Summary
In Fireman’s Fund we concluded that the trial court erred in granting summary judgment against Great American, as RSI’s excess insurance carrier, for the full amounts paid in settlement of the Current/Low litigation by South Bay’s primary and excess carriers, Underwriters and Fireman’s Fund. Fidelity and Hunter Storm were not parties to that appeal.
Summary of this case from Great American, Ins. Co. v. Fidelity and Guaranty, Ins., Co.Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG03101684
NEEDHAM, J.
A roofing subcontractor on a construction project agreed to indemnify the general contractor and owner for claims arising from the subcontractor’s work. Three of the subcontractor’s employees were injured, one fatally, when the roof on the project collapsed during construction. The workers sued the general contractor and the owner but, due to the exclusivity of workers’ compensation as a remedy against their employer, did not sue the roofing subcontractor. The insurance companies of the general contractor and roofing subcontractor funded multi-million dollar settlements with the injured workers, and then pursued equitable contribution and subrogation claims against each other and the owner’s insurer.
Here we conclude that the trial court erred in granting summary judgment against the roofing contractor’s excess insurance carrier for the full amounts paid in settlement by the general contractor’s excess and primary carriers. Although the subcontractor had agreed to indemnify the owner and general contractor for the subcontractor’s negligence, the indemnity agreement did not require the owner’s and general contractor’s indemnification if they were solely or actively negligent. While the undisputed evidence presented in support of the summary judgment motions was sufficient to demonstrate at least some negligence on the part of the roofing subcontractor, it did not demonstrate the absence of negligence on the part of the general contractor and owner. Absent a factual determination that the owner and general contractor were not negligent, or that the subcontractor was solely responsible, the insurers of the general contractor were not entitled to judgment in their favor as a matter of law based on the indemnity agreement.
I. Background
A. The Construction Contracts
Hunter/Storm/Durham & 680 LLC (Hunter/Storm) hired South Bay Construction Company (South Bay) to build a commercial warehouse on real property it owned in Fremont, California. South Bay subcontracted with appellant Roof Structures, Inc. (RSI) to build the roof on the warehouse. Among other things, the subcontract provided that RSI would “indemni[f]y, save harmless and defend Owner and Contractor and each of them from and against any and all suits, actions, legal proceedings, claims, demands, damages, liabilities, cost[s] and expenses of whatsoever kind or nature (including attorney’s fees) in any manner caused or occasioned, or claimed to be caused or occasioned through any occurrence, omission, fault or negligence of Subcontractor, or anyone acting under its direction and control or on its behalf, in connection with or incident to the performance of the work and, without limiting the generality of the foregoing, the same shall include injury or death [] to any person or persons and damage to any property including that of Owner and Contractor. . . .” The subcontract also required RSI to carry liability insurance with minimum limits of $1 million and to name South Bay and Hunter/Storm as additional insureds. It provided that RSI’s insurance “shall be primary over any other insurance carried by South Bay Construction.”
B. The Insurance Policies
At the times relevant to this case, Hunter/Storm was insured by a general liability policy that was issued by Fidelity and Guaranty Insurance Company (Fidelity) and provided $1 million in primary coverage and $10 million in excess coverage. South Bay was insured by a $1 million primary general liability policy issued by respondent Underwriters Insurance Company (Underwriters) and a $25 million excess general liability policy issued by respondent Fireman’s Fund Insurance Company (Fireman’s Fund). RSI was insured by a $1 million primary general liability policy issued by St. Paul Fire and Marine Insurance Company (St. Paul) and a $10 million excess general liability policy issued by appellant Great American. Hunter/Storm and South Bay were additional named insureds on RSI’s policies.
