Court Opinion

ID: 4372803
Source: CourtListenerOpinion
Date Created: 2019-03-01 18:01:59.593428+00
Date Added: 2024-06-11T14:49:40.269802
License: Public Domain

Filed 3/1/19

               CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                SECOND APPELLATE DISTRICT
                        DIVISION EIGHT

THE INSURANCE COMPANY               B283684
OF THE STATE OF
PENNSYLVANIA,                      (Los Angeles County
                                   Super. Ct. No. BC587563)
       Plaintiff and Respondent,

       v.

AMERICAN SAFETY
INDEMNITY COMPANY,

       Defendant and Appellant.

     APPEAL from a judgment of the Superior Court of Los
Angeles County. Gregory Wilson Alarcon, Judge. Affirmed.

      Chamberlin & Keaster, Robert W. Keaster and Michael A.
Miller for Defendant and Appellant.

     Herold & Sager, Andrew D. Herold, Michael D. Douglas
and Brooke M. Finley for Plaintiff and Respondent.
                 __________________________
                            SUMMARY
       This is a dispute between insurers. Under Insurance Code
section 11580 (section 11580), when a judgment is obtained
against an insured based upon property damage, the judgment
creditor may bring an action on the policy against the insurer, to
recover on the judgment. Here, plaintiff’s insured (a general
contractor) secured a default judgment against defendant’s
insured (a subcontractor), after a homeowner obtained an
arbitration award of more than $1.1 million against the general
contractor.
       Plaintiff indemnified the general contractor for the
arbitration award. Defendant refused to indemnify the
subcontractor for the amount of the default judgment. In this
lawsuit, plaintiff (as subrogee of its insured) sought recovery from
defendant under section 11580 of the amount of the default
judgment against the subcontractor.
       Both parties filed summary judgment motions, and the
trial court granted summary judgment for plaintiff. Defendant
appeals on three principal bases. Defendant contends the default
judgment was void because the underlying complaint failed to
specify the amount of damages sought. (Code Civ. Proc., § 580.)
Defendant further contends the default judgment was an award
for economic loss rather than property damage, and therefore not
recoverable under section 11580. And, defendant contends
plaintiff did not prove the default judgment was covered under
any of defendant’s policies. Defendant also raises other points
not presented to the trial court before it granted summary
judgment.
       We find no merit in defendant’s principal contentions, and
do not consider claims not presented to the trial court until after

                                 2
it heard and ruled on the summary judgment motions.
Accordingly, we affirm the judgment.
                                 FACTS
1.       The Parties and the Background
         Plaintiff is The Insurance Company of the State of
Pennsylvania. Plaintiff was the excess liability insurer for New
Millennium Homes LLC and NM Homes One, Inc. (collectively,
NMH).1 NMH was the builder and developer of a housing
development in Calabasas. Amir and Brenda Moghadam bought
one of the homes from NMH in December 2005 (the Moghadam
property).
         Defendant is American Safety Indemnity Company.
Defendant was the commercial general liability insurer for
Camarillo Engineering, Inc. (Camarillo). Defendant issued
six different policies to Camarillo covering annual periods that
began on December 1, 2003, and ended on August 1, 2009. Each
of the policies provides that defendant will pay “those sums that
the insured becomes legally obligated to pay as damages because
of . . . ‘property damage’ to which this insurance applies.”
Property damage is defined as “[p]hysical injury to tangible

1      Plaintiff issued NMH a “follow form excess liability policy”
that was subject to the same warranties, terms and conditions as
the underlying coverage. The underlying commercial general
liability policy was issued by Everest Indemnity Insurance to
NMH. One of its provisions was that “[i]f the insured has rights
to recover all or part of any payment we have made under this
Coverage Part, those rights are transferred to us. The insured
must do nothing after loss to impair them. At our request, the
insured will bring ‘suit’ or transfer those rights to us and help us
enforce them.”

                                 3
property, including all resulting loss of use of that property.”2
The insurance applies to property damage if it is “caused by an
‘occurrence’ that takes place in the ‘coverage territory’ ” and if the
property damage “occurs during the policy period.”
       In 2004, Camarillo performed “mass grading, compacting,
and finish grading” of the soils at the Moghadam property under
a November 2004 subcontract with NMH. The subcontract
required Camarillo to indemnify and hold NMH harmless from
claims (including attorney fees “incurred as a result thereof”) for
property damage “arising out of or resulting from the activities of
or work performed” by Camarillo.
       In early 2009, the Moghadams “ ‘began to notice drywall
and stucco cracks, separation and cracking of interior tiles, and
lifting of exterior flagstones’ ” on their property. They
complained to NMH “ ‘[i]n approximately May 2009.’ ” An
ensuing geotechnical investigation found the distress to the
Moghadam residence was due to “ ‘differential fill settlement, as
well as expansive soil activity,’ ” and that “an inadequate design
and construction of the post-tension slab foundation system are
exacerbating the distress.” A construction engineer hired to
prepare a repair estimate concluded the entire structure was
compromised and should be demolished and rebuilt at a cost of
almost $1.9 million.

2     The full definition of “property damage” is: “a. Physical
injury to tangible property, including all resulting loss of use of
that property. All such loss of use shall be deemed to occur at the
time of the physical injury that caused it; or [¶] b. Loss of use of
tangible property that is not physically injured. All such loss of
use shall be deemed to occur at the time of the ‘occurrence’ that
caused it.”

                                  4
       In September 2011, the Moghadams filed a claim in
arbitration against NMH for defective construction, alleging their
total current damages were “at least $2,347,592.” Their claim
alleged most of the stress features (the cracks and separations
mentioned above) had occurred on the southeastern portion of the
house, where the fill was deepest. The claim also described a
floor tilted downward, as well as hairline wall and ceiling cracks
throughout the house.
       In December 2011, while the arbitration was pending,
NMH sued Camarillo and two other defendants for contractual
and equitable indemnity, contribution and related causes of
action.3 Paragraph 8 of the NMH complaint incorporated by
reference, and attached as exhibit A, the Moghadams’ arbitration
claim that alleged the Moghadams’ current damages were “at
least $2,347,592.” The NMH complaint further alleged (par. 19)
“that Defendants, and each of them, had and have a duty to
defend, indemnify, and hold harmless [NMH] for the claims made
in the Moghadam Claimants’ Arbitration Complaint, including
attorneys’ fees and costs.” NMH’s complaint did not otherwise
specify the amount of damages sought, alleging damages “in an
amount to be established at the time of trial.”

3     Another of the defendants, Neblett & Associates, Inc.
prepared grading and geotechnical recommendations for site
development and foundations, and performed grading
observations and testing during development.

