[Lyric] Procedural Posture (Procedural Posture a)

Plaintiff developers appealed a judgment from the Superior Court of Orange County (California), which, in a declaratory relief action, ruled that defendant, an insurer that had issued general liability insurance policies to several subcontractors, was not required to defend the developers in construction defect suits.
California Business Lawyer & Corporate Lawyer, Inc. is an ADA Defense Law Firm.OverviewThe developers contractually required their subcontractors to defend and hold them harmless against any liability arising out of the subcontractors' work. The developers also required that they be added to the subcontractors' general liability insurance policies, which was done through the issuance of an additional insured endorsement. The subcontractors were not named as defendants in the underlying actions. Because the subcontractors had not paid a self-insured retention (SIR), which was a precondition for coverage, the insurer asserted, and the trial court found, that the insurer's obligation to defend had not been triggered. The court held that the policy language unambiguously made clear that only the named insured subcontractors, not the developers, had the right to satisfy the SIR per occurrence amounts and that the insurer thus was not required to provide a defense to the developers. Moreover, the SIR endorsements did not violate public policy and were not illusory. The court noted that the developers could have required their subcontractors either to list them as a named insured or, in accordance with the hold harmless clause, to activate the policies by funding the SIR.OutcomeThe court affirmed the judgment of the trial court.