Court Opinion

ID: 9375773
Source: CourtListenerOpinion
Date Created: 2023-02-28 20:02:27.464501+00
Date Added: 2024-06-11T17:17:01.654346
License: Public Domain

Filed 2/28/23 Heidari v. Golden Bear Ins. Co. CA1/2
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                   DIVISION TWO

 ALI HEIDARI,
             Plaintiff and Appellant,
                                                                        A1658151
 v.
 GOLDEN BEAR INSURANCE                                                  (Santa Clara County
 COMPANY,                                                               Super. Ct. No. 17CV306136)
             Defendant and Respondent.

         In 2014, appellant Ali Heidari filed suit against Saratoga Construction
(Saratoga), alleging construction defects in Saratoga’s construction of his
home in Monte Sereno. Saratoga tendered defense of the action to
respondent Golden Bear Insurance Company (GBIC), which insured Saratoga
under a general commercial liability policy during part of the period during
which the home was constructed. GBIC denied coverage. Heidari and
Saratoga settled the underlying action, Saratoga assigned its rights under
the policy to Heidari, and he brought suit against GBIC seeking declaratory
relief regarding its duty to defend the underlying action. A bifurcated trial
was held on the issue of GBIC’s duty to defend, at the conclusion of which the

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

transferred from the Sixth Appellate District, where it had case number
H047317, to the First Appellate District, where it was assigned case number
A165815.

                                                               1
trial court found that because subcontractors performed all the construction
work on the property, coverage was barred under the contractors’ warranty
exclusion contained in the policy. We affirm.
                               BACKGROUND
      The Factual Setting
      On November 14, 2014, Heidari filed suit against Saratoga in Santa
Clara Superior Court (Ali Heidari v. Wells Fargo Bank, N.A., et al, Case No.
114CV273242) (the underlying action) alleging construction defects in
connection with the construction, between May of 2006 and June of 2008, by
Saratoga of a residential property on Oak Drive in Monte Sereno, purchased
by Heidari at a foreclosure sale in 2009 or early 2010.
      The complaint in the underlying action alleged that “the residence’s
exterior decks and stairs allow water to enter into the structure,” the
“residence’s exterior walls . . . allow unintended water to pass into the
structure,” “the residence’s hardscape . . . were installed in such a way as to
cause water or soil erosion to enter into or come in contact with the
structure,” “the shower enclosure in the master bedroom shower leaks into
the flooring system,” “there are cracks in the ceiling in the family room,”
“there is flooding in front of the garage when it rains,” “the residence’s
retaining walls and site walls (and the drainage systems associated with
those walls) allow water to pass beyond, around or through its designed (or
actual) moisture barrier,” “there are gaps in the hardwood floor and the floor
squeaks,” and “the post supporting the driveway gate at the top of the
property has settled causing damage to the post and the gate.”
      After service of the complaint, Saratoga tendered the defense and
indemnity of the underlying action to its insurance carriers, including

                                        2
respondent GBIC, which insured Saratoga under a commercial general
liability policy between July 13, 2006 and March 9, 2007.
      By letter dated December 30, 2015, GBIC declined the request for
defense and indemnity.
      Heidari and Saratoga settled the underlying action on October 14,
2016. As part of the settlement agreement, Saratoga assigned to Heidari all
claims and causes of action against GBIC for failure or refusal to defend. The
matter then proceeded to an uncontested trial, at the conclusion of which the
trial court entered a default judgment of $528,761, plus costs, against
Saratoga.
      The Proceedings Below
      On February 8, 2017, Heidari filed the instant action against GBIC in
Santa Clara Superior Court, seeking declaratory relief regarding GBIC’s duty
to defend and to indemnify, and alleging breach of contract and breach of the
implied covenant of good faith and fair dealing.
      Both parties moved unsuccessfully for summary adjudication or
summary judgment on the issue of GBIC’s duty to defend.
      On January 4, 2019, the parties filed a set of Stipulated Facts for Trial,
including the following:
      “• Saratoga was the general contractor for the demolition and
construction of the property between approximately May of 2006 and June
30, 2008. [¶] . . . [¶]
      “• Saratoga was responsible for supervising the work of all
subcontractors and material suppliers at the property.
      “• Saratoga retained subcontractors to construct the retaining wall at
the property at issue in the litigation. [¶] . . . [¶]

