forward those documents to his commercial general liability carrier.
Counsel for Peerless, who was retained to defend the property owners, then filed an answer to the complaint, as well as a cross-complaint on behalf of Varon and against DiModica and the restaurant for indemnity and declaratory relief. From April through August of 2007, Peerless sought to get Associated to acknowledge its coverage obligations to Varon, the property owner. In August of 2007, six months after no response to the cross-complaint was filed, the default of DiModica and the restaurant was entered on Varon’s cross-complaint. The default sought no damages because the cross-complaint was only for indemnity for whatever liability might ultimately be found on the complaint (which had yet to be determined) and for declaratory relief.
In October of 2007, the claims adjuster for Peerless contacted the claims adjuster for Associated and again pointed out the lease provisions requiring DiModica to maintain the premises and to indemnify the lessor, and again urged that the indemnity provision of the lease should supersede policy language. The claims adjuster for Peerless also confirmed that he would have no problem setting aside the default if Associated would accept the tender under the lease, reimburse Peerless all posttender fees it had incurred in the defense, and “[a]gree to full indemnification of the Lessor according to the lease agreement and pay 100% of any judgment.”
The internal progress notes in Associated’s claim file indicated that in October of 2007, its claims adjuster recommended accepting tender by Peerless of defense and indemnity. Other personnel at Associated authorized acceptance of the tender without reservation, stating: “I agree because the indemnity agreement effectively makes us primary. It was worth a shot on the sharing proposal but it now seems that [Peerless] has it figured out correctly and we should assume the defense and indemnity of our mutual [insured].” Associated’s claims adjuster then confirmed with Peerless that “I now have permission to accept your tender, ” requested coordinating the default removal, and concluded that “This tender is accepted without any reservation.” Associated issued a check for approximately $15,000 as reimbursement for legal fees, but apparently no one followed up to get a dismissal of the no-money default on the cross-complaint.
Months later, a new adjuster for Associated sought to repudiate the acceptance of the indemnity tender made under the lease. Associated reopened its claim file, which revealed that the default had never been set aside. Associated then demanded that Peerless accept pro rata liability, not merely a stipulation from counsel to set aside the no-money judgment. Peerless continued to maintain that Associated was primary as a result of the express indemnity clause in the property lease.
Associated then settled the underlying personal injury claim for $640,000. Part of the stipulation for settlement included the agreement by the property owner to dismiss the cross-complaint against DiModica with prejudice.
Associated sued, seeking equitable contribution from Peerless. Peerless moved for summary judgment on three independent grounds: (1) that the insurers’ respective “other insurance” conditions did not conflict, and the Peerless policy is therefore excess as a matter of law; (2) Associated’s named insured’s contractual indemnity obligations under the property lease imposed the sole primary coverage obligation on Associated; and (3) Associated’s express acceptance of the defense and indemnity tender to its named insured, which resulted in the default on the cross-complaint being abandoned and the cross-complaint ultimately being dismissed with prejudice, estops Associated from pursuing contribution. The trial court reached only the first of the three grounds and concluded that Associated’s policy was primary and the Peerless policy excess to Associated’s $1 million primary coverage. Because Associated settled the underlying personal injury claim within the policy limits, it was not entitled to contribution from Peerless as a matter of law.
The trial court granted summary judgment, and Associated appeals.
DISCUSSION
I. The standard of review.
The interpretation of an insurance policy is a question of law, and to resolve questions of policy coverage we look principally to the language in the policy contract. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.) Following a grant of summary judgment, we review the matter de novo to determine if there is any triable issue of material fact and affirm if summary judgment is proper on any ground, whether the ground was relied upon by the trial court or not, and regardless of the reasoning of the trial court. (J.H. v. Los Angeles Unified School Dist. (2010) 183 Cal.App.4th 123, 139; Becerra v. County of Santa Cruz (1998) 68 Cal.App.4th 1450, 1457.)
