Yu v. American Safety Indemnity CA4/3

Filed 10/29/14 Yu v. American Safety Indemnity 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

BANN-SHIANG LIZA YU,

Plaintiff and Appellant, G048617

v. (Super. Ct. No. 30-2009-00255065)

AMERICAN SAFETY INDEMNITY OPINION
COMPANY,

Defendant and Respondent.

Appeal from a judgment of the Superior Court of Orange County, Kim
Garlin Dunning, Judge. Affirmed.
Mohammed K. Ghods and William A. Stahr for Plaintiff and Appellant.
Blau & Associates, David S. Blau and Ron Nelson for Defendant and
Respondent.

* * *
 Plaintiff and appellant Bann-Shiang Liza Yu appeals from a summary
judgment in favor of defendant and respondent American Safety Indemnity Company in
an insurance bad faith action. She raises several grounds, including that none of several
policy exclusions applies, and defendant failed to defend additional insureds, breached
the covenant of good faith and fair dealing, and did not negate the equitable contribution
cause of action. Plaintiff also claims the trial court erred by making a blanket order
overruling all of her evidentiary objections.
We conclude an endorsement excluding coverage for preexisting damage
barred coverage as a matter of law. In addition, plaintiff has not shown there was any
evidence-based error. We affirm.
FACTS AND PROCEDURAL HISTORY
Plaintiff is the owner and developer of the Candlewood Suites Hotel. She
contracted with ATMI Design Build (ATMI) to act as the general contractor to construct
the hotel (Project). On November 18, 2002, ATMI entered into two subcontracts with
Jose Jesus Aguilar, doing business as C&A Framing Company (C&A), one to provide
materials and labor and one to perform the rough framing for the Project. In May 2003
ATMI fired C&A before it had completed all the work required by the subcontracts.
After that date C&A never returned to the construction site and did not communicate with
anyone connected with the Project. The Notice of Completion for the Project was
recorded April 15, 2004.
In 2003 C&A filed suit against ATMI seeking approximately $180,000 for
framing work it did on the Project. In November 2003 ATMI filed a cross-complaint
against a variety of subcontractors, including C&A. As to C&A, ATMI alleged it failed
to perform and inadequately performed its work, resulted in “damages to the work
performed by other sub trades on the [P]roject.”

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 In 2004 plaintiff sued ATMI and several of the subcontractors for alleged
construction defects. C&A was added as a defendant in the second amended complaint
filed November 2005.
On March 30, 2005 defendant issued to C&A a commercial general liability
policy (Policy) for the period March 30, 2005 to March 30, 2006; the Policy actually
terminated on July 15, 2005. Coverage under the Policy (Coverage A) provided:
“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.
[¶] . . . [¶] b. This insurance applies to ‘bodily injury’ and ‘property
damage’ only if:
“(1) The ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’
that takes place in the ‘coverage territory’; and
“(2) The ‘bodily injury’ or ‘property damage’ occurs during the policy
period.”
An endorsement to the Policy stated:
“‘Property damage,’ . . . which commenced prior to the effective date of
this insurance will be deemed to have happened prior to, and not during, the term of this
insurance.” (Deemer Provision.)
An endorsement to the Policy, entitled PRE-EXISTING INJURY OR
DAMAGE EXCLUSION (boldface omitted; Pre-existing Damage Exclusion), provided:
“This insurance does not apply to:
“1. Any ‘occurrence,’ incident or ‘suit’ whether known or unknown to any
Insured:

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 “a. which first occurred prior to the inception date of this policy or the
retroactive date of this policy, if any; or
“b. which is, or is alleged to be, in the process of occurring as of the
inception date of this policy, or the retroactive date of this policy, if any, even if the
‘occurrence’ continues during this policy period.
“2. Any damages arising out of or relating to ‘bodily injury,’ ‘property
damage’ or ‘personal and advertising injury’ which are known to any officer of the
Named Insured, which are in the process of settlement, adjustment, or ‘suit’ as of the
inception date of this policy, or the retroactive date of this policy, if any.
“We shall have no duty to defend any insured or Additional Insured against
any loss, ‘occurrence,’ incident or ‘suit,’ or other proceeding alleging damages arising
out of or related to ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’
to which this Endorsement applies.
“All other terms, conditions and exclusions under the policy are applicable
to this Endorsement and remained unchanged.” (Boldface omitted.)
The Policy also contained an additional insured endorsement (Additional
Insured Endorsement) as follows:
“This Endorsement shall not serve to increase our limits of
insurance . . . . [¶] Name of Person or Organization: Project owners or general
contractors, if other than a named insured, as well as their directors, officers and
employees where required to be named as an Additional Insured in a written contract
with the Named Insured entered into prior to the loss or occurrence.
“Effective Date: The latter of the effective date of this policy or the date on
which ‘your work’ first started . . . , but in no event later than the policy expiration date
or applicable earlier termination date of this policy.
“In consideration of the payment of premiums, it is hereby agreed that the
following changes are incorporated into the policy:

