Filed 2/8/16 Nazarian v. Colony Ins. Co. CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

RICHARD NAZARIAN, et al.,

Plaintiffs and Appellants,

v.

COLONY INSURANCE COMPANY,

Defendant and Respondent.

 B257595

 (Los Angeles County

 Super. Ct. No. BC501308)

APPEAL from a judgment of the Superior Court of Los Angeles County, Malcolm 

Mackey, Judge. Affirmed.

Reisman & Reisman, Daniel A. Reisman; Law Office of John J. Perlstein and John 

L. Perlstein for Plaintiffs and Appellants. 

Ropers, Majeski, Kohn & Bentley, Michael T. Ohira and Terry Anastassiou for 

Defendant and Respondent.

____________________________
2

Richard Nazarian and the RCN Corporation appeal from the judgment entered in 

favor of Colony Insurance Company in this action for breach of an insurance contract. In 

the underlying lawsuit, Michael Florman had sued Nazarian and RCN for breach of 

contract, breach of warranty, negligence, and misrepresentation in conjunction with a 

home construction project. Nazarian requested that his insurance carrier Colony defend 

him in the action. Colony declined, asserting that the Florman complaint sought damages 

for residential construction expressly excluded from coverage under the insurance policy. 

Nazarian and RCN then brought this action for declaratory judgment, breach of contract, 

and breach of the implied covenant of good faith and fair dealing. The trial court granted 

summary judgment on the grounds that the policy afforded no coverage for the claims 

asserted in the underlying litigation and that Colony had no duty to defend Nazarian and 

RCN in that action. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. Florman’s Action

In March 2009, the Nickel Company, identified as a division of RCN Corporation, 

entered into a contract with Michael Florman to construct an 8,500 square foot single 

family residence for Florman and his wife in Pacific Palisades. In 2012 Florman sued 

Nazarian individually and under the fictitious business name of The Nickel Company, as 

well as a corporation identified as “RCN Corporation dba The Nickel Company” for 

breach of contract, breach of warranty, negligence, and misrepresentation. Florman’s 

complaint alleged that Nazarian had represented himself to Florman and his wife as an 

experienced licensed general contractor who could and would build their dream home to 

their specifications and within their budget. Florman alleged that Nazarian, “on behalf of 

himself and the entities he controlled or under which name he did 

business . . . represented to the [Flormans] that he could and would take complete 

responsibility for the construction of their Home, and that such could and would be 

completed to their satisfaction for approximately [$1,500,000].” Nazarian, the complaint 

alleged, further represented that he would personally act as the construction 
3

superintendent and would closely monitor the work. Based on Nazarian’s 

representations, the Flormans hired Nazarian and his businesses to construct their home. 

Nazarian and his businesses discontinued their work on the Florman construction project 

prior to the completion of the work initially envisioned. Florman alleged that Nazarian 

and his businesses did not act competently; that their work fell below the standard of 

care; that they failed to provide appropriate supervision and cost control; that their 

subcontractors’ work was deficient in many respects, causing substantial damage to the 

dwelling; and that the home was not free of construction defects. These allegations were 

incorporated into Florman’s causes of action for breach of contract, breach of express and 

implied warranty, and negligence. 

II. The Insurance Policy and Tender of Defense

Nazarian tendered the Florman lawsuit to Colony for defense and indemnification. 

Colony had issued a liability insurance policy to “Richard Charles Nazarian, d.b.a. 

The Nickel Company,”1 which was initially effective November 14, 2008, through 

November 14, 2009 (Policy No. GL950087), and was renewed though November 14, 

2010 (Policy No. GL950087-1). 

The policy provided commercial general liability coverage: “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.” The policy expressly set 

forth the right and duty to defend the insured against suits seeking covered damages, and 

disclaimed any obligation to defend the insured in a lawsuit seeking damages for bodily 

injury or property damage to which the insurance did not apply. By means of 

Endorsement U159-0702, the policy expressly limited the commercial general liability 

 

1 Nazarian submitted a declaration in conjunction with his opposition to the motion 

for summary judgment in which he stated that he is the principal and sole shareholder of 

the RCN Corporation, and that RCN does business under the fictitious name of The 

Nickel Company.
4

coverage to bodily injury or property damage that resulted from the business described as 

“GENERAL CONTRACTOR: REMODELING.” 

