COUNTY SANITATION DISTRICT NO OF LOS ANGELES COUNTY v. HARBOR INSURANCE COMPANY (1993)

Appellant County Sanitation District No. 2 of Los Angeles County, (the District) sued several insurers for their failure to defend and indemnify the District against suits arising from the Abalone Cove landslide, asserting the insurers should pay the costs of defense and settlement.   The court applied the “manifestation” trigger of insurance coverage and held some of the insurers were not liable;  and that recovery from the California Insurance Guaranty Association (CIGA), which had taken over the one insurer which was liable, was limited by statute.

We conclude the court ruled appropriately in every respect and, consequently, affirm the judgment.

UNDERLYING FACTS:

1. The Horan Action

In August 1979, Lawrence and Patricia Horan, et al., (the Horan plaintiffs) filed suit against the District for damages their respective parcels of real property suffered as a result of the 1974 Abalone Cove landslide on the Palos Verdes Peninsula.   In pertinent part, the complaint alleged that each of the Horan plaintiffs had complied with statutory requirements and filed timely claims with the District;  the Abalone Cove landslide was part of “an ancient landslide mass that has not been active within the last 10,000 years prior to 1956;”  the construction activity commenced by the District in 1956 precipitated activation of this landslide area;  in 1974 a small slide took place on improved public property in the Abalone Cove Beach Area;  no steps by the District were taken to stabilize this area;  consequently the Horan plaintiffs' properties, located upslope from this area, had moved and continued to move, causing damage to the structures on their properties.

The District received the first claims from the Horan plaintiffs on March 26, 1979.   The last claim was received on August 8, 1979.   Each claim stated the damage occurred within one year prior to the filing of the claim.

On May 27, 1987, the County reached a $715,000 settlement with the Horan plaintiffs.   All parties to the underlying action stipulated at trial to the reasonableness of the settlement amount.

2. The District's Action

The District filed its original and first amended complaint against six insurers, which had issued it general liability insurance policies from 1972 through 1981.¹  In sum, the District alleged that the Abalone Cove landslide continuously occurred from 1974 to 1981;  by the terms of the insurers' policies, each had agreed to defend and indemnify the District for the kind of damage caused to the Horan plaintiffs by the Abalone Cove landslide;  these policies were in effect when the Abalone Cove landslide occurred;  and with the approval of each of these insurers, on May 28, 1987, the District had reached a settlement of $715,000 with the Horan plaintiffs.   The District further alleged that it had made a demand on these insurers, and each refused to pay, except CIGA, which paid $100,000 on behalf of Integrity;  Central National, which loaned the sum of $107,500;  and Puritan, which loaned the sum of $7,500.   In addition, the District alleged it had incurred $471,419.50 in litigation costs and expenses.

Respondent Central National cross-complained against the District, alleging it was entitled to repayment of its $107,500 loan to the District.

Before trial, the District settled with three insurers.   The three remaining were:  respondent American Bankers, which issued the District a primary general liability policy for the period November 30, 1974, to December 1975;  respondent Central National, which issued three successive, primary general liability policies for the period December 17, 1975, to February 17, 1978;  and respondent CIGA, the successor to insolvent Integrity, which issued the District three successive, primary general liability policies for the period February 17, 1978, to February 17, 1981.²

Prior to trial, in response to motions for summary adjudication of issues and for summary judgment, the court ruled that “only those insurers whose coverage existed at the time of the manifestation of damage could be liable.”   The court defined “manifestation of damage” as “the time the damage was manifested in the property of the claimants ․ manifested by cracks in the walls, houses falling down, things like that.”   The court ruled, therefore, that respondent Central National was liable for only the two Horan plaintiffs who experienced damage prior to expiration of Central's coverage and, as to the remaining claims, granted respondent American Bankers' motion for summary judgment.

On the basis of irrelevancy, the court did not permit the District to call an expert witness, who would have testified about the nature and effects of the 1974 Abalone Cove landslide.

