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Insurance Law News - March 2015

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Although Homeowners Insurer Has No Duty to Defend Insured Against "Personal Injury" Claims Arising From Sexual Assault Committed By Others, Personal Umbrella Insurer Does Have Such Duty

Although a homeowners insurer had no duty to defend an insured against various "personal injury" claims arising from an alleged sexual assault committed by others, a personal umbrella insurer did have a duty to defend the insured against such claims. (Gonzalez v. Fire Insurance Exchange (2015) 2015 WL 960927)


Jessica Gonzalez filed a civil lawsuit against Stephen Rebagliati and nine other members of the De Anza College baseball team. In her complaint, Gonzalez alleged the following:

Gonzalez, age 17 attended a party held by Rebagliati and other members of the De Anza College baseball team. During the party, Gonzalez consumed alcohol, passed out, and was then sexually assaulted by an unknown number of men as she lay unconscious in a room. Rebagliati and several other named defendants were inside the room where Gonzalez was assaulted.  Some of the men in the room took photographs and cheered while the assault took place. Three women who witnessed the assault attempted to help Gonzalez but were prevented by men inside the room. Following the assault, Rebagliati and other defendants told third parties that Gonzalez had consented to the assault.

The above factual allegations supported causes of action for negligence for inviting Gonzalez to the party, negligence for serving her alcohol, negligence for failing to rescue her from the assault, false imprisonment, invasion of privacy, slander per se, battery, sexual battery, rape, unlawful intercourse, forcible acts, oral copulation, and conspiracy. Most of the causes of action were pleaded as to Rebagliati "and/or" each of the other named defendants.

At the time of the alleged events Rebagliati was insured under a homeowners policy issued by Fire Insurance Exchange (Fire). The Fire homeowners policy provided that Fire would indemnify and defend Rebagliati against claims of "bodily injury, property damage or personal injury resulting from an occurrence to which this coverage applies…." The policy defined "personal injury" so as to include "false imprisonment," "invasion of privacy" and "slander," and defined "occurrence" as an "accident."

Rebagliati was also insured under a personal umbrella policy issued by Truck Insurance Exchange (Truck). The Truck umbrella policy provided that Fire would indemnify (and if there was no other insurance, defend) Rebagliati against claims resulting from an "occurrence" and not otherwise excluded. The umbrella policy defined an "occurrence" as either (a) "an accident that results in bodily injury or property damage" or (b) the commission of various "personal injury" offenses, including "false imprisonment," "invasion of privacy" and "slander."

Rebagliati tendered the defense of the lawsuit to both Fire and Truck. Although Rebagliati denied any wrongdoing, both Fire and Truck refused to provide Rebagliati with a defense.

Following the insurers' refusal to defend, Gonzalez entered into a settlement with Rebagliati. Pursuant to the settlement, Gonzalez obtained a monetary judgment against Rebagliati, and an assignment of any rights Rebagliati might have against Fire and Truck.

Gonzalez as assignee of Rebagliati then filed a bad faith action against Fire and Truck. The trial court ruled that neither Fire nor Truck had a duty to defend Rebagliati in the underlying lawsuit brought by Gonzalez, and the trial court thus granted summary judgment to Fire and Truck. Gonzalez appealed.


The California Court of Appeal affirmed as to Fire (the homeowners insurer), but reversed as to Truck (the personal umbrella insurer).

The appellate court reasoned that the Fire homeowners policy covered various "personal injury" offenses (e.g., false imprisonment, invasion of privacy and slander), but only if caused by an "occurrence" (i.e., an accident). Here, however, none of Rebagliati's alleged conduct was an "accident." Rebagliati's alleged acts of confining Gonzalez to the room where she was assaulted, taking photos of her during the assault, telling others that she consented to the assault, etc., were all deliberate, intentional acts for which coverage was not available. Because Rebagliati's alleged conduct was not covered by the insuring agreement of the Fire homeowners policy, there was no need to analyze whether any exclusions applied.

However, the appellate court reached a different conclusion as to the Truck personal umbrella policy. Unlike the Fire homeowners policy, the Truck umbrella policy covered the "personal injury" offenses of false imprisonment, invasion of privacy and slander without any requirement of an "occurrence," or accident. Thus, Gonzalez's claims against Rebagliati were covered by the insuring clause of the Truck umbrella policy.

