When an Intentional Act Results in Injury or Damage, it is not an Accident within the Meaning of an Insurance Policy Even When the Insured did not Intend to Cause the Injury or Damage

Gary L. LaHendro | Haight Brown & Bonesteel

In Maryam Ghukasian v. Aegis Security Insurance Company (No. B311310, filed April 14, 2022, and certified for publication on May 5, 2022), the Court of Appeal of the State of California, Second Appellate District held that Maryam Ghukasian’s insurer, Aegis Security Insurance Company (“Aegis”), had no duty to defend her in an underlying lawsuit alleging she cleared land and cut trees on her neighbors’ property without their consent. The appellate court explained Ms. Ghukasian’s acts of intentionally cutting the trees and clearing the land were not accidental for purposes of insurance coverage, even if she acted on the good faith but mistaken belief the trees were on her property.

Ms. Ghukasian owns a home in Glendale, California. She purchased a homeowner’s insurance policy from Aegis for the policy period of June 13, 2018 to June 13, 2019 (the “Aegis Policy”). In August 2018, Ms. Ghukasian hired a contractor to clear and cut trees she believed were on her property. However, the trees were on the property of her neighbors, Vrej and George Aintablian.

In February 2019, the Aintablians filed a lawsuit against Ms. Ghukasian, alleging causes of action for negligence and trespass. Both causes of action were based on Ms. Ghukasian’s cutting and clearing of the trees on the Aintablians’ property without their consent.

Ms. Ghukasian tendered the lawsuit to Aegis for defense and indemnity coverage. The Aegis Policy provides coverage for a suit “brought against [Ms. Ghukasian] for damages because of…property damage caused by an occurrence to which this coverage applies.” “Occurrence” is defined under the Aegis Policy in relevant part as an accident that results in property damage during the policy period. Aegis denied coverage for the Aintablians’ lawsuit on the basis their Complaint alleges intentional conduct by Ms. Ghukasian.

In response to Aegis’ denial of coverage, Ms. Ghukasian sued Aegis for declaratory relief, breach of the insurance contract and bad faith. Aegis moved for summary judgment, arguing it had no duty to defend Ms. Ghukasian in the Aintablians’ lawsuit because their Complaint did not allege an “occurrence” or accident.

The trial court held that Ms. Ghukasian’s mistaken belief as to the boundaries of her property does not transform her intentional act of hiring a contractor to cut trees and clear land into an accident for purposes of insurance coverage. Ms. Ghukasian appealed the trial court’s judgment in favor of Aegis to the Court of Appeal of the State of California.

The appellate court relied on Albert v. Mid-Century Ins. Co., 236 Cal.App.4th 1281 (2015) and Fire Ins. Exchange v. Superior Court, 181 Cal.App.4th 388 (2010) in reaching its decision. In Albert, an insurer denied coverage for a lawsuit filed against an insured by her neighbor for damages caused by the insured in pruning trees on the neighbor’s property. Albert held “it is completely irrelevant that plaintiff did not intend to damage the trees, because she intended for them to be pruned.”

The appellate court noted that Albert relied on Fire Exchange for the proposition that “[w]hen an insured intends the acts resulting in the injury or damage, it is not an accident ‘merely because the insured did not intend to cause injury.’ The insured’s subjective intent is irrelevant.” Albert, supra at 1291, quoting Fire Exchange, supra at 392.

Here, the appellate court found the Aintablians’ Complaint alleges harm from Ms. Ghukasian’s intentional conduct, as she specifically instructed her contractor to clear the land and cut the trees. According to the appellate court, Ms. Ghukasian’s mistaken belief about the boundaries of her property is irrelevant in determining whether the conduct itself – leveling land and cutting trees – was intentional.

As part of her appeal, Ms. Ghukasian argued that the California Supreme Court overruled Albert and Fire Exchange in Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., 5 Cal.5th 216 (2018). However, in reaching its decision, the appellate court distinguished Ms. Ghukasian’s case from Liberty Surplus, which addressed the issue of “when a third party sues an employer for the negligent hiring, retention, and supervision of an employee who intentionally injured that third party, does the suit allege an ‘occurrence’ under the employer’s commercial general liability policy.” Liberty Surplus concluded it can, absent an applicable exclusion.

The appellate court noted that Liberty Surplus found the employer’s alleged negligent hiring constituted an “occurrence” (i.e., accident) under the insurance policy because the causal sequence of events that led to the alleged injury began with the employer’s negligence in hiring the employee. The appellate court also noted Liberty Surplus‘ explanation that the employee’s molestation of the third party “may be deemed an unexpected consequence of [the employer’s] independently tortious acts of negligence.” By contrast, the appellate court found Ms. Ghukasian’s intentional conduct (i.e., leveling and cutting trees) was the immediate cause of the injury and that there was no independent act that produced the damage.

The appellate court also rejected Ms. Ghukasian’s contention that because the Aintablians’ Complaint includes a cause of action for negligence, it alleges an “occurrence.” The appellate court explained, “[t]he scope of the duty [to defend] does not depend on the labels given to the causes of action; instead it rests on whether the alleged facts or known extrinsic facts reveal a possibility that the claim may be covered by the policy.” (citing with emphasis Cunningham v. Universal Underwriters, 98 Cal.App.4th 1141, 1148 (2002)). The appellate court found that although the Aintablians allege a cause of action for negligence, the factual allegations reflect that Ms. Ghukasian committed intentional acts (i.e., leveling and cutting trees without consent).

Based on the foregoing, the appellate court held that the trial court did not err in granting Aegis’ motion for summary judgment.

This document is intended to provide you with information about insurance law related developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact the authors. This communication may be considered advertising in some jurisdictions.

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