Modern Development Co. v. Navigators

Decision Date31 July 2003
Docket NumberNo. B157874.,B157874.
Citation111 Cal.App.4th 932,4 Cal.Rptr.3d 528
CourtCalifornia Court of Appeals Court of Appeals
PartiesMODERN DEVELOPMENT COMPANY, Plaintiff and Appellant, v. NAVIGATORS INSURANCE COMPANY, Defendant and Respondent.

Burnham Brown, Clark J. Burnham and Alison F. Greene, Oakland, for Defendant and Respondent.



Modern Development Company (Modern) appeals from the grant of summary judgment for respondent, Navigators Insurance Company (Navigators), in a lawsuit arising from an insurance coverage dispute. Modern contends that Navigators had a duty to defend in a lawsuit brought by a disabled man for physical and emotional damages resulting from Modern's alleged failure to comply with the Americans with Disabilities Act and other similar California statutes. The trial court agreed with Navigators' contention there was no "occurrence" that triggered coverage under the insurance policy. We affirm.


Modern is a California Limited Partnership that owns and operates the Paramount Swap Meet. The Swap Meet is an open-air marketplace operated at the site of a former drive-in movie theater. Navigators issued Modern a commercial general liability policy No. 98G110630 for the period of February 1, 1998 through February 1, 1999 (the Policy.) The Swap Meet is a named insured covered under the Policy. The Policy insured Modern for up to $1 million for amounts that it was legally obligated to pay.

On or about December 7, 1998, Mr. Juan Moreno filed a complaint1 against Modern in the United States District Court of California for violations of the Americans with Disabilities Act of 1990(ADA), 42 U.S.C. § 12101, and related California statutes. The complaint set forth the following causes of action: 1) violation of the ADA; 2) injunctive relief for denial of full and equal access to a person with physical disabilities in a public facility; no accessible public facilities in a public Swap Meet (Health & Safety Code § 19955 et seq.; Civil Code § 55); 3) violation of California Disabled Persons Act (Civ.Code §§ 542 et. seq, denial of equal access to persons with physical disabilities (Civ.Code §§ 54 et. seq.); 4) violations of Unruh Civil Rights Act (Civ.Code § 51 et. seq.); and, 5) violations of Business and Professions Code sections 17200 et. seq. Moreno's complaint contained the following factual allegations:

(1) The [Swap Meet] facility has undergone "construction work" and "Modernifications" which subject the Swap Meet to the handicapped access requirements set forth by the Americans with Disabilities Act Access Guidelines and the California Health and Safety Code.

(2) The [Swap Meet] failed to remove architectural barriers and to otherwise comply with the accessibility requirements set forth by the Americans with Disabilities Access Guidelines (ADAAG) and the California Health and Safety Code.

(3) Modern Development had reason to know of the accessibility requirements references above and "intentionally" failed to "rectify the situation."

(4) In August 1998, when Mr. Moreno visited the [Swap Meet], the public restroom facilities were configured in such a way that they were inaccessible to Mr. Moreno in his wheelchair.

(5) As a result of the inaccessible facilities, Mr. Moreno was humiliated, embarrassed and frustrated, suffering serious emotional and physical injuries. (Italics added.)

On or about February 17, 1999, Modern tendered the defense of the Moreno action to Navigators. On or about March 26, 1999, Navigators declined to defend or indemnify Modern on the grounds that the complaint did not allege any "bodily injury" or "property damage" caused by an "occurrence." Modern subsequently settled the Moreno action for $9,750. Modern claims that it incurred a minimum of $7,600 in attorneys' fees defending the action.

On March 27, 2000, Modern filed a complaint for damages in the Los Angeles Superior Court alleging breach of contract, breach of the covenant of good faith and fair dealing, injunctive relief and restitution pursuant to California Business and Professions Code section 17200 et seq. The complaint sought compensatory damages, prejudgment interest, attorney fees and punitive damages. On or about June 29, 2000, Navigator filed an answer to the complaint.

The parties filed cross motions for summary judgment and/or summary adjudication. The motions addressed the legal issue of whether Navigator had a duty to defend Modern in the Moreno lawsuit. The motions were heard in the trial court on January 10, 2002. The trial court granted Navigator's motion for summary judgment Making its ruling, the court found:

"As for the defendant's motion for summary judgment, the Court finds that it has merit and grants the motion in favor of the defendant. The Court finds that there is no potential for coverage. Further, that the underlying Moreno action was not a covered claim. The Court finds that there was no "occurrence" as that term is defined in the CGL policy and as interpreted by the applicable case law.

