In Yu v. Liberty Surplus Ins. Corp. (No. G054522, filed 12/11/18), a California appeals court held that a developer’s failure to allege the amounts of damages sought in its cross-complaint rendered default judgments against a subcontractor void and, therefore, unenforceable against the subcontractor’s insurers in a direct action under Insurance Code section 11580(b)(2).
Yu, the owner, hired ATMI to develop a hotel. ATMI subcontracted with Fitch to perform stucco and paint work. Yu sued ATMI for construction defects and the developer cross-complained against its subcontractors, including Fitch, for breach of contract; warranty; indemnity, etc. Yu’s operative complaint prayed for damages “in an amount not less than $10,000,000, according to proof.” ATMI’s cross-complaint stated that it incorporated the allegations of Yu’s complaint “for identification and informational purposes only,” but “does not admit the truth of any allegations contained therein.” The cross-complaint also prayed for damages with respect to the various causes of action “in an amount according to proof.”
Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
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