Developer’s declaratory action against subcontractor’s insurer regarding allocation of defense costs and fees is premature because insured’s potential liability was still unknown.
Homeowners sued Centex Homes for construction defects at a residential project. One of Centex’s subcontractors was Oak Leaf Landscape Inc., which was insured by St. Paul Fire & Marine Insurance Co. (Travelers). Centex, which was named as an additional insured on the policy, tendered the defense to Travelers, which accepted it subject to a reservation of rights. Centex then sued its subcontractors, alleging several causes of action, including declaratory relief against Travelers. Centex asserted Traveler’s alleged failure to allocate the defense costs and fees in the underlying dispute as the main dispute and controversy. Travelers demurred, contending that the allocation was premature. The trial court agreed and sustained the demurrer.
Affirmed. A cause of action for declaratory relief may adjudicate future rights and liabilities between parties, but there must be an “actual controversy relating to the legal rights and duties of the respective parties.” To be “ripe” for adjudication, the controversy “must be definite and concrete, touching the legal relations of parties and having adverse legal interests….” Here, Centex’s claims were all anticipatory because it remained uncertain whether Oak Leaf’s work caused the alleged property damage. Also, given that the underlying case was still ongoing, the amount of defense fees was still unknown. Further, other subcontractors may be potentially liable for the damage—an issue yet to be resolved. Overall, there were not enough facts about liability, damages, or the cost of defense from which the trial court could declare the parties’ rights and obligations. Thus, the trial court properly sustained the demurrer.