C. The Accident and Underlying Personal Injury Action
During the construction of the warehouse, a portion of the roof collapsed and three RSI employees—Mickey Current, Robert Low and Daniel Ramos—fell to the ground. Ramos was killed and Current and Low suffered serious injuries. Current and Low brought a personal injury action against Hunter/Storm and South Bay, alleging that they had retained control over all work performed on the project, including the design specifications of the roof, and had exposed the workers to an unreasonable risk of harm. Ramos’s heirs filed a wrongful death action against South Bay, alleging that it had retained control over the project and had failed to warn the workers or RSI of design characteristics of the roof that exposed the workers to an unreasonable risk of harm. RSI’s primary insurer, St. Paul, assumed the defense of Hunter/Storm and South Bay.
Discovery revealed that the accident occurred when a 600-pound welding machine fell through an “odd sized bay” in the roof while it was being moved across several panels of oriented strand board (OSB) that were being used as roof decking. A system of steel girders and trusses supported the OSB deck, with wooden joists spanning the space between the trusses. At the end of each joist was a metal joist hanger that was supposed to be nailed into a wooden nailing strip on the top of each truss, with the decking put on top of the joists and tacked in place. Not all the joist hangers had been nailed into the nailing strip. The roofing had been recently exposed to rain.
Hunter/Storm and South Bay filed a motion for summary judgment in the Current/Low action. Hunter/Storm argued that it was only the owner of the property and retained no control over the general contractor or subcontractors, thus precluding liability under Privette v. Superior Court (1993) 5 Cal.4th 689. South Bay argued that RSI was contractually responsible for constructing the roof and for its employees’ safety, and that it was RSI’s decision to move the welding machine over an unfinished roof that caused the accident. Hunter/Storm and South Bay submitted evidence that while RSI’s own safety procedures required that the welding machine be moved along a truss line on the roof to ensure adequate weight support, the machine left the truss line before the accident. The accident would not have occurred if RSI had kept the welding machine on the ground and used extension cables, if it had required that its workers use safety harnesses, or if it had nailed in the joist hangers to the supporting trusses.
In their opposition to summary judgment, Current and Low submitted evidence that Hunter/Storm had required RSI, against RSI’s recommendation, to use a lesser grade material for the roof sheathing; that Hunter/Storm made “owner revisions” that removed steel trusses from the roof structure in order to save money, and that RSI followed the specification and design conditions required of it by Hunter/Storm. They also presented evidence that South Bay was directly involved in “value engineering” decisions that altered the design and material specifications for the roof (including the decision to remove a line of steel trusses supporting the roof), that South Bay was aware of the risks of using OSB rather than plywood in wet weather, and that South Bay was responsible for protecting the roof from weather conditions, but elected not to cover it with plastic sheeting. Current and Low submitted a declaration by Matt Wall, a construction management expert, that stated, “There is no legitimate structural or design reason for changing from 5/8-inch plywood to 15/32-inch OSB. All this change does is make the roof structure weaker and, hence, more dangerous for workers, and saves money on the cost of the material.” Wall relied on the declaration of Phillip Opsal, an expert in wood science, who concluded the 15/32-inch OSB was “unfit and unsuitable” for use as a roof covering due to its tendency to buckle and weaken in bad weather, and he opined the accident would not have occurred if 5/8-inch plywood had been used. Wall concluded the accident would not have occurred if the roof sheathing material had not been changed, if the line of trusses had not been removed, and if thicker OSB had been nailed in rather than tacked. He also noted that South Bay had decided not to protect the roof with visqueen or other protective materials. Based on this evidence, the court (Hon. Jack Komar, Presiding) denied the motions for summary judgment.
Hunter/Storm and South Bay then settled with Ramos’s heirs for $1.95 million. That settlement was funded by St. Paul, which paid $955,000 of its $1 million policy limit under RSI’s primary policy, and by Underwriters, which paid $950,000 of its $1 million policy limit under South Bay’s primary policy. The Current/Low actions settled for $4 million, funded with $45,000 from St. Paul, $50,000 from Underwriters, $1,952,500 from Great American under the excess policy held by RSI, and $1,952,500 from Fireman’s Fund under the excess policy held by South Bay. Fidelity, as Hunter/Storm’s primary and excess carrier, did not contribute to the settlements, which were made subject to a reservation of rights, and without any admission as to which parties and/or insurers were ultimately liable for the amounts paid.
