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Faultless Subcontractor Had No Obligation to Insure, Indemnify Contractor Against Claim for Injuries


January 13, 2003


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(A version of this article appears in the California Construction Law Reporter, published by the West Group.)


By James E. Acret

An electrician employed by Sasco was injured when a pipe that was undergoing pressure testing by the prime contractor exploded. Neither Sasco nor the injured worker participated in any way in the pressure testing. The subcontract provided that subcontractor would provide insurance coverage to protect contractor from claims that might arise out of or result from subcontractor's operations. An endorsement to subcontractor's liability policy provided coverage to the prime contractor only with respect to liability arising out of subcontractor's operations.

The subcontract also required that to the fullest extent permitted by law, subcontractor would indemnify contractor against claims arising out of or resulting from the performance of the work provided that the injury arose from any act or omission of subcontractor even if contributed to by the active negligence of the prime contractor.

The worker sued the prime contractor, which sought indemnity from Sasco and defense and indemnity from Sasco's insurer. The insurer denied coverage and refused to defend. The trial court awarded $113,383.05 to the prime contractor and its insurer plus $27,780.48 in costs and attorney fees.

The Court of Appeal reversed. St. Paul Fire and Marine Insurance Company v. American Dynasty Surplus Lines Insurance Company, 101 Cal.App.4th 1038, 2002 DJDAR 10253 (2002). Contractor contends that Sasco's act of showing up on the job and performing work under the subcontract in and of itself is sufficient to trigger the promise of indemnification. But Sasco undertook no duty to indemnify except for a liability that arose from an act or omission by the Sasco. Furthermore, there was no potential for coverage under Sasco's liability policy.


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