Unpublished Disposition, 928 F.2d 1138 (9th Cir. 1984)

MEMORANDUM^* 

Windsor Fountains Homeowners Association appeals the summary judgment in favor of Aetna Casualty and Surety Co. in an action for policy benefits and bad faith refusal to pay benefits, arising out of Aetna's refusal to: (1) defend the Association against declaratory relief actions brought by other insurance carriers; (2) indemnify the Association for the cost of repairing plumbing; and (3) indemnify the Association for damage to condominium units and personal property caused by leaky plumbing and efforts to repair the plumbing. We affirm.

(1) Refusal to defend against declaratory relief actions

The purpose of the Aetna liability policy was to insure the risk that the work of the insured might cause bodily injury or property damage to property other than to the condominium itself. See Western Employers Ins. Co. v. Arciero & Sons, 146 Cal. App. 3d 1027, 1029, 194 Cal. Rptr. 688, 689 (1983). The Association claims that Aetna was obligated under the policy to defend it against declaratory relief actions brought by the insurance carriers of the Association and developer, and that Aetna's refusal to defend the Association constituted a repudiation of the policy. We reject the argument. The policy only covered damages for bodily injury or property damage caused by an occurrence for which the Association was responsible. The declaratory relief complaints did not seek damages, but rather declarations that the insurers were not liable for losses claimed under the policies. The possibility that such declaratory judgments might be granted was not a risk covered by the Aetna policy. Aetna's refusal to defend the Association therefore was not a repudiation of the policy.

(2) Refusal to indemnify for the cost of plumbing repairs

Coverage under the policy was triggered only by an "occurrence," defined by the policy as:

an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

The Association did not bring about an "occurrence." Its responsibility to effectuate repairs to the common areas of the condominium development was contractual. See Fragomeno v. Insurance Co. of the West, 207 Cal. App. 3d 822, 255 Cal. Rptr. 111, 114 (1989).

The Association argues that: (1) it had a duty to exercise due care to protect its residents' safety; (2) had it failed to repair the pipes until after the condominium unit owners had obtained judgments against it, the project would have become totally uninhabitable; (3) the delay would have constituted a breach of the Association's duty of care as a landlord; and (4) it therefore was motivated to repair the plumbing in part by tort considerations, which triggered coverage under the Aetna policy. We reject the argument. The "occurrence" that the Association argues triggered coverage in fact never occurred. The Association committed no act upon which liability against it could be premised. In the absence of such an act, there is no coverage under the Aetna policy.

(3) Refusal to indemnify for damage to the condominium units

and personal property of unit owners

Aetna had no duty under the general liability policy to indemnify the Association for damage to the condominium units. The "products" exclusion in the policy stated that the insurance did not apply to damage to the named insured's products arising out of such products. Under California law, a constructed home and its parts are the product of the builder or seller. See Arciero, 146 Cal. App. 3d at 1029, 194 Cal. Rptr. at 689. The condominium project was the developer's product, and Aetna had no duty under the policy to insure damage to it.

There also is no duty on Aetna's part to indemnify the Association for damage to personal property of the condominium unit owners. The policy expired on May 1, 1980. Recovery for damage to personal property that occurred before that date would be barred by the four-year statute of limitations as of May 1, 1984. The Association is insulated by the statute of limitations from liability for any damage that occurred during the policy period. Aetna therefore has no indemnity obligation.

Aetna is not obligated under the policy to reimburse the Association for damage to personal property caused by efforts in 1988 and 1989 to repair the plumbing. The repair work occurred eight years after the policy expired, and was not a continuing result of an earlier wrongful act by the Association. See California Union Ins. Co. v. Landmark Ins. Co., 145 Cal. App. 3d 462, 476, 193 Cal. Rptr. 461, 469 (1983). There was no "occurrence" during the policy period. Under California law, to recover for bad faith failure to pay policy benefits, the insured must show that there was coverage under the policy. See Allstate Ins. Co. v. Gilbert, 852 F.2d 449, 454 (9th Cir. 1988); Wagner v. State Farm Mut. Auto. Ins. Co., 40 Cal. 3d 460, 469, 709 P.2d 462, 220 Cal. Rptr. 659, 664 (1985); Brandt v. Superior Court (Standard Ins. Co.), 37 Cal. 3d 813, 693 P.2d 796, 798, 210 Cal. Rptr. 211 (1985). The Association failed to make that showing.

AFFIRMED.