1

Filed 2/28/23 Heidari v. Golden Bear Ins. Co. CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or 

ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

ALI HEIDARI,

Plaintiff and Appellant,

v.

GOLDEN BEAR INSURANCE 

COMPANY,

Defendant and Respondent.

 A1658151

 (Santa Clara County

 Super. Ct. No. 17CV306136)

In 2014, appellant Ali Heidari filed suit against Saratoga Construction

(Saratoga), alleging construction defects in Saratoga’s construction of his 

home in Monte Sereno. Saratoga tendered defense of the action to 

respondent Golden Bear Insurance Company (GBIC), which insured Saratoga 

under a general commercial liability policy during part of the period during 

which the home was constructed. GBIC denied coverage. Heidari and 

Saratoga settled the underlying action, Saratoga assigned its rights under 

the policy to Heidari, and he brought suit against GBIC seeking declaratory 

relief regarding its duty to defend the underlying action. A bifurcated trial 

was held on the issue of GBIC’s duty to defend, at the conclusion of which the 

1 On August 9, 2022, the Chief Justice ordered that this case be 

transferred from the Sixth Appellate District, where it had case number 

H047317, to the First Appellate District, where it was assigned case number 

A165815. 
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trial court found that because subcontractors performed all the construction 

work on the property, coverage was barred under the contractors’ warranty 

exclusion contained in the policy. We affirm. 

BACKGROUND

The Factual Setting

On November 14, 2014, Heidari filed suit against Saratoga in Santa 

Clara Superior Court (Ali Heidari v. Wells Fargo Bank, N.A., et al, Case No. 

114CV273242) (the underlying action) alleging construction defects in 

connection with the construction, between May of 2006 and June of 2008, by 

Saratoga of a residential property on Oak Drive in Monte Sereno, purchased 

by Heidari at a foreclosure sale in 2009 or early 2010. 

The complaint in the underlying action alleged that “the residence’s 

exterior decks and stairs allow water to enter into the structure,” the 

“residence’s exterior walls . . . allow unintended water to pass into the 

structure,” “the residence’s hardscape . . . were installed in such a way as to 

cause water or soil erosion to enter into or come in contact with the 

structure,” “the shower enclosure in the master bedroom shower leaks into 

the flooring system,” “there are cracks in the ceiling in the family room,” 

“there is flooding in front of the garage when it rains,” “the residence’s 

retaining walls and site walls (and the drainage systems associated with 

those walls) allow water to pass beyond, around or through its designed (or 

actual) moisture barrier,” “there are gaps in the hardwood floor and the floor 

squeaks,” and “the post supporting the driveway gate at the top of the 

property has settled causing damage to the post and the gate.” 

After service of the complaint, Saratoga tendered the defense and 

indemnity of the underlying action to its insurance carriers, including 
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respondent GBIC, which insured Saratoga under a commercial general 

liability policy between July 13, 2006 and March 9, 2007. 

By letter dated December 30, 2015, GBIC declined the request for 

defense and indemnity. 

Heidari and Saratoga settled the underlying action on October 14, 

2016. As part of the settlement agreement, Saratoga assigned to Heidari all 

claims and causes of action against GBIC for failure or refusal to defend. The 

matter then proceeded to an uncontested trial, at the conclusion of which the 

trial court entered a default judgment of $528,761, plus costs, against 

Saratoga.

The Proceedings Below

On February 8, 2017, Heidari filed the instant action against GBIC in 

Santa Clara Superior Court, seeking declaratory relief regarding GBIC’s duty 

to defend and to indemnify, and alleging breach of contract and breach of the 

implied covenant of good faith and fair dealing. 

Both parties moved unsuccessfully for summary adjudication or 

summary judgment on the issue of GBIC’s duty to defend. 

On January 4, 2019, the parties filed a set of Stipulated Facts for Trial,

including the following: 

“• Saratoga was the general contractor for the demolition and 

construction of the property between approximately May of 2006 and June 

30, 2008. [¶] . . . [¶]

“• Saratoga was responsible for supervising the work of all 

subcontractors and material suppliers at the property.

“• Saratoga retained subcontractors to construct the retaining wall at 

the property at issue in the litigation. [¶] . . . [¶]
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“• Saratoga cannot identify all subcontractors it retained to work on 

the Subject Property at issue in the litigation.

“• Saratoga cannot locate any copies of any subcontracts for the work 

at the property.

