*1 Aug. [No. S023292. 1993.] GRADING, INC.,
BAY CITIES PAVING & Plaintiff and Respondent, COMPANY, LAWYERS’ MUTUAL INSURANCE Defendant and Appellant.
Counsel Strain, Amerian, M. Green- & Aaron Dolven Phillips, Greenberg, Richard Zakheim, Esner, Esner, Marylander & Stuart B. Grant Marylander berg, S. Zakheim for Defendant and Rosalyn Appellant. II, Garrett,
Musick, R. Chamberlain Peeler & De W. Briyn, Harry R. Jospeh Waxier, Adams, tine, Davis, Jr., Jill Andrew J. & Hazel Richard T. Duque *4 Crutcher, Endicott, Scott, Gibson, R. Hoyt, Baran Dunn & L. Scott John Pulverman, Aiwasian, McConnell, & Martin E. Deborah A. Bianchi Meyers, Amici Curiae on behalf of Jeffrey M. Cohon and Lawrence P. House as Defendant and Appellant.
Arthur R. Abelson for Plaintiff and Respondent.
Opinion BAXTER, J. a contractor was owed for its work on general money A construction The who had been contractor project. attorney representing in connection with the mechanic’s lien but thereafter project recorded a failed serve a notice on the construction lenders and failed stop project’s to file a to foreclose the mechanic’s lien. As a result of complaint omissions, it attorney’s the contractor was unable to collect the amount was owed. then The attorney. contractor commenced this action its
attorney’s insurance contains a limit- professional liability provisiоn $250,000 ing coverage to a maximum of each claim” and further “for that, act, provides “Two or more claims out of a error or arising acts, omission or a series of related errors or omissions shall be treated as single claim.”
The narrow issue before us is one of first Does the impression. policy’s $250,000 claim limit to the two omissions? We hold the per apply attorney’s limitation for two suit applies independent reasons: contractor’s against its former is a meaning claim within the insurance if policy’s definition of “claim.” Even the contractor’s action definition, could be viewed as two claims within the comprising those claims must be treated under the policy’s provision acts, errors, limiting coverage for claims out of a series of related arising omissions.
Facts The facts are few and Cities & undisputed. Respondent Bay Paving contractor, Cities), Grading, Inc. (Bay general licensed retained Attorney Robert Curotto Cities connection with construction work represent it was its on the performing. Bay completed project work but was unable to сollect substantial of the amount it was owed. Curotto portion Curotto, however, filed a lien mechanic’s on Cities’ behalf. did not serve a notice he stop project’s on construction lenders. Nor did timely seek to foreclose the mechanic’s lien.
Bay Cities sued Curotto for that he had legal alleging been malpractice, negligent failing to serve a notice and stop failing to foreclose mechanic’s lien. Curotto tendered the defense of the action his profes- carrier, sional Mutual appellant Lawyers’ Insurance Com- pany Mutual). (Lawyers’
Curotto, Cities, Bay and Lawyers’ Coverage Mutual as follows: stipulated $250,000 under the Mutual Lawyers’ issued to Curotto was limited to policy $750,000. claim and an per annual aggregate of Cities contended it was Bay asserting two claims within the the the separate meaning of and that policy $500,000. limit of coverage was therefore Mutual Lawyers’ contended only one claim was asserted. being Lawyers’ Bay Mutual would pay $250,000, and the would before the the whethеr parties try court issue of two claims were asserted within the If being of the the court meaning policy. claim, found there was only one Cities’ limited the Bay recovery would be $250,000 claims, If the stipulated payment. court found there were two Bay $187,000. Cities could recover additional to a maximum damages up of action, Pursuant to the stipulation, Curotto was dismissed from the and Mutual Lawyers’ was the designated as defendant.
The trial court ruled that Curotto had committed mal- legal two acts of that were practice (1) not related under the the terms of the failure to policy: notice, file a stop failure to file a timely action to foreclose $169,000 mechanic’s lien. Bay Cities was awarded addition to $250,000 already under the paid stipulation. affirmed,
Lawyers’ Mutual appealed. Court of that: Appeal holding (1) each of Curotto’s two errors gave rise to a claim under the separate meaning within are not “related” the two claims
policy, policy.
