Underwriters v. ProBuilders Specialty Insurance Co.

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In 2015, we obtained an appellate decision in favor of Underwriters of Lloyd’s of London, rejecting co-carrier ProBuilders Specialty Insurance Company’s reliance on a non-standard coverage form provision purporting to eliminate ProBuilders’ duty to defend in cases in which another carrier is already defending. The 4th District Court of Appeals deemed that provision to be an unenforceable escape clause. The appellate court also held that ProBuilders could not rely upon an Independent Contractors endorsement’s requirements as a basis to deny a duty to defend the mutual insured, or a basis to dispute Underwriters’ equitable contribution claim.  In addition, the appellate court rejected ProBuilders’ argument that Underwriters’ equitable contribution claim should be barred as untimely because the claim was not pursued within two years of Underwriters’ initial payment of underlying defense costs, or within two years of the underlying parties’ tentative settlement agreement. The opinion represents the first published California appellate decision on those three specific inter-carrier coverage issues.  Of critical significance is the appellate court’s endorsement of the equitable tolling doctrine from Lambert v. Commonwealth Land Title Insurance Co., in the context of inter-carrier contribution claims. The California Supreme Court declined ProBuilders’ petition for review.

Underwriters of Interest Subscribing to Policy Number A15274001 v. ProBuilders Specialty Insurance Co. (2015) 241 Cal.App.4th 721 (modified without change in judgment by 241 Cal.App.4th 1389)

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