Intentional acts are generally not covered under a homeowners policy, but what if an act was committed “innocently” and resulted in unintended consequences? The court recently considered whether a homeowner who unknowingly trimmed her neighbor’s olive trees believing them to be hers constituted an “accident” under her homeowners policy. The second District Court of Appeal in Albert v. Mid-Century Insurance Company (2015) 236 Cal.App 4th 1281, held the homeowner’s act was not an accident and the insurer properly denied coverage to the homeowner. As there was no potential for coverage, the Court of Appeal found the homeowner was not entitled to a defense and indemnity in an underlying action brought by her neighbor for trimming the neighbor’s trees. The Court of Appeal therefore affirmed a judgment in favor of the insurer.
Albert’s Claim and Mid-Century’s Denial
Plaintiff Shelly Albert purchased homeowners insurance policy from defendant Mid-Century Insurance. In 2011, Albert’s neighbor, Henri Baccouche, sued her for damage caused to his property when Albert erected an encroaching fences and pruned nine mature olive trees on Baccouche’s property. According to the Baccouche complaint, Baccouche’s olive trees were “full, substantial canopies that provided privacy, enhanced the value of [Mr. Baccouche’s] property and defined the space, and provided environmental services as well. To [Mr. Baccouche’s] surprise, shock, disgust and anger, his trees had been severely damaged by [plaintiff] (presumably by her agents, servants, employees or independent contractors), whose actions in hacking, cutting and pruning the trees reduced them to a pitiable state.”
Albert tendered the claim to Mid-Century Insurance to provide a defense. Albert provided a recorded statement to Mid-Century and claimed the fence was within her property and denied that any part of the fence was on her neighbor’s property. Albert claimed the olive trees were boundary trees and the fire department had notified her she was obligated to clear the area where the trees were located. Albert stated she had trimmed the trees for many years without objection from her neighbor.
Thus, Albert appeared to have a good faith belief that she had every legal right to erect the fence and prune the trees. Nevertheless, Mid-Century Insurance denied the claim on the grounds that Albert’s conduct was not an “accident” and that her conduct fell within the intentional act exclusion. Mid-Century denied Albert’s claim finding that there was “no potential” for coverage under her policy because she had admitted she purposefully erected the fence, and had intentionally cut Baccouche’s trees. In other words, Albert’s conduct was intentional and therefore excluded from coverage.
Albert subsequently asserted in a letter to Mid-Century the alleged “boundary trees” were half on her property and therefore Mid-Century should have covered the claim. Albert further asserted that a survey made clear the trees “straddled” the property line between the two parcels of land.
Mid-Century’s position on coverage remained unchanged. Mid-Century explained in a letter to Albert it had considered the possibility that the trees were solely owned by Albert, were solely owned by Baccouche, or were jointly owned, but the ownership of the trees was irrelevant to the coverage determination because the damage had occurred from nonaccidental conduct. Plaintiff subsequently filed suit against Mid-Century alleging causes of action for declaratory relief, breach of contract, and breach of the implied covenant of good faith and fair dealing.
Mid-Century Insurance moved for summary judgment and Albert filed a cross-motion for summary adjudication on the duty to defend the underlying Baccouche action. The trial court granted Mid-Century’s motion for summary judgment and Albert appealed.
The insuring clause of Albert’s policy provided in relevant part: “We will pay those damages which an insured becomes legally obligated to pay because of: … property damage resulting from an occurrence. At our expense and with attorneys of our choice, we will defend an insured against any suit seeking damages covered under [this section]…. We do not have any duty to defend or settle any suit involving actual, alleged, threatened or declared … property damage not covered under this liability insurance. This applies whether or not the suit is groundless, false or fraudulent.” (Albert, supra, 36 Cal.App 4th at 1285.)
The policy defines an “occurrence” as “an accident, including exposure to conditions, which occurs during the policy period, and which results in … property damage … during the policy period. Repeated or continuous exposure to the same general conditions is considered to be one occurrence.” The policy contained an “Intentional acts” exclusion that excluded “property damage … which is caused by, arises out of or is the result of an intentional act by or at the direction of the insured. By way of example this includes but is not limited to any intentional act or intentional failure to act by an insured, whether a criminal act or otherwise, where resulting injury or damage would be objectively expected to a high degree of likelihood, even if not subjectively intended or expected. This exclusion applies even if: [¶] … an insured mistakenly believes he or she has the right to engage in certain conduct; [¶] … [¶] … the injury or damage is different or greater or of a different quality than that intended or expected.”
Court of Appeal Holds Albert’s Non-Accidental Conduct Was Excluded from Coverage
The Court of Appeal agreed with the trial court and with Mid-Century that there was no duty to defend Albert in the Baccouche lawsuit because the claims all arose from Albert’s admittedly non-accidental conduct. The Court held that the word “accident” in the coverage clause of a liability policy refers to the conduct of the insured for which liability is sought to be imposed on the insured. The term “accident” refers to the nature of the insured’s conduct, and not to its unintended consequences. The Court did not find Albert’s conduct was an accident “merely because the insured did not intend to cause injury.” Thus, Albert’s subjective intent was irrelevant.
The Court, however, noted an accident may exist “when any aspect in the causal series of events leading to the injury or damage was unintended by the insured and a matter of fortuity.” The Court gave the following example: an insured may be speeding (an intended action), but still negligently hit another car. The speeding is an intentional act, but the act directly responsible for causing the injury – hitting the other car – was not intended by the driver and was fortuitous. The occurrence resulting in the injury is thus deemed an accident. On the other hand, where the driver is speeding and then deliberately hits another car, that action is intentional, and any resulting injury could not be deemed caused by an accident. (Id. at 1291.)
In arguing her conduct was accidental, Albert contended although she deliberately hired a contractor to trim the trees, excessive cutting of them was not an intended consequence, and it should be deemed an accident. Albert alleged the excessive cutting could have resulted from “miscalculation by the independent contractors, or it could have been as a result of a mishap with a motor vehicle…or truck…used in the tree trimming process, or by falling ladders, malfunctioning chainsaws or any number of other instrumentalities. All of these were possible ‘accidents’ causing the alleged excessive cutting.” However, the Court found it irrelevant Albert did not intend to damage the trees, because she intended for them to be pruned and it was undisputed the contractor she hired intended to cut the trees. In short, the Court of Appeal determined the trimming of the trees was no accident. The Court of Appeal affirmed judgment in favor of Mid-Century.
While Albert possibly did not intend to damage the trees, she intended for them to be pruned, and there was nothing to indicate the allegedly excessive pruning was the result of any unforeseen accident. The Court of Appeal in Albert v. Mid-Century Insurance reinforced the principle that an act is intentional even if the conduct arose from a mistaken belief and resulted in unintended consequences. The Court’s opinion also reaffirms where there is no potential for coverage there is no duty to defend. The Court’s opinion, however, leaves open the potential for coverage where actual facts show the tree trimmer had cut a tree unintentionally.
ABOUT THE AUTHOR
Janice Walshok is an associate at Tyson & Mendes LLP. She has experience with conducting civil jury trials and specializes in insurance bad faith, premises liability, and high net worth insurance issues. Contact Janice at 858.263.4121 or email@example.com.
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