Stanford Law School - Robert Crown Law Library

Filed 7/21/08

IN THE SUPREME COURT OF CALIFORNIA

KIRK CRAWFORD et al.,
Plaintiffs and Appellants,
S141541
v.
Ct.App. 4/3 G032301
WEATHER SHIELD MFG. INC.,
) Orange
County
Defendant and Appellant.
Super. Ct. Nos. 815154, 815156,
) 815182,
816278

Standard comprehensive liability insurance policies provide that the insurer
must both indemnify and defend the insured against claims within the scope of the
policy coverage. The insurer’s duty to defend is broader than its duty to
indemnify. The latter duty runs only to claims that are actually covered by the
policy, while the duty to defend extends to claims that are merely potentially
covered. (E.g., Buss v. Superior Court (1997) 16 Cal.4th 35, 45-46 (Buss);
Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295.) “The
[insurer’s] defense duty is a continuing one, arising on tender of defense and
lasting until the underlying lawsuit is concluded [citation], or until it has been
shown that there is no potential for coverage . . . .” (Montrose, supra, at p. 295.)
Here, however, we address issues concerning the contractual duty to defend
in a noninsurance context. We consider whether, by their particular terms, the
provisions of a pre-2006 residential construction subcontract obliged the
1

---

subcontractor to defend its indemnitee — the developer-builder of the project —
in lawsuits brought against both parties, insofar as the plaintiffs’ complaints
alleged construction defects arising from the subcontractor’s negligence, even
though (1) a jury ultimately found that the subcontractor was not negligent, and
(2) the parties have accepted an interpretation of the subcontract that gave the
builder no right of indemnity unless the subcontractor was negligent. We conclude
that the answer is yes. We will therefore affirm the judgment of the Court of
Appeal.
FACTS AND PROCEDURAL BACKGROUND
The basic facts are not in dispute. J.M. Peters Co. (JMP) was the
developer, builder, and general contractor of a large Huntington Beach residential
project. Weather Shield Manufacturing Co., Inc. (Weather Shield), contracted
with JMP to manufacture and supply wood-framed windows for the project. In
the contract, Weather Shield promised (1) “to indemnify and save [JMP] harmless
against all claims for damages . . . loss, . . . and/or theft . . . growing out of the
execution of [Weather Shield’s] work,” and (2) “at [its] own expense to defend
any suit or action brought against [JMP] founded upon the claim of such
damage[,] . . . loss or theft.” (Italics added.)
In September and October 1999, 220 owners of 122 finished homes in the
project sued JMP, Weather Shield, and other participants in the project’s
construction. The defendants included Darrow the Framing Corporation
(Darrow), the project’s principal subcontractor, whose responsibilities included
framing the structures and installing the windows. The complaints alleged
numerous construction defects, including electrical, plumbing, roofing, chimney,
framing, and other structural problems. As relevant here, they also asserted that,
because of improper design, manufacture, and installation, windows in the homes,
2

---

including those supplied by Weather Shield, leaked and fogged, causing extensive
damage. Theories of negligence, strict liability, breach of warranty, and breach of
contract were set forth.1
In April 2000, JMP cross-complained against Weather Shield, Darrow, and
all the other project subcontractors sued by the homeowners. The cross-
complaints asserted, among other things, that under the pertinent subcontract
provisions — all of which had been drafted by JMP and were identical on the
point — the subcontractors owed JMP duties of indemnity and defense against the
homeowners’ complaints. The cross-complaints sought declaratory relief with
respect to JMP’s alleged indemnity and defense rights.2
JMP, and all the subcontractors except Weather Shield and Darrow, settled
before trial. The “sliding scale” settlement agreement provided the homeowners a
minimum payment of $2.55 million, and guaranteed an additional sum of $1.45
million against any recovery from the nonsettling subcontractors. The settling
defendants also agreed to assist the homeowners in prosecuting their claims
against the nonsettling parties. JMP and the settling subcontractors mutually

1
The cases were consolidated for pretrial and trial purposes.
2
JMP’s cross-complaints alleged that the cross-defendant subcontractors had
a “present” duty to provide, and JMP had a “present” right to receive, a
contractual defense. Each cross-complaint also recited that “[b]y way of this
Cross-Complaint, [JMP] hereby tenders the defense of this action to the Cross-
Defendants, and each of them, pursuant to the applicable subcontracts. [JMP] is
informed and believed and based thereon alleges that the Cross-Defendants, and
each of them have and/or will reject, ignore, or fail to properly accept the tender of
defense.” The record is silent as to whether JMP had previously tendered defense
of the homeowners’ actions to the cross-defendant subcontractors, or any of them.
Weather Shield does not urge on appeal that it was absolved of any duty to defend
by reason of JMP’s failure to timely tender the defense of the homeowners’
actions.
3

---

released all claims, demands, and liabilities among themselves. All complaints
and cross-complaints were dismissed except as to Weather Shield and Darrow.
In July 2002, during final pretrial proceedings, Weather Shield moved to
dismiss the homeowners’ strict liability causes of action. The motion cited then
extant case law holding that a subcontractor hired by a developer — even a
subcontractor that supplied a component product rather than a service — could not
be strictly liable for defects in mass-produced homes, unless the subcontractor also
owned or controlled the housing development. (See, e.g., Casey v. Overhead
Door Corp. (1999) 74 Cal.App.4th 112, 119-120 (Casey); La Jolla Village
Homeowners’ Assn. v. Superior Court (1989) 212 Cal.App.3d 1131, 1146 (La
Jolla Village).) The court granted the motion, subject to a reevaluation of
prejudice in the event of an intervening change in the law.
The window leak and framing issues went to trial against Weather Shield
and Darrow on the remaining theories of negligence and breach of warranty. In
October 2002, the jury returned general verdicts against Darrow and in favor of
Weather Shield. The jury awarded the homeowners approximately $1 million in
damages against Darrow. Following the jury verdict, Darrow settled all the
complaints against it.
Thereafter, in March 2003, JMP’s cross-complaint against Weather Shield
was separately tried to the court. JMP sought both (1) express indemnity for
amounts paid to the homeowners in settlement, and (2) under the duty-to-defend
provisions of Weather Shield’s subcontract, attorney fees and expenses incurred
by JMP in defending itself against the homeowners’ suit.
The trial court ruled that the subcontract’s terms obliged Weather Shield to
indemnify JMP for amounts paid to the homeowners only if Weather Shield was
found negligent. Thus, the court determined, the jury’s verdict that Weather
Shield was not negligent absolved Weather Shield of indemnity liability in this
4

---

case. On the other hand, the court concluded, the subcontract did give Weather
Shield responsibility for JMP’s legal defense against the homeowners’ claims,
insofar as those claims concerned the windows supplied by Weather Shield,
regardless of whether Weather Shield was ultimately found negligent.
JMP presented evidence that it had incurred $375,069 in attorney fees to
defend the homeowners’ claims, and that 70 percent of the homeowner settlement
amount was attributable to the window problems. JMP therefore urged that, under
their subcontracts, Weather Shield and Darrow were together liable for 70 percent
of JMP’s defense fees, or $262,548. The court apportioned this amount equally
between Darrow and Weather Shield, and therefore awarded JMP $131,274 in
damages against Weather Shield. The court also found Weather Shield
contractually liable to JMP, as the prevailing party on JMP’s cross-complaint, for
$46,734 in attorney fees incurred by JMP to prosecute the cross-action.
Meanwhile, in December 2002, this court held in Jimenez v. Superior Court
(2002) 29 Cal.4th 473 (Jimenez) that, contrary to the teaching of such cases as
Casey, supra, 74 Cal.App.4th 112, and La Jolla Village, supra, 212 Cal.App.3d
1131, the manufacturer or supplier of a component part installed in a mass-
produced home may be held strictly liable when a defect in the component causes
damage to other parts of the structure. (Jimenez, supra, at p. 484.)
Following entry of judgment in this case in March 2003, the homeowners
moved for a judgment notwithstanding the verdict (judgment NOV) (Code Civ.
Proc., §§ 629, 659) and a new trial (id., §§ 657, 659) against Weather Shield.
Among other things, the homeowners asserted that, under Jimenez, they were
entitled to try their previously dismissed strict liability causes of action. In May
2003, the court denied the motion for a judgment NOV, but granted a new trial
against Weather Shield on the issue of strict liability.
5

---

Weather Shield appealed (1) the new trial order, and (2) the declaratory
relief judgment insofar as it required Weather Shield to reimburse JMP’s expense
of defending the homeowners’ action and prosecuting JMP’s cross-complaint.
Two of the groups of homeowner plaintiffs filed protective cross-appeals from the
judgment against them, and in Weather Shield’s favor, on the construction-defect
claims. JMP did not appeal the order absolving Weather Shield from contractual
indemnity liability for amounts paid by JMP to the homeowners.3
In a divided decision, the Court of Appeal affirmed the orders and
judgments challenged by Weather Shield, and dismissed the cross-appeals as
moot. On the issue of Weather Shield’s liability for JMP’s defense, regardless of
its own negligence, the majority reasoned, in essence, that Weather Shield’s
promise “to defend” JMP against suits founded upon claims arising out of the
execution of Weather Shield’s work necessarily contemplated an immediate duty
to provide a service, which duty arose at the time such a suit was brought and a
defense was therefore needed. Thus, the majority concluded, the duty could not
depend upon the outcome of issues to be litigated in the very action Weather
Shield was obliged to defend.
The concurring and dissenting opinion argued that the contract language
did not compel the majority’s interpretation of the duty to defend. Moreover, the
concurring and dissenting opinion urged, policy concerns weigh against allowing

3
We were informed by the parties that, following the trial court judgment,
JMP assigned all its rights thereunder to the homeowners. The homeowners then
defended JMP’s defense-cost award in the Court of Appeal. In this court as well,
the homeowners have briefed the defense-cost issue as assignees of JMP’s rights
under the defense-cost award.
6

---

a builder or developer with superior bargaining power to impose contractual
defense obligations on a nonnegligent subcontractor.
Weather Shield sought review, raising both the new-trial and defense-cost
issues. We granted review, limited to the following issue: Did a contract under
which a subcontractor agreed “to defend any suit or action” against a developer
“founded upon” any claim “growing out of the execution of the work” require the
subcontractor to provide a defense to a suit against the developer even if the
subcontractor was not negligent?4 We turn to that issue.
DISCUSSION
Parties to a contract, including a construction contract, may define therein
their duties toward one another in the event of a third party claim against one or
both arising out of their relationship. Terms of this kind may require one party to
indemnify the other, under specified circumstances, for moneys paid or expenses
incurred by the latter as a result of such claims. (See Civ. Code, § 2772
[“Indemnity is a contract by which one engages to save another from a legal
consequence of the conduct of one of the parties, or of some other person.”].)5
They may also assign one party, pursuant to the contract’s language, responsibility
for the other’s legal defense when a third party claim is made against the latter.

