Court Opinion

ID: 8483574
Source: CourtListenerOpinion
Date Created: 2022-11-14 19:01:45.4278+00
Date Added: 2024-06-11T16:49:46.762713
License: Public Domain

Filed 11/14/22 Truck Ins. Exchange v. Federal Ins. Co. CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION FIVE

 TRUCK INSURANCE EXCHANGE,                                            B298906

           Plaintiff and Appellant,
                                                                      (Los Angeles County
           v.                                                         Super. Ct.
                                                                      No. BC534069)
 FEDERAL INSURANCE COMPANY
 et al.,

           Defendants and Respondents.

 FIRST STATE INSURANCE                                                B311639
 COMPANY,

      Cross-complainant and                                           (Los Angeles County
 Appellant,                                                           Super. Ct.
                                                                      No. BC534069)
           v.

 FEDERAL INSURANCE COMPANY,

      Cross-defendant and
 Respondent.
       APPEALS from a judgment of the Superior Court of
Los Angeles County, William F. Highberger, Judge. Affirmed as
to B298906; reversed in part and remanded as to B311639.
       Pia Hoyt, Scott R. Hoyt and John P. Mertens for Plaintiff
and Appellant Truck Insurance Exchange.
       Schwartz & Janzen, Steven H. Schwartz; Wiggin and Dana,
Aaron S. Bayer and Anjali S. Dalal for Defendant, Respondent,
Cross-complainant, and Appellant First State Insurance
Company.
       Chamberlin & Keaster, Kirk C. Chamberlin and Michael C.
Denlinger for Cross-defendant and Respondent Federal
Insurance Company.
                        ——————————
       These consolidated appeals concern the interpretation of a
settlement agreement between a primary insurer and two excess
insurers.
       In the first appeal, case No. B298906, plaintiff and
appellant Truck Insurance Exchange (Truck), the primary
insurer, appeals the trial court’s judgment following the court’s
grant of summary adjudication in favor of defendant and
respondent excess insurers Federal Insurance Company (Federal)
and First State Insurance Company (First State) (collectively the
Excess Insurers) on Truck’s third cause of action for contribution.
In its contribution cause of action, Truck sought reimbursement
from the Excess Insurers of indemnity payments and defense fees
that Truck made in the underlying bodily injury actions filed
against its insured, Moldex Metrics, Inc. (Moldex). Truck
incurred the indemnity and fee payments at issue here after
Truck entered into a settlement agreement with the Excess
Insurers on July 24, 2013 (the Settlement Agreement). Truck

                                2
contends that the trial court incorrectly interpreted the
Settlement Agreement to constitute a waiver of Truck’s rights of
subrogation as a basis to seek reimbursement from the Excess
Insurers. Specifically, Truck argues that language in the
Settlement Agreement preserving its right to seek “contribution”
encompassed its rights to subrogation, as the right to
contribution is not available to a primary insurer seeking
reimbursement from excess insurers. We conclude that the trial
court did not err by granting summary adjudication as to Truck’s
third cause of action for contribution. We affirm the trial court’s
judgment as to Truck in case No. B298906.
       In the second appeal, case No. B311639, cross-complainant
and appellant First State contends that the trial court erred in
ruling that First State waived its right to reimbursement from
Federal per the terms of the Settlement Agreement. First State
asserts that the trial court’s orders granting Federal’s motion for
summary adjudication and its motion in limine must be reversed.
We reverse the judgment as to the portion of First State’s claim
for declaratory relief in its cross-complaint relating to its
entitlement to reimbursement from Federal for the time periods
prior to July 2013 and after January 30, 2018. The trial court’s
January 16, 2020 order granting summary adjudication in
Federal’s favor and the trial court’s August 7, 2019 order
granting Federal’s motion in limine are also reversed, and the
matter is remanded to the trial court for further proceedings in
case No. B311639.

                                 3
                         BACKGROUND

The Cases Against Moldex and Its Coverage Dispute

       The insured, Moldex, manufactures respiratory protection
products used by industrial workers. Federal issued a
commercial umbrella policy to Moldex, which was in effect from
August 1, 1982 to June 1, 1984, and provided policy limits of
$5 million. First State issued an umbrella policy that was
effective from June 18, 1984 to June 18, 1985, which provided
policy limits of $15 million.
       Truck issued a commercial liability policy to Moldex with a
policy period from June 16 to July 25, 1986. The policy limits
were $500,000 per occurrence and in the aggregate, exclusive of
defense costs. Under the policy, Truck had a duty to defend any
suit against Moldex seeking bodily injury or property damages,
even if the allegations were groundless, false, or fraudulent.
       Beginning in 1986, lawsuits were filed against Moldex
alleging exposure to silica and other hazardous substances
because its respiratory protection devices failed. Moldex gave
notice of the claims to primary liability insurers other than
Truck, who defended and indemnified Moldex. When the
primary insurers’ liability limits were exhausted in 2003, Moldex
gave notice of claims to umbrella and excess insurers, including
Federal and First State.
       In December 2004, Moldex tendered actions to Truck under
its policy. In September 2007, Federal filed a complaint in
Federal Insurance Co. v. Moldex-Metric, Inc., Los Angeles
Superior Court case No. BC377842, to determine coverage for
actions against Moldex that were tendered to Truck (the