With another endorsement, the policy also expressly excluded coverage for any 

claims arising from residential construction work, except as otherwise specified by the 

policy. This endorsement, U527-0607, was entitled, “EXCLUSION: ANY 

RESIDENTIAL CONSTRUCTION WORK EXCEPT AS SPECIFIED.”2 The 

endorsement modified the coverage under the commercial general liability coverage to 

add the following exclusion: “This insurance does not apply to ‘bodily injury’ or 

‘property damage’ included in the ‘products-completed operations hazard’ and arising out 

of or resulting from ‘your work’ on any ‘residential construction.’” “Residential 

construction” was defined to mean “buildings, structures or other improvements to real 

property constructed, maintained or sold for the purpose of being used by natural persons 

as a dwelling, inclusive of all infrastructure improvements in connection therewith, 

including, but not limited to, grading/excavating, utilities, road paving/curbs/sidewalks.” 

The policy provided that the exclusion for residential construction “may be subject 

to exception, as set forth below, but only if the box corresponding to the description of 

any such exception is checked, and then only to the extent of the exception so described.” 

None of the boxes corresponding to the described exceptions was checked.

Colony denied coverage and rejected Nazarian’s request for a defense on the basis 

that Florman’s suit concerned new residential construction and was therefore excluded 

from coverage.3 

 

2 We are aware that in the course of the summary judgment briefing, Nazarian and 

RCN contended that the applicable version of the endorsement excluded “new residential 

construction” as opposed to “any residential construction,” but as discussed below we 

quote the language of the policy from the copy that Nazarian and RCN attached and 

incorporated by reference into their complaint. 

3

In denying coverage, Colony reproduced language from the policy and 

Endorsement U527-0607. Colony’s recitation of the policy language involved the “new 

residential construction” version of the endorsement rather than the “any residential 
5

III. Nazarian and RCN’s Action Against Colony and the Summary 

Judgment

Nazarian and RCN sued Colony, among others, for breach of contract and breach 

of the implied covenant of good faith and fair dealing. They also requested a declaration 

of the rights of the parties. According to the allegations in the complaint, Colony 

breached its insurance contract and the implied covenant of good faith and fair dealing by 

refusing to defend and indemnify Nazarian and RCN in the Florman action. 

Colony moved for summary judgment. After reviewing the evidence and hearing 

argument, the trial court concluded that the insurance policy did not provide coverage for 

Nazarian individually or doing business as The Nickel Company for the claims asserted 

in the Florman action and that Colony had no duty to defend him in either capacity; that 

the policy did not provide coverage to RCN under either its corporate name or fictitious 

name of The Nickel Company for the claims asserted in the Florman action and that 

Colony had no duty to defend it; that the cause of action for violation of the covenant of 

good faith and fair dealing failed in the absence of insurance coverage; and that Colony 

was entitled to summary adjudication of the cause of action for violation of the covenant 

of good faith and fair dealing under the genuine dispute doctrine (see Wilson v. 21st 

Century Ins. Co. (2007) 42 Cal.4th 713, 723-724) because a genuine dispute existed as to 

whether Colony owed any duties under the policy. The court entered judgment in 

Colony’s favor. Nazarian and RCN appeal.

DISCUSSION

I. Applicable Principles and Standard of Review

The interpretation of an insurance policy is a question of law and follows the 

general rules of contract interpretation. (Haynes v. Farmers Ins. Exchange (2004) 32 

Cal.4th 1198, 1204; Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18

 

construction” version attached to and incorporated by reference into the complaint by 

Nazarian and RCN.
6

(Waller).) “The fundamental rules of contract interpretation are based on the premise that 

the interpretation of a contract must give effect to the ‘mutual intention’ of the parties.

‘Under statutory rules of contract interpretation, the mutual intention of the parties at the 

time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to 

be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.)’” 

(Waller, at p. 18.) “When interpreting a policy provision, we give its words their 

ordinary and popular sense except when they are used by the parties in a technical or 

other special sense.” (Haynes, at p. 1204.) “A policy provision will be considered 

ambiguous when it is capable of two or more constructions, both of which are reasonable. 

[Citation.] But language in a contract must be interpreted as a whole, and in the 

circumstances of the case, and cannot be found to be ambiguous in the abstract.” 

