Court Rejects Efforts to Limit Scope of Judgment Creditor’s Direct Action Under Insurance Code Section 11580

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In ICSOP, homeowners filed a claim in arbitration against their general contractor alleging damages from subsidence.

May 1, 2019
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP

In Ins. Co. of St. of PA v. Amer. Safety Indemnity Co. (No. B283684, filed 3/1/19) (“ICSOP”), a California appeals court rejected one insurer’s efforts to limit the scope of another insurer’s direct action as a judgment creditor under Insurance Code section 11580(b)(2).

In ICSOP, homeowners filed a claim in arbitration against their general contractor alleging damages from subsidence. While the arbitration was pending, the general contractor filed suit against the grading subcontractor seeking indemnity and contribution. The complaint attached the homeowners’ complaint in arbitration pleading damages of $2.3 million, and alleged that the subcontractors had a duty to indemnify for those damages. The arbitrator awarded the homeowners $1.1 million.

The general contractor was insured by plaintiff ICSOP, which paid the arbitration award. A default judgment was entered against the grading subcontractor for $1.5 million, that included both the arbitration award plus $356,340 for the general contractor’s attorney’s fees. American Safety insured the grading subcontractor but refused to indemnify ICSOP. ICSOP then sued American Safety on the default judgment, pursuant to Insurance Code section 11580(b). The trial court granted summary judgment for ICSOP and the appeals court affirmed.

Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com
Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP



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