FLIER, J.
The key issue presented in this appeal is whether Adir Export International, Ltd. (Adir) was insured by respondent Equinox Insurance Company (Equinox). Appellants Atlantic Mutual Insurance Company and General Security Insurance Company settled underlying litigation on behalf of Adir and now seek equitable contribution from respondent Equinox. We conclude that as a matter of law, Adir fell within the definition of an insured under Equinox's primary policy and excess policy. We therefore reverse the trial court's judgment based on the finding that Adir was not an insured. We remand the case for further proceedings.
Adir dba La Curacao, is a department store that sells large appliances to the public. Adir sold products manufactured by Electrolux, which did business as Frigidaire.
In December 2000, Hector Nije purchased a range at Adir. There is no dispute the range at issue in the underlying litigation was manufactured by Electrolux or one of its affiliated entities. Nije, who lived with Dinora Campos, installed the range himself. In April 2002, Campos's son and nephews were severely burned when the range tipped over, causing boiling liquid to spill on the three children. On October 2, 2002, Campos, her son and nephews (Campos plaintiffs), sued numerous defendants including Adir and Frigidaire alleging causes of action for negligence, products liability, and premises liability.
Equinox paid $15 million to settle the underlying litigation on behalf of Frigidaire. Atlantic Mutual and General Security paid $5 million to settle the underlying litigation on behalf of Adir.
In February 2006, Atlantic Mutual, General Security, and Adir sued Equinox seeking among other things equitable contribution.
Barry Zalma testified as an expert for Equinox, opining on the meaning of the insurance policies. Most of the other evidence was admitted through deposition testimony and concerned Adir's general operations and the particular range sold to Nije. The parties vigorously disputed whether the box containing the range had been opened prior to the sale. We need not describe the remaining testimony in detail because it is not relevant to the current appeal.
Equinox's primary policy stated that it was effective April 1, 2001, through April 1, 2004. The policy defines insured as follows: "[t]he word `insured' means any person or organization qualifying under SECTION II — WHO IS AN INSURED." Endorsement No. 5 amended the "Who Is An Insured" provision "to include any person or organization designated below (hereinafter referred to as `vendor'), as an Insured, but only with respect to the distribution or sale in the regular course of the vendor's business of your products designated below" subject to exclusions. The following two exclusions are at issue in this case: (1) "repacking, unless unpacked solely for the purpose of inspection, demonstration, testing or the substitution of parts under instruction from the manufacturer and then repacked in the original container;" and (2) "negligence of the vendor." Under the heading "Name of Vendor," which identified the additional insureds, the policy specified: "All Vendors not specifically named elsewhere in this policy." Endorsement No. 5 was listed in the schedule of forms as follows: "Additional Insured — Vendors (Broad Form — All Other Vendors)."
The excess policy was effective April 1, 2001, through April 1, 2004. The excess policy contained the following definition of insured: "`Insured' means any person or organization qualifying as such under the section entitled, `DEFINITIONS — PERSONS INSURED'." "PERSONS INSURED," in turn was defined to include "[a]ny additional insured included in the underlying insurance, but only to the extent that insurance is available to such additional insured under such underlying insurance." No broad form vendor's endorsement was attached to the excess policy.
A certificate of insurance (certificate) showed Adir as the certificate holder, Electrolux as the insured, and Equinox as the insurance carrier. At the top, the certificate stated: "This certificate is issued as a matter of information only and confers no rights upon the certificate holder other than those provided in the policy. This certificate does not amend, extend or alter the coverage afforded by the policies described herein." The certificate identified only the primary policy, i.e., the commercial general liability policy. The certificate stated that the insurance policy was effective April 1, 2001, through April 1, 2004. The certificate was signed at the bottom and the following was written underneath the signature: "VALID AS OF: 01/21/03."
The court entered judgment in favor of Equinox. The entire judgment provides as follows: "The Court enters judgment in favor of Defendant Equinox Insurance Company and Against Plaintiffs Atlantic Mutual Insurance Company and General Security Insurance Company on the sole remaining claim for equitable contribution. The Court finds that there was no Vendor's Endorsement to the Equinox Excess Policy and La Curacao [Adir] is not an insured under the policy. General Security has no legal standing to pursue the equitable contribution claim." Finding that Adir was not an insured, the trial court did not make findings on other issues raised, including whether Adir had repackaged the stove prior to sale or whether Adir was negligent.
Atlantic Mutual and General Security appeal from the judgment.
