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March 2015

Umbrella Policy Potentially Provides Coverage For Personal Injury Claims Not Arising From An Accident

In Gonzalez v. Fire Insurance Exchange, decided February 5, 2015, the California Court of Appeal for the Sixth Appellate District upheld the trial court’s order granting summary judgment in favor of Fire Insurance Exchange (“Fire”) but reversed the trial court’s order granting summary judgment in favor of Truck Insurance Exchange (“Truck”).  The court held that there were potentially covered claims under the umbrella policy issued by Truck for personal injury claims and Truck had failed to conclusively demonstrate that any policy exclusion eliminated the potential for coverage.

In 2007, Jessica Gonzalez (“Gonzalez”) filed a complaint against Stephen Rebagliati (“Rebagliati”) and nine other members of the De Anza College baseball team, alleging that Gonzalez had been sexually assaulted by an unknown number of men at a party while she was unconscious in a room in which Rebagliati, and the other named defendants, were present.  The complaint alleged fifteen causes of action against Rebagliati and the other defendants, including negligence, false imprisonment, invasion of privacy, slander per se, sexual battery, and rape. 

Rebagliati was covered by a homeowner’s policy issued by Fire which provided coverage for “damages which an insured becomes legally obligated to pay because of bodily injury, property damage or personal injury resulting from an occurrence to which this coverage applies.”  The term “occurrence” was defined in pertinent part as “an accident including exposure to conditions which results during the policy period in bodily injury or property damage.”  Rebagliati was also covered by an umbrella insurance policy issued by Truck, which stated it would pay damages resulting from an “occurrence”, which was defined in pertinent part as “a. with regard to bodily injury or property damage, an accident” or “b. with regard to personal injury, offenses committed during the policy period”.  Rebagliati tendered his defense to Fire and Truck on several occasions, but coverage was denied. 

Rebagliati assigned his contractual rights against Fire and Truck to Gonzalez as part of a settlement agreement.  In 2011, Gonzalez filed a bad faith action against Fire and Truck pertaining to their denial of coverage for Rebagliati’s defense.  Fire and Truck moved for summary judgment and both motions were granted by the trial court.  Gonzalez appealed.       

The Court of Appeal first addressed Gonzalez’s argument that Fire’s policy provided coverage for intentional personal injury offenses because the policy’s definition of “occurrence” referred to “bodily injury” but not “personal injury.”  The Court of Appeal adopted the reasoning set forth in Lyons v. Fire Ins. Exchange (2008) 161 Cal.App.4th 880, which rejected the same argument concerning identical policy language.  The Court of Appeal held that the policy unequivocally defined the term “occurrence” as an accident, and that the court would not re-write the policy.

The Court of Appeal then held that that Gonzalez’s complaint did not allege an “accident” under the definition of the Fire policy.  The Court of Appeal found that Gonzalez’s claims, including claims of negligence, false imprisonment, invasion of privacy and slander per se, did not constitute an “accident”, because the facts underlying each of the claims showed that Rebagliati’s actions were intentional.   Accordingly, the Court of Appeal upheld the trial court’s order granting Fire’s motion for summary judgment.

The Court of Appeal then addressed Gonzalez’s argument that Truck’s umbrella policy provided broader coverage because the definition of “personal injury” did not require that the listed covered offenses, such as false imprisonment, invasion of privacy, and slander per se, be “accidental.”  The Court of Appeal agreed and found that Gonzalez’s complaint raised potentially covered claims of false imprisonment, slander per se and invasion of privacy.

As a result, the burden was on Truck to conclusively show that an exclusion barred coverage.  The Court of Appeal held that Truck failed to meet its burden of establishing that the “sexual molestation” and “criminal acts” exclusions barred coverage because Gonzalez’s complaint left open the possibility that Rebagliati did not engage in sexual assault or any criminal act, but was only present in the room when others committed such acts.  The Court of Appeal also rejected Truck’s attempt to rely on extrinsic evidence that Rebagliati admitted touching Gonzalez, stating that Truck could not rely on extrinsic facts it was unaware of at the time of tender.

The Court of Appeal also found that Truck failed to conclusively establish the application of exclusion for “expected or intended” damages.  The exclusion is based on the insured’s subjective belief as to whether his or her conduct would cause the type of damage claimed and Rebagliati denied any wrongdoing at the time of tender. 

Finally, the Court of Appeal rejected Truck’s argument that the allegations in Gonzalez’s complaint were “inseparably intertwined” with the underlying sexual assault, and therefore coverage should be excluded on that basis.  The Court of Appeal distinguished cases that had found that all of the allegations were inseparably intertwined with the underlying sexual molestation on the grounds that they involved either a single defendant accused of acts of sexual molestation or the molestation allegations had been admitted or proven by extrinsic evidence.  Since Gonzalez’s allegations of sexual molestation were against multiple defendants and Rebagliati had denied any wrongdoing at the time of tender, the exclusion was held inapplicable.

Accordingly, the Court of Appeal reversed the judgment and directed the trial court to enter an order denying Truck’s motion for summary judgment, and granting Fire’s motion for summary judgment. 

Click here for the opinion

This opinion is not final.  The Court of Appeal may modify it on rehearing or the California Supreme Court may order it depublished or grant review.  The latter two events would render the opinion unavailable as legal authority in California courts.


Aaron P. Rudin
George P. Soares