Filed 8/3/26 Sunset Beach and Marina v. Capitol Specialty Ins. Corp. CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
SUNSET BEACH AND MARINA,
LLC,
G064756
Plaintiff and Appellant,
(Super. Ct. No. 30-2022-
v. 01277306)
CAPITOL SPECIALTY OPINION
INSURANCE CORPORATION,
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County,
Sheila Recio, Judge. Affirmed.
Law Office of Dale E. Washington and Dale E. Washington for
Plaintiff and Appellant.
Musick, Peeler & Garrett, Cheryl A. Orr and Stephen L. Cope for
Defendant and Respondent.
* * *
In 2013, plaintiff Sunset Beach and Marina, LLC (Sunset)
entered into a written contract with CD&G, a general contractor, to construct
two new condominium units on vacant land owned by Sunset (2013
Construction Contract). The 2013 Construction Contract obligated CD&G to
include Sunset as an additional insured on CD&G’s liability insurance. Upon
completion of the construction in 2016, Sunset sold one of the new
condominium units to an individual named Catherine Bierschbach.
Bierschbach later sued Sunset, CD&G, and Dan O’Neil dba O’Neil
Construction Company (O’Neil), alleging numerous construction defects that
resulted in, among other things, water intrusion in her unit (Bierschbach
Litigation).1 CD&G and Sunset tendered the defense of the Bierschbach
Litigation to defendant Capitol Specialty Insurance Corporation (CSIC),
which had issued a general commercial liability policy to CD&G in 2016 and
renewed it in 2017 (collectively, the policies).2 CSIC denied both claims. As to
Sunset, CSIC concluded (1) Sunset did not qualify as an additional insured
under the policies, and even if it did, (2) the Bierschbach Litigation asserted
defects relating to new condominium construction, which was expressly
excluded from coverage under the policies. This coverage litigation by Sunset
against CSIC followed.
1
Bierschbach v. Sunset Beach and Marina, LLC, et al., Orange
County Superior Court case No. 30-2017-00926762.
2
Prior to 2016, CD&G was insured by a different carrier.
2
In this action, Sunset alleges CSIC owed it a duty to defend the
Bierschbach Litigation as an additional insured under the policies CSIC
issued to CD&G, breached that duty, and acted in bad faith in investigating
whether there was potential for coverage. Sunset also alleges a direct action
under Insurance Code section 11580 against CSIC as a judgment creditor of
CD&G.3
The trial court granted CSIC’s unopposed motion for summary
judgment, finding CSIC met its burden of showing Sunset did not qualify as
an additional insured under the policies and the policies expressly excluded
the work CD&G performed for Sunset that was the subject of the Bierschbach
Litigation. The court denied Sunset’s cross-motion for summary adjudication
on the issue of CSIC’s duty to defend and entered judgment against Sunset.
Sunset appeals the judgment on the grounds (1) the trial court
abused its discretion under Code of Civil Procedure section 473, subdivision
(b),4 by denying Sunset’s request to continue the hearing on CSIC’s motion for
summary judgment; (2) the court erred in interpreting the policies; and (3) a
triable issue of material fact exists as to whether there was a mistake in the
issuance of the policies relating to the endorsement for new condominium
construction, allowing for reformation. We affirm.
3
CD&G is not a party to the underlying litigation or this appeal.
Sunset sued CD&G in the Bierschbach Litigation for indemnity and obtained
a default judgment against it in the amount of $2,043,404. “In appropriate
cases, Insurance Code section 11580 enables a judgment creditor to bring a
direct action against the judgment debtor’s insurer to satisfy the judgment
out of policy proceeds.” (Hearn Pacific Corp. v. Second Generation Roofing,
Inc. (2016) 247 Cal.App.4th 117, 140.)
4
All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.
3
STATEMENT OF FACTS AND PROCEDURAL HISTORY
I.
THE PLEADINGS
Sunset initiated the underlying action on August 24, 2022,
against CSIC and R.E. Chaix & Associates Insurance Brokers, Inc. (Chaix),
the surplus lines broker that placed CD&G’s insurance with CSIC.5 Sunset’s
operative complaint is the second amended complaint filed November 22,
2022, as amended by stipulation and order with respect to an aspect of the
prayer for relief (SAC). The SAC alleges four causes of action against CSIC,
including declaratory relief, breach of contract, insurance bad faith, and
direct action for recovery of judgment under Insurance Code section 11580.
