Unpublished Disposition, 930 F.2d 31 (9th Cir. 1991)

No. 89-15258.

United States Court of Appeals, Ninth Circuit.

Before BEEZER and KOZINSKI, Circuit Judges, and KLEINFELD, District Judge.^* 

MEMORANDUM^** 

Uzeta appeals from a summary judgment which determined that Allstate's homeowner's insurance policy did not apply to an intra-family claim. The District Court exercised diversity jurisdiction with regard to the complaint and counter-claim, and granted summary judgment to the insurer. We affirm.

Anthony had lived with and taken care of his aged mother, Maria Cortez, at her house on Park Street, and during that period, she conveyed another house she owned, on Coleridge Street, to Anthony and Peter. Anthony and Peter then purchased the Allstate homeowner's insurance policy sued upon in this case. Anthony and Peter lived in San Francisco, as their mother did during the Park Street period, but she then moved to San Diego and lived with another of her sons, Raymond.

Raymond Uzeta, as the conservator for the Uzetas' mother, sued Anthony and Peter Uzeta in state court, seeking rescission of the deed to the Coleridge Street property, compensatory damages for lost rental value, and punitive damages for fraud. Raymond claimed that Anthony had subjected his mother to poor living conditions, and had taken unfair advantage of her weakened physical and mental condition to obtain the conveyance from her of the Coleridge Street property.

Anthony tendered defense of this lawsuit to Allstate, which refused defense and coverage. The lawsuit went to trial, and the jury returned a verdict that Mrs. Cortez lacked sufficient mental capacity to execute the deed, did so as a result of undue influence by Anthony and Peter Uzeta, and incurred damages for lost rents.

Anthony and Peter had purchased an Allstate homeowner's policy with liability coverage on the Coleridge Street property after obtaining the conveyance from their mother. A massively redundant barrier of exclusions prevents coverage under the liability part for claims such as the one made by their brother Raymond as conservator. The policy promises to pay sums which an insured person becomes legally obligated to pay as damages "because of bodily injury or property damage." "Property damage" is defined to require "physical injury to or destruction of tangible property," which are not alleged or established in Raymond's lawsuit.

The policy excludes coverage for losses occurring on premises other than the Coleridge Street property listed, if owned, rented or controlled by an insured person. This meant that for Anthony to have had any coverage for losses occurring on the Park Street property, he would have had to add the Park Street property to his policy. Such a clause protects the insurer from insuring multiple properties for the price of one.

The policy treats as "insured persons" " [y]ou, and if a resident of your household, any relative...." Since Anthony's mother resided in his household when the claim arose, she was an insured. The policy excludes coverage for claims between insured persons:

We do not cover bodily injury to an insured person or property damage to property owned by an insured person.

This exclusion would be fatal to Anthony's claim, even if his claim otherwise fell within the coverage language. Even without this exclusion, if the claim were construed to fall within the property damage coverage, coverage would nevertheless be barred by the exclusion for "property damage [other than fire, explosion or smoke] to property occupied or used by an insured person."

Anthony argues that the District Court did not take account of his potential liability for bodily injury. Raymond had threatened to add counts to the complaint alleging bodily injury. Assuming that the insurance company should have taken this potential claim into account, though, does not solve Anthony's coverage problem, because the several exclusions described above would apply even if bodily injury were alleged. The claim could have squeezed past the coverage language, but would still be blocked by the exclusions. Also, as Allstate correctly notes in its brief, no claims for bodily injury or tangible property damage were ever pursued, and no damages were awarded in these categories.

Anthony suggests that the definitions of "insured person", "resident", and "household," should all be interpreted to carry out a purpose of broadening coverage rather than excluding coverage. We cannot see how they can be read so receptively to coverage as Anthony needs, however, without depriving the insurer of the protection of its plain and unambiguous contractual language, and imposing a result not in accord with any objectively reasonable expectations which the contract may have fostered.

The structure of the policy as well as the language show that the "family exclusion" and the related exclusions in this policy are designed to exclude rather than supplement coverage, perhaps in order to avoid coverage for categories of claims in which the risk of collusion is higher than the insurer wishes to bear. California law permits insurance companies to exclude coverage for injuries to an insured, and construes a provision similar to the one in Allstate's policy to accomplish that objective with sufficient clarity. California State Automobile Association Inter-Insurance Bureau v. Warwick, 17 Cal. 3d 190, 130 Cal. Rptr. 520 (Cal.1976).

The several exclusions are easily understood and unambiguous in the context of this case, and plainly exclude coverage in several ways for Raymond's claim against Anthony. The insurance agreement is a contract pursuant to which the insurer promises to defend and indemnify Anthony only in certain circumstances, and excluding certain others, and he has no claim arising independently of the contract. His theory for relief must be that the contract is ambiguous, which it is not, or that California law as a matter of policy prohibits the exclusions upon which Allstate relied. It does not.

Uzeta correctly argues that under California law, if a provision of an insurance policy is susceptible of two constructions, the one more favorable to the policy holder must be selected. For example, in Island v. Fireman's Fund Indemnity Co., 30 Cal. 2d 541, 184 P.2d 153 (Cal.1947), as Uzeta correctly argues, the household exclusion was not applied to a family member, because the exclusion was susceptible of the construction that a family member not residing under the same roof was not a member of the household. The facts, though, in Island, were that the family member was not living at home, but was in the armed forces and had left the family household some months before the accident. In the case at bar, by contrast, there is no ambiguity about whether Anthony was living in the same household as his mother.

Anthony correctly notes that California has abolished the tort doctrine of intra-family immunity. Self v. Self, 58 Cal. 2d 683, 26 Cal. Rptr. 97 (Cal.1962); Gibson v. Gibson, 3 Cal. 3d 914, 92 Cal. Rptr. 288 (Cal.1971). He argues that this implies that the family exclusion in liability insurance is void as against public policy. That A can sue B in tort, however, does not support the inference that B's insurer must as a matter of contract cover claims such as A's. Anthony's argument cannot bridge the distance from the tort doctrine to the limitation he seeks on freedom of contract. Generally an exclusion will be written because the insurer contemplates the possibility that its insured could be subject to a type of claim which the insurer prefers not to cover. If the claim could not be brought under tort law or some other branch of the law, the insurer would not need to write its contract to exclude it.

California law allows insurers to exclude coverage for claims between insureds. California State Automobile Association Inter-Insurance Bureau v. Warwick, 17 Cal. 3d 190, 130 Cal. Rptr. 520 (Cal.1976); Farmers Insurance Exchange v. Cocking, 29 Cal. 3rd 383, 173 Cal. Rptr. 846 (Cal.1981). Uzeta argues that California statutory and common law allowing family exclusions violates the equal protection clause of the California constitution, but Farmers Insurance Exchange v. Cocking, supra, has already construed that provision of the California Constitution to permit such exclusions.

In sum, when Allstate sold Anthony and his brother the insurance policy, it plainly and unambiguously excluded coverage for claims such as the one made against him by his mother's conservator. The claims made and the claims which might reasonably be anticipated were outside the coverage of the policy or plainly excluded. California law permitted the insurer to exclude such claims. Accordingly, even though California tort law would allow such claims, Allstate did not insure against liability for them, and had no obligation to defend or indemnify.

The judgment of the District Court is AFFIRMED.