Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. No. BC367258 Malcolm H. Mackey, Judge.
Weston & McElvain, Richard C. Weston, Christine C. DeMetruis and Aaron C. Agness for Defendant and Appellant.
Selvin Wraith Halman, Susan F. Halman and Melissa A. Dubbs for Plaintiff and Respondent.
MALLANO, P. J.
In this equitable contribution action involving commercial general liability coinsurers, the trial court determined, on cross-motions for summary adjudication, that defendant First Financial Insurance Company (FFIC) was required to contribute to plaintiff NIC Insurance Company (NIC) the amount of approximately $433,100 plus interest, or one-half of NIC’s costs, incurred in defending an underlying construction defect tort action brought against their mutual insured, Kim Komick, doing business as Kim Komick Construction (Komick). On appeal, FFIC challenges the trial court’s determination that NIC was entitled to equitable contribution and the court’s method of apportioning NIC’s defense costs.
Although the parties labeled their motions as ones for summary adjudication, the court’s rulings on the motions resulted in a resolution of all of the issues in the case and entry of a final judgment.
We affirm the judgment because the trial court correctly determined that FFIC had a duty to defend Komick and the court did not abuse its discretion in apportioning defense costs under the “equal shares” method by dividing the costs equally among four policies, with two of the four being FFIC policies. “The equal share method apportions the loss equally [among] the... insurers until the coverage provided by one is exhausted, with any remaining portion of the loss being paid by the [others] until [their] policy limit[s are] reached.” (Reliance Ins. Co. v. St. Paul Surplus Lines Ins. Co. (4th Cir. 1985) 753 F.2d 1288, 1291; American Cas. Co. of Reading, Pa. v. PHICO Ins. Co. (Pa. 1997) 702 A.2d 1050, 1053–1056.)
BACKGROUND
A. Underlying Construction Defect Case
In 1998, Komick, a general contractor, and Louis Bourgeois purchased improved property in Manhattan Beach, California, demolished the existing structure, and constructed a new residence on the property. Komick hired approximately 25 subcontractors to construct the residence, including David Weber, doing business as Weber Construction. In May 1998, Komick and Bourgeois sold the property to Komick & Bourgeois, LLC. A certificate of occupancy was issued in January 1999.
Kim Komick formed another company, KKC Development, Inc., in February 1999. The term “Komick entities” includes Komick, Komick & Bourgeois, LLC, Kim Komick Construction, and KKC Development, Inc.
In August 1999, Komick & Bourgeois, LLC, sold the residence to Gary and Dana Gorman for approximately $1.9 million. The Gormans and their children moved into the residence on September 18, 1999. In December 2001, the Gormans moved out of the residence.
In April 2002, the Gormans filed an action against Komick & Bourgeois, LLC, and others, alleging that numerous structural defects in the residence led to mold contamination, causing the Gormans to suffer both property damage and bodily injuries. (Gorman et al. v. Komick & Bourgeois, LLC, et al. (Super. Ct. L.A. County, No. YC043494) (Gorman action).) During the course of the action, the Gormans alleged that exposure to mold caused one of their children’s toxic encephalopathy and developmental delays. The original complaint and subsequent amended complaints alleged defects in the “foundation, concrete, drainage, grading, framing, stucco, flashing, structural calculations, decks, ventilation, waterproofing, tile and stonework, doors, HVAC, plumbing, electrical and windows.” The complaints also alleged that the residence was affected by excessive moisture, mold, mildew, and fungus. The complaints contained the allegation that each of the defendants was the agent or employee of the remaining defendants and were acting within the course and scope of such agency or employment in doing the things described in the complaint.
In a first amended complaint filed about June 2002, the Gormans named Komick as an additional defendant. In December 2002, the Komick entities filed a cross-complaint against various subcontractors, including Weber. Later, the Gormans filed Doe amendments identifying over 20 subcontractors as defendants, including Weber.
In the Gorman action, Weber’s attorney filed a declaration in connection with Weber’s motion for determination of good faith settlement stating that the Gormans provided a document in 2004 specifying a cost of repair of approximately $1.6 million for “the defects for which they believe [Weber] shares joint and several liability with various other alleged tortfeasors, ” and specifying “an 8% share of responsibility for other property-related damages, for a total of $66,640.00. These ‘other’ property-related damages include loss of use; property expenses; mold repairs to date; house repairs to date; mold stigma re: resale; and personal property damage.” Weber’s attorney also stated that Weber, through his pleadings, asserted that he met or exceeded all applicable standards of care relating to his work on the residence and that he did not contribute to the alleged construction defects or alleged resulting mold. Weber also contended that Komick hired him “to act as her eyes and ears at the construction project when she was not at the site herself; that his main purpose was to oversee the construction and ensure that the project was proceeding according to [Komick’s] instructions; that he was not hired to perform any specific projects at the [site], ” and that “he was not afforded any responsibility for the final outcome of any aspects of the project....”
