The California Court of Appeal, Third Appellate District, reversed a summary judgment granted after the trial court concluded a subcontractor, contractor, and developer lacked insured status under commercial auto policies issued to a trucker and a trailer owner. The Court of Appeal concluded the subcontractor, general contractor and developer faced potential vicarious liability to the underlying plaintiff under the "peculiar risk" doctrine and, thus, qualified as insureds under the "omnibus" clauses in the trucker and trailer owner's policies.
While hauling a trailer on a construction site, Meza, a trucker, seriously injured a pedestrian, Bristman. Bristman sued Meza along with the trailer owner, Western Trucking LLC ("Western"). Bristman also sued the subcontractor, general contractor and site developer.
Progressive Casualty Insurance Company insured Meza, and Wilshire Insurance Company insured Western. The subcontractor, general contractor and developer were each insured under a commercial auto policy issued by American.
American accepted the subcontractor, general contractor, and developer's defense and, in turn, tendered these parties' defense to Progressive and Wilshire. Progressive and Wilshire denied the tender after concluding the subcontractor, general contractor and developer failed to qualify as insureds.
American sued Progressive and Wilshire. It sought a declaration that these insureds owed a duty to defend the subcontractor, contractor and developer. American also sought reimbursement of sums it paid defending these insureds.
The insurers filed cross-motions for summary judgment. The trial court ruled against American, holding that, as a matter of law, Progressive and Wilshire lacked a duty to defend the subcontractor, general contractor and project developer. The trial court found no agency relationship existed between the respective insureds and that the peculiar risk doctrine did not apply to make the subcontractor, general contractor and developer potentially vicariously liable for the trucker or trailer-owner's negligence. The trial court therefore entered judgment in favor of Wilshire and Progressive. American appealed.
The Court of Appeal reversed. It concluded the subcontractor, general contractor and developer were potentially vicariously liable under the "peculiar risk" doctrine. Thus, they qualified as insureds under the "omnibus" clauses in the trucker's and trailer owner's auto liability policies.
The Appellate Court first examined the Progressive and Wilshire policies. Both policies contained "omnibus" clauses, which defined "insured" to include both Meza and Western and any other permissive user of the truck or trailer, as well as any other person or organization legally liable for "acts or omissions of any person otherwise covered[.]"
The Court then noted that although the general rule is that an employer of an independent contractor is not liable for contractor's (or its employees') negligence, the "peculiar risk" doctrine provides an exception to this rule. The doctrine provides that an employer of an independent contractor is liable to third persons injured as a proximate result of the independent contractor's negligence where there is a special, or "peculiar" risk of physical harm, i.e., a risk particular to the work to be done, arising out of the place where it was to be done, and against which a reasonable man would recognize the necessity of taking precautions. However, if a contract exists between the employer and the independent contractor that requires the contractor to take steps to address the peculiar risk, an employer held liable under the doctrine of peculiar risk is entitled to equitable indemnity from the independent contractor.
Applying these principles, the Court found that the trial court erred in finding that the truck access to the site entrance – requiring a U-turn, encroaching on pedestrian cross-walks, etc. – did not involve a special risk. Consequently, the subcontractor, contractor, and developer were potentially liable for the Bristman accident under the vicarious liability theory of the peculiar risk doctrine. Progressive and Wilshire thus owed these parties a defense since they qualified as insureds under the "omnibus" language of the Progressive and Wilshire policies, which the Court found drew no distinction between direct and vicarious liability.
The Appellate Court further found no triable issue of material fact existed regarding the subcontractor, general contractor and developer's potential vicarious liability under the doctrine of peculiar risk and, accordingly, Progressive and Wilshire owed these parties a defense. The Court therefore reversed the judgments in favor of Progressive and Wilshire.
This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.
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