Discussion policy “claim” under the Meaning 1. “ states, in this used ‘Claim’ whenever
The attоrney’s liability policy demand, institution of arbitration including service of suit or means (Italics added.) reason By any the insured.” money against proceedings, for money. demand for Curotto is a Cities’ suit understanding, Bay able Rather, is centered on the dispute Cities does not contend otherwise. Bay states, company “The “Limits of section. It policy’s Liability” ‘The Coverage’ under entitled subsection section of this policy Policy During Against each claim First Made Period the Insured claim ‘each shall not exceed the amount stated in the Declarations for it (Italics added.) asserting ....’” Cities contends Bay $250,000, claims, limit of each of which is to the separate subject per-claim in a injury because each of Curotto’s two omissions resulted have parties Cities. Mutual there is a claim. Lawyers’ contends 3 of that the stipulated paragraph pertinent portion herein of “Limits of section. It states: “The inclusion policy’s Liability” of suits bringing more than one Insured or the of claims or making increase the more than one shall not person orgаnization operate act, arising limit of Two or more claims out Company’s liability. acts, shall be error or omission or a series related errors or omissions (Italics added.) treated as a single Lawyers’ claim.” As we shall explain, Mutual under has better view. Cities has a
In concluding rejected two claims are the Court of presented, Appeal there Lawyers’ only Mutual’s there is one claim because argument that, one lawsuit. The court’s was “There causes of premise are two distinct action and the fact that are they included within one lawsuit should not be with the view that includ- deciding agree factor.” Court of Appeal’s ing claims within a not render them a single single action does conclusion, however, claim. That of whether there is more begs question than claim in one the first instance. The Court of erred on that Appeal threshold Bay with the Cities question by starting underlying premise was asserting two causes of action. We do not that the number of suggest however, A claims is determined rules of correct by pleading. undеrstanding, nature of a “cause of action” does shed on before us. light 860
Bay was not two causes of action. asserting Bay Cities had injury thus cause of action its attorney.1 “California has under which consistently applied ‘primary rights’ theory, the invasion of one primary right rise to a cause action.” gives Blackwood, (Slater v. 791, 795; supra, Boy Big Drilling Corp. v. 15 Cal.3d Witkin, Rankin (1931) 13]; 213 Cal. (3d P.2d Cal. Procedure 1985) ed. 66-67.) Pleading, Cities had one pp. primary right—the § right to be free negligence by its connection with the particular debt collection for which he was He retained. breached that allegedly right two ways, but it nevertheless remained a single right. suffered,
Similarly, ‘cause of action’ “[T]he is based the harm as upon opposed to the particular theory asserted . . . Even where litigant. there are multiple legal theories which upon be recovery might predicated, one Blackwood, injury gives rise to only (Slater one claim for relief.” v. supra, 15 Cal.3d 791, 795, added.) italics Cities suffered a single injury as a result of its attorney’s omissions—the to collect the amount inability owed to Bay Cities for its work on the construction project. Rankin,
In Big Boy Drilling Corp. 646, 649, supra, v. 213 Cal. we considered the of a “cause of action” in with concept connection a contrac- tor’s efforts (through its to recover assignee) money owed for work done on real property. “Whether plaintiff accomplishes purpose by foreclo- both, sure of mechanics’ liens or of a by way personal judgment, or transaction, immaterial. Both having demands arisen out of the same there is but one cause of action with two forms of relief. The different seeking of kinds of relief does not establish different causes of . . The action. . ‘cause of action’ is distinguished from the and the ‘relief ‘remedy’ sought, for a plaintiff may be entitled frequently to several for the species remedy Rankin, enforcement of a single right.” (Big Boy Drilling Corp. supra, Cal. omitted].) [citations reasoning to proper pleading, though not is illustrative controlling,
in the present case. Bay Cities contends it had two sources of payment оf its lien, construction work: foreclosure mechanic’s serving timely stop notice on the project’s construction lenders. These two proce- dures, however, arose from same transaction—Bay Cities’ work on the *7 project—and merely different remedies for of the amount nonpayment 1Apparently, the Court of Appeal confused the concept of a “cause of action” with that of “counts,” pleading merely ways which are stating of the same cause of differently. action previously have noted that the two terms are often used imprecisely indiscriminately. and (Slater v. Blackwood 15 Cal.3d Cal.Rptr. 593].) 543 P.2d Thus, to a single right—the right to Cities. Cities had
owed as a result of right for its construction. loss of payment in a attorney’s single injury. two omissions resulted right to a damage single We find it difficult to how the loss of or imagine attorney’s professional rise to more than one claim under an give could however, such We need not as to whether or how liability policy. speculate, an arise the least that can be said might unusual circumstance because that—when, case, single single in this seeks to from a as a client recover on matter attorney alleged damages single based a debt collection for which the attorney attorney’s was retained—there is claim under the single professional liability factors, context,
Other lead and to the same primarily policy language above, that, conclusion. “The As noted the relevant states language inclusion herein of more than one Insured or the of claims or making bringing suits more than one shall not person organization operate to increase the limit Company’s Two or more claims out liability. arising act, of a error or omission . . . be treated a single shall as claim.” Under this if language, an attorney’s single error harmed two clients claim, each gave of them a as a those two claims would be treated claim under the limitation It policy’s liability. would be anomalous when, limit in that circumstance but the limitation as disregard case, in this a single client suffers a result single injury multiple as a errors. view,
Under Bay Cities’ the number of an greater attorney’s negligent acts, the greater the number claims if under even all the acts policy, cause single injury. Such rule have the plainly would undesired result of who providing has made one error an incentive to attorney with then make many additional errors and omissions as so as possible, increase the amount of insurance coverage.