                                          3
      “• Saratoga cannot identify all subcontractors it retained to work on
the Subject Property at issue in the litigation.
      “• Saratoga cannot locate any copies of any subcontracts for the work
at the property.
      “• Saratoga cannot locate any copies of insurance certificates
identifying Saratoga Construction, Inc. as an additional insured for Saratoga
Construction, Inc.’s subcontractors’ work at the property.
      “• The demolition work began on or around May of 2006.
      “• The Notice of Completion for improvement of the property was
recorded on November 30, 2007.
      “• The Final Inspection of the property took place and passed
inspection on June 30, 2008.
      “• GBIC issued CGL policy number GBL 07088 to Saratoga effective
July 13, 2006, through July 13, 2007 (the ‘Policy’).
      “• The Policy was cancelled due to non-payment of the premium, with
an effective cancellation date of March 9, 2007.
      “• Saratoga’s owner, Reza Norouzi, destroyed all project job file
documents when the property entered foreclosure.”
      A three-day bifurcated bench trial on the issue of GBIC’s duty to defend
took place in May of 2019, with testimony from Beth Ossino, GBIC’s claims
manager; Reza Norouzi, Saratoga’s owner and principal; and Michael
Stevens, Saratoga’s attorney.
      GBIC argued that coverage was barred by various exclusions in its
policy, including—as will be discussed in greater detail—a contractors’
warranty exclusion providing that coverage “shall not apply to occurrences
arising out of operations performed by Independent Contractors unless, as a
condition precedent,” Saratoga obtained agreements from its subcontractors

                                        4
to hold Saratoga harmless for liabilities incurred and certificates of insurance
listing Saratoga as an additional insured. GBIC also argued that coverage
was barred under the policy because Saratoga’s work on the property was not
completed during the policy term.
        At trial, Ossino testified regarding Saratoga’s application for insurance
from GBIC, on which it had indicated that “90%” of the work was to be
performed by subcontractors, and in describing the work that was
subcontracted, wrote that “ALL TRADES ARE SUBBED OUT”:
        “Q. What was your understanding in reading the terminology ‘All
trades are subbed out?’
        “A. That all the actual work performed out there was done by
subcontractors, that Saratoga probably provided just supervision, probably
scheduling timing permanent type work, but all the actual trades—the actual
construction work was performed by subcontractors.
        “Q. Right in the middle of that box next to that section, there is a—it
looks like percent symbol, work subcontract, it says: ‘90%.’ Do you see that?
        “A. Yes.
        “Q. What is your understanding of that when you had this statement:
‘All trades subbed out.’ How did this correlate?
        “A. The ten percent would have been the insured supervision work,
and 90 percent would be all the actual construction work on the projects.
[¶] . . . [¶]
        “Q. Did you have any understanding at all whether Saratoga
Construction had worksite employees?
        “A. Based on what they told the inspector, I think at that time, they
said that they only had one other full-time employee who was a job
superintendent, and I think on the application, it also notes an accounting

                                         5
person. So we didn’t have any indication that they had anybody actually out
there performing work, other than supervisory work.”
      Norouzi testified to the contrary, that Saratoga’s own employees did
perform construction work on the project, including the “site drainage
installation,” and “the waterproofing and the drainage work behind the
retaining wall.”
      Norouzi also testified regarding Saratoga’s insurance application:
      “Q. You see, maybe you want to use the magnifying glass right there,
where it says: ‘Percentage work subcontracted.’
      “A. Yes.
      “Q. So Saratoga Construction didn’t—did not subcontract out all the
work on his projects, only the trades?
      “A. For sure, yes.
      “Q. And the trades aren’t all of the work on the project, are they?
      “A. No. [¶] . . . [¶]
      “Q. Who are the trades?
      “A. Subcontractors.
      “Q. You were naming them?
      “A. Roofing, foundation, framing, electrical, plumbing, sheet rock,
stucco, yeah.
      “Q. Those things were subbed out, correct?
      “A. Yes.
      “Q. And Saratoga Construction still had some men working, right?
      “A. I had some workers, yes.
      “Q. And they did work that were not the trades?
      “A. Yes.

