Vista De Santa Barbara Assoc vs. Financial Pacific Insurance
Nature of Proceeding:
Filed By:
Motion for Summary Adjudication
Dahlin, C. William

Plaintiff Vista de Santa Barbara Associates’ motion for summary adjudication is granted.

This action involves an insurance coverage dispute between Plaintiff, which owns and operates a Mobile Home Park, and its insurer Financial Pacific Insurance Company (“FinPac”). In its fourth cause of action, Plaintiff seeks declaratory relief that FinPac had a duty to defend it in a lawsuit brought by a mobile park resident.

Plaintiff’s separate statement includes the following. Plaintiff owned and operated the Vista de Santa Barbara Mobile Home Park (the “Park”) until September 26, 2013.

Plaintiff purchased a CGL from FinPac for three consecutive years between 2008 and 2011 (Policy Nos. 172915D, 172915E, and 172915F). Plaintiff purchased the CGL to obtain liability insurance for damages/injuries caused by or incurred at the Park. Coverage A in the CGL provides coverage for “bodily injury” and Coverage B provides coverage for “personal and advertising injury” which is defined to include wrongful eviction, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies. Under the CGL, FinPac had a duty to defend any “suit” seeking damages for “bodily injury” and/or “personal advertising injury.”

In December 2008, Park resident Fred Nunes brought a lawsuit against Plaintiff and Plaintiff’s property managers in Santa Barbara Superior Court (the “Nunes Action”) Nunes alleged that Plaintiff and its managers wrongfully demanded rent “under threat of eviction” and that he was “suffering immediate and continuing injury because [he] is being compelled to pay unlawful rent under threat of eviction by defendants.” He alleged that he faced “the risk of losing [his] mobilehome and [his] leasehold interest in Space 50, if [he] is unable to continue to pay the illegal rents demanded by defendants.” He also alleged that Plaintiff’s managers monitored and photographed his property without his consent which Plaintiff allegedly ratified.

Plaintiff tendered defense of the Nunes Action to FinPac on December 23, 2008. On January 28, 2009, FinPac denied that any potential for coverage existed under the CGL and invited Plaintiff to submit additional information regarding a coverage determination. Plaintiff responded in February 2009, and on March 4, 2009, FinPac again replied that no potential for coverage existed. Further correspondence took place between the parties and FinPac again denied the demand for a defense on October 26, 2010.

On December 8, 2010, Plaintiff wrote to FinPac to advise it that Nunes (the matter had since been ordered to arbitration) was now specifically asserting a claim for constructive eviction and again demanded a defense under the policy. FinPac again denied a defense on the basis that no coverage existed unless Nunes alleged that he surrendered possession of the property. Plaintiff ultimately resolved the Nunes Action by paying Nunes pursuant to his offer to compromise.

Plaintiff seeks summary adjudication on its fourth cause of action for declaratory relief on the basis that FinPac had a duty to defend it in the Nunes Action. The facts are essentially undisputed and the motion presents the legal question of whether FinPac owed Plaintiff a duty to defend it in the Nunes Action under the CGL. Indeed, the only purported “disputes” set forth in the response to the separate statement consist of contentions by FinPac that certain documents speak for themselves.

An insurer owes its insured a duty to defend whenever “there is a potential for liability under the policy.” (Horace Mann Ins. Co. v. Barbara B.(1993) 4 Cal.4th 1076, 1084.)

The “insured is entitled to a defense if the underlying complaint alleges the insured’s liability for damages potentially covered under the policy, or if the complaint might be amended to give rise to liability that would be covered under the policy.” (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 299-300.) “[T]he insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot.” (Id.) “Any doubt as to whether the facts establish the existence of the defense duty must be resolved in the insured’s favor.” (Id.) “[U]nless the third party complaint can by no conceivable theory raise a single issue which could bring it within policy coverage,” the insurer owes the insured a duty to defend. (Gray v. Zurich Ins. Co.(1966) 65 Cal.2d 263, 276.) It bears noting that in Gray, our Supreme Court noted that Defendant cannot construct a formal fortress of the third party’s pleadings and retreat behind its walls. Since modern procedural rules focus on the facts of a case rather than the theory of recovery in the complaint, the duty to defend should be fixed by the facts which the insurer learns from the complaint, the insured, or other sources. An insurer, therefore, bears a duly to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy. Id. at pp. 276-277.

