1

Filed 5/10/16 (unmodified opn. attached) CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

CERTAIN UNDERWRITERS AT LLOYDS, LONDON, Plaintiff and Appellant,

v. ARCH SPECIALTY INSURANCE COMPANY,

Defendant and Respondent. C072500
(Super. Ct. No. 34

- 2010

- 00093381

- CU

- IC

- GDS)

MODIFICATION OF OPINION UPON DENIAL OF REHEARING; NO CHANGE IN JUDGMENT

THE COURT: The opinion filed on April 11, 201 6 , is modified as follows:

1. On page 2 of the slip opinion, delete from lines 20 and 21 “that Underwriters is entitled to equitable contribution. On remand, the trial court will determine the amount” and insert:

that Arch‟s “other insurance” clause s are unenforceable to relieve A rch

of a duty to defend in this equitable contribution case
2. On page 7 of the slip opinion, delete the third and fourth full paragraphs and in sert: Underwriters filed a motion for summary adjudication that Arch ‟s

“ other insurance” provisions are unenforceable to relieve it of its duty to defend , thus eliminating that affirmative defense

.2 Arch moved for summary judgment or summary adjudication, arguing its “other insurance” provisions relieved it of any duty to defend, and it had no duty to defend the additional insured under the additional insured endorsement.

3. On page 8, at the end of the sentence on line 6, insert: The trial court did not need to decide Arch‟s separate argument that it had no duty to defend the addit ional insured.

4 . On page 20 of the slip opinion, line 6, delete “We conclude Underwriters is entitled to receive equitable contribution from Arch” and insert:

We conclude Arch‟s “other insurance” clause s are unenforceable in this equitable co ntri bution case

5

. On page 20 of the slip opinion, lines 3 and 4 of the DISPOSITION, delete the words “The amount of contribution is to be determined on remand

. ”

Defendant‟s petition for rehearing is denied.

BY THE COURT:

BLEASE, Acting P. J.

HULL, J.

HOCH, J.1

Filed 4/11/16 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

CERTAIN UNDERWRITERS AT LLOYDS, LONDON, Plaintiff and Respondent,

v. ARCH SPECIALTY INSURANCE COMPANY,

Def endant and Respondent. C072500
(Super. Ct. No. 34

- 2010

- 00093381

- CU

- IC

- GDS)

APPEAL from a judgment of the Superior Court of Sacramento County, Shelleyanne Wai Ling Chang, Judge. Reversed with directions.
Gill & Rhoades, Susan J. Gill, Julie W. Rh oades, and Tyler G. Olpin for Plaintiff and Appellant

. Selman Brietman, Gregory J. N ewman and Donald W. Montgomery for Defendant and Respondent.2

Two insurers shared indemnification cost s to settle claims made against mutual
insureds in underlying cons truction defect litigation brought by third parties. But o ne insurer

-- defendant Arch Specialty Insurance Company (Arch)

-- refused to share the

cost s to defend the insureds in the underlying litigation. The other insurer

-- plaintiff
Certain Underwrite rs at Lloyds, London (Underwriters)

-- paid all defense costs and now seeks equitable contribution from Arch. In ruling on cross

- motions for summary judgment/adjudication (Code Civ. Proc., § 437c) , the trial court concluded Arch had no duty to defend the insureds in the underlying litigation, because Arch‟s insurance policy expressly stated it had a duty to defend provided no “other insurance” afforded a defense,
and Underwriters‟ policy did afford a defense. Underwriters appeals from summary judgment ent ered in favor of Arch and also challenges the trial court‟s denial of Underwriters‟ motion for summary adjudication of Arch‟s responsibility to contribute to
defense costs

. We conclude Arch‟s “other insurance” clause cannot be enforced in this equitable
contribution action between successive primary insurers

. Enforcement of such a clause
in a primary CGL policy would violate public policy

. We also conclude Arch did not successfully circumvent this result by including the clause in the “ coverage ” sectio n of the insurance policy as well as the “ l imitations ” section. Accordingly, we reverse the judgment and direct the trial court to enter an order denying summary judgment to Arch
and granting Underwriters‟ cross

- motion for summary adjudication that Underw riters is entitled to equitable contribution

. On remand , the trial court will determine the amount.

