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Golden Eagle Insurance Co. v. Century Surety Company12/8/2003
or indemnify Cal Coast until primary coverage was exhausted. We disagree.
As we explain below (see pt. B., ante), Century had a duty to defend Cal Coast upon tender of the arbitration demand in the Solemint action, and thus it was obliged to contribute to the defense and settlement of that action, notwithstanding the "excess only" provision in its policy. As we also explain below (see pt. C., ante), Century's briefs on appeal are devoted almost exclusively to an issue--namely, a purported conflict between the "pro rata" provision in the Golden Eagle policies and the "excess only" provision in the Century policy--that we need not address in resolving this appeal.
A. Standard of Review
"Summary judgment is proper if there is no triable issue of material fact and the moving party is entitled to summary judgment as a matter of law. (Code Civ. Proc., ยง 437c.)" (National Auto. & Cas. Ins. Co. v. Underwood (1992) 9 Cal.App.4th 31, 36.) We review the trial court's ruling on Golden Eagle's motion for summary judgment de novo. (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819.)
B. Duty to Defend
At the outset, we observe that an insurer who improperly declines to defend its insured may be required to contribute to the defense and reasonable settlement of the action against the insured. (Truck Ins. Exchange v. Unigard Ins. Co. (2000) 79 Cal.App.4th 966, 974, 978.) Because Century does not challenge the application of this principle in the case before us, the key issue presented on appeal is whether Century correctly refused to defend Cal Coast when the arbitration demand in the Solemint action was tendered to it.
1. Principles Governing the Duty to Defend
Generally, " he defense duty is a continuing one, arising on tender of defense and lasting until the underlying lawsuit is concluded [citation], or until it has been shown that there is no potential for coverage." (Montrose I, supra, 6 Cal.4th at p. 295.) As our Supreme Court explained in Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081: " liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263 . . . (Gray).) As we said in Gray, `the carrier must defend a suit which potentially seeks damages within the coverage of the policy.' [Citation.]"
In Montrose I, supra, 6 Cal.4th at p. 300, the Supreme Court further clarified: "[In Gray] we said that `the insurer need not defend if the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage.' [Citation.] The quoted language cannot reasonably be understood to refer to anything beyond a bare `potential' or `possibility' of coverage as the trigger of a defense duty."
Generally, " he determination whether the insurer owes a duty to defend usually is made in the first instance by comparing the allegations of the complaint with the terms of the policy. Facts extrinsic to the complaint also give rise to a duty to defend when they reveal a possibility that the claim may be covered by the policy. [Citation.]" (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1081.)
Extrinsic facts available to the insurer may also properly establish that it has no duty to defend, provided that they are "`undisputed facts which conclusively eliminate a potential for liability.'" (Montrose I, supra, 6 Cal.4th at pp. 298-299.) To establish the absence of a duty to defend on summary judgment, an insurer may show that "the underlying claim [could] not come within the policy coverage by virtue of the scope of the
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