Title: Crawford v. Weather Shield
Citation: 44 Cal. 4th 541 original opinion
Docket Number: S141541
State: California
Issuer: California Supreme Court
Date: July 21, 2008

1
Filed 7/21/08  
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
KIRK CRAWFORD et al., 
) 
 
 
) 
 
Plaintiffs and Appellants, 
) 
 
 
) 
S141541 
 
v. 
) 
 
 
) 
Ct.App. 4/3 G032301 
WEATHER SHIELD MFG. INC., 
) 
 
 
) 
Orange County 
 
Defendant and Appellant. 
) 
Super. Ct. Nos. 815154, 815156, 
 
 
) 
815182, 816278 
___________________________________ ) 
 
Standard comprehensive liability insurance policies provide that the insurer 
must both indemnify and defend the insured against claims within the scope of the 
policy coverage.  The insurer’s duty to defend is broader than its duty to 
indemnify.  The latter duty runs only to claims that are actually covered by the 
policy, while the duty to defend extends to claims that are merely potentially 
covered.  (E.g., Buss v. Superior Court (1997) 16 Cal.4th 35, 45-46 (Buss); 
Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295.)  “The 
[insurer’s] defense duty is a continuing one, arising on tender of defense and 
lasting until the underlying lawsuit is concluded [citation], or until it has been 
shown that there is no potential for coverage . . . .”  (Montrose, supra, at p. 295.) 
Here, however, we address issues concerning the contractual duty to defend 
in a noninsurance context.  We consider whether, by their particular terms, the 
provisions of a pre-2006 residential construction subcontract obliged the 
 
 
2
subcontractor to defend its indemnitee — the developer-builder of the project — 
in lawsuits brought against both parties, insofar as the plaintiffs’ complaints 
alleged construction defects arising from the subcontractor’s negligence, even 
though (1) a jury ultimately found that the subcontractor was not negligent, and 
(2) the parties have accepted an interpretation of the subcontract that gave the 
builder no right of indemnity unless the subcontractor was negligent.  We conclude 
that the answer is yes.  We will therefore affirm the judgment of the Court of 
Appeal. 
 
FACTS AND PROCEDURAL BACKGROUND 
The basic facts are not in dispute.  J.M. Peters Co. (JMP) was the 
developer, builder, and general contractor of a large Huntington Beach residential 
project.  Weather Shield Manufacturing Co., Inc. (Weather Shield), contracted 
with JMP to manufacture and supply wood-framed windows for the project.  In 
the contract, Weather Shield promised (1) “to indemnify and save [JMP] harmless 
against all claims for damages . . . loss, . . . and/or theft . . . growing out of the 
execution of [Weather Shield’s] work,” and (2) “at [its] own expense to defend 
any suit or action brought against [JMP] founded upon the claim of such 
damage[,] . . . loss or theft.”  (Italics added.) 
In September and October 1999, 220 owners of 122 finished homes in the 
project sued JMP, Weather Shield, and other participants in the project’s 
construction.  The defendants included Darrow the Framing Corporation 
(Darrow), the project’s principal subcontractor, whose responsibilities included 
framing the structures and installing the windows.  The complaints alleged 
numerous construction defects, including electrical, plumbing, roofing, chimney, 
framing, and other structural problems.  As relevant here, they also asserted that, 
because of improper design, manufacture, and installation, windows in the homes, 
 
 
3
including those supplied by Weather Shield, leaked and fogged, causing extensive 
damage.  Theories of negligence, strict liability, breach of warranty, and breach of 
contract were set forth.1 
In April 2000, JMP cross-complained against Weather Shield, Darrow, and 
all the other project subcontractors sued by the homeowners.  The cross-
complaints asserted, among other things, that under the pertinent subcontract 
provisions — all of which had been drafted by JMP and were identical on the 
point — the subcontractors owed JMP duties of indemnity and defense against the 
homeowners’ complaints.  The cross-complaints sought declaratory relief with 
respect to JMP’s alleged indemnity and defense rights.2 
JMP, and all the subcontractors except Weather Shield and Darrow, settled 
before trial.  The “sliding scale” settlement agreement provided the homeowners a 
minimum payment of $2.55 million, and guaranteed an additional sum of $1.45 
million against any recovery from the nonsettling subcontractors.  The settling 
defendants also agreed to assist the homeowners in prosecuting their claims 
against the nonsettling parties.  JMP and the settling subcontractors mutually 
                                              
1  
The cases were consolidated for pretrial and trial purposes. 
2  
JMP’s cross-complaints alleged that the cross-defendant subcontractors had 
a “present” duty to provide, and JMP had a “present” right to receive, a 
contractual defense.  Each cross-complaint also recited that “[b]y way of this 
Cross-Complaint, [JMP] hereby tenders the defense of this action to the Cross-
Defendants, and each of them, pursuant to the applicable subcontracts.  [JMP] is 
informed and believed and based thereon alleges that the Cross-Defendants, and 
each of them have and/or will reject, ignore, or fail to properly accept the tender of 
defense.”  The record is silent as to whether JMP had previously tendered defense 
of the homeowners’ actions to the cross-defendant subcontractors, or any of them.  
Weather Shield does not urge on appeal that it was absolved of any duty to defend 
by reason of JMP’s failure to timely tender the defense of the homeowners’ 
actions. 
 
 
4
released all claims, demands, and liabilities among themselves.  All complaints 
and cross-complaints were dismissed except as to Weather Shield and Darrow. 
In July 2002, during final pretrial proceedings, Weather Shield moved to 
dismiss the homeowners’ strict liability causes of action.  The motion cited then 
extant case law holding that a subcontractor hired by a developer — even a 
subcontractor that supplied a component product rather than a service — could not 
be strictly liable for defects in mass-produced homes, unless the subcontractor also 
owned or controlled the housing development.  (See, e.g., Casey v. Overhead 
Door Corp. (1999) 74 Cal.App.4th 112, 119-120 (Casey); La Jolla Village 
Homeowners’ Assn. v. Superior Court (1989) 212 Cal.App.3d 1131, 1146 (La 
Jolla Village).)  The court granted the motion, subject to a reevaluation of 
prejudice in the event of an intervening change in the law. 
The window leak and framing issues went to trial against Weather Shield 
and Darrow on the remaining theories of negligence and breach of warranty.  In 
October 2002, the jury returned general verdicts against Darrow and in favor of 
Weather Shield.  The jury awarded the homeowners approximately $1 million in 
damages against Darrow.  Following the jury verdict, Darrow settled all the 
complaints against it. 
Thereafter, in March 2003, JMP’s cross-complaint against Weather Shield 
was separately tried to the court.  JMP sought both (1) express indemnity for 
amounts paid to the homeowners in settlement, and (2) under the duty-to-defend 
provisions of Weather Shield’s subcontract, attorney fees and expenses incurred 
by JMP in defending itself against the homeowners’ suit. 
The trial court ruled that the subcontract’s terms obliged Weather Shield to 
indemnify JMP for amounts paid to the homeowners only if Weather Shield was 
found negligent.  Thus, the court determined, the jury’s verdict that Weather 
Shield was not negligent absolved Weather Shield of indemnity liability in this 
 
 
5
case.  On the other hand, the court concluded, the subcontract did give Weather 
Shield responsibility for JMP’s legal defense against the homeowners’ claims, 
insofar as those claims concerned the windows supplied by Weather Shield, 
regardless of whether Weather Shield was ultimately found negligent. 
JMP presented evidence that it had incurred $375,069 in attorney fees to 
defend the homeowners’ claims, and that 70 percent of the homeowner settlement 
amount was attributable to the window problems.  JMP therefore urged that, under 
their subcontracts, Weather Shield and Darrow were together liable for 70 percent 
of JMP’s defense fees, or $262,548.  The court apportioned this amount equally 
between Darrow and Weather Shield, and therefore awarded JMP $131,274 in 
damages against Weather Shield.  The court also found Weather Shield 
contractually liable to JMP, as the prevailing party on JMP’s cross-complaint, for 
$46,734 in attorney fees incurred by JMP to prosecute the cross-action. 
Meanwhile, in December 2002, this court held in Jimenez v. Superior Court 
(2002) 29 Cal.4th 473 (Jimenez) that, contrary to the teaching of such cases as 
Casey, supra, 74 Cal.App.4th 112, and La Jolla Village, supra, 212 Cal.App.3d 
1131, the manufacturer or supplier of a component part installed in a mass-
produced home may be held strictly liable when a defect in the component causes 
damage to other parts of the structure.  (Jimenez, supra, at p. 484.) 
Following entry of judgment in this case in March 2003, the homeowners 
moved for a judgment notwithstanding the verdict (judgment NOV) (Code Civ. 
Proc., §§ 629, 659) and a new trial (id., §§ 657, 659) against Weather Shield.  
Among other things, the homeowners asserted that, under Jimenez, they were 
entitled to try their previously dismissed strict liability causes of action.  In May 
2003, the court denied the motion for a judgment NOV, but granted a new trial 
against Weather Shield on the issue of strict liability. 
 
