ISOP

This appeal concerns an insurance coverage dispute between an excess insurer and a primary insurer over the obligation to defend a housing developer in a construction defect case. The court determined the excess insurer, Insurance Company of the State of Pennsylvania (ISOP), had an obligation to pay "the developer’s defense costs. ISOP asserts other carriers providing coverage for several subcontractors, and which named the developer as an additional insured, had the duty to provide defense coverage. It asserts the California rule of “horizontal exhaustion” required the payment from these primary policies before any excess or umbrella policies could be triggered. We conclude the trial court got it right. The judgment is affirmed.

I

Facts

Barratt American, Inc., Windsong Partners, and Pacific Gateway Homes (collectively Baixatt) are the developers of the Windsong Common Interest Development in Orange County. Barratt hired several subcontractors to work on the project. It also secured several layers of insurance protection.

First, Barratt obtained primary insurance coverage from United National Insurance to provide indemnity against all losses. Second, Barratt required…