F ACTS A ND P ROCEEDINGS
T he parties assisted the trial court by agreeing to a “JOINT STIPULATION OF
UNDISPUTED MATERIAL FACTS

. ”
Underwriters and Arch wer e both primary insurers of Framecon, Inc. (Framecon)
but at different times

.3

Underwriters issued a commercial general liability (CGL) polic y to Framecon

e ffective October 28, 2000 to October 28, 2001, and an other CGL policy effective October 28, 2001 to October 28, 2002. These were the only CGL policies issued to
Framecon for that two

- year period, and Underwriters was the primary insurer for that period. The policies provided coverage for property damage only if caused by an occurrence in the coverage territory and th e damage occurs during the policy period.
Arch issued a CGL policy to Framecon effective October 28, 2002, to October 28, 2003. That was Framecon‟s only CGL policy for that time period , and Arch was the primary insurer for that year. T he Arch policy applied to property damage if caused by an occurrence during the policy period , whether or not such occurrence wa s known to the
ins ured, and damage resulting from such occurrence first t ook place during the policy period. Claims involving c ontinuous or progressively deteriorating property damage alleged to have occurred throughout successive policy periods may trigger coverage by
all such primary CGL policies in effect during those periods

. ( Montrose Chem. Cor p. v. Admiral Ins. Co . (1995) 1 0 Cal. 4th 645, 689.) We need not address the matter because Arch does not dispute its duty to indemnify the insured in this case.
Between 1999 and April 200 2 , Framecon entered subcontracts to do carpentry and framing work on homes being developed by KB H ome Sacramento, Inc., and KB Home North Bay, Inc. (collectively KB Home)

. In October 2006, owners of some of those homes sued KB Home for construction defects, including some defects allegedly attributable to Framecon‟s work (the “Allen action”) . KB ho me filed a cross

- complaint against Framecon, seeking a defense and indemnity under the subcontracts.
Framecon tendered the cross

- complaint to both Underwriters and Arch

. KB Home tendered the complaint to both Underwriters and Arch , asserting it was an “ additional
insured ” under Framecon‟s insurance policies. No one disputes that KB Home qualified
as an additional insured.4

Underwriters agreed to defend Framecon with a reservation of rights.
Underwriters also agreed to defend KB Home as an additional insured, with a reservation of rights. In September 2007, Arch sent a letter to Framecon, stating it was investigating the claim and further stating that, even if the policy afforded coverage for the claim, Arch would not pay for a defense. B ased on t he coverage terms of Arch ‟s “insuring agreement,” “in the event Framecon, Inc. is already being afforded a defense in this matter by another insurer, even if coverage were found to apply, [ Arch ‟s] policy would be excess with regard to defense of

. . . Fram econ.” The letter further noted the intent of
Arch ‟s policy to be “ excess ” to any other insurance providing a defense under the excess provision of the “Conditions” section of Arch ‟s insurance policy. Arch sent a similar
letter to KB Home , invoking the “ other insurance ” provisions to deny a defense

. Arch‟s insurance policy contains two sections about the effect of “other insurance” on the duty to defend: (1) the coverage section and (2) the conditions section. The “coverage ” section provides:

“ COVER AGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
“INSURING AGREEMENT “a. We will pay those sums that an insured becomes legally obligated to pay as tort damages for bodily injury or property damage to which this insurance applies. We have the right and duty to defend you, the Named Insured, against any suit seeking tort damages provided that no other insurance affording a defense against such a suit is available to you . Our duty to defend you is further limited as provided below or in the
Section o f the policy entitled „EXCLUSIONS: COVERAGES A AND B

. . . . ” (Italics added; orig. emphasis omitted.) This provision goes on to state that, in cases where Arch has no duty to defend, it nevertheless has the right to intervene in any suit in which the insured requests a defense5

or indemnity, and “we will also defend you if you are not being defended by any other insurer.”
The “ conditions ” section of Arch‟s policy states:
“SECTION IV

- COMMERCIAL GENERAL LIABILITY CONDITIONS
“8. OTHER INSURANCE , DE DUCTIBLES AND SELF

- INSURED
RETENTIONS “If other insurance is available to an insured for a loss we cover under Coverage A or B of this policy, our obligations are limited as follows:
“a. Excess Insurance “This insurance is excess over any other insuran ce, and over deductibles or self

insured amounts applicable to the loss, damage, or injury, whether such other insurance is primary, excess, contingent or contributing and whether an insured is a named insured or additional insured under said policy. “Whe n this insurance is excess, we will have no duty under Coverage A or B to defend any claim or suit that any other insurer has a duty to defend.” (Orig. emphasis omitted.) As indicated, Arch stipulates it was the primary insurer and the only CGL policy issued to Framecon for the period from October 2002 to October 2003.
In contrast to the foregoing provisions, Underwriters‟ policies stated:
“COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY “1. Insuring Agreement “a. We will pay those sum s 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 wi ll have no duty to defend the insured against any „suit‟ seeking damages

