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ARTICLE: Will the California Supreme Court Change the Insurance Landscape for Contractors? Featured Article by Skane Wilcox LLP in the January 2011 E&O Prevention Newsletter by AgentsofAmerica.org Please click this link to read the article.
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· In a construction defect case involving approximately 50 homes in 2 developments we were able to secure a settlement for $3,000 for our client, window and door manufacturer, on the basis that we established all defects relating to the window and door issues were an installation issue and that the products used were products purchased as sold almost 15 years before the project was built.
· Our firm represented a plaster subcontractor in a construction defect case that was tried to verdict in a binding arbitration. Prior to the start of the arbitration, the demand to the client was $30,000. The arbitrator ruled that there was no evidence of the plaster cracks complained of arising out of or resulting from our client's work - - they were either due to the work of the framer or of those who installed the foundation.
· Our firm represented a general contractor in a personal injury case where the plaintiff, a subcontractor's employee, slipped and fell on pieces of wooden sheets placed by our client on the construction site floor. Plaintiff allegedly suffered serious and permanently debilitating injuries due to this fall. We worked diligently with plaintiff's counsel very early in the case to obtain a settlement for our client. We reached an excellent result for our client - as well as for the client's insurer.
Dobbas v. Vitas, et al (January 7, 2011)
The appellate court held the trial court correctly denied American Guarantee and Liability Ins. Co.'s ("American Guarantee") motion to intervene in a professional liability action brought by its insured, James Dobbas ("Dobbas"), against Dobbas' insurance agent, Fred Vitas and Fred Vitas Insurance Agency ("Vitas").
The insured, Dobbas, owned a bull that escaped and caused a fatal automobile accident. American Guarantee issued an excess policy to Dobbas for Dobbas' railroad activities and paid the excess policy limit on behalf of Dobbas to the accident victims. Dobbas sued Vitas alleging Vitas failed to obtain excess insurance (for Dobbas' ranching activities) to cover the accident victims' injuries for which Dobbas was liable.
American Guarantee's claimed its interest in the action between Dobbas and Vitas was as a subrogee to Dobbas for Vitas' liability for failing to provide insurance to cover the injuries. However, the court found that since Vitas and American Guarantee agreed to provide insurance covering the same event, their relationship is not defined by principles of subrogation, but by the principles of equitable contribution.
The appellate court found that where two parties are contractually bound to provide insurance for the same loss, the payment by one does not create superior equities (in subrogation), rather a right to equitable contribution. For that reason, the appellate court affirmed the trial court's ruling that American Guarantee had no interest as a subrogee in the action against Vitas. The appellate court further found that because the obligation of both American Guarantee and Vitas was to provide insurance to Dobbas to indemnify the same loss, American Guarantee's rights against Vitas parallels those of two equally situated insurers when one fails to pay a claim. The appropriate resolution of such facts is by application of the rules of equitable contribution which apportions costs among insurers that share the same level of liability on the same risk.
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Los Angeles:1055 W. 7th St., Suite 2850, Los Angeles, CA 90017
San Diego: 1230 Columbia Street, Suite 800, San Diego, CA 92101
San Francisco: 33 New Montgomery Street, Suite 710, San Francisco, CA 94105 Las Vegas: 1120 Town Center Drive, Suite 200, Las Vegas, NV 89144
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