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Jessica Gonzalez v. Fire Insurance Exchange

(Sexual Assault and Potential False Imprisonment Claim Did Not Constitute Personal Injury Caused by an Occurrence as Required by Primary Homeowners Policy, However, Because the Insured’s Personal Umbrella Policy Did Not Require an Occurrence In Order to Trigger Personal Injury Coverage, Trial Court is Required to Consider Whether The Duty to Defend is Owed Under the Umbrella Policy for the Underlying Lawsuit.)

In Gonzalez v. Fire Ins. Exch., ______ Cal.App.4th ____ (March 4, 2015), the California Sixth District Court of Appeal affirmed the trial court’s entry of summary judgment in favor of the primary homeowners liability insurer, Fire Insurance Exchange (“Fire”), and reversed the trial court’s entry of summary judgment in favor of Truck Insurance Exchange (“Truck”) under an umbrella liability policy issued to the parents of Stephen Rebagliati in connection with the tender of defense of an underlying sexual assault and false imprisonment lawsuit filed by Ms. Gonzalez against Rebagliati and nine other members of the De Anza College baseball team. The underlying complaint filed by Gonzalez alleged that she sustained bodily injury and other damages based on sexual assault, false imprisonment, invasion of privacy and slander. Rebagliati tendered the defense of the Gonzalez lawsuit to Fire under a homeowner’s liability policy and to Truck under a personal umbrella policy. Fire and Truck denied Rebagliati’s tender of defense of the Gonzalez lawsuit. Subsequently, Gonzalez entered into a settlement agreement with Rebagliati based on an assignment of rights and entry of a stipulated judgment in exchange for an agreement not to execute on the personal assets of Mr. Rebagliati and his parents.

Thereafter, Gonzalez filed an action for bad faith and recovery of the stipulated judgment against Fire and Truck. In response, Fire and Truck filed a motion for summary judgment arguing that potential coverage was not triggered under the Fire homeowner’s liability policy or Truck personal umbrella policy based on the absence of an “occurrence” and/or the application of certain exclusions, including a sexual molestation exclusion. Subsequently, the trial court entered summary judgment in favor of Fire and Truck and held that neither insurer owed Rebagliati a defense against the Gonzalez lawsuit.

In affirming the trial court’s entry of summary judgment in connection with the Fire homeowner’s liability policy, the Court of Appeal stated as follows:

Gonzalez's complaint alleged several preliminary allegations that were incorporated into all of her causes of action. She alleged that Rebagliati was inside the room when she was sexually assaulted. Additionally, she alleged that while she was sexually assaulted, several women attempted to rescue her from the situation but were prevented by the men in the room.

Despite these allegations, Gonzalez maintains her complaint alleged accidental conduct. We disagree. First, Gonzalez claimed Rebagliati may have been found negligent for his failure to rescue Gonzalez from the situation. However, this is an intentional act, not an “accident” that results in an “‘additional, unexpected, independent and unforeseen happening.’” (Quan, supra, 67 Cal.App.4th at p. 599.) When one expects or intends an injury to occur, there is no ‘accident.’” (Interinsurance Exchange v. Flores (1996) 45 Cal.App.4th 661, 669 [53 Cal. Rptr. 2d 18].) An alleged failure to rescue Gonzalez from the situation can only be characterized as a deliberate, intentional act.

Gonzalez also points to her third cause of action for false imprisonment, arguing that her complaint alleged the possibility that Rebagliati accidentally caused her to be confined to a room. Gonzalez argues that her complaint raised the possibility that “Rebagliati faced potential liability for accidentally blocking to be confined in a room on the property.”

The Lyons court illustrated two situations where negligent false imprisonment may constitute an accident. In the first example, a shopkeeper closes a storage vault forgetting he had asked an employee to go inside to take inventory. (Lyons, supra, 161 Cal.App.4th at p. 888.) In the second example, a store owner detains an individual he mistakenly believes was shoplifting. (Ibid.) In these scenarios, the “conduct is intentional and results in the restraint and control of the movements of the other person …” but can still be characterized as “accidental.” (Ibid.) These intentional acts are accidental because they “potentially arisefrom extrinsic causes, such as the employee's unexpected or chance distraction, or the carelessness of the shopkeeper. So, too, the wrongful detention of a suspected shoplifter without reasonable cause typically arises from an employee's careless assessment of objective facts. The above scenarios all involve mistakes as to objective facts.” (Id. at p. 889.)

Importantly, “coverage turns not on ‘the technical legal cause of action pleaded by the third party’ but on the ‘facts alleged in the underlying complaint’ or otherwise known to the insurer. (Barnett v. Fireman’s Fund Ins. Co.… .)” (Swain v. California Casualty Ins. Co. (2002) 99 Cal.App.4th 1, 8–9 [120 Cal. Rptr. 2d 808].) Therefore, to determine whether Gonzalez's complaint sufficiently alleged accidental conduct that would give rise to coverage, we must look at what acts were alleged in her complaint.

