Order: BEACON RESIDENTIAL COMMUNITY ASSOCIATION VS. CATELLUS THIRD AND KING LLC et al

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                                LAW OFFICES

HAIGHT, BROWN &
BONESTEEL, LLLP.
San Francisco

Steven M. Cvitanovic (Bar No. 168031)
Zachary W. Shine (Bar No. 271522)
HAIGHT BROWN & BONESTEEL LLP

Three Embarcadero Center, Suite 200 ELECTRONICALLY
San Francisco, California 94105-2981 FILED
Telephone: (415) 546-7500 oe
Facsimile: (415) 546-7505 Superior Court of California,

County of San Francisco

Attorneys for Defendants and Cross-Complainants Mission Place LLC; Miselbdlbiatd DA 4
Holding LLC; Mission Place Mezzanine LLC; Mission Place Partners LLC -Gtenkuefoih daburt
Estate Investors [V, LLC; and Centurion Real Estate Partners, LLC (sued IBNiSOW Bie and
erroneously sued as Centurion Partners LLC) Depuly Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO

BEACON RESIDENTIAL COMMUNITY =) Case No. CGC 08-478453
ASSOCIATION, ;
Plaintiff, ) EXHIBIT I TO THE DECLARATION OF
) ZACHARY W. SHINE IN SUPPORT OF
v. } MISSION PLACE’S REPLY TO THE
} OPPOSITIONS OF HKS AND WEBCOR
CATELLUS THIRD AND KING LLC, et al, } TO MISSION PLACE’S MOTION TO
) ENFORCE THE COURT’S JANUARY 15,
Defendants. ) 2014 ORDER GRANTING MISSION
) PLACE’S MOTION FOR SUMMARY
} ADJUDICATION
AND RELATED CROSS-ACTIONS }
)

1
EXHIBIT I TO DECL. OF ZACHARY W. SHINE RE: MOTION TO ENFORCE THE

es COURT'S JANUARY 15, 2014 ORDER GRANTING MISSION PLACE’S MSAEXHIBIT I2 OY KD KH F WY

Selman Breitman LLP
ATTORNEYS AT LAW
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ORIGINAL FILED,

LINDA WENDELL HSU (SBN 162971) JAN TA 20 A
BENJAMIN R. LARSON = (SBN 235325) ‘
SELMAN BREITMAN Lip GO PARK-LI, Cle
lew Montgomery, Sixth Floor BY: —
San Francisco, CA 94105 SUMMONS ISSUED
Telephone 2 (415) FF 0 s .
facsimile : (415) 979-2099 CASE MANAGEMENT
Email: Thsu@selmanbreitman.com CONSERENCE SET
: blarson@selmanbreitman.com
JUN
ATTORNEYS FOR PLAINTIFES 18 2010 -98aM
Zurich American Insurance Company and
American Guarantee & Liability Insurance Company DSPARTMENT 213
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
CGC~ 107496018
ZURICH AMERICAN INSURANCE Case No.:
COMPANY and AMERICAN GUARANTEE
& LIABILITY INSURANCE COMPANY COMPLAINT FOR DECLARATORY
RELIEF, EQUITABLE
Plaintiffs, CONTRIBUTION, EQUITABLE
INDEMNITY, EQUITABLE
v. SUBROGATION AND
REIMBURSEMENT
WESTCHESTER SURPLUS LINES

INSURANCE COMPANY; MISSION PLACE,
LLC; MISSION PLACE MEZZANINE, LLC;
MISSION PLACE MEZZ HOLDINGS, LLC;
MISSION PLACE PARTNERS, LLC;
CENTURION REAL ESTATE INVESTORS
IV, LLC; CENTURION REAL ESTATE
PARTNERS, LLC; BEACON RESIDENTIAL
COMMUNITY ASSOCIATION and DOES |
through 50, inclusive,

Defendants.

Plaintiffs Zurich American Insurance Company (‘Zurich American”) and American
Guarantee & Liability Insurance Company ("American Guarantee") allege as follows:

GENERAL ALLEGATIONS

lL Zurich American is, and at all times relevant hereto was, a corporation authorized
to do business in the State of California.

2. American Guarantee is, and at all times relevant hereto was, a corporation
authorized to do business in the State of California.

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3. Plaintiffs are informed and believe and thereon allege that defendant Westchester
Surplus Lines Insurance Company ("Westchester") is, and at all times relevant hereto was, a
corporation organized and existing under the laws of the State of Georgia, and authorized to do
business, and doing business, in the State of California as a commercial liability insurer.

4, Plaintiffs are informed and believe and thereon allege that defendant Mission Place,
LLC is, and at all times relevant hereto was, a limited liability corporation organized and existing
under the laws of the State of Delaware, and authorized to do business, and doing business, in the
State of California.

5. Plaintiffs are informed and believe and thereon allege that defendant Mission Place
Mezzanine, LLC is, and at all times relevant hereto was, a limited liability corporation organized
and existing under the laws of the State of Delaware, and authorized to do business, and doing
business, in the State of Califomia. On information and belief, Mission Place Mezzanine, LLC is
the sole member of Mission Place, LLC.