4
Subsequent to our grant of review, an issue arose whether, despite our
limitation of issues, the pendency of review precluded further proceedings in the
trial court under the new trial order, the propriety of which order we did not intend
to address. Concluding that there was no reason to delay the homeowners’ strict-
liability trial while we considered the defense-cost issue, we therefore dismissed
review with respect only to the order granting a new trial on that issue, as affirmed
by the Court of Appeal. We directed the Court of Appeal to issue a partial
remittitur in accordance with the partial dismissal order.
5
All further unlabeled statutory references are to the Civil Code.
7

---

(See Mel Clayton Ford v. Ford Motor Co. (2004) 104 Cal.App.4th 46, 49, 55 (Mel
Clayton Ford).)
As befits the contractual nature of such arrangements, but subject to public
policy and established rules of contract interpretation, the parties have great
freedom to allocate such responsibilities as they see fit. (E.L. White, Inc. v. City of
Huntington Beach (1978) 21 Cal.3d 497, 507 (E.L. White, Inc.); Heppler v. J.M.
Peters Co. (1999) 73 Cal.App.4th 1265, 1276-1277 (Heppler).) “When the parties
knowingly bargain for the protection at issue, the protection should be afforded.”
(Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 633 (Rossmoor);
see Heppler, supra, at p. 1277.) Hence, they may agree that the promisor’s
indemnity and/or defense obligations will apply only if the promisor was
negligent, or, conversely, even if the promisor was not negligent. (Heppler, supra,
at p. 1277; Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997)
53 Cal.App.4th 500, 505 (Continental Heller); Peter Culley & Associates v.
Superior Court (1992) 10 Cal.App.4th 1484, 1492 (Peter Culley & Associates).)
In general, such an agreement is construed under the same rules as govern
the interpretation of other contracts. Effect is to be given to the parties’ mutual
intent (§ 1636), as ascertained from the contract’s language if it is clear and
explicit (§ 1638). Unless the parties have indicated a special meaning, the
contract’s words are to be understood in their ordinary and popular sense.
(§ 1644; Continental Heller, supra, 53 Cal.App.4th 500, 504; accord, Centex
Golden Construction Co. v. Dale Tile Co. (2000) 78 Cal.App.4th 992, 996-997
(Centex Golden).)
Though indemnity agreements resemble liability insurance policies, rules
for interpreting the two classes of contracts do differ significantly. Ambiguities in
a policy of insurance are construed against the insurer, who generally drafted the
policy, and who has received premiums to provide the agreed protection. (See,
8

---

e.g., Buss, supra, 16 Cal.4th 35, 47-48; La Jolla Beach & Tennis Club, Inc. v.
Industrial Indemnity Co. (1994) 9 Cal.4th 27, 37-38.) In noninsurance contexts,
however, it is the indemnitee who may often have the superior bargaining power,
and who may use this power unfairly to shift to another a disproportionate share of
the financial consequences of its own legal fault. (E.g., Goldman v. Ecco-Phoenix
Elec. Corp. (1964) 62 Cal.2d 40, 49 (Goldman); see Regan Roofing Co. v.
Superior Court (1994) 24 Cal.App.4th 425, 436 (Regan Roofing).)
This public policy concern influences to some degree the manner in which
noninsurance indemnity agreements are construed. For example, it has been said
that if one seeks, in a noninsurance agreement, to be indemnified for his or her
own active negligence, or regardless of the indemnitor’s fault — protections
beyond those afforded by the doctrines of implied or equitable indemnity —
language on the point must be particularly clear and explicit, and will be construed
strictly against the indemnitee. (E.g., E.L. White, Inc., supra, 21 Cal.3d 497, 507;
Rossmoor, supra, 13 Cal.3d 622, 628; Goldman, supra, 62 Cal.2d 40, 44; Centex
Golden, supra, 78 Cal.App.4th 992, 998; Heppler, supra, 73 Cal.App.4th 1265,
1278.)
For similar public policy reasons, statutory law imposes some absolute
limits on the enforceability of noninsurance indemnity agreements in the
construction industry. At the time Weather Shield contracted with JMP, a party to
a construction contract could not validly agree to indemnify the promisee for the
latter’s sole negligence or willful misconduct. (§ 2782, subd. (a); see also § 1668.)
Finally, Civil Code section 2778, unchanged since 1872, sets forth general
rules for the interpretation of indemnity contracts, “unless a contrary intention
appears.” If not forbidden by other, more specific statutes, the obligations set
forth in section 2778 thus are deemed included in every indemnity agreement
unless the parties indicate otherwise. Several subdivisions of this statute touch
9

---

specifically on the indemnitor’s obligations with respect to the indemnitee’s
defense against third party claims.
In this regard, the statute first provides that a promise of indemnity against
claims, demands, or liability “embraces the costs of defense against such claims,
demands, or liability” insofar as such costs are incurred reasonably and in good
faith. (§ 2778, subd. 3, italics added.) Second, the section specifies that the
indemnitor “is bound, on request of the [indemnitee], to defend actions or
proceedings brought against the [indemnitee] in respect to the matters embraced
by the indemnity,” though the indemnitee may choose to conduct the defense.
(Id., subd. 4, italics added.) Third, the statute declares that if the indemnitor
declines the indemnitee’s tender of defense, “a recovery against the [indemnitee]
suffered by him in good faith, is conclusive in his favor against the [indemnitor].”
(Id., subd. 5.) On the other hand, section 2778 provides, if the indemnitor got no
reasonable notice of the action, or was not allowed to control the indemnitee’s
defense, recovery by the third party against the indemnitee is only presumptive
evidence against the indemnitor. (Id., subd. 6.)
With these principles in mind, we examine the pertinent terms of Weather
Shield’s subcontract with JMP. We agree with the Court of Appeal majority that,
even if strictly construed in Weather Shield’s favor, these provisions expressly,
and unambiguously, obligated Weather Shield to defend, from the outset, any suit
against JMP insofar as that suit was “founded upon” claims alleging damage or
loss arising from Weather Shield’s negligent role in the Huntington Beach
residential project. Weather Shield thus had a contractual obligation to defend
such a suit even if it was later determined, as a result of this very litigation, that
Weather Shield was not negligent.
We focus on the particular language of the subcontract. Its relevant terms
imposed two distinct obligations on Weather Shield. First, Weather Shield agreed
10

---

“to indemnify and save [JMP] harmless against all claims for damages to persons
or to property and claims for loss, damage and/or theft . . . growing out of the
execution of [Weather Shield’s] work.” Second, Weather Shield made a separate
and specific promise “at [its] own expense to defend any suit or action brought
against [JMP] founded upon the claim of such damage . . . loss, . . . or theft.”
(Italics added.)
A contractual promise to “defend” another against specified claims clearly
connotes an obligation of active responsibility, from the outset, for the promisee’s
defense against such claims. The duty promised is to render, or fund, the service
of providing a defense on the promisee’s behalf — a duty that necessarily arises as
soon as such claims are made against the promisee, and may continue until they
have been resolved. This is the common understanding of the word “defend” as it
is used in legal parlance. (See, e.g., Black’s Law Dict. (8th ed. 2004) p. 450,
col. 2 [“2. To represent (someone) as an attorney . . .”]; Merriam Webster’s
Collegiate Dict. (11th ed. 2004) p. 326, col. 1 [“3: to act as attorney for . . .”];
Random House Webster’s College Dict. (2d rev. ed. 2001) p. 348, col. 2 [“4. to
serve as attorney for (a defendant) . . .”]; American Heritage Dict. (4th ed. 2000)
p. 475, col. 2 [“4. Law a. To represent (a defendant) in a civil or criminal action
. . .”].)
A duty to defend another, stated in that way, is thus different from a duty
expressed simply as an obligation to pay another, after the fact, for defense costs
the other has incurred in defending itself. Section 2778, the statute governing the
construction of all indemnity agreements, makes the distinction clear. On the one
hand, as noted above, the section specifies that a basic contractual indemnity
against particular claims, demands, or liabilities “embraces the costs of defense”
against such claims, demands, or liabilities. (Id., subd. 3.) On the other hand, the
statute separately specifies the indemnitor’s duty actually “to defend,” upon the
11

---

indemnitee’s request, proceedings against the latter “in respect to the matters
embraced by the indemnity,” though “the person indemnified has the right to
conduct such defenses if he chooses to do so.” (Id., subd. 4.) Finally, section
2778 sets forth how the indemnitor’s obligations will be affected if the indemnitor
fails to accept an indemnitee’s tender of defense or, alternatively, if the indemnitor
is denied an opportunity to assume and control the defense. (Id., subds. 5, 6.)6
By virtue of these statutory provisions, the case law has long confirmed
that, unless the parties’ agreement expressly provides otherwise, a contractual
indemnitor has the obligation, upon proper tender by the indemnitee, to accept and
assume the indemnitee’s active defense against claims encompassed by the
indemnity provision. Where the indemnitor has breached this obligation, an
indemnitee who was thereby forced, against its wishes, to defend itself is entitled
to reimbursement of the costs of doing so.