D. The Present Action for Contribution/Subrogation
After the settlements with the injured workers, Great American filed an action against Fidelity, Fireman’s Fund and St. Paul, seeking declaratory relief, equitable contribution and equitable subrogation. Fireman’s Fund filed a cross-complaint seeking declaratory relief, equitable indemnification and equitable contribution against Great American and equitable subrogation against RSI. St. Paul filed a cross-complaint naming Underwriters, which filed its own cross-complaint for declaratory relief, equitable indemnification and equitable subrogation against Great American.
Fidelity moved for summary judgment against Great American, arguing that it had no duty to participate in the settlements on behalf of its insured, Hunter/Storm, because Great American’s insured, RSI, had agreed to indemnify Hunter/Storm for all claims arising out of RSI’s scope of work. The motion turned on the interpretation of the indemnification clause in the RSI-South Bay contract, as well as the terms of the contract between South Bay and Hunter/Storm. The superior court (Hon. Steven A. Brick, Presiding) granted the motion: “The evidence submitted by Fidelity demonstrates that the accident and injuries sustained by the plaintiffs in the underlying actions were caused, at least in part, by the negligence of RSI. [Citation omitted.] To the extent that Great American has submitted evidence that demonstrates negligence on the part of Hunter, such a showing does not overcome the contractual duties of RSI and [South Bay] to indemnify Hunter. [Citation omitted.] Accordingly, since Great American was the insurer of both RSI and [South Bay] as well as Hunter, it has failed to demonstrate that the claimed loss was one for which Fidelity, as Hunter’s insurer, is liable.”
Great American appealed the judgment entered in favor of Fidelity. This court reversed in an unpublished opinion. (Great American Insurance Company of New York v. Fidelity and Guaranty Insurance Company, filed April 30, 2007, A112817 (Great American v. Fidelity).) We concluded: (1) RSI’s duty to indemnify Hunter/Storm was governed by Paragraph I of its contract with South Bay (quoted ante, pp. 2-3), which did not require the indemnification of Hunter/Storm for its own acts of negligence; (2) the South Bay-RSI subcontract did not impart to RSI the indemnity obligations of South Bay to Hunter/Storm under the general contract, which would have required indemnification regardless of whether Hunter/Storm was itself negligent; (3) because there had been no definitive finding regarding the parties’ negligence, Fidelity was not entitled to summary judgment as a matter of law.
We take judicial notice of the record and prior opinion in that appeal.
While Great American’s appeal of the judgment in favor of Fidelity was pending, but before this court issued its opinion reversing that judgment, Fireman’s Fund and Underwriters filed motions for summary judgment and/or summary adjudication against Great American based on the indemnity clause in the RSI-South Bay contract. Fireman’s Fund argued that under the RSI indemnity agreement, it was entitled to recover from Great American and RSI the $1,952,500 it had contributed to the settlement under the excess policy it has issued to South Bay. Underwriters argued that it was entitled to recoup the $1 million it had paid under South Bay’s primary policy to settle the underlying lawsuits because Great American’s insured, RSI, was contractually obligated to indemnify South Bay under the terms of the subcontract. In its opposition to the motions, Great American presented evidence that Hunter/Storm and South Bay had been negligent and argued that the South Bay-RSI indemnity clause did not cover their own acts of negligence. Great American also argued that as the primary insurer of South Bay, Underwriters could not obtain contribution from Great American as RSI’s excess insurer.
Although the action by Fireman’s Fund was directed against RSI as well as Great American, the parties agreed as part of the underlying settlement with the plaintiffs that the execution of any judgment against RSI would be limited to its insurance assets.
