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, 2016, 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” clauses are unenforceable to relieve Arch

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 

insert:

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 additional 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” clauses are unenforceable in this 

equitable contribution 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,

Defendant 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. Rhoades, and Tyler G. Olpin for Plaintiff

and Appellant.

Selman Brietman, Gregory J. Newman and Donald W. Montgomery for Defendant

and Respondent.
2

Two insurers shared indemnification costs to settle claims made against mutual

insureds in underlying construction defect litigation brought by third parties. But one 

insurer -- defendant Arch Specialty Insurance Company (Arch) -- refused to share the 

costs to defend the insureds in the underlying litigation. The other insurer -- plaintiff 

Certain Underwriters 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 entered 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” section of 

the insurance policy as well as the “limitations” 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 Underwriters is 

entitled to equitable contribution. On remand, the trial court will determine the amount.

FACTS AND PROCEEDINGS

The parties assisted the trial court by agreeing to a “JOINT STIPULATION OF 

UNDISPUTED MATERIAL FACTS.” 

Underwriters and Arch were both primary insurers of Framecon, Inc. (Framecon)

but at different times. 
3

Underwriters issued a commercial general liability (CGL) policy to Framecon

effective October 28, 2000 to October 28, 2001, and another 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 the 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. The Arch policy applied to property damage if caused by 

an occurrence during the policy period, whether or not such occurrence was known to the

insured, and damage resulting from such occurrence first took place during the policy 

period. Claims involving continuous 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. Corp. v. 

Admiral Ins. Co. (1995) 10 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 2002, Framecon entered subcontracts to do carpentry and 

framing work on homes being developed by KB Home 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 home 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. Based on the 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 . . . Framecon.” 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:

“COVERAGE 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 of 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 defense 
5

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, DEDUCTIBLES 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 insurance, and over deductibles or selfinsured 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.

“When 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 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 . . . 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‟ policies 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 deleted 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 or 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 insurance 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. 

Underwriters and Arch both agreed 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, other 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 defense 
7

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 damages covered under their respective policies on a “time on the risk” 

basis for homes completed during each carrier‟s policy period. Underwriters paid 

$79,200 and Arch paid $16,500 on behalf of Framecon. 

Homeowners at a different development filed suit in 2006 (the Lamb action). 

Again, Underwriters provided a defense to Framecon and KB Home, and Arch refused to 

provide a defense based on the “other insurance” policy language. The Lamb action 

settled in 2008, with both carriers agreeing to indemnify Framecon 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 complaint 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 that 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 underlying 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 “other insurance” clauses. The trial court accepted Arch‟s reliance on one case 

as assertedly holding that placing the “other insurance” clause in the “Insuring 
8

Agreement” portion of the insurance policy defining coverage, as opposed 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

invalidating such clauses, on the grounds they assertedly involved clauses placed only in 

the conditions/limitations portion of the contract or were otherwise distinguishable. 

DISCUSSION

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. ProBuilders Specialty Ins. Co. (2015) 241 Cal.App.4th 

721, 728 (Underwriters of Interest), 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 paid 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 shared 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 discharge 
9

of an obligation, the selection of which indemnitor is to bear the loss should not be left to 

the 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 

existence 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 principles 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 court 

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 pp. 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 Arch‟s insurance policy afforded “coverage” for this risk, Arch maintains its

policy did not afford “coverage” for defense costs related to this risk, because Arch
10

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 policies. [Citations.]” (Ibid.) Dart rejected a primary insurer‟s contention 

that its obligations were cancelled by the insured‟s inability to prove the type of otherinsurance 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 pp. 1080-1081.)

Arch does not dispute that its policy was primary, not 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 of 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 ultimately 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 Coverage 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 stated that, if other primary insurance applied, costs would be shared. (Id at 

pp. 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 

provided 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 pp. 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 coverage is exhausted and which does not broaden 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-called 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; in 
12

effect, this insurer does not provide primary coverage but only acts as an excess insurer. 

[Citation.] A final subcategory of “escape” clauses extinguishes 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 seemingly 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 

way 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 disclaiming 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 is 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. [Citations.] Put another way, “an „other 

insurance‟ dispute can only arise between carriers on the 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 other insurer had a duty to defend. (Id. at 
13

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 policies 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 indemnification 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 was 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 pp. 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 that 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 section 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, and we therefore do not 

rely on USF. 

Arch invokes general principles 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 Title 
14

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. (1998) 

65 Cal.App.4th 21, 30 [subcontractor‟s insurer had duty 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 instance 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 insuring 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 principles answer the more specific public policy 

questions presented 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” clause purporting to relieve a primary insurer (ProBuilders) 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 insuring agreement permitted them to evade their 

obligations by shifting the entire burden associated with defending and indemnifying a 
15

mutual insured onto a co-insurer. . . . [W]hen „the “other insurance” clause . . . is written 

into an otherwise primary policy, 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 discouraged 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 „other 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 specified period 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-party 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 

pp. 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 liability 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 pp. 732-733.)
16

Here too, Arch‟s policy made Arch liable for defense costs, but then purported to 

extinguish that obligation when other insurance afforded a defense (“We have the . . . 

duty to defend you . . . provided that no other 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 insurance” provision was an escape 

clause that must be disregarded.

In defending the judgment, Arch relies (as did the trial court) on Chamberlin v. 

Smith (1977) 72 Cal.App.3d 835 (Chamberlin), which held an insurer successfully 

escaped responsibility by placing 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 distrust of escape clauses to 

“other insurance” clauses that attempt to shift the burden away from a primary insurer, as 

noted in the 2002 opinion of Dart, supra, 28 Cal.4th at pages 1079-1080. 

Moreover, Chamberlin is materially distinguishable. It involved attorney 

malpractice insurance. The insured lawyer made a mistake 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), and sued to recover defense costs 

from Mission. (Chamberlin, supra, 72 Cal.App.3d at pp. 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, errors or 

omissions . . . which occurred prior to the effective date of the policy, and then only if 
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such claim is made during the policy period provided (1) [the insured had no knowledge 

of the mistake when the policy took effect] 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 pp. 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 contain 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 pp. 848-849.) There is a “distinction between 

an indemnity against liability 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, was a composite pro rata-excess clause. (Ibid.) The court 

said the purpose of the two clauses, each in a different way, was to limit liability in the 
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event there is other insurance coverage for a loss covered by the policy. (Ibid.) 

“However, the 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 an 

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 occurring 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 prorated 

between Reserve and 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 respected.” 

(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 was 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 itself 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.) Additionally, we 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 coverage 
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section as determinative, calling it “ „semantic microscopy‟ ” that “would tend to 

encourage 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 also 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 there 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 specific event or situation.” (Id. at p. 726.) Here, in contrast, Arch‟s otherinsurance 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 enforce proration between policies when 

they all have conflicting „excess other insurance‟ language barring proration. [Citations.] 
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Giving „excess other insurance‟ clauses priority over policies providing for pro rata 

apportionment of liability among policies 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, the trial court erred in granting summary judgment to Arch and in denying 

summary adjudication to Underwriters.

DISPOSITION

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 

Underwriters‟ motion for summary adjudication. The amount of contribution is to be 

determined 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.