MITCHELL v. CALIFORNIA FAIR PLAN ASSOCIATION (1989)

Plaintiffs and appellants Accie and Gloria Mitchell appeal from (1) the order dismissing their action against defendant and respondent California Fair Plan Association (California Fair) following the sustaining of California Fair's demurrer to their first amended complaint without leave to amend, and (2) the judgment on the pleadings subsequently entered in favor of defendants and respondents The Aetna Casualty & Surety Company and The Standard Fire Insurance Company (Aetna), in consolidated actions for breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory bad faith (Ins.Code, § 790.03).

The sole issue presented by this appeal is whether plastic sheeting used to cover a temporary opening in the roof of plaintiffs' residence during remodeling constituted a “roof” within the meaning of their homeowner insurance policies.   We determine the policies are ambiguous in this regard and must be construed against the insurers, and in accordance with the reasonable expectations of the plaintiffs.   We reverse the complained of order and judgment.

FACTS

The First Amended Complaint

In their first amended complaint, plaintiffs alleged that on September 24, 1986, during the effective periods of the homeowner policies issued by California Fair and Aetna covering, inter alia, personal property contents losses sustained by reason of windstorm, their residence and its contents were damaged due to a wind and rain storm.   Prior to the storm, plaintiffs had commenced replacement of the roof.   At the time of the storm, their roofing contractor had completed replacement of portions of the roof, and all unfinished portions were covered with plastic sheeting weighted down with heavy materials.

During the storm, the wind whipped the plastic sheeting, “creating openings in it and moving it in such a manner that the interior ceiling, walls, as well as furniture, furnishings and other personal property contents belonging to Plaintiffs were severely damaged by direct force of the wind and rain entering through the openings in the temporary roof caused by the wind and from rainwater seeping into various other parts of the house once it had entered.   As a result, Plaintiffs' personal property contents of their residence was [sic] damaged in the sum of at least $64,550.00.”

The Policies

The policies in question exclude coverage for loss to property within a building caused by rain “unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain ․ enters through this opening.” ¹  Neither of the policies defines “roof,” “wall,” or “building.”

The Trial Court's Ruling

Citing Camden Fire Ins. Ass'n v. New Buena Vista Hotel Co. (1946) 199 Miss. 585, 24 So.2d 848, and New Hampshire Ins. Co. v. Carter (Fla.App.1978) 359 So.2d 52, the trial court found that as a matter of law, portions of a roof covered during construction of a replacement roof by a mere sheet of plastic are not covered by a “roof” within the meaning of the above described policy clauses.

CONTENTIONS

Plaintiffs contend (1) the policies are ambiguous, in that they fail to define “roof,” “wall,” or “building,” and must therefore be construed in plaintiffs' favor and in accordance with their reasonable expectations to cover the plastic sheeting here in question, (2) other jurisdictions have held, in decisions recognized by the California appellate courts, that temporary roofing materials constitute a roof within the meaning of the windstorm peril, and (3) the trial court erred in relying on the Camden and New Hampshire cases.

Defendants contend (1) the policies are unambiguous when the words are given their plain and ordinary meaning, (2) even assuming ambiguity, a reasonable person would not expect that a homeowner policy would provide coverage for an incomplete roof during construction, and (3) the trial court properly relied on the Camden and New Hampshire cases.

DISCUSSION

“On appeal from a judgment on the pleadings, the case is reviewed in the same way as a judgment of dismissal entered following the sustaining of a general demurrer.  [Citations.]  ‘While it is the duty of a reviewing court, in most cases, to indulge in every reasonable presumption in favor of sustaining the trial court, substantially the reverse is true when [the] plaintiff appeals from a judgment on the pleadings.’  [Citation.]”  (Lumbermens Mutual Casualty Co. v. Vaughn (1988) 199 Cal.App.3d 171, 178–179, 244 Cal.Rptr. 567.)

“ ‘When a motion for judgment on the pleadings has the purpose and [effect] of a general demurrer, the facts alleged in the pleading attacked must be accepted as true, and the [trial] court may also consider matters subject to judicial notice.’  [Citation.]  Ordinarily such a motion is confined to the face of the challenged pleading;  but when a written instrument is attached to the pleading and properly incorporated therein by reference, the court may examine the exhibit and treat the pleader's allegations of its legal effect as surplusage.  [Citation.]”  (Lumbermens Mutual Casualty Co. v. Vaughn, supra, 199 Cal.App.3d at p. 178, 244 Cal.Rptr. 567.)

