A federal appellate court upheld a lower court ruling in favor of a Chubb Ltd. unit on Tuesday in a lawsuit filed by Admiral Insurance Co. regarding regulation of a building requirement.
The complex case arose from the work of building the Los Angeles Mission College Media Arts Center by engineering consultant Pasadena-based Gateway Science & Engineering Inc., according to court papers in Admiral Insurance Co. v. ACE American Insurance Co.
Gateway received a professional liability policy in connection with the Admiral project that covered claims arising from negligence in professional services, and a commercial general liability policy from the Chubb unit ACE American, according to the ruling of the 9th US Circuit Court of Appeals in San Francisco .
Admiral̵
7;s policy excluded claims covered by the CGL policy, while Ace’s policy excluded claims for professional services. “Because of their terms, the policies did not overlap,” the verdict said.In 2014, Harford Fire Insurance Co., which according to court papers issued a performance guarantee on behalf of the project’s main contractor, filed state court and arbitration lawsuits against Gateway, claiming that its negligence had damaged the construction project.
ACE settled the dispute on behalf of Gateway and other insured for $ 3.6 million, while the Admiral reached its own settlement with Hartford for $ 2.5 million, according to court documents.
in July 2020, the Admiral brought an action against ACE, alleging that Admiral, as part of its settlement agreement with Hartford, had paid Hartford to settle claims for which ACE was responsible.
The U.S. District Court in Pasadena granted the ACE a summary judgment on allegations of breach of the implied obligation to reconcile, the contractual obligation to make amends and the implied obligation to make amends; reasonable indemnity and subrogation; and unfair enrichment.
A panel of three judges confirmed the decision. “These claims have no justification,” the decision said. ACE “did not violate the implied obligation to resolve,” it said. By regulating all claims covered by its policy, “it fulfilled the obligation to regulate.”
It also did not violate its obligation to indemnify Gateway, the verdict said. “Since all claims against Gateway were settled before liability was established, the obligation to indemnify never arose,” the decision said, rejecting the remaining claims and upholding the lower court’s decision.
Lawyers in the case did not respond to a request for comment.
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