>
>American Casualty Co. of Reading, Pa.  v. General Star Indemnity Co., (Cal. App.½7/05)
>
>Carolco entered into a “license agreement” with Crowvision whereby Crowvision could use Carolco’s production studio to produce a movie (“The Crow”).  In the agreement, Crowvision agreed indemnify and hold harmless Carolco for all liability by  reason of any loss to any persons (including Crowvision employees) or property, resulting from any cause whatsoever, or arising out of the condition of the licensed premises or any portion thereof. . . “ There was a specific exception to this indemnification, however, for any injury resulting “solely” from the negligence of Carolco.   One reason for this exception may have been that a California statute has declared void as against public policy any provision in an indemnity agreement involving a construction project whereby one party indemnifies the other against liability arising from the other party’s sole negligence. 

>
>A separate provision of the license agreement required that Crowvision obtain liability insurance and that Carolco be named an additional insured under this insurance. 

>
>Crowvision did obtain liability insurance, both primary and “umbrella,” and provided that Carolco would be an additional insured under both policies. (Interestingly, the coverage covered “lessors of property leased to insured for the filming operation.”  The court stated that it was not questioned that this definition applied to the “licensor” Carolco.   Carolco also had its own primary and umbrella liability insurance.

>
>During the course of the movie production, an employee of Crowvision was injured due to the malfunction of a lift on the premises.  Arguably the malfunction was the result of the sole negligence of Carolco, and the court assumes this to be true for purposes of this lawsuit.  Crowvision was protected against significant liability to the employee, in any event, by the workmen’s compensation laws.  But the employee sued Carolco and obtained a judgment for $1.75 million.   Pursuant to an interim order during litigation, Crowvision’s and Carolco’s primary insurers each paid a portion of the judgment.

>
>Crowvision’s insurer, American,  then sued Carolton’s umbrella insurer, General Star,  to recover the amounts American paid in the defense of the case and the judgment.   General Star counterclaimed to be reimbursed from American for amounts that it had been required to pay under its “umbrella” coverage.  (We are not told how much this was or how it was incurred.)  In essence, General Star argued that both American and Carolton’s primary insurer were the companies primarily liable, and that it was entitled to reimbursement under principle’s of contribution.   The court’s opinion does not deal directly claims under the indemnification agreement because it concludes that agreement would not alter the result that would apply assuming that there was no indemnification.  Even assuming that Carolton was solely liable, the court held, on summary judgment, that American was a primary insurer of the loss and had to reimburse General Star (and not vice versa).

>
>The court concluded that, because American had named Carolco as an “additional insured,” with regard to liability arising out of the production activities, it was a primary insurer as to any claims, and General Star - an “excess insurer” as to such liability, had no duty to defend or pay claims until all primary coverage was exhausted.  The primary coverage of the two primary insurers here covered the entire amount of the claim. 

>
>The court was careful to delineate the difference between the claims of the parties here for “equitable contribution” and a claim for equitable subrogation.  Subrogation, by which an insurer “stands in the shows” of its injured to enable it to get recovery against others with liability for an insured claim, did not apply here because Carolton, as an additional insured, could not be liable to American under subrogation principles (The court does not indicate whether there was an independent waiver of subrogation in the license agreement - the “additional insured” clause essentially made it moot anyway.)

>
>The court argued that American’s view, nevertheless, was in the nature of equitable subrogation, since under equitable contribution the only question to be asked is whether the event is covered and whether the insurers in question are primary or secondary.  The court stated that American’s position appeared to be grounded on the language of the indemnity provision, which stated that there could be no indemnity for claims as to which Carolco was “solely liable.”  But this language was of no consequence in a contribution action, and no one was really make an indemnification claim. 

>
>The court distinguished another case in which an indemnitee’s insurer can avoid equitable contribution for losses covered by the indemnification.  That makes sense, but in the instant case the contribution was being sought from the indemnitor’s insurer - not on the basis of the indemnification, but on the basis of general equitable contribution principles.

>
>Comment 1: The case strikes the editor as a valuable summary of the extensive reach of “additional insured” coverage.  It would seem that, wherever practical, landlords and licensors are well advised to seek such coverage and, if they get it, perhaps need to less concerned about indemnification (at least to the extent that they feel that insurance coverage adequately covers any risks.) 

>
>Comment 2: It should be noted that, in a number of jurisdictions, a tenant who pays for insurance obtained by the landlord pursuant to an “additional rent” clause or other “pass through” arrangement is treated as an implied additional insured.  This concept has even been applied in a few cases to tenants who do not pay designated additional rent, but who have not contractually agreed to buy liability insurance, since it would appear that the landlord is relying upon the tenant’s rent to pay for the landlord’s liability insurance, whether the lease says so or not. 

>
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