 
6
Weather Shield appealed (1) the new trial order, and (2) the declaratory 
relief judgment insofar as it required Weather Shield to reimburse JMP’s expense 
of defending the homeowners’ action and prosecuting JMP’s cross-complaint.  
Two of the groups of homeowner plaintiffs filed protective cross-appeals from the 
judgment against them, and in Weather Shield’s favor, on the construction-defect 
claims.  JMP did not appeal the order absolving Weather Shield from contractual 
indemnity liability for amounts paid by JMP to the homeowners.3 
In a divided decision, the Court of Appeal affirmed the orders and 
judgments challenged by Weather Shield, and dismissed the cross-appeals as 
moot.  On the issue of Weather Shield’s liability for JMP’s defense, regardless of 
its own negligence, the majority reasoned, in essence, that Weather Shield’s 
promise “to defend” JMP against suits founded upon claims arising out of the 
execution of Weather Shield’s work necessarily contemplated an immediate duty 
to provide a service, which duty arose at the time such a suit was brought and a 
defense was therefore needed.  Thus, the majority concluded, the duty could not 
depend upon the outcome of issues to be litigated in the very action Weather 
Shield was obliged to defend. 
The concurring and dissenting opinion argued that the contract language 
did not compel the majority’s interpretation of the duty to defend.  Moreover, the 
concurring and dissenting opinion urged, policy concerns weigh against allowing 
                                              
3  
We were informed by the parties that, following the trial court judgment, 
JMP assigned all its rights thereunder to the homeowners.  The homeowners then 
defended JMP’s defense-cost award in the Court of Appeal.  In this court as well, 
the homeowners have briefed the defense-cost issue as assignees of JMP’s rights 
under the defense-cost award. 
 
 
7
a builder or developer with superior bargaining power to impose contractual 
defense obligations on a nonnegligent subcontractor. 
Weather Shield sought review, raising both the new-trial and defense-cost 
issues.  We granted review, limited to the following issue:  Did a contract under 
which a subcontractor agreed “to defend any suit or action” against a developer 
“founded upon” any claim “growing out of the execution of the work” require the 
subcontractor to provide a defense to a suit against the developer even if the 
subcontractor was not negligent?4  We turn to that issue. 
DISCUSSION 
Parties to a contract, including a construction contract, may define therein 
their duties toward one another in the event of a third party claim against one or 
both arising out of their relationship.  Terms of this kind may require one party to 
indemnify the other, under specified circumstances, for moneys paid or expenses 
incurred by the latter as a result of such claims.  (See Civ. Code, § 2772 
[“Indemnity is a contract by which one engages to save another from a legal 
consequence of the conduct of one of the parties, or of some other person.”].)5  
They may also assign one party, pursuant to the contract’s language, responsibility 
for the other’s legal defense when a third party claim is made against the latter.  
                                              
4  
Subsequent to our grant of review, an issue arose whether, despite our 
limitation of issues, the pendency of review precluded further proceedings in the 
trial court under the new trial order, the propriety of which order we did not intend 
to address.  Concluding that there was no reason to delay the homeowners’ strict-
liability trial while we considered the defense-cost issue, we therefore dismissed 
review with respect only to the order granting a new trial on that issue, as affirmed 
by the Court of Appeal.  We directed the Court of Appeal to issue a partial 
remittitur in accordance with the partial dismissal order. 
5  
All further unlabeled statutory references are to the Civil Code. 
 
 
 
8
(See Mel Clayton Ford v. Ford Motor Co. (2004) 104 Cal.App.4th 46, 49, 55 (Mel 
Clayton Ford).) 
As befits the contractual nature of such arrangements, but subject to public 
policy and established rules of contract interpretation, the parties have great 
freedom to allocate such responsibilities as they see fit.  (E.L. White, Inc. v. City of 
Huntington Beach (1978) 21 Cal.3d 497, 507 (E.L. White, Inc.); Heppler v. J.M. 
Peters Co. (1999) 73 Cal.App.4th 1265, 1276-1277 (Heppler).)  “When the parties 
knowingly bargain for the protection at issue, the protection should be afforded.”  
(Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 633 (Rossmoor); 
see Heppler, supra, at p. 1277.)  Hence, they may agree that the promisor’s 
indemnity and/or defense obligations will apply only if the promisor was 
negligent, or, conversely, even if the promisor was not negligent.  (Heppler, supra, 
at p. 1277; Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 
53 Cal.App.4th 500, 505 (Continental Heller); Peter Culley & Associates v. 
Superior Court (1992) 10 Cal.App.4th 1484, 1492 (Peter Culley & Associates).) 
In general, such an agreement is construed under the same rules as govern 
the interpretation of other contracts.  Effect is to be given to the parties’ mutual 
intent (§ 1636), as ascertained from the contract’s language if it is clear and 
explicit (§ 1638).  Unless the parties have indicated a special meaning, the 
contract’s words are to be understood in their ordinary and popular sense.  
(§ 1644; Continental Heller, supra, 53 Cal.App.4th 500, 504; accord, Centex 
Golden Construction Co. v. Dale Tile Co. (2000) 78 Cal.App.4th 992, 996-997 
(Centex Golden).) 
Though indemnity agreements resemble liability insurance policies, rules 
for interpreting the two classes of contracts do differ significantly.  Ambiguities in 
a policy of insurance are construed against the insurer, who generally drafted the 
policy, and who has received premiums to provide the agreed protection.  (See, 
 
 
9
e.g., Buss, supra, 16 Cal.4th 35, 47-48; La Jolla Beach & Tennis Club, Inc. v. 
Industrial Indemnity Co. (1994) 9 Cal.4th 27, 37-38.)  In noninsurance contexts, 
however, it is the indemnitee who may often have the superior bargaining power, 
and who may use this power unfairly to shift to another a disproportionate share of 
the financial consequences of its own legal fault.  (E.g., Goldman v. Ecco-Phoenix 
Elec. Corp. (1964) 62 Cal.2d 40, 49 (Goldman); see Regan Roofing Co. v. 
Superior Court (1994) 24 Cal.App.4th 425, 436 (Regan Roofing).) 
This public policy concern influences to some degree the manner in which 
noninsurance indemnity agreements are construed.  For example, it has been said 
that if one seeks, in a noninsurance agreement, to be indemnified for his or her 
own active negligence, or regardless of the indemnitor’s fault — protections 
beyond those afforded by the doctrines of implied or equitable indemnity — 
language on the point must be particularly clear and explicit, and will be construed 
strictly against the indemnitee.  (E.g., E.L. White, Inc., supra, 21 Cal.3d 497, 507; 
Rossmoor, supra, 13 Cal.3d 622, 628; Goldman, supra, 62 Cal.2d 40, 44; Centex 
Golden, supra, 78 Cal.App.4th 992, 998; Heppler, supra, 73 Cal.App.4th 1265, 
1278.) 
For similar public policy reasons, statutory law imposes some absolute 
limits on the enforceability of noninsurance indemnity agreements in the 
construction industry.  At the time Weather Shield contracted with JMP, a party to 
a construction contract could not validly agree to indemnify the promisee for the 
latter’s sole negligence or willful misconduct.  (§ 2782, subd. (a); see also § 1668.) 
Finally, Civil Code section 2778, unchanged since 1872, sets forth general 
rules for the interpretation of indemnity contracts, “unless a contrary intention 
appears.”  If not forbidden by other, more specific statutes, the obligations set 
forth in section 2778 thus are deemed included in every indemnity agreement 
unless the parties indicate otherwise.  Several subdivisions of this statute touch 
 
