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CnD Elec. v. Navigators Ins. Co. - No. CV 05-4689-GHK (JWJx), 2006 U.S. Dist. LEXIS 103145 (C.D. Cal. Jan. 17, 2006)


The ultimate question in determining the duty to defend is whether the facts alleged do fairly apprise the insurer that plaintiff is suing the insured upon an occurrence which, if his allegations are true, gives rise to liability of insurer to insured under the terms of the policy.


This case arose from a dispute over insurance coverage and an insurer's "duty to defend" the insured against a claim by a third party. On June 28, 2002, plaintiff CnD Electric, Inc. ("CnD") entered into a subcontract with Dolan Construction Company ("Dolan") to perform electrical work on a construction project known as "Kinara Spa" in West Hollywood, California. CnD's work on the spa began on June 28, 2002, and ended on November 2, 2002.

On January 21, 2003, the underlying third party complaint (the "underlying action") was brought in state court by another subcontractor on the project, New Technology Plumbing, against Dolan, as the general contractor for the project, and Kinara Spa ("Kinara"), as the owner, for failing to make all of their payments for work performed under a construction contract. See CnD Electric, Inc.'s Book of Exhibits in Supp. of Its Mot. for Partial Summ. J. (hereinafter "CnD Book"), Ex. V. In response to the action, on June 25, 2003, Kinara Spa filed cross-complaints against a number of parties, including CnD and Dolan, contending that payment was excused because New Technology Plumbing and other subcontractors failed to perform work according to plans and specifications; thus much of the work of the subcontractors had to be redone because of numerous defects in workmanship, including improper wiring. On February 9, 2004, Dolan filed its First Amended Cross-Complaint in the underlying action, naming a number of subcontractors, including CnD. During the relevant period, CnD carried two successive policies of commercial general liability insurance issued by defendant Navigators Insurance Company ("Navigators"). The first (policy number PL101408) was effective from September 1, 2001, to September 1, 2002. The second (policy number GL207799) was effective from September 1, 2002, to September 1, 2003.

The policy's main insuring agreement provides in relevant part:1. Insuring Agreement:

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. . . .

On June 1, 2005, CnD filed this case in state court, bringing four claims against Navigators: (1) a request for declaratory relief as to the respective rights and duties of CnD and Navigators, particularly in regard to Navigator's duty to defend and/or indemnify CnD in the underlying action; (2) breach of contract; (3) reimbursement; and (4) breach of the covenant of good faith and fair dealing, The case was removed to the district court on June 28, 2005. CnD moved for partial summary judgment as to Navigator's duty to defend CnD in the underlying action.


Do Navigators' have a duty to defend?




The court granted CnD’s motion for partial summary judgment and declaratory relief establishing Navigators’ duty to defend CnD in the underlying third-party construction defect lawsuit. CnD showed that there was at least a potential that the underlying lawsuit would come within the coverage of the Navigators policy and Navigators, while it showed that coverage might be uncertain, did not submit admissible evidence to show a triable issue as to whether it had a duty to defend. As the duty to defend cannot be defeated by facts tending to show only that coverage is debatable or uncertain, such facts are not material to the question to be resolved. To make a showing that would entitle it to summary judgment, CnD did not have to prove that coverage itself was beyond dispute, only that it was beyond dispute that there was a potential for coverage.

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