                                         6
      “Q. Is this an accurate statement here that 90 percent of the work for
the trades work, which is 90 percent of the total work was subbed out?
      “A. Yes. [¶] . . . [¶]
      “Q. Mr. Norouzi, I believe you previously testified that you—Saratoga
self-performed some site drainage work?
      “A. Yeah. [¶] . . . [¶] The drainage behind the retaining wall. Yes.”
      At the conclusion of the trial, the trial court rendered an oral statement
of decision, finding as follows:
      “THE COURT: Thank you. All right. [¶] So in this matter, I thought
a lot about all of the evidence that was presented during the trial, and I
considered the credibility of the witnesses. And in considering credibility, the
Court considered the demeanor of the witnesses while they were testifying,
the consistency of the testimony while testifying, and compared to other
admissible evidence, including their depositions. It’s coherently [sic], and
whether or not the testimony was corroborated. And based on those factors,
the Court found Mrs. Ossino to be credible.
      “Mr. Norouzi was not credible. His demeanor consistently changed
when he was caught in a lie. He was very nervous. He was almost shaking,
and sometimes he seemed to be on the verge of tears. When he was telling
the truth, his demeanor would change. He became more casual, relaxed. For
instance, when he said that the property wasn’t completed until late 2007 or
2008, was very relaxed, was very assured. When he said nobody lived at the
property during construction, he was very matter of fact, not nervous, not
anxious. Not like when he was discussing his file, and whether or not he
gave it to his attorney or when he destroyed it.
      “But in the end, the evidence was clear that Mr. Norouzi destroyed his
job file way before the underlying litigation began. That his attorney knew

                                       7
that he had destroyed the file, but neither Mr. Stevens nor Mr. Norouzi ever
revealed to Golden Bear during the time there was a tender for a defense that
that file did not exist, or any of the information that Golden Bear had asked
for. Really, what this case came down to, and the Court’s perception of the
evidence it heard, was that Mr. Stevens and Mr. Norouzi wanted to give the
insurance company, Golden Bear, just enough information without trying to
lie of some sort of fact that would put them under the policy for a potential
claim without revealing the truth of the situation. And when you look at the
truth of the situation, there was no coverage, and that’s why they didn’t want
to disclose the full truth, because they knew there was no coverage under the
policy, had they disclosed what they knew. But at the time that the defense
was tendered, there was enough information in the complaint and in the
insurance policy, and the extrinsic evidence that Mrs. Ossino found, namely,
the completion date of the project that it was out, after the policy was
canceled with that, she had sufficient information to deny the claim.
      “More over, after the matter was submitted just a few moments ago,
based on the information of reopening, and we talked a lot about the
condition proceeding [sic] and whether or not Mr. Norouzi complied with that
request for information as to the contract and the warranties, he never
supplied that information, nor could he ever have. And therefore, there is no
potential claim, because he couldn’t satisfy the condition proceeding [sic].
      “And given the testimony that I’ve heard this afternoon, and the
documents, the Court is satisfied that the evidence shows that all of the work
was done by subcontractors. And because they hadn’t completed the
condition precedent, again, there is no coverage. [¶] . . .[¶]
      “It’s clear that Mr. Norouzi, nor his attorney, Mr. Stevens, ever gave
any warranties or insurance documents related to the subcontractors to

                                        8
Golden Bear. Not when Golden Bear specifically asked for the documents, or
at any time during the litigation—the underlying litigation. And no such
documents were produced here at trial.
      “Furthermore, since Mr. Norouzi destroyed his job file, no such
documents could have ever been produced to Golden Bear. Per policy terms,
such documents were a condition precedent to coverage for the subcontractors
work, including a duty to defend Saratoga Construction for any work
performed by subcontractors.”
      On July 22, 2019, the trial court issued a written statement of decision,
finding as to the contractor’s warranty exclusion as follows:
      “In the instant matter, coverage was not afforded by the policy for
occurrences arising out of operations performed by independent contractors
unless, as a condition precedent, the insured received a written agreement
from each and every independent contractor holding the insured harmless for
all liabilities incurred by the independent contractor, the insured obtained
certificates of insurance from each and every independent contractor
indicating that they maintain coverage the same as provided by the policy
and with limits in the same amounts as provided by their policy, and the
insured was listed as an additional insured under that policy. The insured
also had to warrant that the independent contractor’s insurance would
remain in force until completion of the independent contractor’s work for the
insured.
      “Defendant’s evidence at trial demonstrated that its own file, which it
reviewed in determining whether to provide a defense for Saratoga in the
Underlying Action, revealed that at the time Saratoga applied for insurance
the insured represented that its employee would supervise the work done at
the Property, and that the work on the Property and to build the structure

