Judge: Michelle Williams Court, Case: 21STCV06969, Date: 2022-09-21 Tentative Ruling

Case Number: 21STCV06969    Hearing Date: September 21, 2022    Dept: 74

21STCV06969           CALIFORNIA SPECIALTY INSULATION vs ALLIED WORLD SURPLUS LINES

TENTATIVE RULINGS:

Defendant Allied World Surplus Lines Insurance Company’s Motion for Summary Judgment is DENIED.

Motion For Summary Judgment of Plaintiff California Specialty Insulation, Inc. is GRANTED.

Plaintiff is entitled to a declaratory judgment in its favor.

Background

On February 22, 2021, Plaintiff California Specialty Insulation, Inc. (“CSI”) filed this action for declaratory relief against Defendant Allied World Surplus Lines Insurance Company (“Allied World”). The complaint alleged Defendant issued a policy of commercial general liability insurance under Policy No. 5057-0295 effective between December 17, 2016 and December 17, 2017. CSI was named as a defendant in Los Angeles Superior Court case 19STCV36103 Jason Standiford v. California Specialty Insulation, Inc., et al. While Allied World initially provided a defense, it withdrew its defense and disclaimed coverage citing the Bodily Injury to any Employee or Temporary Workers of Contractors Exclusion. CSI seeks a declaration of rights regarding Allied Word’s duty to defend and indemnify CSI in connection with the Standiford action.

Motions

On June 29, 2022, Defendant Allied World filed its motion for summary judgment arguing the Bodily Injury to Contractors Exclusion precludes coverage.

On July 8, 2022, Plaintiff CSI filed its competing motion for summary judgment arguing the Bodily Injury to Contractors Exclusion does not apply.

Opposition

In their oppositions, the parties reiterate their respective arguments in their competing motions and respond to the authority and interpretations offered by the opposing party.

Reply

In their replies, the parties reiterate their respective arguments.

Requests for Judicial Notice

The parties request the Court take judicial notice of the complaint filed in Standiford. The requests are GRANTED. (Evid. Code § 452(d).) Plaintiff also requests the Court take judicial notice of various documents related to the removal and remand of this case from the district court. These documents are irrelevant to the issues presented and Plaintiff’s request for judicial notice is DENIED as to Items Nos. 2-5, Exhibits D-G. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422 n.2 (“any matter to be judicially noticed must be relevant to a material issue.”).)

Evidentiary Objections

Allied World’s objections filed in support of its opposition and reply are immaterial to the Court’s disposition of the motion. (Code Civ. Proc. § 437c(q).)

Motion for Summary Judgment

Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial.¿(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) In analyzing such motions, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”¿(Hinesley¿v.¿Oakshade¿Town Center¿(2005) 135 Cal.App.4th 289, 294.)¿Thus, summary judgment or summary adjudication is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.¿(Code Civ. Proc. § 437c(c);¿Villa v.¿McFarren¿(1995) 35 Cal.App.4th 733, 741.) ¿ 

¿ 

Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”¿(Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.) A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty. (Code Civ. Proc. § 437c(f)(1).)

“A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action.” (Code Civ. Proc. § 437c(p)(1).)

Interpretation of Insurance Contracts

As summarized by the Court in MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635:

Interpretation of an insurance policy is a question of law and follows the general rules of contract interpretation. The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the ‘mutual intention’ of the parties. Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. Such intent is to be inferred, if possible, solely from the written provisions of the contract. The clear and explicit meaning of these provisions, interpreted in their ordinary and popular sense, unless used by the parties in a technical sense or a special meaning is given to them by usage, controls judicial interpretation. A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable. But language in a contract must be interpreted as a whole, and in the circumstances of the case, and cannot be found to be ambiguous in the abstract.