. . . to which this insurance does not apply. We may, at our discretion, investigate any „occurrence‟ and settle any claim or „suit‟ that may result

. . . . ”6

Underwriters‟ policie s also contain as an endorsement the following:

“ OTHER INSURANCE CLAUSE “In consideration for the payment of premium, it is hereby understood and agreed that subsection 4. Other Insurance, of section IV Commercial General Liability Conditions, is delete d in its entirety and replaced by the following: “4. Other Insurance “a. Coverage provided under this policy is excess over any other collectable insurance, except: “(1) when an Insured Contract specifically states that this insurance shall be primary and the policy is endorsed to be primary with respect to operations performed under that Insured Contract then this policy will be primary only with respect to those operations, performed under such Insured Contract, or “(2) in the event that an excess o r umbrella policy is purchased which lists this policy in the schedule of underlying insurance. “b. When this insurance is excess we will have no duty to defend any claim or suit covered by other collectable insurance until the obligation of such other i nsurance to provide a defense has been met in its entirety.” Based on its “other insurance” provisions, Arch did not provide a defense to
Framecon or KB Home. In October 2009, the claims against Framecon in the Allen action were settled

. Underwriter s and Arch both agree d to indemnify Framecon for damages covered under each of their policies on a “time on the risk” basis for homes completed during each carrier‟s policy period. Underwriters paid $219,484.06, and Arch paid $114,015.17. In 2008, othe r homeowners in the same development filed a complaint against KB Home (the Carter action). KB cross

- complained against Framecon and sought a defense and indemnity as an additional insured. As with the Allen action, Underwriters defended
Framecon and KB Home with a reservation of rights, while Arch refused to share defense7

costs , invoking the “other insurance” language. In 2011, all claims against Framecon in
the Carter action were settled. Underwriters and Arch both agreed to indemnify
Framecon for dam ages covered under their respective policies on a “time on the risk” basis for homes completed during each carrier‟s policy period. Underwriters paid $79,2 00 and Arch paid $16,500 on behalf of Framecon. Homeowners at a different development filed suit i n 2006 (the Lamb action). Again, Underwriters provided a defense to Framecon and KB Home, and Arch refused to provide a defense ba sed on the “other insurance” policy language. The Lamb action
settled in 2008 , with both carriers agreeing to indemnify Fra mecon for damages. Underwriters paid $21,250, and Arch paid $12,500. Underwriters filed this lawsuit for declaratory relief and equitable contribution from Arch for the defense costs incurred in the underlying litigation. The operative
amended complai nt seeks (1) declaratory relief that Arch had a duty to defend Framecon in the underlying lawsuits, (2) equitable contribution from Arch to reimburse Underwriters for a portion of the costs Underwriters incurred to defend Framecon, (3) declaratory relief t hat Arch had a duty to defend KB Home as an additional insured, and (4) equitable contribution from Arch for Underwriters‟ costs to defend KB Home. Underwriters filed a motion for summary adjudication that Arch had a duty to
defend the insureds in the u nderlying litigation. Arch filed a motion for summary judgment, arguing its “other insurance” provisions relieved it of any duty to defend. The trial court denied Underwriters‟ motion for summary adjudication and granted summary judgment in favor of Arch. In its written order, the trial court adopted Arch‟s use of the term “exclusive defense” to refer to the provisions of its policy purporting to relieve it of a duty to defend if another insurance carrier has a duty to defend. We refer to them as “o ther insurance” clauses. The trial court accepted Arch‟s reliance on one case as assertedly holding that placing the “other insurance” clause in the “Insuring8

Agreement” portion of the insurance policy defining coverage, as oppos ed to merely placing it in the conditions/limitations portion of the contract, makes the “other insurance” clause an enforceable exception from “ coverage ” (for defense costs) rather than a disfavored escape clause against public policy. The trial court disregarded cases
invalidati ng such clauses, on the grounds they assertedly involved clauses placed only in the conditions/limitations portion of the contract or were otherwise distinguishable.

