Michael Bock v. Travelers Property Casualty Insurance

FILED
NOT FOR PUBLICATION JAN 05 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S . CO U RT OF AP PE A LS
FOR THE NINTH CIRCUIT
MICHAEL BOCK; LORIE BOCK, No. 10-17297
Plaintiffs - Appellants, D.C. No. 3:10-cv-00722-RS
v.
MEMORANDUM *
TRAVELERS PROPERTY CASUALTY
INSURANCE COMPANY,
Defendant - Appellee.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Argued and Submitted December 9, 2011
San Francisco, California
Before: O'SCANNLAIN, COWEN,** and BERZON, Circuit Judges.
The Bocµs appeal from the district court's grant of judgment on the
pleadings in favor of Travelers. They argue that Travelers had a duty to defend
them under their homeowners' policy against a cross-complaint filed by their
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Robert E. Cowen, Senior Circuit Judge for the Third
Circuit, sitting by designation.
neighbors, the Braµesmans. Separately, the Bocµs argue that Travelers was under
a duty to investigate the facts underlying the cross-complaint. Each contention will
be discussed in turn.
I
Under California law, an insurer 'must defend a suit which potentially seeµs
damages within the coverage of the policy.' Gray v. Zurich Ins. Co., 65 Cal. 2d
263, 275 (1966). However, '[a]n insured is not entitled to a defense just because
one can imagine some additional facts which would create the potential for
coverage.' Friedman Prof'l Mgmt. Co. v. Norcal Mut. Ins. Co., 120 Cal. Rptr. 3d
359, 372 (Ct. App. 2004). '[T]he insured may not speculate about unpled third
party claims to manufacture coverage.' Hurley Constr. Co. v. State Farm Fire &
Cas. Co., 12 Cal. Rptr. 2d 629, 631 (Ct. App. 1992).
We have examined the cross-complaint filed by the Braµesmans and
conclude that it only states a cause of action for encroachment, an intentional tort
not covered by the Bocµs' insurance policy. Only through speculation --
unpermitted by California law -- could we conclude that the Braµesmans' cross-
complaint also alleged unintentional conduct, which would trigger the duty to
defend. Accordingly, we conclude that Travelers was under no duty to defend the
Bocµs against the Braµesmans' cross-complaint.
2
II
Separately, the Bocµs argue that Travelers was under a duty to investigate
the facts underlying the Braµesmans' cross-complaint. Under California law, an
insurer satisfies its duty to investigate 'by comparing the allegations of the
complaint with the terms of the policy,' Horace Mann Ins. Co. v. Barbara B., 4
Cal. 4th 1076, 1081 (1993), and by considering 'the extrinsic facts . . . µnown by
the insurer at the inception of the third party lawsuit,' Gunderson v. Fire Ins.
Exch., 44 Cal. Rptr. 2d 272, 277 (Ct. App. 1995).
In this case, it is uncontested that Travelers was not aware of any extrinsic
facts at the time the cross-complaint was tendered that would have triggered a duty
further to investigate. Indeed, Travelers specifically told the Bocµs that if they
were 'aware of any other facts or theories which . . . are relevant to the duty to
defend . . . , we welcome your thoughts and will give serious consideration to any
information that you may provide.' It is uncontested that the Bocµs tendered no
further information to Travelers. Accordingly, Travelers was under no duty to
investigate the facts underlying the Braµesmans' cross-complaint.
AFFIRMED.
3
FILED
Bocµ v. Travelers Prop. Cas. Ins. Co., No. 10-17297 JAN 05 2012
MOLLY C. DWYER, CLERK
BERZON, Circuit Judge, dissenting in part: U.S . CO U RT OF AP PE A LS
I join in Part II of the majority disposition but dissent as to Part I. The
majority's conclusion that the cross-complaint only states an intentional tort and so
did not give rise to the duty-to-defend is inconsistent with the language of the
cross-complaint and with California duty-to-defend law.
Both the claim for trespass and the prayer for relief refer to property
'damage' and seeµ monetary relief for the injury, including for 'repairs.' Nothing
in the complaint confines the claim to the injury caused by the intentional act of
building on the Braµesmans' property, as opposed to injury due to the negligent
design or construction that caused an injury to the Braµesmans' property separate
from the encroachment itself. And the references to 'damaged' property and to
'repairs' suggests some such additional injury, as one does not usually refer to the
encroaching structure as 'property [that was] damaged' and in need of 'substantial
repairs.'
With that degree of ambiguity, the allegations 'sufficed to raise the
possibility that [the Bocµs] would be liable for property damage covered by the
policies.' Montrose Chemical Corp. v. Superior Court, 6 Cal. 4th 287, 304 (Cal.
1993). The complaint does not 'compel the conclusion' that it is based solely on
the intentional encroachment, Horace Mann Ins. Co. v. Barbara B., 4 Cal. 4th
1076, 1084 (Cal. 1993), and, as noted, there is language consistent with the
conclusion that it is not.
I would therefore reverse the judgment on the pleadings, and so respectfully
dissent.