Opinion ID: 1058146
Heading Depth: 2
Heading Rank: 4

Heading: the litigation preceding these appeals

Text: Uniwest and its insurers filed a complaint against Amtech and its insurers in the Circuit Court for Fairfax County in October 2006. Uniwest and its insurers alleged, among other things, that Amtech breached its contractual duty to defend and indemnify Uniwest in the Employees' lawsuit. The circuit court determined that the defense and indemnification provision in Paragraph 10 of the Subcontract was void pursuant to Code § 11-4.1 because it indemnified Uniwest for its own negligence. Uniwest and its insurers then non-suited their action. Thereafter, Amtech, ABM, and AIU filed a complaint in the circuit court in May 2008 seeking declaratory judgment that they were not liable to Uniwest or its insurers in any amount or on any basis. Uniwest and its insurers responded by filing counterclaims in which they again alleged Amtech had a duty to defend and indemnify Uniwest under the Subcontract, under either Paragraph 10 or Paragraph 3.18.1 of the General Conditions incorporated through the Prime Contract. They further alleged that the negotiation between Hohn and Gibley formed an independent agreement to defend and indemnify. They also claimed AIU had a duty to defend and indemnify Uniwest under Subdivisions E-4 and E-7 of the AIU Policy, that AIU had acquiesced to defending and indemnifying Uniwest by not timely reserving its rights, and that AIU was estopped from denying its obligation to defend and indemnify because it retained Devine and he participated in the Employees' lawsuit. Uniwest and its insurers also filed third-party complaints bringing similar claims against Continental. By agreement of all parties, the circuit court entered an order expressly incorporating its earlier ruling in the non-suited action that Paragraph 10 was void pursuant to Code § 11-4.1. The circuit court entered a separate order by agreement of the parties, expressly limited to Continental, finding that Uniwest was an additional insured under the CNA Policy. [7] It stated that [f]or [the] purposes of all claims asserted in this action against [Continental] only, the [c]ourt finds that Continental has admitted that [Uniwest] is an additional insured under [the CNA Policy]. ... This order is without prejudice to any claims or defenses of any other party to this action. After a five-day bench trial, the circuit court determined that Amtech did not have a duty to defend and indemnify Uniwest based on Paragraph 3.18.1 of the General Conditions. To the extent the Subcontract incorporated Paragraph 3.18.1, it did so only to place Amtech in Uniwest's shoes with regard to Uniwest's duty to defend and indemnify Fountains. The court also determined that communications between Hohn and Gibley negotiating the terms for Amtech's defense and indemnification of Uniwest did not create an independent agreement by Amtech to defend and indemnify Uniwest. Rather, those communications arose solely from Amtech's belief at the time that it owed such a duty based on Paragraph 10 of the Subcontract, although that provision was in fact void pursuant to Code § 11-4.1. Consequently, Amtech had no duty to defend or indemnify Uniwest. The circuit court also determined that AIU had no duty to defend and indemnify Uniwest under either Subdivision E-4 or Subdivision E-7 of the AIU Policy. Because there was no valid provision requiring Amtech to defend and indemnify Uniwest, Uniwest was not an additional insured under the CNA Policy and Subdivision E-4 was not implicated. Likewise, in the absence of a valid defense and indemnification provision, there was no Insured Contract as defined by the AIU Policy to impose such a duty on AIU under Subdivision E-7. The circuit court further determined that AIU had not acquiesced to or become estopped from denying a duty to defend and indemnify Uniwest. Although AIU retained Devine and he participated in the Employees' lawsuit, there was no acquiescence or estoppel because he merely supplemented and did not replace Lynn as lead counsel for Uniwest. Likewise the court held that AIU had not waived its ability to reserve its rights. Because Uniwest never demanded that AIU defend and indemnify it, the timing of AIU's reservation of rights did not constitute a waiver under California law, which governed the AIU Policy. The circuit court then determined that Amtech had a duty to procure insurance for Uniwest because the Subcontract incorporated the insurance requirements of the Zipf Specifications. Amtech breached this duty by failing to add Uniwest as an additional insured under the CNA and AIU Policies. Accordingly, the court found Amtech liable to Uniwest and its insurers for the $9,500,000 settlement between Uniwest and the Employees. The circuit court entered a final order awarding Uniwest and its insurers $9,500,000 in compensatory damages plus prejudgment interest. Uniwest and its insurers filed petitions for appeal assigning error to the court's determinations that neither Amtech nor AIU had a duty to defend and indemnify Uniwest. Amtech, ABM, and AIU filed a separate petition assigning error to the determination that Amtech had a duty to procure insurance for Uniwest and, if it did breach such a duty, to the amount of damages awarded. We awarded these appeals.