Gonzalez's complaint simply does not allege a possibility that Rebagliati “accidentally” falsely imprisoned her based on a mistake as to the objective facts. Gonzalez's argument that her complaint alleged the possibility that Rebagliati only committed accidental acts—such as mistakenly blocking her exit—is not asserted in her underlying complaint, which plainly alleged Rebagliati and the other men in the room engaged in intentional acts. Gonzalez's attempt to parse out the complaint for accidental conduct that may give rise to coverage is unavailing; the entirety of her allegations involved intentional conduct.

Gonzalez appears to assert that her complaint could be hypothetically construed to state a claim regarding accidental conduct. However, this argument is not based on any facts alleged in her complaint, and “[a]n insured may not trigger the duty to defend by speculating about extraneous ‘facts’ regarding potential liability or ways in which the third party claimant might amend its complaint at some future date.” (Gunderson v. Fire Ins. Exchange (1995) 37 Cal.App.4th 1106, 1114 [44 Cal. Rptr. 2d 272].)

Moreover, the other causes of action Gonzalez insists can be interpreted as based on accidental conduct, such as her causes of action for invasion of privacy and slander per se, also involve intentional conduct. Gonzalez's complaint alleged the men in the room jeered, cheered, and took pictures of the assault. She also alleged they slandered her in the days and months following the incident. Any utterance by Rebagliati, or any action taken in furtherance of invading Gonzalez's privacy, would have been an intentional act and not an accidental occurrence that would be potentially covered by the Fire policy.

As respects the trial court’s entry of summary judgment in favor of Truck with respect to potential coverage afforded by its umbrella policy, the Court of Appeal held that the personal injury coverage afforded by the Truck policy did not require accidental conduct. Hence, the Gonzalez complaint alleged potential personal injury coverage as defined in the Truck umbrella policy. Further, the Court of Appeal held that the sexual molestation exclusion in the Truck umbrella policy did not bar potential coverage of the Gonzalez lawsuit in its entirety. Truck argued that such exclusion applied to bar coverage of the Gonzalez lawsuit because the conduct alleged in the complaint was “inseparably intertwined” with the underlying sexual assault and thereby excluded by the sexual molestation exclusion. In rejecting Truck’s arguments, the Court of Appeal stated as follows:

We disagree with the insurers that these cases set forth a blanket rule that if a cause of action is related to sexual molestation it must be excluded from insurance coverage. This interpretation would gloss over the finer nuances of the law governing an insurer's duty to defend. For example, Horace Mann reiterated that “if the parties to a declaratory relief action dispute whether the insured's alleged misconduct should be viewed as essentially a part of a proven sexual molestation, or instead as independent of it and so potentially within the policy coverage, … then factual issues exist precluding summary judgment in the insurer's favor. Indeed, the duty to defend is then established.” (Horace Mann, supra, 4 Cal.4th at p. 1085.)

Unlike the scenarios contemplated in Jane D. and Coit, Gonzalez's complaint did not necessarily set forth allegations that were inseparably intertwined with Rebagliati's purported sexual assault. The aforementioned cases involved only one defendant, with causes of actions based upon the one defendant's alleged acts. Here, Gonzalez's complaint raised the possibility that other individuals—and not Rebagliati—perpetrated the assault. Perhaps if it was known to Truck that Rebagliati had admitted to the molestation, any cause of action for slander based on the assault might have “arisen” out of his molestation of Gonzalez and would therefore be properly excluded from coverage. However, we have no such admission before us here; therefore, we decline to address whether all of Gonzalez's claims would necessarily be inseparably intertwined with the underlying sexual molestation and would therefore be subject to exclusion on that ground.

Furthermore, in Horace Mann, Coit, and Jane D., the underlying molestation allegations were either admitted by the accused or otherwise proven by extrinsic evidence. Here the insurers have not demonstrated they had conclusive proof that molestation by their insured, Rebagliati, occurred prior to refusing the defense. Nor did Rebagliati admit he committed any of the alleged acts prior to tendering his defense.

The insurers argue that Rebagliati's denial of wrongdoing is irrelevant to determine coverage. We agree, as it is the facts alleged in the complaint, and any extrinsic evidence known to the insurer, that determine whether coverage applies. However, when the insured meets his or her relatively low burden to demonstrate that a possibility for coverage exists on a motion for summary judgment, it is up to the insurer to conclusively demonstrate an exclusion applies. Truck simply fails to meet its burden.

Therefore, the trial court erred in granting summary judgment in favor of Truck.

 

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