Moreover, insurance coverage is interpreted broadly so as to afford the greatest possible protection to the insured, whereas exclusionary clauses are interpreted narrowly against the insurer. An insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear. As we have declared time and again ‘any exception to the performance of the basic underlying obligation must be so stated as clearly to apprise the insured of its effect. Thus, the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language. The exclusionary clause must be conspicuous, plain and clear. This rule applies with particular force when the coverage portion of the insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded. The burden is on the insured to establish that the claim is within the basic scope of coverage and on the insurer to establish that the claim is specifically excluded. . . . in order to ascertain the scope of an exclusion, we must first consider the coverage language of the policy.

(MacKinnon, supra, 31 Cal.4th at 647–648 (quotations and citations omitted).)

“Whether a clause is ambiguous and whether an insured has an objectively reasonable expectation of coverage in light of the insuring language are questions of law.” (Titan Corp. v. Aetna Casualty & Surety Co. (1994) 22 Cal.App.4th 457, 469.)

Undisputed Facts

On June 24, 2022, the parties executed a Stipulation of Facts that was filed with both motions. The following are the material factual stipulations therein. “Sometime in 2017, Air Control Systems, Inc. (‘Air Control’) was retained by the owner of real property to perform improvement work at a building located at 4375 Bandini Boulevard, Los Angeles, California 90058 (the ‘Premises’).” (Stip. Facts No. 1.) Both Air Control and Plaintiff CSI were licensed by the California Contractors License Board. (Id. No. 2, 4.) “On or about August 8, 2017, pursuant to a purchase order, Air Control retained . . . CSI . .  to install duct insulation for K-room heaters at the Premises.” (Id. No. 3.)

Jason Standiford was an employee of Air Control, who alleged in Los Angeles Superior Court case 19STCV36103, the “Underlying Action,” “that on October 10, 2017, during the course and scope of his employment for Air Control, Standiford was on top of a ladder performing work at the Premises, when a scissor lift vehicle allegedly driven by a CSI employee hit the ladder, causing Standiford to fall and allegedly sustain injuries.” (Id. Nos. 5-7.)

Allied World “issued to CSI commercial general liability policy number 5057-0295, effective from December 17, 2016 to December 17, 2017.” (Id. No. 9.) CSI tendered the Standiford action to Allied World, Allied World initially retained counsel to defend CSI without a reservation of rights, but “withdrew from the defense and disclaimed any duty to defend or indemnify CSI from the claims asserted in the Underlying Action under the Policy” citing the “‘Bodily Injury to Any Employee or Temporary Worker of Contractors Exclusion’ endorsement [form CSGL 00224 00 08 16] in the Policy.” (Id. No. 11-16.)

The Standiford Suit Falls Within the Basic Scope of Coverage

The policy provides that Allied World “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ . . . to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages. However, we will have no duty to defend the insured against any ‘suit’ seeking damages for ‘bodily injury’ . . .  to which this insurance does not apply.” (Yoon Decl. Ex. 2; Pltf. Ex. A, (hereafter “Policy”) § I, ¶ 1(a).)

“This insurance applies to ‘bodily injury’ . . . only if: (1) The ‘bodily injury’ . . . is caused by an ‘occurrence’ that takes place in the ‘coverage territory’; (2) The ‘bodily injury’ . . . occurs during the policy period; and (3) Prior to the policy period, no insured . . . knew that the ‘bodily injury' . . . had occurred, in whole or in part.” (Policy § I, ¶ 1(b).)

“‘Bodily injury’ means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” (Policy § V, ¶ 3.) “Coverage territory” includes the United States. (Policy § V, ¶ 4.) “‘Occurrence’ means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” (Policy § V, ¶ 13.) “‘Suit’ means a civil proceeding in which damages because of ‘bodily injury,’ . . . to which this insurance applies are alleged.” (Policy § V, ¶ 18.)

The parties do not dispute that the Standiford action is a “suit” seeking damages for “bodily injury” caused by an “occurrence” that occurred during the policy period in the “coverage territory” within the meaning of the Policy. Therefore, the Standiford action is covered by the Policy unless an exclusion applies.