                                4
Coverage Dispute). In August 2011, the trial court ruled that
Truck was required to reimburse Federal and First State for
defense fees and indemnity, plus prejudgment interest. Federal
was owed defense costs of $3,854,390.61 and indemnity of
$98,212.50; First State was owed $5,000,412. Truck appealed the
trial court’s ruling and began defending Moldex in the actions.
       On January 24, 2012, Truck’s appeal in the Coverage
Dispute was denied as premature, because there was no final
appealable judgment. On January 30, 2012, Truck entered into a
settlement agreement with the O’Quinn Law Firm, which
represented Moldex claimants in Texas and Mississippi (the
O’Quinn Settlement). Truck settled with several hundred
claimants in Texas who were or had been represented by
O’Quinn. The O’Quinn Settlement did not resolve actions in
Mississippi. In the period prior to the O’Quinn Settlement, Truck
had paid $10,000 to settle claims against Moldex. After reaching
the settlement with O’Quinn, Truck deposited $500,000 in trust
for O’Quinn to use to pay claimants in exchange for releases in
favor of Moldex.
       On February 14, 2012, Truck notified Moldex and the
excess insurers that the claims had been settled. Truck stated
that it had exhausted its policy limit of $500,000, and was
returning the defense and indemnity of Moldex to the Excess
Insurers.
       Between March 2012 and July 2013, 483 claimants
received $409,677.50 under the O’Quinn Settlement in return for
releases. The law firm holding the funds that Truck had placed
in trust returned the remainder to Truck.
       On February 28, 2013, the trial court entered a final
judgment against Truck in the Coverage Dispute, finding Truck

                                5
had a duty to defend and indemnify Moldex with respect to the
actions tendered. The judgment required Truck to reimburse
Federal for defense costs of $3,854,390.61 and indemnity of
$98,212.50, and reimburse First State for defense costs of
$5,035,006.25 and indemnity of $230,875, plus interest. Truck
filed an appeal.

The Settlement Agreement

         In July 2013, Truck entered into the Settlement Agreement
with Federal and First State to resolve the Coverage Dispute.
Truck agreed to pay a total of $11,000,000 based on the judgment
in the Coverage Dispute, which included $8,889,396.86 of defense
costs and $329,087.50 of indemnity toward Truck’s aggregate
policy limit. The “Parties each release[d] each other from any
and all Claims that are, were[,] or could have been asserted in
the Action (including, without limitation, the Coverage Dispute
and the Appeals.” The releases “shall not apply to, have any
effect on[,] or constitute a release, waiver, or assignment
of: . . . (b) any of Federal’s and/or [First State]’s rights against
any Person other than Truck . . . ; or (d) to the extent such rights
exist, any of Truck’s rights to claim contribution for any
indemnity paid over its limit and defense fees incurred
therewith.” Truck agreed that it would continue to defend and
indemnify Moldex for the underlying claims “until such time as
Truck establishes that it has properly exhausted the Truck
Policy.”

                                 6
The Side Agreement

       Also in July 2013, First State and Federal entered into a
settlement agreement (the Side Agreement),1 addressing how
Moldex’s claims would be “handled and allocated between them
should Truck establish exhaustion.” The Side Agreement stated,
“on July 22, 2013,[2 ] Federal, First State and Truck Insurance
Exchange . . . entered into a Settlement Agreement and
Release . . . to resolve certain disputes between Federal and First
State, on the one hand, and Truck, on the other hand, regarding
the extent to which Truck is obligated to reimburse Federal and
First State for amounts they paid for Moldex-Metrix,
Inc.’s . . . defense and indemnity.” It further stated that Truck
would “continue to defend and indemnify Moldex . . . until such
time as Truck establishes that it has properly exhausted the
Truck Policy” and upon exhaustion would work with “Moldex,
Federal, and First State to ensure an orderly transition of the
defense.”
       The Side Agreement detailed the division of costs between
the Excess Insurers in the event that Truck established
exhaustion. The Excess Insurers agreed that the Side Agreement
would “remain in effect until the earliest of (a) the exhaustion of
one of the Parties policies; (b) the discovery of additional coverage
applicable to Moldex’s claims; (c) the entry into a subsequent cost

      1 Federal executed the Side Agreement on July 22, 2013,
and First State executed the Side Agreement on July 23, 2013.

      2 The Settlement Agreement was actually executed on
July 24, 2013.

                                  7
share between the Parties following entry of the Truck
Settlement; or (d) by written notice of one of the parties hereto to
the representative identified in the Truck Settlement. The
earliest that a Party may terminate pursuant to (d) is thirty (30)
days after one (or both) of the Parties hereto begins to defend
following notification of Truck’s exhaustion.”