NIC, which began defending the Komick entities in June 2002 subject to a reservation of rights, settled the Gorman action on behalf of the Komick entities in March 2005 for $1 million. NIC incurred $866,201.48 in unreimbursed defense costs and fees in defending the Komick entities.
In April 2003, Weber tendered his defense in the Gorman action to FFIC, which accepted the tender subject to a reservation of rights. In April 2005, Weber settled the Gorman action for $1.3 million, with FFIC and another carrier (Navigators Insurance Company) each paying $650,000.
B. The Insurance Policies
In dispute in this appeal is the trial court’s apportionment of NIC’s defense costs equally among four insurance policies: one issued by Navigators Insurance Company, one issued by NIC, and two issued by FFIC.
1. Navigators Insurance Company
Navigators Insurance Company, NIC’s parent company, insured Weber under a commercial general liability policy for the period from November 3, 2000, to November 3, 2001. The Navigators Weber policy is one of the four policies included in the trial court’s “equal shares” apportionment method. In FFIC’s challenge to the trial court’s apportionment method, FFIC does not specifically challenge the Navigators Weber policy, so we need not address this policy further.
Although the trial court’s ruling refers to the Navigators 2000 to 2001 Weber policy, Navigators also issued a policy to Kim Komick Construction for the period from May 15, 1997, through May 15, 1998, which was renewed for the period May 15, 1998, to May 15, 1999. The Gorman residence was constructed during one or both of the foregoing policy periods; the Gormans purchased the residence after the expiration of the Navigators policies issued to Kim Komick Construction.
2. NIC
NIC insured Komick, with Komick & Bourgeois, LLC, as an additional insured, from May 15, 2000, to May 15, 2001. The policy contained an independent contractor endorsement providing: “The insured hereby represents and warrants that: [¶]... [¶]... No duty to defend or indemnify any insured under this policy for any claims that are or should be covered under the policies required of contractors and subcontractors under this endorsement will exist absent exhaustion of all such contractors’ and subcontractors’ policies.”
The NIC policy was renewed as to Komick, Komick & Bourgeois, LLC, and KKC Development, Inc., for the period from May 15, 2001, to June 14, 2002, but the renewal policy contained an exclusion for property damage caused by mold.
NIC defended Komick and Komick & Bourgeois, LLC, under the initial policy in effect from May 15, 2000, through May 15, 2001, but not under the renewal policy, which contained a mold exclusion. NIC’s initial policy is one of the four policies included in the trial court’s “equal shares” apportionment method.
3. FFIC
FFIC insured Weber under a policy in effect from September 21, 1998, to September 21, 1999, and a policy in effect from September 21, 1999, to September 21, 2000. (The Gormans moved into the residence on September 18, 1999, three days before the expiration of the first FFIC policy.)
FFIC admitted that, by endorsement, “Kim Komick Construction” was an additional insured under the two FFIC Weber policies.
The “Additional Insured” endorsement, adding “Kim Komick Construction” to both policies, provided: “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’ for that insured or for you. [¶] This insurance does not apply to any ‘occurrence’ arising out of the neglect or negligence of the Person or Organization named in the Schedule. [¶] All of the provisions and exclusions of the policy that apply to LIABILITY COVERAGE also apply to this endorsement.”
The policies defined “‘Your work’” in pertinent part to mean: “a. Work or operations performed by you or on your behalf....” “‘Occurrence’” was defined to mean “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
The policies contained an “Independent Contractors” exclusion endorsement providing: “This insurance does not apply to ‘bodily injury, ’ ‘property damage, ’ ‘personal injury’ or ‘advertising injury’ arising out of the actions of independent contractors for or on behalf of any insured.”
The second FFIC Weber policy contained a “Property Damage Claims in Process” exclusion for losses or claims for property damage “which first occurred prior to the inception date of this policy, ” and “which is, or is alleged to be, in the process of occurring as of the inception date of this policy.”
