Continental Cas. Co. v. City of Richmond

• Decision Date: 20 June 1985
• Docket Number: 84-1564,Nos. 84-1563,s. 84-1563
• Citation: 763 F.2d 1076
• Parties: CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellee, v. CITY OF RICHMOND, a municipal corporation, et al., Defendant-Appellant and Mead Reinsurance Company, Defendant-in-Intervention-Appellant. CA
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1076

763 F.2d 1076

CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellee, v. CITY OF RICHMOND, a municipal corporation, et al., Defendant-Appellant and Mead Reinsurance Company, Defendant-in-Intervention-Appellant.

CA Nos. 84-1563, 84-1564.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 3, 1984.

Decided June 20, 1985.

Gary V. Dixon, Ross, Dixon & Masback, Washington, D.C., for plaintiff-appellee.

Timothy J. Murphy, Crosby, Heafey, Roach & May, Oakland, Cal., for City of Richmond.

Louis H. Castoria, Wilson, Elser, Edelman & Dicker, San Francisco, Cal., for Mead Reinsurance Co.

Appeal from the United States District Court for the Northern District of California.

Before GOODWIN, POOLE, and BOOCHEVER, Circuit Judges.

POOLE, Circuit Judge:

Continental Casualty Company ("CNA" or the "Company") sought a declaratory judgment that an insurance policy it had issued to the City of Richmond, California, did not provide coverage for claims asserted in a civil rights and wrongful death action filed against Richmond by the three minor children of Willie Lee Drumgoole.

The district court granted summary judgment for CNA, finding that there were no genuine issues of material fact for trial because the policy unambiguously precluded coverage for the claims asserted. The City and Mead Reinsurance Company ("Mead") appeal. Because we conclude the Drumgoole claims were not covered under the CNA insurance contract, we affirm.

I. FACTS

On October 1, 1982, the three minor children of Willie Lee Drumgoole filed an action in the United States District Court for the Northern District of California against the City and certain elected officials. The plaintiffs sought damages under the California Wrongful Death Statute, Calif.Code Civ.Proc. Sec. 377 (West Supp.1984), and legal and equitable relief under 42 U.S.C. Secs. 1981, 1983, and 1985, as the result of their father's death while in police custody in the Richmond jail.

The complaint alleged that ten Richmond police officers assaulted, beat, and choked Drumgoole on or about September 28, 1982, while Drumgoole was detained in the jail, causing his death. This conduct was said to indicate a pattern and practice of police brutality and excessive force against black citizens by members of the Richmond police department, and to have occurred because of the failure of the City properly to train, supervise, assign, and discipline its employees. The Drumgoole heirs also claimed that their father was denied prompt and appropriate medical attention, and that the defendants conspired to conduct a biased investigation into the incident following Drumgoole's death.

These wrongful acts allegedly violated Drumgoole's constitutional rights to due process, equal protection, and freedom from unnecessary or excessive force in contravention of the Fourth, Fifth, Eighth, Ninth, and Fourteenth Amendments. In addition, the heirs asserted a claim under the California Wrongful Death Statute for negligent failure of the City employees to exercise the degree of care in controlling Drumgoole that would have been displayed by properly trained and supervised law enforcement officers.

Pursuant to a Public Officials Liability Policy issued by CNA, Richmond gave CNA notice of the Drumgoole lawsuit on November 8, 1982, characterizing the claim as one "aris[ing] out of the alleged wrongful death of Willie Lee Drumgoole on 9/28/82, who had been incarcerated in the Richmond City Jail." The policy provided coverage for errors and omissions, including employee misfeasance, malfeasance, and nonfeasance. CNA, however, refused to defend Richmond in the Drumgoole lawsuit, and denied coverage based on an exclusionary clause in the policy which provided that CNA would not be liable on any claim arising from the bodily injury, assault, battery, or death of any person. CNA filed this action in May 1983 seeking a declaration that the CNA policy did not provide coverage for the Drumgoole claims, and in September 1983, moved for summary judgment.

Richmond also was insured under a comprehensive general liability policy with Mead Reinsurance Company. The Mead policy provided broad liability coverage for bodily injury, property damage, errors and omissions, and personal injury. Mead successfully moved to intervene for the limited purpose of opposing CNA's motion for summary judgment.

On December 22, 1983, the district court granted summary judgment for CNA. The court determined that the claims asserted by the Drumgoole heirs all arose from the bodily injury and death of their father. As a result, those claims were expressly precluded from coverage under the exclusionary clause of the CNA policy. With this conclusion we agree.

Jurisdiction in the district court was based on diversity of citizenship of the parties pursuant to 28 U.S.C. Sec. 1332. This appeal is properly before us under 28 U.S.C. Sec. 1291.