The claims for declaratory relief, breach of contract, and insurance bad faith
all arise from Sunset’s claim that it is an additional insured under the
policies. The direct action under Insurance Code section 11580 arises from
Sunset’s allegation it obtained a judgment against CD&G for amounts that
were covered by insurance and it therefore has a direct claim against CSIC
“independent of being an additional insured.” CSIC answered the SAC on
December 22, 2022.
II.
CROSS-MOTIONS FOR SUMMARY JUDGMENT/ADJUDICATION
On December 26, 2023, Sunset moved for summary adjudication
of two issues: (1) CSIC owed Sunset a duty to defend the Bierschbach
Litigation at the time it denied Sunset’s tender of that claim, and (2) CSIC
conducted an unreasonable investigation of its duty to defend as a matter of
5
A surplus lines insurer is a nonadmitted carrier, i.e., one not
licensed by the State of California. Sunset settled with Chaix, which was
then dismissed from the action.
4
law. CSIC opposed the motion. Sunset did not file a timely reply to CSIC’s
opposition.
On February 16, 2024, CSIC moved for summary judgment or, in
the alternative, summary adjudication on the grounds the undisputed facts
show Sunset was not an insured, additional insured, or assignee under the
policies and the policies provided no coverage for the Bierschbach Litigation.
When Sunset did not file an opposition to CSIC’s motion, CSIC filed and
served a notice of nonopposition on June 21, 2024.
On June 24, 2024, Sunset filed an untimely reply in support of its
own motion for summary adjudication. At the same time, Sunset also filed a
declaration from Sunset’s counsel stating he had miscalendared the deadline
for filing Sunset’s opposition to CSIC’s motion and requesting a brief
continuance of the hearing to allow Sunset time to file an opposition. Sunset’s
counsel noted in his declaration there was no date available on the court’s
calendar that would allow him to appear ex parte to seek this relief before the
date of the hearing on the cross-motions. Sunset filed a written objection to
CSIC’s late-filed reply and declaration on June 26, 2024.
The trial court heard the parties’ cross-motions on June 28, 2024.
Prior to the hearing, the court issued a tentative ruling granting CSIC’s
motion and denying Sunset’s motion. Sunset’s counsel alerted the court at the
hearing to the declaration he had filed on June 24 and verbally requested a
continuance of the hearing pursuant to section 473 based on his calendaring
error. CSIC opposed any continuance of the hearing. The court indicated it
was not previously aware of and had not reviewed the declaration filed on
July 24 and asked Sunset’s attorney for an offer of proof regarding what
would be in an opposition to CSIC’s motion if it were granted a continuance
to file one. Sunset’s counsel acknowledged the opposition would make
5
arguments similar to those already set forth in Sunset’s own motion for
summary adjudication. The court denied Sunset’s “oral request to continue,
whether it is based on sections 473 or 437[c](h) of the Code of Civil
Procedure,” granted CSIC’s motion, and denied Sunset’s motion. Judgment
was entered against Sunset on August 15, 2024.
Sunset timely appealed.
DISCUSSION
I.
SUNSET FAILED TO SHOW PREJUDICIAL ERROR FROM THE DENIAL OF ITS
REQUEST FOR A CONTINUANCE TO OPPOSE CSIC’S MOTION
Before reaching the merits of the parties’ cross-motions, we
consider whether the trial court abused its discretion by denying Sunset’s
request for a continuance of the hearing to allow Sunset to file an opposition
to CSIC’s motion and by not considering the declaration that had been filed
by Sunset’s counsel. Sunset contends the continuance should have been
granted under section 473, subdivision (b), because Sunset’s counsel
“admitted fault” in a sworn declaration and was not able to seek ex parte
relief before the hearing because the department was dark.6 Sunset contends
the requested continuance was only for two weeks, CSIC would not have been
prejudiced by a brief continuance, and the trial court did not consider the
6
As noted above, the trial court order denying the continuance
also referenced section 437c, subdivision (h), which mandates a continuance
of a summary judgment motion to allow for additional discovery when “it
appears from the affidavits submitted in opposition to [the motion] that facts
essential to justify opposition may exist but cannot, for reasons stated, be
presented.” (Ibid.) Sunset, however, only argues on appeal that it was
entitled to a continuance pursuant to section 473, subdivision (b). We
therefore do not address section 437c, subdivision (h).
