Federated Mutual Ins. Co. v. National Union Fire Ins. Co. of Pittsburgh

Filed 7/12/07 Federated Mutual Ins. Co. v. National Union Fire Ins. Co. of Pittsburgh CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from an order of the Superior Court of Los Angeles County, James R. Dunn, Judge. Reversed.

Knapp, Petersen & Clarke, Robert D. Brugge, Barry R. Gammell, and Barbara Ciolino, for Plaintiff, Cross-Defendant, and Appellant.

McCormick, Barstow, Sheppard, Wayte & Carruth, James P. Wagoner, Annette A. Ballatore-Williamson, Geni K. Krogstad, and Leslie A. Soley, for Defendant, Cross-Complainant, and Respondent.

I. INTRODUCTION

Plaintiff and cross-defendant, Federated Mutual Insurance Company, appeals after summary judgment in an insurance coverage action was entered in favor of defendant and cross complainant, National Union Fire Insurance Company of Pittsburgh, Pa. Plaintiff insured Accurate Forklift (the forklift company). Defendant insured Kendall-Jackson La Crema Winery (the winery). Summary judgment was entered after the parties filed cross-summary judgment motions. We agree with plaintiff that: defendants insured, the winery, had a duty to procure adequate public liability insurance against bodily injury; the winery had a contractual duty to have the forklift company named as an insured under the policy; the winery complied with its duty to procure adequate public liability insurance against bodily injury and have the forklift company named as an insured under defendants policy; the accident which gave rise to the underlying lawsuit is an occurrence within the meaning of defendants policy and the additional insured endorsement; and there is thus a triable issue as to whether the forklift company qualifies as an additional insured under an endorsement attached to defendants policy. Hence, we reverse the order granting defendants summary judgment motion. Because we reverse the judgment, we need not address the parties prejudgment interest contentions.

II. STATE OF THE PLEADINGS

A. Complaint

Plaintiff filed its complaint against defendant on July 13, 2004, for equitable contribution and subrogation and declaratory relief. According to the complaint, plaintiff issued a general liability policy to the forklift company which was effective from October 1, 1999, through October 1, 2000. Defendant issued a general liability policy to the winery which was effective between September 6, 1999 and October 1, 2000. Prior to September 21, 2000, the winery rented a Nissan forklift from the forklift company. Paragraph 8 of the rental agreement provides that the winery was required to maintain adequate public liability insurance against bodily injury and furnish insurance certificates to that effect. Defendant, the winerys insurer, issued the forklift company an insurance certificate. Defendants insurance certificate states that forklift company is an additional insured. Defendants insurance policy has an other insurance provision policy. Under the terms of defendants other insurance clause, the forklift company is a primary, not excess, insured. By contrast, plaintiffs policy provides only excess insurance.

On October 12, 2001, Stephan Wold filed a lawsuit entitled Wold v. Nissan Motor Co. Ltd. (Super. Ct., Sonoma County, 2001, No. SCV227990) (the underlying action.) On or about December 21, 2001, the forklift company notified plaintiff the complaint had been served. The forklift company requested that plaintiff provide a defense. On or about January 8, 2002, plaintiff tendered the defense of the underlying action of defendant. Thereafter, plaintiff hired counsel and incurred substantial attorney fees and costs in the defense of the forklift company in the underlying action. On or about January 15, 2002, defendant acknowledged plaintiffs tender of the forklift companys defense. On or about March 13, 2002, defendant disputed the scope of coverage provided to the forklift company but agreed to share on an equitable basis in the defense costs incurred in the underlying action with plaintiff.

After March 13, 2002, a dispute arose between plaintiff and defendant as to their respective duties in the underlying action. Defendant asserted it was not obligated to defend and indemnify the forklift company against all claims in the underlying action. Rather, defendant argued it was only obligated to pay a portion of the defense and settlement or judgment in the underlying action. By contrast, plaintiff asserted defendant was obligated to defend as the only primary insurer. Ultimately plaintiff and defendant reached an interim agreement. Defendant agreed to contribute 50 percent of the forklift companys defense costs and attorneys fees with the understanding each insurer would reserve the right to contest the apportionment of those moneys.

On January 29, 2004, the underlying action settled. Under the terms of the settlement, Mr. Wold was paid $500,000 and $50,000 was paid to the winerys workers compensation carrier. It was agreed that plaintiff and defendant would each pay an equal share of the $550,000 settlement. But plaintiff and defendant agreed they were reserving the right to dispute their ultimate reimbursement obligations resulting from the settlement of the underlying action. In defending the underlying action, plaintiff incurred $309,769.45 in attorney fees and defense costs. As of July 13, 2004, the date the complaint in the present lawsuit was filed, defendant paid $124,700, leaving an unpaid balance for defense fees and costs totaling $185,069.45. Additionally, plaintiff paid $275,000 to settle the underlying action. Defendant has not reimbursed plaintiff for any portion of the $275,000 paid in settlement of the underlying action.

Based on the foregoing facts, plaintiff alleges three causes of action. The first cause of action is for equitable contribution. Plaintiff alleges that defendant had a duty to defend the underlying action and indemnify the forklift company. The duty to defend and indemnify the forklift company arose from: defendants general liability policy; the rental agreement for the forklift; the insurance certificate issued by defendant; and the additional insured endorsement attached to defendants policy. The defense and indemnification duties existed up to the full policy limits in defendants policy. According to the complaint, the forklift company was an additional insured under defendants policy. Therefore, defendants policy provided coverage for the underlying lawsuit. Plaintiffs policy states only excess coverage is provided if any other primary insurance is provided to the insured. Under equitable contribution principles, plaintiff was thus entitled to reimbursement for all of its defense and indemnification costs.