6. Plaintiffs are informed and believe and thereon allege that defendant Mission Place
Mezz Holdings, LLC is, and at all times relevant hereto was, a limited liability corporation
organized and existing under the laws of the State of Delaware, and authorized to do business, and
doing business, in the State of California. On information and belief, Mission Place Mezz
Holdings, LLC is the sole member of Mission Place Mezzanine, LLC.

7. Plaintiffs are informed and believe and thereon allege that defendant Mission Place
Partners, LLC is, and at all times relevant hereto was, a limited liability corporation organized and
existing under the laws of the State of Delaware, and authorized to do business, and doing
business, in the State of California, On information and belief, Mission Place Partners, LLC is the
sole member of Mission Place Mezz Holdings, LLC.

8. Plaintiffs are informed and believe and thereon allege that defendant Centurion
Real Estate Investors IV, LLC is, and at all times relevant hereto was, a limited liability
corporation organized and existing under the laws of the State of Delaware, and authorized to do
business, and doing business, in the State of California. On information and belief, Centurion

Real Estate Investors IV, LLC is a managing member of Mission Place Partners, LLC.

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9 Plaintiffs are informed and believe and thereon allege that defendant Centurion
Real Estate Partners, LLC is, and at all times relevant hereto was, a limited liability corporation
organized and existing under the laws of the State of Delaware, and authorized to do business, and
doing business, in the State of California. On information and belief, Centurion Real Estate
Partners, LLC is the managing member of Centurion Real Estate Investors [V, LLC.

10. For ease of reference, the defendants identified in paragraphs three through eight
will be collectively referred to hercin as "Mission Place” or the “Mission Place entities."

11. Plaintiffs are informed and believe and thereon allege that defendant Beacon
Residential Community Association ("BRCA") is, and at all times relevant hereto was, a non-
profit mutual benefit corporation organized and existing under the laws of the State of California.

12. Plaintiffs are ignorant of the true names and capacities of those defendants sued
herein as Does 1 through 50, inclusive, and therefore sues them by such fictitious names.
Plaintiffs will seek leave to add their true names and capacities when such have been ascertained.
Plaintiffs are informed and believe and thereon allege that Does | through 50 are in some manner
legally responsible for the claims and liabilities alleged in this complaint.

13. Atall times herein mentioned, defendants, and each of them, were each other's
principals, agents, employers, employees, membets, parents, subsidiaries, sisters, affiliates, and/or
joint venturers, and in doing the things complained of herein were acting in the course and scope
of such relationship(s).

FACTUAL BACKGROUND
The Zurich Primary Policies

14. Zurich American issued Policy No. ACO 8309548-10 (the "First Zurich Policy") to
first named insured Integrated Risk Facilities, Inc., a risk purchasing group. Pursuant to
Endorsement 40 in the First Zurich Policy, Mission Place, LLC was added as a named insured for
the period of December 22, 2004 to December 22, 2005 for a premium of $105,939. A true and
correct copy of the relevant portions of the First Zurich Policy is attached hereto as Exhibit A.

15. Zurich American issued Policy No. ACO 8309548-11 (the "Second Zurich Policy")
to first named insured Integrated Risk Facilities, Inc., a risk purchasing group. Mission Place,

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LLC and BRCA are named insureds under the Second Zurich Policy for the period of December
22, 2005 to December 22, 2006. A true and correct copy of the relevant portions of the Second
Zurich Policy is attached hereto as Exhibit B.

16. Zurich American issued Policy No. ACO 9682131-00 (the “Third Zurich Policy")
to named insured Integrated Risk Facilities, Inc. a risk purchasing group. Mission Place, LLC and
BRCA are named insureds under the Third Zurich Policy for the period of December 22, 2006 to
December 22, 2007. A true and correct copy of the relevant portions of the Third Zurich Policy is
attached hereto as Exhibit C. The First Zurich Policy, Second Zurich Policy and Third Zurich
Policy are referred to herein as the "Zurich Policies". The Zurich Policies have a Products-
Completed Operations Aggregate Limit of $1,000,000.

17. The insuring agreement of the Zurich Policies states, in part:

SECTION 1 - COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY

DAMAGE LIABILITY
1 Insuring Agreement
a We will pay those sums that the insured becomes

legally obligated to pay as damages because of
"bodily injury" or "property damage" to which this
insurance applies. We will have the right and duty
to defend the insured against any "suit" secking
those damages. However, we will have no duty to
defend the insured against any "suit" seeking
damages for "bodily injury" or "property damage"
10 which this insurance does not apply.

18. The Zurich Policies include the following definition:

13. "Occurrence" means an accident, including continuous or repeated exposure
to substantially the same general harmful conditions.

19. The Zurich Policies were issued with a "Broad Named Insured" endorsement which

modifies the named insured as follows:

Integrated Risk Facilities, Inc., A Risk Purchasing Group and/or all
group participants, all affiliated, associated, allied, sponsored or
subsidiary organizations, including but not limited to Joint
Ventures, Co-Ventures, Real Estate Managing Agents,
Partnerships, Limited Liability Companies and Partnerships, Joint
Operating Agreements as now or may hereafter be constituted or

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20.

reconstituted for which Integrated Risk Facilities, Inc. A Risk
Purchasing Group has the responsibility of placing insurance and
for which insurance is not more specifically provided.

The Zurich Policies were issued with a "Damage to Property Exclusion and

Property Damage Definition Amendment" endorsement which states, in part:

21.

