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July 2011

State Farm General Insurance Co. v. Frake ?Term "Accident" Does Not Apply to Deliberate Conduct that Directly Causes Injury

The Term "Accident" Refers to the Conduct of the Insured, Not the Consequences of that Conduct

(July 13, 2011) __ Cal.App.4th___; 11 C.D.O.S. 8782

The California Court of Appeal, Second Appellate District, reversed a stipulated judgment entered after the Superior Court denied an insurer's renewed motion for summary judgment finding the insurer had a duty to defend a lawsuit alleging the insured negligently injured a claimant during horseplay.  The Court of Appeal held the term "accident" in the insurer's policy applies to the act that causes harm, not the consequences of that act, and an intentional act is not an accident. 

John King ("King"), a high school friend of State Farm's insured, Patrick Frake ("Frake"), sued Frake for negligence, assault, battery, and intentional infliction of emotional distress after an intoxicated Frake struck King in the testicles. Frake tendered the lawsuit to State Farm under a "renter's policy" that afforded coverage for bodily injury caused by an "occurrence" which was defined in the policy as requiring an "accident."

State Farm learned that Frake, King, and their friends had a "tradition" of engaging in horseplay in which they would grab each others' testicles and hit one another in the groin.  Frake and his friends had engaged in this type of horseplay throughout the weekend before the incident, and Frake claimed he struck King after King had attempted to hit him in the groin. 

State Farm denied coverage on the basis that there was no "occurrence" because Frake's conduct was not accidental.  At Frake's counsel's request, State Farm reconsidered its position in light of an intervening appellate decision which had held that an insured's allegation that he had acted in self-defense was sufficient to establish conduct as accidental.  State Farm agreed to provide Frake with a defense pursuant to a full reservation of rights.  The case went to trial solely on the negligence theory and the jury found for King and awarded him over $450,000 in damages.

Frake assigned to King all of his rights against State Farm in exchange for a covenant not to execute on the judgment.  State Farm filed a declaratory relief action seeking a determination of its obligations to defend and indemnify Frake in the lawsuit.  Frake and King filed cross-complaints alleging breach of contract and breach of the implied covenant of good faith and fair dealing.  State Farm moved for summary judgment on the basis that there was no dispute that Frake had intentionally struck King and, therefore, State Farm had no duty to defend or indemnify Frake.  The trial court denied State Farm's motion because Frake disputed that he had intended to injure King.  Citing State Farm Fire and Casualty Co. v. Superior Court, 164 Cal.App.4th 317 (2008) (Wright), the trial court found that the term "accident" may include an injury that is an unexpected or unintended consequence of the insured's deliberate conduct. 

State Farm renewed its summary judgment motion based on the California Supreme Court's decision in Delgado v. Interinsurance Exchange of the Automobile Club of Southern California, 47 Cal.4th 302 (2009).  The trial court denied the renewed motion holding Delgado was new law only in the context of self-defense but Delgado did not hold that a deliberate act resulting in an unintended injury constitutes an accident.  After this ruling, the parties entered into a stipulation for entry of judgment against State Farm to facilitate State Farm's appeal of the dispositive coverage issue.

The Court of Appeal reversed.  The Court held that under California law the word "accident" in the coverage clause of a liability policy refers to the conduct for which liability is sought, not the consequences of that conduct.  Prior cases had made clear that a deliberate act is not an accident "unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage."  The court held the policy language supports this conclusion because coverage is afforded for "bodily injury?.caused by an occurrence" and "occurrence" is defined as an accident.  An accident must therefore be a causal event.  Accident cannot refer to unintended injury or damage because "a consequence cannot cause itself."

Frake and King argued that a passage in Delgado suggested that Delgado defined "accident" to include the unintended consequences of an intentional act.  In that passage, the California Supreme Court said that "in the context of liability insurance, an accident is an unexpected, unforeseen, or undesigned happening from either a known or an unknown cause"  Delgado, supra, 47 Cal.4th at 308.  The Court of Appeal rejected this argument because the Supreme Court reiterated throughout Delgado that it is the nature of the injury-causing event that determines whether there is an accident not whether the harm was unintended.

The Court also rejected the argument that the holding in Wright was controlling.  The Court found the facts of Wright were distinguishable because that insured intended to throw the claimant into a pool but a fortuitous event intervened and caused injury when the claimant landed instead on a concrete step.  Also, Wright was decided before the Supreme Court decided Delgado.  To the extent Wright held that the term "accident" applies to deliberate acts that directly cause unintended harm, the Court of Appeal concluded it is contradictory to well-established California law.

Frake admitted he intended to strike King in the groin area and there was no dispute that King suffered injury as a direct result of the strike.  The court concluded that even if Frake did not intend to hit King's testicles that he did so was completely foreseeable.  There was no "unexpected, independent, and unforeseen happening" in the causal chain and, therefore, no accident or coverage.

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This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.

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