                    PROCEDURAL HISTORY

       On January 23, 2014, Truck filed a complaint for a
declaration as to Moldex and the Excess Insurers that the policy
limit had been exhausted in July 2013, a declaration as to Moldex
that it owed no further duty to defend and indemnify Moldex
because the policy had been exhausted, and reimbursement or
contribution as against the Excess Insurers for indemnity of
$248,765 paid in excess of Truck’s policy limit. Truck also sought
a declaration awarding it defense costs paid in the underlying
lawsuits after Truck’s policy was exhausted.
       A bench trial began on January 11, 2016. On March 25,
2016, the trial court entered a statement of decision. The court
found that Truck’s payments did not apply to exhaust the policy.
The trial court entered judgment in favor of Moldex, Federal, and
First State on March 25, 2016.
       Truck filed a timely notice of appeal from the judgment.

First Appeal

       On appeal, another panel of this court reversed the trial
court’s judgment in Truck Insurance Exchange v. Moldex-Metric
Inc (May 18, 2017, B272378) [nonpub. opn.], holding that Truck

                                 8
was entitled to a declaration that the policy limits had been
exhausted in July 2013, and that Truck had no further duty to
defend or indemnify Moldex. Because the trial court did not
reach the issue of Truck’s right to contribution from the Excess
Insurers, the panel remanded the matter for further proceedings
on the contribution cause of action.
      The Supreme Court denied review on August 9, 2017.

Remand to the Trial Court

      Motions for Summary Adjudication (Case No. B298906)

      Following remand, on December 1, 2017, Federal submitted
a motion for summary adjudication asserting that it did not have
a duty to defend Moldex under its policy but had paid as a
volunteer, and thus had no responsibility for post-exhaustion
defense fees. The trial court granted the motion.3
      On September 28, 2018, First State sought summary
adjudication asserting that it was not liable to Truck for
indemnity or defense fees, which Federal joined. The trial court
granted the motion. Specifically, the court determined that
Truck waived, in the Settlement Agreement, its right to
reimbursement or indemnity of money paid in excess of its policy

      3 In case No, B298906, Truck seeks reimbursement for its
overpaid indemnity from the Excess Insurers and reimbursement
of defense fees from First State. Truck concedes that it did not
appeal the trial court’s August 1, 2018 ruling on Federal’s motion
for summary adjudication regarding defense fees, and that
Federal is not obligated to reimburse Truck for defense fees
regardless of the outcome of this appeal.

                                9
limits and associated defense fees. The trial court emphasized
that its determination was based solely on an interpretation of
the Settlement Agreement—a “one-off contract”—and that
neither party offered extrinsic evidence or asserted that
consideration of extrinsic evidence was necessary to interpret the
Settlement Agreement.
       The trial court agreed with the Excess Insurers that the
key terms of the Settlement Agreement were contained in section
4.01. The court interpreted the phrase “until such time as Truck
establishes that it has properly exhausted the Truck Policy” to
mean that Truck’s duty to defend Moldex continued until
August 9, 2017, the date the Supreme Court denied review of the
appellate court’s decision, thereby establishing exhaustion.
(Boldface omitted.) The court reasoned that if it interpreted the
phrase to mean Truck’s duty to defend Moldex ended when the
dollar policy limits were exhausted in July 2013, the provisions
for orderly transition within 60 days would not make sense. The
trial court concluded that its reasoning was sufficient to resolve
the matter, as Truck did not assert that it incurred expenses
after August 9, 2017.
       The trial court further explained that the terms “[c]laims”
and “[u]nderlying [c]laims” were defined very broadly in the
Settlement Agreement and encompassed claims not yet presented
to Moldex or its insurers as of July 24, 2013 “if they fell into the
general basket of silicosis claims resulting from alleged negligent
design or manufacture of Moldex respiratory masks.” The court
concluded that Truck took on this contractual duty in exchange
for “receiving a discount of millions of dollars off the amount of
the then-existing Judgment in favor of the Excess Carriers.”

                                10
       Finally, the trial court stated that the only claims available
to Truck against Federal and First State were claims of
subrogation, which Truck waived by entering the Settlement
Agreement. Specifically, the court noted that the language in
section 3.02 of the Settlement Agreement retained only Truck’s
right to contribution, but not its right to subrogation. The
Settlement Agreement was negotiated by sophisticated insurance
litigation lawyers and should have included the term
“subrogation” if a right to subrogation was to be preserved.
       Federal also submitted, on September 28, 2018, its own
motion for summary adjudication concerning Truck’s cause of
action against Federal for contribution and reimbursement. The
court ruled that Federal’s motion was moot in light of its grant of
First State’s motion and Federal’s joinder in First State’s motion.
       In case No. B298906, Truck appeals the trial court’s rulings
on First State’s motion for summary adjudication, in which
Federal joined.