The superior court (Hon. Kenneth Burr, Presiding) granted the motions. In its written order granting judgment in favor of Fireman’s Fund on its cross-complaint, the court incorporated by reference the reasoning and conclusions in Judge Brick’s earlier order granting summary judgment in favor of Fidelity and additionally stated: “It is undisputed that RSI’s negligent conduct was a substantial factor in causing the accident at issue in the two underlying actions and that South Bay and Hunter were not ‘solely negligent’ in causing the accident. . . . [¶] It is undisputed that RSI agreed to indemnify South Bay and Hunter and agreed to obtain insurance that named South Bay and Hunter as additional insureds. Based on the terms in the subcontract between RSI and South Bay, the Court concludes that the parties intended that RSI would contractually assume the financial responsibility and risk for accidents and injuries in which its negligence was a substantial factor, such as those claimed in the underlying actions, and that the insurance coverage obtained by RSI would provide coverage that was primary to the insurance coverage carried by South Bay or Hunter for accidents such as the accident at issue in the underlying actions. . . . There is no dispute that Great American provided excess insurance coverage in the amount of $10 million to RSI and that [Fireman’s Fund] provided excess insurance coverage to South Bay. . . . [¶] It is undisputed that [Fireman’s Fund] contributed $1,952,500 to fund the underlying settlements on behalf of its insured, South Bay. . . . [Fireman’s Fund] is subrogated to the rights of its insured. . . . [Fireman’s Fund] is entitled to judgment against both RSI and Great American in the amount of $1,952,500.”
The court similarly granted judgment in the amount of $1 million in favor of Underwriters on its cross-complaint against Great American, concluding that it was entitled to subrogation and indemnity. In addition to incorporating by reference the earlier order granting judgment in favor of Fidelity, the written order granting Underwriters’s motion stated that RSI’s conduct was a “substantial factor” in causing the accident and that South Bay and Hunter were not “solely negligent.” It concluded, “Based on the terms in the subcontract between RSI and South Bay, the Court concludes that the parties intended that RSI would contractually assume the financial responsibility and risk for accidents and injuries in which its negligence was a substantial factor, such as those claimed in the underlying actions, and that the insurance coverage obtained by RSI would provide coverage that was primary to the insurance coverage carried by South Bay or Hunter for accidents such as the accident at issue in the underlying actions. . . .”
Great American and RSI appeal from the judgments entered in favor of Fireman’s Fund and Underwriters.
II. Discussion
A. Standard of Review
Summary judgment is properly granted when all the papers submitted show there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A plaintiff or cross-complainant is entitled to summary judgment when it demonstrates there is no defense to the action or proceeding, and it meets this burden only when it proves each element of the cause of action entitling it to judgment. (Code Civ. Proc., § 437c, subds. (a), (p)(1); West Coast Life Ins. Co. v. Ward (2005) 132 Cal.App.4th 181, 188.) We apply de novo review to an order granting summary judgment. (Reliance Nat. Indemnity Co. v. General Star Indemnity Co. (1999) 72 Cal.App.4th 1063, 1074 (Reliance).) When the resolution of the motion hinges upon the meaning of contractual provisions construed without the aid of extrinsic evidence, the issue is one of law subject to independent review. (Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53 Cal.App.4th 500, 504.)
B. Summary Judgment in Favor of Fireman’s Fund
Great American and RSI argue that summary judgment should not have been granted in favor of Fireman’s Fund because the undisputed facts did not demonstrate that Fireman’s Fund was entitled to subrogation or indemnification as a matter of law. We agree.
Equitable subrogation “ ‘allows an insurer that paid coverage or defense costs to be placed in the insured’s position to pursue a full recovery from another insurer who was primarily responsible for the loss.’ ” (Travelers Casualty & Surety Co. v. American Equity Ins. Co. (2001) 93 Cal.App.4th 1142, 1151-1152 (Travelers Casualty).) The right is purely derivative and is subject to the same defenses that could be asserted against the insured. (Id. at p. 1151.) Fireman’s Fund paid $1,952,500 to the plaintiffs in the Current/Low lawsuit on behalf of Hunter/Storm and South Bay. It thus became subrogated to any right of indemnification to which Hunter/Storm and South Bay would have been entitled if they had settled the lawsuit themselves. (See Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 634 (Rossmoor).
