Opinion ID: 710686
Heading Depth: 1
Heading Rank: 1

Heading: Premises Alienated Exception

Text: 3 The apartment company advances three arguments to support its contention that the premises alienated exclusion does not defeat coverage. 4 The apartment company argues that both corporate partners were not owners of the partnership property as a matter of law. In support of this proposition, it cites Bartlome v. State Farm Fire & Casualty Co., 208 Cal.App.3d 1235 (1989), Becker v. State Farm Mutual Auto Insurance Co., 52 Cal.App.3d 282 (1975), and Employers Casualty Co. v. Employers Commercial Union, 632 F.2d 1215 (5th Cir.1980). These cases, it maintains, override California Corporations Code Sec. 15025 which states that [a] partner is a co-owner with the other partners of specific partnership property holding as a tenant in partnership. 5 We follow the plain language of Sec. 15025 and reject the argument. Bartlome, Becker, and Employers Casualty are distinguishable. They involve situations where property owned by the partnership causes injury, and additional coverage is sought from an individual partner's personal insurance policy. The decisions largely rest on the concern that to allow coverage in such cases would permit individuals, who also happen to be members of partnerships, to take out personal liability policies at a comparatively small premium and then read into them coverage for any number of undisclosed partnerships. Bartlome, 208 Cal.App.3d at 1243-44. There is no such concern in the present case. The proposition that individual partners are not bound by the partnership's insurance policy exclusions does not follow from the principle that a partner's insurance policies do not cover damage done by the partnership's property. 6 Our analysis is not altered by two recent California cases dealing with a partner's ownership of a partnership's property. See Barr Lumber Co. v. Old Ivy Homebuilders, Inc., 34 Cal.App.4th Supp.1 (1995); Munkdale v. Giannini, 35 Cal.App.4th 1104 (1995). Barr Lumber simply applies the rule that a judgment foreclosing a lien on a partnership's property must name the partnership, and not just the partner, as a party. Munkdale follows a statutory definition of change of ownership which includes a transfer of property between a partnership and a partner. Neither case assists the apartment company's attempt to escape the premises alienated exclusion. 7 The apartment company further argues that the exclusion only applies to named insureds, and the corporate partners are not named insureds. Under the terms of the exclusion, however, it does not matter whether the corporate partners are named insureds. The exclusion was triggered when the partnership, as named insured, sold the property. 8 Finally, relying on Maryland Casualty v. Reeder, 221 Cal.App.3d 961, 968, 971-74 (1990), and Prudential-LMI Commercial Insurance Co. v. Reliance Insurance Co., 22 Cal.App.4th 1508 (1994), the apartment company argues that, when a developer purchases a broad form endorsement, the alienated premises exclusion does not apply, as long the developer never occupies or rents the premises. See Reeder, 221 Cal.App.3d at 978. The record reveals, however, that the partnership did rent the apartment complex prior to selling it to Dale. The apartment company asserts that the partnership always intended to resell the property as soon as possible, and that it only rented the property temporarily. We hold, however, that even the partnership's short-term rental activity eliminated any broad form exception to the premises alienated exclusion.