Southern California Edison Co. v. Harbor Insurance

Following a nonjury trial, judgment was entered declaring that insureds under two insurance policies were not entitled to reimbursement for expenses claimed pursuant to “sue and labor” clauses contained in each policy. Insureds appeal from the judgment.

A consortium consisting of six utility corporations and a political subdivision of the State of Arizona, headed by Southern California Edison Company, joined together to construct a coal-fired steam generating plant located near Farmington, New Mexico. The plant comprised units Nos. 4 and 5 of a larger complex called the Four Comers Project. A number of insurance companies, each assuming a specific percentage of risk, combined to issue to Edison two insurance policies. The policies provided successive periods of coverage. The first, a builder’s risk policy, provided coverage during the course of construction of the units. The builder’s risk policy became effective on April 4, 1966, and continued in effect (with an exception not relevant here) until the commercial operating dates of units 4 and 5, July 1, 1969, and July 1, 1970, respectively. Unless specifically excluded, the builder’s risk policy covered “all property and…