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Centex Homes v. R-Help Construction Company, Inc.

In Centex Homes v. R-Help Const. Co., Inc., 32 Cal.App.5th 1230 (March 11, 2019), the California Court of Appeal reversed the trial court’s entry of judgment in favor of R-Help Construction Co., Inc. in connection with a Cross-Complaint for express contractual indemnity and failure to secure insurance filed by Centex Homes. The parties’ dispute arose out of an underlying personal injury lawsuit alleging that plaintiff sustained injury when he fell into a utility box allegedly installed by subcontractor, R-Help Construction Company, Inc. (“R-Help”). Centex had contracted with R-Help to install junction boxes at a property development. However, R-Help contended that the junction box in question was not installed by it. As such, it was not liable to the plaintiff and was not obligated to indemnify Centex for any settlement or judgment entered against Centex. Ultimately, Centex settled the underlying plaintiff’s claim for personal injury and demanded that R-Help indemnify it for the costs in defending plaintiff’s lawsuit in the amount of the judgment. Subsequently, Centex filed a Motion for Summary Adjudication against R-Help, arguing that it was entitled to a defense of the underlying personal injury lawsuit as a matter of law, pursuant to the indemnity clause in the subcontract with R-Help. The trial court denied such motion and held that the issue of indemnity should be submitted to the jury. On the other hand, the trial court adjudicated Centex’s claim of breach of contract based on the failure to secure insurance as a matter of law in favor of R-Help. Thereafter, the jury found that R-Help was not obligated to indemnify Centex for the defense and settlement of the underlying personal injury lawsuit.

In reversing the trial court’s decision to submit the duty to defend under the indemnity clause in the subcontract between R-Help and Centex, the Court of Appeal reasoned as follows:

Centex contends the trial court improperly delegated the duty to defend issue to the jury. It claims the issue is one of law for the court. We agree.

Centex argues Wagener's allegation that the utility box was within the scope of work R-Help performed for it is alone sufficient to require R-Help to defend. Centex relies on Crawford v. Weather Shield Mfq., Inc. (2008) 44 Ca1.4th 541 179 Cal. Rptr. 3d 721. 187 P.3d 4241. In Crawford, the developer of a residential project subcontracted with a window manufacturer to supply windows for the project. The subcontract required the window manufacturer to indemnify the developer against all claims arising out of the manufacturer's work. Homeowners sued the developer alleging the windows manufactured by the subcontractor were faulty. The developer tendered defense to the manufacturer under the indemnity provisions in the subcontract. Our Supreme Court held that the duty to defend claims embraced by the indemnity agreement arises immediately upon the proper tender of defense, and thus before the litigation has determined whether indemnity is actually owed. (Id. at p. 558.) Claims on which a duty to defend is owed include those which at the time of tender allege facts that would give rise to a duty of indemnity. (Ibid.)

Here Wagener claimed his injuries arose out of or related to R-Help's work for Centex. Under Crawford, the duty to defend arose immediately upon the proper tender of defense of a claim embraced by the indemnity agreement. (Crawford v. Weather Shield Mfq., Inc., supra, 44 Cal.4th at p. 558.) The duty to defend was not a question of fact for the jury; the trial court was compelled to determine as a matter of law that Wagener's claim was embraced by the indemnity agreement.”

In addition, the Court of Appeal reversed the trial court’s entry of judgment on Centex’s claim for breach of contract based on the failure to secure insurance. The Court of Appeal held that an action for damages arising from a breach of contract is an action at law requiring a jury trial.

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