Bernstein

Plaintiffs appeal the stipulated judgment entered following grant of summary adjudication of plaintiffs’ causes of action for breach of contract and breach of the covenant of good faith and fair dealing in favor of defendant Consolidated American Insurance Company (Consolidated). Plaintiffs contend that they were entitled to a defense of certain third party claims pursuant to the terms of the contractual liability endorsement of their general liability policy issued by Consolidated. It is this contention which is the subject of this appeal.

Facts

Plaintiffs Norman and Henrietta Bernstein and Fred and Rosella Bernstein (the Bernsteins) were the principal shareholders of Century Conditioning Corp. (Century), a California corporation. Century was a full-service mechanical contractor, whose primary business was the installation of plumbing systems, usually as a subcontractor on large-scale construction projects.

In 1982, the City of Santa Monica (the City) retained De Leuw, Gather & Company (De Leuw) as architects to expand and upgrade an existing City bus terminal (the Project). The City awarded the construction contract to Mallcraft, Inc., who in turn awarded a…