6
declaration of Sunset’s counsel attesting to his fault in missing the deadline
to file Sunset’s opposition. We find no abuse of discretion.
Section 473, subdivision (b) provides in relevant part that “[t]he
court may, upon any terms as may be just, relieve a party or the party’s legal
representative from a judgment, dismissal, order, or other proceeding taken
against the party through the party’s mistake, inadvertence, surprise, or
excusable neglect. Application for this relief shall be accompanied by a copy of
the answer or other pleading proposed to be filed therein, otherwise the
application shall not be granted, and shall be made within a reasonable time,
in no case exceeding six months, after the judgment, dismissal, order, or
proceeding was taken.”7 (§ 473, subd. (b).) Relief under this portion of the
statute lies within the court’s discretion. (Henderson v. Pacific Gas & Electric
Co., supra, 187 Cal.App.4th at pp. 219, 224–225.) “[A]n attorney’s failure to
meet a procedural deadline is a proper subject of section 473 relief.” (Id. at p.
229.) The trial court’s ruling on a discretionary motion for relief under section
473, subdivision (b) is reviewed for abuse of discretion. (Id. at p. 219.)
Irrespective of whether a continuance is mandatory or
discretionary, an order denying such request is reversible only if “it is
tantamount to the denial of a fair hearing” and “the burden to demonstrate
7 Section 473, subdivision (b) also contains a mandatory provision
that requires a court to provide relief when the attorney provides a “sworn
affidavit attesting to the attorney’s mistake, inadvertence, surprise, or
neglect . . . .” But that mandatory relief is “only available for defaults, default
judgments, and dismissals.” (Martin Potts & Associates, Inc. v. Corsair, LLC
(2016) 244 Cal.App.4th 432, 438.) It does not apply to “mistakes an attorney
makes in opposing, or not opposing, a summary judgment motion (or not
timely requesting a continuance of a hearing on a summary judgment
motion).” (Henderson v. Pacific Gas & Electric Co. (2010) 187 Cal.App.4th
215, 228.) Thus, only the discretionary relief provided for in section 473,
subdivision (b) is applicable here.
7
prejudice is on the appellant.” (Freeman v. Sullivant (2011) 192 Cal.App.4th
523, 528; see id. at p. 527; § 475 [“No judgment . . . shall be reversed or
affected by reason of any error . . . unless it shall appear from the record that
such error . . . was prejudicial, and also that by reason of such error . . . the
said party complaining or appealing sustained and suffered substantial
injury, and that a different result would have been probable if such
error . . . had not occurred or existed”].)
Even if we were to conclude the trial court abused its discretion
by failing to consider the declaration filed by Sunset’s counsel and by denying
the requested brief continuance, Sunset has failed to show it was denied a
fair hearing on CSIC’s motion. To the contrary, as Sunset’s counsel
acknowledged at the hearing, Sunset’s own motion for summary
adjudication—which the trial court considered jointly when ruling on CSIC’s
motion—was the flip side of the coin and contained the same or similar
information that Sunset would have included in any opposition to CSIC’s
motion. Sunset failed to show what additional evidence or argument it would
have presented, had it obtained a continuance, that would have changed the
outcome, and considering the issues and evidence before the court on the
cross-motions, we see none. Sunset therefore has failed to show grounds for
reversal.
II.
THE TRIAL COURT PROPERLY GRANTED SUMMARY JUDGMENT TO CSIC
Sunset contends the trial court erred in granting summary
judgment to CSIC because (1) it misinterpreted language in the endorsement
regarding who qualifies as an additional insured, (2) the policies provided the
potential for coverage for the Bierschbach Litigation, (3) the trial court
misinterpreted aspects of the policies relating to coverage, and (4) factual
8
issues prevented entry of summary judgment as to CSIC’s duty to investigate
potential coverage and grounds for reformation based on mistake in providing
the coverage requested by CD&G.8 We reject all of Sunset’s contentions.
A. SAC Allegations
We begin by summarizing the allegations of the SAC, which
frame the issues for summary judgment. (Feltham v. Universal Protection
Service, LP (2022) 76 Cal.App.5th 1062, 1068.)