 
10
specifically on the indemnitor’s obligations with respect to the indemnitee’s 
defense against third party claims. 
In this regard, the statute first provides that a promise of indemnity against 
claims, demands, or liability “embraces the costs of defense against such claims, 
demands, or liability” insofar as such costs are incurred reasonably and in good 
faith.  (§ 2778, subd. 3, italics added.)  Second, the section specifies that the 
indemnitor “is bound, on request of the [indemnitee], to defend actions or 
proceedings brought against the [indemnitee] in respect to the matters embraced 
by the indemnity,” though the indemnitee may choose to conduct the defense.  
(Id., subd. 4, italics added.)  Third, the statute declares that if the indemnitor 
declines the indemnitee’s tender of defense, “a recovery against the [indemnitee] 
suffered by him in good faith, is conclusive in his favor against the [indemnitor].”  
(Id., subd. 5.)  On the other hand, section 2778 provides, if the indemnitor got no 
reasonable notice of the action, or was not allowed to control the indemnitee’s 
defense, recovery by the third party against the indemnitee is only presumptive 
evidence against the indemnitor.  (Id., subd. 6.) 
With these principles in mind, we examine the pertinent terms of Weather 
Shield’s subcontract with JMP.  We agree with the Court of Appeal majority that, 
even if strictly construed in Weather Shield’s favor, these provisions expressly, 
and unambiguously, obligated Weather Shield to defend, from the outset, any suit 
against JMP insofar as that suit was “founded upon” claims alleging damage or 
loss arising from Weather Shield’s negligent role in the Huntington Beach 
residential project.  Weather Shield thus had a contractual obligation to defend 
such a suit even if it was later determined, as a result of this very litigation, that 
Weather Shield was not negligent. 
We focus on the particular language of the subcontract.  Its relevant terms 
imposed two distinct obligations on Weather Shield.  First, Weather Shield agreed 
 
 
11
“to indemnify and save [JMP] harmless against all claims for damages to persons 
or to property and claims for loss, damage and/or theft . . . growing out of the 
execution of [Weather Shield’s] work.”  Second, Weather Shield made a separate 
and specific promise “at [its] own expense to defend any suit or action brought 
against [JMP] founded upon the claim of such damage . . . loss, . . . or theft.”  
(Italics added.) 
A contractual promise to “defend” another against specified claims clearly 
connotes an obligation of active responsibility, from the outset, for the promisee’s 
defense against such claims.  The duty promised is to render, or fund, the service 
of providing a defense on the promisee’s behalf — a duty that necessarily arises as 
soon as such claims are made against the promisee, and may continue until they 
have been resolved.  This is the common understanding of the word “defend” as it 
is used in legal parlance.  (See, e.g., Black’s Law Dict. (8th ed. 2004) p. 450, 
col. 2 [“2.  To represent (someone) as an attorney . . .”]; Merriam Webster’s 
Collegiate Dict. (11th ed. 2004) p. 326, col. 1 [“3:  to act as attorney for . . .”]; 
Random House Webster’s College Dict. (2d rev. ed. 2001) p. 348, col. 2 [“4.  to 
serve as attorney for (a defendant) . . .”]; American Heritage Dict. (4th ed. 2000) 
p. 475, col. 2 [“4. Law a.  To represent (a defendant) in a civil or criminal action 
. . .”].) 
A duty to defend another, stated in that way, is thus different from a duty 
expressed simply as an obligation to pay another, after the fact, for defense costs 
the other has incurred in defending itself.  Section 2778, the statute governing the 
construction of all indemnity agreements, makes the distinction clear.  On the one 
hand, as noted above, the section specifies that a basic contractual indemnity 
against particular claims, demands, or liabilities “embraces the costs of defense” 
against such claims, demands, or liabilities.  (Id., subd. 3.)  On the other hand, the 
statute separately specifies the indemnitor’s duty actually “to defend,” upon the 
 
 
12
indemnitee’s request, proceedings against the latter “in respect to the matters 
embraced by the indemnity,” though “the person indemnified has the right to 
conduct such defenses if he chooses to do so.”  (Id., subd. 4.)  Finally, section 
2778 sets forth how the indemnitor’s obligations will be affected if the indemnitor 
fails to accept an indemnitee’s tender of defense or, alternatively, if the indemnitor 
is denied an opportunity to assume and control the defense.  (Id., subds. 5, 6.)6 
By virtue of these statutory provisions, the case law has long confirmed 
that, unless the parties’ agreement expressly provides otherwise, a contractual 
indemnitor has the obligation, upon proper tender by the indemnitee, to accept and 
assume the indemnitee’s active defense against claims encompassed by the 
indemnity provision.  Where the indemnitor has breached this obligation, an 
indemnitee who was thereby forced, against its wishes, to defend itself is entitled 
to reimbursement of the costs of doing so. 
                                              
6  
Pursuant to subdivision 5 of section 2778, if a contractual indemnitor 
declines the indemnitee’s tender of defense of a third party claim against the latter, 
the third party’s later judgment against the indemnitee may be conclusive 
evidence, against the indemnitor, of the indemnitee’s liability to the third party, 
and the amount thereof, while the indemnitee’s good faith settlement of the third 
party claim may be presumptive evidence against the indemnitor on that issue.  
(See, e.g., Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 791; 
Peter Culley & Associates, supra, 10 Cal.App.4th 1484, 1495-1497.)  In other 
words, a contractual indemnitor’s failure to assume the indemnitee’s defense and, 
with it, control of the underlying litigation may restrict the indemnitor’s later 
ability to separately litigate issues pertaining to its own indemnity liability.  In this 
case, as indicated above, no issue is presented of the effect of JMP’s settlement 
with the homeowners on Weather Shield’s indemnity liability.  We confront the 
separate question whether the express terms of Weather Shield’s subcontract 
required Weather Shield, at its own expense, to assume JMP’s defense, and, 
having failed to do so, to reimburse JMP after the fact for the latter’s actual 
defense costs, regardless of Weather Shield’s liability to indemnify JMP for 
amounts paid to the homeowners in settlement. 
 
 
13
Thus, in Safeway Stores, Inc. v. Massachusetts Bonding & Ins. Co. (1962) 
202 Cal.App.2d 99 (Safeway Stores), one King undertook, by written agreement, 
to act as general contractor in the construction of a new Safeway store.  The 
agreement included King’s obligation to indemnify Safeway against any claims, 
demands, or suits for damage, loss, or injury “ ‘result[ing] from or occur[ring] in 
connection with the performance of [the] contract.’ ”  (Id., at p. 105.)  
Construction workers employed by King sued Safeway for injuries they sustained 
when recently installed roof trusses collapsed.  The workers alleged that Safeway 
had negligently permitted the installation of trusses it knew to be defective.  King 
offered Safeway a defense, which Safeway initially accepted.  However, it 
thereafter became apparent that the attorney furnished by King was serving King’s 
conflicting interests; in discussions between the parties, King indicated he would 
deny indemnity liability if Safeway was found negligent.  Safeway thereupon 
retained its own attorney to defend the workers’ action, and later sought 
reimbursement of its defense costs from King. 
The Court of Appeal agreed with Safeway.  The court noted that “under the 
contract of indemnity, no contrary intent appearing, King was bound to defend the 
actions.  (Civ. Code, § 2778, subd. 4.)”  (Safeway Stores, supra, 202 Cal.App.2d 
99, 114, italics added.)  However, the court reasoned, in light of the obvious 
conflict between Safeway’s litigation interests and King’s position on the 
indemnity issue, Safeway had reasonably inferred that, despite King’s technical 
proffer, King did not intend to honor his contractual obligation to provide Safeway 
with a complete defense.  Under these circumstances, the court concluded, 
Safeway did not act as a volunteer in assuming its own defense, and was entitled 
to reimbursement for King’s breach of the duty to defend. 
Similarly, in Buchalter v. Levin (1967) 252 Cal.App.2d 367, the court 
acknowledged that subdivision 4 of section 2778 “establishes an indemnitor’s 
 
