Court grants partial summary judgment in insurance dispute with Crum & Forester Specialty Insurance, contractor

By Takesha Thomas | Mar 7, 2019

SAN DIEGO – An insurance company was granted partial summary judgment in a breach of contract claim over insurance coverage.

On Feb. 21, U.S. District Judge Thomas Whelan of the U.S. District Court of the Southern District of California granted the move by Crum & Forester Specialty Insurance Co. in a case brought by Reno Contracting Inc.

The court denied the defendant's motion over certain claims made by the plaintiff, but ruled that Reno Contracting's policy provided no coverage for the underlying litigation.

Crum filed the motion in November 2018.

Whelan denied, however, Crum's motion against Reno's complaints. 

"Defendant demonstrates the absence of a genuine dispute that the Reno Contracting policy did not cover Reno Contracting’s liability as to the underlying litigation, all of which resulted from its joint venture with Coyle Residential with respect to the Riverview Project. But defendant does not demonstrate entitlement to judgment as a matter of law as to any claims in the complaint. A determination of lack of coverage under the relevant policy may have some relationship to the three breach of contract claims—for failure to defend, to indemnify, or to settle, respectively," Whelan wrote.

Reno Contracting filed suit against Crum in November 2017, alleging that Crum "failed to defend; breached the implied covenant of good faith and fair dealing through failure to defend; breach of contract through failure to indemnify; breach of the implied covenant of good faith and fair dealing through failure to indemnify; breach of contract through failure to settle; and breach of the implied covenant of good faith and fair dealing through failure to settle," the ruling states.

The suit stems from two insurance policies issued by Crum to Reno after Reno was sued by a subcontractor, Silverline Construction, related to a construction project. 

Reno entered into a joint venture with Coyle Residential in August 2011 for a construction project called the Riverview Project in San Jose. Under that agreement, both parties (Coyle/Reno) were to serve as the general contractor for the project. Silverline Construction was to be the subcontractor, the ruling states.

In March 2013, Silverline executed a stop payment notice on the project alleging that Coyle/Reno owed Silverline $3.8 million for labor and services. Reno alleged that Coyle failed to provide supervision for the project, "which caused 'significant problems on the construction site,'" the ruling states.

Crum issued one insurance policy for this joint venture with a policy period from June 8, 2012, to June 8, 2014. According to the ruling, the policy "provided that the joint venture’s members were also insured, 'but only with respect to the conduct of [Coyle/Reno’s] business.'”

The second policy was issued by Crum to Reno for a policy period of Aug. 1, 2013, to Aug.1, 2014, the ruling states.

"This policy had general aggregate and per-claim limits of $5 million. It required that claims be made and reported during the policy period. As relevant here, it covered 'damages' resulting from 'wrongful act[s],'” the ruling states.

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