ARONSON, J.
Plaintiff Zurich Specialties London, Ltd., (Zurich) brought this equitable contribution action to compel defendant Century Surety Company (Century) to pay its share of the defense and indemnity costs Zurich incurred on behalf of their mutual insured, Star Sheet Metal (Star). Century appeals from a judgment in Zurich's favor, arguing the trial court erred because the defense and indemnity costs incurred on Star's behalf did not exceed the deductible established by Century's policy and therefore Century had no obligation to contribute to either Star's defense or indemnification.
In deciding Century's appeal we must distinguish between Century's duty to defend and its duty to indemnify because Century's policy does not apply the deductible to defense costs in the same way that it applies the deductive to indemnity costs. As we explain below, the plain language of Century's policy reveals that the deductible does not apply to Century's duty to defend and therefore Century was required to contribute to Star's defense regardless of how the defense costs compare to Century's deductible.
The plain language of Century's policy does apply the deductible to Century's duty to indemnify, but we do not reach the question whether the deductible defeats Zurich's equitable contribution claim for the indemnity costs it incurred on Star's behalf. As we explain below, after the trial court ruled Century had a duty to contribute to Star's defense, Century stipulated to judgment in Zurich's favor on Century's duty to contribute to Star's indemnification without trying that issue to the court. By doing so, Century waived its right to dispute that obligation on appeal. Accordingly, we affirm the trial court's judgment.
Star is a sheet metal contractor that performed work on several housing projects during the 1990's. Those projects gave rise to six construction defect lawsuits in which the homeowners alleged ongoing property damage. In each lawsuit, the housing developers filed cross-complaints for indemnity against the subcontractors that worked on the projects, including Star.
Century issued two commercial general liability insurance policies covering Star from January 1996 to December 1997. Zurich issued two commercial general liability insurance policies covering Star from December 1999 to December 2001. Connecticut Specialties also insured Star during this general time period, but the record does not include any specifics regarding Connecticut Specialties's policy.
Century's policy required it to defend and indemnify Star for any covered damages Star was legally obligated to pay. The relevant policy provision read as follows: "We will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies. We will have the right and duty to defend any `suit' seeking those damages." The policy's declaration page specified a $5,000 per claim deductible as follows: "DEDUCTIBLE: [¶] $5,000 Per Claim Bodily Injury Liability & Property Damage Liability Combined (this deductible also applies to Personal and Advertising Injury Liability.) Deductible also applies to Supplementary Payments — Coverages A and B [x] Yes [] No."
The "DEDUCTIBLE LIABILITY INSURANCE" endorsement attached to the policy limited Century's obligation to pay damages to amounts exceeding the stated deductible: "Our obligation under the Bodily Injury Liability and Property Damage Liability Coverages to pay damages on your behalf applies only to the amount of damages in excess of any deductible amounts stated in the Schedule above as applicable to such coverages." This endorsement further stated the deductible did not apply to Century's defense obligations: "The terms of this insurance, including those with respect to: [¶] a. Our right and duty to defend any `suits' seeking those damages, . . . [¶]. . . [¶] apply irrespective of the application of the deductible amount."
Star tendered each of the six construction defect lawsuits to Connecticut Specialties and Zurich. Connecticut Specialties and Zurich accepted the tenders, provided Star with a defense in each action, and settled each action on Star's behalf. Although Star did not tender any of the actions to Century, Zurich requested that Century participate in Star's defense and indemnification in each action. Century refused, denying it had any obligation to participate in Star's defense or indemnification.
Zurich spent approximately $133,000 to defend and settle the six indemnity actions against Star. It then filed this action for equitable contribution seeking to compel Century to contribute its share of the defense and indemnity costs for the six lawsuits.
Zurich moved to bifurcate the trial in this action. The trial court granted the motion and limited the trial's first phase to whether Century had a duty to participate in Star's defense. If the court concluded Century had a duty to participate in Star's defense, the court would then decide in the second phase whether Century also had a duty to participate in Star's indemnification.
During phase one, Century argued it had no duty to participate in Star's defense because the "Other Insurance" clause in Century's policy made the policy excess to Zurich's policy. In Century's view, its policy provided coverage only after Star exhausted coverage under Zurich's policy, and the underlying lawsuits did not exhaust the coverage Zurich's policy provided. Century also argued it had no obligation to participate in Star's defense because the defense costs did not exceed Century's deductible. According to Century, its $5,000 per claim deductible applied to each home included in a lawsuit. For example, one of the underlying lawsuits involved 26 homes and therefore Century argued its deductible for that lawsuit was $130,000 — that is, $5,000 per claim multiplied by 26 claims.
