Bitts v. General Accident Fire & Life Assur. Corp.

• Decision Date: 16 August 1960
• Docket Number: No. 16430.,16430.
• Citation: 282 F.2d 542
• Parties: Robert J. BITTS and Albert D. Bonell, Individually and Doing Business as Bonell Refrigeration Co., Appellants, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, Limited, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

282 F.2d 542 (1960)

Robert J. BITTS and Albert D. Bonell, Individually and Doing Business as Bonell Refrigeration Co., Appellants, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, Limited, a Corporation, Appellee.

No. 16430.

United States Court of Appeals Ninth Circuit.

August 16, 1960.

Crist, Peters, Donegan & Brenner, Palo Alto, Cal., for appellants.

Charles A. Legge, Bronson, Bronson & McKinnon, San Francisco, Cal., for appellee.

Before BARNES, MERRILL and KOELSCH, Circuit Judges.

MERRILL, Circuit Judge.

Appellant Bonell has instituted this action for declaratory relief to determine his rights under a general liability insurance policy issued by appellee. Appellant Bitts, alleging personal injuries resulting from the negligence of Bonell, brought suit against Bonell in the Superior Court for Santa Clara County, California. Appellee, after notice from Bonell, refused to defend on Bonell's behalf. The sole question involved is whether the injury to Bitts resulted from a hazard excluded from the coverage of the policy. Such was the holding of the District Court, which granted summary judgment in favor of appellee. Federal jurisdiction is founded upon diversity of citizenship.

In his action against Bonell, Bitts alleged that he had purchased component refrigerator parts from Bonell for the purpose of constructing a refrigerator; that in order to connect the refrigerator coil with one of the other parts he had opened the end of the coil; that gas under high pressure within the coil had escaped with explosive force resulting in personal injuries. Bitts does not contend that the coil was defective. He asserts negligence on the part of Bonell in failing to warn him of the characteristics of the coil and of the dangerous consequences of opening the coil. The accident occurred away from Bonell's business premises.

The policy obligated the appellee "to pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law * * * for damages * * * sustained by any person or persons"; also to "defend in his behalf any suit against the insured alleging such injury * * * and seeking damages on account thereof * * *."

The policy contained an endorsement entitled "Exclusion of Products Hazard," providing:

"It is agreed that the policy does not apply to the products hazard as defined therein."

The definition under Condition 3(c) of the policy is as follows:

"The term `products hazard\' shall mean (1) the handling or use of, the existence of any condition in or a warranty of goods or products manufactured, sold, handled or distributed by or for the name insured * * * if the accident occurs after the insured has relinquished possession thereof to others and away from premises owned, rented or controlled by the insured * * *."

Bonell contends that the exclusionary clause should be construed to have reference only to injuries resulting from the negligent manufacture of products and should not be held to apply to such an antecedent act of negligence as failure to warn. This Court has held to the contrary in Tidewater Associated Oil Co. v. Northwest Casualty Co., 9 Cir., 1959, 264 F.2d 879, construing a clause substantially identical to the one here involved.

That case involved an Oregon accident. Bonell contends that California courts have held to the contrary and that, since California law must control here, the Tidewater case cannot apply. As establishing California law, appellant relies upon ...