“In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence... and all [uncontradicted] inferences reasonably deducible from the evidence....” (Code Civ. Proc., § 437c, subd. (c); KOVR-TV, Inc. v. Superior Court (1995) 31 Cal.App.4th 1023, 1028.) We view the evidence and inferences in the light most favorable to the opposing party. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Nonetheless, the opposition to summary judgment will be deemed insufficient when it is essentially conclusionary, argumentative, or based on conjecture and speculation. (Joseph E. Di Loreto, Inc. v. O’Neill (1991) 1 Cal.App.4th 149, 161; O’Neil v. Dake (1985) 169 Cal.App.3d 1038, 1044; Baron v. Mare (1975) 47 Cal.App.3d 304, 309, 311.)
II. The express terms of both the Peerless policy and the Associated policy make coverage by Peerless excess to Associated’s primary coverage.
According to Associated, both its policy and the Peerless policy contain “other insurance” provisions, whereby both policies simultaneously appear to offer primary coverage, but in the face of a second policy, primary coverage from each policy disappears and becomes only excess coverage. Associated accurately states the general rule of law: when two insurance policies cover the same parties for the same liability and competing “other insurance” provisions exist, those provisions are ignored and both insurers must share in all defense and coverage obligations, resulting in equitable contribution on a pro rata basis. (Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1079-1080; Travelers Casualty & Surety Co. v. American Equity Ins. Co. (2001) 93 Cal.App.4th 1142, 1149-1150; Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1289) Associated’s argument, however, is flawed because the actual terms of the “other insurance” clauses in the present case are not broad, excess-only clauses, and they do not compete with each other for exemption from primary coverage. The two policies simply do not conflict.
The case of Hartford Casualty Ins. Co. v. Travelers Indemnity Co. (2003) 110 Cal.App.4th 710 (Hartford) is instructive. In Hartford, the appellate court reviewed the language of the policies before it and concluded that the “policies in this case contain narrow exceptions to their operation as primary insurance. There are no broad ‘excess only’ clauses in either policy that purport to make the coverage excess whenever there is other insurance. Both policies declare themselves to be excess in the situation where the parties and the insurers are most likely to intend that result-when the insured is covered as an additional insured on another party’s policy for some specific event or situation. A clause that carves out this intended exception to primary coverage is not similar to an escape clause, where the insurer appears to offer coverage that in fact evaporates in the presence of other insurance. [Citation.]” (Id. at pp. 726-727.)
As further explained in Hartford, “Another reason for enforcing the terms of the policy in this case is that the language in [the two] policies does not conflict. As noted [in other cases], the problem posed to those courts involved policies that each claimed to be excess whenever there was other insurance. Literal enforcement of the policy language would have left the insured without coverage. This equitable consideration led the courts to ignore the excess only clauses because they in fact would serve as escape clauses for the insurers-a result that could not have been intended by the policyholders. [Citation.] [¶] Equity should not be employed to override the terms of the insurance policies in this case. By its terms, the Hartford policy is primary except in specified instances that do not apply in this case. The Travelers policy is primary in the specific instance that does apply in this case-when the insured is named as an additional insured under another policy, which makes the Travelers policy excess by definition. Because the policy terms, as they apply in this case, do not conflict or offend public policy and do not infringe on any rights of the insured, there is no reason to disregard the express terms of both policies.” (Hartford, supra, 110 Cal.App.4th at p. 727, fn. omitted.)
In the present case, the express terms of the Associated policy provided that the Associated policy was primary and specifically not excess over any other liability insurance policy in one particular instance. That one exception to Associated’s “other insurance clause” specified that if Associated was required by an “insured contract” to include any person or organization as an additional insured, then its coverage would be primary. The commercial lease agreement here is an “insured contract” (as defined elsewhere in Associated’s policy), which required Associated to name as additional insureds Burbank Boyz II, Varon, and Kunert. Indeed, Associated did name both Varon and Kunert, as well as Burbank Boyz II, as additional insureds in connection with the commercial lease agreement.