The trial court conducted a bench trial on phase one and concluded Century had a duty to participate in Star's defense. The court rejected Century's "Other Insurance" argument based on published case law rejecting Century's reliance on the identical policy provision. The court also rejected in a single sentence Century's argument that it had no obligation to participate in Star's defense because the defense costs did not exceed Century's deductible: "Further, the deductible is an obligation of the insured and based on the facts of this case it does not defeat the obligation of Century to participate in the defense of Star in the underlying cases."
The trial court also directed Zurich and Century to meet and confer on a schedule for the trial's second phase regarding Century's duty to participate in Star's indemnification. Zurich and Century, however, submitted a stipulated judgment stating no further issues remained. The stipulated judgment declared Century had a duty to defend and indemnify Star in the underlying actions and therefore must contribute to the defense and indemnity costs Zurich incurred. The stipulated judgment awarded Zurich nearly $58,000 plus prejudgment interest.
The trial court signed the stipulated judgment and Century timely filed its notice of appeal.
On appeal, Century abandons its argument the "Other Insurance" clause in its policy relieved it of its obligation to participate in Star's defense or indemnification until Star exhausted Zurich's coverage. Instead, Century's sole claim on appeal is that it did not owe equitable contribution because the defense and indemnification costs Zurich incurred on Star's behalf did not exceed Century's deductible. Century does not dispute its policy otherwise required it to defend and indemnify Star.
"`Liability insurance usually imposes two separate obligations on the insurer: (1) to indemnify its insured against third party claims covered by the policy (by settling the claim or paying any judgment against the insured); and (2) to defend such claims against its insured (by furnishing competent counsel and paying attorney fees and costs).' [Citation.]" (Howard v. American National Fire Ins. Co. (2010) 187 Cal.App.4th 498, 519.)
"[T]he insurer's duty to defend is broader than its duty to indemnify." (Buss v. Superior Court (1997) 16 Cal.4th 35, 46 (Buss).) "The insurer's duty to indemnify runs to claims that are actually covered, in light of the facts proved. [Citations.] By definition, it entails the payment of money in order to resolve liability. [Citations.] It arises only after liability is established. [Citations.] [¶] By contrast, the insurer's duty to defend runs to claims that are merely potentially covered, in light of facts alleged or otherwise disclosed. [Citations.] It entails the rendering of a service, viz., the mounting and funding of a defense [citations] in order to avoid or at least minimize liability [citation]. It arises as soon as tender is made. [Citation.]" (Ibid.)
"In the insurance context, the right to contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others. Where multiple insurance carriers insure the same insured and cover the same risk, each insurer has independent standing to assert a cause of action against its coinsurers for equitable contribution when it has undertaken the defense or indemnification of the common insured. Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk. The purpose of this rule of equity is to accomplish substantial justice by equalizing the common burden shared by coinsurers, and to prevent one insurer from profiting at the expense of others." (Fireman's Fund. Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1293, original italics (Fireman's Fund).)
"Equitable contribution thus assumes the existence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question." (Fireman's Fund, supra, 65 Cal.App.4th at p. 1295.) If one insurer has no duty to defend or indemnify, then it cannot be held liable for equitable contribution. (See, e.g., Community Redevelopment Agency v. Aetna Casualty & Surety Co. (1996) 50 Cal.App.4th 329, 332, 342 [where insurer's duty to defend was never triggered, it had no obligation to contribute to insured's defense costs].)
In allocating liability among responsible insurers a trial court exercises its equitable discretion based on the facts of each case to accomplish substantial justice between the insurers. (Scottsdale Ins. Co. v. Century Surety Co. (2010) 182 Cal.App.4th 1023, 1032-1033; Hartford Casualty Ins. Co. v. Travelers Indemnity Co. (2003) 110 Cal.App.4th 710, 724; Fireman's Fund, supra, 65 Cal.App.4th at pp. 1294-1295.) We review a trial court's equitable allocation of liability among insurers for abuse of discretion. (Scottsdale, at p. 1033; Hartford, at p. 724; Fireman's Fund, at p. 1308.) But the interpretation of an insurance policy to determine whether it gives rise to a duty to defend or indemnify is a question of law that we independently review. (Powerine Oil Co. Inc. v. Superior Court (2005) 37 Cal.4th 377, 390; Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1074 (Rosen).) We are not bound by the trial court's interpretation of the policy. (Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 453.)
Century contends it had no duty to contribute to Star's defense because the defense costs in the six underlying actions did not exceed Century's deductible. Century's policy, however, plainly states that the deductible does not apply to the duty to defend and therefore Century had a duty to contribute to Star's defense regardless of whether the defense costs exceeded Century's deductible.