                                       9
would be done by independent subcontractors. The complaint did not allege
or disclose which entities completed the work on the property, and the letters
by Mr. Stevens to Defendant never stated that Saratoga completed any of the
work on the property or grounds and only referred to work completed by
subcontractors. Mr. Stevens admitted that Ms. Ossino had requested, among
other things, subcontractor agreements, subcontractor insurance certificates
and insured endorsements affording coverage for Saratoga, but he never
provided any such documents to her. Furthermore, Mr. Norouzi destroyed
his project file and presumably any written agreements and insurance
certificates from each and every independent contractor, if any existed. Mr.
Stevens knew this, but did not disclose the information to Ms. Ossino.
Accordingly, the court concludes that Mr. Norouzi never complied with the
conditions precedent by providing the necessary information for each and
every independent subcontractor to Defendant before, contemporaneous with
or after the requested tender of defense, and like [State Farm Mutual
Automobile Insurance Company v. Richard Cecil] Flynt [(1971) 17 Cal.App.3d
538], Defendant was never required to tender a defense.”
      As an independent basis for finding that GBIC had no duty to defend,
the trial court also concluded that there was no coverage because the policy
expired by July 2007, whereas the project was not completed until December
2007, and thus “the Project was not put to its intended use until after the
insurance policy issued by Defendant had terminated.”
      Judgment was subsequently entered in favor of GBIC, from which
Heidari filed a notice of appeal.

                                      10
                                 DISCUSSION
      Applicable Law and the Standard of Review
      A recent case by our colleagues in Division Three distilled the
applicable law:
      “An insurer ordinarily is free to limit the risks it assumes, and we do
not rewrite any provision of any contract, including an insurance contract, for
any purpose, including perceived public policy benefits. (Underwriters of
Interest Subscribing to Policy Number AXXXXXXXX v. ProBuilders Specialty
Ins. Co. (2015) 241 Cal.App.4th 721, 729 ([ProBuilders]); Certain
Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945,
967–968 (Certain Underwriters).) However, any ambiguity is generally
resolved in favor of coverage. (AIU [Ins. Co. v. Superior Court (1990)]
51 Cal.3d [807,] 822.) We interpret the terms of an insurance policy de novo.
(Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 390.)
      “A liability insurer has a ‘broad duty to defend its insured against
claims that create a potential for indemnity.’ (Montrose Chemical Corp. v.
Superior Court (1993) 6 Cal.4th 287, 295 (Montrose).) If, on the other hand,
there is no potential for coverage, the insurer has no duty to defend.
(La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co. (1994)
9 Cal.4th 27, 40 (La Jolla Beach & Tennis Club).) This standard is met ‘ “if
the third party complaint can by no conceivable theory raise a single issue
which could bring it within the policy coverage.” ’ (Montrose, at p. 300.)
Thus, the duty to defend is ‘not without limits’; rather, it is ‘limited by “the
nature and kind of risk covered by the policy.” ’ (La Jolla Beach & Tennis
Club, at p. 39, italics omitted.)” (24th & Hoffman Invs., LLC v. Northfield
Ins. Co. (2022) 82 Cal.App.5th 825, 833–834.)

                                        11
          “A ‘potential for coverage’ refers to the possibility that facts alleged in
the complaint or otherwise known to the insurer establish a basis for
indemnity under the policy. (Scottsdale Ins. Co. v. MV Transportation (2005)
36 Cal.4th 643, 654–655.) If there is a dispute as to the existence of such
facts, a potential for coverage exists until the factual dispute is resolved so as
to establish either actual coverage or the absence of coverage. (Id. at pp. 655,
657; Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1085.)”
(State Farm Gen. Ins. Co. v. Mintarsih (2009) 175 Cal.App.4th 274, 284,
fn. 6.)
          The interpretation of GBIC’s insurance policy and the existence of a
duty to defend are questions of law that we review de novo. (Hartford
Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 286−288;
North American Capacity Ins. Co. v. Claremont Liability Ins. Co. (2009)
177 Cal.App.4th 272, 284 (Claremont).)
          “We review the trial court’s factual findings for substantial evidence.
(Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) We begin with
the presumption that the record contains evidence to uphold every finding of
fact and appellant has the burden to demonstrate there is no substantial
evidence to support the findings under attack. (Ibid.) ‘ “When a finding of
fact is attacked on the ground that there is not any substantial evidence to
sustain it, the power of an appellate court begins and ends with the
determination as to whether there is any substantial evidence contradicted or
uncontradicted which will support the finding of fact.” [Citations.]’ (Ibid.)”
(Claremont, supra, 177 Cal.App.4th at p. 285.)
     The Trial Court Properly Found No Duty to Defend Based on
the Contractors Warranty Exclusion
          The contractors warranty exclusion in the policy provides as follows:
          “EXCLUSION – CONTRACTORS WARRANTY