D ISCUSSION

I

General Legal Principles and Standard of Review

“ „ Equitable contribution is the right to recover from a co

- obligor who shares a liability with the party seeking contribution. ‟ ” ( Underwriters of Interest Subscribing to Policy Number A15274001 v. Pro B uilders Specialty Ins. Co . (2015) 241 Cal. App.4th 721, 728 ( Underwriters of In terest ), citing North American Capacity Ins. Co. v. Claremont Liability Ins. Co . (2009) 177 Cal. App.4th 272, 295.) “[T]he right to contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has p aid more than its share of the loss or defended the
action

. . . . Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk. The purpose of this rule of equity is to accomplish substantial justice by equalizing the
common burden s hared by coinsurers, and to prevent one insurer from profiting at the expense of others.” ( Fireman‟s Fund Ins. Co. v. Maryland Casualty Co . (1998)
65 Cal. App.4th 1279, 1293 ( Fireman‟s Fund ) .) The right to seek equitable contribution “is predicated on the commonsense principle that where multiple insurers or indemnitors share equal contractual liability for the primary indemnification of a loss or the discharge9

of an obligation, the selection of which indemnitor is to bear the loss should not be left to
th e often arbitrary choice of the loss claimant, and no indemnitor should have any incentive to avoid paying a just claim in the hope the claimant will obtain full payment from another coindemnitor. [Citations.] Equitable contribution thus assumes the
exis tence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question.” ( Id . at p. 1295.) The reciprocal rights and duties of multiple insurers who cover the same event do
not arise out of contract , for their agreements are not with each other. ( Commerce & Industry Ins. Co. v. Chubb Custom Ins. Co . (1999) 75 Cal. App.4th 739, 749.) Their respective obligations flow from equitable principles designed to accomplish ultimate justice. Since these prin ciples do not stem from agreement between the insurers, their application is not controlled by the language of their contracts with the respective policy holders. ( Ibid .) Although equitable contribution may call for judicial discretion, here the trial co urt expressly stated it decided the matter as a question of law, and our review is de novo. ( Underwriters of Interest, supra , 241 Cal. App.4th at p p. 727

- 728; GuideOne Mutual Ins. Co. v. Utica National Ins. Group (2013) 213 Cal. App.4th 1494, 1501.)

II

Arch Had Duty to Defend Despite “Other Insurance” Provisions Underwriters argue Arch‟s policy terms

-- excusing it from a duty to defend when another insurer has a duty to defend

-- are unenforceable “escape clauses” against public policy, regardless of their location in the insurance policy. Arch does not dispute that its insurance policy required it to indemnify the insureds for the damages at issue in the
construction defect litigation . And Arch did pay its share of the indemnification costs

. Although Ar ch‟s insurance policy afforded “coverage” for this risk , Arch maintains its policy did not afford “coverage” for defense costs related to this risk , because Arch10

included the “other insurance” language in the “coverage” section of its policy. We
conclude Underwriters has the better argument. The original purpose of “other insurance” clauses was to prevent multiple recovery by insureds in cases of overlapping policies providing coverage for the same
loss. ( Dart Industries, Inc. v. Commercial Union Ins. Co . (2002) 28 Cal. 4th 1059, 1079

- 1080 ( Dart ).) “On the other hand, „other insurance‟ clauses that attempt to shift the burden away from one primary [italics added] 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 polic ies. [Citations.]” ( I bi d

. ) Dart rejected a primary insurer‟s contention that its obligations were cancelled by the insured‟s inability to prove the type of other

insurance clause in the lost contract. Even if the primary insurer had a “ „ null and void
with excess ‟ ” other

- insurance clause, that would merely entitle the primary insurer to
seek contribution from other insurers ; it would not affect its obligation to its insured . ( Id

. at p p. 1080

- 1081.) Arch does not dispute that its policy was primary, n ot excess. “ „ 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. [Citation.] Primary insurers generally have the primary duty o f defense. [¶] “ 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.‟ [Citation.]” ( Century Surety Co

. v. United Pacific Ins

. Co

. (2003) 109 Cal. App.4th 1246, 1255 ( Century ),
italics omitted .)11

In Century , an insured subcontractor tendered defense of a lawsuit to four successive CGL insurers that provided coverage over a five

- year period. Three insurers accepted the tender and ult imately settled the suit, but the fourth insurer (Century) refused to provide a defense on the ground its policy contained an “other insurance” clause that “ „ If other valid and collectible insurance is available to any insured for a loss
we cover under Co verage A or B of this Coverage Part, then this insurance is excess of
such insurance and we will have no duty to defend any claim or “ suit ” that any other insurer has a duty to defend. ‟ ” ( Id . 109 Cal. App.4th at p. 1252.) The other carriers‟ policies sta ted that, if other primary insurance applied, costs would be shared. ( Id at
p p. 1251

- 1252.) In Century‟s declaratory relief action, the appellate court held Century was required to contribute. Century‟s contract was the only policy that expressly provid ed the insured with coverage during that part of the five

- year period. Since the underlying suit involved continuing loss liability, there were multiple insurers involved. But Century was not a true excess or secondary insurer, but rather was one of the primary insurers on the claim. ( Id . at p p. 1256

- 1260.)