6
Pursuant to subdivision 5 of section 2778, if a contractual indemnitor
declines the indemnitee’s tender of defense of a third party claim against the latter,
the third party’s later judgment against the indemnitee may be conclusive
evidence, against the indemnitor, of the indemnitee’s liability to the third party,
and the amount thereof, while the indemnitee’s good faith settlement of the third
party claim may be presumptive evidence against the indemnitor on that issue.
(See, e.g., Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 791;
Peter Culley & Associates, supra, 10 Cal.App.4th 1484, 1495-1497.) In other
words, a contractual indemnitor’s failure to assume the indemnitee’s defense and,
with it, control of the underlying litigation may restrict the indemnitor’s later
ability to separately litigate issues pertaining to its own indemnity liability. In this
case, as indicated above, no issue is presented of the effect of JMP’s settlement
with the homeowners on Weather Shield’s indemnity liability. We confront the
separate question whether the express terms of Weather Shield’s subcontract
required Weather Shield, at its own expense, to assume JMP’s defense, and,
having failed to do so, to reimburse JMP after the fact for the latter’s actual
defense costs, regardless of Weather Shield’s liability to indemnify JMP for
amounts paid to the homeowners in settlement.
12

---

Thus, in Safeway Stores, Inc. v. Massachusetts Bonding & Ins. Co. (1962)
202 Cal.App.2d 99 (Safeway Stores), one King undertook, by written agreement,
to act as general contractor in the construction of a new Safeway store. The
agreement included King’s obligation to indemnify Safeway against any claims,
demands, or suits for damage, loss, or injury “ ‘result[ing] from or occur[ring] in
connection with the performance of [the] contract.’ ” (Id., at p. 105.)
Construction workers employed by King sued Safeway for injuries they sustained
when recently installed roof trusses collapsed. The workers alleged that Safeway
had negligently permitted the installation of trusses it knew to be defective. King
offered Safeway a defense, which Safeway initially accepted. However, it
thereafter became apparent that the attorney furnished by King was serving King’s
conflicting interests; in discussions between the parties, King indicated he would
deny indemnity liability if Safeway was found negligent. Safeway thereupon
retained its own attorney to defend the workers’ action, and later sought
reimbursement of its defense costs from King.
The Court of Appeal agreed with Safeway. The court noted that “under the
contract of indemnity, no contrary intent appearing, King was bound to defend the
actions. (Civ. Code, § 2778, subd. 4.)” (Safeway Stores, supra, 202 Cal.App.2d
99, 114, italics added.) However, the court reasoned, in light of the obvious
conflict between Safeway’s litigation interests and King’s position on the
indemnity issue, Safeway had reasonably inferred that, despite King’s technical
proffer, King did not intend to honor his contractual obligation to provide Safeway
with a complete defense. Under these circumstances, the court concluded,
Safeway did not act as a volunteer in assuming its own defense, and was entitled
to reimbursement for King’s breach of the duty to defend.
Similarly, in Buchalter v. Levin (1967) 252 Cal.App.2d 367, the court
acknowledged that subdivision 4 of section 2778 “establishes an indemnitor’s
13

---

obligation to defend the indemnitee upon request, even though the indemnity
agreement does not expressly so provide . . . .” (Buchalter, supra, at p. 374, italics
added.) However, the court concluded, the subdivision’s provision that the
indemnitee may “conduct his own defense ‘if he chooses to do so’ ” (ibid.) does
not mean the indemnitee ordinarily may refuse the indemnitor’s good faith proffer
of a complete defense, then still collect reimbursement from the indemnitor for the
defense costs the indemnitee has voluntarily incurred. (Id., at pp. 374-375; cf.
Goodman v. Severin (1969) 274 Cal.App.2d 885, 897.)
In Gribaldo, Jacobs, Jones & Associates v. Agrippina Versicherunges A.G.
(1970) 3 Cal.3d 434 (Gribaldo), a majority of this court carefully distinguished
between the “costs of defense” described in subdivision 3 of section 2778, on the
one hand, and the duty “to defend” the indemnitee, as set forth in subdivision 4 of
the statute, on the other. There, an errors and omissions indemnity policy
provided for a deductible of $2,500, said nothing about a duty to defend, gave the
underwriters the right to assume the insureds’ defense, specified that the insureds
need not contest any legal claim unless counsel mutually chosen by the parties
advised otherwise, and prohibited either party from settling a claim against the
insureds without the other’s consent. The policy further stated that if the insureds
refused a settlement offer against the underwriters’ recommendation, and elected
to contest the claim further, the underwriters’ liability would not exceed the
amount for which the claim could have been settled, plus costs and expenses
incurred by the insureds with the underwriters’ consent.
After the insureds settled a third party claim, they sought declaratory relief
against the underwriters on the issue of liability for defense costs. The insureds
contended that under subdivision 4 of section 2778, the policy included, and the
underwriters had breached, an “actual duty to defend” (Gribaldo, supra, 3 Cal.3d
434, 441) any claim, of a type covered by the policy, in which the initial demand
14

---

exceeded the $2,500 deductible. Hence, the insureds insisted, the underwriters
were now obliged to pay the insureds’ costs of defending such claims in full,
regardless of the amounts for which the claims were actually resolved.
The trial court disagreed. It reasoned that, under the particular terms of the
policy, the underwriters were not obliged to defend the insureds. Hence, the court
concluded, any liability of the underwriters for the insureds’ defense costs arose
solely under subdivision 3 of section 2778, as part of any indemnity the
underwriters otherwise owed the insureds. That obligation, the court held, applied
only to costs incurred by the insureds to defend claims “embraced within the
provisions of the policy, that is, those claims in excess of $2,500 actually paid by
[the insureds].” (Gribaldo, supra, 3 Cal.3d 434, 441.)
This court affirmed. The majority agreed “that under the provisions of
subdivision 4 of section 2778 the indemnitor is required to defend matters
embraced by the indemnity if . . . requested to do so by the indemnitee.”
(Gribaldo, supra, 3 Cal.3d 434, 448.) However, the majority noted, the policy at
issue indicated a contrary intent, as section 2778 permits. By its plain terms, the
policy allowed the underwriters, at their option, to assume the insureds’ defense,
and it “require[d] [the insureds] to defend claims where so advised by counsel.”
(Ibid.) Moreover, the majority noted, even assuming the policy did not, at the
outset, exclude a duty to defend, the insureds had, contrary to the policy, incurred
defense costs without first obtaining the underwriters’ consent, and had failed, as
required by subdivision 4 of section 2778, to request a defense. (Gribaldo, supra,
at pp. 448-449.)
Accordingly, the majority reasoned, the underwriters had breached no duty
under subdivision 4 of section 2778 to defend any and all claims in which the
demand exceeded the $2,500 deductible. Instead, the majority concluded, the trial
court had acted correctly in calculating the underwriters’ defense-cost liability
15

---

under subdivision 3 of the statute. Under the latter provision, the majority held,
the underwriters’ defense-cost liability was limited to the insureds’ expense of
defending claims as to which the underwriters otherwise owed indemnity — i.e.,
those claims actually paid by the insureds in amounts exceeding the $2,500
deductible. (Gribaldo, supra, 3 Cal.3d 434, 447-450.)
Recently, City of Watsonville v. Corrigan (2007) 149 Cal.App.4th 1542
observed once again that subdivision 4 of section 2778 “describes the indemnitor’s
duty to defend . . . actions or proceedings brought against the indemnitee if the
latter requests the defense.” (City of Watsonville, supra, at p. 1549, original
italics.) However, the Court of Appeal held that by failing to request a defense, or
to notify the indemnitor of the third party action, and by unilaterally deciding to
conduct its own defense, the indemnitee does not necessarily forfeit its contractual
right to reimbursement of its defense costs under the indemnity provisions of
subdivision 3 of the statute.
Thus, as these decisions indicate, subdivision 4 of section 2778, by
specifying an indemnitor’s duty “to defend” the indemnitee upon the latter’s
request, places in every indemnity contract, unless the agreement provides
otherwise, a duty to assume the indemnitee’s defense, if tendered, against all
claims “embraced by the indemnity.” The indemnitor’s failure to assume the duty
to defend the indemnitee upon request (§ 2778, subd. 4) may give rise to damages
in the form of reimbursement of defense costs the indemnitee was thereby forced
to incur. But this duty is nonetheless distinct and separate from the contractual
obligation to pay an indemnitee’s defense costs, after the fact, as part of any
indemnity owed under the agreement. (Id., subd. 3.)
Implicit in this understanding of the duty to defend an indemnitee against
all claims “embraced by the indemnity,” as specified in subdivision 4 of section
2778, is that the duty arises immediately upon a proper tender of defense by the
16

---

indemnitee, and thus before the litigation to be defended has determined whether
indemnity is actually owed. This duty, as described in the statute, therefore cannot
depend on the outcome of that litigation. It follows that, under subdivision 4 of
section 2778, claims “embraced by the indemnity,” as to which the duty to defend
is owed, include those which, at the time of tender, allege facts that would give
rise to a duty of indemnity.7 Unless the indemnity agreement states otherwise, the
statutorily described duty “to defend” the indemnitee upon tender of the defense
thus extends to all such claims.
Here, the subcontract at issue not only failed to limit or exclude Weather
Shield’s duty “to defend” JMP, as otherwise provided by subdivision 4 of section
2778, it confirmed this duty. In language similar to that of the statute, the
subcontract explicitly obligated Weather Shield both to indemnify JMP against
certain claims, and “at [its] own expense to defend” JMP against “any suit or
action . . . founded upon” such claims. (Italics added.) The duty “to defend”
expressly set forth in Weather Shield’s subcontract thus clearly contemplated a
duty that arose when such a claim was made,8 and was not dependent on whether
the very litigation to be defended later established Weather Shield’s obligation to
pay indemnity.

