GRAY v. ZURICH INSURANCE COMPANY (1966)

This is an action for damages for the alleged failure of the defendant Zurich Insurance Company to defend the plaintiff Vernon Dartmouth Gray in connection with an action for assault and battery and for failure to pay a judgment rendered therein against plaintiff.

It is admitted that the defendant issued Policy No. 8970000 to the plaintiff on or about October 21, 1960. An altercation occurred between the plaintiff and one John R. Jones and as a result thereof an action for assault and battery was filed in Missouri which resulted in a judgment against plaintiff in the sum of $6,000. Plaintiff notified the Nettleship Company, which was an agent of defendant Zurich, but Zurich refused to defend plaintiff in the Missouri action upon the ground that there was no coverage in its policy for the lawsuit there involved.

Plaintiff sought to get his version of the manner in which the altercation arose and the assault that followed before the court by means of a written offer of proof to which defendant objected. In order to get the procedure and facts in proper focus, it should here be mentioned that appellant noticed a motion to augment the record on appeal by including, inter alia, certain minute orders of the trial court for hearing on the date set for argument of this case on its merits. We granted the motion to augment.¹ We thereby learned officially that the trial court rejected appellant's offer of proof, and thus refused to permit plaintiff to relitigate the facts and circumstances surrounding his altercation with the plaintiff in the assault and battery case in Missouri. Examination of defendant's exhibit A discloses that it contains, inter alia, a copy of the petition in the Missouri action, and that paragraph 2 thereof contains this allegation:

‘That on or about November 8, 1960, plaintiff John R. Jones, while talking to defendant, was wilfully, maliciously, brutally and intentionally assaulted by the defendant without provocation or cause.’ Defendant had access to this pleading, and in view of the demands made upon it by plaintiff to defend the Missouri action, undoubtedly availed itself of this opportunity and was fully familiar with it when it declined to defend said action on the ground that there was no coverage in the policy for the cause of action there involved.²

The pretrial order recites that it is admitted by all parties that said policy contained an exclusion clause denying coverage for intentional acts.

The case was tried by the court, sitting without a jury. Written findings of fact and conclusions of law were expressly waived. Judgment for defendant was rendered. Plaintiff has appealed.

The basic issue on this appeal is: Was the insurance company under a duty to defend the assault and battery case in Missouri and indemnify plaintiff for the loss proximately growing out of that action?

The obligation of the insurer to defend an action brought against the insured is determined by reference to (1) the terms of the insurance policy, and (2) the language of the complaint in the action brought against the insured.

In Lamb v. Belt Casualty Co., 3 Cal.App.2d 624, p. 630, 40 P.2d 311, p. 314, the court held:

‘In determining whether or not the appellant [insurer] was bound to defend, its denial of liability and refusal to defend, based upon its own investigation of the facts in the case, are to be disregarded. The language of its contract must first be looked to, and next the allegations of the complaints in each action for damages against the insured. * * *’

In Ritchie v. Anchor Casualty Co., 135 Cal.App.2d 245, p. 250, 286 P.2d 1000, p. 1003, this court stated the principle in this language:

‘* * * Respondent contends, and we agree, that the insurer's obligation to defend is measured by the terms of the insurance policy and the pleading of the claimant who sues the insured. * * *’

In Karpe v. Great American Indemnity Co., 190 Cal.App.2d 226, pp. 233–234, 11 Cal.Rptr. 908, p. 913, the court stated:

‘* * * The obligation to defend is measured by the terms of the policy and the allegations of the complaint against the insured. [Citations.] * * * The obligation to defend is broader than the obligation to indemnify. Nevertheless an insurer is not required to defend an action against its insured when the complaint in that action shows on its face that the injury complained of is excluded from policy coverage. [Citations.] * * * There was no duty to defend.’

Alos, where suit against the insured is brought and tried and results in judgment against the insured, the judgment operates as res judicata or collateral estoppel in the insured's subsequent action against the insurer. (Abbott v. Western Nat. Indemnity Co., 165 Cal.App.2d 302, 331 P.2d 997, affirming judgment of nonsuit; hear. den.) In Abbott defendant had issued a comprehensive policy to plaintiff which excluded, as here, any loss caused intentionally or at the direction of the insured. An action for damages for assault and battery was brought, as here, by one Jendrusch against the insured. Defendant had refused to defend the suit. It was held that there was no coverage of the intentional tort of assault and battery, and that plaintiff properly had been nonsuited in his action against the defendant insurance company.