 
14
obligation to defend the indemnitee upon request, even though the indemnity 
agreement does not expressly so provide . . . .”  (Buchalter, supra, at p. 374, italics 
added.)  However, the court concluded, the subdivision’s provision that the 
indemnitee may “conduct his own defense ‘if he chooses to do so’ ” (ibid.) does 
not mean the indemnitee ordinarily may refuse the indemnitor’s good faith proffer 
of a complete defense, then still collect reimbursement from the indemnitor for the 
defense costs the indemnitee has voluntarily incurred.  (Id., at pp. 374-375; cf. 
Goodman v. Severin (1969) 274 Cal.App.2d 885, 897.) 
In Gribaldo, Jacobs, Jones & Associates v. Agrippina Versicherunges A.G. 
(1970) 3 Cal.3d 434 (Gribaldo), a majority of this court carefully distinguished 
between the “costs of defense” described in subdivision 3 of section 2778, on the 
one hand, and the duty “to defend” the indemnitee, as set forth in subdivision 4 of 
the statute, on the other.  There, an errors and omissions indemnity policy 
provided for a deductible of $2,500, said nothing about a duty to defend, gave the 
underwriters the right to assume the insureds’ defense, specified that the insureds 
need not contest any legal claim unless counsel mutually chosen by the parties 
advised otherwise, and prohibited either party from settling a claim against the 
insureds without the other’s consent.  The policy further stated that if the insureds 
refused a settlement offer against the underwriters’ recommendation, and elected 
to contest the claim further, the underwriters’ liability would not exceed the 
amount for which the claim could have been settled, plus costs and expenses 
incurred by the insureds with the underwriters’ consent. 
After the insureds settled a third party claim, they sought declaratory relief 
against the underwriters on the issue of liability for defense costs.  The insureds 
contended that under subdivision 4 of section 2778, the policy included, and the 
underwriters had breached, an “actual duty to defend” (Gribaldo, supra, 3 Cal.3d 
434, 441) any claim, of a type covered by the policy, in which the initial demand 
 
 
15
exceeded the $2,500 deductible.  Hence, the insureds insisted, the underwriters 
were now obliged to pay the insureds’ costs of defending such claims in full, 
regardless of the amounts for which the claims were actually resolved. 
The trial court disagreed.  It reasoned that, under the particular terms of the 
policy, the underwriters were not obliged to defend the insureds.  Hence, the court 
concluded, any liability of the underwriters for the insureds’ defense costs arose 
solely under subdivision 3 of section 2778, as part of any indemnity the 
underwriters otherwise owed the insureds.  That obligation, the court held, applied 
only to costs incurred by the insureds to defend claims “embraced within the 
provisions of the policy, that is, those claims in excess of $2,500 actually paid by 
[the insureds].”  (Gribaldo, supra, 3 Cal.3d 434, 441.) 
This court affirmed.  The majority agreed “that under the provisions of 
subdivision 4 of section 2778 the indemnitor is required to defend matters 
embraced by the indemnity if . . . requested to do so by the indemnitee.”  
(Gribaldo, supra, 3 Cal.3d 434, 448.)  However, the majority noted, the policy at 
issue indicated a contrary intent, as section 2778 permits.  By its plain terms, the 
policy allowed the underwriters, at their option, to assume the insureds’ defense, 
and it “require[d] [the insureds] to defend claims where so advised by counsel.”  
(Ibid.)  Moreover, the majority noted, even assuming the policy did not, at the 
outset, exclude a duty to defend, the insureds had, contrary to the policy, incurred 
defense costs without first obtaining the underwriters’ consent, and had failed, as 
required by subdivision 4 of section 2778, to request a defense.  (Gribaldo, supra, 
at pp. 448-449.) 
Accordingly, the majority reasoned, the underwriters had breached no duty 
under subdivision 4 of section 2778 to defend any and all claims in which the 
demand exceeded the $2,500 deductible.  Instead, the majority concluded, the trial 
court had acted correctly in calculating the underwriters’ defense-cost liability 
 
 
16
under subdivision 3 of the statute.  Under the latter provision, the majority held, 
the underwriters’ defense-cost liability was limited to the insureds’ expense of 
defending claims as to which the underwriters otherwise owed indemnity — i.e., 
those claims actually paid by the insureds in amounts exceeding the $2,500 
deductible.  (Gribaldo, supra, 3 Cal.3d 434, 447-450.) 
Recently, City of Watsonville v. Corrigan (2007) 149 Cal.App.4th 1542 
observed once again that subdivision 4 of section 2778 “describes the indemnitor’s 
duty to defend . . . actions or proceedings brought against the indemnitee if the 
latter requests the defense.”  (City of Watsonville, supra, at p. 1549, original 
italics.)  However, the Court of Appeal held that by failing to request a defense, or 
to notify the indemnitor of the third party action, and by unilaterally deciding to 
conduct its own defense, the indemnitee does not necessarily forfeit its contractual 
right to reimbursement of its defense costs under the indemnity provisions of 
subdivision 3 of the statute. 
Thus, as these decisions indicate, subdivision 4 of section 2778, by 
specifying an indemnitor’s duty “to defend” the indemnitee upon the latter’s 
request, places in every indemnity contract, unless the agreement provides 
otherwise, a duty to assume the indemnitee’s defense, if tendered, against all 
claims “embraced by the indemnity.”  The indemnitor’s failure to assume the duty 
to defend the indemnitee upon request (§ 2778, subd. 4) may give rise to damages 
in the form of reimbursement of defense costs the indemnitee was thereby forced 
to incur.  But this duty is nonetheless distinct and separate from the contractual 
obligation to pay an indemnitee’s defense costs, after the fact, as part of any 
indemnity owed under the agreement.  (Id., subd. 3.) 
Implicit in this understanding of the duty to defend an indemnitee against 
all claims “embraced by the indemnity,” as specified in subdivision 4 of section 
2778, is that the duty arises immediately upon a proper tender of defense by the 
 
 
17
indemnitee, and thus before the litigation to be defended has determined whether 
indemnity is actually owed.  This duty, as described in the statute, therefore cannot 
depend on the outcome of that litigation.  It follows that, under subdivision 4 of 
section 2778, claims “embraced by the indemnity,” as to which the duty to defend 
is owed, include those which, at the time of tender, allege facts that would give 
rise to a duty of indemnity.7  Unless the indemnity agreement states otherwise, the 
statutorily described duty “to defend” the indemnitee upon tender of the defense 
thus extends to all such claims. 
Here, the subcontract at issue not only failed to limit or exclude Weather 
Shield’s duty “to defend” JMP, as otherwise provided by subdivision 4 of section 
2778, it confirmed this duty.  In language similar to that of the statute, the 
subcontract explicitly obligated Weather Shield both to indemnify JMP against 
certain claims, and “at [its] own expense to defend” JMP against “any suit or 
action . . . founded upon” such claims.  (Italics added.)  The duty “to defend” 
expressly set forth in Weather Shield’s subcontract thus clearly contemplated a 
duty that arose when such a claim was made,8 and was not dependent on whether 
the very litigation to be defended later established Weather Shield’s obligation to 
pay indemnity. 
                                              
7  
We do not suggest that the indemnitor’s duty to defend would continue 
even if, during the progress of the third party proceeding against the indemnitee, 
all claims potentially subject to the contractual indemnity obligation were 
eliminated, or if the promisor otherwise conclusively established that the claims 
were not among those “embraced by the indemnity” (§ 2778, subd. 4).  Such 
issues are not before us, and we express no views thereon. 
8  
Unlike subdivision 4 of Civil Code section 2778, Weather Shield’s 
subcontract did not expressly condition the duty “to defend” upon the 
indemnitee’s request for a defense.  In any event, as noted above (fn. 1, ante), 
Weather Shield does not contend it was absolved of a duty to defend on account of 
any failure by JMP to make such a request. 
 
