Steven Berns v. Sentry Select Ins. Co.

656 F. App'x 326

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 27, 2016
• Docket: 14-55996
• Status: Unpublished

Opinion

MEMORANDUM **

Plaintiff Steven Berns appeals the district court’s grant of summary judgment to Sentry Select Insurance Company. We reverse and remand for further proceedings.

In order to prevail on appeal, Sentry must show that Exclusion 1 unambiguously precludes coverage. See MacKinnon v. Truck Ins. Exch., 31 Cal.4th 635, 3 Cal.Rptr.3d 228, 73 P.3d 1205, 1213 (2003). Ambiguities in the language of the exclusion must be construed in favor of the insured (Berns). See Producers Dairy Delivery Co. v. Sentry Ins. Co., 41 Cal.3d 903, 226 Cal.Rptr. 558, 718 P.2d 920, 924 (1986). In light of the language of Exclusion 1 and of California precedent interpreting the term “intentional,” Sentry’s position that the term “intentional” unambiguously means “voluntary and deliberate” is untenable.

The exclusion at issue in this case precludes coverage for “[a]ny dishonest, malicious, fraudulent, criminal or intentional ‘act.’” Sentry’s contention that the term “intentional” broadly applies to any “voluntary” or “deliberate” act conflicts with the interpretive principle of ejusdem generis. “Under the rule of ejusdem generis, where general words follow an enumeration of specific items, the general words are read as applying only to other items akin to those specifically enumerated.” Harrison v. PPG Indus., Inc., 446 U.S. 578, 588, 100 S.Ct. 1889, 64 L.Ed.2d 525 (1980). Here, the term “intentional” follows four more specific words (“dishonest,” “malicious,” “fraudulent,” and “criminal”) that describe particularly blameworthy conduct. The term “intentional” should be read in light of these terms and therefore should be read as requiring some sort of wrongful conduct, not just any purposeful act.

Additionally, California law has inconsistently interpreted the term “intentional” in insurance policies. Some cases have adopted Sentry’s broad interpretation of the term. See, e.g., Delgado v. Interinsurance Exch. of Auto. Club of S. Cal., 47 Cal.4th 302, 97 Cal.Rptr.3d 298, 211 P.3d 1083, 1088 (2009); B & E Convalescent Ctr. v. State Comp. Ins. Fund, 8 Cal.App.4th 78, 9 Cal.Rptr.2d 894, 907 (1992). Other cases, however, have adopted Berns’s view that “intentional” requires a specific intent to cause harm. See, e.g., Gray v. Zurich Ins. Co., 65 Cal.2d 263, 54 CaLRptr. 104, 419 P.2d 168, 174 (1966) (in bank); Gonzalez v. Fire Ins. Exch., 234 Cal.App.4th 1220, 184 Cal.Rptr.3d 394, 410 (2015); State Farm Fire & Cas. Co. v. Eddy, 218 Cal.App.3d 958, 267 Cal.Rptr. 379, 386 (1990); see also Allstate Ins. v. Galloway, 936 F.2d 576 (9th Cir. 1991) (affirming the district court’s conclusion that an intentional acts exclusion “was ambiguous because it did not make clear whether the phrase ‘intentional act’ referred merely to the intent to act, or to the intent to cause the consequences of the act”). The California Supreme Court has written that the word “intentional” may have a “built-in ambiguity.” Gray, 54 Cal.Rptr. 104, 419 P.2d at 174.

We therefore reject Sentry’s interpretation of the exclusion. Construing the ambiguity in favor of Berns, we conclude that the “intentional” acts exclusion applies only to intentionally wrongful acts; in other words, the exclusion applies only if the insured acted with a specific intent to wrongfully inflict injury. As applied to this case, there is evidence suggesting that Porter misappropriated company files, in which case Berns would have been justified in scolding and terminating her. Because Berns may not have acted with the requisite intent to come within the exclusion, Sentry had a duty to defend. See Shade Foods, Inc. v. Innovative Prods. Sales & Mktg., Inc., 78 Cal.App.4th 847, 93 Cal.Rptr.2d 364, 387 (2000) (noting that an insurer has a duty to defend any lawsuit that potentially falls within the coverage of the policy). We reverse the district court’s order granting summary judgment to Sentry and remand for further proceedings consistent with this decision.

REVERSED and REMANDED.

** This disposition is not áppropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.