"To resolve a question of policy interpretation, the court performs an independent review, looking first to the language of the insurance policy in order to ascertain its plain meaning as a layperson would understand it. [Citation.] The court is guided by the principle that the provisions of an insurance policy must be `construed within the context of the policy as a whole.' [Citation.] The plain meaning of a policy provision governs . . . except where the policy provisions are ambiguous. [Citation.]" (Prudential Ins. Co. of America, Inc. v. Superior Court (2002) 98 Cal.App.4th 585, 598-599; Rosen, supra, 30 Cal.4th at p. 1075 ["`If the policy language "is clear and explicit, it governs"'"].)
Century's duty to defend Star arises from the policy's provision in "Coverage A. Bodily Injury and Property Damage Liability." (Internal capitalization adjusted.) In relevant part it states, "We will have the right and duty to defend any `suit' seeking . . . damages [covered by the policy]." The policy's declaration page states that a $5,000 per claim deductible applies to the coverages for (1) "Bodily Injury Liability & Property Damage Liability Combined"; (2) "Personal and Advertising Injury Liability"; and (3) "Supplementary Payments — Coverages A and B."
The "DEDUCTIBLE LIABILITY INSURANCE" endorsement explains Century's obligation to pay "damages" under the "Bodily Injury and Property Damage Liability Coverages" "applies only to the amount of damages in excess of any deductible amounts." No language in the endorsement, or anywhere else in the policy, states the deductible limits Century's defense obligations in any way. To the contrary, the endorsement states Century's duty to defend "appl[ies] irrespective of the application of the deductible amount." (Italics added.) Simply stated, the deductible does not apply to Century's duty to defend.
Century contends the deductible applies to its duty to defend because the policy's declaration page states the deductible applies to "Supplementary Payments — Coverage A and B." Century, however, does not explain how applying the deductible to the "Supplementary Payments" coverage also makes the deductible apply to the separate duty to defend.
Under the "Supplementary Payments" coverage, Century agrees to "pay, with respect to any claim or `suit' we defend:" (1) all expense it incurs; (2) certain bail bond expenses; (3) the cost for bonds to release attachments; (4) expenses the insured incurs at Century's request to assist in investigating or defending any claim; (5) all costs taxed against the insured in any covered lawsuit; (6) prejudgment interest; and (7) postjudgment interest.
Using the "Supplementary Payments" coverage to apply the deductible to Century's duty to defend ignores the clear statement in the "DEDUCTIBLE LIABILITY INSURANCE" endorsement that Century's duty to defend "appl[ies] irrespective of the application of the deductible amount." In construing an insurance policy we must give effect to every part and avoid interpretations that would render a provision superfluous. (Great Western Drywall, Inc. v. Interstate Fire & Casualty Co. (2008) 161 Cal.App.4th 1033, 1042; Civ. Code, §1641.)
Our interpretation of Century's policy is consistent with the generally accepted rule that deductibles apply to an insurer's duty to indemnify, not its duty to defend: "A `deductible' is a portion of an insured loss for which the insured is responsible. [Citation.] It generally is `a specific sum that the insured must pay before the insurer owes its duty to indemnify the insured for a covered loss.' [Citation.] A deductible relates only to the `damages for which the insured is indemnified, not to defense costs. The insurer is fully responsible for defense costs regardless of the amount of the deductible so long as there is a potential for coverage under the policy.' [Citation.]" (Forecast Homes, Inc. v. Steadfast Ins. Co. (2010) 181 Cal.App.4th 1466, 1474, original italics; see also General Star National Ins. Corp. v. World Oil Co. (C.D. Cal. 1997) 973 F.Supp. 943, 948-949.)
Century argues that no statute, regulation, or other authority prevents an insurance policy from applying a deductible to the duty to defend. That argument, however, ignores the more pertinent point that Century's policy did not apply the deductible to the duty to defend. We therefore need not resolve the abstract question whether a policy can apply its deductible to the duty to defend because Century's policy simply failed to do so.
Based on our independent review of Century's policy, we conclude Century's deductible does not apply to its duty to defend and therefore the trial court properly found Century had a duty to contribute to Star's defense.
Century contends it had no duty to contribute to Star's indemnification in the six underlying lawsuits because Star did not meet its deductible. We, however, need not resolve that issue because Century stipulated to its duty to contribute to Star's indemnification and therefore cannot argue the matter on appeal.
"Ordinarily, a judgment entered pursuant to a stipulation is not appealable." (Tudor Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1428; see also Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 400 (Norgart) ["a `party may not appeal a consent judgment'"]; Cadle Co. II, Inc. v. Sundance Financial, Inc. (2007) 154 Cal.App.4th 622, 624 (Cadle) ["A stipulated judgment, however, may not normally be appealed, and becomes final when entered"]; Papadakis v. Zelis (1991) 230 Cal.App.3d 1385, 1387 ["It is settled that a party cannot appeal from a judgment to which he has stipulated"].)