“ [E] xcess insurance is insurance that is expressly understood by both the insurer and insured to be secondary to specific underlying coverage which will not begin until after that underlying coverag e is exhausted and which does not broade n that underlying coverage. [Citation.] That is not the kind of „excess‟ insurance involved in this case

. [¶] The „excess‟ insurance problem before us arises when one insurer attempts, through the
use of a so

- cal led other insurance clause, to reduce a primary coverage obligation into a more limited excess liability. „Insurance policies commonly include “other insurance” provisions which “attempt to limit the insurer‟s liability to the extent that other insurance covers the same risk.” [Citation.] One subcategory is known as “pro rata” provisions, which look to limit the insurer‟s liability to “the total proportion that its policy limits bear to the total coverage available to the insured.” [Citation.] There is another subcategory known as “excess only” clauses, which require the exhaustion of other insurance; in12

effect, this insurer does not provide primary coverage but only acts as an excess insurer. [Citation.] A final subcategory of “escape” clauses exting uishes the insurer‟s liability if the loss is covered by other insurance. [Citations.]‟ [Citation.]” ( Century, supra , 109 Cal. App.4th at p. 1255, orig. italics.)

“ „ “Escape” clauses came to be so named because they permit an insurer to make
a seemin gly ironclad guarantee of coverage, only to withdraw that coverage (and thus escape liability) in the presence of other insurance. [Citation.] When “excess only”
clauses are found in primary [italics added] liability policies, they are treated the same

w ay as escape clauses. [Citations.] Because these types of provisions are disfavored, courts have developed a method of overriding them

- “When two or more applicable policies contain such clauses, both liability and the costs of defense should ordinarily be prorated according to the amount of coverage afforded.” [Citation.] The reason for this rule is that the conflicting provisions are deemed essentially irreconcilable; if given effect competing clauses would strand an insured between insurers disclaim ing coverage

. . . Courts have found for the pro rata solution when confronted by a variety of conflicts between differing types of “other insurance” provisions

. . . . [¶] A predicate for prorating policies with conflicting “other insurance” provisions i s that the policies operate on the same level of coverage, that is to say, two or more policies apply to the

same damage or loss suffered by the same party. [Citation s .] Put another way, “an „other insurance‟ dispute can only arise between carriers on th e same level, it cannot arise between excess and primary insurers.” [Citation.]‟ ” ( Century, supra , 109 Cal. App.4th

at p. 1256.)
In Travelers Casualty & Surety Co. v. Century Surety Co

. (2004) 118 Cal. App.4th
1156 ( Travelers ) , Century issued a primary CGL policy to a framing contractor, containing an endorsement that if other insurance was available for a loss covered by the Century policy, Century‟s policy would be excess of such insurance, and Century would have no duty to defend any claim that the o ther insurer had a duty to defend. ( Id . at13

p. 1158.) Home buyers sued the contractor, alleging continuing damage to their properties from defective construction work. Century declined to provide a defense
because Travelers

-- which had issued CGL polici es for prior years

-- provided a defense (under a policy calling for sharing costs with any other primary insurer). ( Ibid .) The appellate court held Travelers was entitled to equitable contribution from Century for
defense and ind emnification costs. The court said the insured had no other liability insurance during the time that Century‟s policy was in effect. Both carriers‟ policies covered the same type of loss but had conflicting “other insurance” clauses. Giving effect to Century‟s clause, which wa s in the nature of an escape clause, would result in imposing on Travelers a burden of shouldering that portion of a continuing loss attributable to the time when Century was the only liability insurer covering the insured. ( Id . at p p. 1161

- 1162.) Here, Arch persuaded the trial court

-- and argues on appeal

-- that the California cases invalidating “other insurance” clauses are distinguishable because the clauses in
those cases were located only in the conditions section of the insurance policies, not in the coverage section. However, even assuming the other

- insurance clauses in the California cases relied upon by Underwriters were located in the exclusions section rather than the coverage section of the policies, none of the cases discussed or decided th at the
location mattered. Underwriters did cite one federal district court case

