State Farm Fire & Casualty Co. v. Superior Court

• Decision Date: 26 June 2008
• Docket Number: No. B202768.,B202768.
• Court: California Court of Appeals Court of Appeals
• Parties: STATE FARM FIRE AND CASUALTY CO. et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; JOSHUA WRIGHT, Real Party in Interest.

164 Cal.App.4th 317

78 Cal. Rptr. 3d 828

STATE FARM FIRE AND CASUALTY CO. et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent JOSHUA WRIGHT, Real Party in Interest.

No. B202768.

Court of Appeals of California, Second District, Division Three.

June 26, 2008.

As modified July 9, 2008.

Horvitz & Levy, Peter Abrahams, Mitchell C. Tilner; Crandall, Wade & Lowe, William R. Lowe and Curtis L. Metzgar for Petitioners.

No appearance for Respondent.

Blumberg Law Corporation, Ave Buchwald; Law Offices of Moss, Hovden & Lindsay and Del D. Hovden for Real Party in Interest.

OPINION

ALDRICH, J.

INTRODUCTION

If an insured throws someone into a swimming pool intending to get the other person wet, but by mistake does not throw hard enough and so the latter lands on the pool's cement step and suffers injuries, is the incident an "accident" within the meaning of insurance law? We conclude it is.

In an action for damages for personal injuries and declaratory relief brought by real party in interest Joshua Wright against Jeffrey Lint and his insurer, State Farm Fire and Casualty Co. and State Farm General Insurance Co. (together State Farm), the trial court ruled that State Farm owed a duty to defend Lint. In so ruling, the trial court stated that "the evidence is pretty clear that [Lint] didn't intend to harm [Wright]." State Farm filed a petition for writ of mandate seeking an order directing the trial court to vacate its order and enter instead a judgment declaring that State Farm has no duty to defend Lint against Wright. State Farm reasons that Lint's conduct giving rise to Wright's lawsuit was deliberate and so it was not an accident, irrespective of whether Lint intended the injury. We deny the petition.

FACTUAL AND PROCEDURAL BACKGROUND

The following facts are stipulated: Lint, then 21 years old, resided with his parents. Wright was 23 years old. Lint was bigger than Wright.

Both men attended a party. During the evening, the two began to argue. After an exchange of words, Wright went outside. Lint followed Wright, grabbed him, picked him up, and threw him into the shallow end of the swimming pool. Wright landed on the pool's concrete step, which was not covered by water. Wright sustained a fractured right clavicle and was hospitalized for approximately four days.

Lint apologized to Wright. Wright reported that, after the incident, Lint told him that Lint had not meant to hurt him. Wright characterized the incident as "horse-playing around."

Lint was arrested for the swimming pool incident and entered a nolo contendere plea to a charge of misdemeanor battery (Pen. Code, § 242).

Lint's parents had a valid homeowners insurance policy issued by State Farm (policy No. 71-NE-1108-6). Lint was an insured under this policy. The policy covered "damages because of bodily injury ... caused by an occurrence ...." An "occurrence" was defined in the policy as "an accident, including exposure to conditions, which results in: [¶] a. bodily injury; or [¶] b. property damage ...." The policy excluded from coverage, "[B]odily injury ... [¶] (1) which is either expected or intended by the insured; or [¶] (2) which is the result of willful and malicious acts of the insured."¹

Wright's counsel notified State Farm of a claim arising out of the incident. In a recorded statement obtained by State Farm, Lint said, "if I wanted to hurt this guy ... I would have just hit him, but I didn't want to hurt him."

State Farm notified the Lints that it was reserving its right to deny a defense and indemnity. In November 2002, State Farm informed Lint that it was denying a defense and indemnity on several grounds, among which was that "The claim against you does not meet the insuring agreement in the policy, as the actions do not arise out of an accident. Also, the policy specifically excludes damages which are either expected or intended by the insured or the result of willful and malicious conduct."

Wright filed his complaint against Lint, alleging negligence among other things. In his deposition, Lint testified that when he followed Wright outside, he did not plan to "kick his ass" and did not intend to hurt Wright. Lint intended only to talk to Wright. Lint threw Wright in the pool "[j]ust to get him wet," "[j]ust a party joke," or "horseplaying," "something to laugh about."

The Lints again tendered the defense to Wright's lawsuit to State Farm and included a copy of Lint's deposition transcript. State Farm again denied a defense and indemnity on the ground that Wright's injuries were not caused by an occurrence or an accident.

