Unpublished Disposition, 897 F.2d 533 (9th Cir. 1990)Annotate this Case
TRANSCONTINENTAL INSURANCE COMPANY, Plaintiff-Appellee,v.CITY OF SAN BERNARDINO, Defendant-Appellant.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Jan. 29, 1990.Decided March 7, 1990.
Before DAVID R. NELSON, BRUNETTI and KOZINSKI, Circuit Judges.
In 1980, land belonging to numerous San Bernardino homeowners was flooded, allegedly as a result of actions taken by the City. The homeowners sued the City in state court, advancing tort and inverse condemnation theories. The homeowners prevailed all around: The jury found the City liable in tort, and the court found the City liable in inverse condemnation. At that point, the trial judge instructed an advisory jury1 to calculate damages under the various theories. The jury returned special findings as to each homeowner, determining in each case that damages under a tort theory were virtually identical to those under inverse condemnation. See Defendants' Exh. 11. The trial judge largely adhered to the advisory jury's damage calculations, choosing to characterize the bulk of the awards as inverse condemnation damages so as to give the prevailing homeowners the benefit of market interest rates.
The City paid the judgments, then looked to its three insurance carriers for indemnification. It received reimbursement under two of the three policies, but the third, Transcontinental, refused to pay on the ground that its policy expressly excluded inverse condemnation damages. Transcontinental then brought this action in federal court, seeking a declaration that it had no obligation to indemnify the City for amounts paid to the prevailing homeowners in the state court action. The district court granted the declaratory relief.
On appeal, the City concedes that inverse condemnation damages are excluded under the policy, but argues that this is a case of concurrent causation--i.e., that there were two causes of the flooding: (1) inverse condemnation; and (2) negligent or otherwise tortious behavior on the part of the City. While the former is excluded, the latter is not. The City points to California cases holding that where damage has two causes, one of which is covered, the insurance company must pay for the loss. See, e.g., State Farm Mutual Auto Ins. Co. v. Partridge, 10 Cal. 3d 94, 102, 514 P.2d 123, 109 Cal. Rptr. 811 (1973), limited by, Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 770 P.2d 704, 257 Cal. Rptr. 292 (1989).
The district court correctly rejected the City's argument. Under California law, inverse condemnation is not a cause of harm; rather, it is merely "a theory or remedy for vindication of a property owner's cause of action against a public entity for damage to his property." City of Mill Valley v. Transamerica Ins. Co., 98 Cal. App. 3d 595, 600, 159 Cal. Rptr. 635 (1979) (emphasis original). As the district court properly concluded, inverse condemnation and tort are not distinct causes, but rather two ways to characterize the same cause of harm.
Indeed, the California Supreme Court has recently held that a victim of flooding cannot prevail on an inverse condemnation claim absent proof of "unreasonable conduct on the part of the defendant public entities," Belair v. Riverside County Flood Control Dist., 47 Cal. 3d 550, 764 P.2d 1070, 253 Cal. Rptr. 693, 703 (1988); thus, there can never be a case where a successful inverse condemnation claim is not accompanied by a finding of tortious behavior. To hold, as the City asks, that inverse condemnation and negligence are distinct causes would render meaningless all insurance policy exclusions of inverse condemnation damages. We hold instead that the Transcontinental policy, while covering tortious behavior generally, expressly excludes the tortious behavior that necessarily accompanies a successful inverse condemnation claim.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
The district court erred in finding that the jury acted in an advisory capacity as to liability. See Finding of Fact No. 4, Conclusion of Law No. 3. In reality, the liability verdict was reached by a regularly empaneled jury of twelve persons. RT1-A at 17-18. Only later did one of the jurors leave, rendering the remaining jurors' findings as to damages merely advisory. Id. at 18-19