Shephard Mechanical Contractors v. Circo System Balance
This dispute arises out of the construction of an Embassy Suites Hotel. When the owner of the hotel sued the general contractor for construction defects, the general contractor cross-complained against various subcontractors, including J & A Mechanical, Inc., the HVAC (heating, ventilation, and air conditioning) subcontractor. J & A Mechanical then filed a cross-complaint against Shephard Mechanical Contractors, Inc. (Shephard), the second tier HVAC subcontractor. Shephard, in turn, cross-complained against Circo System Balance, Inc. (Circo), the third tier HVAC subcontractor. Shephard sought indemnity and a defense from Circo, pursuant to the subcontract agreement that contained an indemnity provision and a promise to defend.
After Circo refused the tender of defense, Zurich North America (Zurich), Shephard’s insurer, paid for Shephard’s defense and paid the $50,000 settlement of claims against Shephard. Zurich then intervened in Shephard’s cross-complaint against Circo for indemnity on a theory of equitable subrogation. Zurich moved for, and the trial court granted, summary adjudication on the issue of Circo’s duty to defend and indemnify Shephard.
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