 
18
Moreover, the subcontract at issue included a further express indication that 
the express duty “to defend” actions against JMP was not strictly limited to those 
claims on which, in the end, Weather Shield actually owed indemnity.  The 
indemnity and defense clauses of the subcontract contained linguistic differences 
that conform to the logical distinctions between the two duties.  On the one hand, 
the subcontract obligated Weather Shield to “indemnify . . . [JMP] . . . against” all 
claims for injury, damage, loss, or theft arising from performance of the 
subcontract, while, on the other, it required Weather Shield “to defend any suit or 
action . . . against [JMP] founded upon the claim” of such injury, damage, loss, or 
theft.  (Italics added.) 
One can only indemnify against “claims for damages” that have been 
resolved against the indemnitee, i.e., those as to which the indemnitee has actually 
sustained liability or paid damages.  Indemnification, after all, is the act of saving 
another from the legal consequence of an act.  (§ 2772.)  Hence, a clause requiring 
Weather Shield to indemnify JMP “against” defined claims clearly indicated that 
the indemnity obligation would apply only if JMP ultimately incurred such a legal 
consequence as a result of covered claims. 
By contrast, as noted above, the subcontract required Weather Shield “to 
defend” JMP against “any suit or action . . . founded upon the claim of such 
damage . . . .”  (Italics added.)  Under this language, the duty to defend arose, as it 
logically must, as soon as a “suit or action” was brought against JMP that was 
“founded upon” a covered claim, i.e., that asserted a claim within the coverage of 
both clauses.  Necessarily, a duty expressed in this manner did not require a final 
determination of the issues, including the issue of Weather Shield’s negligence, 
before Weather Shield was required to mount and finance a defense on JMP’s 
behalf. 
 
 
19
The Court of Appeal majority so concluded.  Dissenting on this point, 
Justice O’Leary conceded at the outset that “the word ‘defend,’ as defined in the 
abstract, would ordinarily mean providing legal services for a pending claim.”  
Nonetheless, she stressed, noninsurance indemnity contracts, unlike liability 
insurance policies, are construed to limit the obligations imposed, and the duties 
undertaken must be stated with particular clarity and specificity.  Examined in that 
light, she asserted, Weather Shield’s subcontract did not make absolutely clear that 
Weather Shield’s duty to defend, unlike its duty to indemnify, arose regardless of 
its negligence. 
To conclude that, absent greater specificity, the indemnity and defense 
obligations stated in the subcontract both required a finding of Weather Shield’s 
negligence, Justice O’Leary reasoned as follows:  The indemnity and defense 
obligations in Weather Shield’s subcontract were “described in a single sentence” 
with two clauses.  The first clause, stating the indemnity obligation, covered 
“ ‘claims for damages . . . growing out of the execution of [Weather Shield’s] 
work . . . .’  Everyone (the litigants, trial court, and majority) seems to agree [that] 
matters embraced by this indemnity clause [were] narrowly limited to damages 
caused by [Weather Shield’s] own negligent work on the project.”  (Original 
italics.)  The second clause, defining the defense duty, confined that responsibility 
to suits or actions founded upon “ ‘the claim of such damage . . . .’  The qualifying 
phrase, ‘claim of such damage’ clearly refer[red] to the earlier language limiting 
the scope of claims embraced by the indemnity, i.e., ‘all claims for damages . . . 
growing out of the execution of the work[.]’  Therefore, both obligations appear to 
be dependent on the same coverage terms.” 
But Justice O’Leary’s analysis overlooks the clear differences in the two 
clauses that we have described above.  In particular, Weather Shield’s express 
contractual duty to defend suits “founded upon” the kinds of claims specified in 
 
 
20
the agreement necessarily extended to suits that alleged such claims, not just suits 
in which they were proven.  Assuming, as we must, that Weather Shield’s 
subcontract obligated it to indemnify JMP against claims arising from Weather 
Shield’s negligent performance of the subcontract, it follows that Weather Shield’s 
contractual duty to defend JMP encompassed suits or actions that alleged such 
negligence on Weather Shield’s part.  Weather Shield could not avoid this duty on 
the ground that the very litigation to be defended might later result in a finding 
Weather Shield was, in fact, not negligent. 
Parties to an indemnity contract can easily disclaim any responsibility of 
the indemnitor for the indemnitee’s defense, or the costs thereof.  Short of that, 
they can specify that the indemnitor’s sole defense obligation will be to reimburse 
the indemnitee for costs incurred by the latter in defending a particular claim.  
However, the instant subcontract did neither.  On the contrary, it specified that 
Weather Shield would be required, “at [its] own expense,” to “defend” JMP 
against suits “founded upon” claims arising from Weather Shield’s performance of 
its subcontract.  This language indicated a more immediate obligation, one that 
would necessarily arise before the litigation to be defended could determine 
whether Weather Shield owed indemnity to JMP. 
In arguing otherwise, Weather Shield relies heavily on Heppler, supra, 
73 Cal.App.4th 1265.  There, in connection with another of JMP’s large 
residential construction projects, Mueller-Lewis Concrete (Mueller) signed a JMP-
drafted subcontract containing indemnity and defense clauses identical to those at 
issue here.  Homeowners sued JMP, Mueller, and others for construction defects.  
Mueller declined JMP’s tender of defense.  In a global settlement, JMP assigned 
its contractual rights against Mueller to plaintiff homeowners.  As JMP’s 
assignees, they sought to recover against Mueller under both the indemnity and 
defense provisions.  The defect, indemnity, and defense issues went to trial against 
 
 
21
Mueller.  The trial court ruled that plaintiffs must prove negligence and causation 
against Mueller in order to trigger Mueller’s contractual indemnity obligations.  
The jury returned a general verdict for Mueller. 
On appeal, plaintiffs challenged the lower court’s ruling that Mueller’s 
negligence was a prerequisite to its contractual duty of indemnity.  The Court of 
Appeal affirmed the judgment in Mueller’s favor.  For a number of reasons, the 
court concluded that the language of the subcontract triggered Mueller’s 
indemnity obligation only if Mueller itself was found negligent.  (Heppler, supra, 
73 Cal.App.4th 1265, 1275-1281.)9 
However, the plaintiffs in Heppler did not contend that, even if the 
indemnity clause in Mueller’s subcontract was triggered only by Mueller’s actual 
negligence, the duty-to-defend clause applied more broadly.  Accordingly, the 
Heppler court never separately addressed the defense clause of the subcontract, or 
considered how the particular language of that clause might distinguish it from the 
indemnity clause.  In affirming the general verdict for Mueller, the court simply 
assumed that the indemnity and defense provisions of the subcontract were 
congruent.10 
                                              
9  
This aspect of the ruling in Heppler, supra, 73 Cal.App.4th 1265, may be 
what has dissuaded the homeowners in this case, acting in JMP’s stead, from 
challenging on appeal the trial court’s ruling that the identical indemnity clause in 
Weather Shield’s subcontract required Weather Shield’s negligence as a condition 
of its indemnity liability. 
10  
This assumption is confirmed by Baldwin Builders v. Coast Plastering 
Corp. (2005) 125 Cal.App.4th 1339, where the same Court of Appeal panel 
broadly stated the holding of Heppler as being that “an indemnitor/subcontractor 
generally will not be liable or have a duty to defend its general contractor 
pursuant to the terms of an indemnity agreement unless it was negligent in 
performing its work under the subcontract.”  (Baldwin Builders, supra, at p. 1347, 
italics added.)  But this passage in Baldwin Builders is dictum; the case had 
 
(Footnote continued on next page.) 
 
 
22
Here, by contrast, we directly confront the relationship, and the distinctions, 
between the two clauses.  Upon examination, as explained above, their language 
differs in a way suggesting that, even if the indemnity obligation is triggered only 
by an ultimate finding of the indemnitor’s fault, the defense obligation applies 
before, and thus regardless of, any finding to be made in the course of the 
litigation for which a defense is owed.  Hence, whatever Heppler’s merits on the 
issues actually considered in that case, we do not find the decision helpful or 
persuasive on the narrow question before us. 
Similarly, Goldman, supra, 62 Cal.2d 40, cited by Weather Shield, is of 
little use in construing the particular defense clause at issue in this case.  Our 
opinion noted a duty-to-defend clause, phrased in language different from that we 
address here, that might bind the subcontractor in that case.  (See id., at p. 43, 
fn. 2).  We also indicated that the indemnitee had demanded both indemnity and a 
defense from the subcontractor.  (Id., at p. 42.)  However, our decision addressed 
only the subcontractor’s duties under the separate indemnity clause at issue in the 
case.  Our holding was simply that if one seeks contractual indemnity protection 
for his own active negligence, the language providing such protection must be 
                                                                                                                                      
 
 
(Footnote continued from previous page.) 
 
nothing to do with an indemnitor’s duty, regardless of fault, to defend its 
indemnitee.  The sole question was whether, having proved in the underlying 
construction defect litigation that it was not negligent, and thus owed no indemnity 
under the terms of its subcontract, the subcontractor/indemnitor could recover, 
under the contractual attorney-fee reciprocity statute (§ 1717, subd. (a)), its 
attorney fees incurred in so establishing.  The Court of Appeal concluded that the 
answer was yes, reasoning that these were fees expended by the 
subcontractor/indemnitor to enforce the indemnity agreement itself, i.e., to prove 
that it owed no contractual indemnity. 
 
