Court Opinion

ID: 6351903
Source: CourtListenerOpinion
Date Created: 2022-06-21 23:01:29.816914+00
Date Added: 2024-06-11T12:48:33.116101
License: Public Domain

Filed 6/21/22 Thompson v. Crestbrook Insurance CA1/4
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

         IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                     FIRST APPELLATE DISTRICT
                                                  DIVISION FOUR

 PETER THOMPSON et al.
           Plaintiffs and Appellants,
                                                                      A161949
 v.
 CRESTBROOK INSURANCE                                                 (Marin County
 COMPANY et al.                                                       Super. Ct. No. CIV 1904822)
           Defendants and Respondents.

         Peter and Toni Thompson and Henstooth Ranch, LLC (collectively, the
Thompsons) appeal a summary judgment in favor of Crestbrook Insurance
Company (Crestbrook) and Nationwide Agribusiness Insurance Company
(Nationwide) (collectively, the insurers) and Sander, Jacobs, Cassayre &
Griffin, Inc. (the agent). The court held that the insurers had no duty to
defend the Thompsons in an action involving a parcel they own in Sonoma
County. The parcel is subject to a conservation easement (Civ. Code, § 815
et seq.) in favor of Sonoma Land Trust (SLT), which prohibits any impairment
of the land’s conservation values.
         SLT sued the Thompsons in 2015, alleging that they had done work on
the parcel that caused damage in violation of the conservation easement. The
Thompsons tendered defense of the action to another insurer not a party here,
The Burlington Insurance Company (Burlington). Burlington declined the
tender on the ground that the SLT action did not arise from an “occurrence,”

                                                               1
defined as an “accident.” The Thompsons filed a coverage suit removed to
federal court which resulted in a judgment upholding the denial of coverage,
affirmed by the Ninth Circuit Court of Appeals. (Henstooth Ranch, LLC v.
Burlington Ins. Co. (N.D. Cal. 2018) 293 F.Supp.3d 1067, aff’d by mem. opn.
(9th Cir. 2019) 770 Fed.Appx. 804 (Burlington).) While that appeal was
pending, the Thompsons tendered defense of the SLT action to Crestbrook and
Nationwide, under policies identical in relevant part to the Burlington policy.
The insurers declined the tender, the Thompsons filed the present action, and
the trial court ultimately upheld the denial of coverage based on the same
analysis as the federal court. We shall affirm the judgment, not on the
ground adopted by the trial court, but on the ground that the federal court
judgment precludes relitigation of whether the SLT action arose from an
“accident” within the meaning of the two insurers’ policies.
                      Factual and Procedural History
      In 2009, the parcel’s then-owners deeded SLT a conservation easement
over the entire parcel to prevent the loss of its scenic, natural-habitat, and
open-space values that would occur if the parcel were developed. With narrow
exceptions, the easement bars: (1) commercial, industrial, agricultural, or
residential use of the parcel; (2) construction of new roads or structures;
(3) off-road use of motor vehicles; (4) waste disposal; (5) excavation or
alteration of the land; and (6) removal or destruction of trees, except as
required for specified purposes. It requires the parcel’s owners, before
undertaking any restoration activity, to secure SLT’s written approval of a
vegetation-management plan.
      In 2013, the Thompsons acquired the parcel. They also acquired an
adjacent parcel, held by a limited liability corporation which they formed,
Henstooth Ranch LLC (Henstooth), on which they planned to build a house.

                                        2
      In the relevant period, Henstooth held a commercial general liability
(CGL) insurance policy from Burlington. The Thompsons held a homeowners’
policy from Crestbrook, which covered damages an insured must pay “due to
an occurrence,” defined to mean “an accident” resulting in “bodily damage,
property damage or personal injury.” The policy defined “personal injury” to
include, among other things, “wrongful entry”—a term not further defined.
Henstooth later obtained coverage instead under a Nationwide policy that
was similar to the Crestbrook policy, but that defined “personal . . . injury” to
include “wrongful entry into . . . a room, dwelling or premises that a person
occupies.”
      In 2014, without consulting SLT, the Thompsons hired contractors to
do work on the easement parcel, including relocating a 180-year-old oak tree
from the easement parcel to the house parcel. Consequently, in November
2015, SLT filed an action in Sonoma County Superior Court, asserting claims
for breach of contract, violation of the conservation easement (Civ. Code,
§ 815.7) and damage to trees (Civ. Code, § 3346; Code Civ. Proc., § 733).
      SLT’s complaint against the Thompsons alleged that, in late 2014, SLT
learned that the Thompsons “had begun extensive work” on the easement
parcel. They were building “a new road to move [a 180-year-old] oak tree”
from the easement parcel to the house parcel. SLT staff observed “a newly
graded road running nearly the length of the [easement parcel]” from its
boundary with the house parcel to the tree. SLT also learned of “a separate
incident in which the Thompsons or their contractors” had dredged sediment
from a pond on the house parcel and spread it over a portion of the easement
parcel. In November 2014, SLT staff observed further grading. Despite the
requirements of the easement, the Thompsons had not sought SLT’s
permission for any of these activities.