"An exception to this rule exists when both parties enter into the stipulated judgment in order to facilitate an appeal." (Cadle, supra, 154 Cal.App.4th at p. 624.) As the Supreme Court explained in Building Industry Assn. v. City of Camarillo (1986) 41 Cal.3d 810, "[T]here is an exception to the rule that a party may not appeal a consent judgment. If consent was merely given to facilitate an appeal following adverse determination of a critical issue, the party will not lose his right to be heard on appeal." (Id. at p. 817.)
Here, Century acknowledges it stipulated to the judgment the trial court entered and does not contend it stipulated to facilitate an appeal. Nor is there anything in the record indicating Century and Zurich stipulated to judgment on the indemnification issue to facilitate an appeal regarding the deductible or any other issue. Century failed to provide an adequate record from which we could conclude it entered a stipulated judgment to facilitate an appeal. For example, Century did not provide a written stipulation describing its purpose in stipulating to the judgment and we have no hearing transcript explaining why the parties stipulated to judgment. The cases applying this exception — none of which Century cites — involve a stipulation or other clear statement in the record explaining the purpose for the parties stipulating to judgment. (See, e.g., Norgart, supra, 21 Cal.4th at pp. 394-395 [parties' written stipulation clearly showed its purpose was to hasten appellate review]; Monticello Ins. Co. v. Essex Ins. Co. (2008) 162 Cal.App.4th 1376, 1382 [same]; Upland Police Officers Assn. v. City of Upland (2003) 111 Cal.App.4th 1294, 1299 [same].)
Assuming Century stipulated to judgment to facilitate an appeal, there is still no adverse determination on a critical issue regarding Century's indemnification obligations that would support applying the exception in this case. The trial court limited its phase one ruling to Century's duty to participate in Star's defense and did not address Century's duty to participate in Star's indemnification. Indeed, both Century's and Zurich's trial briefs clearly stated the trial's first phase addressed only Century's duty to participate in Star's defense. The trial court's ruling also clearly stated phase one concerned Century's defense obligations only: "By agreement of counsel, the issue presented to the Court in the first phase of this bifurcated trial was whether Zurich is entitled to contribution from Century for defense costs incurred on behalf of Star in several underlying construction defect actions . . . ."
The trial court never conducted the trial's second phase to determine whether Century had a duty to contribute to Star's indemnification and whether Century's deductible defeated Zurich's equitable contribution claim for the indemnity costs it incurred on Star's behalf. Instead, after the trial court ruled Century had a duty to contribute to Star's defense, Century and Zurich submitted a stipulated judgment stating Century had a duty to participate in Star's defense and indemnification and therefore must pay Zurich nearly $58,000 as Century's contribution to those costs. The trial court signed the stipulated judgment and Century appealed without obtaining an actual trial court ruling regarding its indemnification obligations.
Century contends the trial court "impliedly ruled on the effect of Century's deductible with respect to Zurich's claim for contribution toward indemnity costs" by ruling the deductible did not apply to Century's defense obligations. The trial court, however, cannot "impliedly rule[]" on an issue the parties did not present. (See Advanced-Tech Security Services, Inc. v. Superior Court (2008) 163 Cal.App.4th 700, 710 [It is "the settled rule that cases are not authority for issues not decided. `"Language used in any opinion is of course to be understood in the light of the facts and the issue then before the court, and an opinion is not authority for a proposition not therein considered"'"].)
Century further contends there was no need to conduct the trial's second phase because the deductible applies in the same manner to Century's indemnity obligation as it does to Century's defense obligations. As explained above, however, the deductible does not apply in the same manner to both Century's duty to defend and its duty to indemnify. The deductible applies to Century's duty to indemnify only and does not limit Century's duty to defend in any way.
Finally, Century assumes the trial court's statement that "the deductible is an obligation of the insured and based on the facts of this case it does not defeat the obligation of Century to participate in the defense of Star in the underlying cases" means that the trial court would have ruled the deductible did not apply to Century's obligation to participate in Star's indemnification for the same reasons. We, however, cannot make that assumption because the duty to defend and the duty to indemnify are two separate duties governed by different standards. (Buss, supra, 16 Cal.4th at p. 46.) Moreover, as explained above, Century's policy does not apply the deductible to the duty to indemnify in the same manner that it applies the deductible to the duty to defend.
In short, the parties did not try any issue relating to Century's duty to participate in Star's indemnification and therefore we cannot reach that issue in this appeal.
The judgment is affirmed. Zurich shall recover its costs on appeal.
O'LEARY, ACTING P. J. and MOORE, J., concurs.
