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California Pacific Homes Inc. v. Scottsdale Insurance Co.3/25/1999
CERTIFIED FOR PUBLICATION
Defendants Scottsdale Insurance Company and National Casualty Company appeal from a judgment entered in favor of plaintiff California Pacific Homes, Inc. on its motion for summary adjudication as to certain claims it made against the two insurers in an action seeking declaratory relief.
Background
From 1983 to 1986 California Pacific Homes (CPH) constructed and sold condominiums in a project called Madrid. On December 12, 1994, CPH was named as a defendant in a lawsuit brought by homeowners of the Madrid Condominium Association which sought damages for construction defects in the Madrid Project. That lawsuit, denominated Madrid II by the parties, was settled in 1996 with an agreement by CPH to pay a total of $1,975,000 to the homeowner's association. It is undisputed by the parties that the claims against CPH in the Madrid II lawsuit "arose from a single occurrence involving continuous or progressively deteriorating property damage taking place during the entirety of the period from at least 1984 to June 1, 1995." The parties also stipulated for the purpose of "this lawsuit only" that there is coverage under appellants' policies for Madrid II.
Scottsdale and National issued successive comprehensive general liability policies to CPH from June 1, 1990 through June 1, 1995. Each of the policies provides that the "insured's retained limit" is $250,000 ultimate net loss as the result of any one occurrence because of personal injury , property damage, or both combined. The policies each further provide that the insurer will be liable for "$1,750,000 ultimate net loss as the result of any one occurrence because of personal injury , property damage, or both combined" and sets the same dollar limit on an "ultimate net loss as the result of all occurrences during each policy year . . . ."
In 1996 CPH settled the lawsuit brought by the condominium homeowners with a payment of $1,975,000. In constructing the settlement CPH sought funding from various insurers other than Scottsdale and National Casualty who had insured CPH for the period from 1984 to 1990. The formula by which the total settlement amount was allocated was simple-each of the insurers was asked to contribute l/11th of the total sum per policy year they were on the risk. Under this allocation Scottsdale and National Casualty as insurers for five policy years were responsible for 5/11th's of the total settlement, or $897,727.
CPH made a demand upon Scottsdale under its 1990-91 policy that the insurer pay that portion of the Madrid II settlement in excess of CPH's retained limit of $250,000. Scottsdale and National Casualty agreed to contribute $725,982 to the settlement subject to an express reservation of their rights to reimbursement. The insurers adopted the position that before they had any obligation to indemnify, CPH was obligated to satisfy the settlement in an aggregate amount equal to its retained limit for each of the five successive policies totaling $1,250,000.
The present litigation was begun on May 28, 1996, when CPH filed an action seeking declaratory relief and damages for breach of contract under the insurance policies to establish the obligation of Scottsdale and National Casualty to indemnify it for that sum beyond its retained limit of $250,000 up to the policy limit of $1,750,000 for CPH's contribution to settlement of Madrid II. On June 2, 1997, the carriers cross-complained.
CPH filed a motion for summary adjudication on September 8, 1997. A cross-motion for summary judgment was filed by the insurers on the same date. After a hearing on October 28, 1997, the trial court ruled in favor of CPH, concluding t
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