                                          3
      SLT alleged that its staff attempted to visit the site, but the Thompsons
put them off repeatedly. In December 2014, SLT sent the Thompsons a notice
“detailing the steps SLT required them to undertake to restore the property,”
which included hiring a consultant to draft a restoration plan for SLT’s review.
In spring 2015, the Thompsons instead “unilaterally undertook their own
‘restoration’ efforts,” which not only “failed to remedy [their] past violations”
but “caused further harm” to the easement parcel by “fostering growth of non-
native species and weeds” and causing “further erosion that reached bedrock”
in places. The further harm allegedly was caused by both the Thompsons’
“asserted efforts ‘to restore’ [the parcel]” and their “initial unlawful
activities.” In a June 2015 site visit, SLT staff observed that the Thompsons
had conducted “additional unlawful grading” and had “installed a culvert and
a short new road” on the easement parcel.
      After that visit and threats of litigation, the Thompsons hired a
contractor recommended by SLT to create a restoration plan. The Thompsons
gave the plan to SLT for its approval and “agreed not to undertake further
unilateral efforts to restore the property.” But in November 2015, with the
rainy season looming, the Thompsons and SLT reached an impasse over
restoration plans. By then, “the original damage done . . . when the
Thompsons first graded the road, removed the oak tree, and disposed of
dredged materials ha[d] worsened significantly over time due to both erosion of
unprotected soils and the Thompsons’ own, additional activities.” SLT then
filed suit and, in December 2015, Henstooth tendered the action to
Burlington, which declined to provide a defense.
      In August 2016, while the SLT action was pending, the Ninth Circuit
published an opinion certifying to the California Supreme Court the following
question, “Whether there is an ‘occurrence’ under an employer’s [CGL] policy

                                         4
when an injured third party brings claims against the employer for the
negligent hiring, retention, and supervision of the employee who intentionally
injured the third party?” (Liberty Surplus Ins. Corp. v. Ledesma & Meyer
Constr. Co., Inc. (9th Cir. 2016) 834 F.3d 998, 1000 (Ledesma certifying
opn.).) The policy at issue in Ledesma defined “occurrence” to include an
“accident” in terms identical to the policies at issue here. (Id. at pp. 1001–
1002.) The Supreme Court accepted the certified question in October 2016.
(Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., Inc.,
S236765, Supreme Court Mins., Oct. 19, 2016) [2016 Cal. Lexis 8832].)
      A month later, Henstooth sued Burlington, seeking a declaration that
the pending SLT action was based on an “occurrence” under its CGL policy,
obligating Burlington to provide a defense to the action. Burlington removed
the action to federal court. In late 2017, the parties filed cross-motions for
summary judgment, which the district court resolved in a January 2018 order
finding no duty to defend.
      The district court in Burlington summarized the relevant law as follows:
“ ‘An accident does not occur when the insured performs a deliberate act
unless some additional, unexpected, independent, and unforeseen happening
occurs that produces the damage.’ [Citation.] ‘Where the insured intended all
of the acts that resulted in the victim’s injury, the event may not be deemed an
“accident” merely because the insured did not intend to cause injury.’
[Citation.] ‘That does not mean, however, that coverage is always precluded
merely because the insured acted intentionally and the victim was injured.’
[Citation.] . . . ‘Rather, an accident may exist “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.” ’ [Citation.] ‘However, “where damage is the direct

                                        5
and immediate result of an intended . . . event, there is no accident.” ’ ”
(Burlington, supra, 293 F.Supp.3d at pp. 1073–1074.)
      In rejecting Henstooth’s argument that its liability arose in part from
negligence, the district court wrote: “In contrast to the acts of tree removal
and road access construction, Henstooth characterizes its restoration efforts as
negligent, and states that any resulting damage from those efforts ‘could not
be expected or intended by Henstooth.’ ” (Burlington, supra, 293 F.Supp.3d at
p. 1074.) However, the relevant question was not whether Henstooth
“ ‘expected or intended the alleged erosion to occur,’ ” but “whether the
restorative . . . work was intentional.” “The underlying complaint alleges that
despite a demand from SLT to hire a consultant and to provide SLT with a
restoration plan, Henstooth instead took up ‘unilateral’ restorative efforts
that worsened the damage. [Citation.] Thus, Henstooth intended to take up
restorative efforts. It is irrelevant that Henstooth did not intend to cause
additional harm. ‘[T]he term “accident” does not apply where an intentional
act resulted in unintended harm.’ ” (Ibid.) “There is nothing in the complaint,
and Henstooth has not presented any evidence, that ‘an aspect in the causal
series of events leading to the injury or damage was unintended by the
insured and a matter of fortuity.’ ” (Id. at p. 1075.)
      In January 2018, the Thompsons appealed the Burlington judgment to
the Ninth Circuit. They retained Gary Gorski to represent them in that
appeal and in the impending trial of the underlying SLT action.
      On June 4, 2018, Henstooth filed its opening brief to the Ninth Circuit
in the Burlington appeal and, on the same day, our Supreme Court issued
Liberty Surplus Ins. Corp. v. Ledesma & Meyer Constr. Co. (2018) 5 Cal.5th
216 (Ledesma). Henstooth’s brief to the Ninth Circuit did not, of course, cite
Ledesma.