In December 2004, Komick’s personal attorney tendered Komick’s defense to FFIC as an additional insured under the FFIC Weber policies, and in January 2005, FFIC accepted the tender under the second Weber policy subject to a reservation of rights. The second FFIC Weber policy was also the basis for FFIC’s settlement payment on behalf of Weber in the Gorman action.
The FFIC Weber policies are two of the four policies included in the trial court’s “equal shares” apportionment method.
The two FFIC Weber policies and the initial NIC policy contained the following provision: “If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.”
C. NIC’s Rescission Action
During the pendency of the Gorman action, NIC and Navigators filed in 2004 a separate action against the Komick entities, seeking to rescind their respective policies and seeking a declaration that they had no duty to defend or indemnify the Komick entities in the Gorman action. (NIC Insurance Co. et al. v. Komick et al. (Super. Ct. L.A. County, No. BC313371).) NIC alleged that Komick failed to obtain certificates of insurance from all subcontractors and to require all subcontractors to add her as an additional insured on their insurance policies. In October 2005 (after NIC had settled the Gorman action on behalf of the Komick entities), the trial court in NIC’s rescission action denied NIC’s summary adjudication motion as to NIC’s duty to defend and indemnify Komick, but ruled that NIC was entitled to rescind the policy it had issued to Komick on May 15, 2000. In February 2006, NIC sent a written notice of rescission to Komick and returned to her the premium she had paid.
Also in the rescission action, the trial court granted a motion for summary adjudication, determining that Navigators had no duty to defend the Komick entities in the Gorman action. (See fn. 3, ante.)
D. NIC’s Action for Equitable Contribution: Summary Adjudication Motions
In March 2007, NIC filed this action against FFIC for equitable contribution. In August 2008, FFIC filed a motion for summary adjudication. Shortly thereafter, NIC realized that its complaint had omitted allegations pertaining to the second FFIC Weber policy, so the parties entered into a stipulation permitting NIC to file a first amended complaint and permitting FFIC to file a supplemental summary adjudication motion addressing NIC’s claims under the second FFIC Weber policy. FFIC filed its supplemental summary adjudication motion in September 2008. For the most part, each party did not dispute the other’s underlying facts, but only the legal conclusions to be drawn therefrom.
In December 2008, the trial court granted FFIC’s supplemental motion for summary adjudication, determining that NIC was not entitled to recover on theories of equitable indemnity and subrogation. FFIC’s supplemental motion did not seek adjudication against NIC on NIC’s claims for equitable contribution or for declaratory relief, issues which were addressed in NIC’s motion for summary adjudication filed in December 2008 and heard in February 2009.
In its February 24, 2009 ruling on NIC’s motion for summary adjudication, the trial court, applying the “continuous trigger” test, determined that FFIC had a duty to defend Komick as an additional insured under both FFIC Weber policies, but had no duty to indemnify NIC for its settlement payment on behalf of Komick. The court’s written ruling explained that “the only equitable solution is to apportion the costs of defense on an equal share basis to each policy on the risk. Any other allocation would be a burden to one of the insurers and provide a windfall to the other. [¶]... [¶] Here the facts give rise to a potential liability under both [FFIC Weber] policies. NIC stepped up to the plate regarding the potential liability for Komick under their policies and FFIC is required to contribute to the defense for the potential liability.” The court also concluded that “FFIC and NIC insured the same overlapping risks. Both insurers had the duty to defend Komick for the claims asserted in the Gorman action.”
“‘[T]rigger of coverage’ is a term of convenience used to describe that which, under the specific terms of an insurance policy, must happen in the policy period in order for the potential of coverage to arise. The issue is largely one of timing — what must take place within the policy’s effective dates for the potential of coverage to be ‘triggered’?” (Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 655, fn. 2 (Montrose), original italics.) Where successive comprehensive liability insurance policies provide coverage for bodily injury and property damage occurring during the policy period, and bodily injury and property damage is continuous or progressively deteriorating throughout several policy periods, the damages are potentially covered by all policies in effect during those periods. (Id. at p. 689.)
FFIC appealed from the judgment.
DISCUSSION
A. FFIC’s Challenges to NIC’s Right to Equitable Contribution
Although FFIC admitted that Komick was an additional insured under the FFIC policies, FFIC attempts to defeat NIC’s right to equitable contribution on the theory that the two insurers did not cover the same insureds for the same risk. Specifically, FFIC maintains that (1) FFIC and NIC did not cover the same insureds because other Komick entities were insureds on the NIC policy, and (2) FFIC’s and NIC’s policies did not cover the same risk because exclusions in the policies resulted in coverage for Komick under the FFIC Weber policies only for Komick’s vicarious liability arising out of Weber’s work and coverage under the NIC policy only for Komick’s own independent negligence or work.
