Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-01890/USCOURTS-caed-2_02-cv-01890-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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Scottsdale Ins. Co. v. Moreno, No. 03-17061, 2005 WL 1

1253915 (9th Cir. May 27, 2005). 

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

SCOTTSDALE INSURANCE COMPANY,

NO. CIV. S-02-1890 WBS GGH

Plaintiff,

v. MEMORANDUM AND ORDER RE: 

MOTION FOR SUMMARY JUDGMENT 

HENRY MORENO, ROSE A. MORENO,

LA MANSION DEL RIO, WALTER

HARVEY, and DOES 1 through

100, inclusive,

Defendants.

----oo0oo----

Upon remand after the Ninth Circuit’s reversal of this

court’s order granting plaintiff’s motion for summary judgment,1

plaintiff again moves for summary judgment pursuant to Federal

Rule of Civil Procedure 56. In its pending motion, plaintiff

argues that there is no coverage under the policy for the

judgment obtained by defendant Walter Harvey against defendant

Rose A. Moreno because there was no “occurrence.” 

The relevant facts are set forth in this court’s

Case 2:02-cv-01890-WBS-GGH Document 124 Filed 03/09/06 Page 1 of 8
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September 18, 2003 order. In general, “[t]here is little, if

any, dispute between the parties as to the underlying facts

relative to this determination.” (Def.’s Opp’n to Pl.’s Mot. for

Summ. J. 10.)

By its terms, the policy equates “occurrence” with

“accident,” but does not specifically define accident. 

California courts have for some time, however, supplied a default

definition that has been routinely applied to policies similar to

plaintiff’s. An “accident,” as defined “within the terms of an

accident policy, is an unexpected, unforeseen, or undesigned

happening or consequence from either a known or an unknown

cause.” Geddes & Smith, Inc. v. Saint Paul-Mercury Indem. Co.,

334 P.2d 881, 884 (Cal. 1959) (quoting Hauenstein v. Saint

Paul-Mercury Indem. Co., 65 N.W.2d 122, 126 (Minn. 1954)); Collin

v. Am. Empire Ins. Co., 21 Cal. App. 4th 787, 804 (1994)

(recognizing that unless defined, the “common law construction of

the term ‘accident’ becomes part of the policy”). In other

words, given the ordinary meaning of accident, Commercial General

Liability ("CGL") policies, like plaintiff’s, cover events

“‘arising from extrinsic causes; occurring unexpectedly or by

chance; or happening without intent or through carelessness.’” 

St. Paul Fire & Marine Ins. Co. v. Superior Court, 161 Cal. App.

3d 1199, 1202 (1984) (quoting Webster’s Ninth New Collegiate

Dict. 49 (1983)) (alterations in original). 

Significantly, California courts have made clear that

“[a]n intentional act is not an ‘accident’ within the plain

meaning of the word.” Royal Globe Ins. Co. v. Whitaker, 181 Cal.

App. 3d 532, 537 (1986). This rule is not absolute, however. 

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The courts have also held that deliberate acts can qualify as

accidents when “some additional, unexpected, independent, and

unforeseen happening occurs that produces the damage.” Merced

Mut. Ins. Co. v. Mendez, 213 Cal. App. 3d 41, 43 (1989). The

insured must “intend[] all the acts that resulted in the victim’s

injury . . . .” See id. (emphasis added). His intention to

cause, or not cause, an injury is irrelevant. See Collin, 21

Cal. App. 4th at 804 (“‘[A]ccident’ refers to the insured’s

intent to commit the act giving rise to liability, as opposed to

his or her intent to cause the consequences of that act.”).

The parties do not dispute that Moreno deliberately

disposed of logs and other debris by placing these items in the

river. Additionally, the evidence conclusively shows that Moreno

was at least aware that his disposal activities had in the past

damaged Harvey’s facility to some extent. 

However, although Moreno may have, as plaintiff argues,

acted “with knowledge that his[] conduct may well result in a

subsequent happening from which damages flow,” these

circumstances are not determinative of liability. (Pl.’s Mot.

for Summ. J. 18.) In California, the insured’s intentional act

must be directly responsible for the injury. Scheffler v.

Allstate Ins. Co., 196 F. Supp. 2d 1003, 1006 (N.D. Cal. 2002). 

“[A]n ‘accident’ exists when any aspect in the causal series of

events leading to the injury or damage was unintended by the

insured and a matter of fortuity.” Merced Mut. Ins., 213 Cal.

App. 3d at 50. 