Subrogation is distinct from equitable contribution, which is the right of one insurer who has paid an entire loss to recover a portion of its payment “not from the party primarily liable for the loss, but from the co-obligor who shares such liability with the party seeking contribution.” (American Casualty Co. v. General Star Indemnity Co. (2005) 125 Cal.App.4th 1510, 1522.) The issue before us is limited to whether Fireman’s Fund or Underwriters, being subrogated to the rights of Hunter/Storm and South Bay, are entitled to full indemnity from Great American and/or RSI based on the South Bay-RSI indemnity agreement. We do not consider whether any insurer in this case is entitled to equitable contribution from another on the theory that it paid more than its proportionate share of the loss in the underlying lawsuit.
The allocation of loss in this case begins with an analysis of the indemnity provision in the South Bay-RSI contract, which required RSI to indemnify Hunter/Storm and South Bay only for injuries or damages “caused or occasioned or claimed to be caused or occasioned through any occurrence, omission, fault or negligence of Subcontractor, or anyone acting under its direction and control or on its behalf, in connection with or incident to the performance of the work. . . .” Because this provision does not address the issue of Hunter/Storm or South Bay’s negligence, it is a “general” indemnity clause. (McCrary Construction Co. v. Metal Deck Specialists, Inc. (2005) 133 Cal.App.4th 1528, 1537 (McCrary).)
Historically, general indemnity clauses have been construed to provide indemnity for a loss resulting in part from an indemnitee’s passive negligence, but not from an indemnitee’s active negligence. (McCrary, supra, 133 Cal.App.4th at p. 1537.) The “active-passive” distinction is not wholly dispositive. “[T]he question whether an indemnity agreement covers a given case turns primarily on contract interpretation, and it is the intent of the parties as expressed in the agreement that should control. When the parties knowingly bargain for the protection at issue, the protection should be afforded. This requires an inquiry into the circumstances of the damage or injury and the language of the contract; of necessity, each case will turn on its own facts.” (Rossmoor, supra, 13 Cal.3d at p. 633.) The enforcement of an indemnity agreement must be “ ‘based upon reasonable interpretation of the contract in light of its language, the circumstances . . . and the parties’ intent. . . .’ ” (Maryland Casualty Co. v. Bailey & Sons, Inc. (1995) 35 Cal.App.4th 856, 868.)
In McDonald & Kruse, Inc. v. San Jose Steel Co. (1972) 29 Cal.App.3d 413, 419-420 (McDonald & Kruse), the court identified three general categories of indemnification agreements under California law and set forth the rules governing the interpretation of each. This approach has been largely abandoned by more recent case law, which focuses on the particular facts of the case and the intent of the parties in signing the indemnification agreement. (See McCrary, supra, 133 Cal.App.4th at pp. 1538-1539 & fn. 2.)
Reasonably read, the indemnity provision in the South Bay-RSI subcontract obligated RSI to indemnify Hunter/Storm and South Bay for any liability arising from its own acts or omissions. It did not mention the indemnification of Hunter/Storm or South Bay for their own active negligence. (See Hernandez v. Badger Construction Equipment Co. (1994) 28 Cal.App.4th 1791, 1822; contrast Hartford Casualty Ins. Co. v. Mt. Hawley Ins. Co. (2004) 123 Cal.App.4th 278, 282-283, 291 [subcontractor agreed to indemnity for all claims arising out of subcontractor’s work, except sole or willful negligence of general contractor, and its insurer was not entitled to contribution from general contractor’s insurance company where sole negligence and willful conduct not established].) Although Fireman’s Fund argues that the clause covers all damages “caused or occasioned . . . in connection with or incident to the work,” and is thus broad enough to cover Hunter/Storm and South Bay’s own acts of negligence in connection with the roof, we disagree with this interpretation. The complete phrase, which requires indemnity for damages “caused or occasioned . . . . through any occurrence, omission, fault or negligence of Subcontractor, or anyone acting under its direction and control or on its behalf, in connection with or incident to the performance of the work,” is more reasonably limited to acts or omissions on the part of RSI.