                                            12
      “Such coverage as is afforded by the policy to which this endorsement is
attached shall not apply to occurrences arising out of operations performed by
Independent Contractors unless, as a condition precedent:
      “1. The Insured will receive a written agreement from each and every
Independent Contractor holding the Insured harmless for all liabilities
incurred by the Independent Contractor.
      “2. The Insured will obtain certificates of insurance from each and
every Independent Contractor indicating that they maintain coverage the
same as provided by this policy and with limits in the same amounts as
provided by this policy, and that the Named Insured will be listed as an
additional insured under that policy.
      “3. The Insured warrants that the aforementioned Independent
Contractor’s insurance will remain in force until completion of the
Independent Contractor’s work for the Insured.”
      Heidari does not dispute that these conditions were not satisfied with
respect to any of the subcontractors’ work on the project—the only question
as to whether the exclusion completely bars coverage under the policy is
whether there was any work performed by Saratoga itself.
      We agree with the trial court that the allegations of the complaint,
together with the extrinsic facts known to GBIC at the time of tender, show
there was no potential for coverage because subcontractors performed all of
the construction work on the project. To begin with, the complaint in the
underlying action did not identify any construction work performed by
Saratoga itself as opposed to its various subcontractors. And Exhibit F to
that complaint, a September 29, 2016 demand letter from Saratoga’s attorney
to an attorney for North American Capacity Insurance, another of Saratoga’s
insurers, further indicated that certain work on the property alleged to be

                                        13
defective—including the grading and excavation, the hardwood flooring, and
the retaining wall—was performed by subcontractors:
        “Saratoga Construction, Inc., used various subcontractors and
independent suppliers for select portions of the construction including, but
not limited to, grading and excavation, pouring of concrete and concrete
walls, electrical facilities, plumbing facilities and installation of hardwood
flooring. Further, the rough grading and excavation, including that required
for the driveway and retaining wall at the top of the property, was complete
by June 30, 2006 and the foundations for the residence and the retaining
wall were thereafter poured by an independent supplier.”
        On its application for insurance, in response to a prompt asking that it
“describe the type of work subcontracted,” Saratoga wrote that “ALL
TRADES ARE SUBBED OUT,” and indicated that “90%” of the work was
subcontracted. Ossino testified that GBIC understood these representations
to mean that “all the actual work performed out there was done by
subcontractors, that Saratoga probably provided just supervision, probably
scheduling timing permanent type work, but all the actual trades—the actual
construction work was performed by subcontractors.” And she further
testified that “[b]ased on what they told the inspector,” Saratoga’s only full-
time employees were a job superintendent and an “accounting person,” so
that Saratoga could not have had any employees performing construction
work.
        Heidari’s opening brief does not identify any specific work that
Saratoga self-performed on the project, but instead asserts that GBIC was
“on notice that its insured possibly performed at least 10 percent of the work”
based on its insurance application, and that a “logical inference” from the
demand letter’s statement that “select portions” of the construction were

