As we previously reported, a California Court of Appeal ruled last month in Pulte Home Corp. v. CBR Electric, Inc. (2020) 50 Cal.App.5th 216 ("CBR Electric") that construction subcontractors, in the context of a construction defect subrogation claim arising from a contractual indemnity dispute with a developer based upon a construction defect lawsuit, were not entitled to a jury trial. Since then, another Court of Appeal has ruled otherwise.
In Berg v. Pulte Home Corporation (2021) Westlaw 3240294 ("Berg"), a Court of Appeal ruled that a right to jury trial does indeed exist. In Berg, just as with CBR Electric, St. Paul Mercury Insurance Company ("St. Paul") defended Pulte Home Corporation ("Pulte") as an additional insured under a general liability policy issued to St. Paul's named insured and one of Pulte's subcontractors, Groundbreakers Landscaping, Inc. St. Paul later sued three of Pulte's subcontractors -- Vaca Valley Roofing, Inc., Norman Masonry, Inc., and Colorific Painting, Inc. (collectively defendants) -- for equitable subrogation through a complaint in intervention in the Berg litigation. In essence, St. Paul sought to pursue Pulte's breach of contract claims against the subcontractor defendants for their failure to defend Pulte in the Berg case. Standing in Pulte's shoes, St. Paul asserted the subcontractor defendants were jointly and severally liable for the reimbursement of the money it expended in defending Pulte, which totaled $193,137.68.
The resolution of the subrogation claims against the Berg defendants proceeded in three phases:
i) the Trial Court conducted a bench trial to determine whether St. Paul was entitled to equitable subrogation (it found St. Paul had proven the eight elements necessary to entitle it to relief);
ii) a second phase consisted of a jury trial regarding the amount of St. Paul's recoverable damages (the jury returned a verdict in favor of St. Paul, but only awarded a small amount of damages); and
iii) the Trial Court reduced damages awarded by the jury to account for setoffs and/or credits for prior settlements. St. Paul was awarded $4,217.82 against Vaca Valley Roofing, $2,100.11 against Norman Masonry, and $3,121.02 against Colorific Painting (about 5% of the damages sought by St. Paul).