California Supreme Court Alert
Article authored by Chad Tapp and Gwenn Scott
On July 21, 2008, the California Supreme Court decided an important case regarding a subcontractor's duty to defend a general contractor in a construction defect lawsuit. Although this case was decided in the context of the construction industry, the implications of the decision are much broader than the construction field, as the holding may apply to the contractual duty to defend in all non-insurance contracts.
In this case, Weather Shield subcontracted with general contractor JMP to manufacture and supply windows for 122 homes in a residential subdivision. The subcontract agreement between Weather Shield and JMP contained an indemnity clause with the following pertinent language: "[Weather Shield] shall 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 at [Weather Shield's] own expense shall defend any suit or action brought against [JMP] founded upon the claim of such damage...loss...or theft." Following trial, the jury returned a general verdict in favor of Weather Shield, finding that Weather Shield was not negligent in the manufacture of the windows. The jury also returned a general verdict against JMP in the amount of $1 million. The court subsequently decided JMP's cross-complaint against Weather Shield seeking indemnity and cost of defense.
On the cross-complaint, the trial court ruled that the duty to defend was separate and distinct from the duty to indemnify. While the duty to indemnify only arises if the subcontractor is found negligent, the duty to defend arises as soon as a claim is filed, in so far as those claims concern the negligent work.