“• Saratoga cannot locate any copies of insurance certificates 

identifying Saratoga Construction, Inc. as an additional insured for Saratoga

Construction, Inc.’s subcontractors’ work at the property.

“• The demolition work began on or around May of 2006.

“• The Notice of Completion for improvement of the property was 

recorded on November 30, 2007.

“• The Final Inspection of the property took place and passed 

inspection on June 30, 2008.

“• GBIC issued CGL policy number GBL 07088 to Saratoga effective 

July 13, 2006, through July 13, 2007 (the ‘Policy’).

“• The Policy was cancelled due to non-payment of the premium, with 

an effective cancellation date of March 9, 2007.

“• Saratoga’s owner, Reza Norouzi, destroyed all project job file 

documents when the property entered foreclosure.”

A three-day bifurcated bench trial on the issue of GBIC’s duty to defend 

took place in May of 2019, with testimony from Beth Ossino, GBIC’s claims 

manager; Reza Norouzi, Saratoga’s owner and principal; and Michael 

Stevens, Saratoga’s attorney. 

GBIC argued that coverage was barred by various exclusions in its 

policy, including—as will be discussed in greater detail—a contractors’ 

warranty exclusion providing that coverage “shall not apply to occurrences 

arising out of operations performed by Independent Contractors unless, as a 

condition precedent,” Saratoga obtained agreements from its subcontractors
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to hold Saratoga harmless for liabilities incurred and certificates of insurance 

listing Saratoga as an additional insured. GBIC also argued that coverage 

was barred under the policy because Saratoga’s work on the property was not

completed during the policy term.

At trial, Ossino testified regarding Saratoga’s application for insurance 

from GBIC, on which it had indicated that “90%” of the work was to be 

performed by subcontractors, and in describing the work that was 

subcontracted, wrote that “ALL TRADES ARE SUBBED OUT”:

“Q. What was your understanding in reading the terminology ‘All 

trades are subbed out?’

“A. That all the actual work performed out there was done by 

subcontractors, that Saratoga probably provided just supervision, probably 

scheduling timing permanent type work, but all the actual trades—the actual 

construction work was performed by subcontractors.

“Q. Right in the middle of that box next to that section, there is a—it 

looks like percent symbol, work subcontract, it says: ‘90%.’ Do you see that?

“A. Yes.

“Q. What is your understanding of that when you had this statement: 

‘All trades subbed out.’ How did this correlate?

“A. The ten percent would have been the insured supervision work, 

and 90 percent would be all the actual construction work on the projects.

[¶] . . . [¶]

“Q. Did you have any understanding at all whether Saratoga 

Construction had worksite employees?

“A. Based on what they told the inspector, I think at that time, they 

said that they only had one other full-time employee who was a job 

superintendent, and I think on the application, it also notes an accounting
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person. So we didn’t have any indication that they had anybody actually out 

there performing work, other than supervisory work.” 

Norouzi testified to the contrary, that Saratoga’s own employees did 

perform construction work on the project, including the “site drainage 

installation,” and “the waterproofing and the drainage work behind the 

retaining wall.” 

Norouzi also testified regarding Saratoga’s insurance application:

“Q. You see, maybe you want to use the magnifying glass right there, 

where it says: ‘Percentage work subcontracted.’

“A. Yes.

“Q. So Saratoga Construction didn’t—did not subcontract out all the 

work on his projects, only the trades?

“A. For sure, yes.

“Q. And the trades aren’t all of the work on the project, are they?

“A. No. [¶] . . . [¶]

“Q. Who are the trades?

“A. Subcontractors.

“Q. You were naming them?

“A. Roofing, foundation, framing, electrical, plumbing, sheet rock, 

stucco, yeah.

“Q. Those things were subbed out, correct?

“A. Yes.

“Q. And Saratoga Construction still had some men working, right?

“A. I had some workers, yes.

“Q. And they did work that were not the trades?

“A. Yes.
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“Q. Is this an accurate statement here that 90 percent of the work for 

the trades work, which is 90 percent of the total work was subbed out?

“A. Yes. [¶] . . . [¶]

“Q. Mr. Norouzi, I believe you previously testified that you—Saratoga 

self-performed some site drainage work?

“A. Yeah. [¶] . . . [¶] The drainage behind the retaining wall. Yes.” 

