A Contractual Duty to Defend is Separate from The Duty to Indemnify
There is a legal distinction between the contractual duty to defend and the duty to indemnify in a construction services contract between a developer and a contractor.
In UDC-Universal Development, L.P. v. CH2M Hill (2010) 181 Cal.App.4th 10, the Sixth District Court of Appeals addressed the difference between the duty to defend and the duty to indemnify pursuant to a contractual provision between a developer and engineering & environmental planning services contractor.
UDC and CH2M Hill entered into two contracts for CH2M Hill to provide UDC with engineering and environmental planning services in connection with a residential condominium complex. Within one of the contracts was a provision obligating CH2M Hill to indemnify UDC under certain conditions and to defend UDC against "any suit, action or demand" brought against UDC "on any claim or demand covered herein."
After construction of the condominium complex, the complex's homeowner's association brought suit against UDC for defective conditions at the complex due to negligent planning and design of the open space and common areas. UDC tendered its defense to CH2M Hill. CH2M Hill rejected UDC's tender.
One week earlier, the California Supreme Court had issued a ruling in Crawford v. Weather Shield Mfg. Inc. (2008) 44 Cal.4th 541 (Crawford) holding that a contractual indemnitor incurs a duty to defend the indemnitee as soon as the indemnitee tenders its defense to the indemnitor.
In this case, the trial court suggested that it would be a meaningless duty to defend if it did not arise from an accusation or complaint of negligence arising from the work. It was only the duty to indemnify, the court found, that was dependent on a finding of negligence. A separate duty to defend, the court explained, must occur before the duty to indemnify arises. Otherwise, the court stated, you wouldn't need a duty to defend--the duty to indemnify would cover all costs associated with the defense of the lawsuit.
On appeal, the appellate court held that the duty to defend was a matter for the trial court to decide, not the jury. In this case, the duty to defend clause in the contract between CH2M Hill and UDC was broad enough to encompass the claims made by the complex's homeowner's association and therefore CH2M Hill had a duty to defend UDC. The appellate court held that an indemnitee should not have to rely on the plaintiff to name a particular subcontractor or consultant in order to obtain a promised defense by the one the indemnitee believes is responsible for the plaintiff's damages. Although the homeowner's association's complaint did not specifically identify each subcontractor or the details of each role in the project, the general description of the defects in the project implicated CH2M Hill's work, which was sufficient to trigger CH2M Hill's duty to defend.
For the full opinion in UDC-Universal Development, L.P. v. CH2M Hill, see below.
Duty to Defend is Separate From Duty to Indemnify