Moreover, allowing client to assert under multiple claims the policy create would a serious potential to the prejudice to other case, clients. professional liability like most such policies, has two independent coverage limitations. One is the limitation. per-claim The other is an aggregate limitation that regardless number of applies claims submitted during If a policy period. particular client could obtain increased coverage by creating' claims for a less injury, coverage would remain for other clients attorney. with claims That result could prejudice those clients. also Conversely, attorney could *8 the attorney’s personal, an increased risk that because of prejudiced clients’ claims. have to be to those pay assets would used noninsurance another attorney claims could of multiplication prejudice contain liability This and other respect. professional policies material “deductible,” is, the insured bear a portion requirement added.) “[wjith The amount of (Italics each to claim.” respect based If claims can be a client could assert significant. multiple deductible deduct- multiple would be for single injury, attorney responsible on a Indeed, cases, ibles, insurers the number of claims. some to corresponding increase claims so as to being have contended that multiple presented, decrease the amount thereby of the insured’s deductible and the amount Sur. Co. (Combined Corp. v. Seabord the insurer. Communications by owed 743, 744.) favorable to 1981) 641 Such result is not (9th obviously Cir. F.2d client because disadvantage It also to the insured’s insured. works the client a smaller responsible damages, insurer is for portion as- other attorney’s therefore from the must to obtain satisfaction attempt multiple attempts have rejected apply sets.2 Courts insurers’ generally in- third against deductibles to claims or related claims parties Ins. (Beaumont-Gribin-Von Union Dyl Co. Management sureds. California 25]; (1976) Haerens v. Commercial Cal.Rptr. Co. 63 Cal.App.3d [134 211]; generally P.2d see Cos. Ins. Co. Cal.App.2d Supp. Annot., Deductibility-Per-Claim What Is “Claim” Under Liability Insurance: artificial 987.) reasoning, Clause 60 A.L.R.4th By parity construe not in increased To coverage. claims should result multiplication claim limit the so as to find one and thus provision narrowly only a policy deductible, find as to but to construe the same so language expansively claims increase would be a result-oriented thereby coverage, multiple we decline to follow. approach contends, in analyzing rule that is almost the universal “[I]t issues, as damage
coverage the courts look the number causes of injuries to the Such a is оften stated. principle number of sustained.” opposed blush, presents case might particular 2At first it seem odd for an insurer to contend that insurer multiple doing coverage. claims so could amount of Whether an because increase the illustrate, case, but, depend prior choose to do so on the each as cases would would facts of and the finding disadvantage claims can benefit the insurer and the insured $25,000 against damages example, judgment client. For assume that a client obtains a for $5,000. $100,000, is If attorney, per per claim limitation is and the deductible claim, $25,000—$20,000 the carrier and only there is one client is entitled to from receive claims, $5,000 If, however, presenting as attorney. from the the case is construed amount, $25,000, pay obligated entitled but the insurer client remains to the same above, $15,000, much, $10,000. explained and the As responsible twice result works both the insured and client. *9 (6th 1984) (Michigan Corp. Chemical American Home Assur. Co. Cir. however, effect, 379.) Bay do not support F.2d Its application (or there а number of multiple injuries Cities. When is a cause of single result in look to the causes that a number of courts often greater injuries), than the in amount cover- injuries determining cause rather of insurance i.e., case, claim, In a a court age. finding such the result is one Under rather than injuries. Bay looks to the cause to the multiple view, that, are this rule when there apply Cities’ converse of should so causes of a causes should determine single injury, number of words, In number other we convert Bay claims. Cities proposes a coverage. limits into principle generally coverage expands one so, decline do at in before least the circumstances us.
The rule have little or proposed by Bay logical practical Cities would consistency would be unworkable. with a example, For assume a policy $250,000 limitation, attorney, and that the client per-claim retains case, the present $1 collect debt of million from a third party. attorney commits a error that client results in loss of the debt. The has million, view, $1 been damaged amount and under Cities’ $250,000 limited to recovery of because there was a cause of the If, however, injury. (or client client) different even the same debt lost errors, ($1 million) same amount because the committed three $750,000 the recovery (three would be $250,000). times The point errors rule, obvious. Under Bay Cities’ clients in the injuries with the same same amount would receive different solely fortuity recoveries based on the how errors the many attorney commits.
