Century Surety Company v. Acer Hotel et al, No. 3:2013cv00593 - Document 45 (N.D. Cal. 2013)
Court Description: ORDER GRANTING SUMMARY JUDGMENT by Hon. William Alsup granting 30 Motion for Summary Judgment.(whalc1, COURT STAFF) (Filed on 7/12/2013)
Download PDF
<![CDATA[
Century Surety Company v. Acer Hotel et al Doc. 45 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 CENTURY SURETY COMPANY, 11 For the Northern District of California United States District Court 10 12 13 14 15 No. C 13-00593 WHA Plaintiff, v. ORDER GRANTING MOTION FOR SUMMARY JUDGMENT ACER HOTEL, BENZIR SHAIKH, ANWAR SHAIKH, HANDLERY HOTELS, INC., TERRY WHITE, JOSEPH FERREIRA, Defendants. 16 / 17 INTRODUCTION 18 19 In this insurance coverage action, plaintiff insurer moves for summary judgment on its 20 claim that the insurance policy at issue excludes coverage for assault and battery. For the 21 reasons stated below, the motion is GRANTED. 22 STATEMENT 23 The main question is whether the phrase “any . . . assault or battery” fails to cover 24 assaults or batteries by third parties. 25 1. 26 Defendants Anwar and Benazir Shaikh operate the Acer Hotel on premises leased from THE UNDERLYING ACTION. 27 Handlery Hotels, Inc. Defendants Terry White and Joseph Ferreira were hotel guests at the Acer 28 Hotel on April 15, 2010. White and Ferreira allege that while they were residing at the Acer Hotel, White was attacked by another guest of the hotel, one Robert Turner, with a knife. Dockets.Justia.com 1 White and Ferreira commenced a separate action against defendants Anwar and Benazir 2 Shaikh, Acer Hotel, and Handlery Hotels in state court that is still pending. White and Ferreira 3 there assert claims against the Shaikhs, Acer Hotel, and Handlery Hotels under theories of 4 negligence and premises liability for failure to prevent the attack by Turner, willful failure to 5 warn them, failure to respond to the attack appropriately, and negligent infliction of emotional 6 distress. 7 2. 8 On April 15, 2010, the date of the attack, Acer Hotel was the named insured under 9 THE INSURANCE POLICY. commercial general liability insurance policy issued by Century Surety Co., plaintiff in the present action. Pursuant to the policy, the Shaikhs and Acer Hotel (collectively “the insured 11 For the Northern District of California United States District Court 10 parties”) tendered defense of the underlying action to Century. Century agreed to defend the 12 underlying action but filed the instant declaratory action, alleging that the insurance policy 13 excludes coverage for assault and battery. 14 The insurance policy obligates Century to pay sums that the insured parties becomes 15 legally obligated to pay as damages because of “bodily injury,” subject to certain exclusions. 16 The crux of the instant action is an endorsement in the policy entitled “Exclusion — Assault and 17 Battery”: 18 19 This insurance does not apply to “bodily injury,” “property damage,” or “personal and advertising injury” arising out of or resulting from: 20 (a) any actual, threatened or alleged assault or battery; 21 (b) the failure of any insured or anyone else for whom any insured is or could be held legally liable to prevent or suppress any assault or battery; (c) the failure of any insured or anyone else for whom any insured is or could be held legally liable to render or secure medical treatment necessitated by any assault or battery; (d) the rendering of medical treatment by any insured or anyone else for whom any insured is or could be held legally liable that was necessitated by any assault or battery; (e) the negligent: 22 23 24 25 26 27 28 (i) employment; 2 1 (ii) investigation; 2 (iii) supervision; 3 (iv) training; 4 (v) retention; 5 of any person for whom any insured is or ever was legally responsible and whose conduct would be excluded by 1. (a), (b), (c) or (d) above; 6 7 (f) any other cause of action or claim arising out of or as a result of . . . (a), (b), (c), (d) or (e) above. 8 The parties disagree, in particular, about the interpretation of the word “any” in subsection (a). 9 Seeking to expand discovery, the insureds argue that the exclusion is limited to acts 10 employee. According to the insureds, subsection (a) cannot be read to mean assault or battery by For the Northern District of California United States District Court committed by an insured or someone under the insured’s present or past control, i.e. an 11 12 anyone. In contrast, seeking to narrow discovery, Century reads subsection (a) to exclude any 13 injury arising from assault or battery, regardless of the culprit’s identity. This order follows full 14 briefing and oral argument. 