Judgment was entered on February 20, 1991.   In its statement of decision, filed the same date, the court, in pertinent part, ruled:  the liability policies of respondents Central National and American Bankers were “occurrence” type policies;  the central coverage issue involved was “time of occurrence” of “property damage;”  the legal rule to be applied was the time of “manifestation” of such damage to the third person claimant;  the only relevant manifested damage was that to the Horan plaintiffs' properties;  the first “manifestation” of “property damage” to the Horan homes occurred after respondent Central National's coverage had expired on February 27, 1978, and while Integrity's coverage was in effect;  the earliest possible manifestation of damage was one year from the filing of the first claim against the District, i.e., March 27, 1978;  this date was after the expiration of the policies of respondents Central National and American Bankers;  therefore, neither of these respondents had a duty to indemnify or defend.   The court further ruled that respondent Central National was entitled to repayment of its $107,500 loan to the District;  the policy of respondent CIGA (Integrity) was in effect and it had a duty to defend and indemnify;  CIGA's obligation to pay defense costs was statutorily limited to the amounts expended after appointment of Integrity's liquidator;  and CIGA's (Integrity's) indemnification obligation was limited by the policy terms to any amount over $500,000, i.e., $251,000;  as CIGA had contributed $100,000 to the funding of the settlement, it was entitled to a credit or offset in that amount.

The District timely appealed.

DISCUSSION:

The District asserts the court committed legal error when it applied the “manifestation” trigger of liability to a third party liability claim based upon progressive continuing damage;  committed prejudicial error when it disallowed the testimony of the District's expert witness;  and committed legal error when it limited the liability of CIGA.

1. Trigger of Liability

 Where the facts are undisputed, defining and interpreting terms of an insurance contract to determine when liability should attach is a question of law.   As such, we are not bound by the trial court's interpretation;  instead, we exercise our independent judgment to interpret the language of the insurance contract.  (See Fireman's Fund Ins. Co. v. Aetna Casualty & Surety Co. (1990) 223 Cal.App.3d 1621, 1625, 273 Cal.Rptr. 431;  Canterbury Termite Control, Inc. v. Structural Pest Control Bd. (1989) 207 Cal.App.3d 422, 426, 254 Cal.Rptr. 873.)

The District asserts, in a third party liability context where there is continuing, progressive property damage, the correct trigger of liability should be the “time of occurrence” of the event which caused the property damage;  and, here, the “occurrence” which caused the property damage to the Horan plaintiffs was the Abalone Cove landslide, which occurred continuously from 1974 to 1978.   We do not agree.

While there has been no definitive resolution of this issue by our Supreme Court, there is case law, described below, which supports application of the “manifestation” trigger in a third party liability claim context.   We find the analysis and conclusions of these cases to be persuasive;  consequently, we concur with the trial court's legal determination.

California Union Ins. Co. v. Landmark Ins. Co. (1983) 145 Cal.App.3d 462, 193 Cal.Rptr. 461, a third party liability case, discussed the problems arising in a progressive property damage case, specifically addressing the issue of which carrier should indemnify insureds for a loss that occurred over two separate policy periods.   In California Union, the insureds installed a swimming pool during one insurer's policy period.   The pipes to the pool, and possibly the pool itself, began to leak during that insurer's policy period and repairs, which the parties believed would correct the problem, were made.   However, the leaks continued during the term of the successive insurer, and subsequent damage occurred.   After a thorough discussion of several out-of-state and California cases, the California Union court held a situation involving continuous, progressive and deteriorating damage over a period of time was “one occurrence,” and the carrier in whose policy period the damage first becomes apparent remains on the risk until the damage is finally and totally complete, notwithstanding a policy provision which purports to limit the coverage solely to those accidents/occurrences within the time parameters of the stated policy term.   (California Union Ins. Co. v. Landmark Ins. Co., supra, 145 Cal.App.3d at p. 476, 193 Cal.Rptr. 461.)   Having determined that the situation involved was “one occurrence,” the court next addressed the issue of coverage and held the two insurers jointly and severally liable for the damage suffered after the expiration of the first policy.  (Id., at p. 478, 193 Cal.Rptr. 461.)   In the case before us, the District relies heavily on California Union to support its position that the 1974 to 1981 landslide is “one occurrence” and all respondent insurers should share the District's settlement costs and costs of defense.