                                         6
      The SLT action was set to proceed to a bench trial in Sonoma County in
July 2018. Shortly before the trial date, the Thompsons moved for a
continuance based on the fact that a dependency court order had given
Gorski sole custody of his child, unexpectedly requiring him to spend five to
nine hours each court day commuting between Santa Rosa and his home near
Sacramento. The trial court denied the request for a continuance and, from
late July through mid-September 2018, conducted a bench trial of the SLT
action.
      In August 2018, with the SLT trial underway, Burlington filed its
respondent’s brief to the Ninth Circuit. Gorski did not file a reply on
Henstooth’s behalf.
      In January 2019, in the SLT action, the trial court issued a statement
of decision finding that the Thompsons intentionally violated the easement
and awarding SLT nearly $600,000 in damages.
      In February 2019, the Thompsons, with new counsel, filed a motion in
the Burlington appeal seeking leave to file a late reply brief or supplemental
brief addressing Ledesma. The Ninth Circuit denied leave “without prejudice
to [Henstooth] filing a citation of supplemental authorities.” Pursuant to
federal rule, the attorney filed a short letter citing Ledesma. (Fed. Rules App.
Proc., rule 28(j); 28 U.S.C.) In May 2019, the Ninth Circuit filed a
memorandum decision affirming the Burlington judgment. (Henstooth Ranch,
LLC v. Burlington Ins. Co. (9th Cir. 2019) 770 Fed.Appx. 804.) According to
the decision, “Henstooth’s argument, that ‘the damage was unintentional’ even
if the actions it allegedly took were intentional, is unavailing. As California
courts have repeatedly held, ‘where the insured intended all of the acts that
resulted in the victim’s injury, the event may not be deemed an “accident”
merely because the insured did not intend to cause injury.’ Merced Mutual

                                        7
Ins. Co. v. Mendez (1989) 213 Cal.App.3d 41, 50; [citation]. The California
Supreme Court’s recent decision in [Ledesma] is consistent with this rule.
[Citation] (reaffirming Merced’s holding that there is no accident where an
insured ‘intended the acts that caused the injury, but not the injury’).
Because SLT’s suit does not concern accidental conduct under this state-law
standard, Burlington had no duty to defend Henstooth from it.” (770
Fed.Appx. at pp. 804–805.) Henstooth filed a petition for rehearing based on
Ledesma, which the court summarily denied in June 2019.
      Also in June 2019, Thompson’s insurance agent notified Crestbrook and
Nationwide of the SLT action.1 At the time, SLT’s posttrial motion seeking
nearly $3 million in attorney fees was pending. In July 2019 the Thompsons
filed an ultimately unsuccessful appeal from the judgment in the SLT action.2
      In August and September 2019, respectively, Crestbrook and
Nationwide each declined to defend the SLT action. The Thompsons then
filed the present action in Marin County Superior Court. The parties
stipulated to stay discovery and file cross-motions for summary judgment or
summary adjudication of the duty-to-defend issue.
      In addressing the summary adjudication motions, the Thompsons,
citing Ledesma, argued that they were owed a defense because some of the
alleged harm to SLT’s property could be attributed to their negligent hiring or

      1 The Thompsons assert that the initial notice of the SLT action that
they gave the agent in 2015 should have prompted it at that time to notify the
insurers as well as Burlington, but that it “mistakenly” notified only the
latter. However, the Thompsons stipulated below that, if the trial court held
that the insurers had no duty to defend them, the agent would nonetheless be
entitled to judgment as a matter of law.
      Our colleagues in Division Five affirmed the judgment in 2020.
      2

(Sonoma Land Trust v. Thompson (Dec. 16, 2020, No. A157721)
[nonpub. opn.].)

                                       8
supervision of the contractors whose negligent restoration work caused that
damage or worsened the initial harm. In the alternative, they contended that
the facts could support a claim by SLT for a “wrongful entry” onto the
easement parcel committed by the contractors. The Thompsons argued that
the Burlington judgment had no issue-preclusive effect because Henstooth
never asserted coverage based on potential liability for negligent hiring or
supervision, because Ledesma materially changed the applicable law, and
because applying issue preclusion would be unfair in light of Gorski’s failure
to file a reply brief in the Burlington appeal.
      The insurers responded that none of the Thompsons’ potential liability
arose from an “accident.” They argued both that the Burlington judgment
precluded the Thompsons from arguing otherwise and that, as the Ninth
Circuit had held in Burlington, Ledesma does not apply to the SLT action
because none of the harmful conduct allegedly directed by the Thompsons
was an “accident.” The insurers also denied that the SLT action involved any
arguable “wrongful entry.”
      The court issued a tentative ruling granting the insurers’ motion based
solely on the ground that the alleged damage was caused neither by an
“accident” nor by “wrongful entry.” The court summarized the Thompsons’
theory that “the ‘accident’ here was the ‘negligent hiring or supervision of
third parties such as Hess and Lunny’ [the contractors] as contemplated and
applied in [Ledesma, supra,] 5 Cal.5th 216, 222.” Distinguishing Ledesma, the
court held that, given SLT’s allegations and the “extrinsic facts discovered
during the . . . underlying litigation,” the Thompsons’ conduct and SLT’s
allegations “cannot be narrowed to negligent hiring and supervision over the
contractors who performed the injurious work. [The Thompsons’] own conduct
was alleged and shown to be intentional, . . . not an ‘accident.’ ” The court also

