INSURANCE COMPANY OF NORTH AMERICA v. BENNETT (1979)

Defendant appeals from a judgment entered after the court ruled that plaintiff insurance company (INA) had no duty to indemnify her for injuries claimed by a guest in her home after a homeowner's policy had been cancelled.

The facts are not in dispute. Defendant purchased a homeowner's public liability policy from INA on January 1, 1973. In April of that year her house was damaged when bombs being transported by rail exploded near Roseville, California. No repairs were made to the structure. INA gave notice of termination of the policy on November 1, 1973, effective January 1, 1974. On September 29, 1974, defendant's grandson was a guest on the premises and allegedly suffered injury when struck by an object falling from the residence. Defendant was then named in a suit for negligent maintenance of property in a defective and dangerous condition. INA filed suit for declaratory relief on its obligation to indemnify defendant should she be found liable for the injury to her grandson. This appeal followed a judgment for INA in the trial court, after submission of the case on an agreed statement of facts.

Section two of the policy issued to defendant by INA obligates it to pay all sums for which the insured is liable because of bodily injury caused by an “occurrence.” An occurrence is defined as “an accident, including injurious exposure to conditions which results, During the policy term, in bodily injury or property damage.” (Emphasis added.)

Defendant contends this case is controlled by Insurance Co. of North America v. Sam Harris Constr. Co. (1978) 22 Cal.3d 409, 149 Cal.Rptr. 292, 583 P.2d 1335. In that case the California Supreme Court held that the insurance carrier was obliged to defend the owner of an airplane which crashed after the owner sold it and cancelled the policy when the seller was named defendant in a suit brought for negligent maintenance of the aircraft. For the reasons given below, we conclude that Harris does not apply and affirm.

The Harris court based its holding on its construction of the phrase “occurrences or accidents” which was used but not defined in the policy. Reasoning that the word “occurrence” could be defined as “anything that happens” and could lead the insured seller to infer that negligent repairs resulting in a later accident would be covered by the policy, the court applied the established rule that resolution of any ambiguity or uncertainty in an insurance policy must be against the insurer, citing Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 437-438, 296 P.2d 801. Because the case turned on the meaning of the undefined term “occurrence” the court distinguished indemnity policies in which the term was defined and found that the rule that time of the occurrence of an accident is the time when the complaining party was actually damaged and not the time the wrongful act was committed did not apply in the Harris circumstances. Authority cited for the rule was Remmer v. Glen Falls Indem. Co. (1956) 140 Cal.App.2d 84, 88, 295 P.2d 19 and Tijsseling v. General Acc. etc. Assur. Corp. (1976) 55 Cal.App.3d 623, 626, 127 Cal.Rptr. 681.

In Remmer, the court found an indemnity provision did not provide coverage for a landowner who had graded a lot when earth and rock slid on to a neighboring property after the policy had been cancelled. Although the nuisance was actionable when created by the grading, it was not sued upon until the policy was no longer in effect, thus precluding coverage under the policy which defined an occurrence as “ ‘an accident, or a continuous or repeated exposure to conditions, which results in injury during the policy period.’ ” (140 Cal.App.2d at p. 88, 295 P.2d at p. 20).

In Tijsseling, a seller of real property was sued by two buyers when they discovered that a house he had built on the lot sold to the first encroached on the adjacent lot sold to the second. The seller's policy, which defined occurrence as “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage . . .” (55 Cal.App.3d at p. 635, 127 Cal.Rptr. at p. 682), was purchased by the seller After the property sale and was in effect when the encroachment was discovered. The court found that the events constituting damage occurred either when the encroaching dwelling was constructed or when the negligent representations were made by the seller; and, since none of these events occurred during the policy period, it determined that under the Remmer rule there was no coverage. (Id., at pp. 626-627, 127 Cal.Rptr. 681.)

It will be noted that the language of the policies in Remmer and Tijsseling is nearly identical to that used in this case. Our research has revealed only one case in which on similar language coverage was found to exist for an event occurring after the termination of the policy. In Sylla v. United States Fid. and Guar. Co. (1976) 54 Cal.App.3d 895, 127 Cal.Rptr. 38 hearing denied, a garage owner sold a used car which was later involved in an accident. The garage owner was then sued in an action based on strict liability and negligent repair theories, and sued his former insurance company in turn. The policy defined occurrence as an “accident . . . which results, during the policy period, in bodily injury or property damage . . . .” (54 Cal.App.3d at p. 897, 127 Cal.Rptr. at p. 38.) The court distinguished garage liability policies from owner/operator accident liability policies on the grounds that the former recognize hazards beyond those anticipated by owner/operators. It held that the failure to further define “accident” in a garage liability policy created uncertainty sufficient to invoke the rule that ambiguities must be resolved against insurers. (Id., at p. 902, 127 Cal.Rptr. 38.) Since the present case involves a homeowner seeking defense and indemnity for injuries allegedly sustained in her home, Sylla is distinguishable; we find no ambiguity in the language of the policy in this case.¹ There is thus no basis upon which to conclude that the Remmer/Tijsseling rule does not apply. (Accord, see Maples v. Aetna Cas. & Surety Co. (1978) 83 Cal.App.3d 641, 148 Cal.Rptr. 80.)

Defendant's argument that policy considerations necessitate a finding of coverage in such situations to prevent insurers from injuring large segments of the public by cancelling policies after events such as the Roseville explosions is without merit. There is no indication in the record as to why the policy was cancelled and it remained in effect for nine months after the Roseville incident. Similarly, we reject defendant's invitation to apply a “course of nature” rule to relate back harm done, after a policy terminates, as being in direct contravention of the Remmer/Tijsseling rule.

The judgment is affirmed.

FOOTNOTES

1.  By distinguishing Sylla v. United States Fid. and Guar. Co. (1976) 54 Cal.App.3d 895, 127 Cal.Rptr. 38, we do not intend to suggest agreement with it or with its reasoning.

PARAS, Associate Justice.

JANES, Acting P. J., and EVANS, J., concur.