INTEGON NATIONAL INSURANCE COMPANY v. REECE (2020)

MEMORANDUM ***

Appellants Billy and Amber Reece and C.N., a minor, bring this consolidated appeal of the district court's entry of summary judgment in favor of Integon National Insurance Company (“Integon”). We have jurisdiction under 28 U.S.C. § 1291, and reviewing de novo, United States v. Swisher, 811 F.3d 299, 306 (9th Cir. 2016) (en banc), we affirm.

C.N. filed suit in state court against the Reeces for negligent supervision and entrustment, claiming injuries suffered while riding on the Reeces’ electric golf cart. The Reeces sought coverage from Integon under their homeowners’ policy. The policy excluded coverage for motor vehicle accidents, including accidents resulting from negligent supervision or entrustment. The exclusion had an exception, however, for vehicles designed for recreational use off public roads, so long as the “occurrence” took place at the “insured location.”. The “insured location” in this case was the Reeces’ home. C.N. was allegedly injured while on a public roadway.

Because the public roadway was not an “insured location,” the Integon homeowners’ policy does not encompass C.N.’s claims. An insurance policy is a contract, and under California law, “[t]he fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the ‘mutual intention’ of the parties.” Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1, 44 Cal.Rptr.2d 370, 900 P.2d 619, 627 (1995), as modified on denial of reh'g (Oct. 26, 1995). California law also endorses a “common sense” reading of an insurance policy. See, e.g., Foremost Ins. Co. v. Eanes, 134 Cal.App.3d 566, 184 Cal. Rptr. 635, 637 (1982). Here, a common sense reading of the Integon policy reveals the parties’ intent to cover only those “occurrences” that happened on the Reeces’ property. C.N.’s alleged injuries were suffered outside that policy limitation.

Appellants urge us to find coverage on the basis of the Reeces’ location at the time of the accident, arguing that the relevant “occurrence” was their allegedly-negligent supervision while at their home. Such coverage would be inconsistent with the language of the homeowners’ policy, as the parties clearly intended to exclude motor vehicle accidents, and any resulting injuries, suffered away from the insured location.

Appellants’ reliance on Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., 233 Cal.Rptr.3d 487, 418 P.3d 400 (2018), as modified (July 25, 2018) (“Liberty Surplus”), is misplaced. Liberty Surplus considered whether an employer's negligent hiring and supervision of an employee was an “occurrence,” and whether the alleged injury, though inflicted intentionally, could be considered an “accident.” 233 Cal.Rptr.3d 487, 418 P.3d at 402. Those issues are not presented here. Moreover, Liberty Surplus was “not concerned with where the accident occurred but with whether there was an ‘accident’ within the scope of the policy language.” Id., 233 Cal.Rptr.3d 487, 418 P.3d at 406. In this case, the location of the accident is fundamental. Because the “occurrence” in this case did not take place at an insured location, there is no coverage.

AFFIRMED.

Appellants to bear costs.