Here, copies of the relevant policies were attached to appellants' second amended complaint and incorporated therein by reference.

“The specific rules pertaining to the construction of insurance contracts may be summarized as follows:  Absent circumstances indicating a contrary intention, words in an insurance policy are to be used in their plain and ordinary sense [citations].  It is elementary that any ambiguity and uncertainty in an insurance policy is to be resolved against the insurer [citations].  If semantically possible, the insurance contract will be given such construction as will fairly achieve its object of securing indemnity to the insured for the loss or losses to which the insurance relates [citation].  If the insurer uses language which is uncertain, any reasonable doubt will be resolved against it, and if the doubt relates to the extent or fact of coverage, the language will be understood in its most inclusive sense, for the benefit of the insured [citations].  Finally, it is to be noted that insurance contracts are regarded as contracts of adhesion expressing the superior bargaining power of the insurer [citation], and as a consequence the exclusions and exceptions in the insurance policy are strictly construed against the insurer and liberally interpreted in favor of the insured [citations].”  (Healy Tibbitts Constr. Co. v. Employers' Surplus Lines Ins. Co. (1977) 72 Cal.App.3d 741, 748–749, 140 Cal.Rptr. 375.)

In the present case, the language in question is contained in clauses of the policies excluding coverage of loss to property within a building caused by rain, except in the above described circumstances.   We must therefore construe the pertinent policy terms strictly against the insurers and liberally in favor of the insureds.   So construed, it appears that the clauses are ambiguous, in that they fail to define “roof,” “wall,” and “building.”  “ ‘ “A policy provision is ambiguous when it is capable of two or more constructions, both of which are reasonable.”  [Citation.]’  [Citation.]”  (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 912, 226 Cal.Rptr. 558, 718 P.2d 920.)   Here, the terms in question could be limited to parts or all of the permanent structure, or they could include normally adequate temporary coverings installed during repair or remodeling.   Both positions are plausible.

Had the insurers desired to exclude from coverage rain damage resulting from the direct force of wind upon temporary coverings installed during repair or remodeling, they could easily have so specified.   Their failure to do so left their policies in a state of ambiguity.   Recognizing decisions to the contrary in other jurisdictions (Camden Fire Ins. Ass'n v. New Buena Vista Hotel Co., supra, 24 So.2d 848, 849–850, reconsidered at 199 Miss. 585, 26 So.2d 174, 175;  New Hampshire Ins. Co. v. Carter, supra, 359 So.2d 52, 53–54), we are nonetheless obliged to determine the matter before us in accordance with well established precedent in this state.   That precedent requires that we resolve any doubts, uncertainties and ambiguities in favor of the insureds to protect their reasonable expectations of coverage.  (Producers Dairy Delivery Co. v. Sentry Ins. Co., supra, 41 Cal.3d at p. 912, 226 Cal.Rptr. 558, 718 P.2d 920.)   Here, the insureds could reasonably expect, absent policy language to the contrary, that the contents of their home would be protected under the policies from rain damage caused by the impact of wind upon normally adequate temporary coverings used during repair or remodeling.

DECISION

The order dismissing California Fair, and the judgment in favor of Aetna, are reversed.   Appellants to recover costs on this appeal.

FOOTNOTES

1.   The relevant portion of the California Fair policy provided:  “2. Windstorm or hail.  [¶] This peril does not include loss:  [¶] a. to the interior of a building or the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening․”The operative language of the Aetna policy provided:  “2. Windstorm or hail.  [¶] THIS PERIL DOES NOT INCLUDE LOSS TO THE PROPERTY CONTAINED IN A BUILDING BY RAIN, SNOW, SLEET, SAND OR DUST UNLESS THE DIRECT FORCE OF WIND OR HAIL DAMAGES THE BUILDING CAUSING AN OPENING IN A ROOF OR WALL AND THE RAIN, SNOW, SLEET, SAND OR DUST ENTERS THROUGH THIS OPENING.”

DANIELSON, Acting Presiding Justice.

ARABIAN and CROSKEY, JJ., concur.