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 “WHO IS AN INSURED (SECTION II) is amended to include as an
insured the person or organization shown in the Schedule, but only with respect to
liability arising out of ‘your work’ but only as respects ongoing operations performed by
the Name Insured for the Additional Insured on or after the effective date of this
Endorsement.
“Coverage under this Endorsement applies only as respects legally
enforceable written contract with the Named Insured and only for liability arising out of
or relating to the Named Insured’s sole negligence and only for ‘bodily injury’ or
‘property damage’ caused by an ‘occurrence’ under Coverage A not otherwise excluded
in the policy to which this Endorsement applies.
[¶] . . . [¶] All other terms, conditions and exclusions under the policy are applicable to
this Endorsement and remained unchanged.” (Boldface omitted.)
In June 2006, plaintiff filed her fourth amended complaint against ATMI
and approximately 35 subcontractors, including C&A, who was sued for failing to
complete framing. C&A was defended by Mt. Hawley Insurance Company (Mt.
Hawley).
In December 2006 counsel for Mt. Hawley tendered the case to defendant
on behalf of C&A. A month later, defendant denied the tender and included a reservation
of rights. In the letter denying coverage defendant relied on, among other things, the
exclusion of coverage for property damage occurring prior to the Policy period and that
the alleged defects were not caused by work performed during the Policy period. Mt.
Hawley paid to settle the case on behalf of C&A. As part of the settlement C&A and Mt.
Hawley assigned to plaintiff any claims they might have against C&A’s other insurers.
In 2009 plaintiff filed the first amended complaint in this action against
defendant and other insurers, alleging causes of action for declaratory relief, breach of
contract, bad faith, and equitable subrogation, contribution and indemnity. Plaintiff
alleged C&A assigned to her all its rights against any insurer that had issued a policy to

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him that “potentially afford[ed] coverage” for a failure to defend and further that Mt.
Hawley assigned to her any rights it might have to indemnity, contribution and
subrogation. She also alleged she is the assignee of any claims against defendant held by
Himes Peters Jepson Architects, Inc. and Thomas D. Peters (collectively HPJ) as part of
their settlement agreement.
Defendant filed a motion for summary judgment arguing it had no duty to
defend or indemnify C&A in the ATMI action because C&A was not covered under the
Policy. In the alternative defendant moved for summary adjudication of issues that there
was no coverage for C&A or additional insureds and that the causes of action for bad
faith and equitable contribution had no merit.
The trial court granted the summary judgment motion, finding “as a matter
of law there was no potential for coverage” under the Policy. It relied on two
endorsements to the Policy. The first was the Deemer Provision, which states that any
property damage that commenced prior to the effective date of the Policy is “deemed to
have happened prior to, and not during, the term of this insurance.” The second was the
Pre-existing Damage Exclusion, excluding coverage for any occurrence, incident, or suit
occurring prior to or in the process of occurring at the inception date of the Policy, “even
if the ‘occurrence’ continues during this [P]olicy.” It further excluded damages known to
C&A that were in the process of adjustment, settlement or an action as of the inception
date of the Policy.
As to plaintiff’s objections to defendant’s evidence in support of the
motion, the court did not rule on any of them because it did not rely on any declarations
in deciding the motion.
DISCUSSION
1. Introduction
Code of Civil Procedure section 437c, subdivision (c), declares “summary
judgment shall be granted if all the papers submitted show that there is no triable issue as