                                5
      Camarillo did not answer NMH’s complaint or otherwise
appear in the NMH lawsuit, and its default was entered in March
2012.4
      In October 2012, after hearings in June and July, the
arbitrator in the Moghadam arbitration entered an award
against NMH. The arbitrator stated that, “[g]iven the various
testing that was conducted, it is undisputed that the house is
damaged due to differential settling resulting from improper soil
compaction.”5 The arbitrator also found “the soil is still settling
and there is a potential for significant settlement over many
years.”
      The final binding award gave the Moghadams “damages for
diminution in value in the amount of $1,026,750, with interest at
the legal rate accruing as of the date of the Interim Award dated
August 13, 2012.” As the prevailing party under the purchase
agreement and joint escrow instructions, the Moghadams were
awarded attorney fees of $105,000 and costs of $8,840.38, with
interest at the legal rate accruing as of the date of the final
award (October 9, 2012).
      The award was confirmed in December 2012, in the
principal sum of $1,140,590.38, plus prejudgment interest of

4     In June 2012, after several tender letters from NMH to
defendant, defendant advised NMH there was no “additional
insured” coverage for NMH under the policies defendant issued to
Camarillo.

5     The arbitrator described the parties’ disputes as “whether
the settling will continue and to what degree”; “what repairs are
necessary”; and whether “overwatering” and alteration of the
landscape and drainage by the Moghadams were factors
contributing to the damage.

                                 6
$28,417.84, for a total award of $1,169,008.22. The Moghadams
recovered an additional $7,625 for attorney fees and costs
incurred in preparation and filing of the petition to confirm the
award, bringing their total recovery to $1,176,633.22.
       Plaintiff fully indemnified NMH for the arbitration award
to the Moghadams.
       On August 7, 2013, NMH obtained a final default judgment
against Camarillo in the amount of $1,532,973.87, consisting of
damages of $1,176,633.22 and attorney fees of $356,340.65.6 (The
request for default judgment was supported by declarations and
documents including the subcontract, evidence from the
Moghadam arbitration, and the arbitration award.)
2.     The Complaint
       In July 2015, plaintiff brought this lawsuit against
defendant. Plaintiff alleged causes of action for declaratory
relief, subrogation, recovery of the judgment under section 11580,
and breach of contract. The complaint alleged defendant’s
policies provided coverage for the entire amount of the default
judgment; defendant had a duty under those policies to indemnify
Camarillo for the amount of the default judgment; and plaintiff
was subrogated to NMH’s rights to recover the amount of the
default judgment, from Camarillo and defendant, by virtue of
having indemnified NMH for the arbitration award.
3.     The Motions for Summary Judgment
       Both parties moved for summary judgment.

6    NMH also obtained a default judgment in the same amount
against Neblett & Associates (see fn. 3, ante). Both default
judgments stated: “joint and severally liable.”

                                7
       Defendant contended, in opposition to plaintiff’s motion,
that plaintiff could not prove all the elements of any cause of
action against defendants. First, defendant asserted the default
judgment was void as a matter of law under Code of Civil
Procedure section 580, because NMH’s complaint against
Camarillo did not specify the amount of damages sought. Second,
defendant asserted the arbitration award on which the default
judgment was based was for economic loss, not property damage,
and section 11580 permits an action against the insurer only
when the judgment against the insured is “in an action based
upon bodily injury, death, or property damage.” (§ 11580,
subd. (b)(2).) Third, defendant contended plaintiff did not satisfy
its burden to prove the default judgment was covered under any
of defendant’s policies. This was because (a) plaintiff did not
prove “when property damage first occurred” at the Moghadam
property, and (b) plaintiff did not prove that Camarillo satisfied
the applicable self-insured retention (SIR) or deductible under
any of the policies. (We will describe and discuss these and other
policy provisions to the extent necessary in connection with our
legal discussion, post.)
       Defendant’s own summary judgment motion was based on
the first two of defendant’s three contentions.
       Plaintiff argued that the default judgment was not void
because the NMH complaint attached and incorporated by
reference the Moghadam arbitration claim, specifying the
damages sought from NMH for which NMH sought indemnity
from Camarillo. Further, the arbitration award based on
diminution in value was not an award for economic loss, because
diminution in value was merely the measure of damages, and did
not change the fact that the damages awarded arose from claims

                                 8
the home suffered property damage as defined in defendant’s
policies. As for the coverage issues, defendant pointed out
property damage was observed in May 2009, and argued expert
testimony “indicated damages in other areas of the residence
were likely occurring prior to that time, all of which was within
the effective dates of [defendant’s] polices, and at the very least,
during the effective dates of [the policy], effective August 1, 2008
to August 1, 2009.” Plaintiff argued the SIR and deductible
provisions required defendant to request payment from its
insured and there was no evidence defendant did so. Further, the
2008-2009 policy contained a deductible, not an SIR, and,
plaintiff argued, under California law a deductible does not
require payment “prior to an insurer providing coverage.”
       On November 22, 2016, the trial court entered an order
denying defendant’s motion and granting plaintiff’s motion.
4.     Proceedings After the Summary Judgment Ruling
       Plaintiff served defendant with a proposed judgment that
awarded plaintiff damages of $1,532,973.87 (the amount of the
default judgment). Defendant filed objections to the proposed
judgment. In substance, defendant reiterated the arguments it
made in its summary judgment papers, and added a few new
ones, including a claim that the judgment exceeded the per
occurrence limits of defendant’s insurance policies, and that
plaintiff could not recover NMH’s attorney fees and costs
awarded in the default judgment, or any interest on the
judgment, on the theory that those were costs, not damages, and
thus fell under the “supplementary payments” provision of
defendant’s policies, which plaintiff could not enforce under
section 11580. Plaintiff responded by asserting that no California
authority permits a party to use objections to a proposed

                                 9
judgment as a mechanism for reasserting arguments already
raised or asserting new arguments after the court has issued a
dispositive order.
       On May 8, 2017, the court entered judgment “in favor of
Plaintiff and against Defendant in the amount of $1,532,973.87
plus prejudgment interest at a rate of 10% per annum calculated
from August 7, 2013.”
       On May 23, 2017, defendant filed a motion for a new trial,
or alternatively to vacate the ruling and judgment. Defendant
asserted irregularities and abuse of discretion preventing
defendant from having a fair trial; excessive damages;
insufficient evidence; and error in law. Defendant complained
the court’s ruling failed to address or make any findings on the
property damage and coverage issues defendant raised, failed to
specify the reasons for granting summary judgment or
specifically refer to any evidence supporting that determination,
and failed to rule on material evidentiary objections. Defendant’s
motion repeated all the arguments previously made (both before
and after the summary judgment ruling), and added an argument
that a “wrap-up” exclusion in its policies excluded coverage.
       Plaintiff’s response addressed defendant’s substantive
claims, and also contended that defendant’s arguments had
already been adjudicated or were waived by the failure to raise
them during the extensive briefing and oral argument on the
summary judgment motions.
       The trial court denied defendant’s motion, concluding
“there was no error of fact or law, and no incorrect or erroneous
legal basis for the decision, either as a matter of dispositive
procedure, or of substantive law.” The court observed that it
“general[ly] concurs with the opposing memorandum on the

