No Coverage for Construction Defect Claim Only Impacting Insured’s Work

    In a coverage dispute between two insurers over a claim for damages caused by faulty workmanship, the court found there was no right to equitable contribution or indemnity. Travelers Prop. Cas. Co. of Am. v. Mallcraft, Inc., 2023 Cal. Super. LEXIS 67568 (Cal. Super. Ct. Sept. 15, 2023).

    Mallcraft was the general contractor for a building project and was sued for construction defects. Travelers was an additional insured under a policy issued to a subcontractor, KitCor. Travelers defended Mallcraft in an arbitration. Travelers sought equitable contribution and equitable indemnity from Hartford, Mallcraft's insurer. 

    Mallcraft and Travelers stiulated to a judgment agianst Mallcraft for all costs Travelers incurred in the arbitration. Travelers' insured, KitCor, was not implicated in the construction defect claims against Mallcraft. The judgment set forth findings, including the fact that the underlying plaintiff never made any claim that KitCor perfomred work on the project or casued property damage.

    Hartford demonstrated that it had no duty to defend Mallcraft in the arbitration. Based upon the undisputed facts, exclusions in Hartfords policy barred coverage. Hartford demonstrated that the claims against Mallcraft involved repair and replacement of Mallcraft's defective HVAC work. California cases held that coverage did nto exist where the only property damage was the defective construction, and damage to other property had not occurred. 

    Therefore Travelers' claims for equitable contribution and reimbursement failed as a matter of law.