Maples v. Aetna Cas. & Surety Co.

• Decision Date: 09 August 1978
• Citation: 83 Cal.App.3d 641,148 Cal.Rptr. 80
• Court: California Court of Appeals Court of Appeals
• Parties: Wayne R. MAPLES, Plaintiff and Respondent, v. AETNA CASUALTY AND SURETY COMPANY, Defendant and Appellant. Civ. 41409.

Page 80

148 Cal.Rptr. 80

83 Cal.App.3d 641

Wayne R. MAPLES, Plaintiff and Respondent, v. AETNA CASUALTY AND SURETY COMPANY, Defendant and Appellant.

Civ. 41409.

Court of Appeal, First District, Division 3, California.

Aug. 9, 1978.

Sedgwick, Detert, Moran & Arnold, Scott Conley, Stephen Jones, San Francisco, for defendant and appellant.

David J. Crane, Eureka, for plaintiff and respondent.

WHITE, Presiding Justice.

This is an appeal from the granting of summary judgment in favor of the plaintiff in a declaratory relief action. The action sought a declaration that the plaintiff was covered by insurance for a fire occurring after termination of the policy where the boiler installation work allegedly causing the fire occurred during the policy period. The learned trial judge, Honorable W. G. Watson, Jr., declared that there was coverage, reasoning that the plaintiff's cause and circumstances "nearly coincide" with those existing in Sylla v. United States Fid. & Guar. Co. (1976) 54 Cal.App.3d 895, 127 Cal.Rptr. 38, thereby rejecting the authority of Remmer v. Glens Falls Indem. Co. (1956) 140 Cal.App.2d 84, 295 P.2d 19 and Tijsseling v. General Acc., etc., Assur. Corp. (1976) 55 Cal.App.3d 623, 127 Cal.Rptr. 681. Declining to follow Sylla and accepting Remmer and Tijsseling as controlling, we will reverse the judgment. We hold the view in the instant case that the terminology "accidents which occur during the policy period" is not ambiguous as used in the parties' comprehensive liability policy and further hold the phrase refers not to the time the wrongful act was committed, but the time when the complaining party was actually damaged.

On August 31, 1976 respondent Wayne Maples, doing business as Wayne Maples Plumbing (hereinafter "Maples"), filed a complaint for declaratory relief against appellant Aetna Casualty and Surety Company (hereinafter "Aetna"). The complaint alleged that Maples was insured by Aetna from August 1, 1966 to August 1, 1969; that between May 31, 1967 and August of 1967 Maples installed a gas-fired low pressure boiler for heating the residence of Dr. Robert L. Devine in Eureka; that on or about May 2, 1973 an accidental fire damaged Dr. Devine's premises, as a result of which Dr. Devine brought suit against Maples, alleging negligent installation of the boiler and that it caused the fire resulting in $51,000 damage; that Maples tendered the defense to Aetna but Aetna refused to defend or indemnify. The complaint sought a declaration that Aetna had a duty to defend and to indemnify Maples in the Devine action. Attached were the insurance documents under which Maples claimed coverage by Aetna. The following are the pertinent policy provisions: "Coverage D--Property Damage Liability--Except Automobile.

"To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident.

"II. Defense, Settlement, Supplementary Payments

"With respect to such insurance as is afforded by this policy, the Company shall:

"(a) defend any suit against the Insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; . . .

". . .

"IV. Policy Period Territory

"This policy applies only to accidents which occur during the policy period within the United States of America, its territories or possessions, or Canada. . . ."

On October 4, 1976 Aetna answered, denying the allegations and raising the affirmative defense that the policy covered only accidents occurring during the policy period, which expired August 1, 1969, almost four years before the fire. ¹

Maples moved for summary judgment, supporting the motion with affidavits detailing the above facts and with an affidavit by Wayne Maples stating: "That at the time I purchased the said comprehensive liability policy No. 05 ALO 47710CC obtaining coverage for operations, completed projects and contractual liability, I reasonably expected that said insurance would insure me against any negligent acts or omissions by my agents and employees during the term of said insurance whether losses occurred during said term or thereafter."

On February 7, 1977, the court granted the motion for summary judgment. Judgment in favor of Maples was entered February 28, 1977.

1. Did the trial court properly find the case controlled by Sylla v. United States Fid. & Guar. Co. based upon ambiguity in the language of the policy and the principle that such ambiguity should be resolved in favor of coverage?

