Safeco Ins. Co. of America v. Robert S.

• Decision Date: 20 August 2001
• Docket Number: No. S078199.,S078199.
• Citation: 28 P.3d 889,110 Cal.Rptr.2d 844,26 Cal.4th 758
• Parties: SAFECO INSURANCE COMPANY OF AMERICA, Plaintiff and Appellant, v. ROBERT S. et al., Defendants and Respondents.
• Court: California Supreme Court

110 Cal.Rptr.2d 844

26 Cal.4th 758

28 P.3d 889

SAFECO INSURANCE COMPANY OF AMERICA, Plaintiff and Appellant, v. ROBERT S. et al., Defendants and Respondents.

No. S078199.

Supreme Court of California.

August 20, 2001.

LaTorraca and Goettsch, Raymond H. Goettsch and Scott K. Murch, Long Beach, for Plaintiff and Appellant.

Greines, Martin, Stein & Richland, Irving H. Greines and Edward L. Xanders, Beverly Hills, for Farmers Insurance Exchange, Truck Insurance Exchange and Fire Insurance Exchange as Amici Curiae on behalf of Plaintiff and Appellant.

Horvitz & Levy, David S. Ettinger, H. Thomas Watson and Andrea M. Gauthier, Encino, for 20th Century Insurance Company as Amicus Curiae on behalf of Plaintiff and Appellant.

Howard J. Fox, Oak Park, for Defendants and Respondents Robert S., Kelly S., Christy Mitchell and Timothy Mitchell.

Law Offices of Kapp L. Johnson and Kapp L. Johnson, Granada Hills, for Defendant and Respondent Velvet S.

Steven W. Murray, Encino, for Rita and Virgil Palub as Amici Curiae on behalf of Defendants and Respondents.

Law Offices of Ian Herzog, Evan D. Marshall, Ian Herzog, Santa Monica; Mark B. Robinson, Jr., Encino; Roland Wrinkle, Woodland Hills; Harvey R. Levine, San Diego; Robert Steinberg, Los Angeles; Thomas G. Stolpman, Long Beach; William D. Turley, San Diego; Mary E. Alexander, Los Angeles; Joseph Harbison III, Sacramento; Bruce Broilett; Wayne McClean, Woodland Hills; Leonard Sacks, Granada Hills, Tony Tanke, Redwood City; Lea Ann Tratten; Steven J. Keifield; David Rosen; Moses Lebovits, Los Angeles; Douglas Devries Sacramento; Christine Spagnoli; James Sturdevant, San Francisco; Daniel U. Smith; Deborah David, Los Angeles; Lawrence Drivon; Thor Emblem, Escondido; Rick Simons; and David Casey, Jr., San Diego, for Consumer Attorneys of California as Amicus Curiae on behalf of Defendants and Respondents.

KENNARD, J.

When a homeowners policy expressly covers accidental bodily injury but excludes coverage for bodily injury arising out of an "illegal act," is the insurer obligated to defend and indemnify its insureds in a wrongful death action brought against them after their teenage son accidentally shot and killed his friend? We conclude that, in the context of the policy as a whole, the insurer does have such an obligation.

I

On March 10, 1995, 16-year-old Kelly S. and some of his friends were at Kelly's home when Kelly found a .22-caliber Beretta handgun in his mother's coat pocket. Kelly's father had taught him how to handle a 9-millimeter Beretta. Taking the same precautions he would have taken to unload a 9-millimeter Beretta, Kelly removed the clip from the handle of the .22-caliber Beretta, placed the clip on a table, and pulled back the slide on the gun. Believing the gun to be unloaded, Kelly pulled the trigger. The gun fired, killing his friend, Christopher Mitchell.

A petition alleging Kelly's commission of involuntary manslaughter, a felony (Pen. Code, § 192, subd. (b)), was filed in juvenile court (Welf. & Inst.Code, § 602). The court sustained the petition, made Kelly a ward of the court, and placed him on probation.

Timothy and Christy Mitchell, the parents of Christopher, brought a wrongful death action against Kelly and his parents, who tendered defense of the action to Safeco Insurance Company of America (Safeco) under their homeowners insurance policy. Safeco undertook the defense under a reservation of rights.

Safeco then brought this action in superior court seeking a declaration that it had no duty to defend or indemnify its insureds because the policy excluded coverage for an "illegal act." Named as defendants were the insureds and the Mitchells. Safeco unsuccessfully moved for summary judgment, contending that the accidental killing of Christopher fell within the policy exclusion for an "illegal act."

Thereafter Christy Mitchell, joined by the insureds, moved for summary judgment contending that Safeco as a matter of law had a duty to defend and indemnify. The trial court granted the motion, ruling that the policy's "illegal act" exclusion could reasonably be interpreted as excluding coverage only for an intentional illegal act. The court found it was "undisputed that Kelly S[.] did not intend to cause harm to Mitchell's son [and] that [Kelly] did not intend to commit an unlawful or `illegal' act." Accordingly, the court ruled that the Mitchells' wrongful death claim was potentially covered by the insureds' policy, giving rise to Safeco's duty to defend. Safeco appealed.