Here, Moreno’s intentional act of placing debris in the

river, while part of the series of events that led to the

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destruction of Harvey’s property, did not directly cause the

damage at issue. Moreno did not place the offending log beneath

Harvey’s barge. Significantly, he did not even weigh the log

down to ensure that it would sink. In fact, based on the facts

before the court, it appears that his intention was that it would

float away, as most of the other debris apparently did. (Harvey

Decl. ¶ 11.) Through arguably fortuitous events that occurred

after Moreno deliberately disposed of some debris, this

particular log sank and forces of nature put it in a position

where it caused significant damage. (See id. ¶¶ 6-7.) Thus, a

reasonable jury could find that secondary, unintended events,

rather than Moreno’s deliberate acts, caused damage covered by

the policy. Unfortunately for plaintiff, “accidents” do include

the results of careless acts and extrinsic causes. St. Paul Fire

& Marine Ins. Co., 161 Cal. App. 3d at 1202. 

In support of its argument that Moreno was required to

take precautionary measures to eliminate known consequential

exposures, plaintiff relies on two cases that are easily

distinguishable. First, plaintiff cites to Meridian Oil

Production, Inc. v. Hartford Accident & Indemnity Co., 27 F.3d

150, 152 (5th Cir. 1994), where the court held that an oil

company could not claim that it “accidently” caused pollution

when it failed to take measures to contain the hazardous wastes

produced as byproducts of its drilling operations. Similarly,

plaintiff also relies on Harleysville Mutual Casualty Co. v.

Harris & Brooks, 235 A.2d 556, 559 (Md. 1967), where a land

clearing contractor was not covered by his accident insurance

policy when he burned a pile of trees without taking

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precautionary measures to prevent smoke damage to nearby houses. 

Assuming that these cases are consistent with current California

law, which as explained below recognizes a distinction between

accidents and negligence, both Meridian Oil and Harris & Brooks

involved professionals engaged in activities related to their

trades. It does not necessarily follow that a personal property

owner who blithely disposed of his yard waste in an irresponsible

manner is held to the same standard as a professional clear

cutter. See Abellon v. Hartford Ins. Co., 167 Cal. App. 3d 21,

32 (1985) (noting in passing that courts are “required to resolve

uncertainties in favor of the insured and to interpret the policy

provisions according to the layman’s reasonable expectations”).

An insured’s failure to take reasonable measures to

prevent harm to those to whom a duty of care is owed may

constitute negligence, but such behavior does not preclude

accident insurance coverage. See Safeco Ins. Co. of Am. v.

Robert S., 28 P.3d 889, 894 (Cal. 2001) (“[T]he term ‘accident’

is more comprehensive than the term ‘negligence’ and . . .

includes negligence.”); see also Cal. Ins. Code § 533 (“An

insurer . . . is not exonerated by the negligence of the insured

. . . .”). The proper focus of a coverage inquiry is whether the

insured’s intentional acts were entirely responsible for the

damages incurred; plaintiff has failed to present undisputed

facts that conclusively demonstrate this.

Based on these facts, the court cannot hold, as a

matter of law, that plaintiff has no duty to indemnify Moreno for

the sinking of Harvey’s dock. Harvey has presented evidence

which suggests that unintended, secondary events placed the log

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in a position to harm the barge. Consequently, the harm suffered

did not undisputably result entirely from Moreno’s intentional

acts and thus may constitute an accident covered by the term’s of

plaintiff’s insurance policy.

IT IS THEREFORE ORDERED that plaintiff’s motion for

summary judgment be, and the same hereby is, DENIED. 

DATED: March 8, 2006

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Pursuant to Ninth Circuit Rule 36-3(b), (c), this court 2

must attach as an appendix any unpublished Ninth Circuit case

that is “relevant under the doctrine of law of the case . . . .”

7

APPENDIX2

SCOTTSDALE INSURANCE COMPANY, Plaintiff-counter-defendant-Appellee

v. HENRY MORENO; LA MANSION DEL RIO, Defendants and WALTER

HARVEY, Defendant-counter-claimant -Appellant

No. 03-17061 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

133 Fed. Appx. 415; 2005 U.S. App. LEXIS 10075

May 13, 2005, Argued and Submitted, San Francisco, California 

May 27, 2005, Filed

NOTICE: [**1] RULES OF THE NINTH CIRCUIT

COURT OF APPEALS MAY LIMIT CITATION TO

UNPUBLISHED OPINIONS. PLEASE REFER TO THE

RULES OF THE UNITED STATES COURT OF

APPEALS FOR THIS CIRCUIT.