                                        14
performed by subcontractors was that other work was performed by Saratoga
itself. But as noted, GBIC understood Saratoga’s insurance application to
mean that the 10% of the work Saratoga performed itself was supervisory or
scheduling work, a conclusion supported by the fact that Saratoga did not
have any full-time employees who could have performed construction work.
And the fact that Saratoga chose to assert in a demand letter that specific
“select portions” of the construction were performed by subcontractors does
nothing to establish that Saratoga must have self-performed other aspects of
the project.
      In arguing that there was a potential for coverage, Heidari also relies
on Norouzi’s testimony that “the trades” would not include all of the work
performed, and that Saratoga itself performed the “site drainage”
installation, and the “waterproofing and the drainage work behind the
retaining wall.” And in his reply brief, Heidari argues that the trial court’s
factual finding that all the work was performed by subcontractors as well as
its finding that Norouzi’s testimony was not credible are “irrelevant” because
the duty to defend can only be determined at the time of tender and not based
on “hindsight,” relying on Atlantic Mutual Ins. Co. v. Lamb, Inc. (2002)
100 Cal.App.4th 1017 (Atlantic Mutual). We are not persuaded.
      In Atlantic Mutual, Continental brought a federal action against Lamb
seeking a declaration that a patent claimed by Lamb was invalid and
unenforceable, and Lamb tendered defense of the action to its insurers
Granite State and Atlantic Mutual. Atlantic Mutual denied coverage in part
based on a “first publication” exclusion in its policy providing that coverage
did not apply to publication of material that took place before the policy
period. (Atlantic Mutual, supra, 100 Cal.App.4th at pp. 1024–1026.) Atlantic
Mutual then brought an action for declaratory relief against Lamb and

                                       15
Granite State, and moved for summary judgment on the ground that there
was no coverage for the underlying claim and that it therefore had no duty to
Granite State, under either a theory of equitable subrogation or equitable
contribution. (Id. at p. 1028.) In moving for summary judgment, Atlantic
Mutual argued that the first publication exclusion applied based on a
declaration from its claims adjuster, who claimed he had been told “ ‘that the
dispute between Continental and [Lamb] originated with a conversation
which occurred in September of 1998.’ ” (Id. at p. 1038.) The trial court
granted Atlantic Mutual’s motion, without reaching the question of whether
the first publication exclusion applied. (Id. at pp. 1028, 1037–1038.) The
Court of Appeal reversed, then reached the first publication issue and
concluded that Atlantic Mutual had failed to carry its burden to prove that
the exclusion applied:
      “The equivocal and self-serving declaration of Atlantic Mutual’s own
claims adjuster certainly did not rise to the level of conclusive evidence. In
any event, Lamb disputed Atlantic Mutual’s claim as to the date of first
publication. While such contrary evidence was not produced by Lamb at the
time that Atlantic Mutual denied coverage and refused a defense, that fact
does not alter our conclusion that the Continental complaint was, in and of
itself, sufficient to establish a potential for coverage that could only be
defeated by Atlantic Mutual conclusively establishing that the ‘first
publication’ exclusion applied. Atlantic Mutual did not do that, and it does
not matter that Lamb did not produce its contrary evidence until later. Once
the potential for coverage had been established by the Continental complaint,
Lamb needed to do no more. The burden was on Atlantic Mutual.” (Atlantic
Mutual, supra, 100 Cal.App.4th at p. 1039.)
      But as Atlantic Mutual went on to observe:

                                        16
      “Even though it may ultimately be determined that Atlantic Mutual
has a viable defense to coverage by virtue of the application of the ‘first
publication’ exclusion, this can only affect its liability for indemnification. Its
duty to defend depended on the existence of only a potential for coverage.
That potential was never conclusively negated and obviously cannot be
negated short of an actual trial to resolve what is clearly a genuine factual
dispute. Thus, we can only conclude that Atlantic Mutual owed Lamb a
defense and it failed to provide it.” (Atlantic Mutual, supra, 100 Cal.App.4th
at p. 1040.)
      Atlantic Mutual is distinguishable. Here, as discussed, the complaint
was not in and of itself sufficient to establish a potential for coverage. And
here, unlike in Atlantic Mutual, there was an “actual trial” on the issue of
whether GBIC had a duty to defend, after which the trial court made a
factual finding that any potential for coverage was negated by the
contractor’s warranty exclusion because subcontractors, and not Saratoga
itself, performed all the construction work on the project. (See State Farm
Gen. Ins. Co. v. Mintarsih, supra, 175 Cal.App.4th at p. 284, fn. 6 [“If there is
a dispute as to the existence of such facts, a potential for coverage exists until
the factual dispute is resolved so as to establish either actual coverage or the
absence of coverage” (emphasis added)]; Scottsdale Ins. Co. v. MV
Transportation, supra, 36 Cal.4th at p. 655 [duty to defend is “extinguished”
when “insurer negates all facts suggesting potential coverage”].)
      Thus, to the extent that Heidari relies on Norouzi’s testimony, or asks
us to draw inferences in his favor from Saratoga’s insurance application or
the demand letter attached to the complaint, his arguments fail because we
apply the ordinary rule that we review the trial court’s factual findings after