FFIC also contends that it had no duty to defend Komick in the Gorman action under either of the two Weber policies and that NIC had no duty to defend because it rescinded its policies.
As explained below, neither the differences in legal theories of liability, the policy exclusions, nor NIC’s rescission negates FFIC’s duty to defend Komick in the Gorman action.
1. Standard of Review
We apply a de novo standard of review to the foregoing issues because they are based on undisputed facts and entail the interpretation or application of the terms of an insurance policy. (Century Surety Co. v. United Pacific Ins. Co. (2003) 109 Cal.App.4th 1246, 1255.) Questions of law on undisputed facts are also reviewed de novo. (Employers Mutual Casualty Co. v. Philadelphia Indemnity Ins. Co. (2008) 169 Cal.App.4th 340, 347.)
2. Equitable Contribution
“Where two or more insurers’ policies potentially cover an insured’s liability and one of them bears the defense burden alone, the insurer bearing that burden is entitled to equitable contribution from the nondefending carriers. [Citations.]” (Employers Ins. Co. v. Travelers Indemnity Co. (2006) 141 Cal.App.4th 398, 403.) “‘The purpose of this rule of equity is to accomplish substantial justice by equalizing the common burden shared by coinsurers, and to prevent one insurer from profiting at the expense of others.’” (Id. at p. 404.) The right of equitable contribution is not a matter of contract, but flows from equitable principles designed to accomplish justice in the bearing of a specific burden. (Id. at p. 405.)
“Further, as these principles do not stem from any contract between the insurers, the right of equitable contribution is not controlled by the language of their policies with their insureds. [Citation.] Nevertheless, ‘absent compelling equitable reasons, courts should not impose an obligation on an insurer that contravenes a provision in its insurance policy.’ [Citation.]” (OneBeacon America Ins. Co. v. Fireman’s Fund Ins. Co. (2009) 175 Cal.App.4th 183, 199.) Because equitable considerations vary, our courts have not formulated a definitive rule for when contribution should be compelled between insurers; rather, “in determining whether one insurer is entitled to contribution from another, courts should consider the nature of the claim, the relation of the insured to the insurers, the particulars of each policy, and any other equitable considerations.” (Ibid.)
As a general rule, there is no equitable contribution between a primary and an excess carrier, as equitable contribution “‘applies to apportion costs among insurers that share the same level of liability on the same risk to the same insured.’” (Travelers Casualty & Surety Co. v. American Equity Ins. Co. (2001) 93 Cal.App.4th 1142, 1151, 1152 (Travelers).) Thus, “[w]hen two insurers cover the same level of liability (e.g., both primary or both excess) on the same risk as to the same insured, courts may require each to contribute to the cost of defending the claim or indemnifying the loss.” (Carmel Development Co. v. RLI Ins. Co. (2005) 126 Cal.App.4th 502, 507–508.)
“There are two levels of insurance coverage, primary and excess. [Citation.] ‘Primary coverage is insurance coverage whereby, under the terms of the policy, liability attaches immediately upon the happening of the occurrence that gives rise to liability.... [¶] “Excess” or secondary coverage is coverage whereby, under the terms of the policy, liability attaches only after a predetermined amount of primary coverage has been exhausted.’ [Citations.] ‘It is settled under California law that an excess or secondary policy does not cover a loss, nor does any duty to defend the insured arise, until all of the primary insurance has been exhausted.’ [Citations.]” (Travelers, supra, 93 Cal.App.4th at p. 1149.)
“‘Most insurance policies contain “other insurance” clauses that attempt to limit the insurer’s liability to the extent that other insurance covers the same risk. Such clauses attempt to control the manner in which each insurer contributes to or shares a covered loss. [Citations.]’ [Citation.] ‘The courts will... generally honor the language of excess “other insurance” clauses when no prejudice to the interests of the insured will ensue. However, there are many exceptions. For example, where two or more primary insurers’ policies contain excess “other insurance” clauses purporting to be excess to each other, the conflicting clauses will be ignored and the loss prorated among the insurers on the ground the insured would otherwise be deprived of protection. [Citations.] Thus, although a true excess insurer — one that is solely and explicitly an excess insurer providing only secondary coverage — has no duty to defend or indemnify until all the underlying primary coverage is exhausted or otherwise not on the risk, primary insurers with conflicting excess “other insurance” clauses can have immediate defense obligations. [Citations.]’ [Citation.]” (Travelers, supra, 93 Cal.App.4th at pp. 1149–1150.)