The bare allegations of the complaint do not control. If the broad charge made . . . contains within it the potentiality of a judgment, an insurer becomes liable to defend. Id

In the instant case, the CGL provides coverage for both “personal injury” and “bodily injury.” (CGL § I, Cov. B, ¶ 1.a. [personal injury] and § I, Cov. A., ¶ 1.a [bodily injury]) “Personal injury” includes “[t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor…” (Id. § V, ¶ 10.) “Bodily injury, sickness or diseases sustained by a person…” (Id. § V., ¶ 3.) In the Nunes Action, Nunes alleged that Plaintiff and/or its managers, wrongfully monitored and photographed his home, illegally demanded higher rents and threatened to evict him if he did not pay the rents causing him to list his mobilehome for sale and causing him significant distress. Plaintiff argues that coverage was potentially available under both the “personal injury” and “bodily injury” provisions in the CGL and thus FinPac was owed it a duty to defend. As discussed below, the Court finds that FinPac owed Plaintiff a duty to defend in the Nunes Action under the CGL policy, under the “personal injury” provision.

Again, the CGL provides coverage for “personal injury” defined as “[t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy…” In the fourth cause of action for IIED in the Nunes Action, Nunes alleged, among other things, that Plaintiff’s managers “monitored and photographed NUNES’ property and home without his consent and monitored his utilities use.” (Robbins Decl., Exh. D, ¶ 41.) FinPac’s argument that no potential for coverage existed because Nunes did not specifically allege that there was any physical invasion into his mobilehome that disrupted his ability to occupy his mobilehome is unpersuasive. FinPac relies upon Sterling Builders. Inc. v. United National Ins. Co.(2000) 79 Cal.App.4th 105, 108 which states that “claims that do not involve the physical occupation of or trespass upon real property are not within the meaning of the [wrongful entry into, or invasion of the right of private occupancy] phrase…” That case does not assist FinPac here, however, because in Sterling the underlying allegations involved a situation where a plaintiff alleged that the insured fraudulently obtained easements on the plaintiff’s property.

There was no possibility for coverage under the subject CGL because the injuries alleged by the plaintiff were not the result of a trespass, an entry or intrusion, nor the result of an actual occupation of real property, but rather by the insured allegedly obtaining an interest in the real property through misrepresentations. (Id. at 112.) By contrast here, while Nunes did not expressly allege that the monitoring and photographing took place in his mobilehome, the allegations allow for an inference that they did and at a minimum do not negate the possibility that they did and thus that the managers trespassed into the mobilehome (e.g. given the allegation that the monitoring and photographing took place without his consent) and therefore wrongfully entered his property. This falls within the “personal injury” provision in the CGL.

Plaintiff has shown that the Nunes Action raised a claim for which there was at least a “potential for liability under the policy.” (Horace Mann Ins. Co., supra, 4 Cal.4th 1084.)

FinPac has not proven, as it must, that the underlying claim cannot fall within policy coverage under any circumstances. (Montrose Chemical Corp., supra, 6 Cal.4th at 299-300.) At most, the allegations of the complaint in the Nunes’ Action raise some uncertainty regarding the extent to which there was a wrongful entry into or invasion of the right of private occupancy as to Nunes’ mobile home, based upon the alleged monitoring and photographing and “[a]ny doubt as to whether the facts establish the existence of the defense duty must be resolved in the insured’s favor.” (Id.)

The Court notes that in opposition, FinPac states that there is no potential for coverage under the CGL because “[s]ome of the recovery sought in the underlying action does not constitutes [sic] ‘damages’.” (Oppo. 5:14-6:16.) This argument is not entirely clear, but in any event Nunes clearly sought damages in the Nunes Action. Indeed, in the fourth cause of action just discussed above, Nunes sought general damages. (Robbins Decl., Exh. D. ¶ 45.) This argument fails to establish that there was no potential for coverage under the CGL. Further the argument that “some” of the recovery sought does not constitute damage does not foreclose the potential that “some” do.

Given the above finding that Plaintiff established a potential for coverage under the CGL based on the fact that the Nunes Action alleged a potential claim for “personal injury” based on the monitoring and photographing allegations, the Court need not address Plaintiff’s contentions that coverage was also available under the “personal injury” theory based on a wrongful/constructive eviction theory or under the “bodily injury” provision. Indeed, because the Nunes Action raised at least a single issue that could bring it within the CGL’s coverage, FinPac owed Plaintiff a duty to defend. (Gray, supra, 65 Cal.2d at 276 [unless “the third party complaint can by no conceivable theory raise a single issue which could bring it within policy coverage” a duty is owed].)

FinPac’s evidentiary objections are ruled upon as follows: Objection 1 is sustained and Objection 2 is overruled. The Court notes that while it sustained Fin Pac’s objection 1 as to the portion of Mr. Robbins’ Declaration stating that he was informed and believes that the policy language in the CGL for the three consecutive years was substantially the same, that ruling has no bearing on the motion as the policies themselves were properly before the Court and the language is substantially similar and there is no dispute on that point.

The Court need not address Plaintiff’s objections to FinPac’s proposed order denying

Plaintiff’s motion given the above ruling.

Plaintiff’s counsel shall prepare for this Court’s signature an order pursuant to CCP § 437c and CRC Rule 3.1312.