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Court Finds That “Care, Custody Or Control” Exclusion Did Not Negate Coverage For General Contractor Who Shared Jobsite Supervision

McMillin Homes Constr., Inc. v. National Fire & Marine Ins. Co., 35 Cal.App.5th 1042 (2019); Fourth Appellate District Court of Appeal, Division One, Case No. D074219 (June 5, 2019).

McMillin Homes Construction, Inc. (“McMillin”) was the developer and general contractor of a residential community project in Chula Vista. McMillin hired Martin Roofing Company, Inc. (“Martin”) as the project’s roofing subcontractor. In connection with the project, National Fire and Marine Insurance Company (“National Fire”) issued a commercial general liability policy to Martin. The policy named McMillin as an additional insured. Under a “care, custody or control” exclusion (“CCC exclusion”), damage to property in McMillin’s “care, custody or control” was excluded.

When homeowners brought an underlying construction defect lawsuit arising from alleged roofing defects, McMillin tendered its defense to National Fire. National Fire denied coverage based on the CCC exclusion. McMillin then sued for breach of the duty to defend. Following a bench trial, the trial court held that the CCC exclusion negated a duty to defend.

On appeal, the Court relied on Home Indem. Co. v. Leo L. Davis, Inc., 79 Cal.App.3d 863, 872 (1978) to find that the CCC exclusion applied only where control over the damaged property was “exclusive or complete.” Because Martin was responsible for controlling its jobsite, and McMillin oversaw the project as a whole, both of them shared control over the roofing work. As a result, the Court of Appeal concluded that the CCC exclusion did not apply, and thus, National Fire owed a defense to McMillin.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.


About this Author

Katherine Sample Litigation Attorney Sheppard Mullin
Special Counsel

Katherine Sample is a special counsel in the Business Trial Practice Group in the firm's Orange Country office.

Areas of Practice

For more than a decade, Katherine has handled complex civil litigation cases from inception through trial. Her substantial practical legal experience includes second chair trial experience.

Katherine's practice is currently focused on insurance bad faith and insurance coverage matters. Katherine represents insurers in matters involving a wide variety of underlying claims, including claims arising under general liability,...