Historically, “other insurance” clauses were designed to prevent multiple recoveries when more than one policy provided coverage for a particular loss. (Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1079.) But “‘other insurance’ clauses that attempt to shift the burden away from one primary insurer wholly or largely to other insurers have been the objects of judicial distrust. ‘[P]ublic policy disfavors “escape” clauses, whereby coverage purports to evaporate in the presence of other insurance. [Citations.] This disfavor should also apply, to a lesser extent, to excess-only clauses, by which carriers seek exculpation whenever the loss falls within another carrier’s policy limit.’ [Citations.] Partly for this reason, the modern trend is to require equitable contributions on a pro rata basis from all primary insurers regardless of the type of ‘other insurance’ clause in their policies. [Citations.]” (Id. at pp. 1079–1080.)
3. Duty to Defend
“A duty to defend arises if facts alleged in the complaint, or other facts known to the insurer, potentially could give rise to coverage under the policy. [Citations.] The facts need only ‘raise the possibility’ that the insured will be held liable for covered damages. [Citation.] The insurer has a duty to defend even if the claims against the insured are ‘“groundless, false, or fraudulent.”’ [Citation.] ‘Any doubt as to whether the facts establish the existence of the defense duty must be resolved in the insured’s favor.’ [Citation.]” (Legacy Vulcan Corp. v. Superior Court (2010) 185 Cal.App.4th 677, 692, fn. omitted.) “‘If a duty to defend arises, the insurer must defend the action in its entirety, including claims that are not potentially covered. [Citation.] If a duty to defend arises by virtue of the existence of a potential for coverage but is later extinguished, it is extinguished prospectively only, and not retroactively. [Citation.]’” (Id. at p. 693.) An insurer’s duty to defend is not extinguished until the insurer negates all facts suggesting potential coverage. (GGIS Ins. Services, Inc. v. Superior Court (2008) 168 Cal.App.4th 1493, 1506.)
“The duty to defend is much broader than the duty to indemnify. An insurer’s duty to defend must be analyzed and determined on the basis of any potential liability arising from facts available to the insurer from the complaint or other sources available to it at the time of the tender of defense. If the insurer is obliged to take up the defense of its insured, it must do so as soon as possible, both to protect the interests of the insured, and to limit its own exposure to loss. Unlike the duty to indemnify, which is only determined after liability is finally established, the duty to defend must be assessed at the outset of the case. [Citations.]” (CNA Casualty of California v. Seaboard Surety Co. (1986) 176 Cal.App.3d 598, 605.)
“[T]he triggering of liability coverage under a CGL [comprehensive general liability] policy is established at the time the complaining third party was actually damaged....” (Montrose, supra, 10 Cal.4th at p. 670.) Where a third party claims continuous or progressively deteriorating damage or injury within the relevant policy period, “the rule to be gleaned from [Montrose, supra, 10 Cal.4th 645] and the authorities contributing to its analysis is that continuing or progressive property damage is deemed to occur over the entire process of the continuing injury.” (Pepperell v. Scottsdale Ins. Co. (1998) 62 Cal.App.4th 1045, 1053.) Accordingly, “‘[i]n an action wherein all the claims are at least potentially covered because they may possibly embrace some triggering harm of the specified sort within the policy period caused by an included occurrence, the insurer has a duty to defend. [Citation.]’” (GGIS Ins. Services, Inc. v. Superior Court, supra, 168 Cal.App.4th at p. 1505.)
An insurer’s duty to defend the “insured” includes both the named insured and anyone else included in the policy’s definition of “insured.” (American States Ins. Co. v. Progressive Casualty Ins. Co. (2009) 180 Cal.App.4th 18, 26.)
4. FFIC’s Duty to Defend Komick
FFIC makes a series of arguments to support its contention that it had no duty to defend Komick. But the points are unsupported by any legal authority, or inapposite authority, and we conclude the contentions are without merit.
