City of Fullerton v. Ins. Co. of the State of Penn.

U.S. Court of Appeals for the Ninth Circuit
City of Fullerton v. Ins. Co. of the State of Penn., 664 F. App'x 618 (9th Cir. 2016)

City of Fullerton v. Ins. Co. of the State of Penn.

Opinion

MEMORANDUM **

The City of Fullerton and a group of homeowners (together, “appellants”) appeal the district court’s grant of summary judgment in favor of the Insurance Company of the State of Pennsylvania (“IC-SOP”) and Lexington Insurance Company (“Lexington,” and together, “the insurers”). The district court concluded that the insurers had no duty to defend the City in an inverse condemnation action (the “Hanson” action) the homeowners brought against it. 1 We have jurisdiction under 28 U.S.C. § 1291, and we affirm the district court’s judgment.

1. Exclusion X of the relevant policies limits coverage for “property damage” by excluding claims “arising out of land subsi *619 dence for any reason whatsoever.” 2 “Land subsidence” is defined as “the movement of land or earth, including, but not limited to, sinking or settling of land, earth movement, earth expansion and/or contraction, landslide, slipping, falling away, caving in, eroding, earth sinking, and earth rising or shifting or tilting.” Exclusion Y precludes coverage for all claims “[ajrising out of ... inverse condemnation,” except where there is “physical injury or [ jdestruction of tangible property.”

The district court correctly concluded that the property damage alleged in Hanson fell within the scope of Exclusion X. Neither the facts nor the law supports appellants’ theory that the homeowners’ claimed loss of lateral and subjacent support encompasses a claim for property damage in the form of earth “weakening” unaccompanied by earth movement. On its face, the Hanson complaint expressly alleges damages resulting from landslides “in all areas,” as well as “on-going movement and progressive destabilization.” The City’s description of the Hanson action in its communications with the insurers confirms this interpretation of the claims. And at summary judgment, appellants conceded that “[a]ny property damage alleged in the Hanson Action was expressly alleged to result from earth movement.” None of the evidence in the record—including the testimony of the homeowners’ expert in the underlying litigation—reasonably suggests that Hanson involved physical damage to property that was unrelated to earth movement.

Nor do appellants articulate a legal theory under which such a claim could be actionable. They do not identify any case in which a plaintiff asserted a claim for loss of lateral and subjacent support that was not directly tied to land subsidence. The cases they do cite, Rosen v. State Farm Gen. Ins. Co., 30 Cal.4th 1070, 135 Cal.Rptr.2d 361, 70 P.3d 351 (2003), Strictland v. Fed. Ins. Co., 200 Cal.App.3d 792, 246 Cal.Rptr. 345 (1988), and Hughes v. Potomac Ins. Co. of D.C., 199 Cal.App.2d 239, 18 Cal.Rptr. 650 (1962), do not support such a theory.

2. Appellants do not contest the district court’s conclusion that to the extent Hanson claimed damages other than those arising out of physical injury to property, those claims fall within the scope of Exclusion Y.

3. Because we conclude that the district court’s analysis was correct, we do not reach the alternative grounds the insurers raise for affirmance.

AFFIRMED.

**

This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

1

. The City and homeowners ultimately settled the Hanson action. The terms of the settlement included an agreement to pursue this coverage action jointly against the insurers.

2

. "Property damage" is defined as “(1) [p]hysical injury to or destruction of tangible property, including all resulting loss of use of that property; or (2) [l]oss of use of tangible property that is not physically injured or destroyed.”

Reference

Full Case Name
CITY OF FULLERTON, Et Al., Plaintiffs-Appellants, v. INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Et Al., Defendants-Appellees
Status
Unpublished