In Home Insurance Co. v. Landmark Insurance Co. (1988) 205 Cal.App.3d 1388, 253 Cal.Rptr. 277, the issue was “which of two first party insurers is liable for the loss for continuing property damage manifested during successive policy periods.”  (Home Insurance Co. v. Landmark Insurance Co., supra, 205 Cal.App.3d at p. 1390, 253 Cal.Rptr. 277.)   The Home court did not discuss the difference between a first party property loss policy and a third party liability policy.   Disagreeing with the apportionment required by California Union, the Home court held that the “date of manifestation determines which carrier must provide indemnity for a loss suffered by its insured” and that “as between two first-party insurers, one of which is on the risk on the date of first manifestation of property damage, and the other on the risk after the date of the first manifestation of damage, the first insurer must pay the entire claim.  (Home Insurance Co. v. Landmark Insurance Co., supra, 205 Cal.App.3d at pp. 1392, 1393, 253 Cal.Rptr. 277.)   The Home court limited its holding to the facts before it.  (Id., at p. 1394, fn. 3, 253 Cal.Rptr. 277.)

In Fireman's Fund Ins. Co. v. Aetna Casualty & Surety Co., supra, 223 Cal.App.3d at p. 1621, 273 Cal.Rptr. 431, filed September 1990, the same appellate district which decided Home, supra, addressed the issue in a third party liability context.   In Fireman's Fund, two insurers had insured a construction company under liability policies issued during successive policy periods.  Fireman's Fund was on the risk when construction defects were first discovered;  Aetna was on the risk when the defects progressed and when their cause became known.   The Fireman's Fund court held that Garvey v. State Farm Fire & Casualty Co., (1989) 48 Cal.3d 395, 257 Cal.Rptr. 292, 770 P.2d 704, did not require a different trigger of liability when a case involves a third party rather than a first party claim, and determined that the insurer on the risk when the damage manifested itself was the carrier required to pay the entire claim.  (Fireman's Fund Ins. Co. v. Aetna Casualty & Surety Co., supra, 223 Cal.App.3d at pp. 1625–1626, 273 Cal.Rptr. 431.)   The court noted that the causation analysis emphasized in Garvey, supra,³ as the difference between first party property loss and third party liability claims was not pertinent because the present issue did not remotely relate to causation.   It concluded that the critical fact to which the Home court alluded when limiting its holding was not whether a first party or third party claim was at issue, but whether the claimant had been fully satisfied by insurance proceeds and the case involved allocating the loss between insurers.  (Fireman's Fund Ins. Co. v. Aetna Casualty & Surety Co., supra, 223 Cal.App.3d at pp. 1626–1628, 273 Cal.Rptr. 431.)

Subsequent to California Union, Home, and Fireman's Fund, in Prudential–LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230, our Supreme Court discussed attachment of liability in a first party progressive property loss case.   The Prudential–LMI court explained that for purposes of the running of the statutory one year notice provision, liability attached “on the date of inception of the loss, defined as that point in time when appreciable damage occurs and is or should be known to the insured, such that a reasonable insured would be aware that his [or her] notification duty under the policy has been triggered.”  (Id., at p. 678, 274 Cal.Rptr. 387, 798 P.2d 1230.)   While the Prudential–LMI court applied the “manifestation” test, utilized by the trial court here, it specifically limited its holding to first party progressive property loss cases.  (Prudential–LMI Com. Insurance v. Superior Court, supra, 51 Cal.3d at pp. 678–679, 274 Cal.Rptr. 387, 798 P.2d 1230.)   The Prudential–LMI court cited Garvey v. State Farm Fire & Casualty Co., supra, 48 Cal.3d 395, 257 Cal.Rptr. 292, 770 P.2d 704, when it limited its holding, referring to the Garvey court's analysis of the distinction between a first party property loss insurance policy and a third party liability policy.⁴

The Prudential–LMI court discussed California Union, supra, and specifically noted that, as a third party liability case, California Union's analysis “necessarily differed in many respects from the one” the court was undertaking, and as the issue of whether an allocation or exposure theory should apply in the third party property damage liability context was not before it, it would leave that resolution to another date.   (Prudential–LMI Com. Insurance v. Superior Court, supra, 51 Cal.3d at pp. 697–698, 274 Cal.Rptr. 387, 798 P.2d 1230.)   The issue of whether the “manifestation” test should apply in a third party liability insurance context, therefore, was not resolved by Prudential–LMI.

