Pardee Construction Co. v. Insurance Co. of the West

In Pardee Construction Co. v. Insurance Co. of the West (2000) 77 Cal.App.4th 1340, the Fourth District considered whether an insurance company had the duty to defend Pardee in a construction defects lawsuit. The lawsuit involved the development of the Heritage Concord Villas Project (Heritage project) in the Mira Mesa area of San Diego. ( Id. at p. 1346.) From December 27, 1985, through August 20, 1987, Pardee contracted with a number of subcontractors to work on the Heritage project. Each subcontract, as the subcontracts at issue before us, required the subcontractor to obtain general liability insurance naming Pardee as an additional insured on all policies for work performed on the Heritage project, including completed operations. (Ibid.) Many of the subcontractors did not procure insurance naming Pardee as an additional insured until after the completion of the Heritage project, and none of the subcontractors had procured insurance at the time they executed their subcontracts with Pardee. ( Id. at p. 1348.) The Fourth District in Pardee reversed the lower court, which had ruled that the policies did not provide coverage because the Heritage project had been completed prior to the effective date of the policies. ( Pardee, supra, 77 Cal.App.4th at p. 1353.) It explained that the "unambiguous language of the policies and endorsements" provided Pardee with coverage for completed operations of the named insured subcontractors. ( Id. at pp. 1355-1356.) It explained that counsel for the insurers "acknowledged the policies provided the named insured subcontractors completed operations coverage for projects completed before inception of the policies." ( Id. at p. 1356.) Thus, the question before the court was not the intent of the parties, but whether "the additional insured endorsements explicitly exclude coverage for the subcontractors' completed operations; for coverage limitations must be 'conspicuous, plain and clear' in nature in order to be effective ." (Ibid.) The endorsements did not limit coverage, nor did they specifically exclude operations completed. ( Id. at p. 1358.) Consequently, the court held that the clear language of the policies and endorsements provided Pardee with coverage and therefore it was improper to consider extrinsic evidence. ( Id. at p. 1360.)