The second cause is action is for equitable subrogation. The complaint alleges: plaintiff has subrogation rights on behalf of the forklift company; defendant provided primary insurance to the forklift company; and defendant failed to defend and pay any portion of the settlement. Hence, the forklift company has an assignable claim against defendant arising from the failure to defend and provide indemnification in the underlying action. Further, plaintiff has a subrogation right under the terms of the other insurance provision of its own policy.

The third cause of action is for declaratory relief. According to the complaint, there are two disputes between the parties as to defendants duties. The first dispute arises under defendants endorsement issued to the forklift company. The second dispute arises under the other insurance language appearing in the parties policies. The complaint alleges defendant contends it was not obligated to fully defend and indemnify in the underlying action under its additional insured endorsement or the other insurance language in its policy. Rather, according to the third cause of action, defendant contends it is obligated to contribute to the defense costs and settlement on an unspecified equitable or pro-rata basis. Plaintiff sought a declaration of each parties share and reimbursement for the funds expended in defending and indemnifying the forklift company. The complaint sought recovery of $460,069.45 or the amount the court found was owing from defendant.

B. Defendants Answer To The Complaint

Defendant entered a general denial to the allegations in the complaint pursuant to Code of Civil Procedure section 431.30 and alleged five affirmative defenses. The affirmative defenses are: no consideration passed between plaintiff and defendant and thus there is no coverage; defendant is entitled to recover costs and attorney fees expended for the purpose of defending claims that had no potential for coverage under an unspecified policy provision; defendant has no duty to pay for any costs incurred prior to the tender of defense; plaintiff has acted with unclean hands; and the doctrine of superior equities bars plaintiffs claims. Additionally, the answer seeks reimbursement of moneys paid by defendant to plaintiff.

C. Defendants Cross-Complaint

Defendant filed a cross-complaint for declaratory relief and equitable indemnity, contribution, and subrogation. Defendant issued a general liability policy to the winery which contained an additional insured clause. The policy period was from September 6, 1999, to October 1, 2000. On October 1, 1999, plaintiff issued a general liability policy to the forklift company which expired on October 1, 2000. The winery was required to maintain public liability insurance against bodily injury and to provide an insurance certificate. On September 21, 2000, the winery rented a forklift from the forklift company. On October 12, 2001, the underlying lawsuit was filed. The underlying lawsuit consisted of two causes of action. The first cause of action, for products liability, alleged that the forklift was defective when it left the premises of the forklift company. The second cause of action, for negligence, alleged that the forklift company negligently: maintained the forklift; failed to warn Mr. Wold of the dangers of the deficiencies and maintenance of the forklift; and did not warn Mr. Wold of the inherent dangers of the forklift. Defendant and plaintiff agreed to each pay 50 percent of the defense costs incurred in the underlying lawsuit. On January 29, 2004, the underlying lawsuit settled. Under the terms of the settlement, the forklift company agreed to pay Mr. Wold $500,000. Plaintiff and defendant agreed to pay an equal share of this settlement, subject to a reservation of rights. The forklift company further agreed to pay Mr. Wolds workers compensation carrier $50,000 to settle the complaint in intervention. Plaintiff and defendant agreed to fund the $50,000 purchase of the workers compensation lien in equal shares, subject to a mutual reservation of rights.

As to the declaratory relief cause of action, the cross-complaint alleges plaintiff had the sole obligation to provide sole and/or primary coverage in the underlying lawsuit. Defendant paid defense and settlement costs in the underlying lawsuit which should have been paid by plaintiff. Defendant contends that plaintiff provided primary coverage for the attorney fees and settlement cost in the underlying action. Plaintiff denies that it had a duty to provide primary coverage for these costs. A controversy has arisen between plaintiff and defendant as to which provided primary coverage for defense and settlement costs in the underlying action.

As to the equitable indemnity cause of action, the cross-complaint alleged plaintiff had the duty to defend and indemnify the forklift company. This was because coverage was afforded by plaintiffs policy. Defendant paid an unspecified amount of defense and settlement costs in the underlying suit. According to the cross complaint, defendant is equitably entitled to be reimbursed for the defense and settlement expenses it had incurred in connection with the underlying action.

The third cause of action for equitable contribution alleges that defendant paid the aforementioned defense and settlement costs. Plaintiff is obligated to pay all or a portion of the funds paid by defendant in the defense or settlement of the underlying action. As a result, defendant is equitably entitled to recover all or a portion of the defense or settlement costs expended in the underlying lawsuit.

The fourth cause of action for equitable subrogation alleges the winery sustained a loss for which plaintiff was primarily responsible. The defense and settlement costs were not an obligation primarily held by defendant. The primary duty to pay defense and indemnification costs arose from plaintiffs policy issued to the forklift company. Defendant was damaged because plaintiff refused to pay the entirety of the defense and settlement costs. The cross-complaint alleged: [Defendant] believes and therefore alleges that justice requires that the loss be entirely shifted from [defendant] to [plaintiff], whose equitable position is inferior to that of [defendant] on the basis that [plaintiff] has been unwilling to pay all or any portion of the settlement costs or defense fees incurred in settling the [u]nderlying [a]ction and that the loss occurred within [plaintiffs] policy period and not the [defendants] policy period.