II. STANDARD OF REVIEW

The task of this court is identical to that of the trial court when reviewing a grant of summary judgment. M/V American Queen v. San Diego Marine Construction Company, 708 F.2d 1483, 1487 (9th Cir.1983). We must determine de novo, Loehr v. Ventura County Community College District, 743 F.2d 1310, 1313 (9th Cir.1984), whether viewing the evidence in the light most favorable to the party against whom summary judgment has been granted, M/V American Queen, 708 F.2d at 1487, the moving party has demonstrated that there is no genuine issue of material fact and that CNA is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); State of Nevada v. United States, 731 F.2d 633, 635 (9th Cir.1984).

III. DISCUSSION

The underlying facts in this case are not in dispute. At issue is the scope of the exclusionary clause contained in the CNA insurance policy. The policy provides coverage for "all loss" from any claim for "wrongful acts" made against the insured during the policy period. "Loss" includes any amount that the insured is obligated to pay a claimant "on account of injuries or damages" suffered, in addition to costs, charges and expenses incurred in the defense of lawsuits. "Wrongful act" is broadly defined in the policy as:

... any actual or alleged error or misstatement or act or omission or neglect or breach of duty including misfeasance, malfeasance and nonfeasance by the Assureds in the discharge of their duties for the Public Entity individually or collectively or any matter claimed against them solely by reason of their being or having been Assureds.

This definition of "wrongful act" would sufficiently include the acts alleged to have been committed against Drumgoole, were it not for two policy exclusions which provide:

(c) The Insurer shall not be liable to make any payment for Loss in connection with any claim:

* * *

* * *

(3) arising directly or consequentially from bodily injury, mental anguish, sickness, disease, or death of any person or from damage to or destruction of any tangible property including loss of use thereof;

(4) arising directly or consequentially from false arrest, libel, slander, defamation of character, invasion of privacy, wrongful eviction, assault or battery.

Since suit was brought in federal district court on the basis of diversity of citizenship, the substantive law of California applies. See Previews, Inc. v. California Union Ins. Co., 640 F.2d 1026, 1027 (9th Cir.1981). Under California law, the interpretation of an exclusionary clause is an issue of law upon which the court must make its own independent determination. Bareno v. Employers Life Insurance Co., 7 Cal.3d 875, 881, 103 Cal.Rptr. 865, 868, 500 P.2d 889, 892 (1972); Hartford Fire Insurance Co. v. Superior Court, 142 Cal.App.3d 406, 413, 191 Cal.Rptr. 37, 41 (2d Dist.1983). Whereas coverage clauses are interpreted broadly to afford the greatest possible protection to the insured, exclusionary clauses are construed narrowly against the insurer. State Farm Mutual Automobile Insurance Co. v. Partridge, 10 Cal.3d 94, 101-02, 109 Cal.Rptr. 811, 816, 514 P.2d 123, 128 (1973); Crane v. State Farm Fire and Casualty Co., 5 Cal.3d 112, 115, 95 Cal.Rptr. 513, 514, 485 P.2d 1129, 1130 (1971). Exceptions to the performance of the basic underlying contract obligation must be clearly stated to apprise the insured of the effect of those exceptions. Gray v. Zurich Insurance Co., 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 107, 419 P.2d 168, 171 (1966). An insurer cannot avoid its primary duty to provide coverage by incorporating into the insurance contract an exclusionary clause that is ambiguous. State Farm Mutual Automobile Insurance Co. v. Jacober, 10 Cal.3d 193, 201, 110 Cal.Rptr. 1, 6, 514 P.2d 953, 958 (1973).

When interpreting an insurance policy, the intent of the parties and the reasonable expectations of the insured are considered. Holz Rubber Co., Inc. v. American Star Insurance Co., 14 Cal.3d 45, 57, 120 Cal.Rptr. 415, 421, 533 P.2d 1055, 1061 (1975). The best evidence of the intent of the parties is the policy language. City of Mill Valley v. Transamerica Insurance Co., 98 Cal.App.3d 595, 599, 159 Cal.Rptr. 635, 637 (1st Dist.1979). The CNA policy provisions clearly state that coverage is provided only for claims resulting from enumerated wrongful acts. Specifically excluded are claims arising from bodily injury, death, assault and battery.

A. Interpretation of "Arising From"

The meaning of "arising from" is central to this coverage dispute. Appellants urge that we interpret the phrase narrowly to find that CNA is obligated to provide coverage for the civil rights claims asserted against the City. They do not contend, however, that coverage should be provided for the wrongful death claims, since those claims obviously have their genesis in Drumgoole's death. Instead, appellants attempt to distinguish the civil rights and the wrongful death claims by employing a causation analysis applicable in concurrent cause cases. This analysis permits coverage under an insurance...