Intentional Conduct Is Not An “Accident” Despite Insured’s Mistaken Belief

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In Ghukasian v. Aegis Security Insurance Company, 2022 WL 1421511 (Cal. App. 2 Dist. 2022), the California Court of Appeal recently confirmed that, under established California law, an intentional action by an insured is not an “accident” even if the insured believed it had the legal right to take that action.  The Court confirmed that this principle was not changed by the California Supreme Court’s decision in Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., 5 Cal.5th 216 (Cal. 2018).

The underlying lawsuit alleged that the insured directed a contractor to grade land and cut down trees on a neighbor’s property and asserted claims for trespass and negligence.  The insurer denied coverage, noting that its policy only covered property damage caused by an “occurrence,” which was defined as an accident, and the complaint alleged only intentional conduct.  The insured sued and the trial court granted the insurer’s motion for summary judgment, finding there was no potential for coverage and the insurer had no duty to defend.

On appeal, the Second District Court of Appeal found the alleged leveling of land and cutting of trees was not an “accident” as it was undisputed that the insured specifically instructed her contractor to do that work and the work occurred as intended.  The Court noted that, under established California precedent, the insured’s mistaken belief about the boundaries of her property were not relevant.  The Court cited Albert v. Mid–Century Ins. Co., 236 Cal.App.4th 1281 (Cal. App. 2 Dist. 2015) (construction of an encroaching fence and pruning trees not an accident) and Fire Ins. Exchange v. Superior Court, 181 Cal.App.4th 388 (Cal. App. 4 Dist. 2010) (construction of encroaching building was not an accident).

Notably, the Court rejected the argument that the California Supreme Court changed this established law in Liberty Surplus.  The Court distinguished Liberty Surplus, which involved the negligent hiring, retention, and supervision of an employee who intentionally injured a third party.  It reasoned that in Liberty Surplus there was an unexpected event—the employee’s intentional conduct—in the chain of causation for the third party’s injury, where the intentional grading and cutting activity by the insured in the case before it was the direct and only cause of injury.

This ruling demonstrates that it continues to be the law in California that the term “accident” refers to the injury-causing conduct and there is no “accident” when all of those acts were intended.