-- USF Ins. Co. v.
Clarendon Am

. Ins. Co . (C.D. Cal. 2006) 452 F.Supp.2d 972 ( USF )

-- which declined to enforce an “other insurance” clause that was located in the coverage se ction of an insurance policy. There, however, the same clause appeared in the coverage section of the other insurers‟ policies. ( Id . at p. 1002 [identical provisions in the policies are mutually irreconcilable].) Here, the clauses were not identical, an d w e therefore do not rely on USF

. Arch invokes general principle s that an insurer‟s duty to defend is not absolute but is measured by the nature and kinds of risks covered by the policy ( Rosen v. Nations Title14

Ins. Co . (1997) 56 Cal. App.4th 1489, 1497 [no duty to defend because loss was not covered under the policy] ), that limitations on a promised defense duty must be conspicuous, plain , and clear ( Maryland Casualty Co. v. Nationwide Ins. Co . (19 98)
65 Cal. App.4th 21, 30 [subcontractor‟s insurer had du ty to defend contractor as additional insured despite policy language that the insurance applied only to the extent the contractor was held liable for subcontractor‟s conduct] ), and that coverage under an insurance policy is determined in the first instanc e by referring to the policy‟s insuring agreement, which defines the risk undertaken by the insurer . ( 1119 Delaware v.
Continental Land Title Co . (1993) 16 Cal. App.4th 992, 1003 [title policy‟s failure to disclose conditional use permit came within insuri ng clause affording coverage against loss sustained by reason of any “encumbrance” on the property and was not expressly excluded under any policy exclusions].) However, none of these general principl es answer the more specific public policy questions p resented in this case. While this appeal was pending, the Fourth Appellate District published Underwriters of Interest, supra , 241 Cal. App.4th 721, which held unenforceable an “other insurance” claus e purporting to relieve a primary insurer ( Pro B uilders) of its duty
to defend , despite clearly having a duty to indemnify. ProBuilders contributed toward the
indemnification costs in the construction defect case against the insured contractor but
resisted defense costs , based on its other

- insurance clause that ProBuilders had the “duty
to defend

. . . against any suit seeking

. . . damages [to which the insurance applied] provided that no other insurance affording a defense against such a suit is available to you.” ( Id . at p. 724.) The plaintiff‟s policy said it would be excess over any other primary insurance available to the contractor as an additional insured. ( Id . at p. 724, fn. 1.) “The courts have repeatedly addressed

-- and rejected

-- arguments by insurers that an „other insurance‟ clause in their in suring agreement permitted them to evade their obligations by shifting the entire burden associated with defending and indemnifying a15

mutual insured onto a co

- insurer

. . . . [W] hen „the “other insurance” clause

. . . is written into an otherwise primary p olicy, the courts have considered this type of “other insurance” clause as an “escape” clause, a clause which attempts to have coverage, paid for with the insured‟s premiums, evaporate in the presence of other insurance. [Citations.] Escape clauses are d iscouraged and generally not given effect in actions where the insurance company who paid the liability is seeking equitable contribution from the carrier who is seeking to avoid the risk it was paid to cover.‟ Numerous courts have therefore rejected „oth er insurance‟ clauses as a basis for avoiding contribution. [Citations.].” ( Underwriters of Interest, supra , 241 Cal. App.4th at p. 731.)
In Underwriters of Interest , the plaintiff‟s CGL policy provided primary coverage for the common insured for a spe cified p eriod of time (October 2001 to October 2003) , and defendant ProBuilders‟ policies provided primary coverage for the common insured
for a different but overlapping period of time (December 2002 to December 2004) , and the allegations of the third

- par ty action asserted the common insured caused damage to the homes by allegedly defective construction work, including some claims for which ProBuilders potentially provided the only primary policy. ( Id . 241 Cal. App.4th at
p p. 724, 731

- 732.) Because giving effect to its “other insurance” provision, in the nature of an escape clause, would result in imposing on the plaintiff the burden of shouldering that portion of defense costs attributable to claims arising from a time when ProBuilders
was the only liabil ity insurer, the escape clause must be disregarded. ( Id . at p. 732.) Where there are “successive primary insurers and the claim by the third party involved a continuing

- loss liability coverage over the span covered by multiple insurers,” the court
should decline to allow one of those insurers to employ an “other insurance” escape
clause to avoid equitable contribution. ( Ibid .) The court was unpersuaded by the defendant‟s argument that escape clauses should be enforced as long as the insured is not
left without coverage. ( Id . at p p. 732

