{"id":893250,"date":"2017-11-22T14:28:42","date_gmt":"2017-11-22T21:28:42","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=893250"},"modified":"2017-11-22T14:28:42","modified_gmt":"2017-11-22T21:28:42","slug":"california-court-confirms-broad-coverage-ongoing-operations-endorsements","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/california-court-confirms-broad-coverage-ongoing-operations-endorsements\/","title":{"rendered":"California Court Confirms Broad Coverage Under &#8220;Ongoing Operations&#8221; Endorsements"},"content":{"rendered":"<p>Kevin C. Brantley | <a href=\"https:\/\/www.paynefears.com\/insights\/california-court-confirms-broad-coverage-under-ongoing-operations-endorsements\" target=\"_blank\">Payne &amp; Fears<\/a> | November 15, 2017<\/p>\n<p>A California Court of Appeal has confirmed that additional insured endorsements (\u201cAIE\u201d) granting coverage for liability arising out of a named insured\u2019s \u201congoing operations,\u201d and in effect during those \u201congoing operations,\u201d do not require that the liability arise while the named insured is performing work.\u00a0\u00a0<em>McMillin\u00a0Mgmt. Servs., L.P. v. Financial Pacific Ins. Co.<\/em>, Cal. Ct. App., November 14, 2017, Case No. D069814.<\/p>\n<p>In\u00a0<em>McMillin<\/em>, a construction defect insurance coverage action, Lexington Insurance Company argued that McMillin had no liability to homeowners until after their homes closed escrow; thus, McMillin did not face liability while the named insureds\u2019 work was ongoing.\u00a0 The Court of Appeal rejected Lexington\u2019s argument, finding that the \u201congoing operations\u201d AIEs provide only that McMillin\u2019s liability \u201cbe \u2018linked\u2019 through a \u2018minimal causal connection or incidental relationship\u2019 with [the named insureds\u2019] ongoing operations.\u201d\u00a0 (internal citations omitted).\u00a0\u00a0The Court reasoned that Lexington had not established that all of the damage in the underlying action occurred after the named insureds completed their work, thus Lexington had not established as a matter of law that there was no potential for coverage for McMillin under the policies.<\/p>\n<p>While the\u00a0<em>McMillin<\/em>\u00a0Court explicitly limited its ruling to the issue regarding whether the lack of homeowners at the time the named insureds\u2019 ceased work precluded coverage for McMillin under the AIE, this is yet another ruling limiting insurers\u2019 abilities to rely on \u201congoing operations\u201d endorsements to preclude coverage when a named insured\u2019s work is complete.<\/p>\n<p>In reaching its decision, the\u00a0<em>McMillin\u00a0<\/em>Court relied on another recent California Court of Appeal decision,\u00a0<em>Pulte Home Corp. v. American Safety Indem. Co.<\/em>, 14 Cal. App. 5th 1086 (2017).\u00a0\u00a0<em>Pulte<\/em>\u00a0held that \u201congoing operations\u201d AIEs, in effect at the time that work is completed, provide coverage to additional insureds for any liability arising out of the named insureds\u2019 work performed during the policy periods. \u00a0Both\u00a0<em>McMillin\u00a0<\/em>and\u00a0<em>Pulte<\/em>\u00a0show that California courts are willing to extend coverage to additional insureds pursuant to policies issued with \u201congoing operations\u201d AIEs where those policies are in effect at the time the named insured performs work.<\/p>\n<p>Although\u00a0<em>McMillin\u00a0<\/em>and\u00a0<em>Pulte\u00a0<\/em>\u00a0have seemingly resolved the \u201congoing operations\u201d AIE dispute with regard to policies in effect at the time work is performed, the question remains whether California courts will extend this reasoning to provide additional insured coverage under policies issued after a named insureds operations are complete.\u00a0 Policyholders should be prepared to continue to face disputes over \u201congoing operations\u201d AIE in disputes in those situations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kevin C. Brantley | Payne &amp; Fears | November 15, 2017 A California Court of Appeal has confirmed that additional insured endorsements (\u201cAIE\u201d) granting coverage for liability arising out of a named insured\u2019s \u201congoing operations,\u201d and in effect during those \u201congoing operations,\u201d do not require that the liability arise while the named insured is performing&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/california-court-confirms-broad-coverage-ongoing-operations-endorsements\/\">Continue reading <span class=\"screen-reader-text\">California Court Confirms Broad Coverage Under &#8220;Ongoing Operations&#8221; Endorsements<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9914],"tags":[10307,9895,88,23,10262],"class_list":["post-893250","post","type-post","status-publish","format-standard","hentry","category-insurance-coverage","tag-additional-insured-endorsements","tag-advise-consult","tag-california","tag-insurance-coverage","tag-ongoing-operations","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>California Court Confirms Broad Coverage Under &quot;Ongoing Operations&quot; 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