Bodily Injury to Any Employee or Temporary Worker of Contractors Exclusion

The Policy includes a “Bodily Injury to Any Employee or Temporary Worker of Contractors Exclusion” that provides, in relevant part:

This insurance does not apply to:

(1) “Bodily injury” . . . to any “employee” or “temporary worker” of any contractor or subcontractor arising out of or in the course of the rendering or performing services of any kind or nature by such contractor or subcontractor;

(2) Any obligation, including contractual liability, of any insured to indemnify, or contribute with, another person or organization because of damages arising out of such “bodily injury” . . . described in paragraph 1 above.

(Policy at CSGL 00224 00 08 16.)

Broken into its component parts as relevant here, the exclusion removes coverage for: (1) bodily injury; (2) to any employee of any contractor or subcontractor; (3) arising out of or in the course of the rendering or performing services of any kind or nature by such contractor or subcontractor. (Ibid.)

“An insurer is entitled to limit its coverage to defined risks, and if it does so in clear language, we will not impose coverage where none was intended.” (Titan Corp. v. Aetna Casualty & Surety Co. (1994) 22 Cal.App.4th 457, 469. See also Regional Steel Corp. v. Liberty Surplus Ins. Corp. (2014) 226 Cal.App.4th 1377, 1394 (“The insurer ‘has the right to limit the coverage of a policy issued by it and when it has done so, the plain language of the limitation must be respected.”).)

Allied World argues the stipulated facts fit into the exclusion as follows: (1) Standiford alleged he sustained bodily injury, (Stip. Fact Nos. 7-8), (2) Standiford was an employee of Air Control and Air Control is a contractor, (Stip. Fact Nos. 1, 2, 5); and (3) Standiford alleged he was injured “during the course and scope of his employment for Air Control.” (Stip. Fact No. 7.)

The Standiford Suit Is Not Excluded by the Bodily Injury to Any Employee or Temporary Worker of Contractors Exclusion

CSI contends Allied World’s argument violates “the rule that exclusions must be interpreted narrowly.” (CSI Opp. at 8:12-9:7; CSI Mot. at 9:17-10:21.) “Although we normally interpret insuring clauses broadly and strictly construe exclusions, where an exclusion is clear and unambiguous, it is given its literal effect.” (Regional Steel Corp. v. Liberty Surplus Ins. Corp. (2014) 226 Cal.App.4th 1377, 1394 (quotations and citations omitted).)

CSI frames part of its argument in the words of the Court of Appeal in Palp, Inc. v. Williamsburg National Ins. Co. (2011) 200 Cal.App.4th 282. (Compare CSI Opp. at 8:18-20 (“It contends that that exclusion applies whenever a CSI worker accidentally injures a person engaged in a construction trade, period. There is no requirement that the ‘contractor’ have anything to do with CSI or its scope of work.”) with Palp, supra, 200 Cal.App.4th at 292 (“It contends the mechanical device exclusion applies whenever an accident involving a covered vehicle results from the movement of property by a mechanical device that is not attached to the covered vehicle, period. There is no requirement the movement of the property have anything to do with loading or unloading the covered vehicle.”).)

The policy in Palp “excluded coverage for bodily injury or property damage resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered ‘auto’.” (Id. at 287.) The court stated “[b]ut movement where and movement why? ? An exclusion must be read narrowly and in accordance with the reasonable expectations of an insured. The references in the exclusion to ‘hand trucks’ and mechanical devices that are attached to the covered vehicle both support that the ‘movement of property’ must be in relation to the covered auto, i.e., damage resulting from the movement of property to or from the covered auto by a mechanical device (other than a hand truck) unless the device is attached to the covered auto.” (Id. at 293.)

