The additional insured contractor was not entitled to a defense where the underlying case failed to allege any negligence by insured subcontractor.  See Clarendon Nat. Ins. Co. v. Am. States Ins. Co., No. 09-548-JO, 2010 U.S. Dist. LEXIS 16091 (D. Ore. Feb. 22, 2010).

   Providence built houses and subcontracted with Woodmaster to frame the houses.  The subcontract provided Woodmaster would defend and indemnify Providence against any claim for injury arising from Woodmaster's own negligence.  Further, Woodmaster agreed to furnish a certificate of insurance naming Providence as an additional insured.  Woodmaster did add Providence as an "additional insured" on its policy with American States.  The policy, however, provided no coverage for the additional insured if no liability was imposed on Wooodmaster. 

   An employee of Woodmaster was seriously injured when framing a Providence house.  The employee sued Providence.  Clarendon, Providence's insurer, defended, but also asked that American States defend based on the additional insured endorsement in its policy.  American States denied tender of the defense.  When the employee's litigation settled, Clarendon asked American States to contribute, but American States again refused.  As part of the settlement, Providence assigned to Clarendon all claims against American States.  Clarendon then sued American States.

   American States argued Oregon law voided any agreement Woodmaster entered to provide Providence with insurance coverage.  Indeed, under Oregon law, contractors were barred from indemnifying another's negligence.  Under another statute, however, a subcontractor could agree to indemnify against its own negligence.  This was precisely what the indemnity agreement and the "additional insured" language of the American States policy provided: Woodmaster agreed to indemnify Providence against Woodmaster's own negligence, and American States insured Providence against Woodmaster's own negligence.  Therefore, the agreement to procure insurance was valid.

   Nevertheless, American States had no duty to defend Providence.  None of the allegations raised a reasonable implication that Woodmaster was somehow responsible for the employee's injuries.  To the contrary, the employee's allegations expressly alleged Providence was solely responsible.