(Waller, at p. 18.) When a policy is clear and unequivocal, the only thing the insured 

may reasonably expect is the coverage afforded by the plain language of the mutually 

agreed-upon terms. (TIG Ins. Co. of Michigan v. Homestore, Inc. (2006) 137 

Cal.App.4th 749, 755; see VTN Consolidated, Inc. v. Northbrook Ins. Co. (1979) 92 

Cal.App.3d 888, 892 [insurance policy “must be construed from the language used 

and . . . where . . . its terms are plain and unambiguous, the courts have a duty to enforce 

the contract as agreed upon by the parties”].)

“Ordinarily, the objective intent of the contracting parties is a legal question 

determined solely by reference to the contract’s terms. [Citations.] [¶] The court 

generally may not consider extrinsic evidence of any prior agreement or 

contemporaneous oral agreement to vary or contradict the clear and unambiguous terms 

of a written, integrated contract. [Citations.] Extrinsic evidence is admissible, however, 

to interpret an agreement when a material term is ambiguous. [Citations.] [¶] When the 

meaning of the words used in a contract is disputed, the trial court engages in a three-step 

process. First, it provisionally receives any proffered extrinsic evidence that is relevant 

to prove a meaning to which the language of the instrument is reasonably susceptible. 

[Citations.] If, in light of the extrinsic evidence, the language is reasonably susceptible to 

the interpretation urged, the extrinsic evidence is then admitted to aid the court in its role 
7

in interpreting the contract. [Citations.] When there is no material conflict in the 

extrinsic evidence, the trial court interprets the contract as a matter of law. [Citations.] 

This is true even when conflicting inferences may be drawn from the undisputed extrinsic 

evidence [citations] or that extrinsic evidence renders the contract terms susceptible to 

more than one reasonable interpretation. [Citations.] If, however, there is a conflict in 

the extrinsic evidence, the factual conflict is to be resolved by the jury. [Citations.]” 

(Wolf v. Walt Disney Pictures and Television (2008) 162 Cal.App.4th 1107, 1126-1127

(Wolf), footnote omitted.)

An insurer must defend any action that seeks damages potentially covered by the 

policy. (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 275.) Determination of 

potential coverage is made by comparing the allegations in the third party complaint with 

the terms of the policy, considering as well any extrinsic facts made known to the insurer 

at the inception of the case that reveal a possibility the claim may be covered. (Waller, 

supra, 11 Cal.4th at p. 19; Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 

500, 509.) Doubts as to whether the facts give rise to a duty to defend are resolved in the 

insured’s favor. (Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081.) 

“[T]he duty to defend, although broad, is not unlimited; it is measured by the nature and 

kinds of risks covered by the policy. [Citation.]” (Waller, at p. 19.) When no possibility 

of coverage exists, the insurer has no duty to defend. (Ibid.; Aetna Casualty & Surety Co. 

v. Superior Court (1993) 19 Cal.App.4th 320, 327 [duty to defend, while broader than 

duty to indemnify, is not unlimited; if complaint shows “no potential liability for covered 

damages as a matter of law, there can be no potential for indemnification, nor can there 

be a duty to defend”].)

A motion for summary judgment is properly granted only when “all the papers 

submitted show that there is no triable issue as to any material fact and that the moving 

party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) 

We review a grant of summary judgment de novo and decide independently whether the 

triable facts not subject to dispute warrant judgment for the moving party as a matter of 

law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) On an appeal from a 
8

summary judgment, “[a]s with an appeal from any judgment, it is the appellant’s 

responsibility to affirmatively demonstrate error, and, therefore, to point out the triable 

issues the appellant claims are present by citation to the record and any supporting 

authority. In other words, review is limited to issues which have been adequately raised 

and briefed.” (Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 116, 

disapproved on another ground as recognized in Kaufman & Broad Communities, Inc. v. 

Performance Plastering, Inc. (2005) 133 Cal.App.4th 26, 41-42.) “[I]t is not a reviewing 

court’s role to construct theories or arguments which would undermine the judgment.” 

(Mead v. Sanwa Bank California (1998) 61 Cal.App.4th 561, 564.) As the California 

Supreme Court has long held, “‘[a]n appellate court cannot assume the task of 

discovering the error in a ruling.” (Bradley v. Butchart (1933) 217 Cal. 731, 747; see 

also In re Phoenix H. (2009) 47 Cal.4th 835, 845.) “We do not serve as ‘backup 

appellate counsel,’ or make the parties’ arguments for them.” (Inyo Citizens for Better 

Planning v. Board of Supervisors (2009) 180 Cal.App.4th 1, 14, quoting Mansell v. 