Applying the principles of these authorities to the factual picture at bench it is clear that the trial court ruled correctly in denying plaintiff's offer of proof and in deciding the case on its merits.

First, it is to be noted that all parties agree that the policy contains an exclusion clause denying coverage for intentional acts. This is in harmony with section 533 of the Insurance Code. Second, the allegation in the Missouri petition is that plaintiff ‘was wilfully, maliciously, brutally and intentionally assaulted by the defendant without provocation or cause.’ Thus defendant was charged with committing an intentional tort on plaintiff. This is the kind of conduct against which one cannot insure (Insurance Code, § 533) for it would be contrary to public policy (Civil Code, § 1668). Hence from the face of the complaint it is clear that plaintiff in the Missouri case was seeking to recover damages for acts which are excluded from coverage in the policy. Apposite here therefore is the holding of the court in Karpe, supra, that ‘an insurer is not required to defend an action against its insured when the complaint in that action shows on its face that the injury complained of is excluded from policy coverage.’ To the same effect see: Liberty Building Co. v. Royal Indemnity, 177 Cal.App.2d 583, 587, 2 Cal.Rptr. 329; Remmer v. Glens Falls Indemnity Co., 140 Cal.App.2d 84, 90, 295 P.2d 19, 57 A.L.R.2d 1379.

Appellant argues that under Missouri law self-defense or provocation is raised by denial of the allegation of the complaint, and upon this basis argue that respondent thereby became obligated to defend. He relies upon Tomerlin v. Candian Indemnity Co., Cal.App., 37 Cal.Rptr. 15, and Walters v. American Insurance Co., 185 Cal.App.2d 776, 8 Cal.Rptr. 665. The Supreme Court granted a hearing in Tomerlin, and thereafter rendered a decision on a different theory. (Tomerlin v. Canadian Indemnity Co., 61 Cal.2d 638, 39 Cal.Rptr. 731, 394 P.2d 571.)

Appellant's reliance on Walters is misplaced. In that case, one Byington threatened to sue the insured, Walters, for assault and battery but no suit ever was filed. Walters informed the insurer of the threat. The latter immediately disclaimed any coverage of the event. Walters settled the claim, without suit having been brought, for the purpose of protecting his financial standing and credit rating. ‘Here’, the court pointed out, ‘there was no action or pleading by Byington, whereby the insurer's duty to defend would be measured.’ (P. 785, of 185 Cal.App.2d p. 671, of 8 Cal.Rptr.) The situation in Walters is very different from the instant case, as will appear from an analysis of Walters by the court in Maxon v. Security Insurance Company, 214 Cal.App.2d 603, 29 Cal.Rptr. 586.

Maxon is important in two respects: (1) it restates and summarizes the principles that are here controlling, and (2) its analysis of Walters demonstrates the inapplicability of that case to the case at bench. In affirming a judgment for defendant-insurer against plaintiff-insured, the court stated (214 Cal.App.2d pp. 616–619, 29 Cal.Rptr. pp. 593–595):

‘The general rule is that the obligation to defend is measured by comparing the terms of the insurance policy with the pleadings of the claimants who sued the insured. (Liberty Bldg. Co. v. Royal Indeem. Co., 177 Cal.App.2d 583, 587, 2 Cal.Rptr. 329; Bonfils v. Pacific Auto. Ins. Co., 165 Cal.App.2d 152, 160, 331 P.2d 766; Osborne v. Security Ins. Co., supra, 155 Cal.App.2d 201, 206, 318 P.2d 94; Ford v. Providence Washington Ins. Co., 151 Cal.App.2d 431, 437, 311 P.2d 930; Remmer v. Glens Falls Indem. Co., 140 Cal.App.2d 84, 90, 295 P.2d 19, 57 A.L.R.2d 1379; Ritchie v. Anchor Casualty Co., 135 Cal.App.2d 245, 250, 286 P.2d 1000; Lamb v. Belt Casualty Co., 3 Cal.App.2d 624, 630, 40 P.2d 311; Greer-Robbins Co. v. Pacific Surety Co., 37 Cal.App. 540, 543, 174 P. 110.) The obligation to defend is measured by the terms of the policy applied to the allegations of the complaint, whether they be true or false. (Osborne v. Security Ins. Co., supra, p. 206, of 155 Cal.App.2d p. 98 of 318 P.2d; Ritchie v. Anchor Casualty Co., supra, of 135 Cal.App.2d p. 250, p. 1003 of 286 P.2d; Lamb v. Belt Casualty Co., supra, of 3 Cal.App.2d p. 630, p. 313 of 40 P.2d.) As pointed out in the Greer-Robbins Co. case, the insurer's obligation to defend is one that must be determined before the outcome of the action against the assured, not thereafter. The insurer is not required to defend an action against the insured when the complaint in that action shows on its face that the injury complained of is not only not covered by, but is excluded from the policy. * * *