As noted by Allied World, the policy in Palp did not include the modifier “any” and the insurer essentially argued the court should read the modifier “any” into the contract. Nothing prevents an insurer from using the modifier “any” in an exclusion. “Webster defines the word ‘any’ to mean ‘one indifferently out of more than two’; ‘one or another’; and ‘one, no matter what one.’ (Webster's New Internat. Dict. (3d ed. 1961) p. 97.) From the earliest days of statehood we have interpreted ‘any’ to be broad, general and all embracing. In Davidson v. Dallas (1857) 8 Cal. 227, 239, this court declared the ‘word ‘any’ means every, and the expression ‘for these purposes or any of them’ in effect reads: ‘for the foregoing purposes and every of them.” (California State Auto. Ass'n Inter-Ins. Bureau v. Warwick (1976) 17 Cal.3d 190, 195.) Use of the term “any employee” and “any contractor” supports the conclusion that bodily injuries sustained by every employee of every contractor are excluded. (See e.g. City of Carlsbad v. Insurance Co. of State of Pennsylvania (2009) 180 Cal.App.4th 176, 182 (“Thus, the term ‘for any reason whatsoever’ means ‘any cause whatsoever.’ The only reasonable interpretation of the exclusion clause is that it bars coverage for all property damage caused by the landslide, regardless of the cause. Accordingly, it matters not that the landslide was caused, as the parties stipulated, by the negligence of the City.”).) CSI’s reliance upon Palp, is unpersuasive.

CSI cites North American Building Maintenance, Inc. v. Fireman's Fund Ins. Co. (2006) 137 Cal.App.4th 627, 641 for the proposition that “California courts have rejected the notion that the modifier ‘any,’ where it precedes an undefined term, makes the undefined term broad and unambiguous.” (CSI Mot. at 10:11-16; CSI Opp. at 17:19-26.) The court in North American Build found “no unmistakable meaning to the term ‘as an employer or in any other capacity’” in the exclusion entitled “Employment-Related Practices” and held that the exclusion “does not apply to claims by employees of an independent contractor.” (Id. at 641-643.) The court looked to the nature of the exclusion and found “the other language of the EPL exclusion relates primarily to claims that could only arise in situations of employment, former employment, or prospective employment. . . . a commonsense and, thus, a reasonable understanding of this category of claims is that it relates to actual, former, or prospective employment.” (Id. at 642.) The court also noted the title of the exclusion, “‘Employment-Related Practices’—is mirrored in the title of the endorsement by which claims-made coverage is provided for ‘Employment–Related Practices Liability.’ This coverage is for claims arising from ‘wrongful employment practices.’” (Ibid.) No such limitations exist in CSI’s policy with Allied World.

However, the issue is not the use and application of “any” in the Policy, but rather the reasonable interpretation of contractor and subcontractor.

The parties agree “contractor” and “subcontractor” are undefined terms. (Allied Resp. Sep. Stmt. at p. 9, Fact No. 22.) “The fact that a term is not defined in the policies does not make it ambiguous.” (County of San Diego v. Ace Property & Casualty Ins. Co. (2005) 37 Cal.4th 406, 415.) However, “[a] policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable.” (Ibid.)

The parties demonstrate the term “contractor” as used in the Policy is ambiguous. A “contractor” could reasonably be “any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof.” (Bus. & Prof. Code, § 7026. See e.g. AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 825 (turning to statutory definitions to determine the “ordinary and popular” definition of an insurance term).) A “contractor” could reasonably be “any party to a contract,” a person in contractual privity with the insured, or a person directly hired by the insured. (See U.S. Liability Ins. Co. v. Benchmark Const. Services, Inc. (1st Cir. 2015) 797 F.3d 116, 124 (“‘Anyone with a contract’ is surely a reasonable definition of the word ‘contractor,’ as the district court found, but so is a more narrow definition focused on the contractual relationship of the injured party and the insured.”); Atlantic Cas. Ins. Co. v. Paszko Masonry, Inc. (7th Cir. 2013) 718 F.3d 721, 725 (“plausible, however, is the alternative interpretation that services are not provided until the contractor (with or without a signed contract, because a provider of services is a ‘contractor’ within the meaning of the exclusion regardless of whether he has a contract) begins to do compensated work on the project. It is as plausible as the interpretation adopted by the district judge or the one actually preferred by Atlantic—that a ‘contractor’ is anyone in the construction business, whether or not he is rendering a construction service when the injury occurs.”).)