Sunset characterizes the gravamen of its action as involving the
duty to defend. Sunset alleges it contracted with CD&G for “ground up [i.e.,
new] construction” of the condominium units.9 Bierschbach purchased her
unit in April 2016, and construction of her unit was completed in October
2016.
Prior to February 2016, CD&G was insured by Colony Insurance
Co. Approximately two months before completion of the construction,
however, CD&G switched coverage to CSIC. The policies consist of Policy No.
CT20160924-01, which covered the policy period February 22, 2016, to
February 22, 2017 (the 2016 Policy), and renewal Policy No. CT20160924-02,
which covered the period February 22, 2017, to February 22, 2018 (the 2017
Renewal).10
8
Sunset’s appellate briefing is confusing in many respects, so we
have done our best to distill the arguments to the key issues Sunset is
raising.
9
The principal of CD&G, Jack Hall, who signed the 2013
Construction Contract for both parties, was also a member of Sunset.
10
As noted, we refer to the 2016 Policy and 2017 Renewal
collectively as the policies.
9
Bierschbach filed the Bierschbach Litigation against Sunset and
CD&G on June 19, 2017. Sunset alleges in the SAC that there was a
potential for coverage under the policies and both CD&G and Sunset
promptly tendered the claim to CSIC.
CSIC denied coverage as to both CD&G and Sunset on
August 11, 2017. Sunset contends it is an additional insured under both
policies, and that it suffered damages because it had to defend against
Bierschbach’s claim11 and then sue CD&G for indemnity.
B. Standard of Review and Governing Principles of Insurance Law
We review all questions regarding the scope of insurance
coverage de novo. (Yahoo Inc. v. National Union Fire Ins. Co. etc. (2022) 14
Cal.5th 58, 67.) In reviewing an order granting summary judgment, we
review the evidence in the light most favorable to the nonmoving party
(Regents of University of California v. Superior Court (2018) 4 Cal.5th 607,
618), and “decide independently whether the facts not subject to triable
dispute warrant judgment for the moving party as a matter of law.” (Luebke
v. Automobile Club of Southern California (2020) 59 Cal.App.5th 694, 703.)
The standards applicable to the interpretation of an insurance
policy were explained by the Supreme Court in Palmer v. Truck Ins.
Exchange (1999) 21 Cal.4th 1109, 1115:
“‘[I]nterpretation of an insurance policy is a question of law.’
[Citation.] ‘While insurance contracts have special features, they are still
contracts to which the ordinary rules of contractual interpretation apply.’
[Citation.] Thus, ‘the mutual intention of the parties at the time the contract
is formed governs interpretation.’ [Citation.] If possible, we infer this intent
11
Sunset settled the Bierschbach Litigation with Bierschbach.
10
solely from the written provisions of the insurance policy. [Citation.] If the
policy language ‘is clear and explicit, it governs.’ [Citation.] [¶] When
interpreting a policy provision, we must give its terms their ‘“ordinary and
popular sense,” unless “used by the parties in a technical sense or a special
meaning is given to them by usage.”’ [Citation.] We must also interpret these
terms ‘in context’ [citation], and give effect ‘to every part’ of the policy with
‘each clause helping to interpret the other.’ [Citations.] [¶] A policy provision
is ambiguous only if it is susceptible to two or more reasonable constructions
despite the plain meaning of its terms within the context of the policy as a
whole. [Citation.] The court may then ‘invoke the principle that ambiguities
are generally construed against the party who caused the uncertainty to exist
(i.e., the insurer) in order to protect the insured’s reasonable expectation of
coverage.’”
A fundamental tenet of insurance law “‘is the principle that the
duty to defend is broader than the duty to indemnify . . . .’” (Montrose
Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295; see id. at p. 299.)
An insurer must defend any action that asserts a claim potentially seeking
damages within the coverage of the policy. (Id. at p. 295.) “[T]he insured need
only show that the underlying claim may fall within policy coverage.” (Id. at
p. 300.)
“When additional insured endorsements, by their own terms,
depend on the existence of a written contract between the named insured and
the additional insured, the contract is a significant circumstance in
determining the objectively reasonable expectations of the additional insured.
This is true whether or not the insurer ever actually read the contract.” (St.
