Homeowner’s Mistaken Work on Neighbor’s Land Not a Covered “Accident” Under Insurance Policy

A homeowner in the Los Angeles area hired a contractor to cut trees and level land on her property. One problem: Some of that land was not hers, but instead belonged to her neighbors. That is, while she instructed the contractor to do the work, her belief that all the land to be worked on was hers was a mistaken one.

The neighbors sued the homeowner for trespass and negligence, and the homeowner tendered the lawsuit to her insurer, expecting the insurer to defend the lawsuit and indemnify her for any damages she would be required to pay. The insurer, however, denied coverage and refused to defend.

The homeowner sued her insurer for breach of contract and insurance bad faith. At issue in the case was the policy language that provided coverage for an “occurrence,” which it defined as an “accident.” So was the homeowner’s work on her neighbors’ property (that she mistakenly thought was hers) an “accident?”

The Court of Appeal ruled that while the homeowner’s position that this was an “accident” was “plausible,” the caselaw was to the contrary. Specifically, the insured’s subjective intent is irrelevant under the law. What mattered was that her act—performing the work on the land—was intentional, and did not involve anything unforeseen or unexpected. The court referenced previous cases holding, for example, that an insured’s mistaken building on her neighbor’s property, for this reason, does not constitute an accident. In short, if the acts causing damage were intentional, it’s no accident notwithstanding a mistaken motivation for doing them.

In so holding, the court distinguished the California Supreme Court’s decision in Liberty Surplus Ins. v. Ledesma & Meyer (2018) 5 Cal.5th 216, which found coverage for a claim of negligent hiring against a company whose employee later assaulted someone. There, the employee’s assault was deemed an unexpected consequence of the employer’s independent act of hiring, and so was covered under the insurance policy. This stood in contrast to the homeowner’s case, where again, the work on the land was the immediate cause of the injury, and was conduct the insured expected.