                                        9
held that SLT could not have amended its complaint to state a cause of action
for wrongful entry, as entry onto the easement parcel was “not prohibited.”
      The Thompsons contested the tentative ruling, and the court held a
hearing at which the judge asserted that “in this court’s view, I have to make
an independent determination,” reiterating that he “didn’t buy any
arguments about collateral estoppel, . . . so this court has got to come to its
own conclusion.” The court noted that the work the employer in Ledesma had
hired the employee to perform—superintending a construction project, during
which he committed sexual misconduct—had been work the employer was
entitled to undertake, whereas the Thompsons had been required to get SLT’s
approval of any restoration efforts, but had hired contractors to undertake
such efforts unilaterally. In the court’s view, Ledesma applies to harm caused
by a hiree’s negligence or misconduct while doing work the insured was
entitled to hire someone to perform, but not to harm caused by a hiree while
doing work the insured was not entitled to hire anyone to perform. The court
subsequently entered an order adopting its tentative ruling.3 The court
entered judgment in favor of the insurers and the agent, and the Thompsons
timely filed a notice of appeal.

      3 At the hearing, the court had offered a hypothetical: “[I]t’s one thing if I
hire somebody to cut my own trees, and that contractor does a terrible job
and, instead, cuts the neighbor’s tree. Then you have potential liability . . . for
negligent hiring[.] [¶] This is . . . different because, assuming [the contractors]
were negligent, they were doing what their principal had hired them to do.”
After the entry of summary judgment, the Thompsons moved for
reconsideration, stating that they had newly realized that certain facts in the
SLT action matched that hypothetical—namely, when their contractor Lunny
dredged a pond by the house, Mr. Thompson had said to dump the spoils on
part of the house parcel, but Lunny had misunderstood and dumped the spoils
on part of the easement parcel, causing some of the harm SLT alleged. The
court denied reconsideration because the assertedly “new” facts already
existed when the summary judgment motion was briefed.

                                        10
                                   Discussion
      We review a summary judgment de novo, viewing the evidence in the
light most favorable to the nonmoving party. (Schachter v. Citigroup, Inc.
(2009) 47 Cal.4th 610, 618.)
      1. The Burlington ruling precludes relitigation of whether SLT’s
      claim is based on an “Accident.”
      The insurers repeat on appeal their lead argument below, which is that
the Burlington judgment precludes the Thompsons from relitigating the duty-
to-defend issue, since Burlington held that identical policy language does not
give rise to a duty to defend the SLT action. Because we conclude that this
argument is correct, we need not re-evaluate the merits of the decisions
reached by both the federal courts and the trial court here.
      The doctrine of issue preclusion, formerly known as collateral estoppel,
bars relitigation of an issue decided in a prior action if five “threshold
requirements are fulfilled.” (Lucido v. Superior Court (1990) 51 Cal.3d 335,
341 (Lucido).) The issue subject to preclusion “must be identical to that
decided in a former proceeding” in which it was actually litigated and
necessarily decided, by a ruling final and on the merits, to which the party to
be precluded was a party (or in privity with one). (Ibid.) The Thompsons
dispute whether the issue critical to their claim here is identical to the issue
decided in Burlington. They also contend the doctrine does not apply because
“there has been a material change in the law.” (Sacramento County Employees’
Retirement System v. Superior Court (2011) 195 Cal.App.4th 440, 452
(SCERS).) Further, they argue that issue preclusion is not an “inflexible”
doctrine, so that “[e]ven if the minimal requirements for its application are
satisfied,” courts may allow relitigation of an issue “if considerations of policy

                                        11
or fairness outweigh the doctrine’s purposes as applied in a particular case.”
(Bostick v. Flex Equipment Co., Inc. (2007) 147 Cal.App.4th 80, 97 (Bostick).)4
      Because the relevant facts are undisputed, we review de novo the trial
court’s determination that issue preclusion does not apply. (Roos v. Red
(2005) 130 Cal.App.4th 870, 878.)5 We consider each of the Thompsons’ three
contentions in turn.
          a. The issue here is identical to the issue in Burlington.
      Relying largely on the issue-preclusion analysis in a recent duty-to-
defend case, Textron Inc. v. Travelers Casualty & Surety Co. (2020)
45 Cal.App.5th 733, the Thompsons contend that whether any of their
potential liability to SLT arose from an “accident” differs from issues