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to any material fact and that the moving party is entitled to a judgment as a matter of
law.” A defendant may bring a motion on the ground there is a complete defense to the
action. (Code Civ. Proc., § 437c, subds. (o)(2),(p).) If it meets its burden to show a
complete defense, the burden shifts to plaintiff to produce evidence showing a triable
issue of material fact. (Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199
Cal.App.4th 1132, 1144.) “There is a triable issue of material fact if, and only if, the
evidence would allow a reasonable trier of fact to find the underlying fact in favor of the
party opposing the motion in accordance with the applicable standard of proof.” (Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, fn. omitted.) “[A] party ‘. . . must
produce admissible evidence raising a triable issue of fact. [Citation.]’ [Citation.]”
(Dollinger DeAnza Associates v. Chicago Title Ins. Co., supra, 199 Cal.App.4th at pp.
1144-1145.) We review a summary judgment de novo. (Aguilar v. Atlantic Richfield
Co., supra, 25 Cal.4th at p. 860.)
2. Pre-existing Damage Exclusion
The Pre-existing Damage Exclusion excludes coverage on two different
grounds. First, there is no coverage for “[a]ny ‘occurrence,’ incident or ‘suit’ whether
known or unknown,” occurring prior to the starting date of the Policy; or occurring or
allegedly occurring as of the starting date of the Policy, “even if the ‘occurrence’
continues during this [P]olicy period.”
Second, the Pre-existing Damage Exclusion excludes damages “arising out
of or relating to” “‘property damage’” “in the process of settlement, adjustment, or ‘suit’
as of the inception date of this [P]olicy . . . .”
Relying solely on the second part of the Pre-existing Damage Exclusion
plaintiff argues it does not bar coverage for several reasons. But we need not even get to
the second alternative, because the first suffices to exclude coverage. It requires only a
showing there was an “‘occurrence,’ incident or ‘suit’” occurring before the start date of
the Policy or in the process of occurring before the start date. There is no disputed

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material fact the ATMI cross-complaint against C&A was filed before the Policy was
issued. Plaintiff specifically acknowledges that in her brief. Thus, the condition of the
Pre-existing Damage Exclusion is met.
Plaintiff disagrees, arguing defendant did not have “conclusive facts to
negate coverage at the time of its denial” (boldface & underscoring omitted). She
maintains that at the time it declined the tender defendant did not know the contents of
the ATMI cross-complaint, basing this on the misleading assertion defendant had no copy
of the cross-complaint in its claims file. But the record is specifically to the contrary.
In support of its motion for summary judgment, defendant filed the
declaration of Jean D. Fisher, defendant’s corporate claims counsel, in which she states
she reviewed pleadings in the ATMI action on the court’s Web site. She also had
testified to this in two different depositions, where she stated she looked online and
reviewed both the C&A complaint and the ATMI cross-complaint. And she specifically
testified at her deposition she did not print the pleadings “because they’re available
online.”
More importantly, however, whether or not defendant had a copy of or had
reviewed the ATMI cross-complaint at the time it declined coverage is irrelevant.
Pursuant to the Policy language, coverage was excluded as a matter of law because suit
had been filed against C&A prior to the Policy’s inception. (See ML Direct, Inc. v. TIG
Specialty Ins. Co. (2000) 79 Cal.App.4th 137, 145 [in directors and officers policy, court
affirmed denial of coverage based on language excluding coverage for claim arising from
proceeding initiated before or pending as of date of issuance of policy].) That it was not
their suit is of no moment under the language of the Pre-existing Damage exclusion.
If, as a matter of law, there is no potential for coverage, an insurer does not
have a duty to defend the insured regardless of when it acquired that knowledge. “The
resolution of a legal question against coverage . . . establishes in hindsight that no duty to
defend ever existed and that there was never any potential for coverage. [Citation.]”

