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Appellant City of Bakersfield appeals from a judgment in favor of respondent Essex Insurance Company in the Superior Court of Kern County which found Essex did not owe the City a duty to defend or indemnify it in a personal injury lawsuit entitled Navarro v. Fulamex I ("Navarro") arising out of an automobile versus truck accident. The Court of Appeal for the Fifth Appellate District reversed, finding Essex had a duty to defend and indemnify the City because the policy's auto exclusions were not plain and clear enough to defeat the City's reasonable expectation of coverage. The decision was filed on August 2, 2007, and ordered published on August 27, 2007.
The Navarro lawsuit arose from an automobile accident that allegedly was caused by traffic and congestion created by an event organized by the City. Neither the drivers nor the vehicles had any connection to the city, and the accident did not occur in the immediate area of the event. Plaintiffs alleged the City breached its duty of care by "placing the heavily traveled [event] on a major highway, and by providing dangerous and inadequate traffic controls, signage, and traffic direction."
Essex issued a commercial general liability insurance policy to the City for a 15-day period covering occurrences during the event. The policy excluded "'Bodily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any aircraft, 'auto' or watercraft owned or operated by or rented or loaned to any insured." The policy included an endorsement modifying the "auto" exclusion: "This insurance does not apply to 'bodily injury' or 'property damage' arising out of, caused by or contributed to by the ownership, non-ownership, maintenance, use or entrustment to others of any 'auto.' Use includes operation and 'loading and unloading.'"
The policy also contained a "Special Events/Spectator Liability Endorsement," which excluded "'bodily injury', 'property damage', 'personal injury', 'advertising injury', or any injury, loss or damage arising out of:…automobiles, motorized land vehicles of any type…" (Italics in original.)
Essex denied the City's request for a defense based on the "auto" exclusion and the special events/spectator liability endorsement, and filed for declaratory relief. Its summary judgment motion was then granted by the trial court, which found the exclusions applied. The trial court, in granting Essex's motion in its entirety, found the damages in the Navarro lawsuit were the proximate result of an automobile accident and the policy "excluded coverage for bodily injury or property damage arising out of, caused by or contributed to by the ownership, non-ownership, maintenance, use or entrustment to others of any automobile."
The Appellate Court reversed, holding that the defense obligation was triggered by the allegations that the accident was caused by a dangerous condition created by the event, and that no exclusions applied to bar coverage. The Court concluded that the exclusions were not plain and clear "in context of the policy as a whole and in the circumstances of the case," and cannot defeat the insured's reasonable expectation of coverage.
Finally, the court noted, "[A]uto exclusions in CGL insurances should not be interpreted to apply in cases where the insured can get separate insurance." The court commented that no automobile insurance is available for situations where the insured has no connection to the automobiles involved. The court found that the connection to the City was the alleged creation of the dangerous condition, not involvement with any automobile.
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This opinion is not final. It may be depublished, modified on rehearing, or review could be granted. These events would render this decision unavailable for use as legal authority.
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