Opinion
Melvin and Virginia Hendrickson, individually and doing business as Crown Nursery (collectively appellants), appeal a summary judgment in favor of their insurers, Zurich American Insurance Company of Illinois and Zurich Insurance Company (collectively Zurich), in appellants’ action against Zurich for failure to defend and indemnify them in a third party action. We reverse.
Background
Appellants operate a commercial nursery which produces and sells strawberry nursery stock to third party growers. A number of growers who purchased strawberry plants from appellants sued them, alleging that an aerially sprayed herbicide which causes systemic damage to strawberry plants drifted onto appellants’ property and stock of strawberry plants, which appellants then negligently sold to the growers.
The growers’ first cause of action for negligence alleges that appellants sold them the damaged plants even though appellants knew or should have known that the herbicide spray causes systemic damage to strawberry plants such that when replanted they die or become stunted. The growers’ second cause of action for breach of warranty alleges that appellants breached an implied warranty that the plants were of good and merchantable quality. The growers’ third cause of action for negligence alleges that when they began to suspect that appellants’ plants were stunted
Appellants were insured under two of Zurich’s liability policies for the period during which the incident occurred: (1) a primary policy which provides coverage for bodily injury and property damage; and (2) an excess policy which provides excess coverage over the primary policy.
Primary Policy
Appellants’ primary policy provides coverage for “those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies . . . caused by an ‘occurrence.’ ” An “ ‘occurrence’ [is defined] as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “ ‘Property damage’ [is defined as]: ft[] a. Physical injury to tangible property, including all resulting loss of use of that property; or ft[] b. Loss of use of tangible property that is not physically injured.”
Excess Policy
Appellants’ excess policy generally incorporates the primary policy’s insuring language, providing excess coverage for claims covered under the primary policy, and primary coverage for claims the primary policy does not cover. It provides that “HD 1. When primary insurance or other insurance is available, we: HQ a. have the right and opportunity to defend, but not the obligation; and [1[] b. can defend any claim or suit which may create liability under this policy. fl[] 2. We will assume settlement or defense of claims or suits where: fl[] a. the limits of liability of the primary insurance are exhausted by payment of claims; or [ft] b. damages are sought for . . . property damage . . . claims or suits, covered by this policy, and for which no primary insurance or other insurance applies.” (Boldface in original.)
After Zurich refused to defend appellants in the growers’ action, appellants filed the instant action against Zurich, alleging generally that Zurich breached its obligations under the policies to defend and indemnify them against the growers’ claims. The parties filed cross-motions for summary judgment on the issue of Zurich’s duty to defend against the growers’ claims, and alternatively moved for summary adjudication of issues.
Zurich’s motion for summary judgment was based, in relevant part, on its contention that: (1) the growers’ complaint does not allege covered property damage; (2) appellants’ potential liability is purely contractual; and (3)-aircraft exclusions in both policies apply to the growers’ claims.
The court denied appellants’ motion and granted summary judgment for Zurich, ruling that (1) appellants’ liability to the growers is based entirely upon its contractual duties; and (2) Zurich’s policies do not cover the damages sought in the growers’ action.
Discussion
Appellants contend the claims asserted in the growers’ action establish a potential for coverage under Zurich’s policies, giving rise to a duty to defend. They argue that the policies covered the growers’ action under the provisions concerning liability for property damage, and that the growers’ complaint sounds in tort rather than contract, as Zurich claims.
A defendant moving for summary judgment has the burden of negating an essential element of the plaintiff’s cause of action, or establishing a complete defense thereto. (Code Civ. Proc., § 437c, subd. (o);
Campanano
v.
California Medical Center
(1995)
A liability insurer owes a broad duty to defend its insured against claims which create a potential for indemnity, and must defend a suit which potentially seeks damages within the policy coverage. The duty to defend is broader than the duty to indemnify, and an insurer may owe a duty to
The interpretation of an insurance policy is a question of law which we review de novo.
(Waller
v.
Truck Ins. Exchange, Inc.
(1995)
Our interpretation of the subject policies requires that we first examine the insuring clauses
(Waller, supra,
Appellants contend the covered occurrences under the policies were (1) their negligent sale of damaged strawberry plants to the growers, and later (2) their negligent advice to the growers, which caused them to refrain from removing the damaged plants and replacing them with healthy ones. Zurich has ignored the occurrence issue. On appeal it argues only that (1) the growers do not allege any covered property damage, (2) appellants’ liability is purely contractual and therefore not covered, and (3) the aircraft exclusions in the policies apply to the growers’ claims.
I.
Appellants contend the policies potentially covered the growers’ action under the coverage for property damage. As noted, the policies define “property damage,” in relevant part, as: “a. Physical injury to tangible property, including all resulting loss of use of that property; or [^] b. Loss of use of tangible property that is not physically injured.” The clear and unambiguous meaning of this definition is that loss of use of tangible property is distinct from physical injury to the property in question and is not limited to losses caused by or relating to some physical injury of the property. (See
Borg
v.
Transamerica Ins. Co.
(1996)
In essence, the growers’ first cause of action alleges that appellants’ negligent sale of defective plants resulted in lost strawberry production. The parties agree that the damaged plants do not themselves constitute property damage under the policy. However, appellants urge that the growers’ complaint can reasonably be construed as alleging
In support of their loss of use argument appellants rely on
Borg, supra,
The policy in Borg, as here, defined “loss of use” as limited to loss of use of tangible property not physically injured. Borg stated, “This term is meant to exclude intangible economic interests and property rights. It has been defined in its plain and ordinary sense as limited to property having physical substance apparent to the senses, including real estate. [Citations.]” Borg concluded that the third party complaint created a potential for coverage for loss of use damage by alleging that the insured’s deck encroached upon and resulted in a loss of use of his neighbor’s real property. (Borg, supra, 47 Cal.App.4th at pp. 457-458.)
Although we have found no California cases dealing with loss of use of fields in which defective crops were planted, cases outside of California are instructive. In
Economy Mills of Elwell, Inc.
v.
Motorists Mut. Ins. Co.
(1967)
Economy Mills first determined that the failure of the seed beans to mature was unforeseen, unexpected and unintended and therefore constituted an accident under the policy. It then held that the loss of use of land for the purpose of growing a crop constituted property damage under the policy’s loss of use clause. (154 N.W.2d at pp. 661-662, 664.)
In
Safeco Insurance Company
v.
Munroe
(1974)
Here, the growers’ complaint may reasonably be construed as alleging that as a result of appellants’ negligent delivery of defective plants, the growers suffered a loss of strawberry production, and thereby a loss of the use of their land. The policies in this case expressly state that “[floss of use of tangible property that is not physically injured” constitutes “property damage.” Thus, we conclude that the growers’ action presents a potential for coverage which requires a defense. Contrary to respondents’ arguments,
II, IH *
Disposition
The judgment is reversed. Costs to appellants.
Jones, P. J., and Stevens, J., concurred.
A petition for a rehearing was denied July 1, 1999, and respondents’ petition for review by the Supreme Court was denied September 15, 1999.
Notes
See footnote 1, ante, page 1084.