A federal appeals court affirmed a lower court ruling in a Chubb Ltd. unit’s favor on Tuesday in litigation filed by Admiral Insurance Co. over settlement of a construction claim.

The complex case arose from work on the construction of the Los Angeles Mission College Media Arts Center by engineering consultant Pasadena-based Gateway Science & Engineering Inc., according to court papers in Admiral Insurance Co. v. ACE American Insurance Co.

Gateway obtained a professional liability policy in connection with the project from Admiral that covered claims resulting from negligence in professional services, and a commercial general liability policy from Chubb unit ACE American, according to the ruling by the 9th U.S. Circuit Court of Appeals in San Francisco.

Admiral’s policy excluded claims covered by the CGL policy, while Ace’s policy excluded professional services claims. “Thus, by their terms, the policies did not overlap,” the ruling said.

In 2014, Harford Fire Insurance Co., which according to court papers had issued a performance bond on behalf of the project’s general contractor, filed state court and arbitration actions against Gateway, alleging its negligence had damaged the construction project.

ACE settled the litigation on behalf of Gateway and other insureds for $3.6 million, while Admiral reached its own settlement with Hartford for $2.5 million, according to court documents.

in July 2020, Admiral filed suit against ACE, alleging that, as part of its settlement agreement with Hartford, Admiral had paid Hartford to settle claims for which ACE was responsible. 

The U.S. District Court in Pasadena granted ACE summary judgment on claims of breach of the implied duty to settle, of the contractual duty to indemnify and of the implied duty to indemnify; equitable indemnity and subrogation; and unjust enrichment.

A three-judge appeals court panel affirmed the ruling. “These claims have no merit,” the decision said. ACE “did not breach the implied duty to settle,” it said. By settling all the claims covered by its policy, it “satisfied the duty to settle.”

It also did not breach its duty to indemnify Gateway, the ruling said. “Because all claims against Gateway were settled before liability was established, the duty to indemnify never arose,” said the decision, in also dismissing the remaining claims and affirming the lower court’s ruling.

Attorneys in the case did not respond to requests for comment.