At the conclusion of the trial, the trial court rendered an oral statement 

of decision, finding as follows:

“THE COURT: Thank you. All right. [¶] So in this matter, I thought 

a lot about all of the evidence that was presented during the trial, and I

considered the credibility of the witnesses. And in considering credibility, the 

Court considered the demeanor of the witnesses while they were testifying,

the consistency of the testimony while testifying, and compared to other 

admissible evidence, including their depositions. It’s coherently [sic], and 

whether or not the testimony was corroborated. And based on those factors,

the Court found Mrs. Ossino to be credible.

“Mr. Norouzi was not credible. His demeanor consistently changed 

when he was caught in a lie. He was very nervous. He was almost shaking, 

and sometimes he seemed to be on the verge of tears. When he was telling 

the truth, his demeanor would change. He became more casual, relaxed. For 

instance, when he said that the property wasn’t completed until late 2007 or 

2008, was very relaxed, was very assured. When he said nobody lived at the 

property during construction, he was very matter of fact, not nervous, not 

anxious. Not like when he was discussing his file, and whether or not he 

gave it to his attorney or when he destroyed it.

“But in the end, the evidence was clear that Mr. Norouzi destroyed his 

job file way before the underlying litigation began. That his attorney knew 
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that he had destroyed the file, but neither Mr. Stevens nor Mr. Norouzi ever 

revealed to Golden Bear during the time there was a tender for a defense that 

that file did not exist, or any of the information that Golden Bear had asked 

for. Really, what this case came down to, and the Court’s perception of the 

evidence it heard, was that Mr. Stevens and Mr. Norouzi wanted to give the 

insurance company, Golden Bear, just enough information without trying to 

lie of some sort of fact that would put them under the policy for a potential 

claim without revealing the truth of the situation. And when you look at the 

truth of the situation, there was no coverage, and that’s why they didn’t want 

to disclose the full truth, because they knew there was no coverage under the 

policy, had they disclosed what they knew. But at the time that the defense 

was tendered, there was enough information in the complaint and in the 

insurance policy, and the extrinsic evidence that Mrs. Ossino found, namely, 

the completion date of the project that it was out, after the policy was 

canceled with that, she had sufficient information to deny the claim.

“More over, after the matter was submitted just a few moments ago, 

based on the information of reopening, and we talked a lot about the 

condition proceeding [sic] and whether or not Mr. Norouzi complied with that 

request for information as to the contract and the warranties, he never 

supplied that information, nor could he ever have. And therefore, there is no 

potential claim, because he couldn’t satisfy the condition proceeding [sic].

“And given the testimony that I’ve heard this afternoon, and the 

documents, the Court is satisfied that the evidence shows that all of the work 

was done by subcontractors. And because they hadn’t completed the 

condition precedent, again, there is no coverage. [¶] . . .[¶]

“It’s clear that Mr. Norouzi, nor his attorney, Mr. Stevens, ever gave 

any warranties or insurance documents related to the subcontractors to 
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Golden Bear. Not when Golden Bear specifically asked for the documents, or 

at any time during the litigation—the underlying litigation. And no such 

documents were produced here at trial.

“Furthermore, since Mr. Norouzi destroyed his job file, no such 

documents could have ever been produced to Golden Bear. Per policy terms, 

such documents were a condition precedent to coverage for the subcontractors

work, including a duty to defend Saratoga Construction for any work 

performed by subcontractors.” 

On July 22, 2019, the trial court issued a written statement of decision, 

finding as to the contractor’s warranty exclusion as follows:

“In the instant matter, coverage was not afforded by the policy for

occurrences arising out of operations performed by independent contractors

unless, as a condition precedent, the insured received a written agreement

from each and every independent contractor holding the insured harmless for

all liabilities incurred by the independent contractor, the insured obtained

certificates of insurance from each and every independent contractor

indicating that they maintain coverage the same as provided by the policy

and with limits in the same amounts as provided by their policy, and the 

insured was listed as an additional insured under that policy. The insured 

also had to warrant that the independent contractor’s insurance would 

remain in force until completion of the independent contractor’s work for the 

insured.

