{"id":892675,"date":"2017-08-02T16:58:25","date_gmt":"2017-08-02T22:58:25","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892675"},"modified":"2017-08-02T16:58:25","modified_gmt":"2017-08-02T22:58:25","slug":"metaphysics-accident-accident-not-insurance-policy","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/metaphysics-accident-accident-not-insurance-policy\/","title":{"rendered":"The Metaphysics of When an Accident is an \u201cAccident\u201d (or Not) Under Your Insurance Policy"},"content":{"rendered":"

Garret Murai | California Construction Law Blog<\/a> | July 31, 2017<\/p>\n

As an undergrad, I remember taking an introductory philosophy class. When we came to the chapter on metaphysics our professor asked what makes an apple an apple? \u201cWe have a specific name for it, presumably, to distinguish it from other things,\u201d she\u00a0said.\u00a0\u201cBut what makes an apple an apple?\u201d<\/p>\n

From there we went into a rabbit hole. With some students describing an apple by its colors, shape, size, smell and that it grows on trees and others trying to\u00a0distinguish an apple from other things, which in turn led to further discussions such as\u00a0\u00a0why we believe apples come in red, green and yellow, whether an apple is still an apple if a person was colorblind, etc. In the end, we were questioning whether we were even in existence and sitting in a university classroom.<\/p>\n

Insurance can be a bit like that sometimes. When is an accident an accident? If you engage in an intentional act that results in an unintended consequence, is it an accident? In\u00a0Navigators Specialty Insurance Company v. Moorefield Construction, Inc<\/em>.<\/em>\u00a0(December 27, 2016) 6 Cal.App.5th 1258, the Court of Appeals for the Fourth District, while not answering the question of the nature of existence, did shed some light on when an accident is an accident.<\/p>\n

Navigators Specialty Insurance Company v. Moorefield Construction, Inc.<\/em><\/h2>\n

In 2003, general contractor Moorefield Construction, Inc. entered into a construction contract with developer D.B.O. Development No. 28 for the construction of a Best Buy store in Visalia, California. The construction was completed and the store opened later that year.<\/p>\n

As early as the grand opening of the store and through 2009, Best Buy noticed that carpet tiles were not sticking to the floor, that the edges of the carpet tiles were curling, that moisture and adhesive were oozing through the carpet tile edges, and that there was staining along the edges of the carpet tiles as well as odors. In 2009, Best\u00a0Buy notified the building owner JSL Properties, LLC that it would be replacing the carpet tiles and withholding rent under its lease. Best Buy completed the\u00a0flooring repairs\u00a0later that year and withheld $377,404 from rent.<\/p>\n

In 2010,\u00a0JSL filed suit against Moorefield\u00a0and DBO to recover the rental amounts withheld by Best Buy.\u00a0DBO, in turn, filed a cross-complaint against\u00a0Moorefield and others asserting various causes of action including equitable indemnity. Moorefield tendered JSL\u2019s complaint and DBO\u2019s cross-complaint to its commercial general liability insurer, Navigators Specialty Insurance Company, which accepted tender under a reservation of rights.<\/p>\n

During the course of litigation it was discovered that prior to installing the carpet tiles Moorefield ran two series of moisture tests on the underlying concrete slab. Under the terms of the construction contract, the slab on grade\u2019s maximum moisture content was not to exceed five pounds per 1,000 square feet of slab. Both moisture tests revealed that the moisture content exceeded the contract limit. However, rather than wait for the moisture content to fall, and to avoid a potential delay in the store opening, Moorefield directed its flooring subcontractor to install the carpet tiles.<\/p>\n

In 2013, the parties settled for $1.3 million with JSL receiving $885,000 and DBO receiving $425,000. Navigators, on\u00a0behalf of Moorefield, contributed its policy limit of $1 million. Thereafter, Navigators filed suit against Moorefield seeing an order from the court that it had no duty to defend or indemnify Moorefield under its commercial general liability policy.<\/p>\n