- 733.)16

Here too, Arch‟s policy made Arch liable for defense costs, but then purported to extinguish that obligation when oth er insurance afforded a defense (“We have the

. . . duty to defend you

. . . provided that no oth er insurance” is available.) Here too, enforcing Arch‟s clause would result in imposing on Underwriters the burden of shouldering a portion of defense costs attributable to claims arising from a time when
Arch was the only insurer. Here too, the “other i nsurance” provision was an escape clause that must be disregarded.
I n defending the judgment, Arch relies (as did the trial court) on Chamberli n v. Smith (1977) 72 Cal. App.3d 835 ( Chamberlin ), which held an insurer successfully
escape d responsibility by p lacing the “other insurance” clause not only in the “conditions” portion of the policy but also in the “coverage” section. However,
Chamberlin predated the “modern trend” extending the dis trust of escape clauses to “other insurance” clauses that attempt t o shift the burden away from a primary insurer , as noted in the 2002 opinion of Dart, supra , 28 Cal. 4th at p ages 1079

- 1080. Moreover, Chamberlin is materially distinguishable

. It involved attorney malpractice insurance. The insured lawyer made a mista ke in November 1968 that induced his client to enter an unenforceable agreement on December 17, 1968. ( Id.
72 Cal. App.3d at p. 840.) At the time, the lawyer was insured by Mission Insurance Company, but that policy expired at the end of 1968. The client filed suit against the lawyer in December 1970, at which time the lawyer was insured by Reserve Insurance Company. Reserve undertook the defense of the lawyer under a reservation of rights , settled the malpractice suit (with contribution from Mission), a nd sued to recover defense costs
from Mission . ( Chamberlin, supra , 72 Cal. App.3d at p p. 840

- 841 .) The appellate court held Reserve had no responsibility for the loss. Reserve‟s insurance policy contained “the following limitation on its coverage: „This policy applies only to acts, error s or omissions

. . . which occurred prior to the effective date of the policy, and then only if17

such claim is made during the policy period provided (1) [the insured had no knowledge of the mistake when the policy took ef fect] and (2) there is no other insurance applicable to such act, error, or omission

. . . . ‟ ” ( Id . at p. 847, italics added.) The court concluded Reserve‟s policy did not cover the attorney negligence, because the attorney had knowledge of his mistake before the effective date of Reserve‟s policy. ( Id

. at p p. 848, 850.) Chamberlin went on to conclude “the second condition” of the Reserve policy was not met in that there was, in fact, “other insurance” applicable to the error, i.e., the Mission policy (though Mission‟s policy also had an “other insurance” clause). ( Id . at
p. 848.) Thus, Mission had to reimburse Reserve.
Chamberlin rejected Mission‟s argument that Reserve‟s “other insurance” clause was an unenforceable escape clause. ( Id . 72 Cal. App. 3d at p. 848.) The court said the doctrine disfavoring escape clauses “should be applied with caution in the case of successive attorney malpractice insurance policies where the error or omission occurs during the life of one policy, and the claim is made during the life of another. Attorney malpractice insurance policies are somewhat unique. Ordinarily an insurance policy will only cover liability for an occurrence during a period covered by the insurance. Attorney malpractice insurance will often cont ain a „claims made‟ clause which will cover the insured for all claims made during the life of the policy regardless of when the error or omission occurred.” ( Id . 72 Cal. App.3d at p p. 848

- 849 .) There is a “distinction between an indemnity against liabili ty and an indemnity against loss

. . . „in the former the essence of the contract is that the event shall not happen while in the latter the indemnity is against the consequences of the event if it should happen.‟ ” ( Id . at p. 849.)
Chamberlin said the “ other insurance” clause in Mission ‟s policy was in the “conditions” section of the policy and appeared to be a (disfavored) escape clause. ( Id . at
p. 850.) The “other insurance” clause in the “conditions” section of Reserve ‟s policy, while not an escape clause, wa s a composite pro rata

- excess clause. ( Ibid .) The court said the purpose of the two clauses, each in a different way, wa s to limit liability in the18

event there is other insurance coverage for a loss covered by the policy. ( Ibid .)