      Cross-complaint (Case No. B311639)

      On November 16, 2018, in the second phase of the case
following remand, First State filed a cross-complaint against
Federal seeking a declaration that Federal had a duty to
reimburse First State for post-exhaustion defense fees and costs.
First State alleged that as a result of the appellate court’s May
2017 decision, during or about June 2017, Moldex selected First
State to fund the defense and settlement of claims against it.
Truck discontinued its defense and indemnification of Moldex in
August 2017, and First State began its defense and
indemnification of Moldex that same month. Despite the terms of

                                 11
the Side Agreement, Federal had not paid or contributed to the
costs First State incurred. On or about January 30, 2018,
Federal sought to terminate its participation in the Side
Agreement by written notice to First State as provided for in the
Side Agreement.
      Federal filed a motion in limine to preclude First State
from introducing evidence regarding contribution for indemnity
payments or defense fees and costs that First State had made
prior to July 2017 and after January 30, 2018. 4 The motion in
limine did not address the Side Agreement or any amounts owed
between July 2017, when First State began its defense and
indemnification of Moldex, and January 30, 2018, the date that
Federal withdrew from the Side Agreement. Federal argued that
(1) First State released it from any potential right of
reimbursement under the terms of the Settlement Agreement;
and (2) First State admitted that the parties released each other
from any potential right of reimbursement pursuant to the terms
of the Settlement Agreement.
       On August 7, 2019, the trial court granted the motion in
limine to the extent that First State effectively released, by the
terms of the Settlement Agreement, any claims prior to July 2013
and after January 30, 2018. The trial court noted that its grant
of the motion would not dispose of all issues between Federal and
First State on First State’s cross-complaint: First State’s claim
for reimbursement for defense costs incurred between July 2017
and January 30, 2018 would still be at issue in trial.

      4 Federal also filed a cross-complaint against First State,
but later requested that it be dismissed without prejudice.

                                12
      Federal subsequently filed a motion for summary
adjudication. Federal filed the operative amended motion for
summary adjudication on December 23, 2019. Federal sought
summary adjudication regarding First State’s claim for
declaratory relief that it was entitled to reimbursement from
Federal of indemnity payments and defense costs that First State
incurred as to Moldex for three time periods: (a) before July
2013, (b) after January 30, 2018, and (c) between July 2017 and
January 30, 2018. The trial court granted the motion as to
periods (a) and (b), but reserved the question of the period
between July 2017 and January 30, 2018 for trial. With respect
to periods (a) and (b), the court granted the motion for the
reasons set forth in its ruling on the motion in limine.
      A bench trial on First State’s cross-complaint was held on
November 17 and 18, 2020. The trial court rendered its judgment
on January 27, 2021. The court declared that defense costs
incurred defending Moldex between the effective date of the Side
Agreement on July 22, 2013, and January 30, 2018, the date that
Federal terminated the Side Agreement, were apportioned on a
75 percent basis to Federal and 25 percent basis to First State.
The court further declared that all indemnity costs incurred on
behalf of Moldex between July 22, 2013 and January 30, 2018,
where the claimant’s date of first exposure was on or before
August 1, 1981, were apportioned on a 75 percent basis to
Federal and 25 percent basis to First State, and where the
claimant’s date of first exposure was between August 2, 1981,
and June 1, 1984, indemnity costs were apportioned between
Federal and First State on a pro rata basis.
      Neither party appealed the trial court’s rulings following
the bench trial. In case No. B311639, First State challenges the

                              13
trial court’s rulings on the motion in limine and motion for
summary adjudication.

                           DISCUSSION

Summary Adjudication

      “A motion for summary adjudication may be made by itself
or as an alternative to a motion for summary judgment and shall
proceed in all procedural respects as a motion for summary
judgment.” (Code Civ. Proc., § 437c, subd. (f)(2).) A defendant
can satisfy its burden upon a motion for summary adjudication
either by producing evidence which negates an element of the
cause of action, or by showing, through the plaintiff’s or cross-
complainant’s deficient discovery responses, that the plaintiff
does not possess, and cannot reasonably obtain, evidence to
establish that element. (Villa v. McFerren (1995) 35 Cal.App.4th
733, 747–749; Union Bank v. Superior Court (1995)
31 Cal.App.4th 573, 580–581.) Once the defendant has met that
burden, the burden shifts to the plaintiff to show that a triable
issue of one or more material facts exists. (Code Civ. Proc.,
§ 437c, subd. (p)(2).) In opposing the motion, the plaintiff may
not simply rely upon allegations or denials of the pleadings; the
plaintiff must set forth specific facts showing that a triable issue
of material fact exists. (Ibid.; Union Bank, at pp. 580–581, 593.)
      On appeal, we exercise “an independent assessment of the
correctness of the trial court’s ruling, applying the same legal
standard as the trial court in determining whether there are any
genuine issues of material fact or whether the moving party is

                                 14
entitled to judgment as a matter of law.” (Iverson v. Muroc
Unified School Dist. (1995) 32 Cal.App.4th 218, 222.)