CSI relies upon Benchmark, supra, to contend the Court should interpret the exclusion and the term “contractor” to mean “persons or entities hired by CSI pursuant to contract.” (CSI Mot. at 17:19-21; CSI Opp. at 13:21-23.) The Court finds CSI’s interpretation to be a reasonable one that consistent with the objectively reasonable expectations of the insured. California courts routinely look to rulings in other jurisdictions when interpreting insurance policies, particularly where, as here, no California appellate court has addressed the exclusion at issue. (See e.g. Palp, supra, 200 Cal.App.4th at 293.)

The policy at issue in Benchmark is similar to CSI’s policy here: “Stripped of language not relevant here, this provision excludes: ‘Bodily injury’ to any ... ‘employee’ ... of any contractor ... arising out of ... rendering services of any kind ... for which any insured may become liable in any capacity[.] ‘Contractor’ is not a defined term under the policy. The policy provides that USLIC has a duty to defend Benchmark against suits seeking damages ‘because of ‘bodily injury’ ... to which this insurance applies.’” (Id. at 119.) The policy in Benchmark and the Policy in this case are both commercial general liability insurance policies. (Id. at 118; Stip. Fact No. 9.) In Benchmark, the court applied the same principles of insurance contract interpretation that apply in California. (Benchmark, supra, 797 F.3d at 119-120.)

This Court is persuaded by the discussion and conclusion in Benchmark and finds it applicable here. The court relied upon the purpose of commercial general liability insurance policies and the objectively reasonable expectation of an insured under such a policy:

The purpose of commercial general liability insurance also supports the narrower definition of “contractor.” As discussed in the previous section, this type of policy provides coverage for liability arising out of torts to third parties, as distinguishable from injuries that befall the insured's own employees. Since the word “contractor” is being used in a provision we have described as an employer's liability exclusion, it makes sense to define “contractor” as someone with a contract with the insured. A reasonable insured would expect the contractual relationship between the insured and the injured party to govern the applicability of an employer's liability exclusion to a given injury.

(Benchmark, supra, 797 F.3d at 125.) The court found the undefined term “contractor” to be ambiguous and the reasonable expectations of the insured supported coverage based upon an interpretation that any “contractor” meant any contractor retained by the insured. (Id. at 125 (“‘Contractor,’ then, does not mean ‘anyone with a contract,’ but is more narrowly defined and means ‘Benchmark's contractor.’ Therefore, the L–500 Endorsement exclusion does not apply to Bailey's claims. Bailey's boss, Egan, was not retained by Benchmark, and so Bailey is not a contractor's employee within the meaning of the exclusion.”).)

Applying Benchmark to the Policy and facts at issue here, the term contractor and subcontractor are more narrowly defined and mean CSI’s contractor or subcontractor, i.e. a contractor or subcontractor retained by CSI. In the language of Benchmark, Standiford’s boss, Air Control, was not retained by CSI, and so Standiford is not a contractor’s employee within the meaning of the exclusion.

Allied World Does Not Meaningfully Distinguish Benchmark or Provide Persuasive Contrary Authority

Allied World notes the court in Benchmark also addressed a second ambiguity. (Allied World Opp. at 19:5-23; Allied World Reply at 11:4-19.) However, Allied World does not demonstrate the court’s analysis regarding the term “contractor” was affected by its resolution of the other ambiguity and the Court finds no such suggestion in the Benchmark opinion. Allied World also contends “even under Benchmark’s narrower interpretation of ‘contractor,’ the Bodily Injury to Contractors Exclusion applies to preclude coverage for the Underlying Action” because there is a contractual relationship between Air Control and CSI and “[t]he fact that CSI was Air Control's contractor and not the other way around is of no consequence.” (Allied World Opp. at 19:24-20:14; Allied World Reply at 11:20-12:7.) Allied World does not cite any language in the Policy or the Benchmark analysis that supports this conclusion. While the court in Benchmark noted a reasonable interpretation may include any contract with the insured, it adopted the narrow interpretation advanced by CSI herein.