As in Hartford, the two policies here are not in conflict. The language of the excess-only clause in the Associated policy is consistent with and complements the language of the excess-only clause in the Peerless policy. As indicated by the terms in the Peerless policy, it is primary except in the specific instance where the insured is named as an additional insured under another policy, which then makes the Peerless policy excess by definition. Regarding the Associated policy, its policy terms provide that although generally its policy “is excess over any other liability insurance available to any insured, ” the exclusion from primary coverage does not apply and the “insurance provided under this policy is primary if you are required by a written insured contract to include any person or organization as an insured.” In other words, an express exception to the excess-only coverage is when Associated is required by the terms of a written contract to include additional insureds. Because the commercial lease agreement here required coverage of additional insureds, the exception to excess-only coverage applied, and Associated was responsible for primary coverage under the terms of its policy.
Associated complains that we should not focus on the exception in its policy whereby it would be held to primary coverage if the restaurant operator was required by a “written insured contract” to include others as insureds. According to Associated, the commercial lease here (i.e., the “written insured contract”) did not require the restaurant operator to name the property owners as additional insureds under the Associated policy, because the lease only identified the management company (i.e., Burbank Boyz II) as the lessor and did not identify or mention either of the property owners. Thus, Associated urges that the restaurant owner was required by the lease to name only the management company as an additional insured, and was not required to include the property owners-and thus the narrow exception to the “other insurance” provision in the Associated policy purportedly does not apply.
Associated’s strained interpretation, however, ignores uncontradicted “inferences reasonably deducible” from the facts (Code Civ. Proc., § 437c, subd. (c); KOVR-TV, Inc. v. Superior Court, supra, 31 Cal.App.4th at p. 1028), such as the telling conduct of the parties after the commercial lease agreement was signed and before any controversy had arisen. (See Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 754.) The fact that Varon and Kunert were the disclosed actual owners of the leased property and that the restaurant owner’s contractual indemnity obligation extended to them, is a reasonable and uncontradicted inference from the fact that the restaurant owner (DiModica), indeed, did add Varon and Kunert with Burbank Boyz II as additional insureds to his Associated policy. The ineluctable conclusion is that the parties to the commercial lease understood that DiModica’s obligation to indemnify and to insure the lessor of the leased premises included Varon and Kunert. Associated’s notion to the contrary is mere speculation and defies all reasonable inferences from the conduct of those involved in the lease agreement.
It is also apparent that because Varon and Kunert were the actual owners of the premises at the time of the commercial lease, Burbank Boyz II could only have been acting as their agent in signing the lease. (See Midwest Television, Inc. v. Scott, Lancaster, Mills & Atha, Inc. (1988) 205 Cal.App.3d 442, 449, fn. 4.) As indicated by a 2006 grant deed, at the time the property was leased to DiModica it was owned half by Varon and half by Kunert, and they subsequently changed the form of their ownership by transferring title to Burbank Boyz II, a company they also owned. In essence, Varon and Kunert were Burbank Boyz II. A reasonable and compelling inference from the facts is that DiModica understood the real nature of the ownership of the premises. Otherwise, he would not have had Varon and Kunert included in his policy as named additional insureds.
Accordingly, as the trial court aptly concluded in granting summary judgment in favor of Peerless: “Based on the policy terms, the Associated policy is primary and the Peerless policy is excess to the Associated policy. Associated named Varon and Kunert as additional named insureds on its policy in connection with the commercial lease agreement and has admitted in discovery responses that it had a duty to defend and indemnify all three of its named insureds in the underlying action. [Exhibits cited.] As Associated does not dispute that it settled the [underlying personal injury] lawsuit for $640,000, which [was] within its policy limits, Associated is not entitled to contribution from Peerless as a matter of law.”
It is thus unnecessary to address other theories by Peerless supporting summary judgment-whether Associated’s named insured’s express agreement to indemnify the lessor also bars its contribution claim, and whether Associated’s acceptance of the tender under the lease and subsequent dismissal of the indemnity cross-complaint also renders coverage by Peerless excess.
DISPOSITION
The judgment is affirmed.
We concur: ASHMANN-GERST, J., CHAVEZ, J.
It is also apparent from Varon’s signature on the deed of trust that Varon is also the person (otherwise not identified) who, in fact, signed the commercial lease on behalf of Burbank Boyz II.