“Defendant’s evidence at trial demonstrated that its own file, which it

reviewed in determining whether to provide a defense for Saratoga in the

Underlying Action, revealed that at the time Saratoga applied for insurance

the insured represented that its employee would supervise the work done at

the Property, and that the work on the Property and to build the structure 
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would be done by independent subcontractors. The complaint did not allege

or disclose which entities completed the work on the property, and the letters

by Mr. Stevens to Defendant never stated that Saratoga completed any of the

work on the property or grounds and only referred to work completed by

subcontractors. Mr. Stevens admitted that Ms. Ossino had requested, among 

other things, subcontractor agreements, subcontractor insurance certificates

and insured endorsements affording coverage for Saratoga, but he never 

provided any such documents to her. Furthermore, Mr. Norouzi destroyed 

his project file and presumably any written agreements and insurance

certificates from each and every independent contractor, if any existed. Mr.

Stevens knew this, but did not disclose the information to Ms. Ossino.

Accordingly, the court concludes that Mr. Norouzi never complied with the 

conditions precedent by providing the necessary information for each and 

every independent subcontractor to Defendant before, contemporaneous with

or after the requested tender of defense, and like [State Farm Mutual 

Automobile Insurance Company v. Richard Cecil] Flynt [(1971) 17 Cal.App.3d 

538], Defendant was never required to tender a defense.” 

As an independent basis for finding that GBIC had no duty to defend, 

the trial court also concluded that there was no coverage because the policy 

expired by July 2007, whereas the project was not completed until December 

2007, and thus “the Project was not put to its intended use until after the 

insurance policy issued by Defendant had terminated.” 

Judgment was subsequently entered in favor of GBIC, from which 

Heidari filed a notice of appeal. 
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DISCUSSION

Applicable Law and the Standard of Review

A recent case by our colleagues in Division Three distilled the 

applicable law:

“An insurer ordinarily is free to limit the risks it assumes, and we do 

not rewrite any provision of any contract, including an insurance contract, for 

any purpose, including perceived public policy benefits. (Underwriters of 

Interest Subscribing to Policy Number A15274001 v. ProBuilders Specialty 

Ins. Co. (2015) 241 Cal.App.4th 721, 729 ([ProBuilders]); Certain 

Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945, 

967–968 (Certain Underwriters).) However, any ambiguity is generally 

resolved in favor of coverage. (AIU [Ins. Co. v. Superior Court (1990)]

51 Cal.3d [807,] 822.) We interpret the terms of an insurance policy de novo. 

(Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 390.)

“A liability insurer has a ‘broad duty to defend its insured against 

claims that create a potential for indemnity.’ (Montrose Chemical Corp. v. 

Superior Court (1993) 6 Cal.4th 287, 295 (Montrose).) If, on the other hand, 

there is no potential for coverage, the insurer has no duty to defend. 

(La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co. (1994) 

9 Cal.4th 27, 40 (La Jolla Beach & Tennis Club).) This standard is met ‘ “if 

the third party complaint can by no conceivable theory raise a single issue 

which could bring it within the policy coverage.” ’ (Montrose, at p. 300.) 

Thus, the duty to defend is ‘not without limits’; rather, it is ‘limited by “the 

nature and kind of risk covered by the policy.” ’ (La Jolla Beach & Tennis 

Club, at p. 39, italics omitted.)” (24th & Hoffman Invs., LLC v. Northfield 

Ins. Co. (2022) 82 Cal.App.5th 825, 833–834.)
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“A ‘potential for coverage’ refers to the possibility that facts alleged in 

the complaint or otherwise known to the insurer establish a basis for 

indemnity under the policy. (Scottsdale Ins. Co. v. MV Transportation (2005) 

36 Cal.4th 643, 654–655.) If there is a dispute as to the existence of such 

facts, a potential for coverage exists until the factual dispute is resolved so as 

to establish either actual coverage or the absence of coverage. (Id. at pp. 655, 

657; Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1085.)” 

(State Farm Gen. Ins. Co. v. Mintarsih (2009) 175 Cal.App.4th 274, 284, 

fn. 6.)

The interpretation of GBIC’s insurance policy and the existence of a 

duty to defend are questions of law that we review de novo. (Hartford 

Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 286−288; 

North American Capacity Ins. Co. v. Claremont Liability Ins. Co. (2009)

177 Cal.App.4th 272, 284 (Claremont).)

“We review the trial court’s factual findings for substantial evidence. 

(Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) We begin with 

the presumption that the record contains evidence to uphold every finding of 

fact and appellant has the burden to demonstrate there is no substantial 

evidence to support the findings under attack. (Ibid.) ‘ “When a finding of 

fact is attacked on the ground that there is not any substantial evidence to 

sustain it, the power of an appellate court begins and ends with the 

determination as to whether there is any substantial evidence contradicted or 

uncontradicted which will support the finding of fact.” [Citations.]’ (Ibid.)” 

(Claremont, supra, 177 Cal.App.4th at p. 285.)

The Trial Court Properly Found No Duty to Defend Based on 

the Contractors Warranty Exclusion

The contractors warranty exclusion in the policy provides as follows:

“EXCLUSION – CONTRACTORS WARRANTY
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“Such coverage as is afforded by the policy to which this endorsement is 

attached shall not apply to occurrences arising out of operations performed by 

Independent Contractors unless, as a condition precedent:

“1. The Insured will receive a written agreement from each and every 

Independent Contractor holding the Insured harmless for all liabilities 

incurred by the Independent Contractor.

“2. The Insured will obtain certificates of insurance from each and 

every Independent Contractor indicating that they maintain coverage the 

same as provided by this policy and with limits in the same amounts as 

provided by this policy, and that the Named Insured will be listed as an 

additional insured under that policy.

“3. The Insured warrants that the aforementioned Independent 

Contractor’s insurance will remain in force until completion of the 

Independent Contractor’s work for the Insured.” 

Heidari does not dispute that these conditions were not satisfied with 

respect to any of the subcontractors’ work on the project—the only question 

as to whether the exclusion completely bars coverage under the policy is 

whether there was any work performed by Saratoga itself. 

We agree with the trial court that the allegations of the complaint, 

together with the extrinsic facts known to GBIC at the time of tender, show 

there was no potential for coverage because subcontractors performed all of 

the construction work on the project. To begin with, the complaint in the 

underlying action did not identify any construction work performed by 

Saratoga itself as opposed to its various subcontractors. And Exhibit F to 

that complaint, a September 29, 2016 demand letter from Saratoga’s attorney 

to an attorney for North American Capacity Insurance, another of Saratoga’s 

insurers, further indicated that certain work on the property alleged to be 
14

defective—including the grading and excavation, the hardwood flooring, and 

the retaining wall—was performed by subcontractors:

“Saratoga Construction, Inc., used various subcontractors and

independent suppliers for select portions of the construction including, but

not limited to, grading and excavation, pouring of concrete and concrete

walls, electrical facilities, plumbing facilities and installation of hardwood 

flooring. Further, the rough grading and excavation, including that required 

for the driveway and retaining wall at the top of the property, was complete 

by June 30, 2006 and the foundations for the residence and the retaining

wall were thereafter poured by an independent supplier.” 

On its application for insurance, in response to a prompt asking that it 

“describe the type of work subcontracted,” Saratoga wrote that “ALL 

TRADES ARE SUBBED OUT,” and indicated that “90%” of the work was 

subcontracted. Ossino testified that GBIC understood these representations 

to mean that “all the actual work performed out there was done by 

subcontractors, that Saratoga probably provided just supervision, probably 

scheduling timing permanent type work, but all the actual trades—the actual 

construction work was performed by subcontractors.” And she further 

testified that “[b]ased on what they told the inspector,” Saratoga’s only fulltime employees were a job superintendent and an “accounting person,” so 

that Saratoga could not have had any employees performing construction 

work. 

Heidari’s opening brief does not identify any specific work that 

Saratoga self-performed on the project, but instead asserts that GBIC was

“on notice that its insured possibly performed at least 10 percent of the work” 

based on its insurance application, and that a “logical inference” from the 

demand letter’s statement that “select portions” of the construction were 
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performed by subcontractors was that other work was performed by Saratoga 

itself. But as noted, GBIC understood Saratoga’s insurance application to 

mean that the 10% of the work Saratoga performed itself was supervisory or 

scheduling work, a conclusion supported by the fact that Saratoga did not 

have any full-time employees who could have performed construction work. 

And the fact that Saratoga chose to assert in a demand letter that specific 

“select portions” of the construction were performed by subcontractors does 

nothing to establish that Saratoga must have self-performed other aspects of 

the project.

