                                                                              FILED
                           NOT FOR PUBLICATION                                 JUL 10 2014

                                                                           MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


ST. PAUL FIRE & MARINE                           No. 12-15751
INSURANCE COMPANY,
                                                 D.C. No. 1:10-cv-01669-LJO-GSA
              Plaintiff - Appellant,

  v.                                             MEMORANDUM*

VADNAIS CORPORATION; et al.,

              Defendants - Appellees.


                   Appeal from the United States District Court
                       for the Eastern District of California
                   Lawrence J. O’Neill, District Judge, Presiding

                      Argued and Submitted March 13, 2014
                           San Francisco, California

Before: THOMAS, FISHER, and BERZON, Circuit Judges.

       Plaintiff St. Paul Fire & Marine Insurance Company (“St. Paul”) appeals

from the district court’s grant of summary judgment to Steadfast Insurance

Company (“Steadfast”). We have jurisdiction pursuant to 28 U.S.C. § 1291 and

reverse. Because the parties are familiar with the history of the case, we will not


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
recount it here. We review a grant of summary judgment de novo. New

Hampshire Ins. Co. v. Vieira, 930 F.2d 696, 697 (9th Cir. 1991).

      A claim for equitable contribution “arises when several insurers are

obligated to indemnify or defend the same loss or claim, and one insurer has paid

more than its share of the loss or defended the action without any participation by

the others.” Maryland Cas. Co. v. Nationwide Mut. Ins. Co., 97 Cal. Rptr. 2d 374,

378 (Ct. App. 2000) (internal quotation marks omitted).

      “An insurer must defend its insured against claims that create a potential for

indemnity under the policy.” Scottsdale Ins. Co. v. MV Transp., 115 P.3d 460, 466

(Cal. 2005). “The duty to defend is broader than the duty to indemnify, and it may

apply even in an action where no damages are ultimately awarded.” Id. “The

defense duty arises upon tender of a potentially covered claim and lasts until the

underlying lawsuit is concluded, or until it has been shown that there is no

potential for coverage.” Id. “When the duty, having arisen, is extinguished by a

showing that no claim can in fact be covered, it is extinguished only prospectively

and not retroactively.” Id. (internal quotation marks omitted).

      Under the “continuous injury” trigger of coverage, a duty to defend can arise

based on allegations of defective construction and subsequent ongoing

deterioration, even though damages are not manifested until years later, because


                                          2
there could potentially have existed a covered event during the policy period.

Pepperell v. Scottsdale Ins. Co., 73 Cal. Rptr. 2d 164, 169–70 (Ct. App. 1998).

      The district court properly determined that the continuous injury trigger is

applicable here. Cawelo “alleged that the pipeline had defective design and

installation in May 1996, that it corroded and deteriorated, and that because of the

nature of the injuries, the damages were only discovered . . . later.” Likewise, the

district court properly determined that Steadfast’s duty to defend Vadnais arose in

the first instance because, based on the allegations in the complaint of the

progressive deterioration of the defective pipeline, causing leakage into and

dangerous erosion of the surrounding area, there existed—at least potentially—a

covered event. Specifically, we agree with St. Paul that the facts stated or fairly

inferable in the complaint, or otherwise known to Steadfast, suggested a claim for

soil erosion that was potentially covered by the policy. We are not persuaded by

Steadfast’s argument that “there was absolutely nothing to suggest the potential

that Cawelo was claiming damages for erosion at the time Steadfast withdrew from

the defense of Vadnais and denied any further obligation to defend.” Steadfast

knew that the pipeline had deteriorated over time, that it had leaked, and that it

ultimately had produced a sinkhole. Cawelo’s complaint, moreover, expressly

alleged damages “to the property upon which the pipeline is situated and the


                                          3
surrounding lands thereto.” We need not reach any other claims alleged by the

complaint.

      Steadfast’s duty to defend, having arisen, lasts until the underlying action is

concluded or until it is shown that no claim can in fact be covered, but the duty to

defend is only extinguished prospectively. Scottsdale, 115 P.3d at 466. The

underlying action here settled before Steadfast may have shown that no claim was

in fact covered by its policy. Thus, because St. Paul defended the action without

participation by Steadfast, St. Paul is entitled to equitable contribution for

Steadfast’s share of the costs of defense. Safeco Ins. Co. of Am. v. Superior Court,

44 Cal. Rptr. 3d 841, 844 (Ct. App. 2006) (“a settling insurer seeking equitable

contribution from a nonparticipating coinsurer need only establish a potential for

coverage under the recalcitrant coinsurer’s policy in order to obtain contribution

for the costs of defense”).

      REVERSED and REMANDED.




                                           4
