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Upasani v. State Farm General Insurance Company

(Underlying Lawsuit Alleging Conspiracy to Abduct Child Not Covered by Homeowners Liability Policies)

In Upasani v. State Farm Gen. Ins. Co., ______ Cal.App.4th _____ (June 26, 2014), the California Fourth District Court of Appeal affirmed the trial court’s entry of summary judgment in favor of State Farm General Insurance Company (“State Farm”) and held that State Farm was not obligated to defend the insureds, the Upasanis, in connection with an underlying lawsuit alleging that they aided and abetted and conspired with the underlying plaintiff’s wife to abduct her son and send him to India. The jury returned a special verdict in favor of the Upasanis in the underlying lawsuit. During the pendency of such lawsuit, the Upasanis tendered the defense of the claims against them to State Farm under three different homeowners policies covering them during the pendency of the conduct alleged in the underlying lawsuit. State Farm denied the Upasanis’ tender of defense based on the absence of an “occurrence” as defined in the State Farm policies (i.e., absence of an “accident”). Thereafter, the Upasanis sued State Farm for breach of contract and bad faith. In response, State Farm filed a motion for summary judgment which was granted by the trial court.

In affirming the trial court’s entry of summary judgment, the Court of Appeal held that the underlying lawsuit did not allege a potential “accident” as required by the definition of “occurrence” in the State Farm policies. The Upasanis emphasized that the underlying lawsuit alleged causes of action for negligence against them. However, the Court of Appeal noted that it is required to focus on the alleged facts in an underlying complaint in determining whether a duty to defend is triggered under a liability policy. The Court of Appeal stated as follows:

Two of the causes of action alleged by Kulkarni against the Upasanis sounded in negligence--the second cause of action for negligence per se and the fourth cause of action for negligent infliction of emotional distress. But the factual allegations of those causes of action, and the evidence supporting them, showed the conduct that the Upasanis were alleged to have committed was intentional conduct. (Indeed, all of Kulkarni’s causes of action relied on the same general factual allegations.)

. . .

All the allegations in Kulkarni's complaint, as supplemented by the discovery responses, established the only claims against the Upasanis were for conspiracy to abduct Kulkarni's infant son. State Farm did not have a duty to pro-vide coverage to the Upasanis because Kulkarni's damages did not arise from bodily injury caused by an accidental occurrence. Uniform case law supports our conclusion.

In addition, the Court of Appeal held that claims for pure emotional distress do not constitute potential “bodily injury” as defined in a liability policy.

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