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California Case Law Update

COVERAGE

Gonzalez v. Fire Insurance Exchange
234 Cal.App.4th 1220

Facts:
Jessica Gonzalez (“Gonzalez”) filed a complaint against Stephen Rebagliati (“Rebagliati”) and nine other members of the De Anza baseball team, asserting causes of action including false imprisonment, invasion of privacy, slander per se, battery, sexual battery, rape, conspiracy, and negligence, among others. She alleged she was sexually assaulted by an unknown number of men at a party while she was unconscious in a room in which Rebagliati, and the other named defendants, were present.
Rebagliati was covered by a homeowner’s policy issued by Fire Insurance Exchange “FIE”) which provided coverage for “damages which an insured becomes legally obligated to pay because of bodily injury, property damage or personal injury resulting from an occurrence to which this coverage applies.” The term “occurrence” was defined in pertinent part as “an accident including exposure to conditions which results during the policy period in bodily injury or property damage.” Rebagliati was also covered by an umbrella insurance policy issued by Truck Insurance Exchange (“Truck”), which stated it would pay damages resulting from an “occurrence”, which was defined in pertinent part as “a. with regard to bodily injury or property damage, an accident” or “b. with regard to personal injury, offenses committed during the policy period”.

Rebagliati assigned his contractual rights against Fire and Truck to Gonzalez as part of a settlement agreement. In 2011, Gonzalez filed a bad faith action against FIE and Truck pertaining to their denial of coverage for Rebagliati’s defense. Rebagliati’s claim was denied under both primary and umbrella policies on the grounds that (1) none of the alleged conduct was the result of an ‘accident’ or ‘occurrence’; (2) all claims were excluded by a sexual molestation exclusion because they were all inextricably intertwined with the actual sexual molestation; (3) the policies excluded coverage for punitive damages; and, (4) the claims all involved willful conduct and were excluded by the intentional acts exclusion and Insurance Code section 533. Fire and Truck moved for summary judgment and both motions were granted by the trial court. Gonzalez appealed.

Holding:
The Court of Appeal agreed the claims were not covered by the primary FIE homeowners policy. The FIE policy covered “those damages which an insured becomes legally obligated to pay because of bodily injury, property damage or personal injury resulting from an occurrence.” “Occurrence” was defined as an accident. Thus, the occurrence requirement applied not only to the bodily injury and property damage coverages, but the personal injury coverage as well. The Court of Appeal adopted the reasoning set forth in Lyons v. Fire Ins. Exchange (2008) 161 Cal.App.4th 880, which involved the same policy wording and where the court had concluded the personal injury coverage was subject to the occurrence/accident requirement along with the bodily injury and property damage coverages.

The Court of Appeal held the FIE policy unequivocally defined the term “occurrence” as an accident, and the court would not re-write the policy. The Court of Appeal then held Gonzalez’s complaint did not allege an “accident” under the definition of the FIE policy. The Court of Appeal found Gonzalez’s claims, including negligence, false imprisonment, invasion of privacy, and slander per se, did not constitute an “accident”, because the facts underlying each of the claims showed Rebagliati’s actions were intentional. Thus, there was no duty to defend under the FIE homeowners policy.

The Court of Appeal came to a different conclusion for the TIE umbrella policy. The umbrella policy covered damages caused by an occurrence, which was defined to mean: “a. with regard to bodily injury or property damage, an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results in bodily injury or property damage during the policy period; or b. with regard to personal injury, offenses committed during the policy period.” The Court of Appeal found the umbrella policy provided broader coverage because the umbrella policy sets forth no requirement that a personal injury arise out of an “accident” in order for there to be coverage. As a result, Gonzalez’s complaint, which alleged causes of action for false imprisonment, slander per se, and invasion of privacy, raised the potential for coverage under the umbrella policy’s provision providing coverage for damages from an “occurrence” resulting in “personal injury,'” as occurrence is specifically defined in the TIE umbrella policy.

ATTORNEYS’ FEES AWARD

Save Our Uniquely Rural Community Environment v. County of San Bernadino
2015 WL 1636126

Facts:
Al-Nur Islamic Center, a non-profit religious organization, planned to erect a 7,512 sq. ft. mosque in the County of San Bernardino. Save Our Uniquely Rural Community Environment (“SOURCE”) opposed Al-Nur’s plans based on the negative environmental impact SOURCE believed the project would cause. SOURCE filed a petition for writ of mandate and complaint for injunctive relief. The complaint/petition alleged multiple violations of the California Environmental Quality Act (CEQA).

