Court Opinion

ID: 2781272
Source: CourtListenerOpinion
Date Created: 2015-02-23 21:01:02.04035+00
Date Added: 2024-06-11T10:58:10.605621
License: Public Domain

FILED
                           NOT FOR PUBLICATION                             FEB 23 2015

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

AQUARIUS WELL DRILLING INC.;                     No. 13-15040
RAY WILLIAMSON; SHARON
WILLIAMSON,                                      D.C. No. 2:12-cv-00971-MCE-
                                                 CMK
              Plaintiffs - Appellants,

  v.                                             MEMORANDUM*

AMERICAN STATES INSURANCE
COMPANY,

              Defendant - Appellee.

                  Appeal from the United States District Court
                      for the Eastern District of California
             Morrison C. England, Jr., Chief District Judge, Presiding

                          Submitted February 11, 2015**
                             San Francisco California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: SCHROEDER and SILVERMAN, Circuit Judges, and HUCK, Senior
District Judge.***

      California corporation Aquarius Well Drilling, Inc. (“Aquarius”), along with

its sole shareholders Ray and Sharon Williamson (collectively “Appellants”),

appeal the dismissal of their claims against American States Insurance Company

(“Appellee”) for its alleged failure to defend Aquarius against a third-party lawsuit.

Because Appellee had no duty to defend, the district court properly dismissed

Appellants’ claims under Federal Rule of Civil Procedure 12(b)(6). See Gray v.

Zurich Ins. Co., 65 Cal. 2d 263, 275 & n.15 (1966).

      Appellants’ policy obligated Appellee to defend against claims for “property

damage” caused by an “occurrence,” which is defined as an “accident.” The

negligence claim against Aquarius alleged that Aquarius performed an inadequate

well test and therefore misrepresented the condition of the well. All of Aquarius’s

alleged conduct was intentional. Under California law, intentional acts are not

“accidents” unless “some additional, unforeseen, unexpected, and independent

happening” occurs which causes the damage. Merced Mutual Ins. Co. v. Mendez,

213 Cal. App. 3d 41, 50 (Ct. App. 1989). The allegations against Aquarius failed

to indicate any such happening caused the claimed damage.

        ***
            The Honorable Paul C. Huck, Senior United States District Judge for
Southern Florida, sitting by designation.

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       That Appellants did not subjectively intend to be negligent is irrelevant,

since Appellants’ conduct in testing the well and reporting the results was

deliberate. See Delgado v. Interins. Exchange of Auto. Club of S. Cal., 47 Cal. 4th
302, 311 (2009); Fire Ins. Exchange v. Superior Ct., 181 Cal. App. 4th 388, 393

(Ct. App. 2010) (“The insured’s subjective intent is irrelevant.”). The inaccurate

report was not a fortuitous event, but a direct and natural consequence of the well

test. See Ray v. Valley Forge Ins. Co., 77 Cal. App. 4th 1039 (Ct. App. 1999)

(holding no accident where roofer negligently recommended unsuitable materials

because the recommendation was intentional even if roofer did not intend to

convey bad advice nor intend the resulting consequences); see also Merced, 213
Cal. App. 3d at 50 (noting accident requires that both the means and consequences

be involuntary, unexpected, unusual, and unforeseen).

      Moreover, the allegations of negligent misrepresentation created no

possibility of coverage. California law precludes insurance coverage for willful

wrongdoing such as fraud, and treats negligent misrepresentation as a subspecies

of fraud. See Dykstra v. Foremost Ins. Co., 14 Cal. App. 4th 361, 366 (Ct. App.

1993). Because neither claim presents a potentially covered “occurrence” within

the meaning of Appellants’ policy, Appellee had no duty to defend.

                                          3
      In the absence of a duty to defend, derivative claims premised on the alleged

breach of that duty fail. See Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 36

(1995). The district court therefore did not err by dismissing Appellants’

derivative claims.

      AFFIRMED.

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