We begin with a discussion of the applicable legal principles. We then consider whether Adir was insured under Electrolux's primary policy or under its excess policy. We conclude Adir fell within the definition of an insured under both policies. Finally, we discuss Equinox's argument that it satisfied all of its obligations by settling for the full policy amount on behalf of Frigidaire.
"Contribution among insurers is permitted where one insurer pays a loss or defends a claim for which another insurer shares responsibility. [Citations.] Where several insurers insure the same risk and are liable for any loss, the action between them is one for equitable contribution. [Citation.] An insurer seeking equitable contribution need only demonstrate another insurer covered the same risk and failed to pay its share of the loss. [Citation.]" (Maryland Casualty Co. v. Nationwide Ins. Co. (1998) 65 Cal.App.4th 21, 26-27.) There is a basis for contribution when there is a common obligation legally due from multiple insurers. (Golden Eagle Ins. Co. v. Insurance Co. of the West (2002) 99 Cal.App.4th 837, 853.)
"Insurance policies are contracts and, therefore, are governed in the first instance by the rules of construction applicable to contracts. Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs its interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The `clear and explicit' meaning of these provisions, interpreted in their `ordinary and popular sense,' controls judicial interpretation unless `used by the parties in a technical sense, or unless a special meaning is given to them by usage.' (Id., §§ 1638, 1644.) If the meaning a layperson would ascribe to the language of a contract of insurance is clear and unambiguous, a court will apply that meaning. [Citations.]" (Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 666-667.) "In contrast, `[i]f there is ambiguity . . . it is resolved by interpreting the ambiguous provisions in the sense the promisor (i.e., the insurer) believed the promisee understood them at the time of formation. (Civ. Code, § 1649.) If application of this rule does not eliminate the ambiguity, ambiguous language is construed against the party who caused the uncertainty to exist. (Id., § 1654.)' [Citation.] `This rule, as applied to a promise of coverage in an insurance policy, protects not the subjective beliefs of the insurer but, rather, "the objectively reasonable expectations of the insured." [Citation.] Only if this rule does not resolve the ambiguity do we then resolve it against the insurer. [Citation.]' [Citations.]" (Id. at p. 667.)
The primary policy states that "[t]he word `insured' means any person or organization qualifying under SECTION II — WHO IS AN INSURED." Endorsement No. 5 amends the "Who Is An Insured" provision "to include any person or organization designated below (hereinafter referred to as `vendor'), as an Insured, but only with respect to the distribution or sale in the regular course of the vendor's business of your products designated below" subject to various exclusions. Under the heading "Name of Vendor," the policy specified: "All Vendors not specifically named elsewhere in this policy."
Equinox argues that the policy is ambiguous because the term "vendor" is not defined. However, it identifies no definition of vendor that would reasonably exclude Adir. A vendor is generally defined as a "seller." (Merriam-Webster's Collegiate Dict. (11th ed. 2003) p. 1387; Scott v. Continental Ins. Co. (1996) 44 Cal.App.4th 24, 29 [to construe words in an insurance policy in their ordinary sense, courts often utilize dictionary definitions].) It is undisputed that Adir sold Electrolux products including the range sold to Nije. The clear and explicit meaning of "all vendors" includes Adir. Equinox identifies no real ambiguity, and we find none.
"A certificate of insurance is merely evidence that a policy has been issued. [Citation.] It is not a contract between the insurer and the certificate holder." (Empire Fire & Marine Ins. Co. v. Bell (1997) 55 Cal.App.4th 1410, 1423, fn. 25.) Insurance Code section 384 requires that a certificate contain words to the following effect: "This certificate or verification of insurance is not an insurance policy and does not amend, extend or alter the coverage afforded by the policies listed herein. Notwithstanding any requirement, term, or condition of any contract or other document with respect to which this certificate or verification of insurance may be issued or may pertain, the insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of the policies." The certificate in this case contained a similar provision. Thus, the certificate was evidence that Adir was an insured under the policy, but the certificate itself did not change the terms of the policy.
The primary policy was in effect at the time of the accident — April 2002. Both the primary policy and the certificate identify the effective dates of the insurance as between April 1, 2001, and April 1, 2004. Stated otherwise, there is no conflict between the policy and the certificate. Adir was an insured at the time of the accident.
Instead of relying on the effective dates of the policy, Equinox urges us to rely on the notation under the signature in the certificate of insurance stating "VALID AS OF: 01/21/03" in order to find the primary policy was not in effect at the time of the accident. However, the date of the certificate did not alter the clear date of the policy as stated in the certificate. (Dryden School D. v. Dryden Aquatic Team (1993) 600 N.Y.S.2d 388, 391 [date of certificate of insurance does not alter date of insurance policy]; see also Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2010) § 3:70 at pp. 3-15 to 3-16 (rev. # 1, 2010) [certificate of insurance is evidence of the existence of insurance].) The certificate is simply evidence of the policy; it is not a contract between the insurer and the certificate holder. (Empire Fire & Marine Ins. Co. v. Bell, supra, 55 Cal.App.4th at p. 1423, fn. 25.)