D. Plaintiffs Answer To Defendants Cross-complaint

On September 20, 2004, plaintiff filed its answer to the cross-complaint which consisted of a general denial pursuant to Code of Civil Procedure section 431.30 subdivision (d) and 15 affirmative defenses. Plaintiffs second affirmative defense alleges defendants policy was primary because the forklift company was an additional insured under an other insurance clause in both policies. Other affirmative defenses include: no declaration of rights is necessary in that a similar request was made in the complaint; plaintiff already had paid more than it can be equitably required to pay; defendant may not be subrogated to the winerys rights ; defendant is subject to the same defenses as the forklift company; defendant is guilty of unclean hands; there are no facts that warrant defendant securing any indemnity; defendant has waived the right to secure indemnity; defendant is estopped from any relief; plaintiff has no duty to provide any coverage to the forklift company ; plaintiff has no obligation to contribute to the settlement or fees because of exclusions in the policies; and mitigation of damages.

III. CROSS-SUMMARY JUDGMENT MOTIONS

A. The Facts

The parties interposed evidentiary objections to each others evidence. However, the trial court did not rule on any evidentiary objections. Hence, all evidentiary objections have been forfeited. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291, fn. 17; Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 670, fn. 1.)

Plaintiff issued a general policy to the forklift company. The policy period was October 1, 1999 to October 1, 2000. The per occurrence policy limits was $1 million. The insuring clause in plaintiffs policy stated, We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies. The other insurance clause in plaintiffs policy states: a. Primary Insurance [] This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method in c. below. [] b. Excess Insurance [] This insurance is excess over any of the other insurance, whether primary, excess, contingent or on any other basis: [] (1) That is Fire, Extended Coverage, Builders Risk, Installation Risk or similar coverage for your work; [] (2) That is Fire Insurance for premises rented to you or temporarily occupied by you with permission of the owner; or [] (3) If the loss arises out of the maintenance or use of aircraft, autos or watercraft to the extent not subject to Exclusion g. of Coverage A (Section I). [] When this insurance is excess, we will have no duty under Coverages A or B to defend the insured against any suit if any other insurer has a duty to defend the insured against that suit. If no other insurer defends, we will undertake to do so, but we will be entitled to the insureds rights against all those other insurers. When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: [] (1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and [] (2) The total of all deductible and self-insured amounts under all that other insurance. [] We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part. Further, plaintiffs policy provided a means for sharing insurer obligations: If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.

Moreover, plaintiffs policy contains an endorsement entitled, AMENDMENT OF OTHER INSURANCE CONDITION (OCCURRENCE VERSION). The amendment to the other insurance condition states: 4. Other Insurance [] b. Excess Insurance [] This insurance is excess over: [] (1) Any other insurance, whether primary, excess, contingent or on any other basis: [] (a) (1) That is Fire, Extended Coverage, Builders Risk, Installation Risk or similar coverage for your work; [] (b) That is Fire insurance for premises rented to you or temporarily occupied by you with permission of the owner; or [] (c) If the loss arises out of the maintenance or use of aircraft, autos or watercraft to the extent not subject to Exclusion g. of COVERAGE A. . . . Added to the foregoing other insurance amendment was the following: The following is added to item 4.b (Other Insurance): [] (4) If the loss arises out of the maintenance, operation or use of equipment you lease of equipment you lease or rent to others.

Defendant issued a general liability policy in which the winery was identified as an insured. Defendants policy period was September 6, 1999 to October 1, 2000. The insuring agreement in defendants policy states, We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies. The additional insured endorsement in defendants policy states: Who is an Insured . . . is amended to add: [] Any person or organization to whom you become obligated to include as an additional insured under this policy, as a result of any contract or agreement you enter into which requires you to furnish insurance to that person or organization of the type provided by this policy, but only with respect to liability arising out of your operations or premises owned by or rented to you. However, the insurance provided will not exceed the lesser of: [] 1. The coverage and/or limits of this policy, or [] 2. The coverage and/or limits required by said contract or agreement. As will be noted, this language is critical to the outcome of this appeal.

The other insurance of defendants policy states in part: 4. Other Insurance: [] If other valid and collectible insurance is available to the insured for a loss we cover . . . , our obligations are limited as follows: [] a. Primary Insurance [] This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below The excess clause in the policy was replaced with the following amendment and endorsement: b. Excess Insurance [] This insurance is excess over: [] (1) Any of the other insurance, whether primary, excess, contingent or any other basis: [] (a) That is Fire, Extended Coverage, Builders Risk, Installation Risk or similar coverage for your work; [] (b) That is Fire insurance for premises rented to you or temporarily occupied by you with permission of the owner; or [] If the loss arises out of the maintenance or use of aircraft, autos or watercraft . . . . [] (2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement. [] When this insurance is excess, we will have no duty . . . to defend the insured against that suit. If no other insurer defends, we will undertake to do so, but we will be entitled to the insureds rights against all other insurers. [] When this insurance is excess over all other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: [] (1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and [] (2) The total of all deductibles and self-insured amounts under all that other insurance.

The contribution provisions of defendants policy states: If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it is paid its applicable limit of insurance or none of the loss remains, whichever comes first. [] If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurers share is based on the ratio of its applicable limit of insurance of all insurers.