A review brief of the cases primary on which Cities relies further demonstrates why Bay Cities’ rule In proposed does not this case. apply Michigan Co., Chemical Corp. v. American Assur. supra, Home 728 F.2d manufacturer, a chemical which both a feed produced livestock supple- retardant, ment and toxic flame had erroneously the flame retar- shipped dant rather than the feed to a feed supplement distributor. (Apparently bags mislabelled.) The distributor mixed the toxin regular with feed and sold the resulting product farmers. Thousands of head of livestock became ill and had to be destroyed. The farmers filed suit. The manufacturer contended that each against it action constituted a separate “occurrence” under its liability insurance policies. insurers contended was only there occurrence, one the accidental shipment wrong of the Applying chemical. law, insurer, Illinois the court agreed with the explaining, number of “[T]he occurrences must be determined by examining cause property i.e., the damage, PBB mis-shipment mis-shipments [the toxin].” *10 the 382.) to the trial court to determine The remanded the action court p. number of misshipments. F.2d (11th 1984) Cir. 749 City in Indem. Similarly, Home Co. v. Mobile of
659, damages filed for flood against city more 200 claims were than city the alleged The claimant owners incurred 3 rainstorms. during property construction, water in and of its operation had been its negligent planning, it each constituted against The contended claim drainage system. city limita- per-occurrence occurrence in its insurance applying policy’s damagе cause of The was a the tion. contended each storm separate insurer law, Alabama the court that were three Applying and there occurrences. causes, number injuries, that not the with the insurer the number of agreed causing damage or acts was determinative and that each discrete act series of (Id., 663.)3 was a under the at policy. p. occurrence Co., supra, F.2d Michigan Corp. Chemical v. American Home Assur. 374, Mobile, 659, and F.2d illustrate City supra, Home Indem. Co. v. in First and rule not this case. why Bay Cities’ does proposed properly apply foremost, than rather polices those cases decided under “occurrence” type “claims-made” asserts that the Bay analysis without policies. The in so. analysis. language should make no difference our Not policy different at in was significantly occurrence issue those cases policies Indeed, rule in noting general from the relevant this case.4 after provision number of determined the basis of the per-occurrence thаt limitation is on causes, occurrences, i.e., injuries, rather the number of the number of than on 374, court, “The defini- Michigan supra, Chemical 728 F.2d explained: in the insurance reflect this present approach. tions of ‘occurrence’ First, policies in refer an which results these essence ‘accident’ provisions The the accident constitut- language makes injury during policy period. later ing place. the occurrence distinct from the which take logically injuries Second, policies coverage under review on an ‘occur- afford rather The use term ‘indicates rence’ than on ‘claim’ basis. of the former by Bay for point, dispute 3In the third case cited Cities on this was between two insurers attorney, an issued other had subse policy, one which had an “occurrence” and the which quently issued insurer was liable for a “claims-made” was which court attorney. coverage, There as to the and the was no issue amount test, Cities, (American not explained injury” apply. the “cause v. advocated did 1077, Gossett, (7th 1084.) case is Dykema, 1987) Home Assur. v. Cir. F.2d Co. et al. inapposite provides thus no Cities. support for example, policies Michigan Corp. 4For v. American Home Assur. one Chemical Co., 374, an supra, stated: ‘Occurrence’ wherever used herein shall mean 728 F.2d “The term repeated or a which happening exposure accident or event or a continuous or conditions damage advertising unexpectedly unintentionally personal injury, property results period.” (Id., p. original.) at The other during italics in (Ibid.) substantially language. contained identical on basis gauge coverage that the not intended to policies were] claims, but rather on the underlying individual accidents rise giving ” damages.’ circumstances which resulted in claim[s] Champion Interna original, italics added and bracketed material quoting 1976) Casualty (2d 546 F.2d Corp. tional Continental Co. Cir. 505-506.) and “claims- agree respective foci of “occurrence” made” are different in policies present context.5 *11 1978)
Bay (D.N.J. Cities also relies on Transamerica Ins. v. Kеown Co. 397, in an the trustee an estate had attorney acting which as F.Supp. been found liable to beneficiaries the having agreement its for breached trust in real by investing estate. The beneficiaries contended each the attor- year held gave the real estate to a ney rise claim. His insurer contended separate there was a single claim. The and noted that other had agreed court decisions been based 403.) on “whether the court focuses on cause or effect.” at p. The Keown court then there explained was cause that case. Based alone, on that Cities the Bay cites decision as the “cause v. supporting injury” test it Cities espouses. Bay reads too much into Keown. Properly understood, court, us, it our the supports view. Keown like looked to “The injury. effect is also singular; one of real estate value the lost piece detriment of a single (Ibid.) estate.” The same To logic here. applies Keown, paraphrase “The effect is singular; onе debt was lost to detriment of one client.” shown,
As on which Bay cases Cities are distinguishable relies largely cases, because were they decided under (in different most policy language policies), “occurrence” different states’ to insurance approaches policy con- struction, Moreover, and different fact situations. “cause” approach resulted of coverage, restriction not the expansion Bay Cities seeks. Co., Dyl 5In Management Beaumont-Gribin-Von supra, Co. v. Union Ins. California Cal.App.3d the court decided by that claims against asserted third parties property management company a single purposes constituted claim computing amount the deductible the company professional under liability policy. Although this result case, is consistent with our view in Bay this Cities nevertheless cites its the decision for that, label, ‘occurrence,’ statement whether ‘claims made’ or applied “[T]he to an insurance policy is of aid interpretation.” (Id., 624.) little in its at p. question In the context of the before court, may the observation have been explained by accurate. As in one of the cases cited Cities, however, Bay types of policies notably respects, are different some most importantly, period they provide coverage. (Chamberlin for which (1977) 72 v. Smith 835, 845, Cal.App.3d Otherwise, 493].) fn. 5 Cal.Rptr. there would be no need for or use types policies. court, of both Depending question on the before a type policy— “claims-made” or significant “occurrence”—can be to the outcome. To the extent that it otherwise, suggests we disapprove of the Dyl statement in Management Beaumont-Gribin-Von Co., Co. Union supra, Ins. 63 Cal.App.3d 624. California reasons, has a claim we hold that foregoing For all meaning its within the professional Lawyers’ issued Mutual. policy by errors, acts,
II. “Related” omissions under the policy, that there were two claims light In of its conclusion whether they then became Appeal before the Court of issue dispositive reason, of the Court of for thаt most “related” under the Perhaps term. as meaning with the of “related” opinion dealt Appeal’s that issue. We court also briefs Similarly, parties’ emphasize therefore address that as well.
