{"id":896000,"date":"2019-06-12T11:12:33","date_gmt":"2019-06-12T17:12:33","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=896000"},"modified":"2019-06-12T11:12:41","modified_gmt":"2019-06-12T17:12:41","slug":"california-court-weighs-duty-to-defend","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/california-court-weighs-duty-to-defend\/","title":{"rendered":"California Court of Appeals Weighs in on the Duty to Defend and Suggests \u201cFetch\u201d New Motion"},"content":{"rendered":"\n

Garret Murai | California Construction Law Blog<\/a> | June 5, 2019<\/p>\n\n\n\n

It\u2019s not uncommon for construction contracts to include indemnity provisions requiring the indemnitor (typically, the lower-tiered party) to \u201cdefend, indemnify and hold harmless\u201d the indemnitee (typically, the higher-tiered party) from third-party claims. But when an indemnitor refuses to defend an indemnitee, who gets decide that issue, the jury or the court?<\/p>\n\n\n\n

In\u00a0Centex Homes v. R-Help Construction Company<\/em>, Case No.\u00a0B276708 (March 11, 2019), the 2nd District Court of Appeal answered that question. They also framed the issue better than I could, so I\u2019ll let the court speak for itself:<\/p>\n\n\n\n

A subcontractor is hired by a developer to install utility boxes in a subdivision. The subcontract contains a clause requiring the subcontractor to indemnify the developer for all claims arising out of the subcontractor\u2019s work.<\/p>

A plaintiff in an underlying tort action brings an action against the subcontractor and the developer for injuries allegedly arising from the subcontractor\u2019s work. The subcontractor does not defend the developer.<\/p>

The trial court submits the question of the subcontractor\u2019s duty to defend to a jury. The jury finds the plaintiff\u2019s injuries were not caused by the subcontractor\u2019s work. Does this end the matter? No.<\/p>

The end of the trial is not the end of the case. The parties are back to the beginning on the issue of duty to defend. Why? Where plaintiff in an underlying tort action alleges that his injuries arose out of the subcontractor\u2019s work, the developer is entitled as a matter of law to a defense under the indemnity clause. It is error to submit the question of the subcontractor\u2019s duty to defend to a jury. We reverse and remand.<\/p><\/blockquote>\n\n\n\n

Background<\/h3>\n\n\n\n

Centex Homes (Centex) contracted with R-Help Construction Company, Inc. (R-Help) to trench, install and inspect utility boxes and conduits at a residential construction project in the City of Thousand Oaks, California. The subcontract required R-Help to defend and indemnify Centex from all claims \u201cto the extent such Claim(s) in whole or in part arise out of or relate to [R-Help\u2019s work].\u201d<\/p>\n\n\n\n

Following R-Help\u2019s completion of its work, a lawsuit is filed by Matthias Wagener who was injured when he fell into a utility box. What Mr. Wagener was doing standing on top of a utility box, I don\u2019t know, but he sued both Centex and R-Help alleging that the \u201cdefendants\u201d negligently managed, maintained and inspected the utility box cover such that it created an unstable platform.\u201d<\/p>\n\n\n\n

During the discovery phase of the litigation, Mr. Wagener was asked about the basis of his claims, to which he responded:<\/p>\n\n\n\n

It appears as though R-Help installed and thereafter abandoned the subject junction box or hand holder and adjoining conduit, having installed the lid without the prescribed bolts specifically designed to keep the SCE lid bolted to the junction box. Acting as Centex'[s] agent, R-Help and Centex are both jointly and severally liable to plaintiff for the injuries he suffered and the damages he sustained.<\/p><\/blockquote>\n\n\n\n

I\u2019m guessing he had help with that response. At any rate, after receiving Mr. Wagener\u2019s response, Centex tendered Mr. Wagener\u2019s claim to R-Help demanding that R. Help defend and indemnify Centex pursuant to the subcontract. After R-Help failed to respond, Centex filed a cross-complaint against R-Help for breach of contract, indemnity and declaratory relief.<\/p>\n\n\n\n

Centex later settled with Mr. Wagener, leaving Centex\u2019s cross-complaint against R-Help to be decided.<\/p>\n\n\n\n

At the subsequent trial between Centex and R-Help, contradictory evidence was presented by  the parties. Centex\u2019s witnesses testified that the utility box was installed by R-Help, while R-Help\u2019s witnesses testified that it wasn\u2019t. After the case was presented to the jury, the jury found that R-Help did not install the utility box and had no duty to defend Centex.<\/p>\n\n\n\n