                                        17
trial for substantial evidence. As we recently explained in Lincoln v. Lopez
(2022) 77 Cal.App.5th 922, in language equally applicable here:
      “While [Hediari]’s brief does set forth some of the facts the trial court
did decide adversely to him, the brief throughout refers to other evidence, as
though this is of some significance. It is not, for several reasons, beginning
with the fundamental appellate principle that all evidence must be viewed
most favorably to [GBIC] and in support of the decision. (Nestle v. City of
Santa Monica (1972) 6 Cal.3d 920, 925–926; Foreman & Clark Corp. v.
Fallon[, supra,] 3 Cal.3d [at p.] 881; In re Marriage of Hoffmeister (1987)
191 Cal.App.3d 351, 358 [‘Where statement of decision sets forth the factual
and legal basis for the decision, any conflict in the evidence or reasonable
inferences to be drawn from the facts will be resolved in support of the
determination of the trial court decision’].) Put otherwise, [Heidari]’s attempt
to point to other evidence is misguided, as we must affirm even if there is
substantial contrary evidence. (See Bowers v. Bernards (1984)
150 Cal.App.3d 870, 874.) As the court put it in Pope v. Babick (2014)
229 Cal.App.4th 1238, 1245, ‘We do not review the evidence to see if there is
substantial evidence to support the losing party’s version of events, but only
to see if substantial evidence exists to support the verdict in favor of the
prevailing party.’ ” (Lincoln v. Lopez, supra, 77 Cal.App.5th at pp. 928–929,
fn. omitted.)
      And to the extent Heidari relies on Norouzi’s testimony, his argument
fails for the additional reason that the trial court expressly found that
testimony not credible, a finding we do not revisit on appeal, and which
means his testimony is not substantial evidence. (See Conservatorship of
O.B. (2020) 9 Cal.5th 989, 1006 [“Substantial evidence is evidence that is ‘of
ponderable legal significance,’ ‘reasonable in nature, credible, and of solid

                                       18
value’ ” (emphasis added)]; In re Marriage of Oliverez (2019) 33 Cal.App.5th
298, 319; Bruno v. Hopkins (2022) 79 Cal.App.5th 801, 823–824.)
       The two cases on which Heidari primarily relies—ProBuilders, supra,
241 Cal.App.4th 721 and Evanston Insurance Co. v. American Safety
Indemnity Co. (N.D. Cal. 2011) 768 F.Supp.2d 1004 (Evanston)—do not assist
him.
       In ProBuilders, supra, 241 Cal.App.4th 721, Underwriters sought
equitable contribution from ProBuilders for the defense of their mutual
insured Pacific Trades, and the trial court granted summary judgment to
ProBuilders on the basis of an “other insurance” clause. (Id. at pp. 726–727.)
The Court of Appeal reversed on that issue, and also rejected ProBuilders’
alternative argument that summary judgment in its favor should be affirmed
on the basis of a contractors warranty endorsement in the policy:
       “ProBuilders’s policies contained the CSC endorsement that provided,
as a ‘condition precedent to this policy applying to any claim in whole or in
part based upon work performed by independent contractors,’ Pacific Trades
must have (1) obtained valid written indemnity agreements from the
subcontractors it hired to build the homes, and (2) obtained Certificates of
Insurance from the subcontractors it hired showing Pacific Trades was an
additional insured under the subcontractors’ insurance policies, and
(3) maintained records evidencing compliance with those obligations.
ProBuilders produced some evidence below that only 13 of Pacific Trades’s
subcontractors had written contracts with Pacific Trades, and Underwriters
was unable to collect any defense reimbursements from any subcontractor.
Based on this evidentiary showing, ProBuilders asserts it conclusively
demonstrated there was no coverage for the claims asserted in the Aceves
lawsuit, which was fatal to Underwriters’s claim for equitable contribution,

