Subcontractors, Developers and Insurers, Oh My!
Anyone representing contractors, developers, sub-contractors or insurance carriers in construction defect or coverage actions should read the most recent California case law on the duty to pay defense costs for complex construction defect cases.
By "complex," I mean those cases where the HOA sues the developer who sues the general who sues the sub's, all of whom seek coverage from their carriers. As any player in these 15-ring circuses knows, defense costs are often paid by an additional insured endorsement contained in the policies of one or two of the sub-contractors.
That's what happened here. The Court does a great job of clearly explaining the difference between equitable contribution and subrogation where the policies at issue provide potential coverage for some but not all of the causes of action. The additional twist here involves excess carriers.
I'm not going to brief this case here (relying on my insurance blogging colleagues to do so). I do want to alert attorneys for the HOAs, developers, contractors, and insurance carriers for whom I mediate construction defect and coverage cases to this important contribution to the most pressing question at any construction defect settlement conference -- "whose got the money to settle this thing?"
The case is Transcontinental Insurance Company v. Insurance Company of the State of Pennsylvania, filed on February 28, 2007 and published on March 27, 2007 by the Fourth District, Div. Three.