Insurance of North America v. Sam Harris Construction Co.

583 P.2d 1335, 22 Cal. 3d 409, 149 Cal. Rptr. 292, 1978 Cal. LEXIS 294

• Court: California Supreme Court
• Decided: September 29, 1978
• Docket: S.F. 23731
• Status: Published

Opinions

Opinion

NEWMAN, J.

We are concerned here with a liability and indemnity insurance policy that covered defendants’ airplane. Coverage G of the policy protected against liability for injury or destruction of property “arising out of the . . . maintenance ... of the aircraft.” The policy applied, however, only to “occurrences or accidents which happen during the policy period”; and the period stated was from September 3, 1971, to July 1, 1972.¹

On April 19, 1972, after they had sold the plane, defendants cancelled their coverage and received a $626 premium refund for the balance of the policy period (April 19 to July 1). On April 21, in the possession of its new owner, the plane crashed and was destroyed.

The new owner sued, alleging that defendants “negligently . . . maintained, repaired, serviced, owned, sold and operated the aircraft . . . .” Defendants requested that the insurer defend, whereupon the insurer filed this action for declaratory relief. The trial court ruled that there were no obligations under the policy because defendants were not insured at the time of . the crash. The court relied on the rule that “the time of the occurrence of an accident within the meaning of an indemnity policy is not the time the wrongful act was committed, but the time when the complaining party was actually damaged.” (Remmer v. Glens Falls Indem. Co. (1956) 140 Cal.App.2d 84, 88 [295 P.2d 19, 57 A.L.R.2d 1379]; Tijsseling v. General Acc. etc. Assur. Corp. (1976) 55 Cal.App.3d 623, 626 [127 Cal.Rptr. 681].)

In our view that rule is not applicable to this case. The issue here turns on the meaning of “occurrences or accidents . . . during the policy period.” Those words differ from the words construed in Remmer and Tijsseling. Further, in those cases the policies themselves defined “occurrence” to mean an accident causing injury during the policy period. The policy here, however, defines neither “occurrences” nor “accidents.” The meaning of the two words must, therefore, be ascertained by reference to the insured’s reasonable expectation of coverage. (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 267 [54 Cal.Rptr. 104, 419 P.2d 168].) Did that expectation include coverage for negligent maintenance during the policy period that caused an injury after the policy period had expired?

Defendants contend they purchased the policy with an expectation that the insurer would defend against suits based on “occurrences” as well as “accidents”; that negligent maintenance may reasonably be considered to be an occurrence; and that, because the policy covered “occurrences or accidents . . . during the policy period” the timing of the accident is not determinative.

The words “occurrences” and “accidents” are linked here by the conjunction “or,” a term that usually introduces the second of two alternatives. Sometimes the two words are used synonymously. Here, however, they do not appear redundant. They rather suggest that accidents are distinguishable from occurrences.

“Occurrence” has been described as “the general word for anything that happens or takes place,” as “something that occurs; event; incident.” (Webster’s New World Dict. (2d college ed. 1974) p. 984.) It could refer to damage-causing, nonaccidental events such as the theft, robbery, and pilferage that appear to be covered under the “All Risks Physical Damage Coverage” provisions of this policy. It could also refer, though, to acts implicitly included in Coverage G; e.g., negligent repairs that do not cause immediate injury but do result in a later accident.

“It is elementary in insurance law that any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer. .... [I]f the doubt relates to extent or fact of coverage, whether as to peril insured against [citations], the amount of liability [citations] or the person or persons protected [citations], the language will be understood in its most inclusive sense, for the benefit of the insured.” (Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 437-438 [296 P.2d 801, 57 A.L.R.2d 914].) We therefore rule that negligent maintenance of the plane within the policy period was an occurrence covered by the policy even though the accident caused thereby did not happen until after the policy period had expired.

Since the buyer’s complaint against defendants alleged such an occurrence, the insurer had a duty to defend the action.(Gray v. Zurich Insurance Co., supra, 65 Cal.2d at pp. 276-277.)

The judgment is reversed and the cause remanded to the trial court with directions to enter judgment for defendants declaring the insurer’s duty in accord with the views expressed herein.

Bird, C. J., Tobriner, J., and Mosk, J., concurred.

1 Coverage G and the policy-period clause read as follows:

“Coverage G ... To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages: (1) including damages for care and loss of services, because of bodily injury, sickness, disease and, if arising out of the foregoing, mental anguish, including death at any time resulting therefrom, sustained by any person and arising out of the . . . maintenance ... of the aircraft as described in this policy . . . (2) for injury to or destruction of property . . . caused by accident, and arising out of the . . . maintenance ... of the aircraft. . . .”

“This policy applies only to occurrences or accidents which happen during the policy period and within the United States of America, its territories or possessions, Canada or Mexico or while enroute between points within these geographical limits.”