“ However, th e deliberate statement in the „Insuring Agreements‟ part of the Reserve policy that there will be no coverage for an act, error or omission that occurred prior to the effective date of the policy if there is other insurance is not an escape clause, it is a n exception from coverage. Moreover, it is reasonable not to provide coverage where the act, error or omission occurred during the life of an earlier policy . After all, Reserve could have provided no coverage at all for acts, errors or omissions occurrin g prior to the effective date of its policy

. . . . [T]he interpretation to be given words may depend on the use of the words in the instrument where they appear.” ( Ibid .)
Chamberlin continued: “Thus, it appears that Reserve‟s policy affords no
coverage for acts or omissions that occurred prior to its policy period if there is other insurance. However, if other insurance does not completely cover the insured‟s liability, then Reserve‟s policy provides excess coverage

. . . [and] the loss will be prorate d
between Reserve a nd the other insurance company. [¶] It is well recognized that an insurance company has an unquestionable right to limit the coverage of the policy issued by it; and, when it has done so, the plain language of the limitation must be re spected.” ( Id

. 72 Cal. App.3d at p. 850.) Thus, in Chamberlin , the “other insurance” clause in the coverage section was not just about duty to defend. It actually limited coverage (duty to indemnify) by stating the policy itself applied only if there w as no other insurance for the insured‟s error or
omission. Here, although Arch placed an “other insurance” clause in the coverage section of its policy, the clause addressed only duty to defend, not duty to indemnify. Arch does not dispute the policy its elf applied to the loss. The duty to defend is broader than the duty to indemnify and is measured by the nature and kinds of risks covered by the policy. ( Hartford Casualty Ins. Co. v. Swift Distribution, Inc . (2014) 59 Cal. 4th 277,
287

- 288 .) Additional ly, w e see merit in a point made by a federal appellate court in Maine, which criticized Chamberlin ‟s reliance on location of the clause in the coverage19

section as determinative, calling it “ „semantic microscopy‟ ” that “would tend to

encou r age insurers to jockey for best position in choosing where to locate „other insurance‟ language, needlessly complicating the drafting of policies, inducing wasteful litigation among insurers, and delaying settlements

-- all ultimately to the detriment of the
insurance

- buying public.” ( Home Ins. Co. v. St. Paul Fire & Marine Ins. Co . (1st Cir. 2000) 229 F.3d 56, 62

- 63.) Though this federal case applying Maine law is not binding

on us , the point is consistent with California law. Arch argues we should enforce its other

- insurance clause, because enforcement takes no risk that the insured would be left without coverage. Arch cites a case which
enforced a clause because it would not leave the insured stranded between insurers disclaiming coverage. ( Hartford Casualty Ins. Co. v. Travelers Indemnity Co . (2003)
110 Cal. App.4th 710, 727.) The appellate court noted that leaving an insured stranded was an equitable consideration which led other courts to ignore other

- insurance clauses. ( Ibid .) However, the appellate court al so explained its decision turned on the fact that the “policies in this case contain narrow exceptions to their operation as primary insurance. There are no broad „excess only‟ clauses in either policy that purport to make the coverage excess whenever the re is other insurance. Both policies declare themselves to be excess in the situation where the parties and the insurers are most likely to intend that
result

-- when the insured is covered as an additional insured on another party‟s policy for some speci fic event or situation.” ( Id . at p. 726.) Here, in contrast, Arch‟s other

insurance clause is not limited to a specific factual situation but purports to apply
whenever there is other insurance. Moreover, the risk of leaving an insured stranded without coverage is not the only public policy consideration. “[I]mposing the entire liability for a loss on the insurer with a policy providing for pro rata coverage would annul that policy‟s language, and create the anomaly that courts will only predictably enf orce proration between policies when they all have conflicting „excess other insurance‟ language barring proration. [Citations.]20

Giving „excess other insurance‟ clauses priority over policies providing for pro rata apportionment of liability among polici es is completely unrelated to the original historical purpose of such „other insurance‟ clauses, which was to prevent multiple recoveries by insureds in cases of overlapping insurance policies providing coverage for the same loss.” ( Fireman‟s Fund, supra , 65 Cal. App.4th at p. 1306, orig. italics.)
We conclude Underwriters is entitled to receive equitable contribution from Arch. Thus, t he trial court erred in granting summary judgment to Arch and in denying summary adjudication to Underwriters.

D ISPOSITI ON The judgment is reversed with directions to vacate the order dated October 10, 2012, and enter a new order denying Arch‟s motion for summary judgment and granting
Un derwriters‟ motion for summary adjudication. The amount of contribution is to be
deter mined on remand. Underwriters will recover its costs on this appeal. (Cal. Rules of Court, rule 8.278(a).)

HULL , J.

We concur:

BLEASE , Acting P. J.

HOCH , J.