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AmTrust units must defend, but not indemnify contractor


AmTrust Financial Services Inc. units do not have to indemnify a contractor in construction litigation but must pay its defense costs, a federal appeals court ruled Wednesday in affirming a lower court ruling.

The 9th U.S. Circuit Court of Appeals in San Francisco ruled that the U.S. District Court in Pasadena, California, correctly held that the AmTrust units did not have to indemnify Los Angeles-based CMB Developers Inc. for property damage caused by an interior fire sprinkler system, according to the three-judge appeals court panel ruling in CMB Developers Inc. v. Associated Industries Insurance, Inc., et al.

But it also ruled that Associated Industries had a duty to defend CMB in the underlying action.

The panel also upheld the lower court’s dismissal of CMB’s bad faith and punitive damages claims, and of the charge that the insurer had engaged in any unlawful, unfair or fraudulent practice prohibited by California law.

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