Rosen v. State Farm General Ins. Co.

• Decision Date: 12 June 2003
• Docket Number: No. S108308.,S108308.
• Citation: 30 Cal.4th 1070,70 P.3d 351,135 Cal.Rptr.2d 361
• Court: California Supreme Court
• Parties: George ROSEN, Plaintiff and Respondent, v. STATE FARM GENERAL INSURANCE COMPANY, Defendant and Appellant.

135 Cal.Rptr.2d 361

30 Cal.4th 1070

70 P.3d 351

George ROSEN, Plaintiff and Respondent, v. STATE FARM GENERAL INSURANCE COMPANY, Defendant and Appellant.

No. S108308.

Supreme Court of California.

June 12, 2003.

Robie & Matthai, James R. Robie, Michael J. O'Neill, Los Angeles; Dunn Koes, Pamela E. Dunn and Daniel J. Koes, Pasadena, for Defendant and Appellant.

Sonnenschein Nath & Rosenthal, Paul E.B. Glad and Cheryl Dyer Berg, San Francisco, for National Association of Independent

Insurers, United Services Automobile Association and Fireman's Fund-Insurance Company as Amici Curiae on behalf of Defendant and Appellant.

Deborah J. La Fetra, Sacramento, for Pacific Legal Foundation as Amicus Curiae on behalf of Defendant and Appellant.

Morton, Lulofs & Wood, William R. Morton and Karen D. Marcus, Richmond, for California State Automobile Association Inter Insurance Bureau as Amicus Curiae on behalf of Defendant and Appellant.

Horvitz & Levy, Barry R. Levy and Peter Abrahams, Encino, for Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange, American International Companies and Personal Insurance Federation of California as Amici Curiae on behalf of Defendant and Appellant.

Hancock Rothert & Bunshoft, William J. Baron and Kathryn C. Ashton, San Francisco, for London Market Insurers as Amicus Curiae on behalf of Defendant and Appellant.

Summers & Shives, Robert V. Closson and Pamela A. Mckay, San Diego, for Professional Association of Specialty Contractors as Amicus Curiae on behalf of Defendant and Appellant.

Wiley Rein & Fielding, Laura A. Foggan, John C. Yang, Ederlina Y. Co; Sinnott, Dito, Moura & Puebla, Randolph P. Sinnott and JoLynn M. Pollard for Complex Insurance Claims Litigation Association as Amicus Curiae on behalf of Defendant and Appellant.

Verboon, Milstein & Peter and Wayne S. Kreger for Plaintiff and Respondent.

Chipman Miles & Associates, Chipman Miles, Walnut Creek, Brian Miles and Joel M. Westbrook for United Policyholders as Amicus Curiae on behalf of Plaintiff and Respondent.

BROWN, J.

The insurance policy in this case defined "collapse" as "actually fallen down or fallen to pieces." However, sound public policy, the Court of Appeal concluded, requires coverage for imminent, as well as actual, collapse, lest dangerous conditions go uncorrected. By failing to apply the plain, unambiguous language of the policy, the Court of Appeal erred. (Civ.Code, § 1644.) "[W]e do not rewrite any provision of any contract, [including an insurance policy], for any purpose." (Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945, 968, 103 Cal.Rptr.2d 672, 16 P.3d 94 (Lloyd's of London).)

Factual And Procedural Background

Plaintiff submitted a claim to defendant, his homeowners insurance carrier, for the cost of repairing two decks attached to his home. Plaintiff repaired the decks upon the recommendation of a contractor who had discovered severe deterioration of the framing members supporting the decks. Plaintiff believed his decks were in a state of imminent collapse, entitling him to policy benefits.

Defendant denied plaintiff's claim on the ground, among others, that there had been no collapse of his decks within the meaning of the policy, in that its coverage was expressly restricted to actual collapse.

The "Losses Not Insured" section of plaintiffs homeowners policy provided that defendant did not insure for any loss to the dwelling caused by "collapse, except as specifically provided in SECTION I—ADDITIONAL COVERAGES, Collapse." That provision stated: "We insure only for direct physical loss to covered property involving the sudden, entire collapse of a building or any part of a building. [¶] Collapse means actually fallen down or fallen into pieces. It does not include settling, cracking, shrinking, bulging, expansion, sagging or bowing."

Plaintiff sued defendant for breach of contract and breach of the covenant of good faith and fair dealing. Defendant moved for summary judgment, arguing that plaintiff did not suffer a compensable loss because the decks did not actually collapse.¹ In his opposition to the motion, plaintiff argued there was a material factual issue as to whether his decks were in a state of imminent collapse. Plaintiff also argued that public policy required that the collapse provision of the policy be construed to provide coverage for imminent collapse. The trial court denied defendant's motion for summary judgment, concluding there were triable issues of material fact. The parties agreed to try the case to the court on the narrow issue of whether defendant owed plaintiff policy benefits due to the imminent collapse of his decks.

