|
State Farm issued a homeowners insurance policy (Policy) to Richard and Nuala Stellar as named insureds. The Policy covers a claim or suit "brought against an insured for damages because of bodily injury or property damage . . . caused by an occurrence..." "Occurrence "means an accident, including exposure to conditions, which results in: a. bodily injury; or b. property damages; during the policy period." "Bodily injury" means "physical injury, sickness, or disease to a person", but "does not include: . . . emotional distress, mental anguish, humiliation, mental distress, mental injury, or any similar injury unless it arises out of actual physical injury to some person."
The named insureds sued Philip Stellar, Richard's brother, for defamation, intentional infliction of emotional distress and intentional interference with contract. Philip cross-complained against appellants Richard and Miles Stellar, father and son, alleging slander per se, libel and intentional infliction of emotional distress. Philip alleged Richard and Miles stated that Philip had sexually molested his son; Richard sent an e-mail stating Philip is on drugs or had a gambling problem; and Richard prevented Philip's son from having a relationship with his grandmother. In each of the first four causes of action, Philip alleged appellants "acted willfully" and as to the last cause of action that appellants' actions were "intentional and malicious." Philip claims he suffered "extreme emotional" distress and physical manifestations of such distress.
Appellants tendered the defense of the cross-complaint to State Farm. State Farmed denied coverage because there was no "occurrence" or "bodily injury" as defined by the Policy. Appellants sued State Farm for breach of contract, bad faith and declaratory relief. State Farm moved for summary judgment on the ground it owed no duty to defend. The Los Angeles County Superior Court granted State Farm's motion for summary judgment. The Second Appellate District Court of Appeal affirmed.
The court of appeal held State Farm owed no duty to defend appellants because the cross-complaint's allegations all related to intentional or willful conduct and, thus, there was no occurrence or accident. The court noted that although "accident" was not defined by the Policy it would be given its plain meaning - "an event occurring unexpectedly or by chance."
The court of appeal rejected appellants' argument defamation does not necessarily involve intentional conduct relying on an out of context statement from Ulrich v. State Farm Fire & Casualty Co. (2003) 109 Cal.App.4th 598, 610 ["an insured could be liable for defamation for negligently publishing a defamatory statement"]. This statement, however, was merely part of a larger discussion that coverage is determined by the claims coupled with extrinsic facts, not the label chosen by the pleader. The appellants did not demonstrate coverage by the cross-complaints' claims or any extrinsic facts. In fact, the cross-complaint specifically alleged appellants' conduct was willful and intentional. Appellants provided no evidence to support their characterization of their conduct as negligent.
Further, the court of appeal rejected appellants' argument there was bodily injury because of the physical injuries manifested from Philip's emotional distress. "[R]egardless of whether there were allegations or evidence of physical injury sufficient to constitute "bodily injury" under the policy, the undisputed evidence established that such injury stemmed from an underlying claim that was not covered by the [P]olicy." In other words, regardless of whether Philip's alleged injuries constituted "bodily injury" they flowed from an uncovered occurrence.
This opinion is not final. It may be withdrawn from publication, modified on rehearing or the California Supreme Court may grant review. Should any of these events take place, the opinion would be unavailable for use as authority in other cases.
| 