The Court of Appeal reversed the trial court's judgment. Relying on a dictionary definition of "illegal" as meaning "not according to or authorized by law; unlawful," the Court of Appeal concluded that the illegal act exclusion in the policy precluded coverage for any act in violation of civil or criminal law, whether or not the person committing the act intended to cause harm or to violate the law, but that it did not exclude coverage for ordinary civil negligence. Applying this understanding of the scope of the policy's illegal act exclusion, the court held that the policy did not provide coverage for an act causing death that resulted in a juvenile court adjudication of involuntary manslaughter.

We granted the separate petitions for review filed by the insureds and Christy Mitchell.

II

The homeowners policy at issue here covered the period June 30, 1994, through June 30, 1995. The accidental shooting occurred in March 1995. Under the terms of the policy, Kelly and his parents are insureds.

Relevant here are these policy provisions: Safeco agreed to defend and indemnify the insureds in the event of claims brought against any insured for bodily injury caused by "an occurrence," which the policy defined as an accident resulting in bodily injury during the policy period. Excluded from coverage was liability for bodily injury "arising out of any illegal act committed by or at the direction of an insured." (Italics added.) The policy did not define the term "illegal act."

We now turn to the task of stating the controlling principles of insurance contract interpretation and applying them to the policy here.

III

Insurance policies are contracts and therefore subject to the rules of construction governing contracts. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545.) The goal of contractual interpretation is to determine and give effect to the mutual intention of the parties. (Civ. Code, § 1636; Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co. (1993) 5 Cal.4th 854, 867, 21 Cal.Rptr.2d 691, 855 P.2d 1263.)

A policy provision is ambiguous when it can have two or more reasonable constructions. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18, 44 Cal.Rptr.2d 370, 900 P.2d 619.) An ambiguity "`is resolved by interpreting the ambiguous provisions in the sense the promisor (i.e., the insurer) believed the promisee understood them at the time of formation. [Citation.] If application of this rule does not eliminate the ambiguity, ambiguous language is construed against the party who caused the uncertainty to exist. [Citation.]' [Citation.] `This rule, as applied to a promise of coverage in an insurance policy, protects not the subjective beliefs of the insurer but, rather, "the objectively reasonable expectations of the insured."'" (Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 667, 42 Cal. Rptr.2d 324, 913 P.2d 878.) "Any ambiguous terms are resolved in the insureds' favor, consistent with the insureds' reasonable expectations." (Kazi v. State Farm Fire & Casualty Co. (2001) 24 Cal.4th 871, 879, 103 Cal.Rptr.2d 1, 15 P.3d 223.)

The homeowners policy here excluded coverage "arising out of any illegal act committed by or at the direction of an insured." (Italics added.) The phrase "illegal act" is susceptible of two reasonable meanings. As mentioned earlier, the Court of Appeal, relying on a dictionary definition, construed the term broadly, as meaning any act prohibited by law. But the term can also be interpreted more narrowly as meaning a violation of criminal law. This is the construction Safeco urges us to adopt. Certain thesauruses do treat the term "illegal" as synonymous with "criminal." (See, e.g., Burton, Legal Thesaurus (1980) p. 257 [stating that "against the law" and "criminal" are synonyms of "illegal"]; Webster's Collegiate Thesaurus (1976) p. 414 [stating that "criminal" is a synonym of "illegal"].) If we were to adopt this meaning in the context of the policy here, we would have to treat the policy's clause excluding coverage for an "illegal act" as the equivalent of a clause excluding coverage for a "criminal act."

The policy before us, however, contains not a criminal act exclusion but an illegal act exclusion. Had Safeco wanted to exclude criminal acts from coverage, it could have easily done so. Insurers commonly insert an exclusion for criminal acts in their liability policies. (Croskey & Kaufman, Cal. Practice Guide: Insurance Litigation (The Rutter Group 2000) ¶¶ 7:331.5, 7:2256, pp. 7A-86, 71-23 (rev. # 1, 2000).) Because Safeco chose not to have a criminal act exclusion, instead opting for an illegal act exclusion, we cannot read into the policy what Safeco has omitted. To do so would violate the fundamental principle that in interpreting contracts, including insurance contracts, courts are not to insert what has been omitted. (Code Civ. Proc., § 1858; Jensen v. Traders & General Ins. Co. (1959) 52 Cal.2d 786, 790, 345 P.2d 1; Jacobson v. Simmons Real Estate (1994) 23 Cal. App.4th 1285, 1294, 28 Cal.Rptr.2d 699.)¹ We now consider the Court of Appeal's construction of the term "illegal" as meaning violation of any law, whether civil or criminal. (See, e.g., Webster's 9th New Collegiate Diet. (1989) p. 599 ["not according to or authorized by law; unlawful"]; Webster's New World Diet. (2d college ed.1982) p. 699 ["prohibited by law; against the law;...