Centex appealed.<\/p>\n\n\n\n

The Court of Appeal Decision<\/h3>\n\n\n\n

For those of us who practice regularly in the area of construction law the issue on appeal was pretty straightforward: A contractual duty to defend implies an immediate<\/em> duty to defend. After all, what\u2019s the point of including a defense obligation in a contract if a party can just punt the duty down the road, by which time, even if a trier-of-fact was to determine that there was a duty to defend it would be too late anyway?<\/p>\n\n\n\n

Well, that\u2019s exactly what Centex argued on appeal. Citing\u00a0Crawford v. Weather Shield Mfg., Inc.<\/em>\u00a0(2008) 44 Cal.4th 541, Centex argued that the California Supreme Court had held \u201cthat the duty to defend . . . arises immediately upon the proper tender of defense . . . and before . . . litigation has determined whether indemnity is actually owed.\u201d<\/p>\n\n\n\n

The Court of Appeal agreed:<\/p>\n\n\n\n

Here Wagener claimed his injuries arose out of or related to R-Help\u2019s work for Centex. Under Crawford<\/em>, the duty to defend arose immediately upon the proper tender of defense of a claim embraced by the indemnity agreement. The duty to defend was not a question of fact for the jury; the trial court was compelled to determine as a matter of law that Wagener\u2019s claim was embraced by the indemnity agreement.<\/p><\/blockquote>\n\n\n\n

The Court of Appeal did caution, however, that an escape hatch does exist. Quoting the Supreme Court in\u00a0Montrose Chemical Corp. v. Superior Court<\/em>\u00a0(1993) 6 Cal.4th 289, 298, an insurance case,\u00a0the Court of Appeal noted:<\/p>\n\n\n\n

It would be pointless . . . to require an insurer to defend an action where the undisputed facts developed early in the investigation conclusively show, despite a contrary allegation in the complaint, that the underlying acts occurred on a date when the policy was not in effect or at a location concededly not covered by the policy.<\/p><\/blockquote>\n\n\n\n

The Crawford<\/em> decision has even spawned a specific indemnity-related motion, the Crawford<\/em>-motion, filed by an indemnitee (i.e.<\/em>, the party being indemnified) against an indemnitor (i.e.<\/em>, the party providing the indemnity) to force an indemnitor to defend an indemnitee pursuant to an indemnity agreement. Note: even if an indemnity agreement does not expressly include a defense obligation, a defense obligation will be implied, unless expressly waived. See<\/em> Civil Code section 2778.<\/p>\n\n\n\n

Interestingly, the Centex<\/em> decision also seems to suggest that an indemnitor could  file a motion, let\u2019s call it a Centex<\/em>-motion, to get out of the obligation to defend an indemnitee, and perhaps even, as a means of avoiding liability altogether since most defense and indemnity obligations are premised on some fault or presumed fault of the indemnitor. Since, like one of the mean girls in the movie Mean Girls<\/em>, I don\u2019t have the gravitas to make up the name of a new motion (recall Gretchen\u2019s attempt to get the term \u201cfetch<\/a>\u201d to catch on), let\u2019s just call it what it is: a motion for summary judgment.<\/p>\n\n\n\n

Conclusion<\/h3>\n\n\n\n

The Centex<\/em> decision confirms that the duty to defend is immediate<\/em> and, as can be surmised from the Crawford<\/em>decision although it\u2019s not expressly stated in that decision, is not a factual issue to be determined by a jury. The Centex<\/em>decision also suggests that an indemnitor subject to a defense obligation could potentially<\/em> file a motion (a Centex<\/em>-motion) to avoid defense obligations if it can conclusively show by undisputed facts that no defense is owed under the indemnity agreement.  That is so \u201cFetch!\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Garret Murai | California Construction Law Blog | June 5, 2019 It\u2019s not uncommon for construction contracts to include indemnity provisions requiring the indemnitor (typically, the lower-tiered party) to \u201cdefend, indemnify and hold harmless\u201d the indemnitee (typically, the higher-tiered party) from third-party claims. But when an indemnitor refuses to defend an indemnitee, who gets decide… Continue reading California Court of Appeals Weighs in on the Duty to Defend and Suggests \u201cFetch\u201d New Motion<\/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":[9],"tags":[9895,88,224,57,9026],"class_list":["post-896000","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-california","tag-construction-contract","tag-duty-to-defend-2","tag-indemnity-provision","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nCalifornia Court of Appeals Weighs in on the Duty to Defend and Suggests \u201cFetch\u201d New Motion - 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