Even if each of two omissions attorney’s we were to view Cities, rise limitation per-claim to a giving states, arising “Two more claims nevertheless would apply. *12 acts, act, out errors or of a or or a series related error omission of added.) (Italics The Court of omissions shall be treated as a claim.” it to mean the term construed ambiguous, deemed “related” to be Appeal another, and errors that are related to one concluded only causally two errors caused does not because neither of the provision apply attorney’s analysis of Appeal’s other error. As we shall Court explain, are flawed in conclusion several respects. because, . “. . no an Appeal ambiguity merely The Court of assumed ” ‘related,’ and reasoned for the term policy]
definition was рrovided [in ambiguity for with respect “The lack of definition allows [of ‘related’] of a the policy to clause.” The absence from Liability’ the ‘Limits by ambiguous. render the term definition of the term “related” does not itself necessarily the view lack recently policy We that the definition rejected (Bank (1992) Cal .4th the West v. Court Superior creates ambiguity. 538, 1254, 545]; Castro v. 833 P.2d see also Cal.Rptr.2d 1264-1265 [10 1114, 1120 American Co. 206 Cal.App.3d Fireman’s Fund Ins. Life Indeed, 833].) from ambiguity rule that Cal.Rptr. any rigidly presumed [253 avoid the illogical and unworkable. To absence of definition would be define would by the Court of an insurer have ambiguity perceived Appeal, then have to word its words would themselves every policy, defining defined, defined, their words be and the defining process would have to so cumbersome as would continue to itself until the result became replicate The case illustrates the present problem. create impenetrable ambiguity. connection, rather than logical The insurer that “related” means a contends held Under the Court of Appeаl. a causal connection as the Court of by view, if it had defined or Appeal’s prevail only the insurer’s could position “related,” is, related,” using “logically somehow the words qualified by course, the rather than the term Of addition of “related.” unqualified ambiguity “logical- word would not unless word “logically” remove a further itself defined definition would ly” policy. Every require case, course, such Of reject definition. a result. an appropriate definition, might weigh, absence of a not policy though perhaps dispositive, even an the term strongly, favor when finding ambiguity, example, in question has no of the generally accepted meaning outside context The itself. absence from a of a or phrase of definition word however, by itself, does not create an necessarily ambiguity. and settled is more “Under rules proper approach statutory refined.
contract interpretation, mutual of the at the time the intention parties Code, (Civ. contract 1636.) is formed Such intent governs interpretation. § inferred, is to be if solely from the written possible, provisions (Id., 1639.) contract. meaning ‘clear of these explicit’ provisions, § sense,’ in their interpreted ‘ordinary and unless ‘used popular by parties in a (id., technical sense them special given usage’ meaning 1644) 1638.)” controls judicial (AIU Ins. interpretation. § Co. v. § 820, Superior (1990) 51 Court Cal.3d 821-822 799 P.2d Cal.Rptr. 1253]; Reserve Insurance Co. v. Pisciotta 30 Cal.3d 807 [180 Cal.Rptr. 764].) 640 P.2d This on understanding reliance common language is bedrock.
Equally important are the of reasonableness requirements and context.