On August 14, 2000, the forklift company rented and delivered a forklift and bin dumper to the winery. The rental agreement, which was signed by an employee of the winery, stated in part: [The winery] assumes all risks and liability for and agrees to indemnify, save and hold [the forklift company] harmless from all claims and liens, all loss of or damage to the Equipment and loss, damage, claims, penalties, liability and expenses, including attorney fees, howsoever arising or incurred because of the Equipment or the storage, use or operation thereof. [The winery], at its own expense, shall carry adequate public liability insurance against bodily injury, including death, and against property damage and shall keep all Equipment insured at its full insurable value against fire and theft and under extended coverage. [The winery] shall furnish [the forklift company] with certificates of insurance designating [the forklift company] and its assigns as insured parties under the policy which certificates shall provide for ten (10) days prior written notice of cancellation. The insurance so provided shall be effective during the period f[ro]m the moment of delivery of each unit under the lease to [the winery] until the moment of return or surrender . . . to [the forklift company] . . . . No employee of the forklift company signed the rental agreement. As will be noted, the foregoing language in the August 14, 2000 rental agreement, which created a duty to secure insurance, is an important aspect of our holding.

On September 20, 1999, and again on August 2, 2000, the forklift company was provided with certificates of insurance issued by defendant. The certificates state, Certificate holder is named as additional insured/loss payee as respects rented/leased equipment[.] Further, the certificates state, This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies . . . . At another point, the certificates state: This is to certify that the policies of insurance listed below have been issued to the insured named above for the policy period indicated. Notwithstanding any requirement, term or condition of any contract or other document with respect to which the certificate may be issued or may pertain, the insurance afforded by the policies described herein is subject to all terms, exclusions and conditions of such policies. Limits shown may have been reduced by paid claims. The forklift company is expressly named as a certificate holder.

On September 21, 2000, Mr. Wold was seriously injured while driving a forklift at the winery. Mr. Wold was operating the forklift provided by the forklift company for the first time. Mr. Wold was using the forklift to dump garbage. When the accident occurred, Mr. Wold had emptied two or three bins of refuse. As he was performing this task, the forklift tipped over and crushed Mr. Wold who sustained serious injuries.

On October 12, 2001, Mr. Wold filed suit in Sonoma Superior Court. Named as defendants in the Judicial Council form complaint were: Nissan Motor Company Limited; Nissan Forklift Corporation North America; and the forklift company. The first cause of action, which was for products liability, alleged three counts: strict liability; negligence; and warranty breach. The product liability cause of action alleged: Mr. Wold was the user of the product; he used the forklift in a reasonably foreseeable manner; and inadequate warnings of dangers were provided. The second cause of action for General Negligence alleged defendant negligently: maintained the forklift; failed to warn Mr. Wold of the deficiencies in the maintenance of the forklift; failed to warn Mr. Wold and his employer, the winery, of the dangers inherent in the operation of the forklift.

On December 21, 2001, the forklift company notified plaintiff of service of the complaint in the underlying action. The forklift company requested that plaintiff provide a defense in the underlying action. On January 8, 2002, plaintiff tendered the defense of the underlying action of defendant. On January 15, 2002, AIG Claim Services, on behalf of defendant and the winery, acknowledged receipt of plaintiffs tender of the defense of the underlying action.

On March 13, 2002, Kristen K. McGee, an employee of AIG Claims Services, responded to the tender of the underlying action by plaintiff. Ms. McGee stated plaintiff was an additional insured under defendants policy. She also made several comments based on the rental agreement between the forklift company and the winery. Ms. McGee argued that there would be no coverage if the forklift companys liability resulted from other than the use, operation, or storage of the equipment. Similarly, if liability did not arise out of the insureds premises, there would be no coverage, according to Ms. McGee. As a result, Ms. McGee argued, The allegations of the complaint as outlined above appear to fall outside the scope of the limited coverage afforded. Ms. McGee then indicated: [Defendant] will participate in the defense of the insured under a full and complete reservation of rights. In doing so, [defendant] will share in the defense on an equitable basis with [plaintiff]. In order to allow us to determine what would amount to an equitable basis, we will need to review a copy of the applicable . . . policy.

There was evidence concerning discovery responses developed in the underlying action. In interrogatory answers served in the underlying action, Mr. Wold asserted that: the forklift company provided the wrong type of forklift to the winery; the tires on the forklift were too narrow; the forklift should have been equipped with pneumatic tires; the winery should have been provided with a forklift that was more suitable for outdoor use on a slope ; and there was no stopping mechanism to prevent the bin dumper from sliding laterally. Further, interrogatory answers indicated the manufacturer marketed a forklift with dual tires on the Japanese pneumatic version of the same capacity forklift.

In addition to the interrogatory answers in the underlying action, there was deposition testimony concerning the cause of Mr. Wolds injuries. The deposition testimony indicated that on September 12, 2000, a mechanic employed by the forklift company, Jeremiah Berg, modified the forklift begin driven by Mr. Wold at the time of the September 21, 2000 accident. As will be noted, there was deposition testimony adduced in the underlying action that a material cause of the accident were the modifications made by the forklift companys mechanic, Mr. Berg.