This conclusion is consistent with our prior opinion in Great American v. Fidelity, supra, A112817. Although that decision is not binding under the doctrine of law of the case due to the lack of privity between Fidelity and the respondent insurers in this appeal (Bergman v. Drum (2005) 129 Cal.App.4th 11, 20), we have independently analyzed the issue and are in agreement with our earlier holding.
Having so construed the indemnity agreement, we conclude that Fireman’s Fund can only prevail if it demonstrates that, as a matter of law, neither Hunter/Storm nor South Bay were negligent in causing the Current/Low injuries. This it did not do. Though the evidence presented by Fireman’s Fund supports an inference that RSI was negligent in moving the welding machine onto weaker portions of the roof and in failing to provide safety harnesses for the workers, it also supports an inference that Hunter/Storm and South Bay participated in design decisions that weakened the roof and caused the accident. We cannot say as a matter of law that RSI and its employees were solely responsible for the accident, that Hunter/Storm and South Bay were not negligent, or that such negligence did not contribute to the injuries at issue.
Fireman’s Fund argues that Hunter/Storm and South Bay are entitled to indemnity because RSI assumed responsibility for its workers’ safety under the terms of its subcontract. RSI presented evidence that Hunter/Storm and South Bay were actively involved in the roof design, which caused or contributed to the accident. The indemnity agreement cannot be reasonably read to require indemnification for another party’s negligent roof design, or of omissions by another party during construction. (Contrast Morton Thiokol, Inc. v. Metal Building Alteration Co. (1987) 193 Cal.App.3d 1025, 1030 [building owner entitled to indemnification from roofing subcontractor for injury to subcontractor’s employee notwithstanding jury’s finding that owner was actively negligent, where contract required roofer to take all necessary safety precautions and indemnify owner for any breach of contract; the owner had created underlying condition necessitating work on roof, but had no control over construction or worker safety].)
Fireman’s Fund argues that it was entitled to judgment in its favor because interrogatory responses by RSI in the related case of S.B.C.C. v. Roof Structures, Inc. (Alameda County Superior Court No. RG04144978) were tantamount to an admission that neither South Bay nor Hunter/Storm was negligent. Fireman’s Fund argues that any evidence of negligence on the part of Hunter/Storm or South Bay must be disregarded because it contradicts these interrogatory responses. (See State Farm Mut. Auto. Ins. Co. v. Eastman (1984) 158 Cal.App.3d 562, 573 [admissions during discovery may not be contradicted by affidavits filed in support of motion for summary judgment].)
These responses were submitted as evidence in support of the motions for summary judgment by Fireman’s Fund and Underwriters, but were not submitted in support of the earlier motion for summary judgment by Fidelity.
This claim is untenable when the interrogatory responses are read in context. The lawsuit in which the responses were made was a separate action in which South Bay and Hunter/Storm sought to recover attorney fees they had paid for independent counsel during the underlying lawsuit. South Bay and Hunter/Storm argued that RSI was obligated to pay those fees under the indemnity clause of the South Bay-RSI subcontract. A summary judgment award of $48,046.83 was entered in South Bay and Hunter/Storm’s favor. Issues of subrogation and contribution with respect to the underlying settlement were not at issue, and none of the insurers were parties to the action.