Board of Administration (1994) 30 Cal.App.4th 539, 546.) 

II. Scope of Coverage Under the Policy

From the inception of the handling of this insurance claim, the parties have all 

proceeded on the understanding that whether Nazarian and RCN’s activities constituted 

remodeling or residential construction was the central question that would determine 

whether there was coverage and a duty to defend in the Florman litigation: If Nazarian 

and RCN were remodeling the Florman home, the policy would offer coverage and there 

would be a duty to defend; but if they were engaged in residential construction, the 

Colony policy did not cover that work and there would be no duty to defend. In Colony’s 

claim notes, which were submitted to the trial court in support of Nazarian and RCN’s 

opposition to the motion for summary judgment, Colony noted on October 1, 2012, that 

this new construction defect litigation naming Nazarian as the general contractor and 

project manager implicated “exclusion U527 which does not give back any residential 

construction of any type so all residential construction is excluded, as such there is no 
9

coverage for this loss . . . . ” This is a reference to Endorsement U527-0607, the 

exclusion modifying the commercial general liability coverage to exclude any residential 

construction. Subsequently, on October 11, 2012, Colony denied coverage on the basis 

that the litigation involved new residential construction and was therefore outside the

scope of the policy. A few days later, Nazarian’s insurance broker contacted Colony to 

assert that the work constituted remodeling. Colony responded that if Nazarian “could 

provide permits or contracts to show it was a remodel,” it would reevaluate its denial of 

coverage. 

As evidenced by a chain of electronic mail correspondence that was before the 

trial court at summary judgment, the parties continued to debate whether the work on the 

Florman home constituted remodeling or construction. The attorney for Nazarian and 

RCN contacted Colony on October 24, 2012, requesting that Colony reconsider its 

position because Nazarian and RCN “did not build a new home and in fact only did site 

work to an existing property,” so the exclusion Colony had relied upon did not apply. 

Colony responded that it agreed that if this was a remodel rather than construction, the 

claim would fall within the scope of the insurance policy. Colony’s specialist advised 

counsel that he had asked “the insured and the insured’s agent for documentation that this 

was not new construction in spite of the allegations in the complaint that the insured 

planned and constructed the home. I am more than willing to retain defense counsel once 

this is confirmed. The insured indicated he had permits which indicated that this was in 

fact a remodel, would you have such documents?” Nazarian and RCN’s counsel 

responded, “I will get what we have—there was an existing structure and thus not new 

construction.” The Colony specialist wrote to counsel, “Again[,] I am not saying that is 

not the case, I just have seen nothing to confirm that. Will the insured sign a letter to me 

attesting to that? If so that will work.” 

On October 24, 2012, Nazarian’s counsel sent to Colony what he described as “the 

permit showing the existing structure and the demo work done—clearly existing 

construction and thus a defense is owed. Please advise if you are appointing counsel.” 

The Colony specialist wrote a claim note that day in which he stated that Nazarian and 
10

RCN’s attorney “has sent several emails alleging the home built was remodel not new 

construction. He then sent a permit which he alleges shows there was demo work done 

on an existing home. That it does, it shows the home, garage and pool were completely 

removed[,] the lo[t] cleared and the sewer line capped. As such the insured had to build a 

completely new structure, he did not renovate or remodel an existing structure, so how 

they get that this is not new construction is not yet known to me. I have asked the

att[orney] to call me and discuss.” Later that day, the Colony specialist noted that the 

attorney had called and taken the position that “the fact that the insured did the demo 

constitutes remodel???? Even though he did infrastructure work and retaining walls for 

the new home to be built. I would disagree and still feel the U159-designated work 

remodeling contractor [Endorsement U159-0702, limiting commercial general 

liability coverage to the business of “GENERAL CONTRACTOR: REMODELING”]

and the[ ]U527 residential new construction which includes infrastructure [Endorsement 

No. U527-0607] both apply here. The permit issued to the insured is clear that this lot 

was completely cleared before the insured did any work on it other than demo.” 

Accordingly, on October 25, 2012, Colony advised Nazarian’s counsel that it had 

reviewed the further information that had been provided but that the company’s coverage 

position remained unchanged. The claim notes state that counsel was “pushing back. 