Paul Mercury Ins. Co. v. Frontier Pac. Ins. Co. (2003) 111 Cal.App.4th 1234,
1245.)
11
C. The 2013 Construction Contract
The 2013 Construction Contract was dated as of June 25, 2013,
and was signed by CD&G and Sunset on June 27, 2013.12 Sunset was
identified as both the “Owner” and CD&G’s client. Pursuant to the 2013
Construction Contract, CD&G agreed to indemnify Sunset and warranted its
work would be free from defects. Section 14.2.1 required CD&G to name both
Sunset and Sunset’s lender as additional insureds on CD&G’s liability
insurance. Sunset agreed general liability insurance is “at owner’s expense.”
D. The Policies
The application for insurance that CD&G provided to CSIC for
the issuance of the 2016 Policy stated, with respect to its primary operations,
that it is a “general contractor that does residential and commercial
remodeling and some spec new construction-SFR’s and condos. 50% is subbed
out.” (Some capitalization omitted.) The application requested a “Blanket
Additional Insured Endorsement” (some capitalization omitted), but it did not
identify Sunset or any other party as a requested additional insured. In
response, CSIC issued the 2016 Policy.
On or about April 18, 2016, CD&G’s insurance broker, Zee Best,
noticed the 2016 Policy included an exclusion for new condominium
construction (CC 01 019 11 13), which was entitled “Condominium,
Cooperative, Townhouse, Multifamily Dwelling, Apartment Projects
Exclusion” (some capitalization omitted) (the 019 Endorsement).13 When Zee
12
Hall signed on behalf of both Sunset and CD&G.
13
The 019 Endorsement excluded from coverage “any claim,
‘suit’, ‘bodily injury’, ‘property damage’ or ‘personal injury’ arising out of or
resulting in whole or in part from any work or operations performed by you or
any contractors or subcontractors working directly or indirectly on your
12
Best brought the error to CSIC’s attention, CSIC agreed to remove exclusion
CC 01 019 11 13 from the 2016 Policy and substitute it with exclusion CC 01
161 11 13 (the 161 Endorsement) for no additional premium pursuant to
Policy Changes Endorsement 001. The new 161 Endorsement in the 2016
Policy excluded from coverage “any ‘occurrence’, ‘bodily injury’, ‘property
damage’, ‘personal and advertising injury’, incident or ‘suits’ arising out of,
resulting from, caused by or in any way related to any new construction
operations, including but not limited to construction or demolition operations
performed by you or any contractors or subcontractors working directly or
indirectly on your behalf in connection with any condominium, cooperative, or
townhouse project including common areas,” but it carved out from the
exclusion “any interior repair, maintenance or remodeling operations for
which the project contract is with the individual unit owner.” (Italics added.)
Before CSIC issued the new 161 Endorsement to the 2016 Policy,
Zee Best confirmed in an email to CSIC’s agent that “remodel/repair coverage
is ok.” However, during the course of renewing the policy for 2017, Zee Best
noted the 2017 Renewal erroneously included the old 019 Endorsement, and
it again asked that it be removed. CSIC responded by changing the 2017
Renewal to add the 161 Endorsement and delete the 019 Endorsement. On
July 18, 2017, Zee Best wrote to Chaix: “This is still wrong. The endorsement
# CC011611113 is correct as on the prior policy. However, endorsement
# CC011611113 New construction exclusion was not. This one needs to be
deleted. It was our intent to cover new constructions of condos.”
As to who is covered under the policies, CD&G is listed as the
insured. Each of the policies included two separate endorsements identifying
behalf arising out of any project involving any condominium, cooperative,
townhouse, multifamily dwelling, or apartment.”
13
additional insureds. The schedule for the first endorsement modified the
“Commercial General Liability Coverage Part” (some capitalization omitted)
of the policy, and was entitled “Additional Insured—Owners, Lessees or
Contractors—Scheduled Person or Organization” (some capitalization
omitted). The schedule for the second endorsement modified the “Commercial
General Liability Coverage Part Products/Completed Operations Liability
Coverage Part” (some capitalization omitted) (completed operations
coverage), and was entitled “Additional Insured—Owners, Lessees or
Contractors—Completed Operations” (some capitalization omitted).
