Facts

On May 4, 2006, Kamran Banayan purchased general liability insurance coverage from Essex Insurance Company. Banayan purchased the Essex policy to provide general liability insurance coverage for his operations as an owner/builder at real property located in La Jolla. The policy was purchased in conjunction with a course of construction policy for property damage and a workers' compensation policy to cover injuries to Banayan's employees at the project.

In June 2006, Banayan contacted Mountain to provide transportation services for hauling fill dirt and materials from Banayan's project at La Jolla Corona Drive. Mountain was a dispatcher, whose sole responsibility was to park trucks on the city streets, which would be loaded by Banayan, and then haul the fill dirt and material away from the site. Mountain sent truck driver Scott Turner to haul fill dirt and material away from the site. Turner was not required to hold a contractor's license. Turner did not enter any contract with Banayan but rather worked under a sub-hauler agreement with Mountain.

On June 21, 2006, Turner was sitting in the cab of his truck on the public street while Banayan's worker attempted to load the truck with fill dirt. Due to the steep slope on the street, the scoop front-end of the loader became entangled with the truck bed, causing both to tip over on their sides with Turner in the cab of his truck. While Essex had sent Banayan's broker the certificate of insurance, that certificate was not sent to Banayan, nor was the actual policy delivered to Banayan or his broker until after the date of Turner's accident.

Turner sustained significant injuries arising from the incident, including medical bills in excess of $236,000 and loss of earnings of $80,000-$200,000. Essex defended Banayan in the underlying case through independent counsel and settled the matter paying its $1 million policy limit pursuant to a reservation of rights. Essex thereafter pursued its declaratory relief and reimbursement action against its insured, Banayan, seeking reimbursement of approximately $1,250,000 representing the defense fees paid and the $1 million policy limit settlement paid on his behalf.

Result

The court found in favor of Banayan and against Essex on all causes of action. The court held that Essex failed to timely deliver its policy such that it could not rely upon the exclusionary language found in its manuscript additional conditions endorsement. Even though the certificate was sent to Banayan's broker, that certificate did not contain sufficient information regarding the exclusionary language relied upon by Essex in the lawsuit which purported to exclude coverage for bodily injury or to contractors or subcontractors. The court further found that even if the policy had been timely delivered, the claims were all covered because Turner was not a "subcontractor" or "contractor" as those terms were used in the exclusion. Defendants Scott Turner and Kristen Turner were dismissed as nominal defendants.