In the cited interrogatory responses, RSI did not affirmatively challenge South Bay and Hunter/Storm’s claim that they were not negligent. It instead took the position that their negligence was irrelevant because they had failed to make any demand that RSI pay the fees and a demand for payment was a prerequisite for indemnity. Asked whether it contended that South Bay was negligent in causing the accident in the underlying case, RSI responded in relevant part: “[I]n the underlying actions, both SBCC and Hunter Storm denied that they were negligent. The underlying Ramos and Current and Low cases were settled without any admission of liability from SBCC or Hunter Storm, without any determination of fault by a jury, and without any jury determination that either SBCC or Hunter Storm was in fact negligent. RSI at this point is not disputing SBCC’s and Hunter Storm’s assertions that they were not negligent, in whole or in part, with respect to the claims involved in the underlying actions. . . . [¶] In providing this answer, Defendant notes that on April 21, 2003 counsel for Plaintiffs gave a written evaluation of the liability exposure in the underlying action, and noted that SBCC’s liability could be between 15 and 25%. Plaintiffs’ counsel further noted that SBCC would likely be a ‘target defendant’ in the underlying action, and that Plaintiffs’ own expert witness admitted that if the truss line had not been removed, the accident would not have occurred, and there was significant evidence of SBCC’s involvement in the removal of the truss line. Similarly, when SBCC filed for summary judgment in the underlying action, plaintiff successfully opposed the motion by stating facts such as ‘[SBCC] required its subcontractor, R.S.I., to use specific materials (thin OSB sheathing) and a roof structure design (removed steel creating a 10-foot ‘odd bay’) and then failed to protect the thin wood material from rains [that SBCC] knew would cause the OSB material to ‘buckle.’ These decisions were not R.S.I.’s responsibility. . . . Each of [SBCC’s] changes had a direct causal relationship to this accident.”
Asked about its contentions regarding Hunter/Storm’s active negligence, RSI stated, “RSI at this point is not disputing SBCC’s and Hunter Storm’s assertions that they were not negligent, in whole or in part, with respect to the claims involved in the underlying actions. . . . [¶] In providing this answer, Defendant notes [that] on April 21, 2003, however, counsel for Plaintiffs gave a written evaluation of the liability exposure in the underlying action, and noted that Hunter/Storm[] could be liable for between 15 and 25% of the damages. Plaintiffs’ counsel further noted that Hunter/Storm, along with SBCC, would likely be ‘target defendants’ at trial. In addition, Hunter/Storm was sued individually in the underlying action based on evidence that Hunter [S]torm (1) changed the roof sheathing from plywood to OSB; (2) changed the thickness of the OSB sheathing used to construct the roof in an effort to cost-cut; (3) removed steel trusses at the accident location. Based on this evidence, Hunter/Storm’s motion for summary judgment was denied, meaning there was at least enough evidence upon which a reasonable jury could hold Hunter/Storm liable in the underlying action.”
RSI did not, by these responses, admit the non-negligence of South Bay and Hunter/Storm. It chose not to dispute their claim that they had not acted negligently, instead relying on an alternative ground (the failure to make a timely request for indemnification) to contest the action for attorney fees. It also asserted a number of facts that would permit a trier of fact to infer that South Bay and Hunter/Storm were at least partially at fault. RSI specifically denied its own negligence in a separate interrogatory response, further demonstrating that it did not concede the applicability of the indemnity clause to the claim for attorney fees.