More recently, Pines of La Jolla Homeowners Assn. v. Industrial Indemnity (1992) 5 Cal.App.4th 714, 7 Cal.Rptr.2d 53, an appeal from the granting of a motion for summary judgment, utilized the manifestation trigger in a third party liability context to find that as to the liability of an “excess” insurer, a question of fact existed regarding which damages had manifested themselves during the policy period of that insurer.   The policies at issue had language identical to that in the case before us.  (Id., at p. 717, 7 Cal.Rptr.2d 53.)   The Pines court relied upon both Home Ins. Co. v. Landmark Ins., Co., supra, and Fireman's Fund Ins. Co. v. Aetna Casualty & Surety Co., supra, in holding that a policy issued after the “loss in progress” has begun does not cover such loss and that any damage manifested during the first insurer's policy period would be its responsibility.  (Id., at pp. 721–722, 7 Cal.Rptr.2d 53.)

Finally, our own division in Whittaker Corp. v. Allianz Underwriters, Inc. (1992) 11 Cal.App.4th 1236, 14 Cal.Rptr.2d 659, a third party liability case, applied the “manifestation” trigger to find that two “umbrella” insurers were not liable for damage to a third party which became manifest after expiration of their policies.  (Id., at p. 1244, 14 Cal.Rptr.2d 659.)

We are in accord with the holdings summarized above.   All, including California Union, supra, are consistent in their conclusion that the manifestation of the damage triggers the insurer's obligation under its policy.  California Union parts company with the remaining cases when it apportions liability amongst successive insurers, but even it does not contemplate finding pre-manifestation insurers liable for the damages at issue.

 As we noted in Whittaker Corp., supra, “For the purpose of determining whether there is coverage within the policy period, it is well established that the time of the relevant ‘occurrence’ ․ is not when the wrongful act was committed but when the complaining party was actually damaged.  [Citations.]”  (Whittaker Corp. v. Allianz Underwriters, Inc., supra, 11 Cal.App.4th at p. 1241, 14 Cal.Rptr.2d 659.)

We also concur with the Home and Fireman's Fund courts' conclusion that the causation discussion of Garvey (see fn. 4, supra ), which focuses on the question of the insured's liability, is not necessarily a bar to applying the manifestation trigger to the third party liability situation.   Here, there is no question that the “occurrence” of the landslide and the District's inaction caused the damages to the Horan plaintiffs' properties.   As in Home, supra, and Fireman's Fund, supra, the only question is as between several insurers which shall pay.

The purpose of a third party liability policy is to defend and indemnify the insured against damages suffered by third parties because of actions of the insured.   These obligations do not arise until a third party has been injured by the actions of the insured.   When the District posits that the damage to the Horan plaintiffs' property commenced with the 1974 Abalone Cove landslide, it equates “occurrence” with damage and confuses two distinct concepts.  “The policy is invoked or ‘triggered,’ when the time of the injury is within the effective dates of the policy;  the time of the ‘occurrence’ producing the injury is irrelevant to the triggering of the policy.”  (Whittaker Corp. v. Allianz Underwriters, Inc., supra, 11 Cal.App.4th at p. 1243, 14 Cal.Rptr.2d 659, quoting with approval Uniroyal, Inc., v. Home Ins. Co. (E.D.N.Y.1988) 707 F.Supp. 1368, 1387, internal quotation marks omitted;  accord Pines of La Jolla Homeowners Assn. v. Industrial Indemnity, supra, 5 Cal.App.4th at p. 721, 7 Cal.Rptr.2d 53.)   In the instant case, the court ruled that the Horan plaintiffs were actually damaged after the policies of respondents Central National and American Bankers had expired, and the record evinces substantial evidence to support that finding.

2. Exclusion of Expert Witness

 Exclusion of expert witness testimony on the basis of irrelevancy lies within the sound discretion of the trial court.  (People v. Ashmus (1991) 54 Cal.3d 932, 973, 2 Cal.Rptr.2d 112, 820 P.2d 214.)   Here, the court found the testimony to be offered by the District's expert was irrelevant to the issue at hand, based upon the court having ruled that the “manifestation” trigger of liability applied.   Having concluded above that this determination by the trial court was legally correct, we find the court did not abuse its discretion when it disallowed the testimony of the District's expert witness.

3. CIGA's Obligation

 The trial court ruled that CIGA (Integrity) was liable to the District for settlement (subject to a $500,000 “deductible”) and defense costs, but, pursuant to Insurance Code section 1063.2 ⁵ , its defense costs and fees liability was limited to that incurred subsequent to the appointment of the liquidator.   CIGA was ordered, therefore, to pay a total of $5,303.18 in defense costs.   The District challenges the validity of the court's statutory interpretation.

