Oak Park Usd v. Philadelphia Indemnity Ins. Co ( 2019 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 7 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
OAK PARK UNIFIED SCHOOL No. 18-55033
DISTRICT, a California Public School
District; THE VENTURA COUNTY D.C. No.
SCHOOLS SELF-FUNDING 2:17-cv-03765-SVW-KS
AUTHORITY, a California Joint Powers
Insurance Authority,
MEMORANDUM*
Plaintiffs-Appellants,
v.
PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted May 16, 2019
Pasadena, California
Before: LIPEZ,** WARDLAW, and HURWITZ, Circuit Judges.
Oak Park Unified School District (Oak Park) and the Ventura County
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Kermit V. Lipez, United States Circuit Judge for the
First Circuit, sitting by designation.
Schools Self-Funding Authority appeal the district court’s grant of summary
judgment in favor of Philadelphia Indemnity Insurance Company (Philadelphia).
We have jurisdiction under 28 U.S.C. § 1291. We reverse.
Under California insurance law, “the duty to defend is broader than the duty
to indemnify[.]” Horace Mann Ins. Co. v. Barbara B., 4 Cal. 4th 1076, 1081
(1993). The duty to defend arises where a suit “[p]otentially seeks damages within
the coverage of the policy.” Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 275–76
(1966). Here, the Arendts complaint’s first cause of action sought personal injury
and damages for a “dangerous condition of public property.” It alleged that Oak
Park’s soccer field was “in an unreasonable, dangerous, and unsafe condition in
various respects, including the lack of signage in/at the Premises.” Philadelphia’s
Commercial General Liability (CGL) policy provides coverage for
[o]wners and / or lessors of the premises leased, rented, or loaned to
[the lessee] subject to the following . . . exclusion[:] . . . This insurance
does not apply to liability of the owners and / or lessors for “bodily
injury” or “property damage” arising out of any design defect or
structural maintenance of the premises or loss caused by a premises
defect.
Philadelphia contends that the CGL policy’s exclusionary clause eliminated the
possibility of coverage, as the Arendts action sought damages for “‘bodily injury’ .
. . arising out of any design defect or structural maintenance of the premises or loss
caused by a premises defect.” To define “design defect,” Philadelphia relies on
California Civil Code § 2784, which states, in relevant part, that “‘design defect’ is
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defined as a condition arising out of its design which renders a structure, item of
equipment or machinery or any other similar object, movable or immovable, when
constructed substantially in accordance with its design, inherently unfit, either
wholly or in part, for its intended use.” Cal. Civ. Code § 2784. But there is no
evidence in the record that Oak Park’s soccer field is “a structure, item of
equipment or machinery or any other similar object, movable or immovable.”
There is similarly no evidence in the record as to the meaning of the terms
“structural maintenance of the premises” or “loss caused by a premises defect” as
applied to Oak Park’s soccer field. Because these terms are ambiguous, and as
exclusions are construed narrowly, see MacKinnon v. Truck Ins. Exch., 31 Cal. 4th
635, 648 (2003), we construe these terms in favor of the insured. We therefore
conclude that the exclusionary clause did not eliminate the potential for coverage
under the CGL policy. See Silberg v. Cal. Life Ins. Co., 11 Cal. 3d 452, 464 (1974)
(“[A]ny ambiguities in an insurance policy must be read against the insurer.”).
Philadelphia therefore had a duty to defend Oak Park.
REVERSED.
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