Certain Underwriters at Lloyds, London v. Arch Specialty Ins. Co.
Annotate this CaseTwo insurers shared indemnification costs to settle claims made against mutual insureds in a construction defect litigation brought by third parties. One insurer, defendant Arch Specialty Insurance Company (Arch), refused to share the costs to defend the insureds in the underlying litigation. The other insurer, plaintiff Certain Underwriters at Lloyds, London (Underwriters), paid all defense costs and then sought equitable contribution from Arch. In ruling on cross-motions for summary judgment/adjudication, the trial court concluded Arch had no duty to defend the insureds in the underlying litigation, because Arch's insurance policy expressly stated it had a duty to defend provided no "other insurance" afforded a defense, and Underwriters' policy did afford a defense. Underwriters appealed summary judgment entered in favor of Arch and also challenged the trial court's denial of Underwriters' motion for summary adjudication of Arch's responsibility to contribute to defense costs. After review, the Court of Appeal concluded Arch's "other insurance" clause could not be enforced in this equitable contribution action between successive primary insurers, "[e]nforcement of such a clause in a primary CGL policy would violate public policy." The Court also concluded Arch did not successfully circumvent this result by including the clause in the "coverage" section of the insurance policy as well as the "limitations" section. Accordingly, the trial court's judgment was reversed and the trial court directed to enter an order denying summary judgment to Arch and granting Underwriters' cross-motion for summary adjudication that Underwriters was entitled to equitable contribution.
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