                               10
various substantive issues raised, and an exhaustive addressing
of the issues in a ruling[] is not required.”
       Defendant filed a timely appeal from the judgment.
                             DISCUSSION
1.     The Standard of Review
       A plaintiff moving for summary judgment “has met his or
her burden of showing that there is no defense to a cause of
action if that party has proved each element of the cause of action
entitling the party to judgment on the cause of action. Once the
plaintiff . . . has met that burden, the burden shifts to the
defendant . . . to show that a triable issue of one or more material
facts exists as to the cause of action or a defense thereto.” (Code
Civ. Proc., § 437c, subd. (p)(1).) Summary judgment is
appropriate where “all the papers submitted show that there is
no triable issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” (Id., subd. (c).)
       Our Supreme Court has made clear that the purpose of the
1992 and 1993 amendments to the summary judgment statute
was “ ‘to liberalize the granting of [summary judgment]
motions.’ ” (Perry v. Bakewell Hawthorne, LLC (2017) 2 Cal.5th
536, 542; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826,
854.) It is no longer called a “disfavored” remedy. (Perry, at p.
542.) “Summary judgment is now seen as a ‘particularly suitable
means to test the sufficiency’ of the plaintiff’s or defendant’s
case.” (Ibid.) On appeal, “we take the facts from the record that
was before the trial court . . . . ‘ “We review the trial court’s
decision de novo, considering all the evidence set forth in the
moving and opposing papers except that to which objections were
made and sustained.” ’ ” (Yanowitz v. L’Oreal USA, Inc. (2005) 36
Cal. 4th 1028, 1037, citation omitted.)

                                11
2.     Contentions and Conclusions
       Section 11580 requires policies insuring against loss or
damage resulting from liability for injury suffered by another
person to contain certain provisions. (Id., subd. (a)(1).) One of
these is a provision “that whenever judgment is secured against
the insured . . . in an action based upon bodily injury, death, or
property damage, then an action may be brought against the
insurer on the policy and subject to its terms and limitations, by
such judgment creditor to recover on the judgment.” (Id.,
subd. (b)(2).)
       Defendant contends plaintiff did not establish any of the
elements required by section 11580, because the default
judgment NMH obtained was void; the underlying action was not
based on property damage; and defendant’s policies did not
provide coverage of the underlying claims. We disagree.
       a.     The default judgment was not void
       Under Code of Civil Procedure section 580 (section 580), the
relief granted to a plaintiff in a default judgment “cannot exceed
that demanded in the complaint . . . .” (Id., subd. (a).) The
Supreme Court tells us that “section 580 is to be interpreted, in
accordance with its plain language, to deprive a trial court of
jurisdiction to enter a judgment against a defaulting defendant
which awards greater relief than that sought in the plaintiff’s
complaint.” (In re Marriage of Lippel (1990) 51 Cal. 3d 1160,
1167; id. at p. 1166 [“California satisfies . . . due process
requirements in default cases through section 580.”]; Becker v.
S.P.V. Construction Co. (1980) 27 Cal. 3d 489, 493 (Becker)
[permitting a collateral attack on a default judgment based on
section 580 where the motion to vacate the judgment was not
timely; “ ‘[c]ollateral attack is proper to contest [a judgment void

                                12
on its face for] lack of personal or subject matter jurisdiction or
the granting of relief which the court has no power to grant’ ”];
see, e.g., Dhawan v. Biring (2015) 241 Cal. App. 4th 963, 975
[courts considering default judgments awarding damages in
violation of section 580 “have consistently viewed the judgments
as void, not voidable, and subject to collateral attack at any
time”].)7
       Becker further tells us that “a prayer for damages according
to proof passes muster under section 580 only if a specific amount
of damages is alleged in the body of the complaint.” (Becker,
supra, 27 Cal.3d at p. 494, italics added; see also Greenup v.
Rodman (1986) 42 Cal. 3d 822, 829 [“the allegations of a
complaint may cure a defective prayer for damages”].)
       In this case, the prayer for judgment in the NMH complaint
does not state a specific amount of damages. (The prayer for
judgment does not specify damages “according to proof,” either.)
And, as defendant points out, in the body of the complaint, NMH
refers several times to damage in an amount “according to
proof”or the like. The complaint states, for example, that because

7     Plaintiff tells us that because defendant chose not to defend
Camarillo in the underlying action, and did not seek to vacate the
default judgment NMH obtained, defendant cannot relitigate
Camarillo’s liability in this section 11580 action, citing Clemmer
v. Hartford Ins. Co. (1978) 22 Cal. 3d 865, overruled on another
point in Ryan v. Rosenfeld (2017) 3 Cal.5th 124, 134-135. In
Clemmer, the court held that an insurer who rested on its claim
of noncoverage instead of moving to set aside a default judgment
against its insured was bound by the amount of the judgment
against its insured. (Clemmer, at p. 884.) Clemmer did not
involve section 580 and has no application here.

                                13
of the defects and damages at the Moghadam property caused by
defendants, NMH “[has] incurred and continue[s] to incur costs,
the sum of which [is] not currently known”; that as a direct result
of the defendants’ failure to defend, indemnify and hold NMH
harmless “for any claims or sums paid to the Moghadam
Claimants,” NMH “[has] been damaged in an amount to be
established at the time of trial, which is no less than the
jurisdictional limits of this court”; and that NMH was damaged
by defendants’ breaches of contract “in an amount according to
proof at trial.”
       But in addition, as noted at the outset, NMH alleged in the
body of the complaint that the Moghadams “served a Claim in
Arbitration for Defective Construction . . . , attached hereto as
Exhibit ‘A’ and incorporated herein by this reference, against
[NMH] regarding alleged defects and/or deficiencies and related
damages as to the Moghadam Property.” The Moghadam claim
that was attached and incorporated by reference alleged the
Moghadams’ “total current damages are at least $2,347,592.”8
The NMH complaint further alleged “that Defendants, and each
of them, had and have a duty to defend, indemnify, and hold
harmless [NMH] for the claims made in the Moghadam
Claimants’ Arbitration Complaint, including attorneys’ fees and
costs.” The complaint alleged that “the damages claimed by the
Moghadam Claimants” involve damages to the Moghadam

8      The Moghadam claim described the categories of damages
it sought. These were all demolition and repair costs, relocation
and storage expenses, lost home-business income, investigative
costs, and other costs or fees, loss-of-use damages of at least
$382,429, and at least $44,665 for expert fees in investigating
and repairing the property.

                                14
property caused by the defendants. The NMH complaint alleges
NMH is “entitled to recover the funds they have expended and
the costs they have incurred to date in addressing the claims of
the Moghadam Claimants.”
      Despite all these factual allegations, defendant asks us to
conclude the NMH default judgment was void for failure to allege
“a specific amount of damages . . . in the body of the complaint”
(Becker, supra, 27 Cal.3d at p. 494), thus violating the section 580
requirement that the relief granted in a default judgment “cannot
exceed that demanded in the complaint” (§ 580, subd. (a)). We
cannot do so, because the NMH complaint was quite plain that
NMH sought indemnity “for the claims made in the Moghadam
Claimants’ Arbitration Complaint,” and NMH properly
incorporated by reference into the body of the complaint the
Moghadam claim for damages of “at least $2,347,592.” The
default judgment of $1,532,973.87 was significantly less than the
amount demanded in the complaint.
      Defendant does not dispute that “a copy of the Moghadam
Claim was attached to NMH’s Complaint and incorporated
therein by reference.” Instead, defendant contends that, as a
matter of law, “incorporation by reference is inadequate to satisfy
the strict and clearly worded statutory framework” of section 580
and related statutes. Defendant’s briefs cite no pertinent
authority supporting this contention.9 While its argument on