Noting that other Komick entities were defendants in the Gorman action and additional insureds under the NIC policy, but that only Komick was an additional insured under the FFIC policies, FFIC maintains that FFIC and NIC did not cover the same insureds. But whether the NIC policy covered other Komick entities as additional insureds is of no consequence to the issues of whether FFIC was obligated to provide a defense to Komickin the Gorman action and whether NIC is entitled to equitable contribution. FFIC and NIC covered the same insured — Komick.
Similarly, FFIC’s assertion that it did not owe Komick a defense because FFIC and NIC did not cover the same risk is without merit. The defendants in the Gorman action were charged with causing one set of property damages and one set of bodily injuries. The Gorman action alleged negligence against all defendants based on their own actions as well as based on their vicarious liabilities as the agents or employees of the other defendants. Given the pleading, the damages may have been caused by both Komick’s own negligence and Weber’s negligence for which Komick would have been vicariously liable.
Assuming for purposes of argument that FFIC is correct that its policies provided coverage only for Kim Komick Construction’s vicarious liability arising out of Weber’s work, and that the NIC policy provided coverage only for Kim Komick Construction’s own independent negligence or work, FFIC cites no authority for the proposition that the purported differences in the theories of liability are pertinent to the issue of FFIC’s duty to defend Komick in the Gorman action. Even if the Gorman action presented a “mixed” claim by virtue of the differences in the underlying theories of liability covered by the policies, an insurer must still defend the entire mixed action because the insurer cannot “parse among potentially covered and clearly uncovered claims.” (Scottsdale Ins. Co. v. MV Transportation (2005) 36 Cal.4th 643, 658.)
Equitable contribution is available among all primary insurers, here, FFIC and NIC. Among all primary insurers, the cases make no distinction based on the theories of liability underlying the claim. Because FFIC’s and NIC’s policies both provided primary coverage for Komick, FFIC fails to persuade us that, in connection with Komick’s defense in the Gorman action, it and NIC were not exposed to the same risk — namely Komick’s liability for the damages alleged in the Gorman complaint.
FFIC maintains that NIC failed to meet its burden of showing a potential for coverage under the first FFIC Weber policy because NIC “presented no evidence of any actual or alleged property damage or bodily injury occurring during the Initial Weber Policy.” The only case cited by FFIC to support this proposition is inapposite. In Baroco West, Inc. v. Scottsdale Ins. Co. (2003) 110 Cal.App.4th 96, a contractor sued its insurer for failing to defend it in a third party homeowner’s lawsuit for negligent construction of a residence. The contractor’s own admissions and evidence established that the policy expired before the homeowner sustained any injury or loss pursuant to the completed operations and loss provisions of the policy, so there was not only no potential for coverage, but there was no actual coverage under the policy, and thus no duty to defend. Accordingly, the Court of Appeal affirmed a summary judgment in favor of the insurer. (Id. at pp. 104–105.)
The Baroco West case does not stand for the proposition that the duty to defend cannot be determined from the allegations of the third party complaint. Unlike the situation in Baroco West, our record contains no underlying evidence relating to the Gorman action, so the trial court, and we, must determine the issue of the duty to defend based on the allegations of the Gormans’ complaints. Given the nature of the alleged defects in the property, including foundations, concrete, drainage, grading, framing, stucco, flashing, structural calculations, decks, ventilation, waterproofing, tile and stonework, doors, HVAC, plumbing, electrical, and windows, the Gormans’ complaints permit the inference that at least some of the Gormans’ property damage potentially could have occurred, or could have been in the process of occurring, during the first three days after they moved into the residence, thus falling within the period of the first FFIC policy.
As to the second FFIC Weber policy, FFIC maintains that, because of its property damage claims in process exclusion, “there cannot be property damage under the second FFIC policy if the first policy is triggered, ” and that NIC “cannot have it both ways.” But FFIC’s argument is unsupported and mostly based on flawed logic. The Gormans alleged a host of property damages, from the foundation to the plumbing. Some damages possibly could have been continuous throughout both FFIC policy periods, and other damages could have occurred in the second policy period but not the first. When an insurer seeks to escape the defense duty altogether, “it must present proof... that the underlying claim cannot come within the policy coverage by virtue of the scope of the insuring clause or the breadth of an exclusion.” (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 301.) FFIC has not negated the possibility of coverage for an element of property damage during its second policy period but not during its first policy period.
