Kemmerer Engineering Co. v. Continental Casualty Co.

JEFFERSON, J.

Respondent, Kemmerer Engineering Co. (hereafter, “Kemmerer”), became obligated to pay damages to Whittier College, by reason of its furnishing defective plans and specifications for a construction job on the campus of the college. In a cross-complaint filed in an action brought against it by the college, respondent sought indemnification from appellant Continental Casualty Company (hereafter, “Continental”), under a professional liability errors and omissions policy issued to it by Continental.

The policy in question provided that Continental would pay the damages resulting from any claim made against the insured Kemmerer, for any error or omission by it in performing its engineering services. The term was for three years, commencing July 20, 1960, and continuing through July 20, 1963.

In paragraph 12 of the policy is contained the following provision: "This policy shall be free of all claims not made against the insured during the policy period,

provided, however, in the event of cancellation by the Company or refusal to renew by the Company, the coverage granted by this policy shall be extended to cover the insured with respect to any claim or claims which may be made against the insured during the period of twelve calendar months after the date of such cancellation or refusal, but only with respect to any errors, omissions or acts committed during the policy period. ’ ’

[Italics added.]

The error of Kemmerer which caused the damage occurred some time prior to July 20, 1963, during the period the policy was in effect.

[190]

In finding Continental liable, the trial court concluded that, while no claim was made by Whittier College against Kemmerer during the three-year term of the policy, Continental had refused to renew the policy (on or about July 3, 1963), thus extending coverage (under paragraph 12 above set out) to the Whittier College claim, which was submitted (in December 1963 or January 1964) prior to the expiration of 12 months from the date of Continental’s refusal to renew.

The parties agree on the facts. The only matter in dispute is whether the facts establish a “refusal to renew” within the meaning of paragraph 12.