9     Defendant relies on Schwab v. Southern California Gas Co.
(2004) 114 Cal. App. 4th 1308, which does not involve
incorporation by reference. Schwab involved whether plaintiff
timely served statements of damages as required in personal
injury cases. Defendant cites Schwab’s statement that the
statutes requiring a complaint to state the amount of damages

                                15
this point is opaque throughout, defendant concludes that “it
would be contrary to the basic notions of due process and fairness
to find that Camarillo was put on notice of damages sought
against it based upon an arbitration claim not filed against
Camarillo,” and “[t]herefore” the default judgment is void.10 All
we can say is that defendant’s assertion has no support in law
and is counter to the clear allegations of the NMH complaint.
       After the briefs in this case were filed, the Fourth Appellate
District decided the only case of which we are aware that
concerns the principles of incorporation by reference in the
context of section 580, Yu v. Liberty Surplus Ins. Corp. (2018)
30 Cal.App.5th 1024 (Yu).11 Yu rejected a claim of incorporation

“require formal notice of the amount of money damages or other
relief sought by the party seeking relief.” (Id. at p. 1325.) Of
course that is so, but NMH gave that notice to Camarillo here by
incorporating the Moghadam claim by reference into the body of
the complaint and expressly seeking indemnity for those very
claims. We do not see anything in Schwab pertinent to or
inconsistent with our resolution of this case.

10    Defendant states the Moghadam arbitration claim “also
contained an allegation of ‘inadequate design and construction of
the post tension slab foundation system,’ for which Camarillo
could not be responsible because that claim does not fall within
Camarillo’s scope of work.” That is correct, but defendant does
not tell us why that is relevant to the notice issue. (The
arbitrator ultimately rejected the Moghadams’ claims that the
posttension slab was not properly constructed.)

11     Defendant filed a letter informing the court of the Yu case
under California Rules of Court, rule 8.254(a), permitting a party
to inform the court of “significant new authority” not available
before the party’s last brief was filed.

                                 16
by reference, but did so under circumstances quite different from
those in this case. Yu nowhere suggests that incorporation by
reference of damage amounts is inadequate to satisfy section 580
as a matter of law. Yu merely held that the alleged incorporation
by reference of the monetary demand in Yu was not “ ‘clear and
unequivocal,’ ” as is required for incorporation by reference in
other legal contexts. (Yu, at pp. 1032-1033.) That is not the case
here.
       As in this case, Yu involved a judgment creditor’s action
under section 11580 to collect a default judgment against certain
subcontractors (the Fitch entities) from their insurers. The
question was whether a cross-complaint on which the Fitch
entities defaulted incorporated by reference the amount of
damages claimed in the initial complaint. The facts, briefly, were
these.
       The plaintiff sued the general contractor for construction
defects, and asserted damages of not less than $10 million. The
general contractor filed a cross-complaint against the plaintiff
and 20 subcontractors, including two known as the Fitch entities,
that prayed for damages according to proof, and did not set out a
monetary amount sought. The general contractor eventually
settled with the plaintiff and assigned its cross-complaint rights
to the plaintiff, who obtained a default judgment against the
Fitch entities. (Yu, supra, 30 Cal.App.5th at pp. 1027-1030.)
       When the plaintiff in Yu sued the insurers to collect on her
default judgment, the trial court voided the judgment, because
the cross-complaint did not state an amount of damages. (Yu,
supra, 30 Cal.App.5th at p. 1030.) On appeal, the plaintiff
argued that the cross-complaint “incorporated by reference the
damage amount she had asserted in her initial complaint

                                17
against” the general contractor. (Id. at p. 1032.) Yu describes the
cross-complaint as stating that the operative complaint “ ‘and any
future amended complaints filed in this action and any cross-
complaints filed in this action are incorporated herein by
reference as though fully set forth herein, for identification and
informational purposes only . . . .’ ” (Ibid., italics added in Yu.)
Yu found this alleged incorporation of the monetary demand from
the plaintiff’s fourth amended complaint “was not ‘clear and
unequivocal.’ ” (Ibid.)
       The Yu court explained that “[a]lthough widely accepted,”
there were no “formal requirements” for “ ‘ “permissible
incorporation by reference” ’ ” in a cross-complaint of the
pleadings in the original action. (Yu, supra, 30 Cal.App.5th at
p. 1032.) But “in other legal contexts the doctrine of
incorporation by reference generally ‘requires that (1) the
reference to another document was clear and unequivocal; (2) the
reference was called to the attention of the other party, who
consented to that term; and (3) the terms of the incorporated
documents were known or easily available to the contracting
parties.’ ” (Ibid.)
       The Yu court pointed out the cross-complaint repeatedly
stated that its damage demand was “according to proof” or “ ‘in
an amount precisely unknown,’ ” and that was at odds with “the
purported demand in [the plaintiff’s] complaint” asking for not
less than $10 million in damages. (Yu, supra, 30 Cal.App.5th at
p. 1033.) “Further, the cross-complaint stated that [the
plaintiff’s] complaint was being referred to ‘for identification and
informational purposes only.’ As a result, it is unreasonable to
conclude that the damage demand was effectively called to the
Fitch Entities’ attention, or that they ever consented to it, or that

                                 18
it was ‘readily accessible’ to them.” (Ibid.) Yu then agreed with
the trial court that because the cross-complaint “ ‘specifically
declined’ ” to state the amount of damages sought, it was
“ ‘contradictory to basic notions of due process and fairness to
find’ ” that the Fitch entities “ ‘have been put on notice of their
potential damages by virtue of an allegation in a complaint filed
not against them, but against [the general contractor].’ ” (Ibid.)
        We do not see any facts in Yu that would cause us to
conclude that the NMH complaint did not properly incorporate by
reference the Moghadam arbitration claim. Unlike Yu, the
arbitration claim was not “ ‘incorporated . . . for identification and
informational purposes only’ ”; the arbitration claim and the
Moghadam claimants were repeatedly referred to in the NMH
complaint. Unlike Yu, the arbitration claim was attached as
exhibit A to the complaint, describing in detail the property
damage and related claims of loss, and stating the Moghadams
sought to recover “at least $2,347,592.” And unlike Yu, the
complaint expressly alleged that “the damages claimed by the
Moghadam Claimants” involved damages to the Moghadam
property caused by the defendants and for which they had a duty
to indemnify NMH. These allegations were “clear and
unequivocal” in calling to Camarillo’s attention that NMH was
seeking indemnification in the amounts alleged in the
Moghadams’ arbitration claim, which was “readily accessible”
because it was attached as exhibit A to the complaint. Those
allegations were more than adequate to put Camarillo on “formal
notice” of the “maximum judgment that may be assessed against
[it],” as required by due process. (Greenup v. Rodman, supra,
42 Cal.3d at p. 826.)