Indicating this was not new construction, etc. We are not convinced and as such will 

maintain our position. Counsel has threatened to seek declaratory relief.” 

As this correspondence shows, the parties understood this insurance policy 

identically and never considered its language to be ambiguous. The only question, which 

the parties discussed at length, was the factual matter of whether the insured had been 

engaged in remodeling or new construction. The parties agreed that this was the key 

question at the summary judgment stage as well. Colony sought summary judgment on 

Nazarian and RCN’s claims on the ground that the work done as residential construction, 

and was not therefore covered under the policy: “Plaintiffs were not sued because of 

home remodeling, but for residential construction. Plaintiffs demolished the house to the 

ground, and graded and prepared the building site as part of the construction of a new 
11

8,500 square foot luxury residence.” Nazarian and RCN, in turn, argued in opposition to 

summary judgment that they did not “exclusively perform new residential construction 

on the Florman project,” and that “at least some of the work that Nazarian performed on 

the Florman project falls well within the definition of remodeling.”4 

The trial court resolved the dispute at summary judgment on the same basis upon 

which it had been litigated: by determining whether Nazarian and RCN’s work 

constituted remodeling or residential construction. The court wrote, “The insuring 

agreement of the Colony Policies provides in relevant part that coverage is provided only 

if the claim results from the business of remodeling. This limitation is conspicuously set 

forth in Endorsement U159-0702 of the Colony Policies.” The trial court continued, 

“The plain language of this language is clear, and must be respected. It reflects the 

insurance requested by “Richard Charles Nazarian d.b.a. The Nickel Company”—

coverage for remodeling work, and not residential construction.” The court concluded 

that the allegations in the Florman complaint alleged residential construction rather than 

remodeling. Because Nazarian and RCN engaged in residential construction, and 

 

4 Nazarian appeared to believe that the contents of his application for insurance 

were relevant to the determination of the policy’s coverage, as he referred to the 

application in the declaration he submitted in opposition to the motion for summary 

judgment. While insurance contracts may incorporate other documents by reference (see, 

e.g., Kleveland v. Chicago Title Ins. Co. (2006) 141 Cal.App.4th 761, 765), this policy 

did not incorporate Nazarian’s application. The policy contained only one coverage part. 

According to the Commercial General Liability Coverage Part Declarations, that 

coverage part consisted of that Declarations form, the Common Policy Conditions, the 

Commercial General Liability Coverage Form, and the endorsements indicated on the 

Declarations page. The Declarations page provided that the applicable forms and 

endorsements were listed on a separate schedule, Form U001, and Form U001 listed 

those forms and endorsements included in the policy. At no point on any of these pages 

did the policy refer to or specify that it included the application. Moreover, in the 

Common Policy Conditions, the policy specified: “This policy contains all the 

agreements between you and us concerning the insurance afforded.” The policy provided 

that its terms could be amended or waived “only by endorsement issued by us and made a 

part of this policy.” Therefore, Nazarian’s application is not a part of the insurance 

policy.
12

Endorsements U159-0702 and U527-0607 limited the policy coverage to remodeling and 

excluded residential construction, the trial court concluded that there was no coverage 

and no duty to defend under the policy.

On appeal, Nazarian and RCN contend that the trial court should not have granted 

summary judgment against them. They argue that “[b]ecause at least some of Nazarian’s 

operations on the Florman project can be defined as remodeling, there is potential for a 

covered claim.” They continue, “When Nazarian commenced work on the Florman 

home, there was an existing residential structure. Nazarian then engaged in operations to 

change the structure and form of existing residential property. Certain elements were 

demolished, whereas other elements were retained and altered, including the driveway, 

the gate, and the retaining walls. [Citation.] Nazarian’s work thus fits within the 

definition of remodeling.” Colony, in turn, argues that the Nazarian defendants 

demolished a pre-existing structure, leaving only parts of a driveway, retaining wall, and 

gate; and that he performed some grading and excavation, all of which constituted 

residential construction rather than remodeling. We consider whether Colony 

demonstrated as a matter of law that Nazarian and RCN’s work fell outside the scope of 

coverage of the policy; that is, whether the work performed constituted remodeling or 

residential construction.

