No Coverage for Suit Against Resort by Neighboring Homeowners for Allegations of Interference with Property Rights
Camp Richardson Resort, Inc. v. Phila. Indem. Ins. Co., 2015 U.S. Dist. LEXIS 165223 (E.D. Cal. Dec. 8, 2015)
In Camp Richardson, the Eastern District of California granted the carrier’s motion to dismiss the insured’s complaint seeking declaratory relief and damages for breach of contract and breach of the covenant of good faith, finding that there was no duty to defend or indemnify the insured – a vacation resort – against a suit brought be nearby homeowners.
The insured operated a resort near Lake Tahoe that was separated by a partially paved strip of land from a residential subdivision. A third-party complaint filed by the neighboring homeowners alleged that the insured interfered with their property rights and their use and enjoyment of the driveway on the land dividing the resort from the subdivision, and complained that the resort’s allegedly excessive sale of alcohol resulted in unruly conduct by its patrons to the detriment of the homeowners. The third-party plaintiffs advanced claims of quiet title, interference with an easement, trespass, nuisance, and intentional infliction of emotional distress (among others).
The court addressed possible coverage under the subject CGL policy’s three parts. Under the policy’s coverage for bodily injury and property damage, the court found that coverage turned on whether the third-party complaint alleged an “occurrence,” which was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The carrier argued that the complaint alleged only intentional conduct by the insured. Citing California precedent, the court held that an accident occurs where “some additional, unexpected, independent, and unforeseen happening occurs that produces damage.” The court found that other than a possible mistake as to what property interest the third-party had in the roadway, the insured failed to identify any activities that constituted such an “accident,” and that there was therefore no basis for coverage under the policy’s coverage for bodily injury or property damage.
The insured also argued that Coverage B, which provided coverage for personal and advertising injury, applied due to the third-party allegations of trespass and loss of use of tangible property. The court rejected this theory. In so holding, the court found that because the third-party plaintiffs only possessed an easement (which, under California law, is a non-possessory interest in land) there was no injury because the invasion of the right of private occupancy in California requires an enforceable possessory interest in real property.
The insured also argued that Coverage B applied because it provided coverage for “[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, committed by or on behalf of its owner, landlord or lessor.” However, the court held that under its ordinary and popular reading, the term “committed” requires the owner of the roadway to commit a wrongful invasion of the right of private occupancy of the roadway in order for the policy to provide coverage. Under the facts alleged in the third-party complaint, the court found that the complainants alleged that they owned the property, and thus, the insured could not be the owner committing wrongful entry.
© TROUTMAN SANDERS LLP. ADVERTISING MATERIAL. These materials are to inform you of developments that may affect your business and are not to be considered legal advice, nor do they create a lawyer-client relationship. Information on previous case results does not guarantee a similar future result.