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Gray v. Zurich Ins. Co.

Supreme Court of California

October 25, 1966

L. A. No. 28897

Opinion

 [*266]  [**169]  [***105]    This is an action by an insured against his insurer for failure to defend an action filed against him which stemmed from a complaint alleging that he had committed an assault. CA(1)(1)  CA(2)(2)  The main issue turns on the argument of the insurer that an exclusionary clause of the policy excuses its defense of an action in which a plaintiff alleges that  [*267]  the insured intentionally caused the bodily injury. Yet the [****2]  language of the policy does not clearly define the application of the exclusionary clause to the duty to defend. Since in that event we test the meaning of the policy according to the insured's reasonable expectation of coverage and since the language of the policy would lead the insured here to expect defense of the third  [**170]   [***106]  party suit, we cannot exonerate the carrier from the rendition of such protection.

Plaintiff, Dr. Vernon D. Gray, is the named insured under an insurance policy issued by defendant. A "Comprehensive Personal Liability Endorsement" in the policy states, under a paragraph designated "Coverage L," that the insurer agrees "[To] pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the company shall defend any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this endorsement, even if any of the allegations are groundless, false or fraudulent; but the company may make such investigation and settlement of any claim or suit as it deems expedient." The policy contains [****3]  a provision that "[This] endorsement does not apply" to a series of specified exclusions set forth under separate headings, including a paragraph (c) which reads, "under coverages L and M, to bodily injury or property damages caused intentionally by or at the direction of the insured."

The suit which Dr. Gray contends Zurich should have defended arose out of an altercation between him and a Mr. John R. Jones. 1 Jones filed a complaint in Missouri alleging that Dr. Gray "wilfully, maliciously, brutally and intentionally assaulted" him; he prayed for actual damages of $ 50,000 and punitive damages of $ 50,000. Dr. Gray notified defendant of the suit, stating that he had acted in self defense, and requested that the company defend. Defendant refused on the ground that the complaint alleged an intentional tort which fell outside the coverage of the policy. Dr. Gray thereafter unsuccessfully defended on the theory of self defense; he suffered a judgment of $ 6,000 actual damages although the jury refused to award punitive damages.

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65 Cal. 2d 263 *; 419 P.2d 168 **; 54 Cal. Rptr. 104 ***; 1966 Cal. LEXIS 196 ****

VERNON DARTMOUTH GRAY, Plaintiff and Appellant, v. ZURICH INSURANCE COMPANY, Defendant and Respondent

Prior History:  [****1]  APPEAL from a judgment of the Superior Court of Los Angeles County. Benjamin Landis, Judge.

Action against an insurance company for damages for failing to defend an insured in an action for assault and battery and for refusing to pay a judgment rendered against him.

Disposition: Reversed with directions. Judgment for defendant reversed with directions.

CORE TERMS

insured, coverage, bodily injury, damages, duty to defend, reasonable expectation, wilful, third party suit, cases, exclusion clause, defended, obligation to defend, insurance policy, intentionally, contracts, courts, indemnify, indemnification coverage, allegations, parties, property damage, seek damages, groundless, pleadings, carrier, promise, insurance contract, adhesion contract, bargaining, fraudulent

Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Claim, Contract & Practice Issues, General Overview, Contracts Law, Defenses, Ambiguities & Mistakes, Business & Corporate Compliance, Contracts Law, Types of Contracts, Adhesion Contracts, Reasonable Expectations, Noncommercial Insureds, Commercial General Liability Insurance, Exclusions, Contractual Liabilities, Torts, Intentional Torts, Intent, Business Insurance, Duty to Defend, Exclusions, Motor Vehicle Insurance, Unambiguous Terms, Liability & Performance Standards, Good Faith & Fair Dealing, Public Policy Violations, Obligations, Reservation of Rights, Third Parties, Beneficiaries, Claims & Enforcement