West Hills Development Co. v. Chartic Claims

If an injured claimant can recover under the allegations made in the complaint upon any basis for which the insurer affords coverage, that insurer is obligated to defend the insured. Additionally, even if not specifically alleged, extrinsic evidence proving the insured-insurer relationship existed, can be used.

West Hills hired L&T as a subcontractor to build large columns for the porches of the homes being constructed by West Hills. The columns were not built to code and problems started to begin as a result of the poor word done by L&T. L&T was insured by Oregon Automobile Insurance Company (Oregon Auto) and West Hills tendered the defense to Oregon Auto, arguing that West Hills was an additional insured under the policy. L&T denied the tender, arguing that the damage was done after L&T had done the project, therefore Oregon Auto was not obligated to indemnify West Hills. The Court held that if an injured claimant can recover under the allegations made in the complaint upon any basis for which the insurer affords coverage, that insurer is obligated to defend the insured. The rule thus generally requires that the complaint make the allegation clear. As to the complaint establishing the insured-insurer relationship, however, extrinsic evidence can be used to show whether the party seeking coverage was actually an insured within the meaning of the policy. Here the Court found that it was unnecessary for the claimants to allege the relationship between L&T, West Hills, and Oregon Auto. Because the role of L&T in the project has never been disputed, the allegation of negligent supervision of contractors, together with the reported involvement of L&T, informed Oregon Auto that its duty to defend was at issue. Affirmed.