Schafer & Associates v. Certain Underwriters at Lloyds of London

Filed 6/8/06 R.L. Schafer & Associates v. Certain Underwriters at Lloyds of London CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Tulare County. Patrick J. O'Hara, Judge.

Shea Stokes Carter and Jeffrey J. Leist for Plaintiff and Appellant.

Hancock Rothert & Bunshoft; Duane Morris LLP, William J. Casey, Andrew G. Wanger, Kathryn C. Ashton and Joleen C. Lenihan for Defendant and Respondent.

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In the underlying federal district court action, a surveying firm sued a general contractor, claiming it was entitled to additional payments because it performed more work than specified in its subcontract with the general contractor. The general contractor argued the surveying firm misunderstood its responsibilities under the subcontract and requested attorney fees and costs pursuant to a clause in the subcontract in the event it prevailed in the litigation. The surveying firm lost its lawsuit under the subcontract and the federal district court awarded the general contractor its attorney fees and costs.

In this case, the surveying firm sued the insurer that provided its professional liability policy, claiming the insurer breached its duty to indemnify and defend the surveying firm against a general contractor's claim for the attorney fees and costs under the subcontract. The surveying firm alleged its negligence caused it to underbid the work covered by the subcontract, which led to its liability for damages in the form of the attorney fees and costs.

The insurer contended that it had no duty to defend against the claim for attorney fees and costs and filed a demurrer. The trial court sustained the demurrer without leave to amend. We will uphold that decision. In short, we will not become the first court in California to rule that the coverage of a professional liability policy extends to contractual claims for attorney fees and costs that an insured must pay to a prevailing party after the insured loses a breach of contract action regarding the scope of its contractual obligations. Judgment is affirmed.

FACTS AND PROCEEDINGS

Plaintiff R.L. Schafer & Associates (Surveyor) is a sole proprietorship that provides professional civil engineering and land surveying services and has an office in Porterville, California. Defendant Certain Underwriters at Lloyd's of London (Underwriters) is an insurer authorized to issue policies of insurance in the State of California.

Insurance Policy

Surveyor obtained a professional liability policy (Policy) from Underwriters that stated it was â€