15 ANALYSIS 16 Summary judgment is proper when the pleadings and the evidence in the record “show 17 that there is no genuine dispute as to any material fact and that the moving party is entitled to 18 judgment as a matter of law.” FRCP 56(a). A dispute is genuine only if there is sufficient 19 evidence for a reasonable fact-finder to find for the non-moving party, and material only if the 20 fact may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 21 (1986). 22 In an insurance coverage action: 23 24 25 26 27 28 The principles governing the interpretation of insurance policies in California are well settled. Our goal in construing insurance contracts, as with contracts generally, is to give effect to the parties’ mutual intentions. If contractual language is clear and explicit, it governs. If the terms are ambiguous (i.e., susceptible of more than one reasonable interpretation), we interpret them to protect the objectively reasonable expectations of the insured. Only if these rules do not resolve a claimed ambiguity do we resort to the rule that ambiguities are to be resolved against the insurer. The “tie-breaker” rule of construction against the insurer stems 3 1 from the recognition that the insurer generally drafted the policy and received premiums to provide the agreed protection. 2 To further ensure that coverage conforms fully to the objectively reasonable expectations of the insured, the corollary rule of interpretation has developed that, in cases of ambiguity, basic coverage provisions are construed broadly in favor of affording protection, but clauses setting forth specific exclusions from coverage are interpreted narrowly against the insurer. The insured has the burden of establishing that a claim, unless specifically excluded, is within basic coverage, while the insurer has the burden of establishing that a specific exclusion applies. 3 4 5 6 7 Minkler v. Safeco Ins. Co. of Am., 49 Cal. 4th 315, 321–22 (2010) (quotations and citations 8 omitted). 9 The instant motion turns entirely on the definition of the word “any.” Specifically, 10 alleged assault or battery” applies to the harm inflicted by Turner upon White and Ferreira at the For the Northern District of California United States District Court whether the exclusion in the policy for “bodily injury” arising out of “any actual, threatened or 11 12 Acer Hotel. Plaintiff insurer contends that the word “any” is a broad term that includes bodily 13 harm inflicted by third parties. The insureds respond that the phrase “any . . . assault or battery” 14 should be understood as being limited to assault or battery committed by Acer Hotel employees. 15 This order agrees with the insurer. 16 First, the insureds argue that because sub-parts (b) through (e) of the exclusion specify 17 that those sub-parts apply to “any insured or anyone else for whom any insured is or could be 18 held legally liable,” this same limitation should be read into sub-part (a). This order disagrees. 19 The canon of interpretation cited by the insureds — “expressio unius est exclusio alterius;” i.e., 20 that mention of one matter implies the exclusion of all others” — compels the conclusion that the 21 scope of sub-part (a) and the remaining sub-parts are different. In sub-parts (b) through (e), the 22 limitation to the insured and its agents is express and implies the exclusion of third parties. In 23 sub-part (a), there is no such limitation. Thus, there is no implied exclusion of third parties in 24 sub-part (a) and, in context, sub-part (a) clearly covers a broader set of persons that the other 25 sub-parts. 26 Second, the insureds argue that if sub-part (a) is read to apply “to anyone,” then the other 27 sub-parts, and sub-part (e) in particular, would be redundant. This order disagrees. It is 28 conceivable that the exclusion could cover harms emanating from the underlying assault. For 4 1 example, the other sub-parts could cover negligent medical treatment rendered by an employee 2 with the injured party’s consent (which would not constitute assault), or negligent supervision an 3 employee providing such medical treatment. 4 Third, the insureds argue that sub-part (a) is ambiguous because it can reasonably be read 5 to apply only when assault and battery is committed by an insured or someone under the 6 insured’s control. This contention is not persuasive. “Words used in an insurance policy are to 7 be interpreted according to the plain meaning that a layperson would attach to them.” Blue 8 Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir. 1998). On its face, sub-part (a) is 9 broadly-written. When interpreted according to its plain meaning, sub-part (a) applies to assaults by “any” person, insured or otherwise. The insureds do not cite any authority holding that a 11 For the Northern District of California United States District Court 10 broad use of the word “any” is ambiguous because the clause fails to specify the specific 12 instances in which it applies. This is unsurprising because so holding would defeat the purpose 13 of drafting an exclusion in broad terms. Nor do the insureds cite any authority holding identical 14 or substantially similar policy language to be ambiguous. Indeed, the closest authority cited by 15 the parties held that a policy exclusion for bodily injury “arising out of assault or battery, or out 16 of any act or omission in connection with the prevention or suppression of assault or battery” 17 was non-ambiguous and applied to an assault committed by anyone, insured or otherwise. Zelda, 18 Inc. v. Northland Ins. Co., 56 Cal. App. 4th 1252, 1260 (1997). 