Specifically, Navigators argued that coverage Section A of the policy only applied to bodily injury or property damage that\u00a0\u201cis caused by an \u2018occurrence’\u201d and that the term \u201coccurrence\u201d is defined as \u201can accident, including continuous or repeated exposure to substantially the same general harmful conditions.\u201d Navigators further argued that, because Moorefield deliberately decided to direct\u00a0its flooring subcontractor to install the carpet tiles despite the\u00a0higher than contractually permitted moisture content of the concrete slab, there was no \u201coccurrence\u201d giving rise to coverage under the policy.<\/p>\n

Following a six-day bench trial, the trial court found in favor of Navigators and Moorefield appealed.<\/p>\n

The Court of Appeals Decision<\/h2>\n

On appeal, the Court of Appeals affirmed\u00a0and reversed in part.<\/p>\n

While\u00a0Navigator\u2019s policy did not define \u201caccident,\u201d explained the Court, California law does. \u201cIn the context of liability insurance, an accident is \u2018an unexpected, unforeseen, or undesigned happening or consequence from either a known or unknown clause’\u201d and\u00a0\u201c[t]his common law construction of the term \u2018accident\u2019 becomes part of the policy and precludes any assertion that the term is ambiguous.\u201d \u201cUnder California law, the word \u2018accident\u2019 in the coverage clause of a liability policy refers to the conduct\u00a0of the insured for which liability is sought to be imposed on the insured\u201d and \u201c[a]n accident does not occur when the insured performs a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage.\u201d<\/p>\n

And here, explained the Court, Moorefield knew the vapor emission test results exceeded the specifications yet directed its subcontractor to install the carpeting tiles anyway. Moreover, explained the Court, the testimony of Moorefield\u2019s\u00a0President, Michael Moorefield, and project manager, \u00a0Jay Cote, that there was little to no risk installing the carpet tiles was irrelevant since \u201c[a]n insured\u2019s mistake of fact or law does not transform and intentional act into an accident.\u201d<\/p>\n

The Building Industry Legal Defense Foundation filed an amicus curiae brief arguing that construction defects should always be deemed an \u201coccurrence\u201d under a commercial general liability policy, even when a contactor intentionally performs work with knowledge that its work\u00a0could lead to harm, since the harm itself is fortuitous and unintended and therefore an \u201caccident.\u201d<\/p>\n

In response, the Court emphasized that it was not deciding whether all construction defects are \u201coccurrences\u201d under a commercial general liability policy, but rather, only whether Moorefield\u2019s conduct constituted\u00a0 an accident under the policy. And, here, concluded the Court, Moorefield\u2019s conduct was not an accident because it was a deliberate decision made with knowledge that the test results exceeded specifications.<\/p>\n

Conclusion<\/h2>\n

Moorefield<\/em>\u00a0sets a benchmark against which the obligation of insurance carriers to defend a claim will be measured. Where an insured engages in a deliberate act with knowledge that a particular harm is likely to occur no coverage will be found to exist. However, this is just one point, and an extreme\u00a0one at that,\u00a0along a spectrum of possibilities, with unanswered questions such as when a harm is considered to be foreseeable, how certain must it be that a harm will occur, etc.? Metaphysical enough for you?<\/p>\n","protected":false},"excerpt":{"rendered":"

Garret Murai | California Construction Law Blog | July 31, 2017 As an undergrad, I remember taking an introductory philosophy class. When we came to the chapter on metaphysics our professor asked what makes an apple an apple? \u201cWe have a specific name for it, presumably, to distinguish it from other things,\u201d she\u00a0said.\u00a0\u201cBut what makes… Continue reading The Metaphysics of When an Accident is an \u201cAccident\u201d (or Not) Under Your Insurance Policy<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9,9914,9721],"tags":[10234,9895,72,23],"class_list":["post-892675","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","category-insurance-coverage","category-property-damage","tag-accident","tag-advise-consult","tag-construction-contracts-2","tag-insurance-coverage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nThe Metaphysics of When an Accident is an \u201cAccident\u201d (or Not) Under Your Insurance Policy - Advise & Consult, Inc.<\/title>\n<meta name=\"description\" content=\"When is an accident an accident? 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