Under “Name of Additional Insured Person(s) or Organization(s)”
(boldface omitted), both endorsements state: “Any person or organization
when you have agreed in writing in a contract or agreement that such person
or organization be added as an Additional Insured,” and the second
endorsement for completed operations coverage adds “for Completed
Operations Coverage.”
Section “A” of the endorsements amends “Section II—Who Is An
Insured” of the policy to include, as an additional insured, the person or
organization listed in the schedule, but only with respect to certain
enumerated types of liability caused by CD&G “at the location(s) designated”
in the schedule. Under “Location(s) of Covered Operations,” on the first
endorsement and “Location and Description of Completed Operations” in the
second endorsement, the endorsements state: “As required by written
contract that is executed on or after the policy inception.” (Boldface omitted
and italics added.)
E. The Bierschbach Litigation
On June 19, 2017, Bierschbach sued Sunset, CD&G, and O’Neil,
contending her condominium unit included numerous construction defects,
14
resulting in water intrusion, water damage, mold, and other property
damage.14 Bierschbach alleged claims against Sunset for breach of written
contract, negligence, breach of express warranty, intentional
misrepresentation, and concealment.
F. Sunset Does Not Qualify as an Additional Insured Under the Policies
First, we address Sunset’s contention that it qualifies as an
additional insured under the policies. We agree with the trial court’s
conclusion that CSIC met its initial burden on summary judgment of showing
Sunset was not an additional insured under the policies.
Under the policies, CSIC’s duty to defend extends to “the
insured.” Both policies contain the same two additional insured
endorsements. Both endorsements contain the same key language in their
respective schedules that specifically limits their application to: “Any person
or organization when you have agreed in writing in a contract or agreement
that such person or organization be added as an Additional Insured.” The
endorsements’ schedules further provide that the additional insured coverage
only applies to locations “[a]s required by written contract that is executed on
or after the policy inception.” There was no evidence of any contract before
the trial court on the cross-motions that was “executed” after the inception of
the policies. Rather, the only contract was the 2013 Construction Contract,
which was entered into—i.e., executed—by CD&G and Sunset years before
the 2016 Policy was issued.
Despite this clear language in the endorsements governing who is
an additional insured, Sunset argues the trial court misconstrued the term
14
Bierschbach alleged O’Neil was hired by Sunset and/or CD&G
“to attempt certain repairs at the Residence” but such “repair attempts were
unsuccessful.”
15
“executed” to mean the date on which the 2013 Construction Contract was
signed, rather than the date on which it was fully performed. Put another
way, Sunset argues a contract is not “executed” when it is signed, but only
when all the obligations thereunder have been fully completed. Sunset relies
on Civil Code section 1661, which provides: “An executed contract is one, the
object of which is fully performed. All others are executory.” Sunset also
points out the 2013 Construction Contract contained a section entitled
“Execution of Contract” which laid out the process for completing the
construction, which governs the interpretation of the language in the
endorsements. We disagree with Sunset’s interpretation of the endorsements.
When interpreting the language of an insurance contract, we do
so “according to the common and ordinary meaning of the words of the
contract.” (Blasiar, Inc. v. Fireman’s Fund Ins. Co. (1999) 76 Cal.App.4th 748,
754.) In this context, the term “executed” as used in the phrase “As required
by written contract that is executed on or after the policy inception” refers to
the date the agreement was signed. There can be no reasonable dispute that
when a contract is “executed” refers to the date it is signed—not when it is
performed. (See Nielsen Construction Co. v. International Iron Products
(1993) 18 Cal.App.4th 863, 869 [in interpreting the meaning of “‘executed’” as
used in Labor Code section 3864, which imposes indemnity on an employer
for a personal injury liability only if there is a written agreement “‘executed
prior to the injury,’” the court held the term meant “completing, i.e., signing,
the written agreement,” referring to Black’s Law Dictionary definitions of
“‘execute’” as meaning “‘to sign . . . . To perform all necessary formalities, as to
make and sign a contract’”].)
All of the causes of action in Sunset’s SAC that are based on its
claimed status as an additional insured under the policies therefore fail,
16
including its claims for declaratory relief, breach of contract, and insurance
bad faith.