      4  The Thompsons also note that “ ‘a particular danger of injustice
arises’ ” if a nonparty to the prior action invokes issue preclusion, so such
cases “ ‘require close examination to determine whether nonmutual use of the
doctrine is fair and appropriate.’ ” (Bostick, supra, 147 Cal.App.4th at p. 97.)
But they identify no reason why the nonmutual invocation of the doctrine
here makes its use any less “fair and appropriate” than it would be if raised
by Burlington.
      5 In a supplemental brief requested by this court, the Thompsons
contend that federal law governs the preclusive effect of the federal
judgment. For this proposition, the Thompsons cite Semtek International Inc.
v. Lockheed Martin Corp. (2001) 531 U.S. 497, 507 and this court’s opinion in
Guerrero v. Department of Corrections (2018) 28 Cal.App.5th 1091, 1100. But
what Guerrero in fact holds, based on Semtek and Taylor v. Sturgell (2008)
553 U.S. 880, is that federal preclusion law governs the preclusive effect of a
federal court’s judgment if that court exercised federal-question jurisdiction
but, absent extraordinary circumstances, the preclusion law of the relevant
state will govern the preclusive effect of a federal court’s judgment if that
court exercised diversity jurisdiction and applied state law (Guerrero, supra,
at p. 1000), as did the federal court in Burlington. Under the California
preclusion law that applies here, the “predomina[nt] view” is that “the trial
court’s application of collateral estoppel is reviewed de novo.” (Roos v. Red,
supra, 130 Cal.App.4th at p. 878.) An exception may apply for offensive use of
the doctrine (ibid.), but that is not at issue here.

                                        12
considered in Burlington. That is so, they argue, because they have asserted a
new legal theory based on Ledesma and because they rely on certain facts
regarding their contractors’ actions that they did not raise in Burlington. But,
as recognized in the decision on which they rely: “ ‘[a]n issue decided in a
prior proceeding establishes [issue preclusion] even if some factual matters or
legal theories that could have been presented with respect to that issue were
not presented.’ ” (Textron, supra, at p. 747.)
      In Textron, the Second Appellate District held that a prior decision
regarding which state’s law would define the scope of coverage under a certain
insurance policy had no preclusive effect in a later coverage dispute over the
scope of the same policy because the cases involved wholly different
underlying factual allegations. (Textron, supra, 45 Cal.App.5th at p. 739.) In
1987, Textron filed a declaratory judgment action in its home state of Rhode
Island against numerous insurers, including Travelers, and obtained a
judgment declaring that hundreds of policies covering many states and years
must all be construed, for coverage purposes, pursuant to Rhode Island law.
(Id. at p. 738.) Years later, in 2010, a California woman named Esters was
diagnosed with mesothelioma and sued Textron. (Id. at p. 739.) California
applied a “continuous trigger” rule to determine when illnesses “occur,” while
Rhode Island applied a “manifestation” trigger. (Id. at pp. 740–741.) The
Second District held that the prior judgment did not preclude litigation of
which state’s “trigger” rule should apply to determine whether Esters’s
illness “occurred” during the policy’s coverage period, as the issues in the two
coverage actions were not identical. “ ‘ “The ‘identical issue’ requirement
addresses whether ‘identical factual allegations’ are at stake in the two
proceedings, not whether the ultimate issues or dispositions are the same.
[Citation.]” ’ [Citation.] . . . ‘[A]n issue decided in a prior proceeding

                                         13
establishes [issue preclusion] even if some factual matters or legal theories
that could have been presented with respect to that issue were not presented.
[Citations.] A prior decision does not establish [issue preclusion], however, on
issues that could have been raised and decided in the prior proceeding but
were not. [Citations.]’ [Citation.] . . . Putting it as simply as we can, the
factual predicate of the legal issue decided in the prior case must be sufficient
to frame the identical legal issue in the current case, even if the current case
involves other facts or legal theories that were not specifically raised in the
prior case.” (Id. at p. 747.) “Factually, the Esters action involves an alleged
occurrence of continuing personal injury . . . suffered by a single California
resident from exposure to asbestos in California, caused by Textron’s activities
in California.” (Id. at p. 748.) “Obviously, that specific issue—which trigger
rule should apply to the Esters action—was not litigated and decided more
than 24 years earlier in the Rhode Island action. Thus, the issue presented
and decided in [that] action did not present ‘ “ ‘ “identical factual
allegations’ ” ’ ” to those [here].” (Id. at p. 749.) Although the “ultimate issue”
of how to interpret the policy term “occurrence” with regard to personal
injury may have been identical, that did not create the sort of “identity of
issues” required for issue preclusion. (Ibid.)
      Here, the present action and the Burlington action not only raise the
same “ultimate issue”—that is, whether any injuries alleged in the SLT
action arose from an “accident”—but do so with regard to “identical factual
allegations,” namely, the allegations made by SLT in the same complaint
concerning the conduct of the Thompsons and their contractors affecting the
easement parcel in 2014 and 2015. As the Thompsons note, whether any of
their potential liability to SLT arose from an “accident” must be evaluated
based not only on the allegations of SLT’s complaint but also on facts known

