CROWN TREE SERVICE INC DBA v. ATAIN SPECIALTY INSURANCE COMPANY (2018)

MEMORANDUM **

Anthony Koenn and Crown Tree Services, Inc. (collectively, Koenn) appeals the grant of summary judgment in favor of Atain Specialty Insurance Company. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

This is an insurance coverage dispute arising from a commercial general liability policy sold by Atain to Koenn. The Bear Yuba Land Trust sued Koenn after he removed trees from Bear Yuba’s property under a belief the trees belonged to a neighbor. Koenn’s policy provided a duty to defend claims for property damage caused by an “occurrence,” which is defined as “an accident.”

There is inconsistent authority among California Court of Appeal cases on whether an insured’s reasonable belief, as was Koenn’s here, transforms an intentional act into an accident. Compare Fire Ins. Exch. v. Superior Court, 181 Cal.App.4th 388, 104 Cal.Rptr.3d 534, 538–41 (2010) (holding an intentional act cannot be an accident based on the insured’s subjective beliefs), and Albert v. Mid-Century Ins. Co., 236 Cal.App.4th 1281, 187 Cal.Rptr.3d 211, 219 (2015) (same), with Karpe v. Great Am. Indem. Co., 190 Cal.App.2d 226, 11 Cal.Rptr. 908, 911–12 (1961) (holding an insured’s dispatch of another’s cow to the slaughterhouse was potentially accidental because the insured might have confused the cow for one of his own).

We predict the California Supreme Court would hold that an insured’s subjective belief—no matter how reasonable—cannot transform an intentional act into accidental conduct. See, e.g., Std. Fire Ins. Co. v. Peoples Church of Fresno, 985 F.2d 446, 449–50 (9th Cir. 1993) (analyzing how the California Supreme Court would resolve an unresolved question of insurance policy interpretation); A-Mark Fin. Corp. v. CIGNA Prop. & Cas. Cos., 34 Cal.App.4th 1179, 40 Cal.Rptr.2d 808, 814–15 (1995) (same). Karpe, which held to the contrary, appears to have been implicitly overruled. First, Karpe equated negligence with accidental conduct, which the California Supreme Court has subsequently rejected as overly simplistic. See Delgado v. Interins. Exch. of Auto. Club of S. Cal., 47 Cal.4th 302, 97 Cal.Rptr.3d 298, 211 P.3d 1083, 1091–92 (2009). Second, although the California Supreme Court has held that an insured’s unreasonable belief cannot turn a “purposeful and intentional act” into “an accident,” id., 97 Cal.Rptr.3d 298, 211 P.3d at 1092, California courts have recognized that Delgado’s holding was not limited to unreasonable beliefs, see Fire, 104 Cal.Rptr.3d at 538 n.2; Albert, 187 Cal.Rptr.3d at 219. In contrast, no California court has relied on Karpe for its holding that subjective belief may influence the accident analysis.

Further, a potential for coverage does not exist merely because California courts have interpreted the policy term “accident” differently. See State Farm Mut. Auto. Ins. Co. v. Longden, 197 Cal.App.3d 226, 242 Cal.Rptr. 726, 730 (1987) (“We know of no case suggesting that an insurer has a duty to defend where the only potential for liability turns on resolution of a legal question.”). Thus, because there was no potential for coverage, Atain did not owe Koenn a duty to defend.¹

AFFIRMED.

FOOTNOTES

1.   Because we affirm the grant of summary judgment on the basis that Koenn lacked any potential for coverage, we do not reach Atain’s alternative arguments that coverage was excluded.