In arguing that there was a potential for coverage, Heidari also relies 

on Norouzi’s testimony that “the trades” would not include all of the work 

performed, and that Saratoga itself performed the “site drainage”

installation, and the “waterproofing and the drainage work behind the 

retaining wall.” And in his reply brief, Heidari argues that the trial court’s 

factual finding that all the work was performed by subcontractors as well as

its finding that Norouzi’s testimony was not credible are “irrelevant” because 

the duty to defend can only be determined at the time of tender and not based 

on “hindsight,” relying on Atlantic Mutual Ins. Co. v. Lamb, Inc. (2002) 

100 Cal.App.4th 1017 (Atlantic Mutual). We are not persuaded.

In Atlantic Mutual, Continental brought a federal action against Lamb 

seeking a declaration that a patent claimed by Lamb was invalid and 

unenforceable, and Lamb tendered defense of the action to its insurers 

Granite State and Atlantic Mutual. Atlantic Mutual denied coverage in part 

based on a “first publication” exclusion in its policy providing that coverage 

did not apply to publication of material that took place before the policy 

period. (Atlantic Mutual, supra, 100 Cal.App.4th at pp. 1024–1026.) Atlantic 

Mutual then brought an action for declaratory relief against Lamb and 
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Granite State, and moved for summary judgment on the ground that there 

was no coverage for the underlying claim and that it therefore had no duty to 

Granite State, under either a theory of equitable subrogation or equitable 

contribution. (Id. at p. 1028.) In moving for summary judgment, Atlantic 

Mutual argued that the first publication exclusion applied based on a 

declaration from its claims adjuster, who claimed he had been told “ ‘that the 

dispute between Continental and [Lamb] originated with a conversation 

which occurred in September of 1998.’ ” (Id. at p. 1038.) The trial court 

granted Atlantic Mutual’s motion, without reaching the question of whether 

the first publication exclusion applied. (Id. at pp. 1028, 1037–1038.) The 

Court of Appeal reversed, then reached the first publication issue and 

concluded that Atlantic Mutual had failed to carry its burden to prove that 

the exclusion applied:

“The equivocal and self-serving declaration of Atlantic Mutual’s own 

claims adjuster certainly did not rise to the level of conclusive evidence. In 

any event, Lamb disputed Atlantic Mutual’s claim as to the date of first 

publication. While such contrary evidence was not produced by Lamb at the 

time that Atlantic Mutual denied coverage and refused a defense, that fact 

does not alter our conclusion that the Continental complaint was, in and of 

itself, sufficient to establish a potential for coverage that could only be 

defeated by Atlantic Mutual conclusively establishing that the ‘first 

publication’ exclusion applied. Atlantic Mutual did not do that, and it does 

not matter that Lamb did not produce its contrary evidence until later. Once 

the potential for coverage had been established by the Continental complaint, 

Lamb needed to do no more. The burden was on Atlantic Mutual.” (Atlantic 

Mutual, supra, 100 Cal.App.4th at p. 1039.) 

But as Atlantic Mutual went on to observe:
17

“Even though it may ultimately be determined that Atlantic Mutual 

has a viable defense to coverage by virtue of the application of the ‘first 

publication’ exclusion, this can only affect its liability for indemnification. Its 

duty to defend depended on the existence of only a potential for coverage. 

That potential was never conclusively negated and obviously cannot be 

negated short of an actual trial to resolve what is clearly a genuine factual 

dispute. Thus, we can only conclude that Atlantic Mutual owed Lamb a 

defense and it failed to provide it.” (Atlantic Mutual, supra, 100 Cal.App.4th

at p. 1040.) 

Atlantic Mutual is distinguishable. Here, as discussed, the complaint 

was not in and of itself sufficient to establish a potential for coverage. And 

here, unlike in Atlantic Mutual, there was an “actual trial” on the issue of 

whether GBIC had a duty to defend, after which the trial court made a 

factual finding that any potential for coverage was negated by the 

contractor’s warranty exclusion because subcontractors, and not Saratoga 

itself, performed all the construction work on the project. (See State Farm 

Gen. Ins. Co. v. Mintarsih, supra, 175 Cal.App.4th at p. 284, fn. 6 [“If there is 

a dispute as to the existence of such facts, a potential for coverage exists until 

the factual dispute is resolved so as to establish either actual coverage or the 

absence of coverage” (emphasis added)]; Scottsdale Ins. Co. v. MV 

Transportation, supra, 36 Cal.4th at p. 655 [duty to defend is “extinguished” 

when “insurer negates all facts suggesting potential coverage”].)