                                 19
       Finally, in a two-paragraph argument, defendant asserts
that the Moghadam arbitration claim “only sought unspecified
attorneys’ fees, costs and interest”; the default judgment against
Camarillo “included an award for these items”; and
“[c]onsequently” the default judgment is void for violating
section 580’s notice requirements. Again, there is no authority
for defendant’s assertion. The default judgment entered against
Camarillo was far less than the amount of damages identified in
the arbitration claim, so there can be no legitimate claim of
inadequate notice of Camarillo’s maximum liability.
       b.    The property damage issue
       Defendant contends the judgment against Camarillo is not
recoverable under section 11580 because it was not a judgment
“based upon . . . property damage” within the meaning of
section 11580. We disagree. To reach that conclusion would
require us to ignore the facts and interpret the law in an
irrational fashion.
       In the arbitration, it was “undisputed that the house is
damaged due to differential settling resulting from improper soil
compaction.” The arbitrator explained: “The Property is settling
toward the area where soil compaction depth was near 50 [feet].
The post-tension slab is cracked entirely through near the
mid section of the home at the approximate point of the fill
transition. Floor level surveys demonstrated a differential from
high to low of 1.8 [inches] in 2009, 2.4 [inches] in 2010 and 3.3
[inches] in 2012, contrasted to a normal of 3/4 [inch]. The parties
also acknowledge that the residence walls contain numerous
cracks on the interior and exterior and that posts and other
structures are pulling away at points.” That is property damage.

                                20
That is why the Moghadams sought arbitration, and it is why
they obtained an award.
       The law is equally clear. Under section 11580, when a
judgment is secured against the insured (here, Camarillo) “in an
action based upon . . . property damage,” the judgment creditor
(here, plaintiff as NMH’s subrogee) may bring an action on the
policy “to recover on the judgment.” (Id., subd. (b)(2).)
       Defendant contends the judgment here was not for property
damage, but rather was for indemnity of an arbitration award
that awarded “economic loss for diminution in property value,”
and that, “[a]s a matter of law, diminution in value is economic
loss, not property damage.” We decline to adopt this constricted
view of section 11580.
       First, NMH’s action against Camarillo for indemnity was
plainly “based upon . . . property damage” (§ 11580, subd. (b)(2)),
because NMH sought indemnity “for the claims made in the
Moghadam Claimants’ Arbitration Complaint,” and those were
claims for property damage, as we have just described above.
(Defendant’s policies define property damage as: “Physical injury
to tangible property, including all resulting loss of use of that
property.”)
       Second, the fact that the arbitrator measured the damages
by diminution in value, rather than by the cost of repair, changes
nothing. In statutory actions for construction defects (Civ. Code,
§ 895 et seq.), the homeowner’s “right to the reasonable value of
repairing any nonconformity is limited to the repair costs, or the
diminution in current value of the home caused by the
nonconformity, whichever is less . . . .” (§ 943, subd. (b)). The
arbitrator awarded the diminution in value because NMH’s
proposed repair plans did not reflect the true value of the

                                21
necessary repairs, and the claimants’ proposed repair costs
exceeded the diminution in value – so the Moghadams’ damages
were necessarily “limited to $1,026,750, the diminution in value.”
To say the award was therefore not “based upon . . . property
damage” is simply untenable.
      Defendant’s insistence to the contrary is based on cases
stating that diminution in value is not property damage. (E.g.,
New Hampshire Ins. Co. v. Vieira (9th Cir. 1991) 930 F.2d 696,
701 (Vieira) [“diminution in value is not ‘physical damage’ to
‘tangible property’ ” and so was not covered by the insurer’s
policy].) But that is not the issue here, where there was physical
damage to the property, and diminution in value was necessarily
used as the measure of damages. (See Pruyn v. Agricultural Ins.
Co. (1995) 36 Cal. App. 4th 500, 510, fn. 6 (Pruyn) [“In the liability
policy context, diminution in market value is accepted as a
proper method of measurement of any property damages which
may have been sustained.”].)12

12    Defendant also cites cases stating that property damage is
not established “by the mere failure of a defective product to
perform as intended,” nor by “economic losses such as the
diminution in value of the structure [citations] or the cost to
repair a defective product or structure.” (F & H Construction v.
ITT Hartford Ins. Co. (2004) 118 Cal. App. 4th 364, 372.) These
cases, like Vieira, are inapt. F & H Construction discusses the
principle that “the incorporation of a defective component or
product into a larger structure does not constitute property
damage unless and until the defective component causes physical
injury to tangible property in at least some other part of the
system.” (F & H Construction, at p. 372.) This case does not
involve a defective “product,” and in any event Camarillo’s
improper grading work did cause physical injury to the
Moghadam home.

                                 22
       Third, defendant points out that the default judgment
includes attorney fees and costs awarded to the Moghadams, and
“these components of the default judgment also cannot satisfy the
‘property damage’ requirement of section 11580 (b)(2).”
Defendant misreads section 11580, which allows a judgment
creditor to recover on the judgment when the judgment was
secured “in an action based upon . . . property damage.” The
statute on its face does not require every element of the damages
in that judgment to be property damage; it requires the judgment
to be “in an action based upon . . . property damage.” Here, all
the components of the Moghadam arbitration award – the
“diminution in value,” the attorney fees, the costs, the interest –
were the result of property damage that was “due to differential
settling resulting from improper soil compaction.”
       In short, we are in no doubt that the NMH default
judgment was secured “in an action based upon . . . property
damage,” and none of the authorities defendant cites requires a
contrary conclusion.
       c.    The coverage issues
       A judgment creditor’s direct action against the insurer
under section 11580 is “on the policy and subject to its terms and
limitations.” (Id., subd. (b)(2).) Defendant contends plaintiff did
not prove the default judgment was covered under any of
defendant’s policies. In the trial court, defendant asserted two
bases for the claimed lack of coverage. We conclude defendant is
mistaken on both points.
             i.    When the damage “first occurred”
       Defendant first contends plaintiff did not prove when
property damage first occurred at the Moghadam property, and
therefore the damage is not covered by any of the policies. We

                                23
disagree with defendant’s construction of the policy. It is clear
there is coverage under at least one of the policies: the sixth
policy in effect from August 1, 2008, to August 1, 2009.
                       (1) The policy language
        Defendant issued six successive policies to Camarillo.13
The policies define property damage as “[p]hysical injury to
tangible property.” Each policy applies to property damage only
if “(1) [t]he . . . ‘property damage’ is caused by an ‘occurrence’ that
takes place in the ‘coverage territory’; and [¶] (2) [t]he . . .
‘property damage’ occurs during the policy period.”
        There is very little substantive difference in the six policies,
but the sixth is slightly different from the others in the
placement of some provisions. Where provisions differ, we use
those in the sixth policy, since that is the one that definitively
covers the property damage suffered by the Moghadams.
        The sixth policy defines “occurrence” to mean:
               “an accident, including continuous or repeated
               exposure to substantially the same general harmful
               conditions that happens during the term of this
               insurance.”
For sake of clarity, we note at the outset that there is no dispute
that the property damage was “caused by an ‘occurrence’ that
takes place in the ‘coverage territory’ ” (the United States) and
that the causal act (Camarillo’s improper grading) need not have
taken place during the term of the insurance policy that covers
the damage. “Occurrence” in this context is construed to mean

13    The policies covered December 1, 2003 to December 1,
2004; December 1, 2004 to December 1, 2005; December 1, 2005
to December 1, 2006; August 1, 2006 to August 1, 2007; August 1,
2007 to August 1, 2008; and August 1, 2008 to August 1, 2009.

