Facts

O'Leary Construction is a general contractor that was sued for an alleged electrocution at an Oxnard apartment building O'Leary was remodeling. Preferred Contractors Insurance Company Risk Retention Group (PCIC) refused to defend O'Leary in the case. O'Leary spent about $70,000 on defense costs before the plaintiff dismissed it from the lawsuit. O'Leary then commenced this action. The court granted O'Leary's motion for summary adjudication, ruling PCIC had a duty to defend and breached that duty.

PLAINTIFF'S CONTENTIONS: Plaintiff contended PCIC breached its duty to defend and committed bad faith when it refused to defend. Before O'Leary accepted the remodeling job, a PCIC underwriter said O'Leary was covered for work on apartment buildings. Nevertheless, when O'Leary tendered the complaint in the underlying action to PCIC for defense, the insurer denied coverage, based in part upon an exclusion for damage to condominiums, townhomes and timeshares. The court ruled that exclusion did not apply to apartment buildings.

DEFENDANT'S CONTENTIONS: Defendant denied the contentions.

Settlement Discussions

The case was mediated by retired OCSC Judge Steven Sundvold.

Damages

$70,000 in defense fees spent defending the underlying action.

Result

The case settled for $362,500. O'Leary previously settled with its insurance broker for $40,000.