19 Fourth, the insureds argue that interpreting the word “any” in sub-part (a) to apply to any 20 person would not meet the reasonable expectations of the insured. This argument is just another 21 way of arguing that the language in question is ambiguous. For the reasons already explained, it 22 is rejected. 23 Fifth, during oral argument the insureds contended that California courts have required 24 insurance policies to specify bodily injury committed “by anyone” in order to exclude injuries 25 caused by third parties. None of the decisions cited by the parties, however, ruled on identical or 26 nearly-identical contract language. The closest decision cited by the parties ruled that the 27 following clause did exclude bodily injury caused by third parties without the words “by 28 anyone”: “[bodily injury] arising out of assault or battery, or out of any act or omission in 5 1 connection with the prevention or suppression of an assault or battery.” Zelda, Inc. v. Northland 2 Ins. Co., 56 Cal. App. 4th 1252, 1260–61 (1997). In comparison, when sub-parts (a) and (f) of 3 the clause in dispute are read together, the clause becomes: “[bodily injury arising out of] any 4 actual, threatened or alleged assault or battery[, or] . . . any other cause of action or claim arising 5 out of or as a result of . . . (a), (b), (c), (d) or (e) above.” Although Zelda is not dispositive, the 6 language is sufficiently similar to be helpful. The appellate court’s decision that the clause in 7 Zelda, “by its plain language, covers injury or damage arising when someone (not necessarily an 8 insured) commits an act of assault or battery” is persuasive here (id. at 1261 (emphasis added)). intent of the Acer Hotel (the contracting defendant). The insureds also request that a ruling on 11 For the Northern District of California Finally, the insureds request that the court consider extrinsic evidence of the subjective 10 United States District Court 9 plaintiff’s motion be deferred for 90 days so that they can conduct discovery into the subjective 12 intent of the underwriters. Both requests are rejected. “Evidence of the undisclosed subjective 13 intent of the parties is irrelevant to determining the meaning of contractual language. It is the 14 outward expression of the agreement, rather than a party’s unexpressed intention, which the 15 court will enforce.” Salehi v. Surfside III Condo. Owners’ Ass’n, 200 Cal. App. 4th 1146, 1159 16 (2011) (emphasis added, citations omitted). Here, the outward expression of the contract 17 language is unambiguous and defendants have not identified any potentially competent evidence 18 that would be revealed by discovery. The insureds should already know these communications. 19 The conclusion that subpart (a) of the exclusion covers White and Ferreira’s claims based 20 on the assault by Turner resolves this action. Because the exclusion covers the underlying act of 21 assault, plaintiff has no duty to defend or to indemnify the insureds against a judgement. In this 22 regard, plaintiff’s motion for summary judgment is GRANTED. 23 This leaves the issue of reimbursement. Century moves for summary judgment on its 24 entitlement to reimbursement of defense costs incurred on its insureds’ behalf. An insurer may 25 seek to recoup defense costs that can be allocated solely to claims that are not even potentially 26 covered so long as the insurer defends subject to an express reservation of rights. Buss v. 27 Superior Court, 16 Cal. 4th 35, 60–61 (1997). 28 6 1 As explained above, this order holds that the sub-part (a) exclusion precludes coverage 2 for claims by White and Ferreira against the insureds. Century asserts, and the insureds do not 3 contest, that plaintiff provided a defense subject to an express reservation of rights. 4 Accordingly, this order holds that plaintiff is entitled to reimbursement under Buss, and summary 5 judgment on this issue is GRANTED. 6 CONCLUSION 7 Plaintiff’s motion for summary judgment is GRANTED. Because the amount of 8 reimbursement has not yet been determined, and because the insureds have filed a third-party 9 complaint in this action, the file shall remain open in order to resolve these claims. 11 For the Northern District of California United States District Court 10 IT IS SO ORDERED. 12 13 Dated: July 12, 2013. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