This endorsement modifies insurance provided under the:
Commercial General Liability Coverage Part
Products-Completed Operations Liability Coverage Part

1. Section I— Coverage A, Exclusion ~ Damage to
Property is deleted and replaced as follows:

[Exclusions

This insurance does not apply to:]
Damage to Property

“Property damage" to:

(2) Premises the insured sells, gives away,
abandons, or ceases to have operational
control over, if the "property damage” arises
out of any other part of those premises;

2. Section V — Definitions ~ "Property Damage" is
deleted and replaced as follows:

“Property damage" means:

a. Physical injury to tangible property, including all
resulting loss of use of that property. All such loss of use
shal] be deemed to occur at the time of the physical injury
that caused it...

The Zurich Policies were issued with a "Continuing Claim Exclusion” which

provides the following, in part:

This policy does not apply to “bodily injury", "property damage",
"personal injury" or “advertising injury" arising out of any claim
against the insured which is alleged to be continuing in nature if
the damage or any of it was known prior to the effective date of
this policy. This exclusion will apply whether or not the cause of

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the damage was known prior to the effective date of this policy. In
no event will this policy apply to any lawsuit against the insured if
the filing date of the original complaint was prior to the effective
date of this policy, whether or not the insured was a party, and
whether or not the insured was served with process priot to the
effective date of this policy.

Claim, as used in this endorsement, means any demand for money,
services of any suit.

22, The Zurich Policies were issued with a "Cross Liability Suits Exclusion" which
states, in part:

This policy does not apply to "bodily injury", "property damage",
"personal injury" or “advertising injury" sustained by any named
insured, whether or not such injury or damage arises out of the
activities or operations of any other named insured.

23. The Zurich Policies include other terms, conditions, exclusions and provisions
which may operate to preclude or limit coverage available to its insureds as more fully set forth in
the copies of the policies attached hereto as Exhibits A, B and C.

The American Guarantee Excess/Umbrella Policies

24. American Guarantee issued Policy No. AUC 9007010 01 (the “First American
Policy") to named insured Integrated Risk Facilities, Inc., a risk purchasing group. Mission Place,
LLC is a named insured under the First American Policy for the period of December 22, 2004 to
December 22, 2005. Item 5 of the Declarations identifies the retained limit as $10,000. A true
and correct copy of the relevant portions of the First American Policy is attached hereto as Exhibit
D.

25. American Guarantee issued Policy No. AUC 9007010 02 {the "Second American
Policy") to named insured Integrated Risk Facilities, Inc., a risk purchasing group. Mission Place,
LLC and BRCA are named insureds under the Second American Policy for the period of
December 22, 2005 to December 22, 2006. Item 5 of the Declarations identifies the retained limit
as $10,000. A true and correct copy of the relevant portions of the Second American Policy is
attached hereto as Exhibit E. The First American Policy and Second American Policy are
collectively referred to herein as the "American Policies."

26, The Insuring Agreements of the First American Policy provide:

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SECTION I. COVERAGE

A.

Coverage A - Excess Follow Form Liability Insurance

Under Coverage A, we will pay on behalf of the insured,
those damages covered by this insurance in excess of the
total applicable limits of underlying insurance. The terms
and conditions of underlying insurance are with respect to
Coverage A made a part of this policy, except with respect
to:

1. Any contrary provision contained in this policy; or

2. Any provision in this policy for which a similar
provision is not contained in underlying insurance.

With respect to the exceptions stated above, the provisions
of this policy will apply.

Notwithstanding anything to the contrary contained above,
if underlying insurance does not cover damages, for
reasons other than exhaustion of applicable limits of
insurance by payment of claims, then we will not cover
such damages.

Coverage B ~ Umbrella Liability Insurance

Under Coverage B, we wil! pay on behalf of the insured,
damages the insured becomes legally obligated to pay by
reason of liability imposed by law or assumed under an
insured contract because of bodily injury, property
damage, or personal and advertising injury covered by
this insurance providing the injury, damage or offense takes
place during the policy period of this policy and is caused
by an occurrence happening anywhere. We will pay such
damages in excess of the Retained Limit specified in Item
5. of the Declarations or the amount payable by other
insurance, whichever is greater.

Coverage B will not apply to any loss, claim or suit for
which insurance is afforded under underlying insurance
or would have been afforded except for the exhaustion of
the limits of insurance of underlying insurance.

SECTION IIL. DEFENSE AND SUPPLEMENTARY
PAYMENTS

A.

We have the right and duty to assume control of the
investigation, settlement or defense of any claim or suit
against the insured for damages covered by this policy:

1. Under Coverage A, when the applicable limit of
underlying insurance has been exhausted by

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payment of claims; or

2. Under Coverage B, when damages are sought for
bodily injury, property damage, personal and
advertising injury to which no undertying
insurance or other insurance applies.

27. The Insuring Agreements of the Second American Policy provide:
SECTION I, COVERAGE

A.

Coverage A ~ Excess Follow Form Liability Insurance

Under Coverage A, we will pay on behalf of the insured,
those damages covered by this insurance in excess of the
total applicable limits of underlying insurance, With
respect to Coverage A, the terms and conditions of
underlying insurance are made a part of this policy,
except with respect to:

1 Any contrary provision contained in this policy; or

2. Any provision in this policy for which a similar
provision is not contained in underlying insurance.

With respect to the exceptions stated above, the provisions
of this policy will apply.