Allied World also contends adopting the interpretation advanced by CSI pursuant to Benchmark “would render the word ‘subcontractor’ superfluous . . . [because] If ‘contractor’ is limited to mean only the contractor that the insured hires, that would render the word ‘subcontractor’ irrelevant.” (Allied World Opp. at 20:15-22; Allied World Reply at 10:6-13.) The Court disagrees. As argued by CSI in reply, one reasonable interpretation of “subcontractor” consistent with the interpretation of contractor “is a person or entity hired by a contractor who was hired by the insured.” (CSI Reply at 4:17-20.) Moreover, CSI can directly retain subcontractors to perform work for which it is contracted to perform for another. Narrowly interpreting “contractor” and “subcontractor” to mean “CSI’s contractor or subcontractor” does not render subcontractor superfluous.

Allied World cites Mesa Underwriters Specialty Insurance Co. v. Allergan, Inc. (C.D. Cal., Dec. 21, 2021, No. 8:20-CV-02333-SVW-KS) 2021 WL 6618906. In Mesa, the insurance company, Mesa Underwriters Specialty Insurance, filed a declaratory relief action against Allergan that sought reimbursement for costs defending Allergan in a suit by Kaufman. (Id. at *1.) Apeel, Plaintiff’s insured under a commercial general liability insurance policy, “hired CompuVision to install equipment for a security camera system and to upgrade its network system. [Citation] Ryan Kaufman. an employee of CompuVision, was installing the security cameras at Apeel’s facility when he unknowingly drilled into a transformer, starting an electrical fire that gave him severe bums and catastrophic injuries. [Citation] Kaufman sued both Appeal and Allergan.” (Ibid.) Allegan leased the property were the accident occurred and subleased the property to Apeel. (Ibid.)

The policy at issue in Mesa “excluded coverage for claims based on ‘bodily injury’ to: . . . A contractor and any persons working for or on its behalf arising out of and in the course of performing work related to the conduct of any insured’s business.” (Ibid.)  Accordingly, the exclusion contained an express limitation related to the insured’s business, which is not present in the Policy in this case. Additionally, the court in Mesa used the same limited construction as the district court in Benchmark, which the First Circuit persuasively rejected. (Mesa, supra, 2021 WL 6618906, at *5 (“it defies common sense to suggest that the policy's use of the term ‘contractor’ means some amorphous ‘employee-like person,’ rather than its longstanding legal definition of ‘a party to a contract.’”); Benchmark, supra, 797 F.3d at 125 (“‘Contractor,’ then, does not mean ‘anyone with a contract.’”).) The Court does not find Mesa persuasive.

Allied World also cites Makan Exports, Inc. v. U.S. Underwriters Ins. Co. (N.Y. App. Div. 2007) 43 A.D.3d 883. As noted by CSI, the injured employee in Makan was an employee of a subcontractor hired by the insured. (Id. at 884 (“Arciero allegedly was injured while performing construction on a home being built by the plaintiff Makan Exports, Inc. (hereinafter Makan). Arciero was an employee of a subcontractor hired by Makan.”).) Moreover, the court did not address any arguments regarding the ambiguity of the terms “contractor” or “subcontractor” and their relation to the insured. Accordingly, Makan is inapposite.

Allied World further relies upon Certain Interested Underwriters at Lloyd's London Subscribing to Policy Certificate No. CLP0320674 v. Pioneer Productions, Inc. (S.D. Fla., Feb. 12, 2010, No. 09-60904-CIV) 2010 WL 11506104. However, the policy in that case contained clear and explicit language excluding claims for “‘Bodily Injury’ to an . . . independent contractor . . . of the Insured arising out of and in the course of employment by or service to the Insured for which the Insured may be held liable as an employer or in any other capacity.” (Id. at *1.) A similar limitation was included in the policy at issue in U.S. Underwriters Ins. Co. v. 614 Const. Corp. (S.D.N.Y. 2001) 142 F.Supp.2d 491, cited by Allied Word. (Id. at 492 (“This insurance does not apply to: (i) bodily injury to any employee of any insured, to any contractor hired or retained by or for any insured or to any employee of such contractor, if such claim for bodily injury arises out of and in the course of his employment or retention of such contractor by or for any insured, for which any insured may become liable in any capacity.”).) Additionally, neither court addressed any arguments regarding the potential ambiguity of “independent contractor” or “contractor.” These cases also do not aid Allied World. 