Moreover, none of the exclusions in the Truck umbrella policy conclusively eliminated the potential for coverage. For example, although the Truck umbrella policy excluded coverage for damages arising out molestation by an "insured," Gonzalez's complaint in the underlying action suggested the possibility that Rebagliati might "be held liable for damages resulting from his alleged slander, false imprisonment, or invasion of Gonzalez's privacy arising from molestation undertaken by the other named defendants in the civil lawsuit." Similarly, although the umbrella policy excluded coverage for damages that are "either expected or intended from the standpoint of an insured," Truck had not met its burden of showing that Rebagliati subjectively expected or intended to harm Gonzalez. Because Truck "failed to conclusively demonstrate its policy exclusions eliminated all potential for coverage," Truck had a duty to defend Rebagliati against Gonzalez's underlying lawsuit.


The Fire homeowners policy was somewhat unusual in that it covered various "personal injury" offenses only if resulting from an "accident." Standard liability policies covering "personal injury" offenses do not require an "accident."

On the other, hand, the Truck personal umbrella policy contained the more traditional formulation of "personal injury" coverage that was not dependent on an "accident." Because some of Gonzalez's claims against Rebagliati fell within the scope of the insuring agreement of the Truck umbrella policy, and because Truck did not conclusively establish that all of Gonzalez's claims against Rebagliati were excluded, Truck had a duty to defend Rebagliati under the personal umbrella policy.


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"Prior Publication" Exclusion Relieves Insurer of Duty to Defend Insured Against Trademark Infringement Suit

A "prior publication" exclusion relieved a general liability insurer of any duty to defend an insured in a suit alleging trademark infringement, because the insured published at least one advertisement using the claimant's advertising idea before the policy period, and the insured's subsequent advertisements were substantially similar. (Street Surfing, LLC v. Great American E & S Ins. Co. (9th Cir. 2014) 776 F.3d 603)


Around December 2004, Street Surfing, LLC began selling a skateboard called the "Wave." In August 2005, Street Surfing applied for commercial general liability coverage with Great American E&S Insurance Company. In its application for insurance, Street Surfing represented that "all [of its] products display the Street Surfing Logo." Great American approved Street Surfing's application and provided general liability insurance to Street Surfing from August 2005 until September 2007.

Rhyn Noll owned the registered trademark "Streetsurfer." In June 2008, Noll sued Street Surfing for trademark infringement, unfair competition and unfair trade practices. In his complaint, Noll alleged that Street Surfing used Noll's advertising idea in Street Surfing's advertisements "since at least on or about January of 2005, or such other date as may later be determined." Relying on various policy provisions, Great American denied Street Surfing's tender.

In July 2011, Street Surfing filed a federal court declaratory relief action against Great American, seeking a determination that Great American was obligated to defend and indemnify Street Surfing in the underlying action brought by Noll. Great American moved for summary judgment based on the policy's "prior publication" exclusion, which barred coverage for personal and advertising injury "arising out of oral or written publication of material whose first publication took place before the beginning of the policy period." The district court concluded that the Great American policy's "prior publication" exclusion relieved Great American of any duty to defend Street Surfing against Noll's lawsuit. Street Surfing appealed.


The Ninth Court of Appeals, applying California law, affirmed. The appellate court noted that the straightforward purpose of the "prior publication" exclusion is to "bar coverage when the wrongful behavior began prior to the effective date of the insurance policy."

Here, Noll had alleged in the underlying action that Street Surfing used Noll's advertising idea in advertisements "since at least on or about January of 2005, or such other date as may later be determined." According to the appellate court, those allegations left open the possibility that Street Surfing's conduct actually started after inception of the Great American policy in August 2005.

Nevertheless, the appellate court held that the undisputed extrinsic evidence conclusively showed that Street Surfing published at least one advertisement using Noll's advertising idea before the Great American policy began in August 2005. Specifically, the court noted that in Street Surfing's insurance application, submitted before the policy period, Street Surfing represented that "all [of its] products display the Street Surfing Logo." Because Street Surfing's logo advertisement predated the Great American policy period, the prior publication exclusion applied to any injuries arising from affixing the logo on the Wave skateboard during the policy period. The advertisements Street Surfing published during the policy period fell within the scope of the prior publication exclusion because they were "substantially similar" to the advertisements Street Surfing had published before the policy period.

In short, the prior publication exclusion relieved Great American of any duty to defend because Street Surfing's post-coverage publications were part of a single, continuing wrong that began before Great American's policy went into effect.


This case basically involved an insured who began engaging in wrongful conduct, obtained insurance coverage, continued its course of conduct, got sued for the conduct, and then sought defense and indemnification for the conduct from its insurer. Even giving the insurer's "prior publication" exclusion a narrow construction, the exclusion defeated coverage in these circumstances.


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