Opinion ID: 2516516
Heading Depth: 3
Heading Rank: 2

Heading: Callihan's Coverage for Makarka's Injury

Text: To learn whether the Great American policy covered Callihan, we look first to the policy language. Section II.A of the Garage Coverage Form reads: We [Great American] will pay all sums an insured legally must pay as damages because of bodily injury or property damage to which this insurance applies caused by an accident and resulting from garage operations. Thus, under this coverage term, five conditions must exist before Great American will pay: (1) there must be an accident, (2) resulting from garage operations, (3) that causes an insured to incur legal liability, (4) based on bodily injury or property damage, (5) to which the insurance applies. Callihan's confession of judgment, in which he admits that he negligently performed repairs to Voliva's brakes at the Ride n Shine garage, creates a genuine issue of material fact regarding the first three elements. And it is undisputed that three members of the Makarka family were killed and two were injured when Voliva's truck hit Makarka's automobile, which satisfies the requirement that there be bodily injury or property damage. Thus, the only coverage element upon which summary judgment against Makarka could be based is whether Makarka's injuries were injuries to which this insurance applies. That phrase refers the insured to the conditions and exclusions that limit the policy. In particular, Garage Condition provision, part V.B.7, defines the coverage time frame: Under this Coverage Form, we cover bodily injury, property damage and losses occurring: a. During the policy period shown in the Declarations[.] Thus, this was an occurrence policy. Such policies provide coverage that is based on accidents or events that happen while the policy is in force. [8] Since it is undisputed that Gerik canceled this policy before Makarka's accident, Callihan was not insured against liability stemming from bodily injury occurring in that accident, unless some other, earlier event triggered coverage. As the California Court of Appeals has ruled, the time of the occurrence of an accident within the meaning of an indemnity policy is not the time the wrongful act was committed, but the time when the complaining party was actually damaged. [9] Although courts have referred to this explanation as a general rule, [10] it is merely a restatement of the terms of most occurrence-based liability insurance policies. Like most occurrence policies, the Great American policy is triggered by bodily injury or property damage for which legal damages are due: [Great American] will pay all sums an `insured' legally must pay as damages because of `bodily injury' or `property damage'.... Thus, the proper moment to measure whether coverage is in force is the moment the person seeking damages was injured. Makarka nevertheless argues that Callihan, by negligently damaging Voliva's brakes, caused property damage while the policy was in force that triggered coverage for all consequential injuries related to the faulty brakes. But Makarka's complaint against Callihan never alleged that Makarka was owed compensation for damage to Voliva's brakesa claim that properly would have belonged to Voliva. Instead, Makarka's complaint simply alleged that he was owed compensation for bodily injuries caused by Callihan's negligent repair. Here, bodily injuries for which Makarka sought damages occurred on August 27, 1991. Because Makarka did not own Voliva's truck at the time of repair, he could not show any reasonably ascertainable facts that would give rise to a duty to defend when the Great American policy was still in effect. Since the Great American policy was canceled by April 1, 1991, Great American did not owe Callihan either a defense or indemnity for liability stemming from an accident in August. Makarka points out, however, that courts have carved out exceptions to the date-of-occurrence rule where the words occurrence and accident introduce ambiguity into a policy's terms [11] and argues that this case should also be excepted. In particular, Makarka cites Insurance Company of North America v. Sam Harris Construction Company. [12] Because the reasons driving the cases Makarka cites are not present here, we decline to follow them. Sam Harris interpreted a policy that indemnified its insured for injury or destruction of property arising out of aircraft maintenance, but that limited itself to occurrences or accidents which happen during the policy period. [13] The Sam Harris court ruled that because the policy failed to define the term occurrence, it had to be read broadly to include events and incidents, including negligent repairs that do not cause immediate injury but do result in a later accident. [14] Therefore, the court ruled that the insurer had a duty to defend the insured against a claim based on injury occurring after the policy was canceled if the negligence occurred while the policy was in force. [15] The reasoning in Sam Harris does not apply here because the Great American policy is not triggered by an occurrence or accident. When used in a policy without further definition, these nouns can sometimes create ambiguity, since, when negligence and consequent injury occur separately, occurrence and accident might refer to either the incident in which the negligence occurred or the incident in which the injury was suffered. But the Great American policy avoids this potential ambiguity by specifying precisely what must occur and when it must occur: under the policy, the triggering events of coverage are `bodily injury,' `property damage' and `losses' occurring ... [d]uring the policy period. We find nothing ambiguous in this phrasing. Occurring is the present participle of the verb to occur, which means to come to pass[,] take place[, or] happen. [16] Thus, the durational restriction in the Great American policy plainly limits coverage to cases in which bodily injury, property damage, or losses come to pass, take place, or happen during the policy period. This language cannot reasonably be read as a reference to negligent acts that predate the occurrence of injury. The word accident is also unambiguous as used in the Great American policy. The policy's coverage grant reads: We will pay all sums an insured legally must pay as damages because of bodily injury or property damage to which this insurance applies caused by an accident and resulting from garage operations. (Emphasis added.) In this sentence, the events that trigger coverage are bodily injuries and property damage, not accidents. The phrase caused by an accident appears in the coverage term to ensure that only injuries that are not anticipated are insured. [17] As a modifier, rather than a triggering event, caused by an accident is unambiguous. Here, it is undisputed that Makarka's injuries were caused by an accident. The problem is that the accident causing these bodily injuries occurred long after Callihan performed his faulty work on Voliva's brakes and long after the Great American policy was canceled. And Makarka fares no better if Callihan's negligent work is viewed as an accident, since the property damage caused by that accident is not the damage at issue in Makarka's complaint. Thus, unlike the language contained in the policies in Sam Harris and the other cases cited by Makarka, the language of the Great American policy is not ambiguous. Since the date of policy cancellation and the date of Makarka's accident were not disputed, a reasonable insured [18] would not expect coverage for that accident under this policy. The superior court appropriately ordered summary judgment on the coverage question.