Principles of Contract Interpretation

       A settlement agreement is a contract governed by standard
rules of contract interpretation. (Canaan Taiwanese Christian
Church v. All World Mission Ministries (2012) 211 Cal.App.4th
1115, 1123.) The “ ‘interpretation of a contract is subject to de
novo review where the interpretation does not turn on the
credibility of extrinsic evidence.’ ” (People ex rel. Lockyer v. R.J.
Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 520 (R.J.
Reynolds).)
       “ ‘ “When a dispute arises over the meaning of contract
language, the first question to be decided is whether the language
is ‘reasonably susceptible’ to the interpretation urged by the
party. If it is not, the case is over. [Citation.] If the court
decides the language is reasonably susceptible to the
interpretation urged, the court moves to the second question:
what did the parties intend the language to mean?” ’ [Citation.]
‘In interpreting an unambiguous contractual provision we are
bound to give effect to the plain and ordinary meaning of the
language used by the parties.’ [Citation.] Thus, where ‘ “contract
language is clear and explicit and does not lead to absurd results,
we ascertain intent from the written terms and go no further.” ’ ”
(R.J. Reynolds, supra, 107 Cal.App.4th at p. 524.)
       “ ‘If the contract is capable of more than one reasonable
interpretation, it is ambiguous [citations], and it is the court’s
task to determine the ultimate construction to be placed on the
ambiguous language by applying the standard rules of

                                 15
interpretation in order to give effect to the mutual intention of
the parties [citation].’ [Citation.] However, the ‘mere fact that a
word or phrase in a [contract] may have multiple meanings does
not create an ambiguity.’ ” (R.J. Reynolds, supra, 107
Cal.App.4th at pp. 524–525.)
       “ ‘The goal of contractual interpretation is to determine and
give effect to the mutual intention of the parties.’ ” (R.J.
Reynolds, supra, 107 Cal.App.4th at p. 525.) “ ‘The whole of a
contract is to be taken together, so as to give effect to every part,
if reasonably practicable, each clause helping to interpret the
other.’ ([Civ. Code,] § 1641.) ‘A contract must receive such an
interpretation as will make it lawful, operative, definite,
reasonable, and capable of being carried into effect, if it can be
done without violating the intention of the parties.’ ([Civ. Code,]
§ 1643.) ‘The words of a contract are to be understood in their
ordinary and popular sense, rather than according to their strict
legal meaning; unless used by the parties in a technical sense, or
unless a special meaning is given to them by usage, in which case
the latter must be followed.’ ([Civ. Code,] § 1644.) [¶] In sum,
courts must give a ‘ “reasonable and commonsense
interpretation” ’ of a contract consistent with the parties’
apparent intent.” (R.J. Reynolds, at pp. 525–526.) A word or
phrase used in a certain sense in one part of a contract is deemed
to have the same meaning throughout the contract in the absence
of anything in the contract suggesting otherwise. (Id. at p. 526.)

Truck Is Not Entitled to Contribution from the Excess Insurers

      In case No. B298906, Truck appeals the trial court’s grant
of summary adjudication in favor of First State and Federal on

                                 16
its third cause of action for contribution. Truck contends that it
is entitled to reimbursement from the Excess Insurers for
indemnity costs that it incurred after its policy was exhausted in
July 2013, and reimbursement from First State for defense fees
incurred after July 2013. Truck argues that (1) the trial court’s
ruling directly contradicts this court’s holding, in the prior
appeal, that Truck did not waive reimbursement of indemnity
and defense costs in the Settlement Agreement, (2) the trial court
misinterpreted the Settlement Agreement to operate as a waiver
of reimbursement rights for amounts paid prior to the issuance of
the appellate opinion on May 18, 2017, rather than only those
paid prior to the date of exhaustion in July 2013, and (3) the trial
court misinterpreted the Settlement Agreement to create an
artificial distinction between contribution and subrogation rights
to find that Truck waived its subrogation rights. We disagree
with each of Truck’s contentions of error.
       (1) The prior appeal
       Truck’s assertion that this court previously held that Truck
did not waive its right to recover payments mischaracterizes the
prior appellate decision. This court remanded the matter to the
trial court to make a determination regarding Truck’s cause of
action for contribution in the first instance, and offered no
opinion as to the outcome of that inquiry. The panel’s statement
in the “FACTS” section of its opinion that the “releases [in the
Settlement Agreement] did not constitute a waiver, to the extent
such rights exist, of any of Truck’s rights to claim contribution for
any indemnity paid over its limit and defense fees incurred
therewith” did not interpret the term “contribution” to include a
right to subrogation or entitle Truck to reimbursement from the
Excess Insurers for amounts incurred after a specific date.

                                 17
Moreover, the panel’s holding that the settlement agreement
between Moldex and Truck waived all of Moldex’s bad faith
claims because the term “bad faith” must be interpreted broadly
in the context of that settlement agreement was not tantamount
to a holding that the term “contribution” in the wholly separate
Settlement Agreement at issue here must be interpreted broadly
to include subrogation rights.
       (2) Settlement Agreement waiver of rights
       We reject Truck’s assertion that the Settlement Agreement
merely reiterated Truck’s obligation under California law to
continue to defend Moldex until exhaustion was accepted by
Moldex or to the date of exhaustion as determined by a court,5
but did not impose specific obligations upon Truck beyond those
under California law. Section IV of the Settlement Agreement,
entitled “ADDITIONAL AGREEMENTS” states:
       “Truck agrees that it will continue to defend and indemnify
Moldex for the Underlying Claims until such time as Truck
establishes that it has properly exhausted the Truck Policy. In
the event that Truck establishes proper exhaustion of the Truck
Policy, Truck agrees to work with Moldex, Federal, and First
State to ensure an orderly transition of the defense over a
reasonable period, not to exceed sixty (60) days.”