First, “An insurance provision is when is ambiguous it capable of or more constructions of (Suarez both which are reasonable.” v. Life 1396, Ins. Co. North (1988) America 206 1402 Cal.App.3d Cal.Rptr. [254 of 377], added.) italics “Courts will not a strained absurd adopt or interpretation in order create an (Reserve where none ambiguity exists.” Insurance Co. v. Pisciotta, 800, Second, supra, Cal.3d 807.) in “[Ljanguage a whole, contract must be construed in the context that of instrument as a and case, in the circumstances that of be cannot to be in the ambiguous found (Bank Court, 1254, 1265, abstrаct.” West Superior v. supra, 2 Cal.4th of italics, original quoting Producers Dairy Delivery Sentry Co. v. Ins. Co. 916, 903, (1986) 558, 41 Cal.3d 920].) fn. 7 718 P.2d “There Cal.Rptr. [226 se, cannot be an an ambiguity per i.e. ambiguity unrelated to an application.” (California State Assn. (1986) Auto. Inter-Ins. Bureau v. Superior Court 855, 859, fn. 1 Cal.App.3d 246].) Cal.Rptr. [223 case, Applying foregoing in this principles question first is whether the term case, “related” is ambiguous as to the in issue this specific is, “Related” is limitation applies. whether the per-claim
that of question a of myriad with that meaning encompasses a used word a broad commonly “related” to dictionary defines leading legal For a relationships. example, relation; allied; connected; (Black’s (6th Dict. Law akin.” mean “standing 1288, 1.) synonyms lists 1990) legal many a thesaurus p. Similarly, ed. col. 2.) In a (Burton, coverage col. Legal for “related.” Thesaurus limitation), that “related” can (not the court observed involving case a claim (O’Doan v. similarity.” a connection well as the “notion of denote causal 71, 78 Cal.Rptr. 243 Cal.App.2d Insurance Co. North America of 684].) 33 A.L.R.3d well as lоgical as Although enough encompass “related” is broad both inherent incorrectly of found an relationships, causal the Court Appeal ambiguity. create necessarily broad do not ambiguity. Multiple meanings or for any For an excluded example, coverage assume that insurance policy a “motor arising Obviously, from the “motor vehicle.” operation truck, mean it does not vehicle” could be either an automobile or a but that here, other, fact that must be or both. Likewise one rather than necessarily does not relationships “related” can wide encompass variety meaning render with a broad contrary, the word To the word ambiguous. reason—its breadth—to meanings may very used for not, however, need achieve belabor broad purpose. ambiguous hypothetical
whether abstract or some “related” is That not the question. circumstance. is in the context of ambiguous is whether the word proper question (Bank Superior the West v. and the circumstances of this case. Court, “The shift between supra, 1265.) will Cal.4th provision (O’Doan at hand.” changes with the event
clarity ambiguity America, 71,77.) The supra, linchpin Insurance Co. North 243 Cal.App.2d “related” is it could have argument ambiguous Cities’ because *14 by rendered the either a broad for all services meaning, example, meaning matter, or, a nar- alternatively, with this attorney particular connection is, causally rower that are attorney that those acts meaning, only is whether “related” an related. The and narrow thus precise is because attorney’s ambiguous professional word is to both of these reasonably susceptible meanings.
We find of “related” advocated by no because construction ambiguity other Cities If an error causes one more attorney’s is not reasonable. Bay is, errors, that leads to an injury, result a chain of causation relies this very claim. One of the on which makes single Bay decisions acts, there will be there have been causative point. though “[E]ven if are each other as well as ‘occurrence’ the acts related to causally Helme (Ariz. Prop. to the final result.” & Cas. Guar. Fund v. Ins. 651], omitted.) A P.2d italics Ariz. 64 A.L.R.4th [735 course, is, claim of to the limitation of subject per-claim policy. if the chain of somehow led Similarly, causally related events to claims (a under difficult to treated claim imagine), they result would be “related,” Cities’ view of limita subject per-claim would be to Thus, if related tion. the related-acts limitation were only causally applied acts, the limi per-claim related-acts limitation would be duplicative tation.
Moreover, the related” test “causally ignores the nature of For injury. assume an example, attorney makes two omissions a trial. during The attorney fails to to the object admission of an otherwise inadmissible document submitted by the opponent key also fails to witness produce on behalf of the client. Each error leads to an adverse independently however, against judgment client. Under Cities’ there are analysis, If, however, two claims because neither error caused the other error. the two related, claims were there causally would be one claim under the are not persuaded. Regardless whether the two errors are related, independent or causally client injury is the same—the Moreover, adverse judgment. when two or more errors lead the same are—for injury, they reason—“related” very under fair and reason- any able meaning of the word.
The only attorney
on
malpractice case which the Court of
relied
Appeal
largely inapposite and
unpersuasive
any
Logan
event. Estate
v. North
western Nat.
Cas.
but nevertheless
& Cas. Ins. Guar. Fund
unpersuasive.
Ariz.
