Court of Appeal:
‘Animal Exclusion’ Does Not Exclude Duty to Defend
Opinion Rejects Insurer’s Contention That If the Insured Does Own or Control Dogs Who Attacked, Exclusion in Policy Applies, If She Doesn’t There’s No Basis for Liability; Says Duty to Defend Broader Than Duty to Indemnify
By a MetNews Staff Writer
Div. Two of the Court of Appeal for this district held Friday that an insurer has a duty to defend its insured in a dog-bite case notwithstanding an “animal exclusion” provision in the policy because the duty to defend is more expansive than the duty to indemnify.
Presiding Justice Elwood Lui authored the opinion, in which Justice Victoria M. Chavez joined. Justice Judith Ashmann-Gerst concurred in the result.
The insured, Poonam Dua, was sued by Simeon and Roslyn Peroff who claim that while walking their dogs on a street in Calabasas on Sept. 18, 2015, two pit bulls being walked by one Eric Taylor attacked and injured their dogs which were taken to an animal hospital, causing the Peroffs emotional distress. Taylor, who is Dua’s boyfriend, owns the pit bulls.
The Peroffs alleged that Dua was “the owner of the property and/or related that housed” the pit bulls or was “otherwise aware of the TAYLOR PIT BULLS” and their dangerousness had a “duty of care” to so act as to have prevented the attack. Dua responded that the dogs did not reside at her alleged home and that she had no means by which to control them.
Dua’s policy provides:
“This insurance does not apply to any occurrence or damages caused by any animal, at any time, at any premises insured hereunder, or caused by, arising out of, or in any way related to any animal owned by or in the care, custody, or control of the insured, or any member of the insured’s family or household.”
The insurer, Stillwater Insurance Company, declined to defend, reasoning that if Dua had responsibility for the pit bulls, the animal exclusion applies; if she doesn’t, there’s no prospect of liability.
Summary judgment in favor of the insurer was granted by Los Angeles Superior Court Judge Gregory Keosian on June 9, 2021. He wrote:
“Defendant argues that the only way Plaintiffs liability could have been established under the policy was by facts that would have established the applicability of the animal liability exclusion. This is because the only way Plaintiff would have been liable for the injuries caused by Taylor’s dogs would have been by showing that Plaintiff owned the pit bulls or by showing that the pit bulls were in her care, custody, or control.”
The judge declared:
“The only reasonable reading of the policy is the reading applied by Defendant.”
In his opinion reversing the summary judgment, Lui said:
“Equating its obligation to indemnify with its duty to defend, the insurer denied the insured a defense because, if the exclusion applies, the insurer has no obligation to defend. The problem with the insurer’s analysis is that the duty to defend is broader than the duty to indemnify, and the policy here specifically includes the defense of frivolous, groundless, false, or fraudulent claims that fall within the policy’s coverage. “This was not a situation where there was no possibility of coverage for the third party’s claims at the time the insurer denied coverage. Even if the insured was correct and the pit bulls were not under her ownership, did not live in her home, and were not under her control when the attack occurred—the third party still might have raised a claim potentially covered by the policy. An insurer can be excused from the duty to defend only if the third party complaint can by no conceivable theory raise an issue within the policy’s coverage. Yet the insured was alleged to know the dogs were dangerous and the insurer knew that the dogs were being walked by the insured’s boyfriend near her home. There may have been a possible claim that came within coverage.”
“That, as currently pleaded, the third party lawsuit was frivolous and baseless does not mean there was no possibility of coverage and thus no duty to defend. The insurer did nothing to investigate and concluded there was no possible coverage based only on the animal liability exclusion. The insured was entitled to a defense and was forced to settle to minimize her exposure because of the insurer’s decision to focus on the policy exclusion rather than the insured’s exposure to a frivolous lawsuit that could fall within the policy coverage.”
The trial court is directed, on remand, to deny summary adjudication of the first cause of action for breach of contract and the second cause of action for breach of the covenant of good faith and fair dealing and to consider, as it found unnecessary to do before, Stillwater’s request for summary adjudication of its contention that punitive damages do not lie against it for its refusal to defend.
In her separate opinion, Ashmann-Gerst said:
“I acknowledge that under the current state of the law this seems to be a groundless claim. But, as my colleagues recognize, pursuant to the terms of the insurance policy and well-established insurance law, Stillwater was obligated to defend Dua against groundless claims. In other words, while the Peroffs’ claim against Dua may have been baseless, that did not excuse Stillwater’s duty to defend her.”
The case is Dua v. Stillwater Insurance Company, 2023 S.O.S. 1333.
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