Jamestown Builders, Inc. v. General Star Indemnity Co.

—Here we apply a no-voluntary-payments provision to preclude insurance coverage for repair expenses voluntarily incurred by a home developer. The developer neither notified the insurer nor sought its consent before presenting it with the fait accompli of completed settlements. Because there was no antecedent breach of any duty to defend and because this is not a late notice claim involving an ongoing lawsuit, the rule requiring a showing of prejudice does not apply.

I

Plaintiffs Jamestown Builders, Inc., and A-M Homes (collectively Jamestown) developed the 300-home Saltaire and Sonterra housing tracts in Laguna Niguel during the mid-1980’s. Jamestown obtained a comprehensive general liability policy from defendant General Star Indemnity Company for a one-year period from November 1986 to November 1987. The Sonterra project was completed in November 1987 and the Saltaire shortly afterward, in June 1988.

Many of the new homeowners were dissatisfied with the construction, complaining the houses were not watertight. These complaints began as a trickle in the late 1980’s, but intensified in the early 1990’s as more homeowners demanded that Jamestown fix the problems and…