SUBSEQUENT HISTORY: Amended by, Rehearing

denied by Scottsdale Ins. Co. v. Moreno, 2005 U.S. App.

LEXIS 12281 (9th Cir. Cal., June 23, 2005)

PRIOR HISTORY: Appeal from the United States

District Court for the Eastern District of California.

D.C.No.CV-02-01890-WBS/GGH. William B. Shubb,

Chief Judge, Presiding.

COUNSEL: For SCOTTSDALE INSURANCE

COM PANY, Plaintiff-counter-defendant-Appellee:

Nicholas Banko, Esq., Linda W. Hsu, Esq., SELMAN

BREITMAN LLP, San Francisco, CA

For HENRY MORENO, Defendant:

For LA MANSION DEL RIO, Defendant:

For WALTER HARVEY, Defendant-counter-claimantAppellant: Mark S. Newman, Esq., BORTON, PETRINI &

CONRON, LLP, Rancho Cordova, CA; Paul A. Pereira,

Esq., POOLE & PEREIRA, Sacramento, CA

JUDGES: Before: HAWKINS and GRABER, Circuit

Judges, and SELNA, ** District Judge.

** The Honorable James V. Selna, United

States District Judge for the Central District of

California, sitting by designation.

OPINION: 

[*416] MEMORANDUM *

* This disposition is not appropriate for

publication and may not be cited to or by the courts

of this circuit except as provided by Ninth Circuit

Rule 36-3.

[**2]

Walter Harvey appeals the district court's decisions to:

(1) grant in part Scottsdale Insurance Company's motion to

strike affidavits submitted by Joseph Countryman; (2) grant

Scottsdale's motion for summary judgment; and (3) deny

Harvey's motion for summary judgment. We reverse the

decisions to strike Countryman's affidavits and grant

summary judgment on Scottsdale's motion, and remand the

remaining issues to the district court.

The district court's decision to strike portions of

Countryman's affidavits is an evidentiary decision made in

the context of a summary judgment motion, and thus is

reviewed for an abuse of discretion. Wong v. Regents of

Univ. of Cal., 379 F.3d 1097, 1103 (9th Cir. 2004). The

district court's decisions to grant Scottsdale's motion for

summary judgment and deny Harvey's motion for summary

judgment, however, are reviewed de novo. Lopez v. Smith,

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203 F.3d 1122, 1131 (9th Cir. 2000)(en banc).

A party cannot create a material issue of fact on a

motion for summary judgment by offering an affidavit that

"flatly contradicts" the affiant's prior testimony. Kennedy v.

Allied Mut. Ins. Co., 952 F.2d 262, 266-67 (9th Cir. 1991);

[**3] Radobenko v. Automated Equip. Corp., 520 F.2d

540, 544 (9th Cir. 1975). We need not consider whether the

sham affidavit rule applies to testimony given in separate

but related litigation because we find that Countryman's

testimony was not inconsistent in any event.

The issue in the prior action was whether Harvey's

docking facility sank as the result of Henry Moreno's

negligence. It was enough for Countryman simply to link

[*417] the ultimate cause of the loss to logs placed in the

river by Moreno. The events that took place prior to

October and November 1998 were ancillary to that issue.

In contrast, the focus of the instant action is whether

Moreno's logs that were lodged in Harvey's docking facility

in July 1998 contributed to the ultimate loss. Countryman's

affidavits therefore place more emphasis on the cyclical

stress that allegedly was caused during that time.

Notwithstanding the fact that Countryman, in his prior trial

testimony, failed to link the stress caused in July 1998 to

the ultimate cause of Harvey's property damage in

November 1998, nothing in his affidavits "flatly

contradicts" his prior testimony. Indeed, Countryman's

prior testimony and present affidavits [**4] are

reconcilable when viewed in light of the respective relevant

issues. The district court therefore abused its discretion by

striking portions of Countryman's affidavits as shams.

With regard to Scottsdale's summary judgment motion,

the stricken portions of the Countryman affidavits are

sufficient to create a material issue of fact with respect to

when damage to the barge commenced. Furthermore,

Harvey is not collaterally estopped from advancing a

"continuous injury" theory because the issue of when the

damage first occurred to Harvey's docking facility was not

"necessarily decided" in the prior action. See Rice v. Crow.

81 Cal. App. 4th 725, 97 Cal. Rptr. 2d 110, 116 (Ct. App.

2000). The grant of summary judgment therefore must be

reversed. FED. R. CIV. P. 56(c).

The orders granting Scottsdale's motion to strike and

Scottsdale's motion for summary judgment are

REVERSED. The case is REMANDED.

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