Robert Freidman, who was retained to testify on behalf of Mr. Wold in the underlying action, stated that dual drive tires would have increased the stability of the forklift. Further, Mr. Friedman testified no capacity plate was present on the forklift which would have warned the operator of the maximum load. Also, the forklift company failed to provide an operators manual or any training. Mr. Friedman testified at a deposition taken in the underlying action: I believe [the forklift company] was negligent in not providing an operators manual, the correct capacity plate on the vehicle, and the fact that there were no instructions available for the use of the attachment. All of these things would have been required for proper training of the operator. [] . . . I believe [the forklift company] was negligent in the installation of the attachment. When they ground the stops off of the ends of the top carriage bar, they allowed -- that allowed the attachment to work its way off the side, and ultimately the right hook -- attachment hook, come off of the top bar of the carriage. [] . . . I believe that to be a proximate cause of the accident, also. Further, according to Mr. Freidman, the forklift company should have provided a capacity plate on the forklift and trained the operator to read and understand it. The winery, in Mr. Freidmans opinion, should have requested a capacity plate be placed on the forklift.

At Mr. Friedmans deposition, the following occurred: Q. Is your opinion that the accident sequence started because of the lack of lateral support for the bin dumper? [] A. Yeah, I -- I believe the change in the center of gravity, as a result of the shift of the bin dumper, you know, started the accident. Thats -- that led -- he was saying -- in his testimony, he said he wasnt doing anything any different during that run than he had any other runs. That would be a scenario where something different did happen and resulted in the accident. [] Q. Right. And so it was the lack of lateral support on the bin dumper that caused it to shift? [] A. Correct.

Also, Michael Braun, another witness retained in the underlying action, testified: Well, the primary opinion would be the modifications made by [the forklift company] to the carriage assembly, on the subject forklift, in order to install the bin dumper, allowed the bin dumper to shift on the carriage. That shifting caused a dynamic load, which caused the, forklift to tip over, causing Mr. Wolds accident. At Mr. Brauns deposition, the following occurred: Q. That modification allowed the bin dumper to shift while attached to the mast carriage, and that that shift caused a dynamic load, and that dynamic load caused the forklift to tip over and injure Mr. Wold? [] A. Yes. And I should add to that, that in addition to removing the fork stops on the carriage, or the pins on the carriage, they did not install any sort of brackets or the load back rests, or anything on the sides that would restrain the bin dumper from moving [from] side to side. At another point in Mr. Brauns deposition the following exchange transpired: Q. Okay. And going back to my earlier question, its the removal of the stops, coupled with the failure to put a load back rest on, or other type of limiting feature, that allowed this shift to take place and caused the accident to occur? [] A. Correct.

Plaintiff provided a defense for the forklift company in Mr. Wolds Sonoma County lawsuit. On February 23, 2004, Mr. Wold signed two releases and settlement agreements. Under the terms of the first release and settlement agreement, Mr. Wold received $500,000. The $500,000 was payable over a 25‑year period by means of security issued by American General Annuity Service Corporation. The first release was executed by representatives of plaintiff and defendant. The second release and settlement agreement released plaintiff and defendant from all liability to Firemans Fund Insurance Company, the winerys workers compensation carrier. The parties in this lawsuit agree the settlement with Mr. Wold was reasonable.

In terms of the costs of defense, the parties agreed the amount of attorney fees that were expended were reasonable. Plaintiff and defendant agreed to each pay one-half of the settlement subject to a reservation of rights. Subject to a reservation of rights, defendant paid the following sums: on February 12, 2004, $250,000 as its portion of the moneys paid to Mr. Wold; on March 24, 2004, $25,000 as its portion of payment to Firemans Fund, the winerys workers compensation carrier; and on May 5, 2004, $124,700.84 was paid to plaintiff as a contribution towards the cost of defending the forklift company in Mr. Wolds lawsuit.

IV. THE RULING AND JUDGMENT

On August 18, 2005, defendants summary judgment motion was granted. The trial court held that defendant owed no duty to defend or indemnify the forklift company. The trial court ruled, The court finds that it is not a reasonable expectation that [the forklift companys] strict liability, breach of warranty and negligence liability would be shifted to [the winery] based on the vague language included in the rental agreement that [the forklift company] itself drafted. Plaintiffs summary judgment motion was denied.

On December 9, 2005, judgment was entered. Plaintiff was to take nothing under its complaint. Further, defendant was to recover: defense costs in the sum $124,700.84 with interest from May 5, 2004; $250,000 paid in settlement interest from February 12, 2004; and $25,000 paid in settlement of the workers compensation plus prejudgment interest from March 24, 2004.

V. DISCUSSION

A. Standards Of Review

1. Summary judgment standard of review

In Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, our Supreme Court described a partys burdens on summary judgment or adjudication motions as follows: [F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. That is because of the general principle that a party who seeks a courts action in his favor bears the burden of persuasion thereon. [Citation.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. . . . [] [T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. . . . A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.] (Fns. omitted, see Kids Universe v. In2Labs (2002) 95 Cal.App.4th 870, 877-878.) We review the trial courts decision to grant the summary judgment motion de novo. (TRB Investments, Inc. v. Firemans Fund Ins. Co. (2006) 40 Cal.4th 19, 30; Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65, 67-68.) The trial courts stated reasons for granting summary judgment are not binding on us because we review its ruling not its rationale. (Continental Ins. Co. v. Columbus Line, Inc. (2003) 107 Cal.App.4th 1190, 1196; Dictor v. David & Simon, Inc. (2003) 106 Cal.App.4th 238, 245.) In addition, a summary judgment motion is directed to the issues framed by the pleadings. (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1252; Ann M. v. Pacific Plaza Shopping Center, supra, 6 Cal.4th at p. 673.) Those are the only issues a motion for summary judgment must address. (Ibid.;Goehring v. Chapman University (2004) 121 Cal.App.4th 353, 364.)