 
23
particularly clear and explicit.  (Id., at p. 44.)  Here, upon close examination of 
Weather Shield’s subcontract, we find it did clearly and explicitly create a defense 
duty not dependent on the ultimate resolution of issues, such as Weather Shield’s 
fault, that would only be determined after the duty arose. 
Nor, under close examination, is Mel Clayton Ford, supra, 104 Cal.App.4th 
46, helpful to Weather Shield’s cause.  Weather Shield suggests Mel Clayton Ford 
stands for the proposition that a duty-to-defend clause in a noninsurance 
agreement does not extend to mere allegations that would trigger an indemnity 
obligation only if proven.  We do not so interpret the decision.  In our view, 
Weather Shield takes out of context the passage on which it relies. 
In Mel Clayton Ford, an agreement between a vehicle manufacturer and its 
retail dealer specified that the manufacturer would defend and indemnify the 
dealer against any third party suits, complaints, or claims “ ‘concerning . . . injury 
or . . . damage arising out of an occurrence caused solely by’ ” a manufacturing or 
design defect in a vehicle supplied to the dealer by the manufacturer.  (Mel 
Clayton Ford, supra, 104 Cal.App.4th 46, 49, italics added.)  Thus, the 
manufacturer excluded from its defense obligation any suit or claim that alleged 
dealer negligence, or any theory other than manufacturing or design defect, as a 
sole or contributing cause of the injury or damage. 
In 1989, the plaintiff purchased from the dealer a truck supplied by the 
manufacturer.  Thereafter, the dealer performed maintenance on the vehicle.  In 
1997, while the plaintiff was driving the truck, it burst into flames, seriously 
injuring him.  He sued both the manufacturer and the dealer, alleging not only a 
defectively designed and manufactured product, but also claims based on failure to 
warn, breach of warranty, and “ ‘theories of [the dealer’s] direct or active 
negligence in the maintenance of the vehicle.’ ”  (Mel Clayton Ford, supra, 
104 Cal.App.4th 46, 50.) 
 
 
24
The Court of Appeal held that the manufacturer had no duty to undertake 
the dealer’s defense under such circumstances.  This was because “[t]he indemnity 
provision required [the manufacturer] to defend the Dealer only where the 
occurrence was caused solely by a production defect, and not whenever product 
liability was one of the allegations of the underlying complaint.”  (Mel Clayton 
Ford, supra, 104 Cal.App.4th 46, 55, second italics added.) 
Thus, in Mel Clayton Ford, it was not an allegations-versus-proof 
distinction that negated the duty to defend.  Rather, given the word “solely” in the 
indemnity/defense clause there at issue, the crucial fact was that the suit for which 
a defense was sought included allegations other than those to which the 
manufacturer had limited its defense duty — design or production defects 
attributable to the manufacturer itself.11 
Here, Weather Shield’s contractual duty was not similarly limited.  Weather 
Shield promised to defend JMP against any suit “founded upon” a “claim of . . . 
damage” “growing out of the execution of [Weather Shield’s] work.”  The 
contract did not specify, or even hint, that no defense duty would exist unless the 
suit was solely concerned with Weather Shield’s performance under its own 
subcontract and included no other claims or allegations.  Nor does Weather Shield 
so claim.  Hence, nothing decided in Mel Clayton Ford establishes that until 
Weather Shield’s faulty performance of its work was proven, it had no duty to 
defend JMP. 
                                              
11  
To the extent there is any ambiguity in Mel Clayton Ford’s holding on this 
point, it cannot be resolved by further examination of the Court of Appeal’s 
opinion in that case.  Except for the summary passage quoted above, the Court of 
Appeal’s discussion of this interpretive issue appeared in the unpublished portion 
of its partially published opinion. 
 
 
25
Finally, we are not persuaded by Regan Roofing, supra, 24 Cal.App.4th 
425, insofar as that decision suggests that a contractual duty to defend specified 
classes of claims, expressed in such terms, necessarily depends on the promisor’s 
ultimate liability for indemnity on those claims. 
In Regan Roofing, after a housing developer, Pacific Scene, was sued for 
construction defects, it cross-complained against numerous project subcontractors 
to establish its contractual indemnity and defense rights.  Each of these agreements 
required the subcontractor to indemnify Pacific Scene against all mechanic’s liens 
related to the subcontractor’s work, as well as “ ‘any other liability, cost or 
expense of any nature or kind arising out of or in any way connected with 
Subcontractor’s performance, . . . save and except only such liability, cost or 
expense caused by [Pacific Scene’s] sole negligence or sole willful misconduct.’ ”  
(Regan Roofing, supra, 24 Cal.App.4th at p. 430, italics added.)  “ ‘Pursuant to the 
. . . foregoing,’ ” the subcontracts declared, “ ‘Subcontractor shall indemnify and 
hold harmless [Pacific Scene] from any costs and expenses for attorney’s fees . . . 
resulting to [Pacific Scene] from such claims or liens.’ ”  (Ibid., italics omitted.)  
Finally, each agreement separately provided that “ ‘[i]n the event any suit on any 
claim is brought against [Pacific Scene], subject to the provision, Subcontractor 
shall defend said suit at Subcontractor’s own cost and expense . . . .’ ”  (Ibid., 
italics omitted.) 
Pacific Scene sought pretrial summary adjudication of a number of issues, 
including rulings on the subcontractors’ duties to indemnify and defend.  The trial 
court determined that the indemnity provision of the subcontracts included 
coverage for Pacific Scene’s own negligence.  However, the court found that the 
question whether the subcontractors actually owed indemnity was premature, 
because, among other things, Pacific Scene had not yet incurred liability or paid 
claims subject to indemnity.  On the other hand, the court concluded, under the 
 
 
26
language of the agreements and section 2778, each subcontractor did have an 
immediate duty to defend claims “ ‘brought against [Pacific Scene] in respect to 
matters embraced by the indemnity clause.’ ”  (Regan Roofing, supra, 
24 Cal.App.4th 425, 432.) 
The Court of Appeal reversed on the latter point.  The appellate court 
indicated that “summary adjudication of the duty to defend and its relationship to 
the duty to indemnify (i.e., the scope of ‘the matters embraced by the indemnity’) 
is premature.  No determination has yet been made as to whether the 
subcontractors were negligent in the performance of their work, giving rise to a 
duty to indemnify and a related duty to defend.  Pacific Scene has not clearly 
established that under this indemnity clause, the duty to defend against claims of 
liability is entirely free-standing of the duty to indemnify for liability arising out of 
a subcontractor’s negligence.  [Citation.]”  (Regan Roofing, supra, 24 Cal.App.4th 
425, 436, italics added.) 
In reaching this conclusion, however, the Court of Appeal erred.  The court 
seems to have assumed that, under subdivision 4 of section 2778, and unless the 
agreement at issue clearly provides otherwise, an indemnitor’s duty to defend the 
indemnitee upon request in matters “embraced by the indemnity” is not, in the 
court’s words, “free-standing,” but extends only to claims as to which indemnity is 
actually owed.  (Regan Roofing, supra, 24 Cal.App.4th 425, 436.)  And the court 
found no such explicit contrary intent in the subcontracts there under 
consideration. 
However, as we have explained, the duty to defend upon the indemnitee’s 
request, as set forth in subdivision 4 of section 2778, is distinct from, and broader 
than, the duty expressed in subdivision 3 of the statute to reimburse an 
indemnitee’s defense costs as part of any indemnity otherwise owed.  Moreover, 
the subcontracts at issue in Regan Roofing, like the one before us here, did 
 
