The opinion of the court was delivered by: EUGENE F. LYNCH
Plaintiff Allstate Insurance Company has filed a declaratory relief action. Defendants Shaucat Salahutdin and Jennie S. Salahutdin have cross-complained alleging bad faith. Allstate now brings summary judgment motions on both the declaratory relief action and the bad faith action. For the reasons set forth below, the Court GRANTS both motions.
The Salahutdins and Alcantaras
are neighbors. These parties dispute the ownership of a strip of land between their properties. In December 1989, the Alcantaras began building a fence in the disputed land. The fence builders used a string to align the fence. This string was attached to the Salahutdins' address pole. Mrs. Salahutdin, upset that the Alcantaras were building a fence on what she believed to be her property, removed the string.
The Salahutdins filed suit on September 5, 1990, against the Alcantaras claiming a prescriptive easement and easement by estoppel across the disputed land. The Alcantaras cross-complained for intentional infliction of emotional distress and trespass. The cross-complaint alleges only these two causes of action, both of which are intentional torts. They based this cross-complaint upon the actions of Mrs. Salahutdin when she removed the string from her address pole. The Alcantara's cross-complaint is the subject of this declaratory relief action.
The Salahutdins had purchased an Allstate Deluxe Plus Homeowners Policy. That policy covered, under Section II - Family Liability Protection, "damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident. . . ." The policy also provided for a duty to defend.
On May 21, 1991, the Salahutdins tendered to Allstate the defense of this cross-complaint. On October 24, 1991, coverage counsel for Allstate determined that the Salahutdins' policy did not cover the damages complained of in the Alcantaras cross complaint. Specifically, Allstate correctly states that the policy only covered "damages arising from an accident." Allstate contends that Mrs. Salahutdin's action in removing the string from the address pole was an intentional act. Further, Allstate claims that an intentional act cannot be an accident. Accordingly, Allstate asserts that there is no coverage.
The Salahutdins admit that Mrs. Salahutdin intended to remove the string from the address pole and that all of her actions were taken deliberately. But, the Salahutdins contend that the term "accident" should be applied to the consequences of the act, not the act itself. They claim that Mrs. Salahutdin did not intend to damage the Alcantaras. They allege that she did not intend to trespass, nor physically or emotionally injure the Alcantaras. Essentially, the Salahutdins claim that the policy covers the Alcantara cross-complaint because it covers intentional acts which are not intended to inflict injury.
I. Declaratory Relief Claim
The duty to defend requires an insurance company to defend its insured against any loss potentially covered by the insurance policy. Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1364 (9th Cir. 1991); Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 275, 54 Cal. Rptr. 104, 419 P.2d 168 (1966). The insured initially bears the burden of demonstrating that the claim is potentially within the scope of the basic coverage. Chamberlain, 931 F.2d at 1364; Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532, 537, 226 Cal. Rptr. 435 (1986).
The burden then shifts to the insurance company to prove that a policy exclusion applies. Merced Mutual Ins. Co. v. Mendez, 213 Cal. App. 3d 41, 47, 261 Cal. Rptr. 273 (1989). Because the scope of the basic coverage provision is at issue in this case, and not a policy exclusion, the Salahutdins bear the burden of proof. Thus, the Salahutdins must show that the underlying action arises from an "accident."
Essentially, the issue in this case is whether an insurance coverage provision limited to "damages arising from an accident" precludes coverage when the insured intends his actions, but not the resulting damage. The law on this issue in California is not entirely consistent. Compare Commercial Union Ins. Co. v. Superior Court, 196 Cal. App. 3d 1205, 1208, 242 Cal. Rptr. 454 (1987) ("accident" refers to insured's general intent to act, not intent to cause harm) with Mullen v. Glens Falls Ins. Co., 73 Cal. App. 3d 163, 169-71, 140 Cal. Rptr. 605 (1977) ("accident" refers to insured's subjective intent to cause harm); see also Kornblum, Kaufman & Levine, Cal. Prac. Guide: Bad Faith (TRG 1990), §§ 8:97.1-8:97.3. However, the more recent cases focus on the nature of the act itself, not the intent of the insured to cause damage. Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1364 (9th Cir. 1991); Merced Mutual, 213 Cal. App. 3d at 50; Commercial Union, 196 Cal. App. 3d at 1208-09; Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532, 537, 226 Cal. Rptr. 435 (1986); St. Paul Fire & Marine Ins. Co. v. Superior Court, 161 Cal. App. 3d 1199, 208 Cal. Rptr. 5 (1984). Even where the intentional act gives rise to negligence or emotional distress claims, the courts have refused to consider these losses "accidental." Chamberlain, 931 F.2d at 1365; Dyer v. Northbrook Property & Cas. Ins. Co., 210 Cal. App. 3d 1540, 259 Cal. Rptr. 298 (1989); Commercial Union, 196 Cal. App. 3d at 1205. Instead, the courts have focused on the nature of the act giving rise to the claims. Chamberlain, 931 F.2d at 1365; Dyer v. Northbrook Property & Cas. Ins. Co., 210 Cal. App. 3d 1540, 259 Cal. Rptr. 298 (1989); Commercial Union, 196 Cal. App. 3d at 1205. Thus, "where the insured intended all of the acts that resulted in the victim's injury, the event may not be deemed an "accident" merely because the insured did not intend to cause injury." Allstate Ins. Co. v. LaPore, 762 F. Supp. 268 (N.D.Cal. 1991) (citing Merced Mutual, 213 Cal. App. 3d at 50).
In construing coverage provisions similar to that at issue here, the term "accident" has been defined as "'arising from extrinsic causes[;] occurring unexpectedly or by chance[; or] happening without intent or through carelessness.'" St. Paul Fire & Marine, 161 Cal. App. 3d at 1202 (quoting Webster's Ninth New Collegiate Dict. 49 (1983)). More to the point, the court in Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532, 537, 226 Cal. Rptr. 435 (1986) stated, "an intentional act is not an 'accident' within the plain meaning of the word. [Citations.]" The court then concluded ...