7
We do not suggest that the indemnitor’s duty to defend would continue
even if, during the progress of the third party proceeding against the indemnitee,
all claims potentially subject to the contractual indemnity obligation were
eliminated, or if the promisor otherwise conclusively established that the claims
were not among those “embraced by the indemnity” (§ 2778, subd. 4). Such
issues are not before us, and we express no views thereon.
8
Unlike subdivision 4 of Civil Code section 2778, Weather Shield’s
subcontract did not expressly condition the duty “to defend” upon the
indemnitee’s request for a defense. In any event, as noted above (fn. 1, ante),
Weather Shield does not contend it was absolved of a duty to defend on account of
any failure by JMP to make such a request.
17

---

Moreover, the subcontract at issue included a further express indication that
the express duty “to defend” actions against JMP was not strictly limited to those
claims on which, in the end, Weather Shield actually owed indemnity. The
indemnity and defense clauses of the subcontract contained linguistic differences
that conform to the logical distinctions between the two duties. On the one hand,
the subcontract obligated Weather Shield to “indemnify . . . [JMP] . . . against” all
claims for injury, damage, loss, or theft arising from performance of the
subcontract, while, on the other, it required Weather Shield “to defend any suit or
action . . . against [JMP] founded upon the claim” of such injury, damage, loss, or
theft. (Italics added.)
One can only indemnify against “claims for damages” that have been
resolved against the indemnitee, i.e., those as to which the indemnitee has actually
sustained liability or paid damages. Indemnification, after all, is the act of saving
another from the legal consequence of an act. (§ 2772.) Hence, a clause requiring
Weather Shield to indemnify JMP “against” defined claims clearly indicated that
the indemnity obligation would apply only if JMP ultimately incurred such a legal
consequence as a result of covered claims.
By contrast, as noted above, the subcontract required Weather Shield “to
defend” JMP against “any suit or action . . . founded upon the claim of such
damage . . . .” (Italics added.) Under this language, the duty to defend arose, as it
logically must, as soon as a “suit or action” was brought against JMP that was
“founded upon” a covered claim, i.e., that asserted a claim within the coverage of
both clauses. Necessarily, a duty expressed in this manner did not require a final
determination of the issues, including the issue of Weather Shield’s negligence,
before Weather Shield was required to mount and finance a defense on JMP’s
behalf.
18

---

The Court of Appeal majority so concluded. Dissenting on this point,
Justice O’Leary conceded at the outset that “the word ‘defend,’ as defined in the
abstract, would ordinarily mean providing legal services for a pending claim.”
Nonetheless, she stressed, noninsurance indemnity contracts, unlike liability
insurance policies, are construed to limit the obligations imposed, and the duties
undertaken must be stated with particular clarity and specificity. Examined in that
light, she asserted, Weather Shield’s subcontract did not make absolutely clear that
Weather Shield’s duty to defend, unlike its duty to indemnify, arose regardless of
its negligence.
To conclude that, absent greater specificity, the indemnity and defense
obligations stated in the subcontract both required a finding of Weather Shield’s
negligence, Justice O’Leary reasoned as follows: The indemnity and defense
obligations in Weather Shield’s subcontract were “described in a single sentence”
with two clauses. The first clause, stating the indemnity obligation, covered
“ ‘claims for damages . . . growing out of the execution of [Weather Shield’s]
work . . . .’ Everyone (the litigants, trial court, and majority) seems to agree [that]
matters embraced by this indemnity clause [were] narrowly limited to damages
caused by [Weather Shield’s] own negligent work on the project.” (Original
italics.) The second clause, defining the defense duty, confined that responsibility
to suits or actions founded upon “ ‘the claim of such damage . . . .’ The qualifying
phrase, ‘claim of such damage’ clearly refer[red] to the earlier language limiting
the scope of claims embraced by the indemnity, i.e., ‘all claims for damages . . .
growing out of the execution of the work[.]’ Therefore, both obligations appear to
be dependent on the same coverage terms.”
But Justice O’Leary’s analysis overlooks the clear differences in the two
clauses that we have described above. In particular, Weather Shield’s express
contractual duty to defend suits “founded upon” the kinds of claims specified in
19

---

the agreement necessarily extended to suits that alleged such claims, not just suits
in which they were proven. Assuming, as we must, that Weather Shield’s
subcontract obligated it to indemnify JMP against claims arising from Weather
Shield’s negligent performance of the subcontract, it follows that Weather Shield’s
contractual duty to defend JMP encompassed suits or actions that alleged such
negligence on Weather Shield’s part. Weather Shield could not avoid this duty on
the ground that the very litigation to be defended might later result in a finding
Weather Shield was, in fact, not negligent.
Parties to an indemnity contract can easily disclaim any responsibility of
the indemnitor for the indemnitee’s defense, or the costs thereof. Short of that,
they can specify that the indemnitor’s sole defense obligation will be to reimburse
the indemnitee for costs incurred by the latter in defending a particular claim.
However, the instant subcontract did neither. On the contrary, it specified that
Weather Shield would be required, “at [its] own expense,” to “defend” JMP
against suits “founded upon” claims arising from Weather Shield’s performance of
its subcontract. This language indicated a more immediate obligation, one that
would necessarily arise before the litigation to be defended could determine
whether Weather Shield owed indemnity to JMP.
In arguing otherwise, Weather Shield relies heavily on Heppler, supra,
73 Cal.App.4th 1265. There, in connection with another of JMP’s large
residential construction projects, Mueller-Lewis Concrete (Mueller) signed a JMP-
drafted subcontract containing indemnity and defense clauses identical to those at
issue here. Homeowners sued JMP, Mueller, and others for construction defects.
Mueller declined JMP’s tender of defense. In a global settlement, JMP assigned
its contractual rights against Mueller to plaintiff homeowners. As JMP’s
assignees, they sought to recover against Mueller under both the indemnity and
defense provisions. The defect, indemnity, and defense issues went to trial against
20

---

Mueller. The trial court ruled that plaintiffs must prove negligence and causation
against Mueller in order to trigger Mueller’s contractual indemnity obligations.
The jury returned a general verdict for Mueller.
On appeal, plaintiffs challenged the lower court’s ruling that Mueller’s
negligence was a prerequisite to its contractual duty of indemnity. The Court of
Appeal affirmed the judgment in Mueller’s favor. For a number of reasons, the
court concluded that the language of the subcontract triggered Mueller’s
indemnity obligation only if Mueller itself was found negligent. (Heppler, supra,
73 Cal.App.4th 1265, 1275-1281.)9
However, the plaintiffs in Heppler did not contend that, even if the
indemnity clause in Mueller’s subcontract was triggered only by Mueller’s actual
negligence, the duty-to-defend clause applied more broadly. Accordingly, the
Heppler court never separately addressed the defense clause of the subcontract, or
considered how the particular language of that clause might distinguish it from the
indemnity clause. In affirming the general verdict for Mueller, the court simply
assumed that the indemnity and defense provisions of the subcontract were
congruent.10

9
This aspect of the ruling in Heppler, supra, 73 Cal.App.4th 1265, may be
what has dissuaded the homeowners in this case, acting in JMP’s stead, from
challenging on appeal the trial court’s ruling that the identical indemnity clause in
Weather Shield’s subcontract required Weather Shield’s negligence as a condition
of its indemnity liability.
10
This assumption is confirmed by Baldwin Builders v. Coast Plastering
Corp. (2005) 125 Cal.App.4th 1339, where the same Court of Appeal panel
broadly stated the holding of Heppler as being that “an indemnitor/subcontractor
generally will not be liable or have a duty to defend its general contractor
pursuant to the terms of an indemnity agreement unless it was negligent in
performing its work under the subcontract.” (Baldwin Builders, supra, at p. 1347,
italics added.) But this passage in Baldwin Builders is dictum; the case had
(Footnote continued on next page.)
21

---

Here, by contrast, we directly confront the relationship, and the distinctions,
between the two clauses. Upon examination, as explained above, their language
differs in a way suggesting that, even if the indemnity obligation is triggered only
by an ultimate finding of the indemnitor’s fault, the defense obligation applies
before, and thus regardless of, any finding to be made in the course of the
litigation for which a defense is owed. Hence, whatever Heppler’s merits on the
issues actually considered in that case, we do not find the decision helpful or
persuasive on the narrow question before us.
Similarly, Goldman, supra, 62 Cal.2d 40, cited by Weather Shield, is of
little use in construing the particular defense clause at issue in this case. Our
opinion noted a duty-to-defend clause, phrased in language different from that we
address here, that might bind the subcontractor in that case. (See id., at p. 43,
fn. 2). We also indicated that the indemnitee had demanded both indemnity and a
defense from the subcontractor. (Id., at p. 42.) However, our decision addressed
only the subcontractor’s duties under the separate indemnity clause at issue in the
case. Our holding was simply that if one seeks contractual indemnity protection
for his own active negligence, the language providing such protection must be

(Footnote continued from previous page.)

nothing to do with an indemnitor’s duty, regardless of fault, to defend its
indemnitee. The sole question was whether, having proved in the underlying
construction defect litigation that it was not negligent, and thus owed no indemnity
under the terms of its subcontract, the subcontractor/indemnitor could recover,
under the contractual attorney-fee reciprocity statute (§ 1717, subd. (a)), its
attorney fees incurred in so establishing. The Court of Appeal concluded that the
answer was yes, reasoning that these were fees expended by the
subcontractor/indemnitor to enforce the indemnity agreement itself, i.e., to prove
that it owed no contractual indemnity.
22

---

particularly clear and explicit. (Id., at p. 44.) Here, upon close examination of
Weather Shield’s subcontract, we find it did clearly and explicitly create a defense
duty not dependent on the ultimate resolution of issues, such as Weather Shield’s
fault, that would only be determined after the duty arose.
Nor, under close examination, is Mel Clayton Ford, supra, 104 Cal.App.4th
46, helpful to Weather Shield’s cause. Weather Shield suggests Mel Clayton Ford
stands for the proposition that a duty-to-defend clause in a noninsurance
agreement does not extend to mere allegations that would trigger an indemnity
obligation only if proven. We do not so interpret the decision. In our view,
Weather Shield takes out of context the passage on which it relies.
In Mel Clayton Ford, an agreement between a vehicle manufacturer and its
retail dealer specified that the manufacturer would defend and indemnify the
dealer against any third party suits, complaints, or claims “ ‘concerning . . . injury
or . . . damage arising out of an occurrence caused solely by’ ” a manufacturing or
design defect in a vehicle supplied to the dealer by the manufacturer. (Mel
Clayton Ford, supra, 104 Cal.App.4th 46, 49, italics added.) Thus, the
manufacturer excluded from its defense obligation any suit or claim that alleged
dealer negligence, or any theory other than manufacturing or design defect, as a
sole or contributing cause of the injury or damage.
In 1989, the plaintiff purchased from the dealer a truck supplied by the
manufacturer. Thereafter, the dealer performed maintenance on the vehicle. In
1997, while the plaintiff was driving the truck, it burst into flames, seriously
injuring him. He sued both the manufacturer and the dealer, alleging not only a
defectively designed and manufactured product, but also claims based on failure to
warn, breach of warranty, and “ ‘theories of [the dealer’s] direct or active
negligence in the maintenance of the vehicle.’ ” (Mel Clayton Ford, supra,
104 Cal.App.4th 46, 50.)
23