                                         14
to the insurer and extrinsic to the complaint. (Montrose Chemical Corp v.
Superior Court (1993) 6 Cal.4th 287, 296.) The coverage issue in each case
turned on the same underlying universe of facts regarding the acts of the
Thompsons and their contractors affecting the easement parcel.
      In Burlington, the Thompsons did not articulate their current legal
theory, based on Ledesma, until the final stages of the appeal. They also did
not point to certain specific facts about the contractors’ conduct on which they
now rely. Their briefs list five “instances of accidental conduct implicated in
the SLT action”: (1) further erosion caused by the contractors’ negligent
efforts to remedy the initial harm caused by the roadbuilding and tree removal
that the Thompsons hired them to perform; (2) Lunny’s negligent use of non-
native seeds to re-seed the easement parcel; (3) Lunny’s act of dumping pond
spoils on that parcel after allegedly misunderstanding Thompson’s directions
about where to dump them; (4) Lunny’s act of constructing, on his own
initiative, a second road into the easement parcel to move the pond spoils; and
(5) Lunny’s decision, on his own initiative, to attempt to re-grade the area
where he had dumped the spoils. But while the Thompsons did not articulate
a legal theory of “negligent hiring/supervision,” they did contend that some
harm for which they faced liability to SLT arose from an “accident” because it
arose from negligent performance of the remediation work. As the district
court noted, “In contrast to the acts of tree removal and road access
construction, Henstooth characterizes its restoration efforts as negligent, and
states that any resulting damage from those efforts ‘could not be expected or
intended by Henstooth.’ ” Also, “Henstooth argued that the restoration efforts
were intentional, but that they were executed negligently.” While the
argument in the federal action did not describe plaintiff’s claim as based on
“negligent hiring or supervision,” the decision that SLT’s claim was not an

                                       15
“accident” was clearly based on the same basic facts, whether or not described
as fully as the Thompsons now describe them. “[O]nce an issue is litigated
and determined, it is binding in a subsequent action notwithstanding that a
party may have omitted to raise matters for or against it which if asserted
might have produced a different outcome.” (Carroll v. Puritan Leasing Co.
(1978) 77 Cal.App.3d 481, 490; see also, e.g., Murphy v. Murphy (2008)
164 Cal.App.4th 376, 401–402.)
            b. Ledesma did not materially change the law so as to negate the
            applicability of issue preclusion.
      The Thompsons contend that the 2018 Ledesma decision triggers an
exception to the issue preclusion doctrine that applies when there has been a
material change in the governing law. (SCERS, supra, 195 Cal.App.4th at
p. 452.) But Ledesma did not change the law in a respect that is material
here. It simply answered what the Ninth Circuit had identified, in an opinion
published before the Burlington action began, as a significant open question
in California insurance law. (Ledesma Certifying Opn., supra, 834 F.3d at
p. 1002.)
      The Thompsons cite SCERS, supra, 195 Cal.App.4th at page 452, in
which the Third Appellate District addressed whether a judgment in a prior
action which barred publication of information about public employees’
salaries precluded relitigation of a similar issue raised in a new case. The
prior judgment had no preclusive effect, the court held, because “[i]n the
[prior] case, the trial court [had been] bound to follow then-extant precedent”
comprising two court of appeal decisions, Priceless and Los Angeles, but “our
Supreme Court later concluded [that] the salaries of public employees were
not confidential, declined to follow Priceless, and disapproved of Los Angeles.
[Citation] This shows a sufficient material change in the law to preclude
[issue preclusion].” (Ibid.)

                                        16
      Here, by contrast, Ledesma did not overrule or disapprove any decision.
The Ninth Circuit’s published opinion certifying the question in Ledesma noted
a California Supreme Court opinion alluding to the unsettled nature of the
issue, as well as several published federal court orders deciding the issue both
ways. (Ledesma Certifying Opn., supra, 834 F.3d at p. 1002 & fn. 3, citing
Minkler v. Safeco Ins. Co. of America (2010) 49 Cal.4th 315, 322, fn. 3.) In
answering the question, our Supreme Court did not suggest that any
precedent weighed against its conclusion; indeed, it implied that Minkler
foreshadowed the result. (Ledesma, supra, 5 Cal.5th at p. 223 [“In Minkler we
did not consider whether the [negligent supervision] claims involved were
‘accidents’ . . . because the issue was not raised. [Citation.] But our reasoning
there establishes that [an employer] may be covered even though [its
employee]’s intentional acts were beyond the scope of its policy.”].)
      Thus, when the Burlington summary judgment motions were litigated,
no precedent precluded the Thompsons from asserting their negligent-
supervision theory. The district court in Burlington was not bound to rule as
it did by any decision that was subsequently overruled in Ledesma.
Accordingly, no material change in law since the Burlington judgment
diminishes its preclusive effect.
         c. There is no unfairness in affording the Burlington judgment
         preclusive effect.
      The Thompsons contend that the trial court declined to apply issue
preclusion based on an exercise of discretion, by which the court implicitly
concluded that “considerations of policy or fairness outweigh the doctrine’s
purposes as applied” here (Bostick, supra, 147 Cal.App.4th at p. 97). They
argue that the court did not abuse its discretion in so deciding. However, the
hearing transcript indicates that the court did not reject issue preclusion on
discretionary, equitable grounds, but accepted the Thompsons’ lead argument