Lint filed a declaratory relief action against State Farm (Lint v. State Farm Fire & Casualty Co. (Super. Ct. L.A. County, 2004, No. VC040632 (cause dism.)); hereinafter the declaratory relief action). Therein, Lint sought a declaration that the State Farm policy covered his acts in that his acts "were either negligent, less than willful, or, if found to be willful, were not done with a pre-conceived design to inflict injury, or was not intended or expected to cause bodily harm, and/or that [he] did not know or believe that his conduct was substantially certain or highly likely to result in the kind of damage that occurred."

Lint and Wright stipulated to entry of judgment in Lint's declaratory relief action. Thereunder, Lint agreed to pay Wright and his attorneys $60,000 and assigned all of his rights against State Farm to Wright.

Wright then amended his complaint to delete all his causes of action against Lint except for one sounding in negligence, and to allege causes of action against State Farm for declaratory relief and breach of contract. In particular, Wright's complaint alleged that "On or about December 27, 2001 Defendants, and each of them, negligently, carelessly and recklessly touched plaintiff during horseplay while attempting to wrestle him ...."

The trial court consolidated Wright's action with the declaratory relief action and trifurcated the issues. First, the court would resolve the question of whether State Farm owed a duty to defend Lint. At the close of trial of phase one, the court ruled that State Farm owed a duty to defend. The court recited the rule that when an injury is an unexpected or unintended consequence of the insured's conduct, it may be characterized as an accident for which coverage exists. (Interinsurance Exchange v. Flores (1996) 45 Cal.App.4th 661, 669 (Flores).) The court found that Lint did not intend to cause any injury to Wright; he only wanted to get Wright wet. Thus, the injury was neither expected nor intended. After this ruling was reduced to a statement of decision and final order, State Farm brought this writ proceeding.

DISCUSSION

1. Standard of review

The facts are undisputed. Thus, the interpretation of the State Farm insurance policy is a question of law, which we review de novo. (Bluehawk v. Continental Ins. Co. (1996) 50 Cal.App.4th 1126, 1131 .)

(1) Under the rules of policy interpretation, we look to the language of the contract to ascertain its plain meaning "or the meaning a layperson would ordinarily attach to it. [Citations.]" (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18 [44 Cal.Rptr.2d 370, 900 P.2d 619].) We give effect to the mutual intent of the parties at the time the contract was formed, inferable if possible, from the written policy. (Ibid., citing Civ. Code, §§ 1636, 1639.) Our interpretation is controlled by "`[t]he "clear and explicit" meaning of these provisions, interpreted in their "ordinary and popular sense," unless "used by the parties in a technical sense or a special meaning is given to them by usage" [citation] ....'" (Waller v. Truck Ins. Exchange, Inc., supra, at p. 18.)

(2) "[C]overage clauses are broadly construed in favor of the insured and express exclusions are strictly construed against the insurer ...." (Flores, supra, 45 Cal.App.4th at p. 670.) In a declaratory relief action to determine the duty to defend, "the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot." (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 300 [24 Cal.Rptr.2d 467, 861 P.2d 1153].)

2. The duty to defend and the insurance policy at issue here

(3) "It has long been a fundamental rule of law that an insurer has a duty to defend an insured if it becomes aware of, or if the third party lawsuit pleads, facts giving rise to the potential for coverage under the insuring agreement. [Citations.] This duty ... is separate from and broader than the insurer's duty to indemnify. [Citation.]" (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 19.) "`[F]or an insurer, the existence of a duty to defend turns not upon the ultimate adjudication of coverage under its policy of insurance, but upon those facts known by the insurer at the inception of a third party lawsuit. [Citation.] Hence, the duty "may exist even where coverage is in doubt and ultimately does not develop." [Citation.]' [Citation.]" (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at p. 295.)

By contrast, "`"where there is no possibility of coverage, there is no duty to defend ...."' [Citation.] ... [¶] ... [W]here the extrinsic facts eliminate the potential for coverage, the insurer may decline to defend even when the bare allegations in the complaint suggest potential liability. [Citations.] This is because the duty to defend, although broad, is not unlimited; it is measured by the nature and kinds of risks covered by the policy. [Citations.]" (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 19.) Hence, "`the insurer need not defend if the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage.' [Citation.]" (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at p. 300, italics omitted.)

(4) "[T]he determination whether the insurer owes a duty to defend...