State Farm Fire & Casualty Co. v. Drasin
Decision Date | 07 March 1984 |
Citation | 152 Cal.App.3d 864,199 Cal.Rptr. 749 |
Parties | STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff and Respondent, v. Lawrence DRASIN and Marlene Drasin, Defendants and Appellants. Civ. 69354. |
Court | California Court of Appeals Court of Appeals |
Kessler & Drasin and Timothy P. McNulty, Los Angeles, for defendants and appellants.
Belcher, Henzie, Biegenzahn, Chertok & Walker and Mark D. Wenzel, Los Angeles, for plaintiff and respondent.
This is an appeal from the granting of a summary judgment entered in favor of plaintiff/respondent State Farm Fire & Casualty Company (hereafter State Farm) and against defendants/appellants Lawrence Drasin and Marlene Drasin (hereafter the Drasins) in a declaratory relief action. The effect of the judgment is an order declaring that State Farm has no duty to defend or indemnify appellants in a presently pending malicious prosecution action filed against the Drasins, entitled Lyman Covell v. Lawrence Drasin et al.
The Drasins entered into a limited partnership agreement with Lyman Covell (hereafter Covell), the general partner, to acquire mining leases in El Dorado County, California. The purpose of acquiring the mining leases was to enjoy the production of income, profits and write-offs incidental to the mining operations. Shortly thereafter, a dispute arose between various limited partners, the Drasins and Covell resulting in the filing of a civil action by the Drasins and others against Covell. In this action, it was alleged that various misdeeds by Covell and others respecting the subject of the limited partnership agreement resulted. Relief in the form of rescission of the limited partnership agreement, restitution of investments, accounting, and dissolution of the partnership was sought. Judgment, however, was obtained in favor of Covell. Subsequently, Covell instituted an action for malicious prosecution against the Drasins.
For defense of this matter, the Drasins submitted the action to their homeowner's insurance carrier, State Farm. State Farm conditionally accepted the Drasins' defense request subject to a reservation of rights. In the letter announcing State Farm's reservation of rights, the Drasins were informed that certain exclusions in the policy 1 possibly negated coverage for defense and indemnity of the lawsuit brought by Covell. State Farm then filed an action for declaratory relief.
At a later date, State Farm filed a motion for summary judgment, seeking a judgment and order from the court on the action for declaratory relief. In granting State Farm's requested summary judgment, the court determined that State Farm was under no duty to defend or indemnify its insured against the presently pending malicious prosecution action brought by Covell. This appeal followed.
The Drasins contend that an issue of material fact exists as to whether the acts involved in the malicious prosecution action fall within the definition of "occurrences" and that the court therefore erred in granting summary judgment. The instant policy, they argue, defines "occurrence" as "an accident, including injurious exposure to conditions which result ... in bodily injury or property damage." Since the policy does not define the term "accident," "accident," as judicially defined, is a casualty--something out of the usual course of events and which happens suddenly and unexpectedly and without design of the person injured including any event which takes place without the foresight or expectation of the person acted upon or affected by the event. (See Maples v. Aetna Cas. & Surety Co. (1978) 83 Cal.App.3d 641, 649, 148 Cal.Rptr. 80.) Therefore, the Drasins come to the "logical deduction" that based upon the foregoing definition, an issue of fact exists as to what the term "occurrence" means and whether the occurrence alleged in the malicious prosecution action is afforded coverage under the State Farm policy. We do not subscribe to such logic.
This case is controlled by Maxon v. Security Ins. Co. (1963) 214 Cal.App.2d 603, 29 Cal.Rptr. 586. In Maxon, the court held that the insurance company was not liable under its personal liability policy for the cost of defending a malicious prosecution action brought against its insured. This holding was reached despite the fact that the court found the insured's actions were in good faith and non-malicious. The court concluded that to recover for malicious prosecution there must be a finding of malice. 2 Accordingly, since there is no civil liability for the negligent but good faith prosecution of an action, there is no potential for a recovery under the policy. Thus, no potential recovery of damages covered by the policy exists and there is no obligation to defend. (Id., at p. 617, 29 Cal.Rptr. 586.) The court in Maxon goes on to indicate that not only is there no obligation to defend, but also no obligation to indemnify an insured on an action for malicious prosecution. 3 (Maxon v. Security Ins. Co., supra, 214 Cal.App.2d at p. 615, 29 Cal.Rptr. 586; see also Civ.Code, § 1668. 4 ) The term "willful act" as used in Insurance Code section 533 means "something more blameworthy than the sort of misconduct involved in ordinary negligence, and something more than the mere intentional doing of an act constituting such negligence." (Russ-Field Corp. v. Underwriters at Lloyd's (1958) 164 Cal.App.2d 83, 96, 330 P.2d 432.) (Maxon v. Security Ins. Co., supra, 214 Cal.App.2d at pp. 615-616, 29 Cal.Rptr. 586.)
The Drasins' arguments relating to State Farm's duty to defend are very similar to those of the appellant insured in the Maxon case. In Maxon, the appellant contended that (P. 616, 29 Cal.Rptr. 586; emphasis in original.)
The malicious prosecution complaint filed against the Drasins does not potentially seek damages that come within the coverage of the subject policy. If the Drasins' original action against Covell is held to be without malice and therefore not willful, then there is no liability under the policy. Similarly, if the Drasins' original action against Covell is held to be willful and with malice, again there is no liability under the policy. (See Ins.Code, § 533.) "The obligation to defend is predicated upon liability for a loss covered by the policy." (Maxon v. Security Ins. Co., supra, 214 Cal.App.2d at p. 616, 29 Cal.Rptr. 586; emphasis added.) Therefore, since State Farm could not be liable under the policy for damages predicated upon the tort of prosecution, it is not obligated to defend such an action.
The Drasins cite Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 54 Cal.Rptr. 104, 419 P.2d 168 in support of their argument that they are entitled to a defense in their malicious prosecution action. They contend that as set forth in Gray, an insurance company must look beyond the four corners of a third party complaint against the insured and show facts in its possession which would indicate that there is no potential for liability under the policy.
In Gray, the California Supreme Court held that an insurer's duty to defend litigation brought against its insured is broader than its duty to indemnify. It stated that the insurer "must defend a suit which potentially seeks damages within the coverage of the policy ...." (Id., at p. 275, 54 Cal.Rptr. 104, 419 P.2d 168; emphasis in original.) However, this duty to defend is measured by the nature and kind of risks covered by the policy. (Id.) It further stated: (Id., at p. 275, fn. 15, 54...
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