                                       17
below that the doctrine did not apply as a matter of law: “Just to be clear, in
this court’s view, I have to make an independent determination. I didn't buy
any arguments about collateral estoppel, or et cetera, so this court has got to
come to its own conclusion.”
      Moreover, there is no basis to conclude that the trial court should have
declined on fairness grounds to apply issue preclusion.6 To evaluate the
question, we “ ‘must balance the need to limit litigation against the right of a
fair adversary proceeding in which a party may fully present his case.’ ”
(Bostick, supra, 147 Cal.App.4th at p. 97.) Courts rely on ad hoc fairness
concerns to deny effect to an otherwise-applicable preclusion doctrine only in
“rare cases” (Ruddock v. Ohls (1979) 91 Cal.App.3d 271, 280)—except
perhaps in a criminal context (cf. Lucido, supra, 51 Cal.3d at p. 343 [stressing
need for “realism and rationality” in applying “ ‘the rule of [issue preclusion]
in criminal cases’ ”]).
      The Thompsons contend that this is such a case because circumstances
in Burlington deprived them of a fair adversary proceeding in which they
could fully present their case. The alleged deprivation arose from the
personal challenges faced by their then-lawyer, Mr. Gorski, after a dependency
court ruling gave him sole custody of his child, which required him to spend
many hours each day during the SLT trial driving between Sonoma County
and his home near Sacramento. But the Thompsons cite no precedent holding
it unfair to bind a party to the results of a prior litigation of an identical issue
because the party’s attorney in the prior action faced personal difficulties
that may have affected his performance. Moreover, the Gorski declaration on

      6  Even if the trial court had declined to apply issue preclusion based on
ad hoc fairness concerns, we would still review its decision de novo. (See fn. 5,
ante, citing Roos v. Red, supra, 130 Cal.App.4th at p. 878.)

                                         18
which the Thompsons rely addressed the impact of Gorski’s situation only on
his ability to represent them in the SLT trial, not in the Burlington appeal.
And, in all events, the issue the Thompsons contend was not fairly considered
in Burlington—the impact of the Ledesma decision—was presented to the
Ninth Circuit by Gorski’s successor, and rejected. The case the Thompsons
cite, Bostick, supra, 147 Cal.App.4th 80, has nothing at all to do with such a
scenario.7
      A rare decision by this court that did apply an ad hoc fairness exception
based on a lawyer’s conduct offers a telling contrast. In Hight v. Hight (1977)
67 Cal.App.3d 498, a mother sought child support arrearages, and the father
raised the preclusive effect of a prior judgment in an action under the former
Revised Uniform Reciprocal Enforcement of Support Act of 1968 (RURESA)
(Code Civ. Proc., former §§ 1650–1657). The mother, who lived in Colorado,
had filed the prior action there, but a Colorado court forwarded it to a district
attorney here to prosecute under RURESA. (Id. at p. 501.) The father had
defended the prior action by claiming the mother had denied him visitation.

      7 Bostick was a product liability action. (Bostick, supra, 147 Cal.App.4th
at pp. 83–84.) Gold’s Gym, facing joint and several liability for injuries due to
a defect in a product manufactured by codefendant Flex Equipment, settled
with the plaintiff during trial. The ensuing verdict apportioned 90 percent of
the fault to Flex, 10 percent to the plaintiff, and none to “other entities.” (Id.
at p. 84.) The trial court, giving preclusive effect to the finding that Gold’s
bore no fault, entered judgment on its cross-claim for indemnity from Flex
(Ibid.) The Second District reversed. (Id. at p. 99.) While it recited the
principle that issue preclusion may not apply if “considerations of policy or
fairness outweigh [its] purposes as applied in a particular case” (id. at p. 97),
it did not apply an ad hoc fairness analysis. It relied on the propositions that
issue preclusion does not apply if the party to be precluded lacked adequate
incentive in the prior action to litigate the issue fully, and that it will apply,
as between parties who were codefendants in a prior action, only as to issues
that “they litigated fully and fairly as adversaries.” (Ibid.)