2. Insurance policy standard of review

Our Supreme Court has described the applicable rules for evaluating insurance policies: While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply. [Citations.] The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties. [Citation.] Such intent is to be inferred, if possible, solely from the written provisions of the contract. [Citation.] If contractual language is clear and explicit, it governs. [Citations]. [] A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable. [Citations.] The fact that a term is not defined in the policies does not make it ambiguous. [Citations.] Nor does [d]isagreement concerning the meaning of a phrase, or the fact that a word or phrase isolated from its context is susceptible of more than one meaning. [Citation.] [L]anguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract. [Citation.]If an asserted ambiguity is not eliminated by the language and context of the policy, courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.e., the insurer) in order to protect the insureds reasonable expectation of coverage. [Citation.] [Citation.] (County of San Diego v. Ace Property & Cas. Ins. Co. (2005) 37 Cal.4th 406, 415; see Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 390-391.)

C. There Is A Triable Issue As To Whether There Is Coverage Under The Additional Insured Endorsement Attached To Defendants Policy

As noted, paragraph 8 of the rental agreement states in part: [The winery] assumes all risks and liability for and agrees to indemnify, save and hold [the forklift company] harmless from all claims and liens, all loss of or damage to the Equipment and loss, damage, claims, penalties, liability and expenses, including attorney fees, howsoever arising or incurred because of the Equipment or storage, use or operation thereof. [The winery], at its own expense, shall carry adequate public liability insurance against bodily injury, including death, and against property damage . . . . [The winery] shall furnish [the forklift company] with certificates of insurance designating [the forklift company] and its assigns as insured parties . . . . As can be noted, paragraph 8 of the rental agreement requires the winery to carry adequate public liability insurance against bodily injury and to provide the forklift company with certificates of insurance. Those certificates must designate the forklift company as an insured party. There is no ambiguity as to the winerys duty. The winery had to provide a certificate of insurance to the forklift company. And that insurance policy had to identify the forklift company as an insured.

The winery complied with its contractual obligation to provide a certificate of insurance. As noted on September 20, 1999, and again on August 2, 2000, the winery provided the forklift company with certificates of insurance issued by defendant which state, Certificate holder is named as additional insured/loss payee as respects rented/leased equipment[.] Further, the certificates state: This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does no amend, extend or alter the coverage afforded by the policies . . . . At another point, the certificates state: This is to certify that the policies of insurance listed below have been issued to the insured named above for the policy period indicated. Notwithstanding any requirement, term or condition of any contract or other document with respect to which the certificate may be issued or may pertain, the insurance afforded by the policies described herein is subject to all terms, exclusions and conditions of such policies. Limits shown may have been reduced by paid claims.

A certificate of insurance evidences the existence of insurance. (Ins. Code, 384, Pardee Construction Co. v. Insurance Co. of the West (2000) 77 Cal.App.4th 1340, 1347, fn. 2 [A certificate of insurance is merely evidence that a policy has been issued].) A certificate of insurance is not a contract between an insurer and an additional insured. (Ibid.; Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006)  3.70.6, p. 3-14 (rev. #1, 2006).) In this case, the two certificates of insurance are evidence that the forklift company was an insured under defendants policy. But that does not resolve the issue of whether the forklift company is an additional insured who is covered by defendants policy.

A carriers duty to defend or indemnify may extend to an additional insured. (American Casualty Co. v. General Star Indemnity Co. (2005) 125 Cal.App.4th 1510, 1528; see Maryland Casualty Co. v. Nationwide Ins. Co. (1998) 65 Cal.App.4th 21, 29.) Coverage depends on the policys additional insured language. (American Casualty Co. v. General Star Indemnity Co., supra, 125 Cal.App.4th at p. 1528; see Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006)  7:514.5, p. 7B-7 (rev. # 1, 2005).) As noted, the additional insured endorsement attached to defendants policy issued to the winery states: Who is an Insured . . . is amended to add: [] Any person or organization to whom you become obligated to include as an additional insured under this policy, as a result of any contract or agreement you enter into which requires you to furnish insurance to that person or organization of the type provided by this policy, but only with respect to liability arising out of your operations or premises owned by or rented to you. (Italics added.) The you in the additional insured endorsement is the winery. As can be noted, the potential for coverage arises because the winery was required to purchase an adequate public liability insurance against bodily injury which designated the forklift company as an insured. Further, the additional insured endorsement applies to bodily injury claims arising out two of situations. The first circumstance is when liability aris[es] out of the [winerys] operations. Mr. Wold was moving the winerys trash at its place of business. Nothing could be clearerthe underlying lawsuit arises out of the winerys operations. Second, if the injury arises out of the premises owned by the winery, there is coverage. The injury occurred at the winerys place of business. If there is any ambiguity as to whether defendants liability arose out of the winerys premises, it is resolved against defendant who drafted the policy. (County of San Diego v. Ace Property & Cas. Ins. Co., supra, 37 Cal.4th at p. 415; see Powerine Oil Co., Inc. v. Superior Court, supra, 37 Cal.4th at p. 391.) Thus, the summary judgment motion should not have been granted as there is a triable issue as to whether there is coverage under defendants additional insured endorsement.

