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Fireman''s Fund Insurance. Co. v. Maryland Casualty Co.7/31/1998
CERTIFIED FOR PUBLICATION
(Marin County Super. Ct. No. 163978)
In this case, we address the question whether the equitable doctrines of contribution and subrogation are entirely distinct and independent concepts, or instead are merely different terms for the same legal principle. Maryland Casualty Company, The Maryland Insurance Company, and Northern Insurance Company of New York (hereinafter collectively referred to as Maryland) appeal from summary judgment entered in favor of Fireman's Fund Insurance Company (Fireman's Fund) on the latter's complaint for contribution and indemnification from Maryland for the costs of defending and settling an underlying lawsuit on behalf of a common insured. Maryland argues that Fireman's Fund's claims for indemnity and contribution are actually based on its equitable subrogation to the rights of the common insured against Maryland. Because those rights have been settled, released and dismissed with prejudice in previous litigation between Maryland and the insured, Maryland insists there are no longer any remaining rights against Maryland to which Fireman's Fund may be subrogated. Therefore, Maryland contends, the trial court erred in granting summary judgment against it on Fireman's Fund lawsuit for equitable contribution. We disagree with Maryland, and therefore affirm the judgment in favor of Fireman's Fund. Both insurers have also appealed the trial court's allocation of defense and indemnification costs between them. We conclude the trial court did not err in this regard, and therefore affirm the court's equitable allocation.
I. Factual and Procedural Background
The underlying facts are not in dispute. Maryland and Fireman's Fund issued several one-year liability insurance polices to the underlying insured, Horst Hanf and Horst Hanf Construction Corporation (Hanf) between 1975 and 1992. Coverage of Hanf under the two carriers' policies overlapped, with Maryland's policies in effect between 1975 and 1986, and those of Fireman's Fund in effect between 1984 and 1992.
Hanf participated in work on a condominium construction project completed in 1975. In 1993, Hanf and others involved in the project were sued on various claims arising from alleged defects in the construction of the condominium residences, with damage alleged to have commenced in September 1979. Hanf tendered defense of the lawsuit to both Maryland and Fireman's Fund, under their overlapping and consecutive policies dating from November 14, 1978, through November 14, 1992. Maryland declined tender. Fireman's Fund accepted under a reservation of rights, and ultimately settled the action on Hanf's behalf for $100,000.
In January 1995, Hanf sued Maryland for breach of contract and of the implied covenant of good faith and fair dealing for refusing to undertake the defense of the underlying construction defect lawsuit. In September 1996, Hanf settled its lawsuit against Maryland, releasing Maryland from all claims with respect to the tender of defense and its liability policy, and dismissing the lawsuit with prejudice. In consideration for this release, Maryland paid Hanf $33,000 as partial reimbursement for fees and costs incurred, and assumed responsibility for a $50,000 promissory note executed by Hanf in favor of Fireman's Fund as part of the settlement of the underlying construction defect lawsuit.
Fireman's Fund elected not to intervene or join in Hanf's suit against Maryland. Instead, it brought this separate lawsuit against Maryland in May 1995, seeking (1) a judicial determination of the issue whether Maryland had a duty to defend and indemnify Hanf; and (2) reimbursement, indemnification and contribution from Maryland
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