G. There Was No Potential Coverage for the Bierschbach Litigation So
Sunset’s Direct Action as a Creditor of CD&G Fails as a Matter of Law
Because Sunset also brings a direct claim against CSIC for
benefits allegedly owed to CD&G pursuant to Insurance Code section 11580,
subdivision (b)(2), we turn to the issue of whether CD&G had any coverage
under the policies for the Bierschbach Litigation. Based on all the papers
before the trial court on the cross-motions (see § 437c, subd. (c) [“summary
judgment shall be granted if all the papers submitted show that there is no
triable issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law”]), we conclude it did not and that there was
insufficient evidence to create a triable issue of material fact on that issue.
The allegations in the Bierschbach Litigation related to defects in
her unit, which was built by CD&G and purchased by Bierschbach new from
Sunset.15 The Bierschbach Litigation did not relate to “interior repair,
maintenance or remodeling operations,” for which the “project contract” was
with Bierschbach—the individual unit owner. The only contract in evidence
before the court on CSIC’s motion pertaining to work performed on
Bierschbach’s unit was the 2013 Construction Contract between CD&G and
15
In the papers submitted to prove up its default against CD&G
in the Bierschbach Litigation, Sunset’s managing member stated in a
declaration that Bierschbach’s claims were due to “CD&G’s faulty work” as a
“general contractor” as to both Bierschbach’s unit and the other condominium
unit on the property, that CD&G did not properly or adequately supervise
and/or construct the property, and that CD&G violated its obligations under
the contract.
17
Sunset for the ground up construction of the condominium units,16 which was
executed at a time when the property was still vacant. Therefore, the 161
Endorsement excluded coverage.
We reject Sunset’s contention that summary judgment was not
appropriate because there was a triable issue of material fact regarding
whether there was a mistake in the issuance of the 161 Endorsement that
could support reformation of the policies.17 The email correspondence
regarding the initial errors by CSIC in including the 019 Endorsement and
the replacement of that endorsement with the 161 Endorsement do not create
a triable issue. The evidence shows Zee Best, acting as Sunset’s agent,
16
We reject Sunset’s suggestion that the phrase “project contract”
in the 161 Endorsement as it pertains to the existence of a contract with the
individual unit owner is ambiguous. The fact that the phrase is undefined
does not alone make it ambiguous. (Bay Cities Paving & Grading, Inc. v.
Lawyers’ Mutual Ins. Co. (1993) 5 Cal.4th 854, 866.) Common sense
mandates that, in the context of the policy, a “project contract” “with the
individual unit owner” means a contract between CD&G, the insured under
the policies, and the person who owns the unit.
17
As Sunset explains in its opening brief, an insurance policy
may be reformed “where, by reason of fraud, inequitable conduct or mutual
mistake, the policy as written does not express the actual and real agreement
of the parties.” (American Surety Co. v. Heise (1955) 136 Cal.App.2d 689,
695–696; see Civ. Code, § 3399 [“When, through fraud or a mutual mistake of
the parties, or a mistake of one party, which the other at the time knew or
suspected, a written contract does not truly express the intention of the
parties, it may be revised on the application of a party aggrieved, so as to
express that intention, so far as it can be done without prejudice to rights
acquired by third persons, in good faith and for value”].)
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expressly agreed the 161 Endorsement was correctly substituted for the 019
Endorsement.
III.
THE TRIAL COURT DID NOT ERR IN DENYING SUNSET’S
CROSS-MOTION FOR SUMMARY ADJUDICATION
Sunset contends the trial court erred in denying its motion for
summary adjudication. We disagree. In the absence of any potential coverage
under the policies, the trial court properly denied Sunset’s motion, which was
predicated on an alleged wrongful denial of a duty to defend and an alleged
bad faith failure to investigate the claim. (See Federal Ins. Co. v. Steadfast
Ins. Co. (2012) 209 Cal.App.4th 668, 680 [“If, as a matter of law . . . there is
no potential for coverage based on the allegations in the complaint or the
extrinsic facts known to the insurer, then there is no duty to defend”];
Benavides v. State Farm General Ins. Co. (2006) 136 Cal.App.4th 1241, 1245
[“plaintiff may not recover for the negligent handling of her claim because
there is no coverage under the terms of the policy”].)
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DISPOSITION
The judgment is affirmed. Respondent shall recover costs on
appeal.
GOODING, J.
WE CONCUR:
DELANEY, ACTING P. J.
SCHWARM, J.*
*Judge of the Orange County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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