Century-National Insurance v. Garcia
51 Cal. 4th 564
| Cal. | 2011Background
- Century-National issued a homeowners fire policy to the Garcia family with Jesus Garcia, Sr. as named insured; Theodora Garcia and their adult son were also insureds.
- Their son intentionally set a fire to the home, causing substantial damage; the Garcias filed a claim and Century-National denied it.
- Century-National filed a complaint for declaratory relief; the Garcias cross-claimed for breach of contract, bad faith, and reform.
- The policy’s Section I includes exclusions for losses caused by intentional acts and dishonest or criminal conduct of any insured.
- The trial court sustained Century-National’s demurrer to the cross-claim, ruling the exclusion barred recovery for innocent insureds; the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the intentional acts exclusion bar innocent coinsureds? | Century-National argues the exclusion applies to any insured, denying coverage. | Garcias contend the exclusion impermissibly reduces statutorily mandated coverage for innocent insureds. | Exclusion cannot bar innocent insureds; severable construction required. |
| Does §533 and the standard form require severable rather than collective application of exclusions? | The standard form and §533 do not mandate severability; the exclusion can apply to all insureds. | The willful acts exclusion for the insured should protect innocent coinsureds and operate severally. | The standard form implies a severable reading; wrongful collective denial is invalid as to innocents. |
| Must the policy be at least substantially equivalent to the standard form under §2070/2071? | Century-National’s policy provides substantially equivalent fire coverage as required. | The exclusion leaves innocent insureds less protection than the standard form. | Century-National’s exclusion fails §2070 because it is not substantially equivalent to the standard form. |
Key Cases Cited
- Minkler v. Safeco Ins. Co. of America, 49 Cal.4th 315 (2010) (exclusions referencing 'an' or 'any' insured apply collectively unless otherwise shown)
- Arenson v. Nat. Automobile & Cas. Ins. Co., 45 Cal.2d 81 (1955) (destruction caused intentionally by the insured does not bar innocent insureds)
- Watts v. Farmers Ins. Exchange, 98 Cal. App. 4th 1246 (2002) (innocent coinsureds protected under severable interpretation)
- Julian v. Hartford Underwriters Ins. Co., 35 Cal.4th 747 (2005) (standard form fire policy construction; substantial equivalence test)
- Mackintosh v. Agricultural Fire Ins. Co., 150 Cal. 440 (1907) (early treatment of increase-in-hazard/type of clause in fire policy)
- Rizzuto v. National Reserve Ins. Co., 92 Cal. App. 2d 143 (1949) (historical treatment of insured-based exclusions in fire policies)