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Schaefer/Karpf Productions v. CNA Insurance Companies6/18/1998
rate and apart from the videotapes themselves. If the production (that is, Schaefer's concept of the story) is tangible property, then it could be said to have suffered physical injury from being linked in the public mind with pornography in the same way the concept of the hamburger was allegedly injured by being linked in the public mind with mad cow disease or the buildings in Geddes, Economy Lumber Co., Armstrong, and Eljer suffered injury from being linked to defective building materials. But is a theatrical production like a hamburger or a building?
"Tangible property," for purposes of a CGL policy is property "`having physical substance apparent to the senses.'" (Giddings v. Industrial Indemnity Co. (1980) 112 Cal.App.3d 213, 219; citation omitted.) A concept is something invisible and incorporeal, having no substance or body until it is transmitted onto a medium. It is the medium which is the tangible property, not the concept. Yet, one might argue, when we speak of a painting, Van Gough's "Starry Night" for example, we are not speaking about the paint or the canvas on which the paint sits; we are speaking about Van Gough's concept or presentation of a starry night which to us has a physical substance apparent to our senses separate and apart from the paint and the canvas. Likewise, when we speak about the program "The Best Christmas Pageant Ever," we are not speaking about a black plastic box with a reel of tape inside; we are speaking about Schaefer's concept of a story about a Christmas pageant which has taken on a form, a substance, apparent to our senses. Here, the medium is not the message.
Whatever might be said of this argument in the world of art or philosophy, we are dealing in this case with the world of insurance-a practical and prosaic world more Philistine than philosophical, more artisan than artistic. It is a bedrock principle of this world the provisions of insurance contracts are interpreted in their ordinary and popular sense. (Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co. (1993) 5 Cal.4th 854, 867.) In this world, videotapes are tangible, concepts are intangible.
Needless to say, given the unique facts of this case, we have found no case directly on point. Two federal circuit court opinions, however, support CNA's argument Schaefer did not suffer injury to tangible property.
In Gulf Ins. Co. v. L.A. Effects Group, Inc. (9th Cir. 1987) 827 F.2d 574, the court, applying California law, held injury to the artistic value of a film was not injury to tangible property for purposes of CGL coverage. In Gulf, the defendant entered into a contract with Twentieth Century Fox to produce special effects for the film "Aliens." During the course of production, a dispute arose between Fox and defendant over defendant's performance and defendant quit. Fox brought an action against defendant asserting various legal and equitable claims. Included in the complaint was an allegation the special effects sequences defendant created for the film "were inexpertly produced and either excised from or detrimentally incorporated into the final cut." (Id. at p. 577.) Defendant tendered defense of Fox's action to Gulf, its CGL insurer. Gulf then brought this action against defendant seeking a declaration it had no duty to defend or indemnify defendant because Fox was not alleging damage to tangible property within the meaning of the 1973 definition. Defendant argued Fox's complaint could be construed as alleging damage to the "artistic value" of the film which, defendant contended, constituted a form of tangible property separate and distinct from a strip of celluloid and the reel on which it was spooled.
The Ninth Circuit affirmed a judgme
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