III. Summary Judgment 

We conclude that summary judgment was proper here, because Colony 

successfully demonstrated, as a matter of law, that the policy did not cover the causes of 

action tendered to it, and that the relevant extrinsic evidence shows that the policy is not 

reasonably susceptible to Nazarian’s argument on appeal. (Wolf, supra, 162 Cal.App.4th 

at pp. 1126-1127.) Endorsement U159-0702 of Nazarian’s insurance policy expressly 

limited Nazarian’s coverage to the business of “GENERAL CONTRACTOR: 

REMODELING.” Nazarian and RCN do not dispute that this endorsement is part of the 

insurance policy. We agree with the trial court that this language is clear and 

unambiguous, and that the policy was expressly limited to covering remodeling work. 
13

When the policy is read as a whole, as insurance policies are (Waller, supra, 11 

Cal.4th at p. 18), both Endorsement U159-0702 and Endorsement U527-0607, excluding 

any residential construction, demonstrate that the intent of the policy was to cover the 

insured with respect to remodeling activities and to exclude residential construction from 

the scope of coverage. Indeed, Nazarian and RCN expressly conceded in their briefing 

that if the version of Endorsement U527-0607 that prohibits “any residential construction 

work except as specified” is in fact the operative endorsement, “then the claims against 

them in the underlying action would not be covered.” That version is the operative 

endorsement here. The version of Endorsement U527-0607 with “any residential 

construction” language was attached, as part of the insurance policy, as Exhibit A to the 

complaint. Nazarian and RCN pleaded in the complaint that Exhibit A was a copy of the 

applicable policy and incorporated it by reference into the complaint. This constituted a 

binding judicial admission by Nazarian and RCN that the insurance policy included the 

“any residential construction” version of Endorsement U527-0607. (See Food Safety Net 

Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1126-1127; St. 

Paul Mercury Ins. Co. v. Frontier Pacific Ins. Co. (2003) 111 Cal.App.4th 1234, 1248.) 

As such, the Nazarian defendants have conceded in their briefing that the claims alleged 

in the Florman litigation are not covered by the Colony commercial general liability 

policy. We agree.5

 

5 We do not, however, decide in this opinion whether Endorsement U527-0607 

precludes coverage in this case. At our request, the parties submitted two rounds of 

supplemental briefing on various matters relating to Endorsement U527-0607, including 

whether Colony met its burden on summary judgment to establish it had no duty to 

defend Nazarian in light of that endorsement. From the parties’ supplemental briefing, it 

is clear that a determination of whether the work here falls within the endorsement’s 

products-completed operations hazard, as well as whether other policy exclusions 

concerning works in progress would apply if the endorsement’s products-completed 

operations hazard does not, requires a factual determination of whether Nazarian’s work 

on the project was completed or abandoned. Because these issues were not litigated 

before the trial court, the evidentiary record on appeal is insufficient to permit a 

determination of whether completion or abandonment occurred and whether the productscompleted operations hazard applies here. Although we cannot on this record determine 
14

The complaint in the Florman litigation alleged not remodeling but the demolition 

of an existing house and construction of a new home. In the complaint, Florman alleged 

that he and his wife contacted Nazarian as part of planning “to build the home of their 

dreams.” They were “in a position to plan and construct a large (approximately 8,500 

square feet) residence . . . which they desired to have built in accordance with the highest 

standard of care.” Florman and his wife were seeking general contractors and 

subcontractors “to build their home,” and they were dependent on professional advice 

because they had “almost no experience with residential construction.” According to the 

complaint, Nazarian represented that he would “build the home of their dreams.” The 

Flormans met with Nazarian “to ensure that he and his companies were fully conversant 

with what was to be constructed and the circumstances surrounding the same, the site, the 

proposed home, their expectations, and all other relevant matters.” Nazarian was alleged 

to have represented that he “would take complete responsibility for the construction of 

their Home” and that he would personally act as the construction superintendent. 

Florman alleged that he retained the Nazarian defendants in the belief that the home 

would be constructed as promised. 

Nazarian and RCN argue that “at least some” of the work performed “can be 

defined as remodeling,” and thus there was a potential of coverage and a duty to defend. 

