prior California decisional law, the dissent in Fragomeno noted that the term "right to private occupancy" "clearly encompasses an insured's interference with another's 'right' to possess an interest in real property." 207 Cal. App. 3d at 834, 255 Cal. Rptr. at 118 (Johnson, J., dissenting) (citing Nichols, 169 Cal. App. 3d at 776, 215 Cal. Rptr. at 416 (complaint must allege an invasion of an interest attendant to the possession of real property)).
While American States contends that the complaints in the underlying actions expose NEV to only contractual liability, a close look at the allegations in the complaints shows otherwise.
Plaintiffs in the underlying state court actions allege that due to the misrepresentations made by NEV, they were led to believe that they would have the right to own and occupy the real property on which their mobile homes were located. Because these statements were false, however, the purchasers were not allowed allege that they were told that Napa County officials would approve the housing development as a subdivision. Apparently this, too, was false. Plaintiffs do not frame these allegations as a breach of contract claim, but rather, as a fraud or negligent misrepresentation claim. NEV contends that these misrepresentations constitute a sufficient "interference with another's 'right' to possess an interest in real property," id, 207 Cal. App. 3d at 834, 255 Cal. Rptr. at 118 (Johnson, J., dissenting), to constitute property damage as defined in the policies.
At a minimum, the term "other invasion of the right of private occupancy," is ambiguous. And as noted above, any ambiguity is to be resolved against the insurer. Pisciotta, 30 Cal. 3d at 807-08, 180 Cal. Rptr. at 807. If American States had intended to limit coverage under the personal injury endorsement to physical invasions of real property, it could have done so expressly. In fact, as will be shown, American States did so limit the term in Policy 2 by amending the definition of personal injury in to encompass only the "wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies." Having failed to so limit the term in Policy 1 gives rise to the ambiguity in the term's meaning and must be resolved in favor of finding coverage.
Therefore, the Court agrees with NEV and finds, with respect to Policy 1, that the underlying complaints do give rise to the potentiality of coverage under the "personal injury" endorsement. With respect to Policy 2, however, the Court disagrees with NEV.
As just noted, the definition of personal injury in Policy 2 does not contain the phrase "other invasion of the right to private occupancy." Instead, personal injury is defined in Policy 2 as the "wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies." Policy 2 at 10. This definition clearly refers to some physical act of eviction or entry upon premises, such as trespassing. Nowhere in the underlying actions do plaintiffs allege any such physical invasion of their property. Thus, the Court concludes that Policy 1 does present the potentiality of coverage for the acts alleged in the underlying actions under the personal injury endorsement, but that Policy 2 does not provide coverage.
For the foregoing reasons,
IT IS HEREBY ORDERED that:
1. NEV's motion to dismiss or stay this action is DENIED.
2. American States' motion for partial summary judgment is DENIED with respect to Policy 1 but GRANTED with respect to Policy 2.
3. NEV's cross-motion for summary judgment is GRANTED with respect to Policy 1 but DENIED with respect to Policy 2.
Dated: June 26, 1991.
William H. Orrick
United States District Judge