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The Second Appellate District affirmed a judgment of dismissal. The court held an employer was not an "additional insured" entitled to a defense under a charitable nonprofit corporation's commercial general liability policy where an employee sought recovery for personal injuries sustained while performing volunteer work on behalf of the nonprofit organization.
Nonprofit corporation Christmas in April USA (CIA) enlisted volunteers to repair homes of low-income and elderly persons. CIA solicited companies, including The Boeing Company, to encourage its employees to volunteer for such construction projects. Todd Black, an employee of California State University at Long Beach (CSULB), worked as a volunteer on a CIA project home in Long Beach. Black was injured on a step-stool while working as a volunteer on a CIA project at the home of Sam and Annie Nichols. Black later sued Boeing, CSULB, and the Nichols for personal injury. As to Boeing, Black contended Boeing was a joint venturer with CSULB and CIA on the Nichols project, his work there was under the direction of Boeing, and Boeing supplied him with a defective step-stool.
Boeing tendered its defense to Continental Casualty, which insured CIA under a commercial general liability policy. Continental rejected the tender on the ground Boeing was not an additional insured under the policy.
Boeing defended the Black suit and prevailed at trial. Boeing then sued Continental to recover its defense costs expensed in the Black litigation.
Boeing maintained it was an additional insured under CIA's Continental CGL policy based on language in a policy endorsement. The endorsement characterized additional insureds under the policy as "Any person, (other than the named insured, or any employee of the named insured) or an organization while acting as any agent for, or on behalf of the named insured, including but not limited to real estate agents, however, such coverage will be granted only on written request of the insured and for such limits as are afforded by this policy."
Continental demurred, contending Boeing could qualify as an additional insured only if it established CIA, as primary insured, made a written request that additional insured coverage extend to Boeing. Continental pointed out there was no allegation by Boeing this occurred.
Boeing argued Continental's reading of the endorsement was absurd because it would require CIA to identify and transmit written requests on behalf of hundreds of volunteers on CIA's projects. Further, Boeing argued Continental's interpretation rendered its coverage illusory, as the crux of CIA's coverage was for the benefit of CIA's volunteers.
The trial court sustained Continental's demurrer without leave to amend. Boeing appealed on the basis the policy endorsement was ambiguous, and the ambiguous terms had to be construed in Boeing's favor on demurrer. Boeing argued that to trigger coverage for an additional insured under the endorsement's terms, "the insured," and not the "named insured," had to make a written request to the insurer, which is what happened in Boeing's case.
The court of appeal rejected Boeing's argument. The court of appeal held, as a matter of law, Boeing did not qualify as an additional insured under Continental's CGL policy. The court found no ambiguity in the additional insured endorsement.
Boeing was not the named insured. Rather, CIA was the only entity specified as a named insured in the policy. Further, under the primary coverage terms, only CIA, as a corporation, and its executive officers and directors (with respect to their duties) and its stockholders (with respect to their liability as stockholders) were insureds. Boeing's case hinged on the policy's special endorsement for additional insureds. The court of appeal rejected Boeing's attempt to create ambiguity in the endorsement. When interpreted as part of the insurance policy as a whole and in context, there was no ambiguity.
The policy's common conditions stated CIA, and no other entity, had the authority to request changes to the policy. Reading that limitation in conjunction with the special endorsement for additional insureds, Boeing had no standing to make a written request to Continental to be named as an additional insured under the policy.
Because Boeing did not qualify as an additional insured under CIA's policy, Continental did not owe Boeing a defense in the Black personal injury action. Therefore, the trial court properly sustained Continental's demurrer to Boeing's first amended complaint without leave to amend.
This opinion is not final. Though it has been certified for publication, it may be withdrawn from publication, modified on rehearing, or granted review by the California Supreme Court. Should any of these events occur, the opinion would be unavailable for use as authority in other cases.
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