The trial court granted the writ petition on a single ground, specifically the administrative record did not support the determination that the project would have a less than significant impact to the environment due to impacts to wastewater disposal. The trial court overturned the approval of the mitigated negative declaration and conditional use permit for the mosque.

SOURCE filed a motion for attorney fees seeking a total of $221,198 for work on the administrative proceedings and the writ petition and $9,900 for the attorney fee motion. The trial court granted the motion for attorney fees but found the amount requested to be “outrageous” and the billing to be unreasonable. The trial court found the administrative record of less than 1,000 pages was not particularly long and that CEQA questions were not particularly difficult for “alleged CEQA specialists.” The trial court reduced the fees awarded to $19,176. SOURCE appealed.

Holding:
The Court of Appeal held SOURCE failed to demonstrate the court abused its discretion by failing to show its arithmetic in significantly reducing claimed attorney fees. The Court of Appeal rejected each of SOURCE’s arguments on the grounds that, while its contentions were valid reasons why a court might award the fees that SOURCE sought, those contentions were not sufficient to demonstrate that the trial court’s reduction of the attorney fees was an abuse of its discretion.

The trial court rested its decision on several factors: the limited success that SOURCE had at trial; the trial court’s finding the hours spent and charges for preparation of work product were excessive and inflated; that the case was not overly complicated; and the trial court’s finding that SOURCE had failed to provide justification for not seeking a lower priced CEQA attorney in the San Bernardino-Riverside market.

The Court of Appeal also rejected SOURCE’s argument that the award must be reversed because the court failed to apply the lodestar method at all. SOURCE argued the amount awarded must have some discernible mathematical basis; it may not be “snatched whimsically from thin air.” The Court of Appeal relied on Gorman v. Tassajara Development Corp., 178 Cal.App.4th 44 (2009), for the proposition that courts are not required to engage in any explicit analysis of attorney fees on the record, that “all intendment and presumptions are indulged to support the judgment on matters as to which the record is silent” and that error must be affirmatively shown. Therefore, lack of explanation by the trial court alone was not enough to reverse an attorney fee award. The trial court made it clear that it intended to substantially reduce the legal fees and provided legitimate justification. Because the record showed that the trial court acted for legitimate reasons, the Fourth District could not find an abuse of discretion simply because the trial court “failed to make its arithmetic transparent.”

DISCOVERY

Simplon Ballpark, LLC v. Scull
235 Cal.App.4th 660

Facts:
Simplon Ballpark, LLC (“Simplon”) sued John Scull. After a bench trial, the court entered judgment in favor of Simplon. Scull filed various posttrial motions, including one for judgment notwithstanding the verdict (JNOV). Scull served the motions on Simplon by mail.

Simplon objected to and moved to strike Scull’s posttrial motions on the ground they were untimely filed and served. Simplon contended that, although the proof of service for the posttrial motions stated the motions were served by mail on July 6, the envelope containing the posttrial motions was postmarked July 9. Simplon argued that because the postmark date was more than one day after the date of deposit for mailing contained in the proof of service declaration, service had to be presumed invalid and the trial court lacked jurisdiction to rule on them.

The trial court granted Scull’s JNOV motion without expressly ruling on Simplon’s objection. Simplon appealed.

Holding:
The presumption of invalidity of service by mail where correspondence is sent using an outgoing mail bin and the date on the envelope is more than one day after the date in the affidavit is a rebuttable presumption affecting the burden of producing evidence that must be affirmatively invoked. The party seeking to invalidate the service must request an order to invoke the presumption based on an evidentiary showing that the postal cancellation date or postage meter date on the envelope is more than one day after the date of deposit for mailing contained in the affidavit. Simplon failed to invoke the presumption because Simplon cited the statute only for the superficial argument that Scull’s service of the motion was untimely and therefore the court lacked jurisdiction over the motion.

ABOUT THE AUTHORS: Kevin Rogers is a graduate of University of San Diego School of Law. He specializes in general liability, professional liability, and business litigation. Contact him at krogers@tysonmendes.com.

Jessica Heppenstall graduated from California Western School of Law in 2008. Ms. Heppenstall’s focus is on general liability and personal injury. Contact her at 858.263.4120 or jheppenstall@tysonmendes.com.

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