      5A  primary insurer’s duty to defend continues until
exhaustion is accepted by the insured or established by a court.
(Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287,
301.) After such a determination is made, the primary insurer
may seek reimbursement from excess insurers for indemnity
payments and defense fees incurred subsequent to the date of
exhaustion. (Aetna Cas. & Surety Co. v. Certain Underwriters
(1976) 56 Cal.App.3d 791, 801.)

                                18
       Truck’s interpretation—that the Settlement Agreement
only imposed obligations to defend and indemnify Moldex up to
the date of exhaustion—is not reasonable for several reasons.
First, the phrase “until such time as Truck establishes” clearly
contemplates that the condition precedent to the fulfillment of
Truck’s obligations is the legal determination that exhaustion
previously occurred, not the exhaustion of the dollar amount of
Truck’s policy. Had the parties intended for the date of
exhaustion to be operative, they could have specified that Truck’s
duty would end after the date that the dollar policy limits were
reached, as determined by a court or by agreement of the insured.
We observe that the interpretation Truck urges undermines its
argument that the Settlement Agreement merely reiterates its
obligation under California law. Under Truck’s interpretation,
the Settlement Agreement would relieve Truck of the obligation
to continue its defense of Moldex. Such an arrangement between
the parties, which would both discount the amount that Truck
owed under the trial court’s judgment and relieve it of its legal
obligation to continue to defend Moldex under California law, is
unreasonable.
       Second, we will not interpret the word “establishes” to have
two different meanings within the same provision. (See R.J.
Reynolds, supra, 107 Cal.App.4th at p. 526 [words used in a
certain sense in one part of contract are normally deemed to have
same meaning throughout contract].) We agree with the trial
court that the provision for orderly transition “[i]n the event that
Truck establishes [that it has] proper[ly] exhaust[ed] . . . the
Truck Policy,” makes no sense and could not be carried out if we
were to interpret Truck’s obligation to end on the date of
exhaustion, as that date would be unknown until such time as it

                                19
was later determined by the court. It is impossible to transition
within 60 days of an unknown date. (See Civ. Code, § 1643
[contract should be interpreted to “make it lawful, operative,
definite, reasonable, and capable of being carried into effect”].)
       Third, the interpretation Truck urges is unreasonable when
viewed in the light of the contract as a whole. The provision is
contained in the “ADDITIONAL AGREEMENTS” section, with
a more limited statement of obligations contained in the
“RECITALS.”6 If the provision were merely a recitation of
Truck’s obligations under California law and not a new and
additional contractual obligation that Truck undertook as part of
the Settlement Agreement, there would be no need to include it
in the additional agreements section in addition to the provision
in the recitals. The structure of the Settlement Agreement
indicates that the provision was intended to create an obligation
additional to Truck’s duties under California law.
      Finally, we conclude that exhaustion was established on
August 9, 2017, the date that our Supreme Court denied review.
Until that point, the determination was not final because the
Supreme Court had authority to reverse the decision of this
appellate court.

      6 The  recitals contain a paragraph that states:
“WHEREAS, in approximately June of 2011, Truck began
defending Moldex in the Underlying Claims and, as of the date of
this Agreement, Truck is defending Moldex in Underlying Claims
and has agreed to continue defending Moldex in all Underlying
Claims until Truck establishes that the applicable limit of
liability under the Truck Policy has been properly exhausted.”

                               20
       (3) Reservation of right to recoup defense fees and
           indemnity costs
       We also reject Truck’s assertion that it did not waive, but
instead expressly reserved, its right to recoup from First and
Federal defense fees and indemnity costs that Truck incurred
after the parties entered into the Settlement Agreement.
       The release provision contained in paragraph 3.01 of
section III of the Settlement Agreement states that “the Parties
each release each other from any and all Claims that are, were[,]
or could have been asserted in the Action (including, without
limitation, the Coverage Dispute and the Appeals).”
       We agree with the trial court that, as defined in the
Settlement Agreement, the terms “Underlying Claims”7 and
“Claim”8 are sufficiently broad to encompass claims not yet
tendered to Moldex for silicosis injuries resulting from alleged
negligent design or manufacture of Moldex respiratory masks.
We conclude that all claims that “are, were[,] or could have been

      7 “Underlying Claims means any Claim relating to,
arising out of, or caused in whole or in part by, in any manner or
fashion, asbestos, asbestos-containing products, silica, silica-
containing products, or any other alleged hazardous or harmful
material, in whole or in part, including mixed dust.”
      8 “Claim means past, present, or future, claims, demands,
actions, causes of action, lawsuits or liabilities of any kind or
nature whatsoever, whether known or unknown, whether at law
or in equity and regardless of the type of relief sought, and
includes but is not limited to claim and demand as those terms
are defined in Title 11 of the United States Code, 11 U.S.C.
§§ 101 et seq., as it may be amended.”