Thus, to the extent that Heidari relies on Norouzi’s testimony, or asks 

us to draw inferences in his favor from Saratoga’s insurance application or 

the demand letter attached to the complaint, his arguments fail because we 

apply the ordinary rule that we review the trial court’s factual findings after 
18

trial for substantial evidence. As we recently explained in Lincoln v. Lopez

(2022) 77 Cal.App.5th 922, in language equally applicable here:

“While [Hediari]’s brief does set forth some of the facts the trial court 

did decide adversely to him, the brief throughout refers to other evidence, as 

though this is of some significance. It is not, for several reasons, beginning 

with the fundamental appellate principle that all evidence must be viewed 

most favorably to [GBIC] and in support of the decision. (Nestle v. City of 

Santa Monica (1972) 6 Cal.3d 920, 925–926; Foreman & Clark Corp. v. 

Fallon[, supra,] 3 Cal.3d [at p.] 881; In re Marriage of Hoffmeister (1987) 

191 Cal.App.3d 351, 358 [‘Where statement of decision sets forth the factual 

and legal basis for the decision, any conflict in the evidence or reasonable 

inferences to be drawn from the facts will be resolved in support of the 

determination of the trial court decision’].) Put otherwise, [Heidari]’s attempt 

to point to other evidence is misguided, as we must affirm even if there is 

substantial contrary evidence. (See Bowers v. Bernards (1984) 

150 Cal.App.3d 870, 874.) As the court put it in Pope v. Babick (2014) 

229 Cal.App.4th 1238, 1245, ‘We do not review the evidence to see if there is 

substantial evidence to support the losing party’s version of events, but only 

to see if substantial evidence exists to support the verdict in favor of the 

prevailing party.’ ” (Lincoln v. Lopez, supra, 77 Cal.App.5th at pp. 928–929, 

fn. omitted.)

And to the extent Heidari relies on Norouzi’s testimony, his argument

fails for the additional reason that the trial court expressly found that 

testimony not credible, a finding we do not revisit on appeal, and which 

means his testimony is not substantial evidence. (See Conservatorship of 

O.B. (2020) 9 Cal.5th 989, 1006 [“Substantial evidence is evidence that is ‘of 

ponderable legal significance,’ ‘reasonable in nature, credible, and of solid 
19

value’ ” (emphasis added)]; In re Marriage of Oliverez (2019) 33 Cal.App.5th 

298, 319; Bruno v. Hopkins (2022) 79 Cal.App.5th 801, 823–824.)

The two cases on which Heidari primarily relies—ProBuilders, supra,

241 Cal.App.4th 721 and Evanston Insurance Co. v. American Safety 

Indemnity Co. (N.D. Cal. 2011) 768 F.Supp.2d 1004 (Evanston)—do not assist 

him.

In ProBuilders, supra, 241 Cal.App.4th 721, Underwriters sought 

equitable contribution from ProBuilders for the defense of their mutual 

insured Pacific Trades, and the trial court granted summary judgment to 

ProBuilders on the basis of an “other insurance” clause. (Id. at pp. 726–727.) 

The Court of Appeal reversed on that issue, and also rejected ProBuilders’

alternative argument that summary judgment in its favor should be affirmed 

on the basis of a contractors warranty endorsement in the policy:

“ProBuilders’s policies contained the CSC endorsement that provided, 

as a ‘condition precedent to this policy applying to any claim in whole or in 

part based upon work performed by independent contractors,’ Pacific Trades 

must have (1) obtained valid written indemnity agreements from the 

subcontractors it hired to build the homes, and (2) obtained Certificates of 

Insurance from the subcontractors it hired showing Pacific Trades was an 

additional insured under the subcontractors’ insurance policies, and 

(3) maintained records evidencing compliance with those obligations. 

ProBuilders produced some evidence below that only 13 of Pacific Trades’s 

subcontractors had written contracts with Pacific Trades, and Underwriters 

was unable to collect any defense reimbursements from any subcontractor. 

Based on this evidentiary showing, ProBuilders asserts it conclusively 

demonstrated there was no coverage for the claims asserted in the Aceves 

lawsuit, which was fatal to Underwriters’s claim for equitable contribution, 
20

and therefore we may affirm the entry of summary judgment in favor of 

ProBuilders on the alternative ground that it conclusively established it owed 

no defense obligation under the policies.