"Finding a no occurrence, there is no duty to defend and thus there is no triable issue of fact. Finding no breach of contract, there can be no breach of the covenant of good faith and fair dealing and no cause for injunctive relief and restitution."

The court also found that the underlying Moreno lawsuit failed to allege any actual physical injury.3 The court declined to rule on Modern's motion for summary judgment, stating that the motion was moot.

Judgment for Navigator was entered on March 15, 2002. Notice of entry of judgment was filed on April 2, 2002. A timely notice of appeal was filed the same date.


The sole issue raised by this appeal is whether Navigators had a duty to defend Modern Development in the Moreno action. The trial court found there was no occurrence within the definition of "occurrence" set forth in the Policy. Consequently, there was no potential for coverage and therefore no duty to defend.

Modern's contention is that Navigators had a duty because: 1) the Moreno action properly alleged "bodily injury;" and, 2) the Moreno complaint properly alleged bodily injury due to an "occurrence."


Summary judgments are reviewed de novo. (Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 464, fn. 4, 63 Cal.Rptr.2d 291, 936 P.2d 70; Scheiding v. Dinwiddie Const. Co. (1999) 69 Cal.App.4th 64, 69, 81 Cal.Rptr.2d 360; Vann v. Travelers Companies (1995) 39 Cal.App.4th 1610, 1614, 46 Cal.Rptr.2d 617; Donchin v. Guerrero (1995) 34 Cal.App.4th 1832, 1837, 41 Cal.Rptr.2d 192.) In doing so, we examine the facts presented to the trial court and independently determine their effect as a matter of law. (Donchin, supra, at p. 1837, 41 Cal.Rptr.2d 192.) We must affirm the judgment if it is correct under any theory of law applicable to the case. (Lucas v. Pollock (1992) 7 Cal.App.4th 668, 673, 8 Cal.Rptr.2d 918.) "Although the trial court may grant summary judgment on one basis, this court may affirm the judgment under another[;] ... it reviews the ruling, not the rationale." (Salazar v. Southern Cal. Gas Co. (1997) 54 Cal.App.4th 1370, 1376, 63 Cal.Rptr.2d 522.)

In reviewing insurance policies, we are also guided by the rule that "[i]nterpretation of an insurance policy is primarily a judicial function. When the trial court's interpretation did not depend upon conflicting extrinsic evidence, the reviewing court makes its own independent determination of the policy's meaning. [Citations.]" (Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co. (1996) 45 Cal.App.4th 1, 35-36, 52 Cal.Rptr.2d 690.) Insurance policies are contracts subject to ordinary rules of contract interpretation. (Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th 1109, 1115, 90 Cal.Rptr.2d 647, 988 P.2d 568.) Our goal is to give effect to the mutual intention of the parties when they entered into the contract. (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 763, 110 Cal.Rptr.2d 844, 28 P.3d 889.) Whenever possible, we determine the parties' intent solely from the terms of the policy, giving those terms their ordinary and popular meanings, unless the parties use terms in a technical or special sense. (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 821-822, 274 Cal.Rptr. 820, 799 P.2d 1253.)

When assessing the validity of a claim that an insurer owes a duty to defend we review the allegations of the underlying action and extrinsic evidence, recognizing that the third party plaintiff cannot be the arbiter of coverage. (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 296, 24 Cal.Rptr.2d 467, 861 P.2d 1153 (Montrose), citing Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 276, 54 Cal.Rptr. 104, 419 P.2d 168 (Gray).)

Additionally, in determining whether allegations in a particular complaint give rise to coverage under a comprehensive general liability policy, courts must consider both the occurrence language in the policy, and the endorsements or exclusions affecting coverage, if any, included in the policy terms. (Collin v. American Empire Ins. Co. (1994) 21 Cal.App.4th 787 at p. 803, 26 Cal.Rptr.2d 391.)

Navigators Commercial General Liability Policy

Customarily, third party liability policies provide in some manner that the insurer is liable only for accidental events. The Policy issued by Navigators contained the following provisions:

"1. Insuring Agreement"

"(a) We will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies. We will have the right and duty to defend any `suit' seeking those damages

"[¶] ... [¶]

"(b) This insurance applies to `bodily injury' and `property damage' only if:

"(1)The `bodily injury' or...

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