                                       19
and therefore we may affirm the entry of summary judgment in favor of
ProBuilders on the alternative ground that it conclusively established it owed
no defense obligation under the policies.
      “We are not persuaded by ProBuilders’s argument, for several reasons.
First, the CSC provision on its face applies only to claims against Pacific
Trades ‘in whole or in part based on work performed by independent
contractors,’ but does not purport to apply to claims against Pacific Trades for
its own negligence or other misfeasance. ProBuilders’s showing below did not
conclusively establish that all of the claims against Pacific Trades in the
Aceves lawsuit were limited to claims based on work performed by
independent contractors; to the contrary, the attorney hired to defend it in
the underlying action averred Pacific Trades was included as a defendant
based on allegations of Pacific Trades’s own negligence. Because
ProBuilders’s showing was inadequate to definitively eliminate the potential
for coverage under the CSC provision for some part of the claims against
Pacific Trades, its showing was inadequate to enter summary judgment
against Underwriters’s claim for equitable contribution. (See Evanston[,
supra,] 768 F.Supp.2d 1004.) Second, even assuming some of the claims
against Pacific Trades in the Aceves lawsuit were ‘based on work performed
by independent contractors’ within the ambit of the CSC provision, there was
some evidence below raising a triable issue of fact as to whether Pacific
Trades had complied with its terms, because the record below contained at
least one written subcontract between Pacific Trades and a subcontractor,
and the record also contained numerous Certificates of Insurance showing
Pacific Trades was an additional insured under many subcontractors’
insurance policies. We conclude ProBuilders’s argument that summary
judgment was proper based on Pacific Trades’s alleged noncompliance with

                                       20
the CSC provision is without merit.” (ProBuilders, supra, 241 Cal.App.4th at
p. 734.)
      ProBuilders is distinguishable, first because it was decided on
summary judgment, where ProBuilders was required to show that “one or
more elements of the [plaintiff’s] cause of action cannot be separately
established” or “that there is a complete defense to that cause of action.”
(Code Civ. Proc., § 437c, subds. (o), (p).) “The evidence of the moving party is
strictly construed and that of the opponent liberally construed, and any
doubts as to the propriety of granting the motion are to be resolved in favor of
the party opposing the motion.” (ProBuilders, supra, 241 Cal.App.4th at
p. 727.) Here, by contrast, we review a factual finding based on the evidence
at trial that all the construction work was performed by subcontractors. And
in ProBuilders, there were “allegations of Pacific Trades’s own negligence”—
not so here with respect to Saratoga.
      Evanston, supra, 768 F.Supp.2d 1004, is similarly inapposite. In that
case, Evanston brought an equitable contribution claim against American
Safety for the costs of defense of their mutual insured, developer Northern
Cal, in an underlying lawsuit alleging that single-family homes constructed
by Northern Cal had several defects. (Id. at pp. 1006, 1008.) The court
denied American Safety’s motion for summary judgment based on a
contractor’s warranty exclusion in its policy that applied to damage “arising
directly or indirectly out of the actions of a subcontractor.” (Id. at p. 1010.)
Because American Safety did “not point to any evidence that any or all of the
damages alleged in the Ayala action are attributable to Northern Cal’s
subcontractors,” it had “not foreclosed the possibility that . . . some of the
Ayala plaintiffs’ claims could be covered by its policy,” and accordingly the

                                        21
court denied American Safety’s motion for summary judgment based on the
endorsement. (Id. at pp. 1011−1012.)
      Again, the situation before us is different because GBIC did produce
“evidence that . . . all of the damages alleged in the [underlying] action are
attributable to [Saratoga’s] subcontractors,” evidence which led the trial court
to conclude that all of the construction work was performed by subcontractors
and thus that the contractors’ warranty exclusion eliminated any potential
for coverage.2 (Evanston, supra, 768 F.Supp.2d at p. 1011.)
                                DISPOSITION
      The judgment is affirmed. GBIC shall recover its costs on appeal.

      2Because we affirm the judgment on the basis of the contractors’
warranty exclusion, we need not reach the parties’ arguments regarding the
various other terms and exclusions of GBIC’s policy.

                                       22
                                               _________________________
                                               Richman, J.

We concur:

_________________________
Stewart, P. J.

_________________________
Van Aken, J. *

Heidari v. Golden Bear Insurance Company (A165815)

      *Judge of the San Francisco Superior Court, Judge Christine Van Aken, sitting as
assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.

                                          23