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Namm v. Fire Insurance Exchange3/11/2003
during the course of business pursuits of an Insured." Most, albeit possibly not all, of the claims of Frank Foster involved Evelyn's alleged actions toward him occurring during the course of his maintenance duties at real properties owned by Hilda. And all of Mair's allegations concerned similar conduct of Evelyn toward him occurring at Hilda's Martinez apartment complex. And, most importantly, both complaints alleged wrongful termination from their employment by Hilda and her company. These allegations clearly bring the claims within the "business pursuits" exclusion. (See, e.g., Fire Ins. Exchange v. Jiminez (1986) 184 Cal.App.3d 437, 441-442.)
In sum, both the well-defined (by case law) "occurrence" and "accident" terminology and the "business pursuits" exclusion in both homeowners' policies preclude coverage under either of them.
3. The First Amended Complaint Demonstrates no "Potential" for Coverage
A substantial portion of appellants' briefing is devoted to arguments about the bases under which there might be a "potential for coverage" under one or more of the policies. Indeed, the concluding 20 plus pages of their opening brief is headed "There Are Potentially Covered Claims Under One or More of The Insurance Policies Issued by Respondent INSURERS."
Upon examination, however, all of the dozen or so "potential bases" for coverage argued thereafter are, at their core, premised on an acceptance of the allegations of the first amended complaint (allegations not included in the original complaint) that, e.g., (1) neither the Fosters nor Mair were employees of appellants, (2) the damages asserted by the Fosters occurred "after their alleged employment ceased," (3) Evelyn was not an employee of Hilda and did not supervise either the Fosters or Mair.
The problem is that none of these "facts," core facts to the "potentials" for coverage, are alleged to have been either communicated to respondents by appellants or otherwise known to respondents. And that is what the law requires. An insurer's "duty to defend depends upon facts known to the insurer at the inception of the suit." (Hurley, supra, 10 Cal.App.4th at p. 538; see also Swain, supra, 99 Cal.App.4th 1, 8.)
Probably the most thorough treatment of this point is found in a decision by Division Three of this court in Gunderson v. Fire Ins. Exchange (1995) 37 Cal.App.4th 1106, 1113-1117 (Gunderson). There, the insureds under a homeowners' policy brought suit against their insurer for its failure to defend them in a declaratory relief and quiet title action involving a claimed easement over property in Sonoma County. The trial court granted summary judgment for the insurer, finding no potential for coverage under the policy, and Division Three affirmed. After reciting the fundamental holdings of our Supreme Court regarding the duty of an insurer to defend, it wrote: " n insurer does not have a continuing duty to investigate whether there is a potential for coverage. If it has made an informed decision on the basis of the third party complaint and the extrinsic facts known to it at the time of tender that there is no potential for coverage, the insurer may refuse to defend the lawsuit. [Citations.] The duty to defend a lawsuit which raises a possibility of liability, but is eventually shown to be groundless, does not equate with a duty to defend a lawsuit which raises no potential liability. [Citations.] [ ] An insured may not trigger the duty to defend by speculating about extraneous `facts' regarding potential liability or ways in which the third party claimant might amend its complaint at some future date. This approach misconstrues the principle of `potential liability' under an insurance
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