Defendant relies on two decisions; neither of which involves an appeal from an order granting summary judgment. First, defendant relies on St. Paul Fire & Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co. (2002) 101 Cal.App.4th 1038, 1043-1061. In St. Paul Fire & Marine Ins. Co., a railroad retained a general contractor to perform construction work at a maintenance yard. The general contractor engaged an electrical subcontractor to perform work at the railroads maintenance yard. A subcontractors employee was injured by a bursting pipe during a pressure test conducted by the general contractor. Neither the subcontractor nor its employee caused the pipe to burst. The subcontract did not require that the pipe be subjected to a pressure test. (Id. at p. 1045.)

The subcontract required the electrical subcontractor to add the general contractor as an additional insured.^[1] (St. Paul Fire and Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., supra, 101 Cal.App.4th at p. 1043.) Additionally, there was a general indemnity provision in which the subcontractor agreed to indemnify the general contractor and hold the railroad harmless from specified liability. (Id. at p. 1044.) The indemnification duty extended only to a loss which arose from the subcontractors act or omission.^[2] The additional insured language coverage in the subcontractors policy was described by the Court of Appeal as follows: [The electrical subcontractor] caused [the general contractor] to be added to that policy as an additional insured, but, according to the [additional insured] endorsement issued by [the subcontractors insurer], the policy provided coverage to [the general contractor] only with respect to liability arising out of [the electrical subcontractors] ongoing operations performed for [the general contractor]. (Italics added.) (Id. at pp. 1043-1044.)

The Court of Appeal reached several conclusions. To begin with, the Court of Appeal held the indemnification agreement did not require the subcontractor to indemnify the general contractor. The indemnification duty arose only from an act or omission on the part of the subcontractor while performing work called for by the subcontract. (St. Paul Fire and Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., supra, 101 Cal.App.4th at pp. 1049, 1052, 1054.) The act or omission involved a pressure test performed by the general contractor. The subcontract made no mention of a pressure test. Further, the Court of Appeal concluded the language in the additional insured clause was ambiguous. As noted, the additional insured clause provided coverage for claims arising out of the subcontractors operations under the subcontract. The Court of Appeal explained, Without any doubt, a reasonable layperson could interpret the language arising out of [the subcontractors] ongoing operations as embracing either (1) any liability arising while [the subcontractor] was on the [railroads] premises doing work under the Subcontract or (2) liability restricted to that arising, at least in part, from [the subcontractors] actual performance of such work. (Id. at p. 1056.) Hence, the Court of Appeal examined all of the relevant circumstances: the factual circumstances of the accident; the duty created by the subcontract to provide additional insurance; and the indemnification agreement in the subcontract. (Id. at pp. 1058-1059.) Based on a review of the foregoing circumstances, the Court of Appeal held: We therefore conclude that the additional insured endorsement in the [the subcontractors insurers] policy must be interpreted as providing coverage to [the general contractor] only for liability arising, at least in part, from [the subcontractors] activities in its performance of the subcontract, in other words, an act or omission by [the subcontractor]. As the stipulated and undisputed facts demonstrate that no act or omission of [the subcontractor] in the performance of the Subcontract played any part in any claim of liability arising from [the subcontractors employees] injury, there never was any potential for coverage under the [the subcontractors insurers] policy. (Id. at p. 1060.)

Based upon the analysis in St. Paul Fire and Marine Ins. Co., defendant argues that we should rely on the language in the indemnification clause in the rental agreement and the additional insured endorsement and reach the following conclusion, Here, the . . . promise to indemnify contained in . . . the Rental Agreement is limited to liability caused by [the winerys] negligence and its companion promise to insure is no broader. Plaintiff argues none of the ambiguities present in St. Paul Fire and Marine Ins. Co. are present here. We agree.

St. Paul Fire and Marine Ins. Co. is not controlling. Unlike the subcontract in St. Paul Fire and Marine Ins. Co., there is no similar limitation on the duty to procure insurance which covered the act or omission of either contracting party. In St. Paul Fire and Marine Ins. Co., the contractual duty to secure insurance only extended to the subcontractors acts or omissions. (St. Paul Fire and Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., supra, 101 Cal.App.4th at p. 1044.) Here, as previously noted, the winerys duty to secure insurance extended to: [The winery], at its own expense, shall carry adequate public liability insurance against bodily injury, including death, and against property damage . . . . [The winery] shall furnish [the forklift company] with certificates of insurance designating [the forklift company] and its assigns as insured parties . . . . Moreover, the additional insured language in St. Paul Fire and Marine Ins. Co. is materially different from that in the endorsement attached to defendants policy. In St. Paul Fire and Marine Ins. Co., the additional insured language required that that the electrical subcontractor add the general contractor as an insured for a narrow type of risk. The additional insured coverage extended only with respect to liability arising out of the electrical subcontractors ongoing operations performed for the general contractor. (St. Paul Fire and Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., supra, 101 Cal.App.4th at p. 1043.) By contrast, the other insured language in the present case broadly states: Who is an Insured . . . [] Any person or organization to whom you become obligated to include as an additional insured under this policy, as a result of any contract or agreement you enter into which requires you to furnish insurance to that person or organization of the type provided by this policy, but only with respect to liability arising out of your operations or premises owned by or rented to you. (Italics added.) The other insured language in St. Paul Fire and Marine Ins. Co. is ambiguous and materially different from the additional insurer endorsement attached to defendants policy.