---

The Court of Appeal held that the manufacturer had no duty to undertake
the dealer’s defense under such circumstances. This was because “[t]he indemnity
provision required [the manufacturer] to defend the Dealer only where the
occurrence was caused solely by a production defect, and not whenever product
liability was one of the allegations of the underlying complaint.” (Mel Clayton
Ford, supra, 104 Cal.App.4th 46, 55, second italics added.)
Thus, in Mel Clayton Ford, it was not an allegations-versus-proof
distinction that negated the duty to defend. Rather, given the word “solely” in the
indemnity/defense clause there at issue, the crucial fact was that the suit for which
a defense was sought included allegations other than those to which the
manufacturer had limited its defense duty — design or production defects
attributable to the manufacturer itself.11
Here, Weather Shield’s contractual duty was not similarly limited. Weather
Shield promised to defend JMP against any suit “founded upon” a “claim of . . .
damage” “growing out of the execution of [Weather Shield’s] work.” The
contract did not specify, or even hint, that no defense duty would exist unless the
suit was solely concerned with Weather Shield’s performance under its own
subcontract and included no other claims or allegations. Nor does Weather Shield
so claim. Hence, nothing decided in Mel Clayton Ford establishes that until
Weather Shield’s faulty performance of its work was proven, it had no duty to
defend JMP.

11
To the extent there is any ambiguity in Mel Clayton Ford’s holding on this
point, it cannot be resolved by further examination of the Court of Appeal’s
opinion in that case. Except for the summary passage quoted above, the Court of
Appeal’s discussion of this interpretive issue appeared in the unpublished portion
of its partially published opinion.
24

---

Finally, we are not persuaded by Regan Roofing, supra, 24 Cal.App.4th
425, insofar as that decision suggests that a contractual duty to defend specified
classes of claims, expressed in such terms, necessarily depends on the promisor’s
ultimate liability for indemnity on those claims.
In Regan Roofing, after a housing developer, Pacific Scene, was sued for
construction defects, it cross-complained against numerous project subcontractors
to establish its contractual indemnity and defense rights. Each of these agreements
required the subcontractor to indemnify Pacific Scene against all mechanic’s liens
related to the subcontractor’s work, as well as “ ‘any other liability, cost or
expense of any nature or kind arising out of or in any way connected with
Subcontractor’s performance, . . . save and except only such liability, cost or
expense caused by [Pacific Scene’s] sole negligence or sole willful misconduct.’ ”
(Regan Roofing, supra, 24 Cal.App.4th at p. 430, italics added.) “ ‘Pursuant to the
. . . foregoing,’ ” the subcontracts declared, “ ‘Subcontractor shall indemnify and
hold harmless [Pacific Scene] from any costs and expenses for attorney’s fees . . .
resulting to [Pacific Scene] from such claims or liens.’ ” (Ibid., italics omitted.)
Finally, each agreement separately provided that “ ‘[i]n the event any suit on any
claim is brought against [Pacific Scene], subject to the provision, Subcontractor
shall defend said suit at Subcontractor’s own cost and expense . . . .’ ” (Ibid.,
italics omitted.)
Pacific Scene sought pretrial summary adjudication of a number of issues,
including rulings on the subcontractors’ duties to indemnify and defend. The trial
court determined that the indemnity provision of the subcontracts included
coverage for Pacific Scene’s own negligence. However, the court found that the
question whether the subcontractors actually owed indemnity was premature,
because, among other things, Pacific Scene had not yet incurred liability or paid
claims subject to indemnity. On the other hand, the court concluded, under the
25

---

language of the agreements and section 2778, each subcontractor did have an
immediate duty to defend claims “ ‘brought against [Pacific Scene] in respect to
matters embraced by the indemnity clause.’ ” (Regan Roofing, supra,
24 Cal.App.4th 425, 432.)
The Court of Appeal reversed on the latter point. The appellate court
indicated that “summary adjudication of the duty to defend and its relationship to
the duty to indemnify (i.e., the scope of ‘the matters embraced by the indemnity’)
is premature. No determination has yet been made as to whether the
subcontractors were negligent in the performance of their work, giving rise to a
duty to indemnify and a related duty to defend. Pacific Scene has not clearly
established that under this indemnity clause, the duty to defend against claims of
liability is entirely free-standing of the duty to indemnify for liability arising out of
a subcontractor’s negligence. [Citation.]” (Regan Roofing, supra, 24 Cal.App.4th
425, 436, italics added.)
In reaching this conclusion, however, the Court of Appeal erred. The court
seems to have assumed that, under subdivision 4 of section 2778, and unless the
agreement at issue clearly provides otherwise, an indemnitor’s duty to defend the
indemnitee upon request in matters “embraced by the indemnity” is not, in the
court’s words, “free-standing,” but extends only to claims as to which indemnity is
actually owed. (Regan Roofing, supra, 24 Cal.App.4th 425, 436.) And the court
found no such explicit contrary intent in the subcontracts there under
consideration.
However, as we have explained, the duty to defend upon the indemnitee’s
request, as set forth in subdivision 4 of section 2778, is distinct from, and broader
than, the duty expressed in subdivision 3 of the statute to reimburse an
indemnitee’s defense costs as part of any indemnity otherwise owed. Moreover,
the subcontracts at issue in Regan Roofing, like the one before us here, did
26

---

explicitly indicate a separate and distinct duty to defend the indemnitee, at the
indemnitor’s own cost and expense, against suits raising claims covered by the
indemnity. That duty — like Weather Shield’s in this case — necessarily arose
when such a claim was made against the indemnitee, and thus did not depend on
whether the conditions of indemnity were, or were not, later established.
Regan Roofing was therefore mistaken insofar as it concluded that, under
the agreements there at issue, the subcontractors’ defense duties arose only if the
subcontractors became liable for indemnity. We will disapprove the Regan
Roofing decision to that extent.12

12 We realize that Regan Roofing’s finding of prematurity was also substantially
influenced by the practical difficulties of sorting out multiple, and potentially
conflicting, duties to assume the active defense of litigation then in progress. (See
Regan Roofing, supra, 24 Cal.App.4th 425, 437.) Weather Shield and its amici
curiae raise similar concerns. But the case before us does not present such
problems. JMP cross-complained against Weather Shield and other
subcontractors on indemnity and duty-to-defend issues, but the trial on these
issues was postponed until after most of the subcontractors had settled with JMP,
and after the underlying construction defect litigation against the remaining
parties, including Weather Shield, was concluded. Thus, while the trial court
correctly held that Weather Shield’s contractual duty to defend arose when a suit
alleging covered claims was brought against JMP, and that the duty thus did not
depend on whether the conditions for indemnity were later established, the court
was able to assess after the fact Weather Shield’s proportionate liability for breach
of its duty to defend.
The instant parties apparently saw no impropriety in this procedure, and neither
do we. At least with respect to pre-2006 residential construction subcontracts, and
subject to any future contrary or inconsistent legislation, the following procedures
seem appropriate: When a party sues one or more other persons, seeking to
establish a contractual right to a defense against litigation not yet concluded, these
issues may, if the parties agree, be deferred until the underlying litigation is
complete. If any party moves for summary judgment or adjudication (Code Civ.
Proc., § 437c) with respect to the duty to defend against litigation still in progress,
the court may proceed as it deems expedient. For example, the court may resolve
legal issues then ripe for adjudication, such as whether any of the contracts at issue
(Footnote continued on next page.)
27

---

Weather Shield and its amici curiae raise numerous, and substantial, policy
concerns about an indemnity agreement that requires a subcontractor to defend a
residential developer or builder in a construction defect suit, before and regardless
of whether the subcontractor itself is found to be at fault. Arguments asserted
include the following: Large builders and developers use their superior bargaining
power, and self-drafted contract terms, unfairly to shift the financial consequences
of their own legal liability to faultless subcontractors, who are not compensated
for the risk and agree only because they need the work.13 Such shifting
discourages builders and developers themselves from taking proper care in
construction oversight. Small subcontractors, moreover, lack the resources to fund
a developer’s defense “up front” while often simultaneously defending themselves
in the same lawsuit, where the developer typically pursues the hostile and
conflicting strategy of pinning blame on them. The developer can demand a
defense from a single subcontractor among many, and the latter may later be
unable to obtain contribution from other subcontractors. Further, subcontractors,

(Footnote continued from previous page.)

include a duty to defend, and, if so, whether the underlying suit or proceeding as
to which a defense is sought falls within the scope of any of the parties’
contractual duty to defend. If the court finds that an ongoing duty to defend is
owed by one or more parties, but the affected parties, acting in good faith, then
cannot agree on how such a defense should be provided or financed, the court
may, in its discretion, permit the underlying litigation to proceed with counsel
chosen and paid by the party to whom the duty is owed, subject to a later
determination of how damages for breach of the duty to defend should be
apportioned among the breaching parties.
13
By noting this argument, we do not dismiss the possibility that in many
instances, subcontractors may prefer to assume, and control, the defense of suits
against builders, developers, or other contractors, especially when the claims
raised may expose the subcontractors themselves to direct or indirect liability.
28

