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.