Because there was a home present on the property when Nazarian began work, Nazarian

and RCN argue that they were “chang[ing] the structure and form of existing residential 

property.” Acknowledging the demolition but noting that a few items were retained and 

 

whether Endorsement U527-0607 excludes coverage for the work performed here, we 

may nonetheless look to the endorsement, together with the other portions of the policy, 

as expressing the policy’s general intent to provide coverage for remodeling but to 

exclude coverage for residential construction. This is consistent with the method in 

which the parties and the trial court relied upon this exclusion, as none of the litigants 

made an argument in the summary judgment moving papers or at the hearing that this 

exclusion was irrelevant, and the trial court relied on this exclusion to help develop an 

understanding of what was covered and what was not covered by the policy. (Waller, 

supra, 11 Cal.4th at p. 18 [insurance contracts are interpreted as a whole].)
15

altered, Nazarian and RCN claim on appeal that the work performed “fits within the 

definition of remodeling.” The complaint and available extrinsic facts, however, 

demonstrated that the scope of the construction work exceeded anything that could be 

considered remodeling. Nazarian, in his declaration submitted in opposition to the 

motion for summary judgment, described the work he performed for Florman as 

including “demolishing much of the existing structure, excavating, adding some of the 

foundation, and waterproofing.” The only features that Nazarian could identify 

remaining after the demolition were the driveway, the gate, and a retaining wall. We 

agree with the trial court that the record shows that “Plaintiffs demolished the old home 

to make way for the construction of the Flormans’ ‘dream home’” and that they “graded 

and prepared the building site as part of the construction of a new 8,500 square foot 

luxury residence.” 

According to the complaint provided to Colony when Nazarian tendered the 

lawsuit for defense and indemnification, Nazarian and RCN were involved in building a 

new house for Florman and were sued as a result. Because the policy was expressly 

limited to remodeling, Colony reasonably concluded that there was no potential for 

coverage for Nazarian or RCN. With no coverage provided by the policy for the Florman 

action, Colony did not breach the insurance contract by declining to defend or indemnify 

Nazarian and RCN; and without a valid cause of action for breach of the insurance 

contract, the cause of action for breach of the implied covenant of good faith and fair 

dealing necessarily fails as well. (Waller, supra, 11 Cal.4th at pp. 35-36.) Summary 

judgment was therefore appropriate.

Nazarian and RCN argue, however, that there was a potential for coverage because 

property damage was alleged in the Florman complaint. Specifically, they rely on 

paragraph 137 of the Florman complaint, in which Florman identified 10 different 

negligent acts in conjunction with the work performed at the residence site. According to 

Nazarian and RCN, “at least one of these alleged acts of negligence must constitute an 

occurrence [of property damage] under the policy,” but they fail to present any argument 

as to how these acts of property damage in the course of residential construction can 
16

survive the insurance policy’s limitation of coverage to property damage that arises from 

remodeling work. Nazarian and RCN have not established any error. 

Nazarian and RCN also contend that because the business description on the 

Common Policy Declarations page of the insurance policy states “Remodeling 

Contractor” and the Commercial General Liability Coverage Part Declarations form lists 

classifications for “Contractors executive supervisors or executive superintendents” and 

“Contractors—subcontracted work—in connection with construction, reconstruction, 

repair or erection of buildings,” the only way to give meaning to all words in the policy is 

to conclude that these words were part of the business description, thus leading to a 

potential for coverage here. While courts must give meaning to all words in a policy, 

they must also avoid constructions that render words superfluous or a nullity. (Civ. 

Code, § 1641.) Nazarian and RCN’s proposed construction would render the other 

express limitations of coverage in the policy a nullity. By its own terms, the policy must 

be read through the lens of Endorsement U159-0702, which specifically limits the 

coverage provided by the policy to the business of “GENERAL CONTRACTOR: 

REMODELING,” as well as the broader intent to exclude residential construction 

expressed in Endorsement U527-0607. Applying Endorsement U159-0702’s limitation 

of coverage does not render the Common Policy Declarations or the Commercial General 

Liability Coverage Part Declarations a nullity; it merely restricts coverage to those 

contracting tasks involving remodeling.

Our conclusion that as a matter of law there existed no potential for coverage 

under the policy makes it unnecessary to address Nazarian and RCN’s remaining 

arguments that RCN may be considered an insured under the policy for purposes of the 

duty to defend against the Florman action and that the genuine dispute doctrine cannot 

support the summary adjudication of the implied covenant of good faith and fair dealing 

cause of action. 
17

DISPOSITION

The judgment is affirmed. Respondent shall recover its costs on appeal.

ZELON, Acting P. J.

We concur:

SEGAL, J.

BECKLOFF, J.

*

 



Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to 

article VI, section 6 of the California Constitution.