Helme,
(Helme),
limit its
supra,
871 (The anwas “occurrence” policy under their professional case.) in the The policy rather than a “claims-made” policy, policy present incident, omission, defined “occurrence” as act series of being “any or or incidents, (Id., or . . . .” resulting injury related acts omissions added, deleted.) whether the various original italics italics was incidents, “related or failures of doctors constituted series of acts and thus The court first that acknowledged omissions” one occurrence. “related” can mean either or a causal connection. court logical concluded, however, notion, is “logic” subjective is a that “causation” and be limited objective, more therefore that the term “related” should policy 456-457.) to with occurrences a causal connection. at pp. discussed, For the we have disagree reasons we with already respectfully court, the Helme supra, 735 P.2d Nor are we persuaded 451. “causal connection,” connection” is more necessarily than a precise “logical espe- cially (Mitchell view of the imprecise meanings causation. (1991) 54 Cal.3d P.2d Cal.Rptr.2d 1050-1054 819 [1 Gonzales [noting causation].) the widespread 872] confusion over our More important, function not to redraft merely term so that it be more might precise easier for us apply. related,
To its support contention that “related” mean “causally” must Cities notes several cases that the number proposition of claims determined generally by the number of causes rather than the number of This injuries. more point seems directed properly issue of whether instance, there one claim was in the or two first and we have discussed some of those decisions connection with that are point, they explaining why either (See 862-866, or inapposite unpersuasive. ante.) discussion at As pp. however, important, those cases did present not issue as whether any Thus, claims or occurrences related. even in which might those cases read as holding that the number of causes determines the number of occurrences, decide, discuss, claims or those courts did even not whether the claims could be “related” under like language before (Eureka us. Federal S & (9th Lv. Amer. Reading 1989) Cas. Co. Cir. 229; F.2d Okada 276; v. MGIC (9th 1986) Indem. Corp. Cir. 823 F.2d 439; Pioneer Nat. Title (5th Ins. Co. v. 1981) Andrews 652 F.2d Cir. North River (D.Kan. 1129; Ins. Co. v. 1985) 628 F.Supp. St. Paul Fire & Huff Marine Ins. Co. v. Hawaiian Ins. & Guar. Co. Hawaii App. 1146]; P.2d Hyer v. Inter-Insurance Exchange, [637 etc. 77 Cal.App. 1055].) P. Several of these are decisions also distinguishable for reasons other than the absence of any discussion of meaning of “related.” For example,
872
and
of the officers
the
out of errors and omissions
three of
cases arose
resulted
the associations’
and loan associations that
savings
directors
leading
acts and
and the
was whether various
omissions
insolvency,
or,
whether the
multiple
alternatively,
to the
constituted
losses
insolvency
nature of
those cases and the
itself was the sole loss. The facts of
insolvency
(Eureka Federal
the
case.
present
not similar to
facts of
injuries
229;
v. MGIC
Reading,
L Amer.
F.2d
Okada
supra,
& v.
Cas. Co.
873
S
276;
supra,
Co. v.
Huff,
F.2d
River Ins.
Corp., supra,
Indem.
North
Moreover,
1129.)
are not as broad as
holdings
of those cases
F.Supp.
the mere
“We thus hold that
suggests.
explained,
As one court
law to
as a matter of
of an
loan
is insufficient
aggressive
existence
with
directors in
acts and omissions
five
connection
disparate
by
transform
into a
We do
single
200 unrelated borrowers
loss.
issuance
loans to over
however,
may
borrowers
not foreclose
that loans
possibility,
(Eureka
in an
fact
be
a
loss
situation.”
aggregated
appropriate
229, 235.)
L
Reading, supra,
Federal S &
Amer. Cas. Co.
873 F.2d
Eureka,
committing
Unlike
case does
have five defendants
not
present
hundred
injured
errors in
loan
that
unrelated
transactions
defendant,
client,
injury.
clients. We have
one
and one
one
Ins.
Gregory
Far more
and
the decision
v. Home
apposite
persuasive
(7th
1989)
Cir.
in which an
(Gregory),
attorney’s
Co.
the obsеrvation in can mean both P.2d “related” “However, causal and think logical requiring connections. we don’t the rule policies language to be construed who party chose such drastic restriction of the natural of the definition of requires scope connection], ‘related’ word mean causal ... At some point, [to course, called a too tenuous be may reasonably connection logical language and the rule of restrictive of broad would relationship, reading *18 602, 606, omitted.) Having into fn. (Gregory, supra, come 876 F.2d play.” test, held that Gregory against the related the court claims rejected causally were single the his client and the class of investors a attorney by by fit within the definition of they “comfortably commonly accepted because 606; Home Ins. Co. v. Wiener concept see also ‘related’].” [of (N.D.Ill. 1989) that errors commit (holding independent F.Supp. client).) ted two in firm rise by attorneys by a to a claim the gave single in agree Gregory, with the court F.2d that the term supra, 876 “related” as it is commonly understood and used both encompasses logical and causal Restricting connections. word to causal connections limits the improperly word to less than its “Related” is general meaning. word, broad is but it not therefore necessarily ambiguous word. We hold that, circumstances, in as used this in policy and these “related” is not ambiguous and is not limited only to related acts. causally however, that,
We do not suggest, in determining amount of coverage, the term “related” would encompass logical conceivable every relationship. At claims, some point, a between two relationship though perhaps “logical,” might be so attenuated or unusual that an reasonable insured objectively could not have would expected they be treated as claim under the case, In the present is there no attenuation to the insured. surprise by two errors the attorney are “related” in They multiple respects. arose transaction, out of the same specific collection of a debt. They arose as to the same They client committed same attorney. They in resulted the same injury, loss of the debt. No objectively reasonable insured under this could have he expected would be entitled to for coverage two claims under the policy.
Disposition The judgment of the Court of with Appeal reversed directions to remand this action to the trial court with instructions to enter in judgment favor of Lawyers’ appellant Mutual.
