• Gonzalez v. Fire Insurance Exchange, (6th Dist.Ct.App. 2015), ----Cal.App.4th ---, 2015 DJDAR 2579, Case No. 1-11-CV215537
  • May 7, 2015
  • Law Firm: McCormick Barstow Sheppard Wayte Carruth LLP - Fresno Office
  • UNDERLYING CLAIM

    Plaintiff filed suit alleging that she was sexually assaulted by Rebagliati and nine other members of the De Anza College baseball team. Rebagliati sought coverage through his parents' homeowners' and personal umbrella policies issued by Fire Insurance Exchange ("Fire") and Truck Insurance Exchange ("Truck"), respectively. Both carriers denied coverage and Rebagliati allowed judgment to be entered against him while assigning his rights against Fire and Truck to the plaintiff. Plaintiff filed a complaint against the insurers for breach of contract and breach of the duty of good faith and fair dealing. Both carriers moved for summary judgment arguing they owed no duty to defend Rebagliati and the motions were granted.
     
    THE APPELLATE COURT'S RULING

    On appeal, the plaintiff argued that, with respect to the primary homeowners policy issued by Fire, the policy defined the term "occurrence" with respect to the "bodily injury" coverage only, and the definition of the term "occurrence" would not apply to a "personal injury" which included intentional torts such as false imprisonment and slander. Citing Lyons v. Fire Ins. Exchange (2008) 161 Cal.App.4th 880, the appellate court determined that it could not read out of the policy the requirement that the personal injury result from an occurrence.

    The plaintiff next contended that her complaint contained allegations of negligent and accidental conduct raising the potential for covered liability. She argued that there existed the possibility that the only thing that the insured had done was enter the room, witness the conduct of others or create a dangerous condition. In addition, the plaintiff claimed that the allegations of false imprisonment, invasion of privacy and slander per se, all specifically covered conduct under the Fire policy, created a duty to defend. The appellate court disagreed, determining that the plaintiff's claims of negligence did not constitute an accident. Rebagliati's failure to rescue the plaintiff from the situation was an intentional act. Furthermore, the complaint did not allege any possibility that Rebagliati accidentally falsely imprisoned the plaintiff by, for example, mistakenly blocking her exit. In addition, the complaint alleged that the men in the room had cheered and taken pictures of the assault, as well as later slandering the plaintiff by claiming that she consented. All of these actions would necessarily amount to intentional acts. Therefore, the trial court had properly granted Fire's motion for summary judgment.

    With respect to the umbrella policy, the court noted that the definition of "personal injury" in that policy did not require that the listed offenses be "accidental." Instead, the term "occurrence" was defined with regard to personal injury as "offenses committed during the policy period ... ." Thus, the allegations raised a potential for covered liability under the policy absent the applicability of an exclusion. Truck argued that the policy exclusion for molestation applied. The court noted that the complaint did contain allegations which raised the possibility that it was the other defendants, as opposed to Rebagliati, who committed the actual physical act of assault. Since Rebagliati could be held liable for damages arising from alleged slander, false imprisonment, or invasion of privacy arising from a molestation undertaken by other defendants meant, the sexual molestation exclusion did not necessarily apply. Although Truck argued that Rebagliati later admitted to touching plaintiff, there was no evidence that this information was available to Truck at the time of the tender.

    Truck next argued that the exclusion for expected or intended damage would apply. However, since Rebagliati had denied any wrongdoing at the time of tender and there was no evidence submitted by Truck to the contrary, the appellate court determined that Truck had not met its burden with respect to this exclusion. Similarly, with respect to the exclusion for personal injury arising out of publications where a willful violation of a penal statute or ordinance has been committed, the court again found no extrinsic evidence at the time of tender demonstrating that Rebagliati had assaulted the plaintiff and violated the law. Accordingly, the exclusion could not be relied on to deny a duty to defend.

    Finally, Fire and Truck claimed that the allegations in the underlying complaint, including those for negligence and slander, were inseparably intertwined with the underlying assault and should therefore be excluded. Again, the appellate court disagreed, noting that the complaint raised the possibility that it was the other individuals, as opposed to Rebagliati, who assaulted the plaintiff. The court suggested that had it been known to Truck that Rebagliati had admitted to the molestation, any slander or invasion of privacy arising out of the molestation would not be covered. However, no such admission was made. Although the court agreed with the insurers that Regagliati's denial of wrongdoing was irrelevant for determining coverage, once the insured had met his burden of demonstrating a possibility of coverage, it was up to the insurer to conclusively demonstrate that an exclusion applied. Since Truck failed to meet its burden, summary judgment was improperly entered in its favor.
     
    EFFECTS OF THE RULING

    The court's ruling in this case supports the idea that, when the "personal injury" coverage of a policy requires that the injury result from an "occurrence" defined as "an accident," intentional conduct will not be covered, even though the policy covers offenses that are often considered intentional such as false imprisonment, slander or invasion of privacy. In fact, the Court of Appeal specifically discussed an instance where a tort like false imprisonment may be considered accidental, such as if an individual were to accidentally lock another into a store at closing time.However, when the policy does not include the requirement of an "occurrence" defined as "an accident," allegations of intentional conduct will not necessarily defeat coverage unless there is an applicable exclusion.

    In addition, it is important to note the heavy emphasis the appellate court placed on the evidence that was before the insurer at the time of tender in determining the duty to defend. The fact that later evidence may have established that the insured was involved in the sexual assault did not excuse the earlier breach of the duty to defend by Truck.