Maryam Ghukasian v. Aegis Security Insurance Company – Laws and insurance products

(The intentional filing and release of property wrongly assumed to belong to the insured did not constitute an accident under the liability policy)

(July 2022) – In Ghukasian v Aegis Security Insurance Co., 78 Cal.App.5th 270 (May 5, 2022), the California Court of Appeals for the Second District of California upheld the trial court’s entry of summary judgment in favor of Aegis Security Insurance Company (” Aegis”) against the insured Maryam Ghukasian (“Ghukasian”) in concluding that Aegis was not liable to defend Ghukasian against a lawsuit brought by a neighboring owner for damage to the owner’s property due to the grading and the intentional clearance of property by Ghukasian. Ghukasian thought she owned the property that had been cleared. However, the property belonged to the nearest neighbor.

Ghukasian purchased a home insurance policy from Aegis for the period June 13, 2018 to June 13, 2019. In August 2018, she hired contractors to level the land and cut down trees on land she believed to be part of his property. These lands did not belong to Ghukasian. Rather, it belonged to Ghukasian’s neighbors Vrej and George Aintablian (the “neighbors”). In February 2019, neighbors filed a lawsuit against Ghukasian alleging causes of action for negligence and trespass in connection with Ghukasian’s clearing of their property. Ghukasian offered defense of the Neighbors action to Aegis. Subsequently, Aegis rejected this offer based primarily on the conclusion that the complaint did not allege facts involving a potential “event” on the part of Ghukasian. Aegis advised that the clearing of neighbors’ property was intentional and therefore did not involve an “accident” as that term was used in the definition of “event” in Aegis’ policy. Subsequently, Ghukasian sued Aegis for breach of contract, declaratory judgment and bad faith. In response, Aegis filed a motion for summary judgment, arguing that the neighbors’ complaint did not allege facts involving a potential “event” as defined in Aegis policy. The trial court sided with Aegis and entered judgment against Ghukasian.

The Aegis policy provided the following cover:

. . .

This policy provides coverage if a “suit is brought against Ghukasian for damages due to…property damage caused by an event to which this coverage applies.” An “event” is in turn defined as “an accident, including continuous or repeated exposure to substantially the same harmful general conditions, which results during the period of insurance… [p]property damage.”

In upholding the trial court’s decision, the Court of Appeal concluded the following:

As the situations in albertand firefight, the complaint in the underlying action alleges harm resulting from Ghukasian’s intentional conduct. The leveling of land and the felling of trees were not unexpected or unforeseen events. (See Merced Mutual Ins. Co. c. Mendez, supra. 213 Cal.App.3d on p. 50) [(Merced) accident . . . is never
present when the insured performs a deliberate act unless some
additional, unexpected, independent, and unforeseen happening
occurs that produces the damage.”]; see also Delgado v. Interinsurance Exchange of Automobile Club of Southern California (2009) 47 Cal.4th 302, 308 (97 Cal. Rptr. 3d 298. 211 P.3d 1083) In the context of liability insurance, an accident is “an unforeseen, unforeseen and unintended event or consequence of a known event or an unknown cause.” On the contrary, it is undisputed that Ghukasian specifically instructed his contractor to level some land and cut trees, which is exactly what was done. Ghukasian’s mistaken belief about the boundaries of his property is irrelevant to whether the conduct itself – leveling land and cutting down trees – was intentional. (See
Albert, supra. 236 Cal.App.4th at p. 1291.)

The Court of Appeals also rejected Ghukasian’s argument that the California Supreme Court’s decision in Liberty Surplus Ins. Corp. vs. Ledesma & Meyer Construction Co. (2018) 5 Cal.5th 216 asked the trial court to find that the neighbor’s complaint alleged a potential “event” based on the cause of action for negligence alleged in the complaint. The Court of Appeal reasoned as follows:

In Excess freedom, the United States Court of Appeals for. the Ninth Circuit certified the following issue to the California Supreme Court: “Where a third party sues an employer for the negligent hiring, retention, and supervision of an employee who intentionally injured that third party, the suit alleges-t an “event” under the employer’s commercial liability insurance policy?” (Liberty Surplus, supra. 5 Cal.5th on p. 220.) The court concluded that it was possible, in the absence of an applicable exclusion. (Same.)

In summarizing the meaning of the term “accident” in a liability insurance policy, the Liberty Surplus Court began by stating ‘”[t]he term “accident” is more comprehensive than the term “negligence” and therefore includes negligence.
[Citation].”‘ (Liberty Surplus, supra. 5 Cal.5th on p. 221.) Since the causal sequence of events leading to the alleged injury began with the employer’s negligence in hiring the employee, the Excess freedom The court found that the alleged negligent hiring of the employer constituted an event under the policy (ie an accident). (Identifier. to the P. 225.) He explained that the assault on the third party by the employee “can be considered an unintended consequence of [the
employer’s] independently tortious acts of negligence.”Identifier. to the P. 229.) In contrast, here, Ghukasian’s intentional conduct (land leveling and tree cutting) was the immediate cause of the injury; there was no additional independent act which produced the damage. Excess freedom therefore distinguishable from the facts of the present case. In addition, Excess freedom does not contain any language indicating that it intended to overrule previous case law that intentional acts are not “accidents” simply because the insured did not intend to cause injury. On the contrary, he cited Thanks‘s of what constitutes an accident with approval, i.e. there is no accident when the insured performs a deliberate act “unless an additional, unexpected, independent and unforeseen happening which produces the damage.”‘ (Liberty Surplus, supra. 5 Cal.5th on p. 225, citing
Merced, supra, 213 Cal.App. 3d at p. 50 [italics added by
Liberty Surplus court].)

We also reject Ghukasian’s assertion that because the underlying action alleges a cause of action for negligence, the complaint alleges an “event” under Excess freedom. “The extent of the obligation [to defend] does not depend on the labels given to causes of action. . . ; rather, the question is whether the facts alleged or the known extrinsic facts reveal a possibility that the claim may be covered by the policy.” (Cunningham vs. Universal Underwriters (2002) 98 Cal.App.4th 1141, 1148 [120
Cal. Rptr. 2d 162].) It is undisputed that the causes of action for trespass and negligence alleged the same facts: Ghukasian and his contractor entered the neighbours’ property without their consent and cut deep into the hillside and removed wood, trees and undergrowth on the property. There is no allegation or evidence that neighbors’ property was damaged by accident (eg, by inadvertently dropping equipment onto neighbors’ property). Thus, although the underlying action alleges a cause of action for negligence, the factual allegations reflect intentional acts.

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