The trial court found for plaintiff. "The public policy of the State of California is ... that policyholders are entitled to coverage for collapse as long as the collapse is imminent, irrespective of policy language." The trial court declined to honor the policy's restriction of coverage because it would, in the court's view, "encourage property owners to place lives in danger in order to allow insurance carriers to delay payment of claims until the structure actually collapses...."

The Court of Appeal affirmed, holding that a homeowners policy that expressly defines the term collapse as actually fallen down or fallen into pieces must, nevertheless, for reasons of public policy, be construed as providing coverage for imminent collapse.

We reverse.

DISCUSSION

"`[Interpretation of an insurance policy is a question of law.' (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18, 44 Cal.Rptr.2d 370, 900 P.2d 619 (Waller).) `While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.' (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545 (Bank of the West).) Thus, `the mutual intention of the parties at the time the contract is formed governs interpretation.' (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 821, 274 Cal.Rptr. 820, 799 P.2d 1253 (AIU Ins.).) If possible, we infer this intent solely from the written provisions of the insurance policy. (See id. at p. 822, 274 Cal.Rptr. 820, 799 P.2d 1253.) If the policy language `is clear and explicit, it governs.' (Bank of the West, supra, 2 Cal.4th at p. 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545.)" (Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th 1109, 1115, 90 Cal.Rptr.2d 647, 988 P.2d 568.)

As the Court of Appeal acknowledged, the policy language here was clear and explicit. "The plain language of the collapse provision in Rosen's homeowners policy is unambiguous, in that it is susceptible only of one reasonable interpretation—actual collapse of a building or a portion thereof is a prerequisite to an entitlement to policy benefits. By defining the term `collapse' to mean `actually fallen down or fallen into pieces,' State Farm effectively removed any ambiguity in the term collapse. Under no stretch of the imagination does actually mean imminently."

The lack of ambiguity in the collapse provision here distinguishes this case, the Court of Appeal pointed out, from the case upon which the trial court principally relied—Doheny West Homeowners' Assn. v. American Guarantee & Liability Ins. Co. (1997) 60 Cal.App.4th 400, 70 Cal.Rptr.2d 260 (Doheny West).

In Doheny West, supra, 60 Cal.App.4th at pages 402-403, 70 Cal.Rptr.2d 260, the homeowners association of a large condominium complex sued its property insurer for breach of contract and bad faith, alleging that the parking structure of the complex, as well as the swimming pool and associated facilities built above the parking structure, had been in a state of imminent collapse, and that the insurer had wrongfully denied a claim for the necessary repairs the association had made to the structure.

Unlike the policy in this case, the Doheny West policy did not specify that the reach of the term collapse was restricted to actual collapse. Instead, the Doheny West policy excluded coverage for collapse except "`for loss or damage caused by or resulting from risks of direct physical loss involving collapse of a building or any part of a building'" resulting from specified causes. (Doheny West, supra, 60 Cal. App.4th at p. 402, 70 Cal.Rptr.2d 260.) While the Doheny West trial court held that this language embraced imminent as well as actual collapse, the trial court found for the defendant insurer on the ground the plaintiff homeowners association had not met its burden of proving that any part of the building was in a state of imminent collapse. (Id. at p. 403, 70 Cal. Rptr.2d 260.)

The Court of Appeal affirmed. Noting that its task was not merely to construe the word collapse in isolation, but rather to construe the total coverage clause, the Court of Appeal held that the coverage clause before it "cannot be said to be clear, explicit, and unambiguous, and thus must be interpreted to protect the objectively reasonable expectations of the insured. [Citation.]" (Doheny West, supra, 60 Cal. App.4th at p. 405, 70 Cal.Rptr.2d 260.) With these principles in mind, the Court of Appeal stated: "It is undisputed that the clause covers `collapse of a building,' that is, that there is coverage if a building falls down or caves in. However, the clause does not limit itself to `collapse of a building,' but covers `risk of loss,' that is, the threat of loss. Further, on its terms it covers not only loss resulting from an actual collapse, but loss `involving' collapse. Thus, with the phrases `risk of loss,' and `involving collapse,' the policy broadens coverage beyond actual collapse." (Ibid., fn. omitted.)

However, the Court of Appeal rejected the plaintiff's contention that the policy phrases in question "broaden[ed] coverage to the extent that the clause covers `substantial impairment of structural integrity.' " (Doheny West, supra, 60 Cal.App.4th at p. 405, 70 Cal.Rptr.2d...