 
27
explicitly indicate a separate and distinct duty to defend the indemnitee, at the 
indemnitor’s own cost and expense, against suits raising claims covered by the 
indemnity.  That duty — like Weather Shield’s in this case — necessarily arose 
when such a claim was made against the indemnitee, and thus did not depend on 
whether the conditions of indemnity were, or were not, later established. 
Regan Roofing was therefore mistaken insofar as it concluded that, under 
the agreements there at issue, the subcontractors’ defense duties arose only if the 
subcontractors became liable for indemnity.  We will disapprove the Regan 
Roofing decision to that extent.12 
                                              
12     We realize that Regan Roofing’s finding of prematurity was also substantially 
influenced by the practical difficulties of sorting out multiple, and potentially 
conflicting, duties to assume the active defense of litigation then in progress.  (See 
Regan Roofing, supra, 24 Cal.App.4th 425, 437.)  Weather Shield and its amici 
curiae raise similar concerns.  But the case before us does not present such 
problems.  JMP cross-complained against Weather Shield and other 
subcontractors on indemnity and duty-to-defend issues, but the trial on these 
issues was postponed until after most of the subcontractors had settled with JMP, 
and after the underlying construction defect litigation against the remaining 
parties, including Weather Shield, was concluded.  Thus, while the trial court 
correctly held that Weather Shield’s contractual duty to defend arose when a suit 
alleging covered claims was brought against JMP, and that the duty thus did not 
depend on whether the conditions for indemnity were later established, the court 
was able to assess after the fact Weather Shield’s proportionate liability for breach 
of its duty to defend. 
     The instant parties apparently saw no impropriety in this procedure, and neither 
do we.  At least with respect to pre-2006 residential construction subcontracts, and 
subject to any future contrary or inconsistent legislation, the following procedures 
seem appropriate:  When a party sues one or more other persons, seeking to 
establish a contractual right to a defense against litigation not yet concluded, these 
issues may, if the parties agree, be deferred until the underlying litigation is 
complete.  If any party moves for summary judgment or adjudication (Code Civ. 
Proc., § 437c) with respect to the duty to defend against litigation still in progress, 
the court may proceed as it deems expedient.  For example, the court may resolve 
legal issues then ripe for adjudication, such as whether any of the contracts at issue 
 
(Footnote continued on next page.) 
 
 
28
Weather Shield and its amici curiae raise numerous, and substantial, policy 
concerns about an indemnity agreement that requires a subcontractor to defend a 
residential developer or builder in a construction defect suit, before and regardless 
of whether the subcontractor itself is found to be at fault.  Arguments asserted 
include the following:  Large builders and developers use their superior bargaining 
power, and self-drafted contract terms, unfairly to shift the financial consequences 
of their own legal liability to faultless subcontractors, who are not compensated 
for the risk and agree only because they need the work.13  Such shifting 
discourages builders and developers themselves from taking proper care in 
construction oversight.  Small subcontractors, moreover, lack the resources to fund 
a developer’s defense “up front” while often simultaneously defending themselves 
in the same lawsuit, where the developer typically pursues the hostile and 
conflicting strategy of pinning blame on them.  The developer can demand a 
defense from a single subcontractor among many, and the latter may later be 
unable to obtain contribution from other subcontractors.  Further, subcontractors, 
                                                                                                                                      
 
 
(Footnote continued from previous page.) 
 
include a duty to defend, and, if so, whether the underlying suit or proceeding as 
to which a defense is sought falls within the scope of any of the parties’ 
contractual duty to defend.  If the court finds that an ongoing duty to defend is 
owed by one or more parties, but the affected parties, acting in good faith, then 
cannot agree on how such a defense should be provided or financed, the court 
may, in its discretion, permit the underlying litigation to proceed with counsel 
chosen and paid by the party to whom the duty is owed, subject to a later 
determination of how damages for breach of the duty to defend should be 
apportioned among the breaching parties. 
13  
By noting this argument, we do not dismiss the possibility that in many 
instances, subcontractors may prefer to assume, and control, the defense of suits 
against builders, developers, or other contractors, especially when the claims 
raised may expose the subcontractors themselves to direct or indirect liability. 
 
 
29
unlike liability insurers, lack defense attorney “panels” available at favorable fee 
rates.  Because of privilege and conflict-of-interest issues, they may also lack 
access to the developer’s attorney billing records.  As a result, a subcontractor may 
be forced to pay exorbitant and unreasonable legal costs for the developer’s 
defense.  Finally, the vagaries of construction defect litigation in California have 
caused many insurers to leave the market.  Thus, and contrary to the Court of 
Appeal’s assumption, “backup” insurance to cover subcontractors’ contractual 
defense burdens is not readily available at reasonable cost. 
As Weather Shield and its amici curiae point out, statutes effective January 
1, 2006, and January 1, 2008, respectively, were adopted to address just such 
concerns.  These new laws, which apply to residential construction contracts 
entered after their effective dates, void any term in such a contract that obliges a 
subcontractor to indemnify certain other project participants, “including the cost to 
defend,” against construction defect claims “to the extent” the claims “arise out of, 
pertain to, or relate to” the negligence of those other entities.  (§ 2782, subds. (c), 
(d), as added by Stats. 2005, ch. 394, § 1; see id., subd. (e), as added by 
Stats. 2007, ch. 32, § 1.)14  However, Weather Shield and its amici curiae assert 
                                              
14  
As noted above, section 2782, subdivision (a) has long provided that a 
party to a construction contract cannot agree to indemnify another project 
participant for the latter’s sole negligence or willful misconduct.  Subdivision (c) 
of section 2782, as adopted in 2005 and slightly amended in 2007, additionally 
provides in pertinent part:  “For all construction contracts, and amendments 
thereto, entered into after January 1, 2006, for residential construction . . . , all 
provisions, clauses, covenants, and agreements contained in, collateral to, or 
affecting any construction contract, and amendments thereto, that purport to 
indemnify, including the cost to defend, the builder . . . by a subcontractor against 
liability for claims of construction defects are unenforceable to the extent the 
claims arise out of, pertain to, or relate to the negligence of the builder or the 
builder’s other agents, other servants, or other independent contractors who are 
directly responsible to the builder, or for defects in design furnished by those 
 
(Footnote continued on next page.) 
 
 
30
that, unless we hold otherwise, California’s 10-year statute of limitations for 
construction defects (Code Civ. Proc., § 337.15) still exposes numerous 
subcontractors who signed earlier agreements to unfair and burdensome defense 
demands by developers. 
In effect, Weather Shield and its amici curiae ask us to conclude as a matter 
of law that, in a pre-2006 residential construction contract, a term which expressly 
obliges a subcontractor “to defend” a builder, developer, or general contractor 
against claims “founded upon” the subcontractor’s negligent work, but says 
nothing further about the scope of the duty, means only that the subcontractor 
must reimburse the promisee, after the fact, for the promisee’s legal expenses as 
                                                                                                                                      
 
 
(Footnote continued from previous page.) 
 
persons . . . .  This section shall not be waived or modified by contractual 
agreement, act, or omission of the parties.  Contractual provisions, clauses, 
covenants, or agreements not expressly prohibited herein are reserved to the 
agreement of the parties.” 
 
Subdivision (d) of section 2782, also adopted in 2005 and effective January 
1, 2006, provides in pertinent part:  “Subdivision (c) does not prohibit a 
subcontractor and builder from mutually agreeing to the timing or immediacy of 
the defense and provisions for reimbursement of defense fees and costs, so long as 
that agreement, upon final resolution of the claims, does not waive or modify the 
provisions of subdivision (c).” 
 
Subdivision (e) of section 2782, as added in 2007 and effective for 
residential construction contracts entered after January 1, 2008, uses parallel 
language to expand the categories of project participants as to whom a 
subcontractor cannot be made contractually responsible for construction defect 
indemnity, including defense costs, “to the extent” such claims “arise out of, 
pertain to, or relate to” the negligence of those entities or their agents, their 
servants, or the independent contractors directly responsible to them.  Under 
subdivision (e), the categories of project participants who may not obtain such 
contractual indemnity from a subcontractor now include not only the builder, but 
also “the general contractor or contractor that is not affiliated with the builder.” 
 