For the purposes of this appeal, there is no factual dispute as to the amount or date of defense fees and costs incurred by the District;  nor is there any dispute that Integrity was ordered into liquidation on March 9, 1987.   We are presented, solely, with a question of statutory construction, which is a question of law.   Consequently, we are not bound by the trial court's conclusion instead, we make an independent determination.  (Wallace Berrie & Co. v. State Board of Equalization (1985) 40 Cal.3d 60, 65, 219 Cal.Rptr. 142, 707 P.2d 204.)

We begin with a brief discussion on the nature and purpose of CIGA and, with that as a background, address the statutes at issue here.

(a) Nature and Purpose of CIGA

“CIGA is not and was not created to act as ordinary insurance company.  [Citation.]   It is a statutory entity that depends on the Guarantee Act for its existence and for a definition of the scope of its powers, duties, and protections.   CIGA is an involuntary, unincorporated association of insurers admitted to transact business in California.   Each insurer is required to participate in CIGA as a condition of doing business in this state.   The statutory purpose of CIGA is to provide for each insurer member insolvency insurance to pay the claims arising out of policies issued by an insurer who becomes insolvent.   Funds for the payment of such claims are obtained by collecting premium payments from its members.   CIGA is limited to the payment of ‘covered claims.’  [Citation.]”  (Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 786, 244 Cal.Rptr. 655, 750 P.2d 297, internal quotation marks omitted.)  “CIGA is not in the ‘business' of insurance․   CIGA issues no policies, collects no premiums, makes no profits, and assumes no contractual obligations to the insureds.”  (Id., at p. 787, 244 Cal.Rptr. 655, 750 P.2d 297.)

CIGA does not “stand in the shoes” of the insolvent insurer for all purposes;  rather, “it is authorized by statute to pay only ‘covered claims' of an insolvent insurer, those determined by the Legislature to be in keeping with the goal of providing protection of the insured public.  (§ 1063.2, subd. (a).)”  (R. J. Reynolds Co. v. California Ins. Guarantee Assn. (1991) 235 Cal.App.3d 595, 600, 1 Cal.Rptr.2d 405.)   The scope of CIGA's statutory duties “turns on the definition of ‘covered claims.’ ”  (Saylin v. California Insurance Guarantee Assn. (1986) 179 Cal.App.3d 256, 262, 224 Cal.Rptr. 493.)

(b) Sections 1063.1 and 1063.2

These sections are part of Article 14.2, which creates and defines the obligations of the California Insurance Guarantee Association.

The definitions of this Article are listed in section 1063.1.   In pertinent part, section 1063.1, subdivision (c)(1), provides, “ ‘Covered claims' means the obligations of an insolvent insurer, including the obligation for honoring premiums, (i) imposed by law and within the coverage of an insurance policy of the insolvent insurer;  (ii) which were unpaid by the insolvent insurer;  (iii) which are presented as a claim to the liquidator in this state or to the association on or before the last date fixed for the filing of claims in the domiciliary liquidating proceedings;  (iv) which were incurred prior to the date coverage under the policy terminated and prior to, on, or within 30 days after the date of the liquidator was appointed;  (v) for which the assets of the insolvent insurer are insufficient to discharge in full․”

Section 1063.2, entitled “Covered claims;  duties;  priority of claims,” sets forth the various obligations of the association.   In pertinent part, section 1063.2, subdivision (a), provides, “The association shall pay and discharge covered claims and in connection therewith pay for or furnish loss adjustment services and defenses of claimants when required by policy provisions.   It may do so either directly by itself or through a servicing facility or through a contract for reinsurance and assumption of liabilities by one or more member insureds or through a contract with the liquidator․”

In pertinent part, section 1063.2, subdivision (j), provides, “ ‘Covered claims' shall not include any loss adjustment expenses, including adjustment fees and expenses, attorney fees and expenses, court costs, interest, and bond premiums, incurred prior to the appointment of a liquidator․”

When limiting the scope of CIGA's obligation to pay for the District's defense costs, the court relied on section 1063.2, subdivision (j), which excludes attorney fees and court costs incurred before appointment of the liquidator, from “covered claims.”   The District asserts this was error because, pursuant to section 1063.2, subdivision (a), CIGA is obligated to pay not only “covered claims” but also the defense related thereto.   In other words, the District contends defense costs are not part of “covered claims” but are adjunct to “covered claims.”

