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Sawyer v. Westchester Fire Insurance Company11/20/2002
d were also at fault, then the insured would not be solely negligent.
In AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, upon which both parties rely, the California Supreme Court set forth the following general principles of insurance policy interpretation, as pertinent here:
"Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The `clear and explicit' meaning of these provisions, interpreted in their `ordinary and popular sense,' unless `used by the parties in a technical sense or a special meaning is given to them by usage' (id., § 1644), controls judicial interpretation. (Id., § 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. . . .
"If there is ambiguity, however, it is resolved by interpreting the ambiguous provision in the sense the promisor (i.e., the insurer) believed the promisee understood them at the time of formation. (Civ. Code, § 1649.) If application of this rule does not eliminate the ambiguity, ambiguous language is construed against the party who caused the uncertainty to exist. (Id., § 1654.) In the insurance context, we generally resolve ambiguities in favor of coverage. [Citations.] . . . [Fn. omitted.]
"It follows, however, that where the policyholder does not suffer from lack of legal sophistication or a relative lack of bargaining power, and where it is clear that an insurance policy was actually negotiated and jointly drafted, we need not go so far in protecting the insured from ambiguous or highly technical drafting. . . ." (51 Cal.3d at pp. 821-823.)
The first step in the interpretation of the "sole negligence" language in exclusion (c) of the additional insured endorsement is to determine the parties' intent, if possible, from the plain meaning of the contract itself. In Southern Pacific Transportation Co. v. Sandyland Protective Assn. (1990) 224 Cal.App.3d 1494, applying Civil Code section 2782, which precludes indemnity for "sole negligence" in construction contracts, the court held that as between the indemnitor (MCM) and the indemnitee (the State), only the indemnitee is negligent and negligence of third parties is irrelevant. Given this judicial interpretation of the same phrase as referring only to the negligence of the contracting parties, that meaning is presumptively the plain meaning of the language. As St. Paul notes, appellants' suggestion that a layperson would ascribe a different meaning to the phrase is unsupported speculation. In the present case, the policy was not issued to a layperson, but to MCM, a large contractor, and the State was added as an additional insured. No laypersons were involved or would likely be involved in such a policy.
Even if appellants' suggestion were accepted as another reasonable meaning of "sole negligence," thus rendering the phrase ambiguous, the second step is to interpret the language "in the sense the [insurer] believed the [State] understood [the language] at the time of formation." The evidence in the record is undisputed that the additional insured endorsement was on a form prescribed by the State and not drafted by St. Paul, and that the State's purpose in prescribing the endorsement was to ensure coverage for MCM's indemnity obligations to the State under its contract with the State. The State required the same form endorsement regardless of which insurance company issued the policy to a contractor.
The third step is to interpret the policy language aga
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