Lucas, Mosk, Panelli, J., Arabian, J., J., C. J. J. and George, concurred. KENNAKD, J. in view, however, concur In judgment. much my I the discussion majority I opinion unnecessary. As shall explain, civil, majority interjects a doctrine of into an pleading insurance dispute Moreover, nothing has to do with pleading. majority reaches out to an under “related” acts or omissions concerning decide an scope issue dispute that is to a resolution of narrow superfluous insurance contract case, terms. and decides issue broad unnecessarily I whether, when an an case. The here is This is matter that his acts of the same negligence preclude commits two on either of two other right parties, client’s to recover sum theories, insurer is liable attorney’s malpractice either of legal *19 majority is liable two claims. The one claim under or for only policy, only can be for under these circumstances insurer liable determines that result, majority not the of the reasoning, one claim. I with but agree opinion.
The of whether one or claims majority analyzes question rights” made under in case in terms of the “primary the insurance this policy But made doctrine. filed in court. a claim This doctrine concerns pleadings under an the same a filed court. pleading insurance is not as Instead, the determination of under an is a question rights (1989) 211 of contract Co. v. (Mid-Century Cal.App.3d law. Ins. Bash Witkin, 1987) 382]; (9th Law ed. Summary of Cal. Cal.Rptr. contracts, Contracts, 616; Code, public whether p. Civ. § § [“All rules, the same as otherwise private, interpreted by except or are to be code.”].) define by any to a contract can “claim” provided partiеs Here, of civil they they want. defined it without reference to rules way pleading. defined “claim” “a demand parties money against as ...
Insured.” definition can of this without This the facts case applied shows, reference to the record in this case the former doctrines. As pleading insured, Inc., made client of the & a demand on Bay Paving Grading, Cities Curotto, the insured written new counsel attorney, through Robert a letter it had retained. The demand letter stated it “two asserting was claims,” Bay acts of premised negligence precluded on Curotto’s two Cities from from But the recovering parties. either of two responsible amount, demand letter of a based on the work sought payment single Therefore, Cities on Cities performed by Bay Bay a construction project. single made a “demand for the Insured.” money against the main issue this case without reference Accordingly, analyzing as I reach the doctrines but a of contract pleading, interpretation, same result as the majority.
II claim, Although concludes that Cities mаde thus majority Bay the issue which at resolving granted, goes on review was it on discuss whether, claims, length considerable Cities had made two assuming the claims would be “related” within This meaning case, is not discussion to the but also unnecessary disposition I misleading, shall explain. “
The pertinent policy is this: ‘Two more claims out of language arising or act, acts, error or omission or a series of related errors omissions ” ante, shall be treated as claim.’ (Maj. italics opn., omitted.) The not define term policy does “related.” argues Cities that the term “related” could ambiguous because it have a broad meaning—all acts related or omissions some way—or narrow meaning of related. causally Because the term is not defined policy, Bay argues it should be interpreted against drafting party, *20 in conformance with (1 standard rules of insurance contract interpretation. Witkin, Law, 699, 632; Summary supra, of Cal. see AIU Ins. Co. v. p. § 807, Superior 820, (1990) Court 51 Cal.3d 821-822 P.2d Cal.Rptr. 799 [274 1253]; 246, Universal (1971) Underwriters Ins. Co. v. 5 Cal.3d 250 Gewirtz 145]; Cal.Rptr. Gray [95 486 P.2d v. Zurich Ins. Co. 65 Cal.2d 269 Cal.Rptr. 168].) P.2d [54 419 majority rejects this argument, saying Bay Cities’ “not interpretation is (Maj. opn., reasonable.” ante, 868.) p. at The majority “[restricting concludes that the word [‘relat- to only causal ed’] connections limits the word improperly to less than its ante, general meaning.” (Maj. 873.) opn., at p.
I am unconvinced. There are in any number of ways which two acts giving rise to claims under a malpractice insurance said might be to be policy in “related” general sense of the A term. law firm that has a policy commit, may through two lawyers, two acts affecting of malpractice same client on the same day. These claims could be in said to be related least three ways: (same (same in temporally day), thematically one sense client), and (two thematically another sense real estate matters involving boundary disputes). Accordingly, two could claims be said reasonably be “related” within the “general of the term. But it meaning” is unlikely, given that the matters, acts of malpractice occurred two that the claims would be considered “related” within the meaning of Thus, the necessity arises to impose some construction on the limiting policy term “related acts or omissions.” the courts look to ambiguous an insurance is policy
When language v. Insur (American Star Ins. Co. of a reasonable insured. expectations 45]; 1320, Cal.Rptr. 232 Cal.App.3d ance Co. West Court, that [stating Cal.3d at Superior supra, AIU Ins. Co. v. see clauses of coverage objectively expectations, an insured’s reasonable protect Here, the context suggests are policies interpreted broadly].) would that under the thought have attorney/insured reasonable related, as case would be classed claims made the circumstances this identical and element of from each was damages but because the Thus, related claims are majority’s coextensive. conclusion correct, the policy its within the but endorsement meaning acts, unambiguous language inherently “related errors omissions” not. case,
Thus, I has the correct although majority reached result cannot subscribe reasoning. to its