Notwithstanding anything to the contrary contained above,
if underlying insurance does not apply to damages, for
reasons other than exhaustion of applicable limits of
insurance by payment of claims, then Coverage A does not
apply to such damages.

Coverage B - Umbrella Liability Insurance

Under Coverage B, we will pay on behalf of the insured,
sums as damages the insured becomes legally obligated to
pay by reason of liability imposed by law or assumed under
an insured contract because of bodily injury, property
damage, or personal and advertising injury covered by
this insurance but only if the injury, damage or offense
arises out of your business, takes place during the policy

riod of this policy and is caused by an occurrence

ppening anywhere. We will pay such damages in excess
of the Retained Limit specified in Item 8. of the
Declarations or the amount payable by other insurance,
whichever is greater.

Coverage B will not apply to any loss, claim or suit for
which insurance is afforded under underlying insurance
or would have been afforded except for the exhaustion of
the limits of insurance of underlying insurance.

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28.

The insurance afforded under Coverage A and Coverage B
applies to bodily injury or property damage only if prior to the
policy period, no designated insured knew that the bodily injury
of property damage had occurred, in whole or in part. If sucha
designated insured knew, prior to the policy period, that the
bodily injury or property damage occurred, then any
continuation, change or resumption of such bodily injury or
property damage during or after the policy period will be deemed
to have known prior to the policy period.

Bodily injury or property damage which occurs during the
policy period and was not, prior to the policy period, known to
have occurted by any designated insured includes any
continuation, change or resumption of that bodily injury or
property damage after the policy period; and

Bodily injury or property damage will be deemed to have been
known to have occurred at the earliest time when any designated
insured:

1 Reports all, or any part, of the bodily injury or
property damage to us or any other insurer;

2. Receives a written or verbal demand or claim for
damages because of the bodily injury or property
damage; or

3. Becomes aware by any other means that bodily
injury or property damage has occurred or has
begun to occur.

SECTION Ul. DEFENSE AND SUPPLEMENTARY
PAYMENTS

A. We have the right and duty to assume control of the
investigation and settlement of any claim, or defense of any
suit against the insured for damages covered by this
policy:

1 Under Coverage A, when the applicable limit of
underlying insurance has been exhausted by
payment ofclaims for which coverage is afforded
under this policy; or

2. Under Coverage B, when damages are sought for
bodily injury, property damage, personal and
advertising injury to which no underlying
insurance or other insurance applies.

The American Policies were issued with the New York Changes endorsement

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which provides:

I. SECTION II, DEFENSE AND SUPPLEMENTARY
PAYMENTS, Paragraph A.2., is amended by addition of
the following:

For amounts within the Retained Limit, we have no duty
to defend, but we shall have the right to associate with the
insured in the defense and control of any claim or suit that
we think may involve this policy. [...]

29. The American Policies exclude coverage under Coverage B for "property damage"
to "[p]remises you sell, give away or abandon if the property damage arises out of any part of
those premises..."

30. The American Policies define "underlying insurance" as "the policy or policies of
insurance listed in the Schedule of Underlying Insurance forming a part of this policy.”

31. The American Policies provide the following definition of “other insurance”:

Other insurance means a policy of insurance providing coverage
that this policy also provides. Other insurance includes any type
of self-insurance or other mechanisms by which an insured
arranges for funding of legal liabilities.

Other insurance does not include underlying insurance or a
policy of insurance specifically purchased to be excess of this
policy providing coverage that this policy also provides.

32. The American Policies include the following definitions applicable to Coverage B:

9. Occurrence means:
a. With respect to bodily injury or property damage
liability, an accident, including continuous or

repeated exposure to substantially the same general
harmful conditions,

12. Property damage means:

a Physical injury to tangible property, including all
resulting loss of use of that property. All such loss
of use shall be deemed to occur at the time of the
physical injury that caused it...

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13. Retained limit means the amount of damages applicable to
each oceurrence for which the insured is responsible
is shown in item §. of the Declarations.
43. The American Policies were issued with the Known Loss And Loss In Progress
Exclusion endorsement which states:

Under Coverage A and Coverage B this policy does not apply to
any liability, damage, loss, cost or expense arising out of:

1, Any injury or damage which incepts prior to the effective
date of this policy;

2. Any occurrence, loss, or claim of which the insured had
knowledge or notice prior to the effective date of this
policy; or
3. Any claim for injury or damage which is first asserted
against the insured prior to the effective date of this policy.
34. The American Policies were issued with a "Broad Named Insured” endorsement

which modifies the named insured as follows:

Integrated Risk Facilities, Inc., A Risk Purchasing Group &/or all

Group Participants, all Affiliated, Associated, Allied, Sponsored or

Subsidiary Organizations, including but not limited to Joint

Ventures, Co-Ventures, Real Estate Managing Agents,

Partnerships, Limited Liability Companies and Partnerships, Joint

Operating Agreements as now or may hereafter be constituted or

reconstituted for which Integrated Risk Facilities, Inc. A Risk

Purchasing Group has the responsibility of placing insurance and

for which insurance is not more specifically provided.