As argued by NIC, the property damage claims in process exclusion is no bar to coverage under the second FFIC Weber policy because the Gormans also alleged bodily injuries, which could possibly have arisen only during the second FFIC Weber policy period, which began three days after they moved into the property. FFIC counters this point with several arguments, none of which have merit. FFIC contends that there were no bodily injury claims asserted against any of its insured’s, noting that the strict liability count in the Gormans’ fourth amended complaint was not asserted against Weber or Komick. But FFIC ignores the negligence count, which alleges bodily injuries against all defendants. And FFIC offers no legal authority to support its contention that the property damage claims in process exclusion applies to bodily injury, as bodily injury is not mentioned in the exclusion.
5. NIC’s Rescission of Its Policy
NIC settled the Gorman action on behalf of the Komick entities in March 2005. Thereafter, in February 2006, NIC rescinded its policies issued to the Komick entities. FFIC asserts that NIC’s rescission defeats NIC’s claim for equitable contribution, arguing that due to the rescission, “NIC’s Policy Never Existed So NIC and FFIC Could Not Have Provided Insurance to the Same Insured.” The argument is unavailing, as NIC had already incurred defense costs before it rescinded its policy.
When a duty to defend has arisen it lasts until the underlying lawsuit is concluded; if the duty to defend is subsequently extinguished by a showing that no claim can in fact be covered, it is extinguished only prospectively and not retroactively. (Scottsdale Ins. Co. v. MV Transportation, supra, 36 Cal.4th at p. 655; Ringler Associates Inc. v. Maryland Casualty Co. (2000) 80 Cal.App.4th 1165, 1192 [where duty to defend appears on face of complaint, it may be terminated only prospectively, not retrospectively]; GGIS Ins. Services, Inc. v. Superior Court, supra, 168 Cal.App.4th at p. 1505.) Thus, NIC’s right to equitable contribution for defense costs from FFIC arose before it rescinded its policy, and such right is unaffected by the rescission.
B. Equal Shares Method of Apportionment
The trial court correctly determined that FFIC had a duty to defend Komick in the Gorman action and that NIC was entitled to equitable contribution from FFIC for its defense costs. We now turn to FFIC’s contention that the trial court abused its discretion in adopting the equal shares method of apportioning the defense costs.
We agree with the parties that we review the trial court’s selection of the apportionment method for abuse of discretion. (Centennial Ins. Co. v. United States Fire Ins. Co. (2001) 88 Cal.App.4th 105, 110–111 (Centennial) [when trial court grants summary judgment motion on basis of its equitable determination of issue as to which exercise of discretion is proper, the standard of review is for abuse of discretion].)
“In choosing the appropriate method of allocating defense costs among multiple liability insurance carriers, each insuring the same insured, a trial court must determine which method of allocation will most equitably distribute the obligation among the insurers....” (Centennial, supra, 88 Cal.App.4th at p. 111.) “As such, the trial court’s determination of which method of allocation will produce the most equitable results is necessarily a matter of its equitable judicial discretion.” (Ibid.)
“In keeping with the fundamental principle that a trial court has discretion to select a method of allocating costs among insurers with the aim of producing the most equitable results based on the facts and circumstances of the particular case, the courts have adopted a number of different ways of apportioning the burden among multiple insurers. These various methods have included, among others, the following: (1) apportionment based upon the relative duration of each primary policy as compared with the overall period of coverage during which the ‘occurrences’ ‘occurred’ (the ‘time on the risk’ method) [citations]; (2) apportionment based upon the relative policy limits of each primary policy (the ‘policy limits’ method) [citations]; (3) apportionment based upon both the relative durations and the relative policy limits of each primary policy, through multiplying the policies’ respective durations by the amount of their respective limits so that insurers issuing primary policies with higher limits would bear a greater share of the liability per year than those issuing primary policies with lower limits (the ‘combined policy limit time on the risk’ method) [citation]; (4) apportionment based upon the amount of premiums paid to each carrier (the ‘premiums paid’ method) [citation]; (5) apportionment among each carrier in equal shares up to the policy limits of the policy with the lowest limits, then among each carrier other than the one issuing the policy with the lowest limits in equal shares up to the policy limits of the policy with the next-to-lowest limits, and so on in the same fashion until the entire loss has been apportioned in full (the ‘maximum loss’ method) [citation]; and (6) apportionment among each carrier in equal shares (the ‘equal shares’ method) [citation].” (Centennial, supra, 88 Cal.App.4th at pp. 112–113, fn. omitted.)
