Continental Casualty Co. v. Superior Court

In Continental Casualty Co. v. Superior Court (2001) 92 Cal.App.4th 430, the Court of Appeal concluded a general liability policy did not cover any of the claims made in a third party lawsuit against the insured and thus the insurer had no duty to provide a defense. (Id. at p. 433.) The policy obligated the insurer to "'pay those sums that the insured becomes legally obligated to pay as damages because of . . . "property damage" to which this insurance applies . . . .'" (Id. at p. 435, fn. 8.) The appellate court held the third party action sought to enforce a claim for intangible economic losses resulting from the operation of a partnership business, not for property damage. (Id. at p. 439.) "Nowhere in its complaint did the third party allege that it had sustained property damage. Rather, it sought a declaration that the insured was 'wholly' liable for certain obligations incurred by the partnership, that is, the construction defect claims." (Id. at pp. 439-440.) "Most significantly, the only asserted construction defect claims that would necessarily be involved in the underlying action were those claims that were not covered under the insurance policy." (Id. at p. 440.)