“The fundamental rule of statutory construction is that the court should ascertain the intent of the Legislature so as to effectuate the purpose of the law.  [Citations.]   Moreover, every statute should be construed with reference to the whole system of law of which it is a part so that all may be harmonized and have effect.  [Citation.]   If possible, significance should be given to every word, phrase, sentence and part of an act in pursuance of the legislative purpose.  [Citation.]   Such purpose will not be sacrificed to a literal construction of any part of the act.   For purposes of statutory construction, the various pertinent sections of all codes must be read together and harmonized if possible.  [Citation.]   Also relevant when the seeming inconsistencies appear in separate codes is the rule declaring that the codes blend into each other and constitute a single statute for purposes of statutory construction.  [Citations.]  [¶] Statutes must be given a reasonable construction which conforms to the legislative intent.   They should be interpreted to promote the objective intended and consistent with wise policy, and the statutory language read as a whole, as well as the consequences that would flow from a particular result, must be considered.  [Citation.]”   (Mendez v. Kurten (1985) 170 Cal.App.3d 481, 485–486, 215 Cal.Rptr. 924, internal quotation marks omitted.)

These rules of statutory construction and the plain language and limitations of this statute require rejection of the District's position.   We cannot forget, as noted by the court in Isaacson, supra, that CIGA's obligation to pay is defined by statute, and the statute limits CIGA to paying only “covered claims.”   While section 1063.2, subdivision (a), does speak to CIGA's obligation to pay “defenses of claimants” in connection with “covered claims,” this obligation is later limited by section 1063.2, subdivision (j), to those defense costs incurred after appointment of the liquidator.   This makes sense because prior to appointment of the liquidator the insurer is not an “insolvent insurer,” and the insurer has the duty to defend and is the entity responsible for payment of defense costs.   This interpretation adheres to the provisos that we interpret a statute to give meaning to every phrase and to promote consistency and harmony amongst various provisions.   To hold otherwise would render subdivision (j) meaningless and, contrary to established rules, would deem the adoption of subdivision (j) by the legislature an idle act.  (See Adams v. Murakami (1991) 54 Cal.3d 105, 123, 284 Cal.Rptr. 318, 813 P.2d 1348.)

DISPOSITION:

The judgment is affirmed.

FOOTNOTES

1.   The six insurers were:  Harbor Insurance Company, Calvert Insurance Company, American Bankers Insurance Company of Florida (American Bankers), Central National Insurance Company of Florida (Central National), Integrity Insurance Company (Integrity) and Puritan Insurance Company (Puritan).

2.   The policies of the three remaining insurers, in pertinent part, have similar, if not identical, provisions, which provide:  “The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (a) bodily injury or (b) property damage to which this insurance applies, caused by an occurrence ․”“Occurrence” is defined as an “accident, including injurious exposure to conditions, which results during the policy period in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”

3.   See footnote 4, infra.

4.   The Garvey court noted the scope of coverage and the operation of the exclusion clauses differ in the first party property loss and third party liability situations, requiring a different causation analysis.   The Garvey court explained, “[T]he right to coverage in the third party liability insurance context draws on traditional tort concepts of fault, proximate cause and duty.   This liability analysis differs substantially from the coverage analysis in the property insurance context, which draws on the relationship between perils that are either covered or excluded in the contract.   In liability insurance, by insuring for personal liability, and agreeing to cover the insured for his [or her] own negligence, the insurer agrees to cover the insured for a broader spectrum of risks.”  (Garvey, supra, 48 Cal.3d at 407, 257 Cal.Rptr. 292, 770 P.2d 704.)When comparing the pertinent sections of a homeowner's policy, the Garvey court commented, “[U]nder the all-risk first party property policy, because generally ‘all risk of physical loss' is covered, the exclusions become the limitation on loss coverage.   Under the liability portion of the policy, ․ the focus is, at least initially, on the insured's legal obligation to pay for injury or damage arising out of an ‘occurrence.’ ”  (Garvey v. State Farm Fire & Casualty Co., supra, 48 Cal.3d at 407–408, 257 Cal.Rptr. 292, 770 P.2d 704.)

5.   Subsequent statutory references are to the Insurance Code unless otherwise indicated.

PEREZ, Associate Justice.

TURNER, P.J., and ARMSTRONG, J., concur.