The opinion of the court was delivered by: FERN M. SMITH
Plaintiffs Robert E. Bailey and Frances C. Bailey ("the Baileys") are the owners of fee title to real property located at 1892 Cummings Road, Brentwood, California. The Baileys brought an action against State Farm Insurance Co. ("State Farm") and Fidelity National Title Insurance Co. ("Fidelity") for Declaratory Relief. The Baileys claim that State Farm and Fidelity breached their respective duties to defend and indemnify the Baileys in an underlying lawsuit in state court. Both State Farm and Fidelity have brought separate motions for summary judgment. For the reasons set forth below, State Farm's and Fidelity's motions for summary judgment are GRANTED.
In 1989, the Baileys purchased their property from Billy Joe and Melba Dean Norris. The Grant Deed was signed on May 19, 1989. The deed granted fee ownership in Parcel D, with various areas excepted out from fee ownership.
A nonexclusive right of way over the easement was included in the Grant Deed.
In connection with their purchase, the Baileys opened an escrow with Fidelity. The land described in the Preliminary Report was Parcel D, with the same exceptions as those contained in the Norris Grant Deed, and a nonexclusive right of way over the easement. The escrow instructions did not alter the description of the land as stated in the Preliminary Report; accordingly, a policy of title insurance was issued covering the land as described above.
In October 1990, the Baileys were sued in state court by Myron T. Flagg and B. Jeanne Airriess for allegedly interfering with their use of a "public right of way" known as South Cummings Road ("Flagg litigation"). Flagg and Airriess alleged that the Baileys and others installed a series of railroad ties and posts alongside, perpendicular to, and into the roadway. They also alleged that the Baileys and others altered the roadway by removing portions of a concrete edging.
On December 31, 1990, Flagg and Airriess filed a first amended complaint in which they sought to quiet title to an "easement" in South Cummings Road which they claimed by prescription (Second Cause of Action), implication (Third Cause of Action), balancing of hardships (Fourth Cause of Action) and estoppel based on the representations and conduct of the seller and common owner of Flagg's parcel (Fifth Cause of Action). Flagg and Airriess also sought an injunction preventing the Baileys and their co-defendants from interfering with their use of the claimed right of way (First Cause of Action). In addition, Flagg and Airriess alleged Intentional Infliction of Emotional Distress (Ninth Cause of Action) and Intentional Interference with Economic Relationship (Tenth Cause of Action) against the Baileys and others. Finally, Flagg and Airriess alleged that Frances Bailey had slandered Flagg (Eleventh Cause of Action).
The Baileys had purchased a Homeowners Policy - Extra Form 5 from State Farm. That policy covered, under Section II - Liability Coverages, "damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence . . ." and provided for a duty to defend. The policy defines the term "occurrence" to mean an accident.
The Baileys tendered defense of the Flagg litigation to State Farm. Several months later, the Baileys received a letter from State Farm dated June 19, 1991, stating that State Farm had concluded the Baileys' policy did not cover the damages complained of in the underlying action. State Farm denied coverage or defense because there was no "property damage" or "occurrence" under the terms of the policy. State Farm asserts, among other things, that the Baileys intentionally altered South Cummings Road, and an intentional act cannot be an accident.
The Baileys admit they intentionally and deliberately dumped some rock on the roadway and installed the railroad ties on the side of the roadway. They contend that because they did not intend to injure Flagg and Airriess, but intended merely to improve their property, their conduct is covered under the policy.
Essentially, they contend that the term "occurrence" should be applied to the consequences of the act, and not the act itself.
The Baileys also assert that the Flagg litigation is a challenge to their title and their title insurer had a duty to defend. The Baileys tendered the defense to Fidelity. Fidelity refused to provide a defense on the basis that the title policy did not cover the allegations in the Flagg litigation.
I. State Farm's Summary ...