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(State Farm General Ins. Co. v. Mintarsih (2009) 175 Cal.App.4th 274, 284-285, fn. 6,
citing Scottsdale Ins. Co. v. MV Transportation (2005) 36 Cal.4th 643, 657-658.)
Thus, there is no need to address plaintiff’s arguments based on the second
portion of the Pre-existing Damage Exclusion. But even on the merits her claims fail.
This portion of the Pre-existing Damage Exclusion excludes coverage for
damages arising from property damage “in the process of settlement, adjustment, or
‘suit’” at the inception of the Policy. Plaintiff maintains the ATMI cross-complaint did
not allege C&A’s negligence caused property damage. Plaintiff is wrong.
The ATMI cross-complaint alleged C&A did not timely perform or perform
in accordance with the standard of care and damaged other sub trades. It further pleaded
C&A’s negligence caused damage to the work performed by the other subcontractors.
This is a sufficient allegation of property damage.
Additional evidence supporting defendant’s denial of coverage was C&A’s
application for insurance from defendant showing its claim against ATMI, including the
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Policy Loss Run supplied by RLI/Mt. Hawley, C&A’s prior carrier. It shows a claim by
Candlewood Suites Hotel with the claim identified as “insureds framing work allegedly
causing damage to Hotel” (capitalization omitted) and a claimed date of loss of
September 2003.
We give no weight to plaintiff’s attempt to create a triable issue of material
fact by arguing there is a question as to whether the Pre-existing Damage Exclusion was
part of the Policy. Plaintiff points to defendant’s letter denying coverage where the
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endorsement is referred to by a different number than the one in the record before us.

1
“‘Loss runs’ are reports provided by [an] insurance company that document the
claim activity on each of [an insured’s] policies.”(Loss Runs (2014)
[as of Oct. 27, 2014].)
2
The letter denying coverage refers to Endorsement No. 98 08 08 99. The Pre-
existing Injury or Damage Exclusion on which we rely is contained in Endorsement No.
98 08 02 05.

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She claims that endorsement has never been produced and there is a question of its actual
contents.
But the language of the endorsement excluding preexisting injury quoted in
the letter denying coverage is identical to the language of the Pre-existing Damage
Exclusion included in the record and on which we rely. The number of the endorsement
is completely irrelevant. The substance is what is important, and there is no question as
to that.
This Pre-existing Damage Exclusion is a sufficient basis on which
defendant properly denied the tender. Thus, it is unnecessary for us to discuss any of the
other sections of the Policy, including the Deemer Provision on which the trial court also
relied, that would support defendant’s denial of coverage.
3. Additional Insureds
Plaintiff alleged she was the assignee of claims against defendant held by
ATMI, HPJ, and C&A that she received as part of her settlements with them. She argues
she succeeded to the rights of HPJ and C&A as additional insureds under the Policy.
This claim has no merit.
The Additional Insured endorsement provides coverage under defined
circumstances only for “‘property damage’ caused by an ‘occurrence’ under Coverage A
not otherwise excluded in the policy to which this Endorsement applies.” As discussed
above, coverage is excluded under the Pre-existing Damage Exclusion.
In addition, coverage is limited to “ongoing operations performed by the
Named Insured for the Additional Insured on or after the effective date of this
Endorsement.” The record conclusively demonstrates C&A’s work on the Project
predates the effective date of the Policy.
Thus, there is no coverage for any alleged additional insureds.

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4. Equitable Contribution
Plaintiff argues there is a triable issue of material fact as to whether she, as
assignee of Mt. Hawley, which defended C&A, is entitled to equitable contribution. She
contends we must look to see if there was potential coverage at the time defendant denied
the tender, not whether there is coverage “based on all of the facts now known by”
defendant.
Coverage under the Policy is an element of a cause of action for equitable
indemnity. (Monticello Ins. Co. v. Essex Ins. Co. (2008) 162 Cal.App.4th 1376, 1386.)
As discussed above, there was no potential for coverage when defendant denied the
tender. Thus, this claim fails. (See Safeco Ins. Co. of America v. Superior Court (2006)
140 Cal.App.4th 874, 879, 881.)
5. Evidentiary Objections
Finally, plaintiff complains the court overruled her objections to portions of
the evidence defendant submitted in support of its motion for summary judgment without
any analysis. Plaintiff did not set out the 26 objections or explain why overruling them
was error, as was her burden. Thus, she forfeits this claim.
In addition, “an erroneous evidentiary ruling requires reversal only if ‘there
is a reasonabl[e] probability that a result more favorable to the appealing party would
have been reached in the absence of the error. [Citation.]’ [Citations.]” (Twenty-Nine
Palms Enterprises Corp. v. Bardos (2012) 210 Cal.App.4th 1435, 1449.) Plaintiff failed
to make this showing. We have reviewed the objections and the evidence to which they
were directed and found nothing that would change the ruling on the motion for summary
judgment.

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 DISPOSITION
The judgment is affirmed. Defendant is entitled to costs on appeal.

THOMPSON, J.

WE CONCUR:

MOORE, ACTING P. J.

ARONSON, J.

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