---

unlike liability insurers, lack defense attorney “panels” available at favorable fee
rates. Because of privilege and conflict-of-interest issues, they may also lack
access to the developer’s attorney billing records. As a result, a subcontractor may
be forced to pay exorbitant and unreasonable legal costs for the developer’s
defense. Finally, the vagaries of construction defect litigation in California have
caused many insurers to leave the market. Thus, and contrary to the Court of
Appeal’s assumption, “backup” insurance to cover subcontractors’ contractual
defense burdens is not readily available at reasonable cost.
As Weather Shield and its amici curiae point out, statutes effective January
1, 2006, and January 1, 2008, respectively, were adopted to address just such
concerns. These new laws, which apply to residential construction contracts
entered after their effective dates, void any term in such a contract that obliges a
subcontractor to indemnify certain other project participants, “including the cost to
defend,” against construction defect claims “to the extent” the claims “arise out of,
pertain to, or relate to” the negligence of those other entities. (§ 2782, subds. (c),
(d), as added by Stats. 2005, ch. 394, § 1; see id., subd. (e), as added by
Stats. 2007, ch. 32, § 1.)14 However, Weather Shield and its amici curiae assert

14
As noted above, section 2782, subdivision (a) has long provided that a
party to a construction contract cannot agree to indemnify another project
participant for the latter’s sole negligence or willful misconduct. Subdivision (c)
of section 2782, as adopted in 2005 and slightly amended in 2007, additionally
provides in pertinent part: “For all construction contracts, and amendments
thereto, entered into after January 1, 2006, for residential construction . . . , all
provisions, clauses, covenants, and agreements contained in, collateral to, or
affecting any construction contract, and amendments thereto, that purport to
indemnify, including the cost to defend, the builder . . . by a subcontractor against
liability for claims of construction defects are unenforceable to the extent the
claims arise out of, pertain to, or relate to the negligence of the builder or the
builder’s other agents, other servants, or other independent contractors who are
directly responsible to the builder, or for defects in design furnished by those
(Footnote continued on next page.)
29

---

that, unless we hold otherwise, California’s 10-year statute of limitations for
construction defects (Code Civ. Proc., § 337.15) still exposes numerous
subcontractors who signed earlier agreements to unfair and burdensome defense
demands by developers.
In effect, Weather Shield and its amici curiae ask us to conclude as a matter
of law that, in a pre-2006 residential construction contract, a term which expressly
obliges a subcontractor “to defend” a builder, developer, or general contractor
against claims “founded upon” the subcontractor’s negligent work, but says
nothing further about the scope of the duty, means only that the subcontractor
must reimburse the promisee, after the fact, for the promisee’s legal expenses as

(Footnote continued from previous page.)

persons . . . . This section shall not be waived or modified by contractual
agreement, act, or omission of the parties. Contractual provisions, clauses,
covenants, or agreements not expressly prohibited herein are reserved to the
agreement of the parties.”
Subdivision (d) of section 2782, also adopted in 2005 and effective January
1, 2006, provides in pertinent part: “Subdivision (c) does not prohibit a
subcontractor and builder from mutually agreeing to the timing or immediacy of
the defense and provisions for reimbursement of defense fees and costs, so long as
that agreement, upon final resolution of the claims, does not waive or modify the
provisions of subdivision (c).”
Subdivision (e) of section 2782, as added in 2007 and effective for
residential construction contracts entered after January 1, 2008, uses parallel
language to expand the categories of project participants as to whom a
subcontractor cannot be made contractually responsible for construction defect
indemnity, including defense costs, “to the extent” such claims “arise out of,
pertain to, or relate to” the negligence of those entities or their agents, their
servants, or the independent contractors directly responsible to them. Under
subdivision (e), the categories of project participants who may not obtain such
contractual indemnity from a subcontractor now include not only the builder, but
also “the general contractor or contractor that is not affiliated with the builder.”
30

---

part of any indemnity ultimately owed by the subcontractor to the promisee. They
suggest that to produce a contrary result, the subcontract should say, in so many
words, that the duty to defend arises immediately when a claim is asserted against
the promisee, is not limited to later reimbursement of the promisee’s legal
expenses, and applies regardless, and independent, of any duty of indemnity for
which the subcontractor may later become liable.
We are sensitive to the policy issues raised by Weather Shield and its amici
curiae. Nonetheless, for reasons stated at length above, we decline the holding
they propose. Even applying the rule of strict construction they espouse, the
instant contract already sets forth, in unambiguous terms, an immediate and
independent duty to defend. As we have indicated, an express promise “to
defend” another against claims “founded upon” the promisor’s acts or omissions
inherently incorporates the characteristics they insist must be set forth in
additional explicit terms. And if the parties intended only to give the indemnitee a
right to after the fact reimbursement of its legal expenses as a component of any
indemnity otherwise owed by the indemnitor, they would need no language to say
so. That right is already included in every indemnity contract, unless otherwise
specifically provided, under subdivision 3 of section 2778.15

15
Amicus curiae Jeld-Wen, Inc., suggests “[t]here is good reason to believe”
that section 2778’s reference to “contract[s] of indemnity” was never intended to
apply to anything but insurance contracts. Jeld-Wen notes that section 2778,
adopted in 1872, traces its lineage to a similar 1865 New York statute which also
used that term. This nomenclature, Jeld-Wen asserts, was commonly employed in
the mid-19th century to refer to insurance contracts. Jeld-Wen further notes that
early cases interpreting the 1865 New York law all concerned bonds or insurance
policies. We reject the contention for several reasons. First, section 2778,
governing “contract[s] of indemnity,” appears in a portion of the Civil Code (title
12 of part 4 of division 3, commencing with section 2772) simply entitled
“Indemnity.” Section 2772 defines “indemnity” as “a contract by which one
(Footnote continued on next page.)
31

---

Finally, Weather Shield does not suggest that, as applied to it, the
subcontract was either procedurally or substantively unconscionable. Nor does
Weather Shield otherwise imply that it is a relatively small and powerless
subcontractor overwhelmed by JMP’s superior bargaining power. Furthermore,
Weather Shield does not claim it naively signed the instant subcontract without
understanding the terms. Indeed, in its opening brief, Weather Shield describes
itself as “the out-of-state manufacturer of the . . . wood windows” installed in the
Huntington Beach residential development — a development that included at least
122 homes. This description suggests a multistate scale of operations, and a
consequent sophistication, that would undermine any such assertions.16
We therefore conclude that the duty “to defend” JMP against claims
“founded upon” damage or loss caused by Weather Shield’s negligent

(Footnote continued from previous page.)

engages to save another from a legal consequence of the conduct of one of the
parties, or of some other person.” That definition is not confined to insurance
agreements. Second, this same title includes a number of statutes that expressly
apply to the indemnity provisions of noninsurance contracts. (See, e.g., §§ 2782-
2784 [construction contracts], 2784.5 [hauling, trucking, or cartage contracts].)
Third, California cases too numerous to mention have assumed, virtually since the
inception of section 2778, that it applies to indemnity agreements outside the
insurance context. (See, e.g., Davis v. Air Technical Industries, Inc. (1978)
22 Cal.3d 1, 6, fn. 6; Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co.
(1968) 69 Cal.2d 33, 41, fn. 9; Eva v. Andersen (1913) 166 Cal. 420, 424-425;
Showers v. Wadsworth (1889) 81 Cal. 270, 273-274; Peter Culley & Associates,
supra, 10 Cal.App.4th 1484, 1494-1496; Buchalter v. Levin, supra,
252 Cal.App.3d 367, 371-375.) The Legislature has never indicated otherwise.
No reason appears to disturb this settled construction.
16
Questioned on this subject at oral argument, Weather Shield’s counsel did
not deny that Weather Shield is a sizeable multistate purveyor of manufactured
windows.
32

---

performance of its work, as set forth in Weather Shield’s subcontract, imposed
such duties on Weather Shield as soon as a suit was filed against JMP that asserted
such claims, and regardless of whether it was ultimately determined that Weather
Shield was actually negligent. Accordingly, we affirm the judgment of the Court
of Appeal.
CONCLUSION
The judgment of the Court of Appeal is affirmed. The decision in Regan
Roofing Co. v. Superior Court, supra, 24 Cal.App.4th 425, is disapproved to the
extent it conflicts with the conclusions set forth in this opinion.
BAXTER, J.
WE CONCUR:

GEORGE, C.J.
KENNARD, J.
WERDEGAR, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.

33

---

See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Crawford v. Weather Shield Mfg., Inc.
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 136 Cal.App.4th 304
Rehearing Granted
__________________________________________________________________________________

Opinion No.

S141541
Date Filed: July 21, 2008
__________________________________________________________________________________

Court:

Superior
County: Orange
Judge: Raymond J. Ikola
__________________________________________________________________________________

Attorneys for Appellant:

Sedgwick, Detert, Moran & Arnold, Christina J. Imre, Stephanie Rae Williams, Orly Degani and Maureen
M. Home for Defendant and Appellant.

Summers & Shives and Robert V. Closson for California Farming Contractor’s Association as Amicus
Curiae on behalf of Defendant and Appellant.

Crawford & Bangs, E. Scott Holbrook, Jr., and Joshua J. Wes for American Subcontractors Association as
Amicus Curiae on behalf of Defendant and Appellant.

Horvitz & Levy, Lisa Perrochet and John A. Taylor, Jr., for California Professional Association of
Specialty Contractors, Pacific Rim Drywall Association and Southern California Contractors Association
as Amici Curiae on behalf of Defendant and Appellant.

McAtee • Harmeyer and Jeff G. Harmeyer for Jeld-Wen, inc., as Amicus Curiae on behalf of Defendant
and Appellant.

Stephan, Oringher, Richman, Theodora & Miller, Theodora Oringher Miller & Richman, Harry W. R.
Chamberlain and Robert M. Dato for American Architectural Manufacturers Association as Amicus Curiae
on behalf of Defendant and Appellant.

__________________________________________________________________________________

Attorneys for Respondent:

Anderson & Kriger, Clayton Anderson, Philip Y. Kim; and Richard H. Benes for Plaintiff and Appellant
Kirk Crawford.

Kabateck & Garris, Kabateck Brown Kellner, Brian S. Kabateck, Alfredo Torrijos and Richard L. Kellner
for Plaintiff and Appellant Parviz Alai.