Stated simply, the primary issue presented to the trial court and raised on this appeal is whether the coverage by Aetna extended to injuries occurring subsequent to the policy period where the acts leading to the injuries occurred during the time when the policy was in effect. The answer is No coverage dictated by the general rule, well established, "that the time of the occurrence of an Accident within the meaning of an indemnity policy is not the time the wrongful act was committed, but the time when the complaining party was Actually damaged." (Remmer v. Glens Falls Indem. Co., supra, 140 Cal.App.2d 84, 88, 295 P.2d 19, 21 emphasis added.) However, the trial court, relying upon Sylla v. United States Fid. & Guar. Co., supra, 54 Cal.App.3d 895, 127 Cal.Rptr. 38, concluded that coverage did extend to such injuries.

In Sylla, the insurance policy covering a used car dealer provided coverage for damages " 'caused by an occurrence and arising out of garage operations.' " (Id., at p. 897, 127 Cal.Rptr. at p. 38.) The policy defined " 'garage' " as " 'an automobile sales agency, repair shop, . . .' " and defined " '(o)ccurence' " to mean " 'an accident, . . . which results, during the policy period, in bodily injury or property damage. . . .' " (Id., at p. 897, 127 Cal.Rptr. at p. 38.) A car sold during the policy period was involved in an accident after the policy elapsed, and it was alleged that the accident was caused by a defective condition or negligence on the part of the dealer. The trial court sustained a demurrer to the insured's complaint seeking a declaration that the damages were covered by his policy with the defendant. On appeal the Sylla court reversed, finding that the terms " 'accident' " and " 'occurrence' " did not sufficiently explain whether protection was for future injury arising out of acts within the policy period or was only for injury occurring during the policy term. The failure to further define " 'accident' " created an uncertainty which the Sylla court found should be resolved in favor of coverage, reasoning that the insured "had every right to expect coverage for losses proximately resulting from his repair and sale of the automobile at a time the policy was in effect." (Id., at p. 900, 127 Cal.Rptr. at p. 40.)

The decision in Oil Base, Inc. v. Continental Cas. Co. (1969) 271 Cal.App.2d 378, 76 Cal.Rptr. 594, was quoted extensively by the Sylla court to support its conclusion. Besides Oil Base, the Sylla court relied only upon its own interpretation of the insurance contract and upon the general principle, enunciated in Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 269-270, 54 Cal.Rptr. 104, 419 P.2d 168, that ambiguities should be resolved in favor of the reasonable expectations of the insured.

In Oil Base, the question was whether a policy which, by its terms covered only " 'accidents which occur . . . within the United States of America, its territories or possessions, or Canada' " (271 Cal.App.2d at p. 380, 76 Cal.Rptr. at p. 595) applied to a fire occurring in Venezuela, allegedly caused by the negligent manufacture in Los Angeles of oil-base drilling mud which spontaneously ignited in a Venezuela warehouse. The Oil Base court examined cases both from California and from other jurisdictions and concluded that the word " 'accident' " as used in insurance policies, "is susceptible of several meanings" (271 Cal.App.2d 378, 387-388, 76 Cal.Rptr. 594) and that the insurer's choice not to further define the term required application of the rule of Gray v. Zurich Insurance Co., supra.

In our view Sylla and Oil Base are in direct conflict with other California cases and with cited cases from other jurisdictions. Respondent has cited no case from California or from another jurisdiction taking the position taken by the Sylla and Oil Base courts.

The earliest discovered case in this conflicting line of authority is Tulare County Power Co. v. Pacific Surety Co. (1919) 43 Cal.App. 315, 325, 185 P. 399. There the question was whether the insurer could indemnify for the death of a power purchaser occurring during the policy period, but caused by contact with wires installed three months before the policy period began. The policy provision covered " 'injuries, including death therefrom, accidentally suffered, . . . during the period of this policy, . . . when such injuries or death result from accident occurring within the period hereinafter mentioned.' " (Id at p. 325, 185 P. at p. 404.) The Tulare court found that the accident occurred when contact with the wires occurred, observing that it was "entirely immaterial that the installation of the wires which caused the accident occurred two months prior to the issuance of the policy." (Id., at p. 325, 185 P. at p. 404.) ²

A similar result was reached in Protex-A-Kar Co. v. Hartford Acc., etc., Co. (1951) 102 Cal.App.2d 408, 227 P.2d 509, where antifreeze sold during the policy periods caused damages after the policies were terminated. The various policies were to apply only to " 'accidents which occur during the policy period . . .' " (At p. 411, 227 P.2d at p. 511.) Without citation to authority the court concluded that the policies were not ambiguous and that coverage applied only to damages occurring during the policy periods, rejecting the...