FFIC contends that the equal shares method adopted by the trial court was “patently inequitable, as it broadens the scope of coverage provided by the FFIC additional insured endorsements by imposing on FFIC a duty to defend: (1) entities that did not qualify as additional insureds under the FFIC Weber Policies; (2) Komick Construction for that entity’s own, independent negligence, as opposed to its vicarious liability for Weber’s work; and (3) for liability arising out of the work of the other subcontractors involved in the Subject Property.”
The first two of the foregoing arguments were addressed above in Discussion part A.4, and for the reasons set out in part A.4 we reject the first two arguments. And, all three of the arguments are not supported by any reference to the record. FFIC also maintains that there were triable issues as to arguments (2) and (3). But in the exercise of its equitable judicial discretion, the trial court was entitled to resolve those issues (Centennial, supra, 88 Cal.App.4th at p. 111), and FFIC fails to persuade us that the trial court abused its discretion in doing so.
Assuming for the sake of argument that some of the Gormans’ claims against Komick were covered and others were not (i.e., that the Gorman action presented “mixed” claims), NIC was obligated to “defend the entire ‘mixed’ action. [Citation.] This is so, Buss [v. Superior Court (1997) 16 Cal.4th 35, 49, ] explained, because the contractual duty to defend the potentially covered claims immediately and meaningfully implies the prophylactic duty to defend ‘entirely, ’ without pausing to parse among potentially covered and clearly uncovered claims.” (Scottsdale Ins. Co. v. MV Transportation, supra, 36 Cal.4th at p. 658.)
Assuming again that the Gorman action was “mixed, ” FFIC fails to establish that NIC’s defense of the entire mixed action resulted in any additional defense costs that NIC would not have incurred in defending only the potentially covered claims. Similarly, FFIC does not establish that NIC’s defense of the other Komick entities not insured by FFIC increased NIC’s total costs of defense. In other words, FFIC fails to establish that the equal shares method of apportionment produced inequitable results, notwithstanding the other Komick entities and the purported “mixed’ nature of the claims.
FFIC argues that the trial court abused its discretion in assigning an equal share to the first Weber policy because it was in effect for only three days after the Gormans moved into the residence. But no pertinent authority is cited for this point, and FFIC’s expectation of a “proration” with respect to its duty to defend under its first Weber policy is unreasonable under the circumstances of this case, where no underlying facts were presented to establish the actual point or points in time when the Gormans suffered their damages and injuries.
The duty to defend “is triggered if specified harm may possibly have been caused by an included occurrence, so long as at least some such harm may possibly have resulted within the policy period. [Citation.] It extends to all specified harm that may possibly have been caused by an included occurrence, even if some such harm may possibly have resulted beyond the policy period.” (Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, 58.) On this record, half of the Gormans’ damages possibly could have occurred during the first FFIC Weber policy, so the trial court did not abuse its discretion in assigning to it an equal share.
Another factor which supports the trial court’s adoption of the equal shares method is that both FFIC’s policies and the NIC policy expressly permit this method of apportionment by providing: “If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.” The reference to policy limits appears to refer to indemnity payments. But having agreed to apportion its indemnity obligation under the equal shares method, FFIC can hardly maintain that a similar apportionment of its defense obligation is inequitable.
FFIC asserts that the equal shares method was also inequitable because it did not reflect the fact that Weber settled his claims for 5.75 percent of the total settlement, but Weber’s insurer (FFIC) was allocated 50 percent of NIC’s defense costs. But Komick and not Weber was the common insured of FFIC and NIC, and FFIC fails to cite any authority establishing that the amount of Weber’s settlement has a bearing on NIC’s claim for equitable contribution for its defense costs on behalf of Komick.
In a perfunctory manner, FFIC argues that the trial court abused its discretion in not allocating a share of the defense costs to NIC’s 2001 to 2002 Komick policy. But FFIC fails to establish that NIC had a duty to defend the Gorman action under the terms of this policy. Thus, FFIC has not shown that the trial court’s failure to allocate a share of defense costs to this policy constituted an abuse of discretion.
In oral argument, FFIC raised for the first time the issue of the purported disproportion between the premiums paid under its policies to insure Komick as an additional insured and the premium paid by Komick under the NIC policy. The trial court cannot be faulted for failing to consider a factual issue that was not raised below.
We conclude that FFIC fails to persuade us that the trial court abused its discretion in apportioning NIC’s defense costs among the four policies under the equal shares method.
DISPOSITION
The judgment is affirmed. Plaintiff and respondent NIC Insurance Company is entitled to its costs of appeal.
We concur: ROTHSCHILD, J., JOHNSON, J.