California Traditions, Inc. v. Claremont Liability Insurance

California Traditions, Inc. (California Traditions), the developer of a housing development, hired Ja-Con Systems, Inc. (Ja-Con), to perform the rough framing work for 30 residential units in the development. Ja-Con was insured under a comprehensive general liability (CGL) policy issued by Claremont Liability Insurance Company (Claremont). A buyer of one of the units sued California Traditions for defective construction, and California Traditions cross-complained against Ja-Con for indemnity.

Claremont initially provided a defense for Ja-Con but subsequently withdrew its defense based on an exclusion in its CGL policy that excluded coverage for work on condominium and townhome projects (the exclusion). California Traditions, after obtaining a judgment on its cross-complaint against Ja-Con for more than $2 million filed this action against Claremont under Insurance Code section 11580 seeking to satisfy from the Claremont CGL policy the judgment it obtained against Ja-Con.

Claremont moved for summary judgment contending that, as a matter of law, the exclusion precluded any possibility of coverage for the claims asserted against its insured because the undisputed facts…