                                21
asserted in the Action” that are not expressly excepted in section
III, paragraph 3.02 were expressly waived.
        We are not persuaded by Truck’s argument that it reserved
the right to recoup indemnity costs and defense fees in the
exception to the release contained in section III, paragraph 3.02,
which states: “The releases set forth in this Section III shall not
apply to, or have any effect on[,] or constitute a release, waiver or
assignment of . . . (d) to the extent such rights exist, any of
Truck’s rights to claim contribution for any indemnity paid over
its limit and defense fees incurred therewith.”
        In California, the equitable doctrines of contribution and
subrogation are entirely distinct and independent concepts.
(Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1998)
65 Cal.App.4th 1279, 1291 (Fireman’s Fund).) While it is true
that there was confusion over the distinction between these
terms in the past, that distinction has been explained repeatedly
and clearly in California cases since the 1990’s. (See, e.g., id. at
pp. 1291–1296; Herrick Corp. v. Canadian Ins. Co. (1994)
29 Cal.App.4th 753, 759; Reliance Nat. Indemnity Co. v. General
Star Indemnity Co. (1999) 72 Cal.App.4th 1063, 1077–1079
(Reliance).)
        “Subrogation is defined as the substitution of another
person in place of the creditor or claimant to whose rights he or
she succeeds in relation to the debt or claim. By undertaking to
indemnify or pay the principal debtor’s obligation to the creditor
or claimant, the ‘subrogee’ is equitably subrogated to the
claimant (or ‘subrogor’), and succeeds to the subrogor’s rights
against the obligor. (Black’s Law Dict. (6th ed.1990) p. 1427,
col. 1.) In the case of insurance, subrogation takes the form of an
insurer’s right to be put in the position of the insured in order to

                                 22
pursue recovery from third parties legally responsible to the
insured for a loss which the insurer has both insured and paid.”
(Fireman’s Fund, supra, 65 Cal.App.4th at pp. 1291–1292.) “The
right of subrogation is purely derivative. An insurer entitled to
subrogation is in the same position as an assignee of the
insured’s claim, and succeeds only to the rights of the insured.
The subrogated insurer is said to ‘ “stand in the shoes” ’ of its
insured, because it has no greater rights than the insured and is
subject to the same defenses assertable against the insured.
Thus, an insurer cannot acquire by subrogation anything to
which the insured has no rights, and may claim no rights which
the insured does not have.” (Id. at p. 1292.)
       “Equitable contribution is entirely different. It is the right
to recover, not from the party primarily liable for the loss, but
from a co-obligor who shares such liability with the party seeking
contribution. In the insurance context, the right to contribution
arises when several insurers are obligated to indemnify or defend
the same loss or claim, and one insurer has paid more than its
share of the loss or defended the action without any participation
by the others. Where multiple insurance carriers insure the
same insured and cover the same risk, each insurer has
independent standing to assert a cause of action against its
coinsurers for equitable contribution when it has undertaken the
defense or indemnification of the common insured. Equitable
contribution permits reimbursement to the insurer that paid on
the loss for the excess it paid over its proportionate share of the
obligation, on the theory that the debt it paid was equally and
concurrently owed by the other insurers and should be shared by
them pro rata in proportion to their respective coverage of the

                                 23
risk.” (Fireman’s Fund, supra, 65 Cal.App.4th at p. 1293,
fn. omitted.)
       “As a general rule, there is no contribution between
primary and excess carriers.” (Fireman’s Fund, supra,
65 Cal.App.4th at p. 1294, fn. 4.) “However, where different
insurance carriers cover differing risks and liabilities, they may
proceed against each other for reimbursement by subrogation
rather than by contribution.” (Reliance, supra, 72 Cal.App.4th at
p. 1078.)
       Truck argues that the term “contribution” in section III,
paragraph 3.02(d) (“to the extent such rights exist, any of Truck’s
rights to claim contribution for any indemnity paid over its limit
and defense fees incurred therewith”) should be read to
encompass all rights that it may have to reimbursement from
First State and Federal, including subrogation. It argues that
the distinction between “contribution” and “subrogation” is
artificial, and does not take context into account.
       As we have discussed, the legal distinction between
“contribution” and “subrogation” is an important one, and well-
known in the insurance context. “Where[, as here,] words have a
definite legal meaning, we presume the parties intended them to
have their ordinary legal meaning, unless a contrary intent
appears in the instrument.” (Grande v. Eisenhower Medical
Center (2020) 44 Cal.App.5th 1147, 1165.) Moreover,
“sophisticated parties should be allowed to strike their own
bargains and knowingly and voluntarily contract in a manner in
which certain risks are eliminated and, concomitantly, rights are
relinquished.” (Brisbane Lodging, L.P. v. Webcor Builders, Inc.
(2013) 216 Cal.App.4th 1249, 1261.) “[W]here the parties are on
equal footing and where there was considerable sophisticated

                                24
give-and-take over the terms of the contract, those parties should
be given the ability to enjoy the freedom of contract and to
structure risk shifting as they see fit without judicial
intervention.” (Id. at p. 1263.)
       That was the case here. As the trial court observed, the
Settlement Agreement was negotiated by experienced insurance
litigators on behalf of large insurance companies. In light of the
specific legal meaning that “contribution” has in the insurance
context, and in the context of claims between primary and excess
insurers in particular, it would not be reasonable to assign
“contribution” a meaning other than its legal meaning. As Truck
has no right of contribution against the Excess Insurers, the
exception in section III, paragraph 3.02, subdivision (d) does not
entitle it to reimbursement from the Excess Insurers.
       We are not otherwise persuaded by Truck’s argument that
interpreting contribution as distinct from subrogation would lead
to an absurd result. Section III, paragraph 3.02, subdivision (d)
of the Settlement Agreement can be reasonably interpreted to
reserve Truck’s claims for contribution from third party primary
insurers.