As mentioned previously, Barry Zalma testified as an expert for Equinox.
The excess policy provides: "The word `Insured' means any person or organization qualifying as such under the section entitled, `DEFINITIONS — PERSONS INSURED'." "PERSONS INSURED" is defined to include "[a]ny additional insured included in the underlying insurance, but only to the extent that insurance is available to such additional insured under such underlying insurance."
The language of the excess policy is not ambiguous, and Equinox does not argue otherwise. The excess policy defines insured to include "[a]ny additional insured included in the underlying insurance." As explained, Adir was included in the underlying insurance through Endorsement No. 5, which applied to "all vendors." The Vendors Broad Form added additional insureds to the primary policy as reflected in the schedule of forms, which stated "Additional Insured — Vendors (Broad Form — All Other Vendors)." Thus, Adir was an additional insured included in the underlying insurance. As an additional insured in the underlying insurance, Adir fell within the definition of "an insured" in the excess policy.
Instead of considering the contract language, Equinox relies on the certificate of insurance and the absence of a vendor's broad form in the excess policy. Although the certificate of insurance issued to Adir identified only the primary policy, the certificate of insurance did not alter the terms of the excess policy. The absence of a vendor's broad form does not show that Adir fell outside the definition of an insured. Equinox fails to explain why a separate endorsement was necessary when the policy language clearly includes Adir. Because the language of the excess policy included Adir, Adir was an insured under the excess policy.
Equinox argues that the trial court's finding that General Security had no standing was based on a finding that Adir was not insured under the excess policy. Because we conclude that Adir was an insured under the excess policy, the court's finding that General Security lacked standing must be reversed.
"An insurer owes the duty of good faith and fair dealing to each of its insureds, and cannot favor the interests of one insured over the other." (Lehto v. Allstate Ins. Co. (1994) 31 Cal.App.4th 60, 72.) The requirement applies to both primary and excess insurers. (Schwartz v. State Farm Fire & Casualty Co. (2001) 88 Cal.App.4th 1329, 1336.) It constitutes bad faith for an insurer to accept a settlement on behalf of only one of its insured's leaving the other without coverage. (Lehto, supra, at p. 75.) The insurer's duty applies regardless of whether all of its insured's interests matured to the point of requiring payment. (Schwartz, supra, at p. 1336.) The disbursement of the entire policy limits to indemnify one insured constitutes a breach of the duty of good faith and fair dealing to a co-insured. (Shell Oil Co. v. National Union Fire Ins. Co. (1996) 44 Cal.App.4th 1633, 1647 (Shell Oil Co.).) In Shell Oil Co., the appellate court affirmed the trial court's finding that the insurer should be liable for damages equal to half of the policy limits for failing to indemnify a co-insured even though the insurer already paid the full policy limits.
Because appellants' remaining arguments are not necessary to our appellate decision, we decline to resolve them. (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 259.) The case must be remanded to the trial court for further proceedings. We express no opinion on whether appellants are or are not entitled to equitable contribution following a trial on the merits. Because the trial court ruled Adir was not Equinox's insured, the court did not address the merits.
The judgment is reversed. The case is remanded to the trial court for further proceedings. Appellants are entitled to costs on appeal.
We concur:
RUBIN, Acting P. J.
GRIMES, J.
Some of the facts are taken from the prior appeal in this same case. (Adir Export International, Ltd. v. White Consolidated Industries, Inc. (July 17, 2008, B196131) [nonpub. opn.].) In the prior appeal, we dismissed Atlantic Mutual and General Security because the record did not reflect a judgment as to them. (Ibid.)
Throughout the trial court proceedings, Adir was referred to as La Curacao. As in the prior appeal, for the sake of consistency, we use the name Adir.
Equinox cites other cases but none of them are relevant to the issue of an insurer paying the entire policy on behalf of one insured where a co-insurer is also involved. (See Friedman Prof. Management Co., Inc. v. Norcal Mutual Ins. Co. (2004) 120 Cal.App.4th 17, 36; Community Redevelopment Agency v. Aetna Casualty & Surety Co. (1996) 50 Cal.App.4th 329, 338; Johnson v. Continental Ins. Companies (1988) 202 Cal.App.3d 477, 486.)