                                        19
(Ibid.) The district attorney never sought evidence from her about visitation,
and it did not appear she “was even aware that [father] was contesting the
action,” which the district attorney eventually dismissed. (Id. at pp. 504, 501.)
In the mother’s action, we applied a fairness exception to the preclusion
doctrine, emphasizing that she had been only a nominal plaintiff in the prior
action, not aware of or able to control how a public official conducted the
litigation in her name. (Id. at pp. 503–504.) Here, the Thompsons do not
suggest that they lacked awareness of or ability to control the Burlington
litigation, where the issue involved was in fact ultimately considered..
      2. The Thompsons cannot rely on “Wrongful Entry” to circumvent
      the preclusive effects of the Burlington judgment.
      The Thompsons argue in the alternative that the insurers had a duty to
defend them under policy provisions covering liability for “personal injury,”
as distinct from “property damage.” They quote an opinion stating, “Unlike
liability coverage for property damage or bodily injury, personal injury
coverage is not based on an accidental occurrence. Rather, it is triggered by
one of the offenses listed in the policy.” (General Accident Ins. Co. v. West
American Ins. Co. (1996) 42 Cal.App.4th 95, 103.) But while that was no
doubt true of the policy at issue in that case, it is not true of one of the
policies at issue here—the Thompsons’ policy from Crestbrook.
      After defining “bodily injury,” “property damage,” and “personal injury,”
the latter of which includes “wrongful entry,” the policy states that
“ ‘Occurrence’ means an accident, including continuous or repeated exposure to
the same general condition. It must result in Bodily Injury, Property Damage
or Personal Injury caused by an Insured.” The policy thus draws no distinction
between the three types of covered harm—bodily injury, property damage,
and personal injury—with regard to whether they must arise from an
“occurrence,” meaning “an accident,” to trigger coverage. It makes no

                                         20
difference whether any potential liability to SLT was for “personal injury” in
the form of “wrongful entry.” To trigger a duty to defend, the potential
liability still was required to arise from an “accident.” The Burlington
judgment establishes that it did not.
      The other policy here, issued by Nationwide, does distinguish “personal
injury” from “property damage” with regard to whether the harm must arise
from an “accident” to trigger coverage. But that distinction makes no
difference here. The Nationwide policy covers only “wrongful eviction from,
wrongful entry into, or invasion of the right of private occupation of a room,
dwelling or premises that a person occupies, committed by or on behalf of its
owner, landlord or lessor.” As the insurers argue, there was no wrongful
entry because the Thompsons had the right to enter the easement parcel and
to authorize others to enter. Moreover, even if a “wrongful entry,” none of the
harm SLT alleged to the undeveloped woodland can possibly be framed as
“wrongful entry into . . . a room, dwelling or premises that [SLT] occupies.”
While the Thompsons cite decisions they describe as equating occupancy to
control, those decisions in fact state only that the government’s regulatory
power over public lands includes a power to control their occupancy—not that
control is the same as occupancy. (See, e.g., Utah Power & Light Co. v. United
States (1917) 243 U.S. 389, 405.)
      In any case, the contention that the easement parcel constitutes “a
room, dwelling, or premises that a person occupies” fails both because the
undeveloped easement parcel is not “a room, dwelling, or premises” and
because SLT does not “occup[y]” it. The easement parcel is plainly not a room
or dwelling and, contrary to the Thompsons’ assumption, it does not qualify
as “premises.” The Second Appellate District, addressing the same policy
provision, concluded that the term “premises,” as used in a list with “room”

                                        21
and “dwelling,” must be read to mean a place where people live. (Mirpad,
LLC v. California Ins. Guarantee Assn. (2005) 132 Cal.App.4th 1058, 1072
[“Under the principle of ejusdem generis, the general word ’premises’ should
be defined in the same class or nature of the more specific words that precede
it”].)
         Nor does SLT “occupy” the easement parcel. To “occupy” is “[t]o hold
possession of; to be in actual possession of” or “[t]o live or stay in (a place).”
(Black’s Law Dict. (11th ed. 2019).) But an easement is “a nonpossessory
‘ “interest in the land of another that gives its owner the right to use the land
. . . or to prevent the property owner from using his land.” ’ ” (Kazi v. State
Farm Fire & Casualty Co. (2001) 24 Cal.4th 871, 880, italics added.) Federal
decisions construing the same policy provision hold that its coverage is
triggered only by “ ‘interference with an enforceable possessory interest in
real property and not just an interference with the use or enjoyment of real
property.’ ” (Camp Richardson Resort, Inc. v. Philadelphia Indemnity Ins. Co.
(E.D. Cal. 2015) 150 F.Supp.3d 1186, 1194 [applying California law], quoting
Evergrow Indus. Co. v. Travelers’ Ins. Co. (9th Cir. 2002) 37 Fed.Appx. 300,
301–302 [same].) While the Thompsons note some unique features of
conservation easements, they cite no authority holding that such an
easement is possessory in character.
         Thus, it is clear that the facts alleged here do not, as a matter of law,
come within the scope of the Nationwide policy.
                                     Disposition
         The judgment is affirmed.

                                          22
                                               POLLAK, P. J.

WE CONCUR:

BROWN, J.
NADLER, J.*

      * Judge of the Sonoma County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

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