                                  24
that what must happen “during the policy year to trigger
coverage” is “damage to property, not the causal conduct.”
(Pennsylvania General Ins. Co. v. American Safety Indemnity Co.
(2010) 185 Cal. App. 4th 1515, 1534 (Pennsylvania General).)
Defendant does not contend otherwise.
      The endorsement in the sixth policy (amending the
definition of “occurrence” to read as just quoted) also added the
following language to the coverage section of the policy (the
language was previously a part of the definition of “occurrence”):
             “ ‘Property damage’ . . . which commenced prior to the
             effective date of this insurance will be deemed to
             have happened in its entirety prior to, and not
             during, the term of this insurance.”
The endorsement further states:
             “We will have no duty to defend or indemnify the
             insured against any ‘suit’ against an insured or any
             additional insured if such ‘suit’ does not allege an
             ‘occurrence’ as defined and meet the timing
             conditions as to both ‘occurrence’ and ‘property
             damage’ . . . of this policy.”14
                    (2) Defendant’s argument
      Defendant tells us that, because none of the policies
provides coverage “for property damage which commenced prior
to the policy period,” and plaintiff did not offer evidence to
establish when property damage first occurred, there is no
coverage under any of the policies. We disagree.

14     All the policies also have a damage exclusion endorsement
stating the insurance does not apply to any occurrence “which
first occurred prior to the inception date of this policy.”

                                25
       No “[p]hysical injury” to the Moghadams’ residence
occurred until May 2009, and they advised NMH at that time,
during the term of the sixth policy. Defendant’s contention is
based, in effect, on plaintiff’s argument that all the policies cover
the property damage (a point we need not decide), and on
defendant’s own mistaken view that, even if property damage
first “manifested” during the policy period, the insured must also
prove that the damage did not “first commence” at some earlier
time. Defendant’s contention is contrary to the policy’s definition
of property damage, without support in legal authority, and an
unreasonable construction of the insured’s burden of proof.
       We agree, of course, that “[t]he burden is on an insured to
establish that the occurrence forming the basis of its claim is
within the basic scope of insurance coverage.” (Aydin Corp. v.
First State Ins. Co. (1998) 18 Cal. 4th 1183, 1188.) But, “once an
insured has made this showing, the burden is on the insurer to
prove the claim is specifically excluded.” (Ibid.)
       Plaintiff made its required showing. The “basic scope of
insurance coverage” in this case is as we have just described: the
policy applies to “property damage” – “[p]hysical injury to
tangible property” – that “occurs during the policy period.”
Plaintiff submitted the arbitration award as evidence. That
award established that in 2009, the Moghadams noticed “drywall
and stucco cracks, separation and cracking along the mortar joint
of interior tiles . . . and lifting of exterior flagstone work,” and
complained to NMH in May 2009. This is plainly evidence of
property damage – “[p]hysical injury to tangible property” – that
first appeared during the term of defendant’s sixth policy. We do
not see how any other conclusion is possible. Defendant’s
constant refrain that plaintiff “did not offer any evidence to

                                 26
establish when property damage first occurred at the Property” is
simply wrong.
      Defendant’s challenge to this straightforward analysis
draws upon plaintiff’s argument that all the policies in effect
“from the time Camarillo completed its work at the Moghadams’
residence forward provide coverage for the damages in question.”
Defendant may well be correct when it contends this is not so.15

15     Plaintiff’s contention that all the policies provide coverage
relies on the “continuous injury trigger of coverage” the Supreme
Court adopted in Montrose Chemical Corp. v. Admiral Ins. Co.
(1995) 10 Cal. 4th 645, 685 (Montrose). Montrose held that “[i]n
the case of successive policies, . . . property damage that is
continuous or progressively deteriorating throughout several
policy periods is potentially covered by all policies in effect during
those periods,” so that the insurer’s duty to defend arose under
those policies. (Id. at p. 655.) The “continuing injury trigger of
coverage” may well be inapt here, because it depends on the
language of the policy, as Montrose itself tells us. (Id. at p. 677
[“The precise question, of course, is what result follows under the
language of the policies of insurance to which the
parties agreed . . . .”]; cf. Croskey et al., Cal. Practice Guide:
Insurance Litigation (The Rutter Group 2018) ¶ 7:176, p. 7A-93
[“[t]he ‘continuous injury’ trigger has been applied mostly in
cases involving gradual release of pollutants and other
environmental harms”].) After Montrose, defendant revised its
policies to use the language that is in the policies issued to
Camarillo, for the very purpose of “obviat[ing] the application of
the ‘progressive damage-continuous trigger’ articulated
in Montrose.” (Pennsylvania General, supra, 185 Cal.App.4th at
p. 1534.) Thus, defendant’s policies state, as described ante, that
property damage “which commenced prior to the effective date of
this insurance will be deemed to have happened in its entirety
prior to, and not during, the term of this insurance.”

                                  27
But we need not decide that point, because coverage is
established under the sixth policy.
       Despite the evidence that physical injury to the Moghadam
residence occurred in 2009 (and the lack of any evidence that
there was earlier physical injury to the home), defendant, relying
on Pennsylvania General, asks us to conclude plaintiff did not
present evidence “of when property damage first occurred at the
Property.” As just demonstrated, we cannot so conclude, and
Pennsylvania General does not suggest otherwise.
       Pennsylvania General involved defendant’s policies,
containing language identical to the policies defendant issued to
Camarillo. But the issue in Pennsylvania General was different.
There, defendant contended the language in its policies defining
“occurrence” – requiring the occurrence to “happen[] during the
term of this insurance” (see ante, at p. 24) – “excludes coverage
where the causal conduct takes place before the inception of the
policy regardless of when the resulting damage first occurs.”
(Pennsylvania General, supra, 185 Cal.App.4th at p. 1528.) The
court rejected that contention (ibid.), concluding “the trigger of
coverage was not when the insured completed its work, but was
instead based on when the damages caused by the negligent
causal acts of the insured first commenced.” (Id. at p. 1532.)
       We have no disagreement with Pennsylvania General’s
conclusion, but it does not relieve defendant of liability on the
sixth policy. The evidence showed physical injury to the property
in 2009 (and not before). In its reply brief, defendant tells us, in
effect, that it does not matter that the property damage
“manifested” in 2009, because “it is the ‘occurrence’ of property
damage during the policy period that triggers liability coverage
under the policy,” not the “manifestation of loss.” That is simply

                                 28
a circular repetition of the same flawed argument, based on inapt
authority.16
      In Pennsylvania General, the court described the issue as
“whether the ‘occurrence,’ which must happen during the policy
year to trigger coverage under [defendant’s] policy, is the first
manifestation of damage rather than [the insured’s] causal
conduct.” (Pennsylvania General, supra, 185 Cal.App.4th at
p. 1530, italics added.) As discussed above, the court held a
reasonable interpretation of defendant’s policy was that the
trigger of coverage was damage to property, not the causal
conduct. (Id. at p. 1534.) The court further noted the facts were
disputed “on when the damages sought in the construction defect

