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Makarka v. Great American Insurance Co.12/22/2000
nt judgment. When the contract is an insurance policy, we pay special attention to four factors: (1) the language of the disputed policy provisions; (2) the language of related provisions in the policy; (3) relevant extrinsic evidence; and (4) case law interpreting similar provisions.
Finally, we treat insurance contracts as contracts of adhesion and construe them to provide coverage that a layperson would reasonably have expected, given a lay interpretation of the policy language. "We therefore resolve ambiguities in the meaning of insurance contracts against the insurer."
B. Callihan's Coverage for Makarka's Injury
To learn whether the Great American policy covered Callihan, we look first to the policy language. Section II.A of the Garage Coverage Form reads:
We [Great American] will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies caused by an "accident" and resulting from "garage operations."
Thus, under this coverage term, five conditions must exist before Great American will pay: (1) there must be an accident, (2) resulting from garage operations, (3) that causes an insured to incur legal liability, (4) based on bodily injury or property damage, (5) to which the insurance applies.
Callihan's confession of judgment, in which he admits that he negligently performed repairs to Voliva's brakes at the Ride-n-Shine garage, creates a genuine issue of material fact regarding the first three elements. And it is undisputed that three members of the Makarka family were killed and two were injured when Voliva's truck hit Makarka's automobile, which satisfies the requirement that there be bodily injury or property damage. Thus, the only coverage element upon which summary judgment against Makarka could be based is whether Makarka's injuries were injuries "to which this insurance applies." That phrase refers the insured to the conditions and exclusions that limit the policy. In particular, Garage Condition provision, part V.B.7, defines the coverage time frame:
Under this Coverage Form, we cover "bodily injury," "property damage" and "losses" occurring:
a. During the policy period shown in the Declarations[.]
Thus, this was an "occurrence" policy. Such policies provide coverage that is based on accidents or events that happen while the policy is in force. Since it is undisputed that Gerik canceled this policy before Makarka's accident, Callihan was not insured against liability stemming from bodily injury occurring in that accident, unless some other, earlier event triggered coverage.
As the California Court of Appeals has ruled, the time of the occurrence of an accident within the meaning of an indemnity policy is not the time the wrongful act was committed, but the time when the complaining party was actually damaged.[ ]
Although courts have referred to this explanation as a "general rule," it is merely a restatement of the terms of most occurrence-based liability insurance policies. Like most occurrence policies, the Great American policy is triggered by bodily injury or property damage for which legal damages are due: "[Great American] will pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' . . . ." Thus, the proper moment to measure whether coverage is in force is the moment the person seeking damages was injured.
Makarka nevertheless argues that Callihan, by negligently damaging Voliva's brakes, caused property damage while the policy was in force that triggered coverage for all consequential injuries related to the
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