The Westchester Policy
35, Defendant Westchester issued Policy No. GLW786230 to named insureds Mission

Place, LLC, Lehan ALI, Inc., Mission Place Mezzanine, LLC and Mission Place Mezz Holdings,
LLC with a beginning effective date of December 22, 2004 (the "Westchester Policy"). The total
premium for the Westchester Policy was $1,700,000, The ‘Westchester Policy has an Each
Occurrence Limit of $5,000,000 and a Products/Completed Operations Aggregate Limit of
$6,000,000. The policy provides that Westchester has a duty to defend and indemnify its insureds
for claims of bodily injury and property damage caused by an occurrence as those terms are
defined by the policy. A purported copy of the Westchester Policy, as provided by counsel for

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Westchester to counsel for Zurich, is attached hereto as Exhibit F.

36. The Westchester Policy was issued with an endorsement entitled "Policy Period
Amended — For 'Products-Completed Operations Hazard’ Coverage Only" which provides the
following:

The policy period for the “products-completed operations hazard”
begins after the close of escrow or the occupation of each single
family dwelling, townhouse or condominium by a third party.
opal s etertfaed by he applicable aw or ate,
subject to a maximum extended policy period of ten (10) years
after the close of escrow or the occupation of a single family
dwelling, townhouse or condominium by a third party.

37. Several policy exclusions were deleted from the Westchester Policy, including
exclusions for property damage to premises you sell, give away or abandon and property damage
to "your work", Additionally, the term "your work" in the Westchester Policy was amended to
include the property and improvements at The Beacon.

The Underlying Actions

38. Plaintiffs are informed and believe and thereon allege the following events that
gave rise to the claim that underlies the present dispute:

39,  Catellus Development Corporation ("Catellus") and other entities developed a
condominium complex in San Francisco, California known as The Beacon Condominium
Complex (the "Beacon"), The Beacon consists of two sixteen story buildings, located at 250 and
260 King Street, respectively, with retail space on the ground floor. The Beacon complex, as 4
whole, includes approximately 595 condominium units. The Beacon was constructed by Webcor
Builders, Inc. and other entities between 2002 and 2004.

40. After the completion of the construction of the first building, located at 250 King
Street, and during construction of the second building located at 260 King Street, Catellus rented
the completed building at 250 King Street to residential tenants. When the Beacon was
substantially complete, it was purchased by Mission Place from Catellus by contract fully

executed on December 19, 2004. The purchase agreement included an assumption by Mission

Place of the residential leases. Mission Place also entered into separate contracts with each unit

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tenant indicating that Mission Place was the landlord and manager. Mission Place, in turn,
marketed the condominium units and sold them to the public.

41, Plaintiffs are informed and believe and thereon allege that Mission Place was aware
of defects at the Beacon prior to its purchase of the properties.

42.  Onor about August 16, 2006, Edward Zucker and numerous other owners of
condominiums in the Beacon filed a class action lawsuit in San Francisco County Superior Court
against numerous named defendants, including Mission Place, LLC, Centurion Real Estate
Partners, LLC, Mission Place Holdings, LLC, Mission Place Mezzanine, LLC and Mission Place
Partners, LLC. (San Francisco County Superior Court Action No. CGC-06-455352 — "Zucker 1’).

43, On or about November 8, 2006, a First Amended Complaint was filed in Zucker I
adding additional named defendants, A true and correct copy of the First Amended Complaint in
Zucker I, without exhibits, is attached hereto as Exhibit G.

44. The plaintiffs in Zucker J allege they suffered injury based on false representations
concerning the square footage of the condominium units at the Beacon, The plaintiffs in Zucker I
further allege that the defendants therein represented that the condominium units at the Beacon
were "new" when, in fact, they had been converted. The plaintiffs in Zucker J also allege that they
have been damaged by the defective design and/or construction of the units at the Beacon
including, but not limited to, leaking water pipes and that they were not advised that the Beacon
was located on a hazardous soil site.

45. Onor about January 22, 2008, Edward Zucker and numerous other owners of
condominiums in the Beacon, many of whom are also plaintiffs in Zucker /, filed another class
action lawsuit in San Francisco County Superior Court against numerous named defendants,
including: Mission Place, LLC, Centurion Real Estate Partners, LLC, Mission Place Holdings,
LLC, Mission Place Mezzanine, LLC and Mission Place Partners, LLC. (San Francisco County
Superior Court Action No. CGC-08-471272 — "Zucker H"). A First Amended Complaint was filed
in Zucker II on or about July 3, 2008.

46. A Second Amended Complaint was filed in Zucker Hon or about August 12, 2009.
Of the various Mission Place entities, the Second Amended Complaint in Zucker H named only

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Mission Place, LLC as a defendant. A true and correct copy of the Second Amended Complaint in
Zucker If, without attachments, is attached hereto as Exhibit H.

47, The plaintiffs in Zucker I/ allege they suffered numerous injuries, including injury
based on false representations concerning the square footage of the condominium units at the
Beacon, the status of the units as "brand new never lived in construction," that a parking space
would be provided at no additional fee, and that the units contained air conditioning and
ventilation systems sufficient to control the internal temperature of the units. The plaintiffs in
Zucker II further allege they were injured by a concealment of hazardous soil conditions and by
embezzlement of funds. Several of the Zucker II plaintiffs allege they have been damaged by the
defective design and/or construction of the units at the Beacon including, but not limited to,
leaking water pipes, excessive sound and odor transmission issues, improper ventilation, sparking
light switches, improper UV screening on the windows, pooling of water on balconies and other
construction deficiencies.

