A federal judge in California has ruled that Evanston Insurance, a specialty insurance underwriter and is part of the Markel Group, owed a duty to defend a home construction company in a catastrophic accident lawsuit, even though the CGL policy included an auto exclusion.
The case ended with a nearly $78 mn judgment against the builder, but Evanston will not have to indemnify.
The dispute traces back to 2017. A home builder obtained a permit requiring it to use licensed contractors. When its general contractor couldn’t handle plumbing work, the company hired another worker. He was unlicensed.
That summer, the plumber drove back from a supply run, ran a red light, and hit another vehicle. The collision left Alex Borjas with severe brain injuries.
He sued both the plumber and the builder. The builder tendered the case to Evanston, part of Markel Group, which denied coverage on two grounds: the auto exclusion and a designated premises limitation.
The policy exclusion barred liability for autos owned or operated by any insured or by employees of an insured.
The premises clause limited coverage to bodily injury tied directly to a named site or project. Evanston said those terms killed any obligation.
A referee later decided the plumber counted as a statutory employee. That ruling made the builder vicariously liable for his negligent driving.
Borjas then won nearly $78mn in trial court. Along the way, the builder assigned its CGL rights to Borjas, who also entered mediation with Evanston.
Evanston sought summary judgment, arguing it had neither duty to defend nor duty to pay. Borjas filed a counterclaim.
The insurer said the plumber’s actions fell squarely within the auto exclusion since he acted as an employee under the builder’s direction. Borjas countered he was an outside contractor.
The court drilled into employment status. The issue turned on control — how much say the builder had over the plumber’s work. Evidence cut both ways. Evanston pointed to messages assigning him tasks and timelines.
Borjas pointed to texts showing he had flexibility and worked briefly. The clash created a genuine factual dispute. With that, the judge denied summary judgment on whether the auto exclusion applied.
On the premises clause, the court sided with Borjas. The accident, it said, had more than a minimal causal connection to the builder’s ownership of the property.
Because the property’s permit requirements set off the hiring chain that led to the accident, the clause did not bar coverage.
The judge went further. Evanston had a duty to defend. In California, that duty sweeps broader than indemnification, extending to claims that are only potentially covered.
When the insurer declined to defend, there remained at least the possibility the policy covered the accident. The court said Evanston failed to raise a triable issue to escape that obligation.