Allied World further cites James River Ins. Co. v. Keyes2Safety, Inc., (N.D. Ill. 2012) 2012 WL 3023334 for the proposition that “courts have found that when the exclusion uses the phrase ‘any,’ like the Bodily Injury to Contractors Exclusion contained in the Policy issued by Allied World, no contractual relationship is required between the contractor (or injured employee) and the insured.” (Allied World Mot. at 11:24-12:11; Allied World Opp. at 18:13-19:4.) In James River Ins. Co. v. Keyes2Safety, Inc. (N.D. Ill., July 24, 2012, No. 11 C 901) 2012 WL 3023334, the court addressed a policy “contain[ing] an exclusion titled ‘Injury to Independent Contractors and Subcontractors–Exclusion,’ which states that ‘[t]his insurance does not apply to ‘bodily injury’ . . . sustained by any independent contractor/subcontractor, or any employee, . . . of same.” (Id. at *1.) The court rejected the argument that the exclusion “applied only to independent contractors and subcontractors of K2S and not any independent contractor or subcontractor.” (Id. at *2-4.) CSI advances the same interpretation rejected by the court in James River, that “the term ‘contractor’ . . . mean[s] persons or entities hired by CSI pursuant to contract.” (CSI Mot. at 17:19-21.) Accordingly, the ruling in James River supports Allied World.

However, James River pre-dates Benchmark. Additionally, the district court in Benchmark cited James River in support of its ruling. (See U.S. Liability Ins. Co. v. Benchmark Const. Services, Inc. (D. Mass. 2014) 31 F.Supp.3d 315, 321 (“Endorsement L500 cannot plausibly be read to limit the exclusion to only ‘independent contractors’ of Benchmark. The term ‘any’ is plain and unambiguous and the Court is not permitted to alter that meaning. . . . see also James River Ins. Co. v. Keyes2Safety, Inc., No. 11–901, 2012 WL 3023334, at *4 (N.D.Ill. July 24, 2012)”) reversed and remanded by Benchmark, supra, 797 F.3d at 124).) Accordingly, the Court is not persuaded to follow James River.

Contrary to Allied World’s suggestion in its opposition and reply, the interpretation and analysis urged by CSI and adopted herein does not re-write the policy. (Allied World Opp. at 14:3-16:6; Allied World Reply at 8:13-11:3.) Rather, it adopts one possible interpretation of the ambiguous and undefined word “contractor” to provide coverage, consistent with the objectively reasonable expectations of the insured, as required by California law. (See e.g. Montrose Chemical Corporation v. Superior Court of Los Angeles County (2020) 9 Cal.5th 215, 230; Benchmark, supra, 797 F.3d at 124.)

In its reply, Allied World answers a question posed by CSI: “‘But why should coverage turn on whether the injured party happens to work in a construction trade?’ (Opposition, p. 8:21-25.) The answer is this: because bodily injury claims by construction workers is a category of risks that Allied World did not agree to insure.” (Allied World Reply at 7:24-8:2.) However, it is Allied World’s burden to clearly state such an exclusion. (See Paszko, supra, 718 F.3d at 725–726 (“It does seem a little odd to treat a construction worker as if he were a passerby just because he was demonstrating a construction service rather than performing a contracted-for service. But if this is a loophole in the wordy exclusion, Atlantic could have plugged it by excluding any and all construction workers from coverage, rather than contractors.”).)

The Court finds the Bodily Injury to Any Employee or Temporary Worker of Contractors Exclusion does not apply and Standiford’s suit is covered by the Policy.