16     Defendant cites Pepperell v. Scottsdale Ins. Co. (1998)
62 Cal. App. 4th 1045, 1050-1053 for the proposition that
(according to defendant and without further analysis), “under
California law, manifestation of loss is not the applicable trigger
of coverage for construction defect claims.” Pepperell does not
state that proposition. In Pepperell, the complaint alleged that
“latent and hidden” construction defects were not discovered until
they began to manifest themselves in 1991, and the insured’s
policy was in effect during construction of the home from 1988 to
1989. (Id. at p. 1048-1049.) The court held that, in light of the
terms of the policy in that case, the allegations of the complaint
regarding construction defects, and the continuing or progressive
damages caused by those defects, “the ‘continuous injury’ trigger
of coverage must be applied as a matter of law,” rather than the
“ ‘manifestation of loss’ ” trigger. (Id. at pp. 1050-1051.) Notably,
the insurance policy in Pepperell was “identical in every material
respect to the policy” in Montrose (Pepperell, at p. 1051) – which,
as defendant has been at pains to tell us, is not the case with its
policies, which were amended in order to circumvent the
Montrose principle.

                                 29
litigation first commenced” (ibid.), specifically, “over whether
damages attributable to [the insured’s] work first manifested
themselves prior to the inception of [defendant’s] policy.” (Id. at
p. 1519, fn. 2, italics added.)
       Thus, Pennsylvania General itself puts the lie to
defendant’s assertion that, despite the first appearance of actual
property damage in 2009, plaintiff must prove something more.
There is no legal support for that proposition. Defendant’s policy
“deem[s]” property damage that commenced before the policy’s
effective date (August 1, 2008) to have happened in its entirety
before that date. The only reasonable construction of this clause
is that it applies to circumstances where damage actually
appeared before the effective date of the policy, in which case the
damage “is deemed to have happened in its entirety” before that
date. But once plaintiff showed property damage that first
appeared in 2009, it was up to defendant to prove that property
damage actually occurred before that date, and of course
defendant did not and could not do so.
       And so we return to first principles. In sum:
       The parties agree, both of them citing and quoting
Whittaker Corp. v. Allianz Underwriters, Inc. (1992)
11 Cal. App. 4th 1236, that “[f]or the purpose of determining
whether there was coverage within the policy period, it is well
established that the time of the relevant ‘occurrence’ or ‘accident’
is not when the wrongful act was committed but when the
complaining party was actually damaged.” (Id. at p. 1241.) The
Moghadam property was “actually damaged” when there was
“physical injury” to their home in 2009. And it is a “settled rule”
that “an insurer on the risk when continuous or progressively
deteriorating damage or injury first manifests itself remains

                                 30
obligated to indemnify the insured for the entirety of the ensuing
damage or injury.” (Montrose, supra, 10 Cal.4th at p. 686; see
Croskey et al., Cal. Practice Guide: Insurance Litigation, supra,
¶ 7:171, p. 7A-92 [“[i]f the . . . property damage was not known to
the insured before the policy period, a [comprehensive general
liability] policy covers any such . . . damage that occurs during
the policy period, together with ‘any continuation, change or
resumption’ of that damage after the end of the policy period”].)
       Defendant’s sixth policy by its terms covered the physical
injury to the home in 2009, as well as any ensuing damage.
              ii.    The self-insured retention (SIR) claim
       Defendant’s second basis for asserting no coverage under
its policies is that plaintiff offered no evidence the applicable self-
insured retention (SIR) or deductible was satisfied under any of
the policies. (The SIR’s ranged from $15,000 to $50,000 per
occurrence for various coverages, and the deductible in the sixth
policy was $10,000 per occurrence.) Defendant says that
satisfaction of the SIR’s (in the first five policies) and the
deductible (in the sixth policy) was a condition precedent to its
coverage obligation, and plaintiff offered no proof the applicable
SIR or deductible was satisfied under any of the policies.
       Notably, defendant refers us to the record containing its
SIR and deductible endorsements, but does not quote the
language of those provisions in its brief. The “condition
precedent” language on which defendant relies is this:
       “As a condition precedent to our obligations to provide . . .
       indemnity, coverage or defense hereunder, the insured,
       upon receipt of notice of any ‘suit’, incident or ‘occurrence’
       that may give rise to a ‘suit’, and at our request, shall pay
       over and deposit with us all or any part of the deductible

                                  31
        amount as specified in the policy, requested by us, to be
        applied by us as payment toward any damages or
        supplementary payments . . . incurred in the handling or
        settlement of any such incident, ‘occurrence’ or ‘suit’.”
        (Italics added and capitalization omitted.)
(The “condition precedent” language of the SIR’s is substantively
identical. We quote the deductible provision because it is the
sixth policy that we have held otherwise provides coverage, as
discussed in part 2.c.i., ante.)
        We need not engage in a lengthy discussion of the law
governing SIR’s and deductibles. As defendant points out, the
authorities tell us that a deductible “generally is ‘a specific sum
that the insured must pay before the insurer owes its duty to
indemnify the insured for a covered loss.’ ” (Forecast Homes, Inc.
v. Steadfast Ins. Co. (2010) 181 Cal. App. 4th 1466, 1474 (Forecast
Homes); see also Croskey et al., Cal. Practice Guide: Insurance
Litigation, supra, ¶ 7:379, p. 7A-155.) The term SIR “ ‘refers to a
specific sum or percentage of loss that is the insured’s initial
responsibility and must be satisfied before there is any coverage
under the policy.’ ” (Forecast Homes, at p. 1474; see also Croskey
et al., supra, ¶ 7:384, p. 7A-160.) “Unlike a deductible, which
generally relates only to damages, an SIR also applies to defense
costs and settlement of any claim.” (Forecast Homes, at p. 1474.)
        There is a rather important caveat, however. “[C]ourts
interpreting SIR’s are all careful to note an SIR, like any
insurance provision, must be enforced according to its plain
terms.” (Forecast Homes, supra, 181 Cal.App.4th at p. 1475.) We
have just quoted those terms, and they twice specify that
payment of the deductible or the SIR is required “at our request”
and the insured “shall pay over and deposit with us all or any

                                32
part of the deductible amount [or SIR amount] as specified in the
policy, requested by us, to be applied by us as payment toward
any damages . . . .”
       In its summary judgment papers, defendant presented no
evidence that it ever requested Camarillo to “pay over and
deposit with us all or any part of the deductible.” Under the
plain terms of the endorsements, defendant’s request for payment
is a part of the “condition precedent” to its indemnity obligation.
Because there is no evidence defendant made a request for
payment of the deductible, there is necessarily no merit to
defendant’s claim it has no indemnity obligation. The same is
true of the SIR’s.
       In its reply brief, defendant cites Evanston Ins. Co. v.
American Safety Indemnity Co. (N.D.Cal. 2011) 768 F. Supp. 2d
1004 (Evanston), telling us the Evanston court “analyz[ed] the
same language in [defendant’s] policies” and “rejected the
argument that [defendant] must demand payment of the SIR to
render the SIR endorsement enforceable.” If the court had done
so, we would disagree, but that is not what the Evanston court
said or did.
       In Evanston, the insured tendered its defense to defendant,
and defendant did request payment of the SIR. (Evanston,
supra, 768 F.Supp.2d at p. 1008.) The insured did not pay the
SIR until about 15 months after its tender of defense, and the
issue was when defendant’s duty to defend attached – at the time
of tender of defense or upon payment of the SIR. The court held
the policy “clearly conditioned Defendant’s defense duty on [the
insured’s] payment of the SIR,” and “[n]o duty to defend attached
until that payment was received.” (Id. at p. 1013.)