---

Page 2 – S141541 – counsel continued

Attorneys for Respondent:

Cooper, White & Cooper, Kathleen F. Carpenter and Carol J. Stair for California Building Industry
Association as Amicus Curiae on behalf of Plaintiffs and Appellants.

Green & Hall, Brian C. Plante and Samuel M. Danskin for Capital Pacific Holdings, Inc., as Amicus
Curiae on behalf of Plaintiffs and Appellants.

Newmeyer & Dillion, Thomas F. Newmeyer, Jay B. Freedman and Michael B. McClellan for Standard
Pacific Corp., KB Home, The Irvine Company, Alexander Communities, Inc., Taylor Woodrow Homes,
Inc., and William Lyon Homes, Inc., as Amici Curiae on behalf of Plaintiffs and Appellants.

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

Christina J. Imre
Sedgwick, Detert, Moran & Arnold
801 South Figueroa Street, 19th Floor
Los Angeles, CA 90017-5556
(213) 426-6900

Richard L. Kellner
Kabateck Brown Kellner
350 South Grand Avenue, 39th Floor
Los Angeles, CA 90071
(213) 217-5000

---

Petition for review after the Court of Appeal affirmed the judgment in a civil action. The court limited review to the following issue: Did a contract under which a subcontractor agreed "to defend any suit or action" against a developer "founded upon" any claim "growing out of the execution of the work" require the subcontractor to provide a defense to a suit against the developer even if the subcontractor was not negligent?

Opinion Information

Date:	Citation:	Docket Number:	Category:	Status:
Mon, 07/21/2008	44 Cal. 4th 541, 187 P.3d 424, 79 Cal. Rptr. 3d 721	S141541	Review - Civil Appeal	closed; remittitur issued

Disposition
Jul 21 2008	Opinion: Affirmed

Dockets
Mar 3 2006	Request for depublication filed (initial case event)   JELD-WEN, Inc., (non-party)
Mar 14 2006	Received oversized petition for review   Weather Shield, Mfg., Inc, defts. and aplts. Orly Degani, counsel (40.1(b))
Mar 14 2006	Application to file over-length brief filed   counsel for deft. and aplt. (Weather Shield, Mfg., Inc.)
Mar 16 2006	Petition for review filed with permission   Weather Shield Mfg, Inc., defts. and aplts Orly Degani, counsel
Mar 16 2006	Record requested
Mar 28 2006	Answer to petition for review filed   counsel for resps. Kirk Crawford, et al.,
Apr 3 2006	Answer to petition for review filed   Alai Plaintiffs, appellant
May 3 2006	Time extended to grant or deny review   to and including June 14, 2006, or the date upon which review is either granted or denied.
May 24 2006	Petition for review granted; issues limited (civil case)   Petition for review GRANTED. The issue to be briefed and argued in limited to the following: Did a contract under which a subcontractor agreed "to defend any suit or action" against a developer "founded upon" any claim "growing out of the execution of the work" require the subcontractor to provide a defense to a suit against the developer even if the subcontractor was not negligent? Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno, and Corrigan, JJ.
May 30 2006	Received Court of Appeal record   three file folders/ briefs
Jun 14 2006	Certification of interested entities or persons filed   counsel for respondent Parviz Alai
Jun 15 2006	Certification of interested entities or persons filed   counsel for aplt. (Weather Shield, Mfg.)
Jun 22 2006	Request for extension of time filed   Counsel for petnr. requests 30-day extension of time (7-23-06) to file the opening brief on the merits.
Jun 27 2006	Extension of time granted   Petitioner's time to serve and file the opening brief on the merit is extended to and including July 23, 2006.
Jul 19 2006	Request for extension of time filed   counsel for deft. and aplt. requests 15-day extension (8-7-06) of time to file the opening brief on the merits.
Jul 25 2006	Extension of time granted   to 8-7-06 for appellant to file the opening brief on the merits. No further extensions of time are contemplated.
Aug 8 2006	Opening brief on the merits filed   counsel for Weather Shield Mfg., Inc. (40.1(b))
Aug 8 2006	Request for judicial notice filed (granted case)   counsel for Weather Shield Mfg., Inc.
Sep 1 2006	Received:   from counsel for Capital Pacific Holdings, Inc. fdba J. M. Peters Co. Inc./Request for 30-day extension to file answer brief on the merits.
Sep 5 2006	Request for extension of time filed   counsel for respondent (Alai Plfs.) requests extension of time to 10-6-06 to file the answer brief on the merits.
Sep 7 2006	Request for extension of time filed   counsel for (Crawford Plfs.) requests extension of time to 10-6-06 to file the answer brief on the merits.
Sep 7 2006	Received:   Letter from Brian Plante, counsel for Capital Pacific Holdings, Inc., dated September 7, 2006.
Sep 7 2006	Received:   Letter from Richard L. Kellner, counsel for Alai Plaintiffs, dated September 7, 2006.
Sep 7 2006	Letter sent to:   Mr. Brian C. Plante, counsel for Capital Pacific Holdings, Inc., requesting further information from counsel regarding whether Capital Pacific Holdings, Inc., has any standing to continue in the case as a party respondent. Response is due by the close of business on Friday, September 8, 2006. The response is to be served on all parties. The response may be filed by fax, with a follow-up copy by mail.
Sep 8 2006	Extension of time granted   Counsel for Capital Pacific Holdings, Inc. to September 11, 2006, to file the letter in response to this court's letter of September 7, 2006.
Sep 8 2006	Request for extension of time filed   By Brain C. Plante, counsel for Capital Pacific Holdings, Inc., requesting a 1-day extension to and including September 11, 2006, to file letter in response to court's letter of September 7, 2006.
Sep 11 2006	Received:   letter from Mr. Brian C. Plante, counsel for Capital Pacific Holdings, Inc., to inform the court that "CPH" will not be filing a separate answer brief on the merits.
Sep 12 2006	Application denied   Capital Pacific Holdings, Inc., fdba J. M. Peters Company, Inc. request for extension of time is denied as moot.
Sep 14 2006	Extension of time granted   Alai Plaintiffs time to serve and file the answer brief on the merits is extended to and including October 6, 2006.
Sep 14 2006	Extension of time granted   Crawford Plaintiffs time to serve and file the answer briefs onthe merits is extended to and including October 6, 2006.
Oct 6 2006	Answer brief on the merits filed   Respondents Crawford Plaintiffs
Oct 25 2006	Request for extension of time filed   By appellant requesting an 8-day extension to and including November 3, 2006, to file appellant's reply brief on the merits.
Oct 26 2006	Extension of time granted   Appellant's time to serve and file the reply brief on the merits is extended to and including November 3, 2006.
Nov 6 2006	Reply brief filed (case fully briefed)   counsel for Weather Shield Mfg., Inc. (40.1(b))
Nov 15 2006	Request for extension of time filed   counsel for California Professional Association of Specialty Contractors (CALPASC) (non-party) requests extension of time to January 5, 2007, to file an amicus curiae brief.
Nov 21 2006	Extension of time granted   On application of amicus curiae California Professional Association of Specialty Contractors and good cause appearing, it is ordered that the time to serve and file the application to file an amicus curiae brief is extended to and including January 5, 2007. No further extensions of time are contemplated.
Nov 29 2006	Request for extension of time filed   Counsel for American Architectural Manufacturers Assoc. requests extension of time to January 5, 2007, to file an application to file amicus curiae brief.
Nov 30 2006	Received application to file Amicus Curiae Brief   American Subcontractors Association in support of appellant (non-party)
Nov 30 2006	Request for extension of time filed   Counsel for amicus curiae Jeld-Wen requests extension of time to 1-5-07 to file an application to file amicus curiae brief.
Dec 1 2006	Extension of time granted   On application of American Architectural Manufacturers Association and good cause appearing, it is ordered that the time to serve and file the application to file amicus curiae brief is extended to and including January 5, 2007. No further extensions of time are contemplated.
Dec 1 2006	Request for extension of time filed   Standard Pacific Corporation, et al, (non-party) requests extension of time to 1-5-07 to file the application to file an amicus curiae brief.
Dec 5 2006	Received application to file Amicus Curiae Brief   California Framing Contractor's Association in support of deft. and aplt.
Dec 5 2006	Received application to file Amicus Curiae Brief   California Building Industry Assoc. in support of respondents
Dec 7 2006	Received application to file Amicus Curiae Brief   Capital Pacific Holdings, Inc. fdba J.M. Peters Co. Inc. (40.1(b))
Dec 11 2006	Extension of time granted   On application of Standard Pacific Corp., et al., and good cause appearing it is orderd that the time to serve and file the application for permission to file an amicus curiae brief is extended to and including January 6, 2007. No further extensions of time are contemplated.
Dec 11 2006	Amicus curiae brief filed   The application of American Subcontractors Association for permission to file and amicus curiae brief in support of appellant is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 11 2006	Extension of time granted   On application of Jeld-Wen and good cause appearing, it is ordered that the time to serve and file the application to file an amicus curiae is extended to and including January 5, 2007. No further extension of time are contemplated.
Dec 11 2006	Permission to file amicus curiae brief granted   American Subcontractors Association in support of appellant is granted.
Dec 12 2006	Permission to file amicus curiae brief granted   California Framing Contractors' Association in support of defendant anad appellant.
Dec 12 2006	Amicus curiae brief filed   The application of California Framing Contractors' Association for permission to file and amicus curiae brief in support of defendant and appellant is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 12 2006	Permission to file amicus curiae brief granted   California Building Industry in support of respondents.
Dec 12 2006	Amicus curiae brief filed   The application of California Building Industry for permission to file an amicus curiae in support of respondents is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 14 2006	Permission to file amicus curiae brief granted   Capital Pacific Holdings, Inc., fdba J.M. Peters Company, Inc.in support of plaintiffs and rspondents.
Dec 14 2006	Amicus curiae brief filed   The application of Capital Pacific Holdings, Inc. fdba J. M. Peters Company, Inc., for permission to file an amicus curiae brief in support of plaintiffs and respondent is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Dec 20 2006	Request for extension of time filed   Appellant, Weather Shield, asking to Jan. 10, 2007, to file one consolidated answer to amicus curiae briefs of Calif. Building Industry Assoc., and Capital Pacific Holdings. by counsel, Orly Degani.
Jan 4 2007	Extension of time granted   On application of appellant and good cause appearing, it is ordered that the time to serve and file the consolidated answer to amicus curiae briefs is extended to and including January 10, 2007.
Jan 8 2007	Received application to file Amicus Curiae Brief   American Architectural Manufactures Assoc. in support of appellant. (non-party) (40.1(b))
Jan 8 2007	Received application to file Amicus Curiae Brief   Standard Pacific Corp., et al., in support of respondents. (non-party)
Jan 8 2007	Received application to file Amicus Curiae Brief   California Professional Association for Specialty Contractors, et al., in support of appellant (40.1(b))
Jan 8 2007	Request for judicial notice filed (granted case)   California Professional Association of Specialty Contractors, et al., (non-party)
Jan 8 2007	Received application to file Amicus Curiae Brief   JELD-WEN, Inc. in support of appellant. (non-party) (40.1(b))
Jan 10 2007	Request for extension of time filed   counsel for deft. and aplt. (Weather Shield) requests extension of time to 1-25-07 to file a combined answer to amicus curiae briefs.
Jan 11 2007	Permission to file amicus curiae brief granted   Jeld-Wen, Inc. in support of appellant.
Jan 11 2007	Amicus curiae brief filed   The application of Jeld-Wen, Inc. for permission to file an amicus curiae brief in support of appellants is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jan 11 2007	Permission to file amicus curiae brief granted   California Professional Association of Specialty Contractors, et al.
Jan 11 2007	Amicus curiae brief filed   The application of California Professional Association of Specialty Contractors et al., for permission to file the request for judical notice and amicus curiae brief in support of appellant is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jan 11 2007	Permission to file amicus curiae brief granted   American Architectural Manufacturing Association in support of appellant.
Jan 11 2007	Amicus curiae brief filed   American Architectural Manufacturing Association for permission to file and amicus curiae brief in support of appellant is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jan 11 2007	Permission to file amicus curiae brief granted   Standard Pacific Corp., et al., in support of respondents.
Jan 11 2007	Amicus curiae brief filed   The application of Standard Pacific Corp., et al. for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jan 16 2007	Extension of time granted   On application of defendant and appellant and good cause appearing, it is ordered that the time to serve and file the combined answer to amicus curiae briefs is extended to and including January 25, 2007.
Jan 26 2007	Response to amicus curiae brief filed   counsel for defendant and appellant (Weather Shiled, Mfg., Inc.) ** combined answer ** CRC 8.25(b))
Feb 6 2007	Received:   change of firm name for attorney for amicus curiae American Architectural Manufacturers Assoc.
Mar 26 2007	Change of contact information filed for:   Law Firm of Kabateck, Brown, Kellner, for Respondents, Alai.
Aug 10 2007	Motion to dismiss filed (non-AA)   Kirk Crawford et al., Plaintiffs and Appellants by Richard H. Benes, counsel
Aug 24 2007	Opposition filed   counsel for Weather Shield, Mfg., Inc. to Plaintiff's Motion to Dismiss.
Aug 24 2007	Filed:   counsel for resps. (Alai Plfs.) Joinder to (Crawford Plfs. Motion to Dismiss)
Sep 12 2007	Order filed   Good cause appearing, the motion of plaintiffs and respondents Kirk Crawford et al., to partially dismiss review in this matter is granted. Review is dismissed with respect to the ruling of the Court of Appeal, Fourth Appellate District, Division Three, affirming the order granting plaintiffs and respondents a partial new trial against defendant and appellant Weather Shield Manufacturing, Inc., on issues of strict products liability. The Court of Appeal is directed to issue a partial remittitur consistent with this order. All other claims remain before this court. Votes: George, C. J., Baxter, Werdegar, Chin, Moreno and Corrigan, JJ.
Oct 18 2007	Change of contact information filed for:   counsel for Jeld-Wen, Inc. (amicus curiae)
Jan 25 2008	2nd record request   remaining records. (Reporter's Trans. 38 volumes)
Jan 29 2008	Received Court of Appeal record   3 & 4, of eight appendices, RT= vols. 1, 2, 5, 6, 31, 32, 33
Feb 1 2008	Received additional record   three boxes
Apr 9 2008	Case ordered on calendar   to be argued on Wednesday, May 7, 2008, at 9:00 a.m. in San Francisco
Apr 29 2008	Request for judicial notice granted   The requests for judicial notice of the appellant Weather Shield Manufacturers, Inc., filed August 8, 2006, and of amici curiae California Professional Association of Specialty Contractors, et al., filed on December 11, 2006, are granted.
May 7 2008	Cause argued and submitted
Jul 18 2008	Notice of forthcoming opinion posted
Jul 21 2008	Opinion filed: Judgment affirmed in full   The decision in Regan Roofing Co. v. Superior Court, supra, 24 Cal.App.4th 425, is disapproved to the extent it conflicts with the conclusions set forth in this opinion. Opinion by Baxter, J. ----- joined by George, C. J., Kennard, Werdegar, Chin, Moreno & Corrigan, JJ.
Aug 21 2008	Remittitur issued (civil case)
Aug 27 2008	Received:   receipt for remittitur from CA 4/3