48. Onor about August 8, 2008, BRCA filed a complaint in San Francisco County
Superior Court against numerous named defendants, including Mission Place, LLC, Mission Place
Mezzanine, LLC, Mission Place Mezz Holdings, LLC, Mission Place Partners, LLC, Centurion
Real Estate Investors IV, LLC and Centurion Real Estate Partners, LLC (San Francisco County
Superior Court Action No. CGC-08-478453 ~ the "BRCA Action"). A tme and correct copy of the
complaint in the BRCA Action is attached hereto as Exhibit L

49. BRCA alleges that it has the sole right to manage, operate, control, repair, replace
and restore the common area and the obligation to maintain, preserve and repair certain of the
individually owned areas of the Beacon. BRCA alleges numerous defective conditions with
respect to the Beacon, including excessive heat gain through windows in the condominium units,
deficient ventilation, defective pool and spa boilers, inadequate ventilation in the pool chemical
room, excessive heat build-up in electrical rooms, leaks in dryer exhaust system ducts, excessive
odor and cigarette smoke transmission, excessive sound transmission, leaks in roofs and roof
systems, leaks from the pool and spa equipment room, leaks from the canopy structures, water
infiltration into planter lights and electrical components, leaks from the podium and podium level

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planter boxes, deficient drainage systems in the podium and motor court planter boxes, deficient
sidewalk and motor court level drainage systems, leaking windows, failing foam building
components, catwalk vibrations, water infiltration through garage walls ceilings and floors, leaks
from electrical conduits, leaks from the fire pump room, structural cracks in a concrete beam,
cracking of a topping slab, deficient garage security door, defective entrance door locks and
hardware, deficient lighting in elevators, premature failure of “dog park” turf and related
landscaping, peeling veneer plaster float, failing electric circuitry for an exterior light pole and
sparking behind light switches.

Defense Of The Underlying Actions

50. Zurich American agreed to defend, and is currently defending, Mission Place in
Zucker I, Zucker H and the BRCA Action pursuant to a full reservation of rights. Zurich American
further agreed to provide Mission Place with independent counsel pursuant to Califomia Civil
Code section 2860 and has been paying defense fees and costs incurred by independent counsel
selected by Mission Place pursuant to California Civil Code section 2860.

51. The claims asserted against Mission Place were such as to trigger Westchester's
duty to provide a defense in Zucker I, Zucker H and the BRCA Action. Zurich American is
informed and believes and thereupon alleges that Westchester has agreed to defend some or all of
the Mission Place entities pursuant to a reservation of rights in Zucker I, Zucker If and/or the
BRCA Action.

52. Plaintiffs are informed and believe and thereon allege that Westchester has reserved
its right to deny coverage to Mission Place on certain coverage issues and the outcome of those
issues can be controlled by counsel first retained by Westchester for the defense of the claim,
Accordingly, Westchester is obligated by California Civil Code section 2860 to provide
independent counsel to Mission Place.

53. Plaintiffs are informed and believe and thereon allege that Mission Place requested
that Westchester acknowledge its obligation to provide Mission Place with independent counsel
pursuant to California Civil Code section 2860.

54, Plaintiffs are informed and believe and thereon allege that Westchester has refused

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and failed to provide independent counsel to Mission Place despite its legal obligation to do so and
has further failed and refused to share in the defense fees and costs paid by Zurich American with
respect to Mission Place's selected independent counsel.

55. As Zurich American has paid, and continues to pay, for the expense of Mission
Place's independent counsel with no contribution from Westchester, it has paid more than its fare
share of defense fees and costs with respect to Zucker I, Zucker [I and the BRCA Action.

FIRST C. OF ACT!
Declaratory Relief Regarding Westchester's Duty To Appoint Independent Counsel
(Zurich American Against Westchester and Does 1 Through 50, Inclusive)

56. Zurich American realleges paragraphs | through 54, inclusive, above, and
incorporates them by reference as if fully set forth herein.

57. Zurich American contends that Westchester has an obligation to provide
independent counsel to Mission Place pursuant to California Civil Code section 2860.

58. Westchester denies that it has an obligation to provide independent counsel to
Mission Place pursuant to California Civil Code section 2860.

59.  Anactual controversy has arisen and now exists between Zurich American, on the
one hand, and Westchester, on the other hand, regarding Westchester's duty to provide
independent counsel to Mission Place with respect to Zucker 1, Zucker Hand the BRCA Action.

60. This Court is vested with the power in the instant case and Zurich American hereby
respectfully requests a judicial determination and declaratory judgment of Westchester's duty to
provide independent counsel to Mission Place with respect to Zucker I, Zucker II and the BRCA
Action. Such a judicial declaration is necessary and appropriate at this time given the above-stated
controversy between Zurich American and Westchester.

SECOND CAUSE OF ACTION
Declaratory Relief Regarding Westchester's Duty To Reimburse Zurich American
(Zurich American Against Westchester And Does 1 Through 50, Inclusive)

61. Zurich American realleges paragraphs 1 through 54, inclusive, above, and

incorporates them by reference as if fully set forth herein.