Finally, the accident in St. Paul Fire and Marine Ins. Co. was not one the insured would have objectively reasonably anticipated would have been covered by the electrical subcontractors policy. The accident involved work performed, not by the subcontractor, but only by the general contractor. And as noted, the additional insured clause extended only to the electrical subcontractors ongoing operations performed for the general contractor. (St. Paul Fire and Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., supra, 101 Cal.App.4th at p. 1043.) By contrast, the accident here fell squarely within the defendants additional insured clauseit occurred during the winerys operations and on its premises. St. Paul Fire and Marine Ins. Co. is not controlling.

Second, defendant relies on St. Paul Mercury Ins. Co. v. Frontier Pacific Ins. Co. (2003) 111 Cal.App.4th 1234, 1238-1248. In St. Paul Mercury Ins. Co., a steel subcontractor rented a crane from a crane company. The crane was to be used to place steel beams as part of the Fashion Valley expansion project in San Diego. (Id. at p. 1238.) The Court of Appeal described the rental agreement thusly: Paragraph 8 of the Lease, titled HOLD HARMLESS-INSURANCE-LESSEE, required [the subcontractor] to indemnify [the crane company] against claims for injury or death in any way caused by [the subcontractor] . . . occasioned by the use, maintenance, operation, handling, transportation or storage of the equipment during the rental term. (Italics added.) The provision also required [the subcontractor] to obtain $2 million in liability insurance to protect [the crane company] from such liability and risk of loss, and to furnish additional insured endorsements making such coverages primary to all other coverages. (Italics added.) (Id. at p. 1238-1239.)

The subcontractor secured a commercial general liability policy which included an additional insured endorsement. The Court of Appeal described the relevant language: [The subcontractor] was insured under a commercial general liability (CGL) and excess liability policy issued by St. Paul. The policy contained an Additional Protected Persons Endorsement (APP endorsement), which provided coverage for injury or damage resulting from [the subcontractors] maintenance, operation or use of the crane. The endorsement exclude[d] coverage for injury or damage that results from any act or failure to act of [the crane company], other than the general supervision of work performed for [the crane company] by [the subcontractor]. [] St. Paul also issued a separate 2010 endorsement, which named [the crane company] as an additional insured and referred to the Fashion Valley project, but stated the policy provided coverage to [the crane company] only with respect to liability arising out of [the subcontractors] operations performed for [the crane company]. [] [The subcontractor ] provided [the crane company] with a certificate of insurance showing it was an additional insured under the St. Paul policy with respect to [the subcontractors] rental of [a] crane from [the crane company]. The certificate described [the subcontractors] operations as the Fashion Valley project. (St. Paul Mercury Ins. Co. v. Frontier Pacific Ins. Co., supra, 111 Cal.App.4th at p. 1239.)

A subcontractors employee was killed after a steel beam fell from the companys crane. Two other employees, including the crane operator, who was employed by the general contactor, sued the crane company. (St. Paul Mercury Ins. Co. v. Frontier Pacific Ins. Co., supra, 111 Cal.App.4th at p. 1240.) The personal injury litigation settled. In the post settlement coverage litigation, at issue was whether the aforementioned additional insured provisions of the subcontractors policy provided the crane company with coverage in the underlying action.

The Court of Appeal first held that the additional insured endorsement was ambiguous. Among other things, the Court of Appeal explained, [T]he 2010 endorsement is ambiguous in context because it covers [the crane company] for claims arising from [the subcontractors] work for [the crane company], but no such work was contemplated. The meaning of the 2010 endorsement cannot be ascertained from its plain terms. (St. Paul Mercury Ins. Co. v. Frontier Pacific Ins. Co., supra, 111 Cal.App.4th at p. 1244.) Thus, the Court of Appeal looked to the rental agreement in order to assess the crane companys objectively reasonable expectations concerning coverage. (Id. at p. 1245.) After assessing those documents, the Court of Appeal held that the crane company had no reasonably objective expectation it would be covered for its own negligence because: paragraph 8 of the rental agreement required indemnification only in the case of injury or death in any way caused by the subcontractors use, maintenance, operation, handling, transportation or storage of the crane; the additional insured clause only applied to liability arising out of the subcontractors operations performed for the crane company; and all of this was particularly true as to the strict tort liability claims advanced by the two plaintiffs. (Id. at p. 1246)

Again, as in St. Paul Fire and Marine Ins. Co., the duty to provide insurance clause in the rental agreement between the forklift rental company and the winery and the additional insured endorsement attached to defendants policy are materially different from those present in St. Paul Mercury Ins. Co. We agree with plaintiff that there are no similar ambiguities present in this case. Thus, summary judgment should not have been entered as there is a triable issue as to whether plaintiff can secure some or all of the benefits available under defendants additional insured endorsement. We obviously do not address the many other issues that will arise during the trial.

One final comment is in order concerning the indemnification agreement in paragraph 8 of the rental agreement which states in part, [The winery] assumes all risks and liability for and agrees to indemnify, save and hold [the forklift company] harmless from all claims and liens, all loss of or damage to the equipment and loss, damage, claims, penalties, liability and expenses, including attorney fees, howsoever arising or incurred because of the Equipment or the storage, use or operation thereof. This is a general indemnification agreement. (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628; Morgan v. Stubblefie