Briefs
Aug 8 2006	Opening brief on the merits filed
Oct 6 2006	Answer brief on the merits filed
Nov 6 2006	Reply brief filed (case fully briefed)
Dec 11 2006	Amicus curiae brief filed
Dec 12 2006	Amicus curiae brief filed
Dec 12 2006	Amicus curiae brief filed
Dec 14 2006	Amicus curiae brief filed
Jan 11 2007	Amicus curiae brief filed
Jan 11 2007	Amicus curiae brief filed
Jan 11 2007	Amicus curiae brief filed
Jan 11 2007	Amicus curiae brief filed
Jan 26 2007	Response to amicus curiae brief filed

If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website

May 22, 2010 Annotated by admin.ah

Written by: Chris Condlin Summary of the case In a negligence suit for construction defects brought by homeowners against a developer, the developer cross-complained against the subcontractor for attorneys fees and indemnification. The CA Supreme Court in Crawford considered whether the contract between the subcontractor and the developer created an obligation on the part of the subcontractor to defend the developer in lawsuits, even when the subcontractor was ultimately found not to be negligent. The Supreme Court, Baxter, J., writing, concluded that the answer is yes. Text of Decision The text of the decision may be found at: http://www.courtinfo.ca.gov/opinions/archive/S141541.PDF Discussion of the opinion Crawford concerns the duties of a indemnitor to an indemnitee in a standard construction contract. Appellant Weather Shield had provided JMP with windows in a subcontracting contract. In a suit over construction defects by homeowners against JMP, Respondent cross-complained against Appellant for indemnification and a duty to defend. The contract clearly stated that Weather Shield promised to “indemnify and save [JMP] harmless against all claims for damages…loss,…and/or theft…growing out of the execution of [Weather Shield’s] work,” and (2) “at [its] own expense to defend any suit or action brought against [JMP] founded upon the claim of such damage[,]…loss or theft.” Thus, the plain language of the contract suggested that Weather Shield was both responsible for indemnifying JMP if Weather Shield was found to have been negligent and also to undertake the defense of JMP in suits against it “founded upon the claim of such damage.” The Court concludes that “subdivision 4 of section 2778…places in every indemnity contract, unless the agreement provides otherwise, a duty to assume the indemnitee’s defense, if tendered, against all claims ‘embraced by the indemnity.’” (Crawford, at 557). The question presented to the Supreme Court was whether Weather Shield was ultimately responsible for this defense even if it was found not to have been negligent in the underlying suit. The Supreme Court found that it was. The Court relied on case law and on Section 2778 of the Civil Code. Section 2778 concerns the responsibility of indemnitors to indemnitees. It states that the indemnitor “is bound, on request of the [indemnitee], to defend actions or proceedings brought against the [indemnitee] in respect to the matters embraced by the indemnity.” (CA Civ. Code Section 2778, subd. 4). This is the default rule, “unless a contrary intention appears.” (CA Civ. Code Section 2778). The Court found that the contract between Weather Shield and JMP did not express such a contrary intention. The Court also relied on case law to buttress its argument that the duty to defend applies to the indemnitor even when the indemnitor is ultimately found not to be obligated to indemnify for the underlying litigation. In several of these cases, the Court had found a duty to defend even when it was not made explicit in the contract, as it had been in the contract between Weather Shield and JMP. The Court distinguishes several cases in which there was found not to be a duty to defend on the grounds that the language of the relevant contracts excluded the duty to defend. The Court overturns Regan Roofing, in which a California Court of Appeal found that the decision on the duty to defend by sub-contractor to contractor should be postponed until a determination had been made on the underlying negligence claim. The Court in Crawford emphasized that “the duty to defend…is distinct from, and broader than, the duty expressed in subdivision 3 of the statute to reimburse an indemnitee’s defense costs as part of any indemnity otherwise owed.” (Crawford, at 564). Weather Shield and its amici curiae emphasized the public policy argument that a strong presumption of a duty to defend will disadvantage smaller sub-contractors, with less ability to front cash for costly defense litigation, versus larger contractors who may be better able to bear the burden of litigation. Although the Court is sympathetic to this argument, it finds it ultimately not persuasive in the face of the clear language of the contract. Effect of this opinion Crawford clarifies an important point of law, and is a significant blow to sub-contractors who had been relying on the Regan Roofing precedent. However, the effect of this decision is significantly limited by statutes effective on Jan. 1, 2006, and Jan. 1, 2008, which were passed to offer protection to sub-contractors in precisely these kinds of situations. The new statutes void any term in a contract that requires a sub-contractor to indemnify certain other parties, “including the cost to defend,” against construction defect claims “to the extent” the claims “arise out of, pertain to, or relate to” the negligence of those other entities. Therefore, this holding applies only to cases brought

Related Media	Supreme Court Holds That Defense Obligation In Indemnity Agreement Is Separate From Indemnity Obligation
	Crawford v. Weather Shield: Analysis & Comments
	Court: Indemnitor’s Duty to Defend Separate From Issue of Indemnification