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Golden Eagle Insurance Co. v. Century Surety Company12/8/2003
insuring clause or the breadth of an exclusion." (Id. at p. 301.) However, " acts merely tending to show that the claim is not covered, or may not be covered, but are insufficient to eliminate the possibility that resultant damages (or the nature of the action) will fall within the scope of coverage, . . . add no weight to the scales." (Ibid.)
2. Application to Present Case
The existence of the duty to defend turns "`upon those facts known by the insurer at the inception of a third party lawsuit.'" (Montrose I, supra, 6 Cal.4th at p. 295, quoting Saylin v. California Ins. Guarantee Assn. (1986) 179 Cal.App.3d 256, 263.) On summary judgment, Golden Eagle contended that nothing available to Century when it refused to participate in the Solemint action conclusively eliminated the potential for coverage under the Century policy. The trial court agreed with Golden Eagle. In view of the parties' respective showings on this matter, the trial court ruled correctly.
Here, it undisputed that on January 28, 1999, Cal Coast--through its broker--tendered the arbitration demand directly to Century at the inception of Solemint action. In making this tender, Cal Coast did not provide any information to Century other than the demand. On January 29, 1999, the day after Cal Coast tendered the demand, Century refused to defend Cal Coast, and it subsequently reaffirmed this position on June 25, 1999. These refusals were based on the holding in Montrose II and the "excess only" provision.
Signore's letters disclose the following rationale for the denial: Century determined that the damages in the Solemint action began in or about 1992, and were continuous and progressive thereafter. Under Montrose II, it reasoned that Golden Eagle's policies provided primary coverage during the Century policy period. Because Century's "excess only" provision denies primary coverage when "other valid and collectible insurance is available to insured for a loss" falling under the basic coverage clauses of the Century policy, Century refused to defend Cal Coast, absent exhaustion of primary coverage provided by its other insurers.
Once an insured makes a prima facie showing that the third party claim potentially falls within policy coverage, the insurer must establish that it cannot. (Montrose I, supra, 6 Cal.4th. at p. 300.) Here, the arbitration demand submitted by Cal Coast, on its face, potentially sought damages within the coverage of the Century policy. The demand characterized Solemint's claims against Cal Coast as " egligent performance of services rendered on the Riverpark project and breach of written contract," but it did not allege that the damages were continuous and progressive or episodic in nature.
Generally, in most construction defect cases involving CGL policies of the type at issue here, "courts follow the general rule that coverage is triggered on the date of injury , not on the date of the defective construction that caused the injury [i.e.,] the loss `occurred' when the injured party was actually damaged." (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2003) 7:1434, p. 7E-18.) Moreover, the proper trigger of coverage is determined on a defect-by-defect basis. (Id. at 7:1437, p. 7E-19.) Accordingly, Century could not properly determine from the arbitration demand itself that the damages alleged fell under Montrose II.
Because Cal Coast submitted nothing to Century other than the arbitration demand, the key question is whether Century then possessed extrinsic facts from other sources that conclusively nullified the potential for policy coverage. Here, the record indicates that Century relied solely on the collate
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