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185563.1 465.28244

62. Zurich American contends that Westchester is obligated to reimburse Zurich
American 100% of the fees and costs paid by Zurich American with respect to independent
counsel because the Broad Named Insured endorsement of ‘the Zurich Policies provides coverage
so long as insurance "is not more specifically provided" to the insured. Since Westchester issued a
policy directly to Mission Place, and based on other terms and conditions in Westchester's policy,
Westchester provides more specific insurance to Mission Place and should be deemed primary to
any insurance available to Mission Place under the Zurich Policies.

63. Alternatively, Zurich American contends the factual circumstances as well as the
nature of the Zurich Policies and the Westchester Policy justify shifting 100% or, at a minimum, a
far greater proportion of the counsel fees and costs to Westchester. Shifting a greater proportion
of such fees to Westchester is justified for numerous reasons including, but not limited to, the fact
that the Westchester policy covers completed operations for ten years whereas the Zurich Policies
are in force for only one year periods; the Westchester Policy was issued directly to Mission Place
whereas the Zurich Policies were issued to Integrated Risk Facilities, Inc.; the Westchester Policy
eliminates several potentially applicable exclusions whereas such exclusions are still present in the
Zurich Policies; the premium for the Westchester Policy was far greater than the premiums for the
Zurich Policies; the limits of liability under the Westchester Policy is much greater than the limits
of liability under the Zurich Policies; the applicability of the relevant exclusions in the Zurich
Policies including, but not limited to, the alienated premises exclusion, the continuing claims
exclusion and the cross liability suits exclusion of the Zurich Policies; and the Westchester Policy
defines "your work" as including the Beacon.

64. Westchester denies it has any obligation to reimburse Zurich American for sums
expended by Zurich American in providing counsel to Mission Place.

65.  Anactual controversy has arisen and now exists between Zurich American, on the
one hand, and Westchester, on the other hand, regarding Westchester's duty to reimburse Zurich
American for sums expended by Zurich American in providing counsel to Mission Place with
respect to Zucker 1, Zucker I and the BRCA Action.

66. This Court is vested with the power in the instant case and Zurich American hereby

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respectfully requests a judicial determination and declaratory judgment of Westchester's duty to
reimburse Zurich American for sums expended by Zurich American in providing counsel to
Mission Place with respect to Zucker I, Zucker If and the BRCA Action. Such a judicial
declaration is necessary and appropriate at this time given the above-stated controversy between
Zurich American and Westchester.

THIRD CAUSE OF ACTION

Declaratory Relief Regarding Indemnity Allocation
(Zurich American Against Westchester And Does 1 Through 50, Inclusive)

67. Zurich American realleges paragraphs | through 54, inclusive, above, and
incorporates them by reference as if fully set forth herein.

68. Zurich American contends that if it and Westchester are obligated to indemnify
Mission Place for liability in connection with Zucker I, Zucker IJ and/or the BRCA Action,
Westchester should be deemed to be primarily responsible for the indemnification of Mission
Place because the Broad Named Insured endorsement of the Zurich Policies provides coverage so
long as insurance “is not more specifically provided" to the insured. Since Westchester issued a
policy directly to Mission Place, and based on other terms and conditions of the Westchester
policy, Westchester provides more specific insurance to Mission Place and should be deemed
primary to any insurance available to Mission Place under the Zurich Policies.

69. Alternatively, Zurich American contends the factual circumstances as well as the
nature of the Zurich Policies and the Westchester Policy justify shifting 100% or, at a minimum, a
far greater proportion of any responsibility for indemnifying Mission Place to Westchester.
Shifting a greater proportion of any obligation to indemnify to Westchester is justified for
numerous reasons including, but not limited to, the fact that the Westchester policy covers
completed operations for ten years whereas the Zurich Policies are in force for only one year
periods; the Westchester Policy was issued directly to Mission Place whereas the Zurich Policies
were issued to Integrated Risk Facilities, Inc.; the Westchester Policy eliminates several
potentially applicable exclusions whereas such exclusions are still present in the Zurich Policies;

the premium for the Westchester Policy was far greater than the premiums for the Zurich Policies;

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the limits of liability under the Westchester Policy is much greater than the limits of liability under
the Zurich Policies; the applicability of the relevant exclusions in the Zurich Policies including,
but not limited to, the alienated premises exclusion, the continuing claims exclusion and the cross
liability suits exclusion of the Zurich Policies; and the Westchester Policy defines "your work" as
including the Beacon.

70. Westchester denies any indemnity obligation should be apportioned as contended
by Zurich American.

71. Anactual controversy has arisen and now exists between Zurich American, on the
one hand, and Westchester, on the other hand, regarding the proper allocation between
Westchester's and Zurich American with respect to any obligation of Westchester and Zurich
American to indemnify Mission Place with respect to Zucker I, Zucker II and the BRCA Action.

72. This Court is vested with the power in the instant case and Zurich American hereby
respectfully requests a judicial determination and declaratory judgment of the proper allocation
between Westchester's and Zurich American with respect to any obligation of Westchester and
Zurich American to indemnify Mission Place with respect to Zucker /, Zucker IT and the BRCA
Action. Such a judicial declaration is necessary and appropriate at this time given the above-stated
controversy between Zurich American and Westchester.

