Garamendi

A group of homeowners—plaintiffs in the underlying action and claimants in the proceedings from which this appeal was taken (claimants)—sued the developer of their subdivision for various alleged defects in their homes. The subcontractor whose liability is at issue in this appeal, Rampart General, Inc. (Rampart), was insured under commercial general liability policies issued by Golden Eagle Insurance Company (Golden Eagle). When Rampart and other subcontractors were brought into the litigation, Golden Eagle undertook the defense of Rampart. However, when Golden Eagle discovered on the eve of trial that Rampart’s corporate status had been suspended for failure to pay franchise taxes, and that Rampart therefore could not participate in the litigation, Golden Eagle declined to intervene on its own behalf. Two other subcontractors remained in the litigation and, after a court trial, claimants obtained judgment against Rampart for $1,323,523.27, consisting of $283,322.33 property damages; $213,500.00 personal injury damages; $540,000.00 for Rampart’s portion of the damages incurred by the developer, the right to recover which had been assigned to claimants as part of their…