The opinion of the court was delivered by: SAUNDRA BROWN ARMSTRONG
The instant insurance coverage dispute arises from an underlying action entitled Karen Matson v. Sylvester L. Chaney, et al., No. 680930-2 ("the Matson action") which is currently pending in California Superior Court, Alameda County. Matson alleges that on or about April 17, 1990, she and the Chaneys entered into a contract for the sale of the Chaneys' property located at 668 Longridge Road, Oakland, California ("the Longridge property").
Matson Complaint, P 11, Glad Decl., Ex. "A." Matson claims that the Chaneys misrepresented certain facts to induce her to enter into a contract to purchase the Longridge property.
The Matson complaint alleges causes of action for intentional misrepresentation, concealment, negligent misrepresentation, negligence, breach of fiduciary duty, intentional infliction of emotional distress, negligent infliction of emotional distress, breach of contract, and constructive trust. See Matson Complaint, PP 13-55, Glad Decl., Ex. "A."
During the negotiation and sale of the Longridge property, Allstate insured the Chaneys under a homeowner's insurance policy (policy no. 034116447) covering the Longridge property. The effective policy period ran from October 10, 1986 to May 24, 1990. The Family Liability Protection portion of the policy states, in pertinent part:
Allstate will pay for damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident covered by part of this policy.
Homeowner's Policy, Section II, at 23 (emphasis added), Burke Decl, Ex. "A." The policy defines "bodily injury" as "physical harm to the body, including sickness or disease, and resulting death, . . ." Id. at 3. "Property damages" is defined as "physical injury to or destruction of tangible property, including loss of use resulting from such physical injury or destruction." Id. at 4 (emphasis added).
The Chaneys subsequently tendered the defense of the Matson action to Allstate and requested that Allstate defend and indemnify them for any damages recovered in that litigation. Allstate accepted the Chaneys' tender of defense under a reservation of rights. Allstate subsequently filed the instant declaratory relief action based on diversity jurisdiction in this Court on October 8, 1991, seeking a declaration of its rights and liabilities under the subject policy. On March 9, 1992, this Court approved a stipulated judgment between Allstate and the Chaneys in which the Chaneys agreed that the subject policy provides no coverage for the damages sought in the Matson action. See Stipulated Judgment (filed March 9, 1992), Glad Decl., Ex. "D." Thus, the instant litigation is proceeding only between Allstate and Matson.
A. Legal Standard For Summary Judgment
The interpretation of an insurance policy is generally a question of law for the Court. See Allstate Ins. Co. v. Miller, 743 F. Supp. 723, 724 (N.D. Cal. 1990). The insured, not the insurer, has the burden of establishing that a loss comes within the basic scope of coverage. Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1364 (9th Cir. 1991). Accordingly, if the Court finds that the policy provides no coverage for the damages sought against the insured, the insurer need not provide the insured with a defense, ...