A homeowners insurer had no duty to defend its insureds against a lawsuit alleging that the insureds conspired to aid in the abduction of a child. ( Upasani v. State Farm General Insurance Company (2014) WL 2885928)
Facts
Avinash Kulkarni sued Meera and Mohan Upasani, alleging that the Upasanis conspired with Kulkarni’s wife to abduct the Kulkarnis’ infant son to India. Kulkarni’s complaint against the Upasanis contained causes of action for violation of Civil Code section 49(a), negligence per se, intentional infliction of emotional distress and negligent infliction of emotional distress. The Upasanis denied that they had ever been part of any conspiracy to abduct Kulkarni’s son.
The Upasanis tendered defense of the lawsuit to their homeowners insurer, State Farm General Insurance Company. However, State Farm declined to defend the Upasanis, primarily on the ground that the Upasanis’ alleged liability to Kulkarni was not based on an “occurrence,” or “accident.”
The jury in Kulkarni’s lawsuit against the Upasanis ultimately returned a defense verdict in favor of the Upasanis. The jury specifically found that the Upasanis had not committed any acts in relation to the abduction of Kulkarni’s son.
The Upasanis later sued State Farm for breach of contract and bad faith arising from State Farm’s refusal to defend the Upasanis against Kulkarni’s lawsuit. However, the trial court ruled that State Farm did not have a duty to defend the Upasanis, and the trial court thus entered summary judgment in favor of State Farm. The Upasanis appealed.
Holding
The Court of Appeal affirmed the judgment in favor of State Farm. The appellate court primarily focused on the fact that the State Farm policy only covered bodily injury caused by an “occurrence,” or “accident.” According to the appellate court, the allegations that the Upasanis had conspired to aid in the abduction of Kulkarni’s son were allegations of “non-accidental, intentional, and purposeful” conduct. In order for a “conspiracy” to exist, the alleged conspirators must have knowledge of an objective and must intend to achieve that objective. That cannot happen by “accident.”
Further, it was immaterial that the underlying complaint against the Upasanis had included causes of action labeled “negligence.” Irrespective of the labels that were affixed to the complaint, the factual allegations in the complaint showed that the Upasanis’ alleged conduct was intentional.
Nor did it matter that in the underlying case the Upasanis had steadfastly denied that they ever conspired to aid in abduction of Kulkarni’s son. The mere fact that Upasanis denied liability did not create a potential that their alleged conduct was an “accident.”
In short, because Kulkarni’s claims against the Upasanis in the underlying action did not arise from an “occurrence,” or “accident,” State Farm had no duty to defend the Upasanis.
Comment
The appellate court correctly held that the mere fact that Upasanis denied any involvement in the alleged conspiracy was not sufficient to create a potential for coverage. That is because in determining whether there is a duty to defend, the test is whether the claimant might recover damages against the insured that would be covered under the policy. ( Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295.) Here, the Upasanis either participated in a conspiracy or they did not. In the former scenario , Kulkarni would obtain an award of uncovered damages , and in the latter scenario , the Upasanis would obtain a defense verdict . However, in neither scenario would State Farm have a duty to indemnify the Upasanis. Because there was no possibility of indemnification , there was no duty to defend .