ERIN HUGHES, ET AL., VS TRAVELERS, ET AL.,

Tentative Rulings

Case Number: SC126699    Hearing Date: February 11, 2020    Dept: P

Tentative Ruling

Erin Hughes et al. v. Travelers et al., Case No. SC126699

Hearing Date: February 11, 2020

Defendants’ Motions for Summary Judgment

Plaintiff Erin Hughes was a defendant in an action filed by her domestic workers (“the lawsuit”), alleging discrimination, physical assault and labor violations, including forced labor. Defendant Pacific Specialty Insurance Company issued a policy to Hughes’ sister, Nelli Ohanian, which required Pacific to defend and indemnify Ohanian and relatives in her household from lawsuits arising out of “occurrences” at her property. Travelers issued a similar policy to Hughes directly. Plaintiff alleges both companies wrongfully refused to defend and indemnify her in the lawsuit and brings causes of action for bad faith refusal to defend and fraud.

Defendants move for summary judgment/adjudication, arguing the lawsuit is based on allegations of intentional wrongdoing, so does not fall within the companies’ contractual duty to defend, which only extends to “accidents.”

REASONING

Determination of whether an insurer owes a duty to defend is made “by comparing the allegations of the complaint with the terms of the policy.” All Green Electric, Inc. v. Security National Ins. Co. (2018) 22 Cal.App.5th 407, 412. The duty to defend does not depend on the labels given to the causes of action, but rests on whether the alleged facts or known intrinsic facts reveal a possibility the claim may be covered by the policy. Travelers Property Casualty Co. of America v. Charlotte Russe Holding, Inc. (2012) 207 Cal.App.4^th 969, 976.

For purposes of determining whether a duty to defend exists, an “accident” does not occur when the insured performs a deliberate act. Navigators Specialty Insurance Company v. Moorefield Construction, Inc. (2016) 6 Cal.App.5th 1258, 1275. A cause of action for negligence does not automatically arise out of “accidental” conduct—courts must determine based on the substance of the claim whether it alleges an “accident” giving rise to a duty to defend. E.g. Quan v. Truck Ins. Exchange (1998) 67 Cal.App.4th 583. The term “accident” does not apply to an act’s consequences, but to the act itself. Fire Ins. Exchange v. Superior Court (2010) 181 Cal.App.4th 388, 395.

The Pacific policy defines “occurrence . . . with respect to bodily injury and property damage,” as an “accident. . . . which results in bodily injury or property damage” An occurrence, with respect to “personal injury,” means the commission of false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, and slander or libel which results in injury other than bodily injury or property damage. Pacific’s compendium of evidence, ex. 1 pg. 1. The insurer promises to “provide a defense at our expense” for any claim or suit “brought against an insured because of bodily injury, personal injury or property damage.” Id. The duty to defend does not apply to “bodily injury, personal injury, or property damage which is a foreseeable result of an intentional or criminal act of any insured[.]”

The Travelers policy contains a similar provision; its coverage only applies to an “occurrence” causing bodily injury or property damage. The policy defines “occurrence” as “an accident . . . which results during the policy period, in bodily injury or property damage.”

Plaintiffs concede there is no coverage for the majority of causes of action alleged, since they are intentional torts and fall within the exception for “an intentional or criminal act of any insured[,]” in the Pacific policy and do not qualify as “occurrences” (i.e. accidents) under the Travelers policy. Plaintiff argues there is coverage because there is a claim for “negligent infliction of emotional distress causing physical trauma.”

A cause of action for negligence is not per se based on an “accident.” Plaintiff identifies no allegations (including those supporting the negligent infliction of emotional distress cause of action) or extrinsic evidence indicating the alleged injuries arise out of an “accident,” as opposed to intentional conduct. All factual allegations in the second amended complaint arise out of intentional conduct. The basis of the negligent infliction of emotional distress cause of action is that Hughes subjected her employees to verbal and physical abuse, deprived them of breaks, threatened to have them deported and failed to pay them for their work. SAC at ¶¶23-70, 117. None of this alleged conduct was accidental or unintentional; it is only the resulting emotional distress that is alleged to be unintended. Under Fire Ins. Exchange, supra, this cause of action is not based on an accident.

As all acts alleged in the underlying suit fall within the polices’ exclusions for intentional conduct, there is no coverage. GRANTED.