‘The appellant relies upon Lamb, and Walters v. American Ins. Co., 185 Cal.App.2d 776, 8 Cal.Rptr. 665. The Lamb case is in accord with the general rule just alluded to. Walters is readily distinguishable from the case at bench. * * * [Discussion of the Lamb case.]

‘In Walters a claim was made against the insured for an assault and battery. The carrier of his personal liability policy refused to defend the claim on the ground that an assault and battery is a willful act. The insured settled with the claimant in order to preserve his credit standing, and thereupon brought an action against the carrier for declaratory relief and for recovery of the amount of the settlement. In reversing a judgment for the defendant the appellate court held that there was no action or pleading filed by the claimant whereby the insurer's duty to defend would be measured. It accordingly concluded that the question was open in the proceeding before it and thereupon proceeded to interpret the exclusion provision in the policy. The exclusion there was to the effect that the coverage did not apply to injury “caused intentionally by or at the direction of the insured.” (P. 779 of 185 Cal.App.2d p. 667 of 8 Cal.Rptr.) The trial court had found that the insured had acted in self-defense, but held that because the settlement was made to protect the insured's credit and not as the result of any legal obligation there was no liability on the part of the carrier. The appellate court held, however, that in view of the trial court's finding that the insured had acted in self-defense the injury was not ‘intentional’ within the terminology of the policy before it. The reviewing court reasoned that under the Russ-Field Corp. [v. Underwriters at Lloyd's, London, England] case, [164 Cal.App.2d 83, 92, 330 P.2d 432] a person acting in self-defense is not committing a willful act under section 533, because while he “intended the act,” he ‘acted by chance and without a preconceived design to inflict injury just as though he were acting intentionally, although negligently, nd injured someone.’ (P. 783, of 185 Cal.App.2d, p. 670 of 8 Cal.Rptr.) The appellate court thereupon concluded that the element of wrongfulness or misconduct contemplated in section 533, was absent. In the case at bench we have a pleading by which the insurer's duty to defend can be measured. In our opinion, Walters is not subject to the interpretation that in every case there is an obligation to defend until it is determined whether or not the act complained of was in fact willful. Such a rule would require to defense, in every instance, of actions in which it clearly appears from the face of the pleading and the terms of the policy that there can be no indemnity for loss. Such a holding is inconsistent with the well-established principle of law announced by a host of authorities that an insurer's obligation to defend is measured by the terms of the policy and the pleading of the claimant who sues the insured. Suffice it to say, Walters recognizes this general principle of law, but proceeds to distinguish it on the basis that where a settlement of litigation has been made and no judgment establishing the liability of the insured rendered, the question of the insurer's liability to defend remains open for adjudication in a latter proceeding.'

So, as in Maxon, Walters is readily distinguishable from the case at bench.

The judgment is affirmed.

FOOTNOTES

1.  When we granted appellant's motion to augment we advised counsel that if we found reference in this new material to anything that would appear to be helpful in deciding this appeal, we would, on the court's own motion, further augment the record to include it. Upon examining the minutes of July 29, 1964, we discovered that on a hearing on July 22, 1964, defendant's exhibits A (legal documents No. 237,851 from the Missouri court) and B (insurance policy) were received in evidence. We therefore further augment the record on appeal to include these exhibits.

2.  We are told by plaintiff that the insurance company did not deny coverage until the day before the civil trial got under way.

FOX, Justice.*