                                33
      In short, Evanston does not involve the insurer’s failure to
demand payment of the SIR; quite the opposite. Nothing in
Evanston in any way contradicts our construction of defendant’s
deductible and SIR endorsements.
             iii. The wrap-up exclusion claim
      Defendant contends coverage is also excluded under a
“wrap-up” exclusion in its policies, which states the insurance
does not apply to “any work insured under a consolidated (Wrap
Up) Insurance Program.”17 Defendant argues that plaintiff’s
excess policy follows form to the underlying policy Everest
Indemnity issued to NMH (see fn. 1, ante), and the
supplementary declarations in the Everest policy identifying
“other named insureds” lists “[a]ll contractors and subcontractors
enrolled in the Owner Controlled Insurance Program (OCIP).”
From this, we are to conclude defendant’s policies do not cover
Camarillo’s work.
      We will not address this contention. It was not raised in
defendant’s opposition to plaintiff’s summary judgment motion or
in defendant’s own summary judgment motion. It is a classic

17    The wrap-up exclusion states: “This insurance does not
apply to any work insured under a consolidated (Wrap Up)
Insurance Program and this insurance shall have no obligation to
defend or indemnify for any claim or any project where such
wrap-up insurance exists or has ever existed. This exclusion
applies whether or not a claim is covered under such wrap-up
insurance, the limits of such wrap-up insurance are exhausted,
the carrier is unable or unwilling to pay or for any other reason.
A consolidated (Wrap Up) insurance program as referred to
herein includes any owner controlled insurance policy (OCIP) or
similar insurance policy or program which insures most or all
contractors and subcontractors involved in a project.”

                                34
example of a claim that was not “factually presented, fully
developed and argued to the trial court,” and that we will not
consider for the first time on appeal. (Peart v. Ferro (2004)
119 Cal. App. 4th 60, 70 [“ ‘unless they were factually presented,
fully developed and argued to the trial court, potential theories
which could theoretically create “triable issues of material fact”
may not be raised or considered on appeal’ ”].)
       Defendant protests that it briefed the issue in its motion for
a new trial, and that in any event it is “strictly a question of law”
that we may decide even if not raised in the trial court. First,
defendant cites no authority for the claim that raising a new
theory in a new trial motion preserves it for appeal. New
theories that could have been raised, but were not, is not one of
the causes that permits a new trial. (See Code Civ. Proc., § 657.)
Second, while an appellate court may decide pure questions of
law not raised below, defendant cites no authority requiring an
appellate court to do so or explaining why we should depart from
established appellate principles to do so here. And third, plaintiff
suggests there are questions of fact relevant to defendant’s new
contention, from which we infer defendant has not presented a
pure question of law. Accordingly, we find this a particularly
appropriate case for declining to review defendant’s new theory
for excluding coverage under its policy.
       d.    The “per occurrence limits” claim
       Next, defendant contends the award of $1,532,973.87 is
excessive because “it exceeds the $1,000,000 per occurrence limits
of each of [defendant’s] Policies.” (Under defendant’s sixth policy,
the limits of insurance include an “Each Occurrence Limit” of
$1 million and a “Products-Completed Operations Aggregate

                                 35
Limit” of $2 million.)18 Defendant says plaintiff offered no
evidence or argument that the Moghadam claim involved more
than one occurrence; the Moghadam claim “was a discrete, soil
related construction defect claim involving one residence”; and so
there is no basis to conclude the Moghadam claim involved
multiple occurrences.
       Defendant’s opposition to plaintiff’s summary judgment
motion did not raise policy limits as a defense to plaintiff’s claim
for indemnification in the entire amount of the default judgment.
Defendant did not raise its policy limits/single occurrence
argument until after the trial court’s dispositive ruling on the
summary judgment motions. There is some irony in defendant’s
complaint that, “[i]ndeed, the trial court’s ruling does not make
any finding with respect to the number of occurrence(s) in the
Moghadam Claim.” The court did not do so, because no one
raised the issue before the court ruled on the summary judgment
motions.
       Defendant again cites no authority for its assertion that
raising a new theory in its objections to the proposed judgment,
or in its new trial motion, preserves it for appeal. In short, for
the same reasons we have discussed in connection with
defendant’s wrap-up exclusion claim, we decline to review this
new theory for reversal of the summary judgment.
       e.    NMH’s attorney fees and costs
       Defendant contends that plaintiff cannot recover the
portion of the default judgment – $356,340.65 – that represents

18    The other policies also have limits of $1 million each
occurrence. The first four policies have a $1 million (and the fifth
a $2 million) products-completed operations aggregate limit.

                                 36
NMH’s attorney fees and costs. Defendant offers two bases for
this assertion.
       Defendant first says that under its policies, attorney fees
and costs are not “property damage,” despite legal authority to
the contrary. (Golden Eagle Ins. Co. v. Insurance Co. of the West
(2002) 99 Cal. App. 4th 837, 842 [“the indemnitee’s defense costs
are sums the insured is legally obligated to pay as damages
because of property damage”].) Defendant makes an elaborate
argument to the effect that its policy definition of “insured
contract” is different from the standard definition in the policies
in Golden Eagle, with the result (it claims) that NMH’s defense
fees in the Moghadam claim are not covered. Then, defendant
says the $356,340.65 in attorney fees and costs – as well as “pre-
judgment interest on the entirety of the default judgment” –
cannot be recovered in a direct action under section 11580. This
is because attorney fees and prejudgment interest are “costs”
under the “supplementary payments” provision of defendant’s
policy, and, defendant claims, a judgment creditor’s right to
recover does not extend to amounts payable under a policy’s
supplementary payments provision.
       Both of defendant’s contentions suffer from the same defect
as defendant’s claims about the wrap-up exclusion and policy
limits: They were not made during the summary judgment
proceedings. Defendant raised these assertions only after the
trial court’s summary judgment ruling. Moreover, defendant’s
claim that prejudgment interest cannot be assessed on the
amount of the default judgment misapprehends the law. NMH
obtained the default judgment on August 7, 2013, and the
judgment in this case assesses prejudgment interest calculated
from August 7, 2013. Plaintiff is entitled to prejudgment interest

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under Civil Code section 3287, not because of any provision in
defendant’s policy.
                         DISPOSITION
     The judgment is affirmed. Plaintiff is to recover its costs on
appeal.

                              GRIMES, J.
      WE CONCUR:

                        BIGELOW, P. J.

                        WILEY, J.

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