Fireman’s Fund also argues that our prior appellate opinion in S.B.C.C. v. Roof Structures, Inc. collaterally estops RSI and Great American from arguing that South Bay or Hunter/Storm was actively negligent. Again we disagree. In an appeal from an order granting summary judgment in favor of South Bay and Hunter/Storm on their claim for attorney fees, we rejected RSI’s argument that the claim was precluded by the failure to request indemnification prior to bringing the lawsuit. RSI had relied upon Civil Code section 2778, which provides, “In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears: [¶] . . . [¶] 4. The person indemnifying is bound, on request of the person indemnified, to defend actions or proceedings brought against the latter in respect to the matters embraced by the indemnity, but the person indemnified has the right to conduct such defenses . . . .” (Italics added.) We concluded this section was inapplicable because RSI had not qualified its indemnity provision with a caveat that a defense demand must be made before an action for indemnity could be brought. (S.B.C.C., Inc. v. Roof Structures, Inc., (Mar. 8, 2007) A112825, Slip Opn., p. 10.) Although our opinion also noted that RSI did “not dispute that the broad language of this indemnity clause obligates [RSI] to ‘make good’ [citation] on any attorney fees respondents claimed they incurred,” this issue was not “actually litigated” or “necessarily decided” for purposes of collateral estoppel analyses where RSI’s appellate challenge was made on grounds alternative to those asserted here. (See Lucido v. Superior Court (1990) 51 Cal.3d 335, 341; Morris v. Blank (2001) 94 Cal.App.4th 823, 832.)
We rely upon our prior decision in that case, though unpublished, to resolve the claim of collateral estoppel. (Cal. Rules of Ct., rule 8.1115(b)(1).)
Although it may well be that RSI bears some responsibility for the injuries in the underlying lawsuit, the degree of that responsibility, relative to that of the other parties, has not yet been established. The summary judgment in favor of Fireman’s Fund must be reversed.
C. Summary Judgment in Favor of Underwriters
As part of the settlement of the underlying lawsuits filed by Ramos’s heirs, Current, and Low, Underwriters paid $1 million under the primary policy it issued to South Bay. The evidence presented in support of and opposition to the motion was essentially the same as that presented in the motion by Fireman’s Fund. Our discussion above applies equally to Underwriters’s motion, and we conclude the summary judgment entered in its favor and against Great American must be reversed as well. We also reverse the March 14, 2007 award of costs and attorney fees in favor of Underwriters. (Allen v. Smith (2002) 94 Cal.App.4th 1270, 1284.)
We further note that a different division of this court has recently held that a primary insurer such as Underwriters does not have superior equity to an excess insurer such as Great American, even when a third party indemnity agreement would otherwise shift liability to the party insured by the excess carrier. (JPI Westcoast Construction, L.P. v. RJS & Associates, Inc. (2007) 156 Cal.App.4th 1448, 1458-1466 (JPI); see also Reliance, supra, 72 Cal.App.4th at pp. 1070-1075; but see Wal-Mart Stores Inc. v. RLI Ins. Co. (8th Cir. 2002) 292 F.3d 583, 591.) The court in JPI reasoned: (1) the contractual terms of insurance coverage are enforced wherever possible, including provisions that limit a carrier’s obligation to provide only excess coverage; (2) an indemnity clause is not negated when a primary carrier is required to pay before the indemnitor’s excess carrier, because the primary carrier is entitled to subrogation against the primary carrier of the indemnitor; (3) it is within an indemnitee’s power to bargain for higher levels of primary insurance coverage by the indemnitor, which would protect the interests of its own primary carrier; and (4) there is no injustice in requiring a primary carrier to pay a claim when it has set its premium based on the assumption that its coverage would be primary. (JPI, supra, 156 Cal.App.4th at pp. 1463-1465.)
Given our resolution of this appeal on other grounds, we need not decide whether JPI warrants a bright-line rule requiring the exhaustion of all primary insurance before an excess insurance policy is triggered, regardless of indemnification agreements between the underlying parties. However, Underwriter’s status as a primary carrier is a circumstance the trial court may want to consider in any proceeding determining its entitlement to subrogation or indemnity from Great American.
III. Disposition
The summary judgments entered in favor of Fireman’s Fund and Underwriters are reversed, as is the order granting costs and fees in favor of Underwriters. Great American is entitled to recover costs on appeal from Fireman’s Fund and Underwriters, and RSI is entitled to recover costs on appeal from Fireman’s Fund.
We concur. JONES, P. J., REARDON, J.
Judge of the Superior Court of Alameda County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.