WEEKLY LAW RESUME™
 Issue By: Ray Coates

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February 4, 2010

Coverage - Occurrence - Encroachment

Fire Insurance Exchange v. The Superior Court of San Bernardino County
Court of Appeal, Fourth District (January 26, 2010)

Following the California Supreme Court decision in Delgado v. Interinsurance Exchange (2009) 47 Cal.4th 302 regarding the scope of coverage under an "occurrence" policy, it was expected that subsequent decisions would explore its scope. This case involved the issue of whether building a structure that encroached on another's property in good faith is an "occurrence."

Kenneth and Dorothy Bourguignon owned property adjoining Leach. Bourguignon obtained from Leach a Lot Line Adjustment for a five and a half foot easement over the Leach property. When the Parsons purchased the Leach property, they disputed the Lot Line Adjustment. The Bourguignons sued the Parsons for quiet title and adverse possession of the five and a half foot strip and the Parsons cross-complained. Damages were sought for diminution in the value of the property. The Parsons specifically alleged Bourguignon knew that his residence encroached on the Leach property.

Bourguignon tendered to Fire Insurance Exchange ("FIE"). FIE refused to defend. Bourguignon sued FIE. FIE moved for summary judgment, which was denied. FIE filed a petition for writ of mandate in the Court of Appeal.

The Court of Appeal granted the writ. It ruled FIE had no duty to defend. The policy provided defense and indemnity for "an occurrence" which was defined as an "accident." Using language similar to Delgado, the Court stated an "accident" is an unintentional, unexpected chance occurrence. It does not exist following a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces damage. The insured's belief that he has a legal right to engage in deliberate conduct does not make it an "accident."

The Court acknowledged that the previous authorities were split on property disputes such as the one in this case. This Court chose to follow the cases which have held intentional conduct does not constitute an "accident" when the person engaging in the conduct is unaware of its wrongful character. Here, the Bourguignons built the house where they intended to build it. The act of construction was intentional and was not an "accident," even though they believed they had a right to do so. There was no unexpected, unintended event between the intentional construction of the building and the encroachment.

The Court therefore ruled that the trial court erred in denying summary judgment to FIE. A preemptory writ of mandate was issued directing the trial court to issue such an order.

COMMENT
The dissent disagreed with the majority opinion and argued that because the encroachment was not expected, it was therefore an accident. There will be other cases on this issue until the Supreme Court resolves the conflict among the cases.

For a copy of the complete decision see: http://www.courtinfo.ca.gov/opinions/documents/E046531.PDF