policy, and denied coverage of the accident involving Ms. Freudenberger.
On May 20, 1994, plaintiffs sued Gary Parker in state court, alleging claims for negligence and loss of consortium. After a prove-up hearing on September 5, 1995, plaintiffs obtained a default judgment against him in the amount of $ 123,274.29, including $ 12,861 in special damages and $ 100,000 in general damages.
On January 1, 1996, plaintiffs' counsel sent Allstate a second demand letter threatening legal action if Allstate did not satisfy by March 1, 1996 the judgment plaintiffs had obtained against Gary Parker. Allstate did not alter its decision to deny coverage.
Thereafter, on February 28, 1996, plaintiffs filed a state court action against Allstate to enforce the $ 123,274.29 judgment pursuant to section 11580(b)(2) of the California Insurance Code, California's "direct action" statute.
Allstate timely removed the action based on diversity of citizenship.
Allstate now moves for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Allstate argues, and plaintiffs concede, that there is no genuine issue of material fact as to plaintiffs' claim. The parties disagree, however, on the purely legal question of whether Gary Parker was an "insured person" under the Parkers' homeowner's policy.
Specifically, Allstate argues that because Gary Parker did not belong to the same "household" as his parents, the named insureds, nor "resided" with them at the time of the accident, the Freudenberger's loss does not fall within the scope of the policy's coverage. Plaintiffs counter that Gary Parker had more than one residence, that one of those residences included the home Allstate insured, and that therefore Allstate is liable to pay the judgment entered against him.
A. Standard of Review
Summary judgment is proper where the moving party demonstrates "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Because no material facts are disputed in this case, the Court need only determine whether defendant is entitled to judgment on plaintiffs' claims as a matter of law. Id. ; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Throughout the review of a motion for summary judgment, the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962). "Finally, if the factual context makes the non-moving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial." California Architectural Building Products v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir. 1987).
B. Legal Standards Governing Contract Interpretation
California law governs the interpretation of insurance policies. Allstate Insurance Co. v. Smith, 929 F.2d 447, 449 (9th Cir. 1991). Although insurance policies have their special features, their interpretation is like that of any other contract, primarily a judicial function. Waller v. Truck Insurance Exchange, Inc., 11 Cal. 4th 1, 22, 900 P.2d 619 (1995). The primary goal of contractual interpretation, and therefore policy interpretation, is "to give effect to the mutual intention of the parties." Cal. Civ. Code § 1636. To the extent possible, the intent of the parties is to be inferred from the written provisions of the policy, and where the language of the policy is clear and unambiguous, it governs. La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co., 9 Cal. 4th 27, 37, 884 P.2d 1048 (1994).
A policy provision will be found ambiguous only where it is susceptible to two or more reasonable interpretations. Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co., 5 Cal. 4th 854, 867, 855 P.2d 1263 (1993). The Court construes the language of the policy in the context of the instrument as a whole and under the circumstances of the case; the language may not be found ambiguous in the abstract. Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1265, 833 P.2d 545 (1992). Nor will the Court find ambiguous or uncertain a policy term that already has been judicially interpreted. Bartlome v. State Farm, 208 Cal. App. 3d 1235, 1239, 256 Cal. Rptr. 719 (1989).
If the Court concludes that the terms of the contract are ambiguous or uncertain, the Court will interpret the contract language based on "the objectively reasonable expectations of the insured." Id. at 1265 (emphasis added). The Court will not consider the insured's subjective beliefs. If the Court is unable to determine whether coverage is consistent with the insured's objectively reasonable expectations, the Court will resolve the ambiguity against the insurer. Id.
C. "Insured Person" Under the Policy
The Parkers' homeowner's policy clearly defines an "insured person" to include a "resident" of the Parkers' "household" who is a relative or dependent upon the Parkers' care. (Memo, Exh. 18). California courts have interpreted the provision "resident of [the named insured's] household" to impose two requirements; namely, that the person for whom coverage is sought must
(1) belong to the same household as the named insured; and
(2) permanently reside with the named insured.