Court Holds That Alleged Private Nuisance Did Not Constitute An “Occurrence” Under Homeowner’s Policy
Daniels v. Allstate Ins. Co., 2014 U.S. Dist. LEXIS 78352 (N.D. Cal. June 6, 2014)
In Daniels, the Northern District of California held that, because the insureds’ alleged conduct was intentional rather than accidental, the underlying private nuisance claim asserted against the insureds did not trigger coverage because it did not allege an “occurrence” as defined by the homeowners’ insurance policy at issue.
This case arose out of a dispute between the insureds and their neighbors concerning the removal of a retaining wall located on the insureds’ property along the boundary line shared with the neighbors. The claimants noticed that the insureds’ retaining wall was collapsing in various places, which prompted them to hire experts to examine the condition of the wall and trees. The experts’ reports confirmed that the wall was severely distressed and posed a threat of collapsing from “poor construction, age and/or damage caused by tree roots[,]” which had the potential of resulting in a landslide that would inundate the neighbors’ property. The neighbors asked the insureds to repair the retaining wall, and the insureds refused. The neighbors thereafter brought an action against the insureds, claiming that the wall and trees on the insureds’ property constituted a private nuisance.
The insureds tendered their defense of the underlying action to their insurer under a homeowners’ insurance policy. The insurer denied coverage on the basis that the policy did not cover the allegations of the underlying complaint because the policy only covered an “occurrence,” which was defined to include accidental events. After the insurer’s denial of coverage, a three-day bench trial was held in the underlying action and the trial court ruled in favor of the neighbors, declaring the retaining wall to be a nuisance. The trial court ordered the insureds to replace the wall and remove the trees and granted $8,000 in monetary damages to the neighbors for discomfort and annoyance. The insureds subsequently sued their insurer, claiming, among other things, that the insurer breached its duty to defend the insureds in connection with the underlying action. The insurer moved to dismiss, and the district court granted the motion.
The district court concluded that the insurer properly denied coverage because the underlying complaint filed against the insureds did not allege “accidental” conduct that satisfied the policy’s definition of “occurrence.” The court noted that although the policy did not define “accident,” it is well-settled under California law that an “accident” for insurance coverage purposes must be “an unexpected, unforeseen, or undesigned happening or consequence from either a known or unknown cause.” The court then found that the dangerous conditions on the insureds’ property, which were found to be a nuisance, arose as the result of known deterioration over many years and, therefore, did not constitute an “occurrence.” Moreover, the court held that the underlying complaint alleged that the insureds’ refusal to remove the retaining wall and trees—which the insureds knew caused the claimants discomfort and the inability to enjoy their property—was intentional.
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