This was an insurance bad faith action that we prosecuted arising from The Travelers Indemnity Company of Connecticut’s wrongful refusal to defend its insured, Don Tucker. Tucker owned and operated an excavating and grading company called Don Tucker & Son. In 2014, a Tucker employee accidentally knocked loose a 5,000-pound shoring beam during excavation for a swimming pool at a jobsite located at 2901 Broadway in San Francisco. The beam landed on Martin Aguilar, a laborer for another company helping to construct the pool, and crushed his lower extremities. Thereafter, Tucker faced two separate lawsuits arising from this incident: First, a Subrogation Action filed by Old Republic Insurance Company – the carrier for Aguilar’s employer at the time – seeking reimbursement against Tucker for the workers compensation benefits it paid to Aguilar; and second, a Personal Injury Action brought by Aguilar to recover for his catastrophic injuries. Tucker tendered both actions to Travelers, which had promised to defend him against any suit seeking damages for bodily injuries caused by an accident. Both Complaints clearly came within the insuring agreement of the commercial general liability policy Travelers had issued to Tucker. Travelers thus had an immediate duty to defend in light of the potential for coverage.
Travelers nevertheless denied coverage and refused to defend Tucker, leaving him to face two lawsuits on his own and the prospect of massive personal exposure.
Although the underlying Complaints were silent as to the nature of the 2901 Broadway jobsite, and made no mention of any work being done at the jobsite other than excavation for a swimming pool, Travelers claimed Tucker’s CGL policy excluded coverage because his company’s excavation work “was being done at a family residence.” We believed that the this denial was frivolous to the extreme.
First, exclusions must be narrowly construed, and Travelers’ CGL policy nowhere excluded claims arising from work “being done at a family residence.” Instead, the pertinent exclusion negated coverage for claims arising from Tucker’s work “on or for any project that, in whole or in part, is or will become any single or multi-family housing, any residential condominium, any residential apartment or any assisted living facility.” Thus, the location of the work being done is immaterial to application of the exclusion, and yet, that was the entire basis for Travelers’ denial.
Second, in order for the exclusion to apply and eliminate the potential for coverage – and thus negate Travelers’ duty to defend – Travelers had the burden of proving, through conclusive evidence, that the exclusion applies in all possible worlds. Travelers had no such evidence. In order for the exclusion to have eliminated the potential for coverage, Travelers had to have undisputed facts showing Tucker’s work was or was going to become a single or multi-family housing, condo, apartment or assisted living facility. All of those things are structures where people live. Tucker did no work on any structure. Instead, he simply excavated a swimming pool. The hole Tucker was digging was never going to become a single or multi-family housing, condo, apartment or assisted living facility. People don’t live in pools. Pools aren’t housing. They are often near housing; they are often located on residential property; but they aren’t part of housing itself. At the time of tender, Travelers did not have conclusive evidence establishing that the exclusion eliminated the potential for coverage.
To avoid bankruptcy, Tucker agreed to settle Aguilar’s claim. Under the terms of the settlement, Tucker assigned Aguilar its claims against Travelers and agreed to allow Aguilar’s claims against it to proceed through an uncontested trial to determine liability, causation and damages. In return, Aguilar agreed not to execute any judgment against Tucker.
Aguilar’s personal injury suit proceeded to trial. After a bench trial, the San Francisco County Superior Court found Tucker liable for Aguilar’s injuries and entered an $18.5 million judgment against him.
We then filed suit against Travelers on behalf of both Aguilar and Tucker. After significant discovery including depositions of Travelers’ claims staff, we filed a summary adjudication to establish Travelers’ breach of the duty to defend. The Court granted our motion, ruling that Travelers breached its insurance contract. The Court’s summary adjudication ruling narrowed the remaining issues in the case to bad faith and punitive damages. The weekend before trial, the case was settled for a confidential amount.