The Settlement Agreement Does Not Bar First State from
Seeking Reimbursement from Federal

      In case No. B311639, First State appeals the trial court’s
rulings in its grant of Federal’s motion in limine and its motion
for summary adjudication that the Settlement Agreement
released all claims between First State and Federal. First State
argues that the trial court’s ruling ignores the plain language and
purpose of the Settlement Agreement.

                                25
       We agree with First State that, read as a whole, the
Settlement Agreement can only be reasonably interpreted to
preserve its claims for reimbursement against Federal. The
Settlement Agreement’s recitals clearly state the Settlement
Agreement’s purpose. The Settlement Agreement was intended
to resolve “certain disputes [that] have arisen between Federal
and First State, on the one hand, and Truck, on the other
hand regarding the extent to which Truck is obligated to
reimburse Federal and First State for amounts paid for Moldex’s
defense and indemnity for Underlying Claims, plus interest,
during the approximately seven (7) year period of time between
December 2004 and June 2011.” As First State emphasizes, the
Settlement Agreement makes no reference to the resolution of
disputes between First State and Federal.
       Additionally, the Settlement Agreement unambiguously
reserves the Excess Insurer’s rights to seek reimbursement from
each other. It states in section III, paragraph 3.02: “The releases
set forth in this Section III shall not apply to, have any effect
on[,] or constitute a release, waiver or assignment of . . . (b) any of
Federal’s and/or [First State]’s rights against any Person other
than Truck.” Thus, the declaration in section III, paragraph 3.01
that “the Parties each release each other from any and all Claims
that are, were or could have been asserted in the Action” is
limited to releases between Truck and the Excess Insurers (i.e.
Truck releases First State, First State releases Truck, Truck
releases Federal, Federal releases Truck).

                                  26
      The terms of the Settlement Agreement do not prohibit
First State from seeking reimbursement from Federal. We
reverse the trial court’s order granting summary adjudication.9
      The trial court’s grant of motion in limine, which prevented
First State from presenting any evidence with respect to the time
periods in question, was based on identical reasoning. We review
rulings on motions in limine for an abuse of discretion.
(Hernandez v. Paicius (2003) 109 Cal.App.4th 452, 456,
disapproved on another ground by People v. Freeman (2010)
47 Cal.4th 993, 1006, fn. 4.) Evidence Code section 354 provides:
“A verdict or finding shall not be set aside, nor shall the
judgment or decision based thereon be reversed, by reason of the
erroneous exclusion of evidence unless the court which passes
upon the effect of the error or errors is of the opinion that the
error or errors complained of resulted in a miscarriage of justice
and it appears of record that: [¶] (a) The substance, purpose,
and relevance of the excluded evidence was made known to the
court by the questions asked, an offer of proof, or by any other
means; [¶] (b) The rulings of the court made compliance with
subdivision (a) futile; or [¶] (c) The evidence was sought by
questions asked during cross-examination or recross-
examination.” A miscarriage of justice should be declared only
when the appellate court, after an examination of the entire
cause, including the evidence, is of the opinion that it is

      9 Having determined that the plain language of the
Settlement Agreement does not prohibit First State from seeking
reimbursement from Federal, we need not address First State’s
argument that the Settlement Agreement must be interpreted in
conjunction with the Side Agreement or Federal’s response
thereto.

                                27
reasonably probable that a result more favorable to the appealing
party would have been reached in the absence of the error.
(People v. Watson (1956) 46 Cal.2d 818, 836.)
      In this case, the trial court’s exclusion of all relevant
evidence with respect to the time periods before 2013 and after
January 30, 2018 on the erroneous basis that First State had
waived its potential claims was an abuse of discretion, and must
also be reversed.

                               28
                         DISPOSITION

       In case No. B298906, we affirm the trial court’s judgment
as to Truck. The trial court did not err by granting summary
adjudication as to Truck’s third cause of action for contribution.
Respondents Federal and First State are awarded costs on appeal
as against Truck.
       In case No. B311639, we reverse the judgment as to the
portion of First State’s claim for declaratory relief in its cross-
complaint relating to its entitlement to reimbursement from
Federal for the time periods prior to July 2013 and after
January 30, 2018, and remand to the trial court for further
proceedings. We reverse the trial court’s January 16, 2020 order
granting summary adjudication in Federal’s favor, and the trial
court’s August 7, 2019 order granting Federal’s motion in limine.
Cross-complainant and appellant First State is awarded its costs
on appeal as against Federal.
       The judgment is affirmed in all other respects.
       NOT TO BE PUBLISHED.

                              MOOR, Acting P. J.
We concur:

             KIM, J.          TAMZARIAN, J.*

      *Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.

                                29