FOURTH CAUSE OF ACTION
Equitable Contribution
(Zurich American Against Westchester And Does 1 Through 50, Inclusive}

73. Zurich American realleges paragraphs | through 54, inclusive, above, and
incorporates them by reference as if fully set forth herein.

14, Westchester is obligated to contribute its equitable share of defense fees and costs
with respect to independent counsel selected by Mission Place in connection with Zucker f, Zucker
Itand the BRCA Action. Does 1 through 50, inclusive, are also obligated to contribute towards the
same fees and costs.

75. Westchester and Does 1 through 50, inclusive, and each of them, have breached,
and continue to breach, their respective duties to contribute their equitable share of defense fees

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and costs with respect to independent counsel selected by Mission Place in that they have failed to
contribute their equitable share towards that defense.

76. Zurich American is entitled to equitable contribution from Westchester and the Doe
defendants, and each of them, of their respective equitable shares of counsel fees and costs to the
extent such defendants’ equitable shares have been paid by Zurich American, in an amount
according to proof, within the jurisdiction of this court.

FIFTH CAUSE OF ACTION
Equitable Indemnity
(Zurich American Against Westchester and Does 1 through 50, Inclusive)

77. Zurich American realleges paragraphs 1 through 54, inclusive, above, and
incorporates them by reference as if fully set forth herein.

78. Zurich American has paid sums in providing counsel to Mission Place in Zucker I,
Zucker Hand the BRCA Action. The sums paid by Zurich American were the primary
responsibility of and should have been paid by Westchester and Does 1 through 50. Accordingly,
Westchester and Does 1 through 50 are obligated to indemnify Zurich American for defense fees
and costs paid by Zurich American with respect to independent counsel selected by Mission Place
in connection with Zucker I, Zucker Il and the BRCA Action.

79, Westchester and Does 1 through 50, inclusive, and each of them, have breached,
and continue to breach, their respective duties to indemnify Zurich American for the sums
expended by Zurich American with respect to the defense fees and costs of independent counsel
selected by Mission Place.

80, Zurich American is entitled to equitable indemnity from Westchester and the Doe
defendants, and each of them, of their respective shares of counsel fees and costs to the extent
such defendants’ shares have been paid by Zurich American, in an amount according to proof,

within the jurisdiction of this court.

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SIXTH CAUSE OF ACTION
Equitable Subrogation

(Zurich American Against Westchester And Does 1 Through 50, Inclusive)
81. Zurich American realleges paragraphs 1 through 54, inclusive, above, and
incorporates them by reference as if fully set forth herein.

82. Zurich American has paid sums in providing counsel to Mission Place in Zucker J,
Zucker I! and the BRCA Action. The sums paid by Zurich American were the primary
responsibility of and should have been paid by Westchester and Does I through 50. Accordingly,
Zutich American is equitably subrogated to the rights of Mission Place to seek recovery of such
sums from Westchester and the Doe defendants.
83. As the direct and legal result of the breach by these defendants, and each of them,
of their respective duties to pay for counsel for Mission Place, Zurich American is entitled to
payment from them of the cost of providing counsel to Mission Place in an amount according to

proof, within the jurisdiction of this court.

| SEVENTH CAUSE OF ACTION
Declaratory Relief Regarding Alienated Premises Exclusion Of The Zurich Policies

(Zarich American Against Mission Place, BRCA and Westchester)
| 84. Zurich American realleges paragraphs 1 through 54, inclusive, above, and

incorporates them by reference as if fully set forth herein.

85. Zurich American contends that the exclusion in the Zurich Policies for property
damage to premises the insured sells, gives away, abandons, or ceases to have operational control
over, if the property damage arises out of any other part of those premises (the "Alienated
Premises Exclusion") operates to bar coverage for the claims asserted against Mission Place in
Zucker I, Zucker i] and the BRCA Action.

86. Mission Place, BRCA and Westchester contend that the Alienated Premises
Exclusion is inapplicable to the claims asserted against Mission Place in Zucker I, Zucker iI and
| the BRCA Action.
| 87.  Anactual controversy has arisen and now exists between Zurich American, on the

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one hand, and Mission Place, BRCA and Westchester, on the other hand, regarding the extent to
which the Alienated Premises Exclusion bars coverage for the claims asserted against Mission
Place in Zucker I, Zucker H and the BRCA Action.

88. This Court is vested with the power in the instant case and Zurich American hereby
respectfully requests a judicial determination and declaratory judgment regarding the extent to
which the Alienated Premises Exclusion bars coverage for the claims asserted against Mission
Place in Zucker I, Zucker I] and the BRCA Action. Such a judicial declaration is necessary and
appropriate at this time given the above-stated controversy between Zurich American and Mission
Place, BRCA and Westchester.

EIGHTH CAUSE OF ACTION
Declaratory Relief Regarding Continuing Claim Exclusion Of The Zurich Policies
(Zurich American Against Mission Place, BRCA and Westchester)

89. Zurich American realleges paragraphs 1 through 54, inclusive, above, and
incorporates them by reference as if fully set forth herein.

90. | Zurich American contends that the Continuing Claim Exclusion operates to bar
coverage for the claims asserted against Mission Place in Zucker I, Zucker Hand the BRCA
Action.

91. Mission Place, BRCA and Westchester contend that the Continuing Claim
Exclusion is i