 
31
part of any indemnity ultimately owed by the subcontractor to the promisee.  They 
suggest that to produce a contrary result, the subcontract should say, in so many 
words, that the duty to defend arises immediately when a claim is asserted against 
the promisee, is not limited to later reimbursement of the promisee’s legal 
expenses, and applies regardless, and independent, of any duty of indemnity for 
which the subcontractor may later become liable. 
We are sensitive to the policy issues raised by Weather Shield and its amici 
curiae.  Nonetheless, for reasons stated at length above, we decline the holding 
they propose.  Even applying the rule of strict construction they espouse, the 
instant contract already sets forth, in unambiguous terms, an immediate and 
independent duty to defend.  As we have indicated, an express promise “to 
defend” another against claims “founded upon” the promisor’s acts or omissions 
inherently incorporates the characteristics they insist must be set forth in 
additional explicit terms.  And if the parties intended only to give the indemnitee a 
right to after the fact reimbursement of its legal expenses as a component of any 
indemnity otherwise owed by the indemnitor, they would need no language to say 
so.  That right is already included in every indemnity contract, unless otherwise 
specifically provided, under subdivision 3 of section 2778.15 
                                              
15  
Amicus curiae Jeld-Wen, Inc., suggests “[t]here is good reason to believe” 
that section 2778’s reference to “contract[s] of indemnity” was never intended to 
apply to anything but insurance contracts.  Jeld-Wen notes that section 2778, 
adopted in 1872, traces its lineage to a similar 1865 New York statute which also 
used that term.  This nomenclature, Jeld-Wen asserts, was commonly employed in 
the mid-19th century to refer to insurance contracts.  Jeld-Wen further notes that 
early cases interpreting the 1865 New York law all concerned bonds or insurance 
policies.  We reject the contention for several reasons.  First, section 2778, 
governing “contract[s] of indemnity,” appears in a portion of the Civil Code (title 
12 of part 4 of division 3, commencing with section 2772) simply entitled 
“Indemnity.”  Section 2772 defines “indemnity” as “a contract by which one 
 
(Footnote continued on next page.) 
 
 
32
Finally, Weather Shield does not suggest that, as applied to it, the 
subcontract was either procedurally or substantively unconscionable.  Nor does 
Weather Shield otherwise imply that it is a relatively small and powerless 
subcontractor overwhelmed by JMP’s superior bargaining power.  Furthermore, 
Weather Shield does not claim it naively signed the instant subcontract without 
understanding the terms.  Indeed, in its opening brief, Weather Shield describes 
itself as “the out-of-state manufacturer of the . . . wood windows” installed in the 
Huntington Beach residential development — a development that included at least 
122 homes.  This description suggests a multistate scale of operations, and a 
consequent sophistication, that would undermine any such assertions.16 
We therefore conclude that the duty “to defend” JMP against claims 
“founded upon” damage or loss caused by Weather Shield’s negligent 
                                                                                                                                      
 
 
(Footnote continued from previous page.) 
 
engages to save another from a legal consequence of the conduct of one of the 
parties, or of some other person.”  That definition is not confined to insurance 
agreements.  Second, this same title includes a number of statutes that expressly 
apply to the indemnity provisions of noninsurance contracts.  (See, e.g., §§ 2782-
2784 [construction contracts], 2784.5 [hauling, trucking, or cartage contracts].)  
Third, California cases too numerous to mention have assumed, virtually since the 
inception of section 2778, that it applies to indemnity agreements outside the 
insurance context.  (See, e.g., Davis v. Air Technical Industries, Inc. (1978) 
22 Cal.3d 1, 6, fn. 6; Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. 
(1968) 69 Cal.2d 33, 41, fn. 9; Eva v. Andersen (1913) 166 Cal. 420, 424-425; 
Showers v. Wadsworth (1889) 81 Cal. 270, 273-274; Peter Culley & Associates, 
supra, 10 Cal.App.4th 1484, 1494-1496; Buchalter v. Levin, supra, 
252 Cal.App.3d 367, 371-375.)  The Legislature has never indicated otherwise.  
No reason appears to disturb this settled construction. 
16  
Questioned on this subject at oral argument, Weather Shield’s counsel did 
not deny that Weather Shield is a sizeable multistate purveyor of manufactured 
windows. 
 
 
33
performance of its work, as set forth in Weather Shield’s subcontract, imposed 
such duties on Weather Shield as soon as a suit was filed against JMP that asserted 
such claims, and regardless of whether it was ultimately determined that Weather 
Shield was actually negligent.  Accordingly, we affirm the judgment of the Court 
of Appeal. 
CONCLUSION 
The judgment of the Court of Appeal is affirmed.  The decision in Regan 
Roofing Co. v. Superior Court, supra, 24 Cal.App.4th 425, is disapproved to the 
extent it conflicts with the conclusions set forth in this opinion. 
 
 
 
 
 
 
 
 
BAXTER, J. 
WE CONCUR: 
 
GEORGE, C.J. 
KENNARD, J. 
WERDEGAR, J. 
CHIN, J. 
MORENO, J. 
CORRIGAN, J. 
 
 
 
 
See last page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Crawford v. Weather Shield Mfg., Inc. 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 136 Cal.App.4th 304 
Rehearing Granted 
__________________________________________________________________________________ 
 
Opinion No. S141541 
Date Filed: July 21, 2008 
__________________________________________________________________________________ 
 
Court: Superior 
County: Orange 
Judge: Raymond J. Ikola 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Sedgwick, Detert, Moran & Arnold, Christina J. Imre, Stephanie Rae Williams, Orly Degani and Maureen 
M. Home for Defendant and Appellant. 
 
Summers & Shives and Robert V. Closson for California Farming Contractor’s Association as Amicus 
Curiae on behalf of Defendant and Appellant. 
 
Crawford & Bangs, E. Scott Holbrook, Jr., and Joshua J. Wes for American Subcontractors Association as 
Amicus Curiae on behalf of Defendant and Appellant. 
 
Horvitz & Levy, Lisa Perrochet and John A. Taylor, Jr., for California Professional Association of 
Specialty Contractors, Pacific Rim Drywall Association and Southern California Contractors Association 
as Amici Curiae on behalf of Defendant and Appellant. 
 
McAtee • Harmeyer and Jeff G. Harmeyer for Jeld-Wen, inc., as Amicus Curiae on behalf of Defendant 
and Appellant. 
 
Stephan, Oringher, Richman, Theodora & Miller, Theodora Oringher Miller & Richman, Harry W. R. 
Chamberlain and Robert M. Dato for American Architectural Manufacturers Association as Amicus Curiae 
on behalf of Defendant and Appellant. 
 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Anderson & Kriger, Clayton Anderson, Philip Y. Kim; and Richard H. Benes for Plaintiff and Appellant 
Kirk Crawford. 
 
Kabateck & Garris, Kabateck Brown Kellner, Brian S. Kabateck, Alfredo Torrijos and Richard L. Kellner 
for Plaintiff and Appellant Parviz Alai. 
 
 
 
 
 
 
 
Page 2 – S141541 – counsel continued 
 
Attorneys for Respondent: 
 
Cooper, White & Cooper, Kathleen F. Carpenter and Carol J. Stair for California Building Industry 
Association as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Green & Hall, Brian C. Plante and Samuel M. Danskin for Capital Pacific Holdings, Inc., as Amicus 
Curiae on behalf of Plaintiffs and Appellants. 
 
Newmeyer & Dillion, Thomas F. Newmeyer, Jay B. Freedman and Michael B. McClellan for Standard 
Pacific Corp., KB Home, The Irvine Company, Alexander Communities, Inc., Taylor Woodrow Homes, 
Inc., and William Lyon Homes, Inc., as Amici Curiae on behalf of Plaintiffs and Appellants. 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Christina J. Imre 
Sedgwick, Detert, Moran & Arnold 
801 South Figueroa Street, 19th Floor 
Los Angeles, CA  90017-5556 
(213) 426-6900 
 
Richard L. Kellner 
Kabateck Brown Kellner 
350 South Grand Avenue, 39th Floor 
Los Angeles, CA  90071 
(213) 217-5000