“We are not persuaded by ProBuilders’s argument, for several reasons. 

First, the CSC provision on its face applies only to claims against Pacific 

Trades ‘in whole or in part based on work performed by independent 

contractors,’ but does not purport to apply to claims against Pacific Trades for 

its own negligence or other misfeasance. ProBuilders’s showing below did not 

conclusively establish that all of the claims against Pacific Trades in the 

Aceves lawsuit were limited to claims based on work performed by 

independent contractors; to the contrary, the attorney hired to defend it in 

the underlying action averred Pacific Trades was included as a defendant 

based on allegations of Pacific Trades’s own negligence. Because 

ProBuilders’s showing was inadequate to definitively eliminate the potential 

for coverage under the CSC provision for some part of the claims against 

Pacific Trades, its showing was inadequate to enter summary judgment

against Underwriters’s claim for equitable contribution. (See Evanston[,

supra,] 768 F.Supp.2d 1004.) Second, even assuming some of the claims 

against Pacific Trades in the Aceves lawsuit were ‘based on work performed 

by independent contractors’ within the ambit of the CSC provision, there was 

some evidence below raising a triable issue of fact as to whether Pacific 

Trades had complied with its terms, because the record below contained at 

least one written subcontract between Pacific Trades and a subcontractor, 

and the record also contained numerous Certificates of Insurance showing 

Pacific Trades was an additional insured under many subcontractors’

insurance policies. We conclude ProBuilders’s argument that summary 

judgment was proper based on Pacific Trades’s alleged noncompliance with 
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the CSC provision is without merit.” (ProBuilders, supra, 241 Cal.App.4th at 

p. 734.) 

ProBuilders is distinguishable, first because it was decided on 

summary judgment, where ProBuilders was required to show that “one or 

more elements of the [plaintiff’s] cause of action cannot be separately 

established” or “that there is a complete defense to that cause of action.” 

(Code Civ. Proc., § 437c, subds. (o), (p).) “The evidence of the moving party is 

strictly construed and that of the opponent liberally construed, and any 

doubts as to the propriety of granting the motion are to be resolved in favor of 

the party opposing the motion.” (ProBuilders, supra, 241 Cal.App.4th at 

p. 727.) Here, by contrast, we review a factual finding based on the evidence 

at trial that all the construction work was performed by subcontractors. And 

in ProBuilders, there were “allegations of Pacific Trades’s own negligence”—

not so here with respect to Saratoga. 

Evanston, supra, 768 F.Supp.2d 1004, is similarly inapposite. In that 

case, Evanston brought an equitable contribution claim against American 

Safety for the costs of defense of their mutual insured, developer Northern 

Cal, in an underlying lawsuit alleging that single-family homes constructed 

by Northern Cal had several defects. (Id. at pp. 1006, 1008.) The court 

denied American Safety’s motion for summary judgment based on a 

contractor’s warranty exclusion in its policy that applied to damage “arising 

directly or indirectly out of the actions of a subcontractor.” (Id. at p. 1010.) 

Because American Safety did “not point to any evidence that any or all of the 

damages alleged in the Ayala action are attributable to Northern Cal’s 

subcontractors,” it had “not foreclosed the possibility that . . . some of the 

Ayala plaintiffs’ claims could be covered by its policy,” and accordingly the 
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court denied American Safety’s motion for summary judgment based on the 

endorsement. (Id. at pp. 1011−1012.) 

Again, the situation before us is different because GBIC did produce 

“evidence that . . . all of the damages alleged in the [underlying] action are 

attributable to [Saratoga’s] subcontractors,” evidence which led the trial court 

to conclude that all of the construction work was performed by subcontractors

and thus that the contractors’ warranty exclusion eliminated any potential 

for coverage.2 (Evanston, supra, 768 F.Supp.2d at p. 1011.) 

DISPOSITION

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

2 Because we affirm the judgment on the basis of the contractors’ 

warranty exclusion, we need not reach the parties’ arguments regarding the 

various other terms and exclusions of GBIC’s policy. 
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_________________________

Richman, J.

We concur:

_________________________

Stewart, P. J.

_________________________

Van Aken, J. *

Heidari v. Golden Bear Insurance Company (A165815)

*Judge of the San Francisco Superior Court, Judge Christine Van Aken, sitting as 

assigned by the Chief Justice pursuant to article VI, section 6 of the California 

Constitution.