Shelton v. Fire Ins. Exchange CA2/1

Filed 7/25/13 Shelton v. Fire Ins. Exchange CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

ALDA SHELTON et al., B240775

Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. SC111083)
v.

FIRE INSURANCE EXCHANGE,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Los Angeles County. Craig D.
Karlan, Judge. Reversed.
The Law Office of Alda Shelton and Alda Shelton for Plaintiffs and Appellants.
Stone & Hiles and David L. Schaffer for Defendant and Respondent.

_________
 We are asked to determine whether an insurer has a duty to defend its insureds
who are sued by a neighbor for emotional distress damages, including bodily injury,
based on the insureds’ maintaining trees and a hedge “in excess of six feet” on the
insureds’ rental property. Alda Shelton and Jon Sherman (collectively, plaintiffs) appeal
from a judgment entered after the trial court granted a motion for summary judgment of
Fire Insurance Exchange (Exchange) against plaintiffs’ complaint for declaratory relief,
bad faith breach of insurance contract, and breach of contract. Plaintiffs contend that the
court erred in granting summary judgment because Exchange had a duty to defend
plaintiffs against the neighbor’s claim that she allegedly had suffered bodily injury
arising from emotional distress resulting from “continuous and repeated exposure to the
same condition”—the untrimmed foliage and resulting blind intersection—caused by
plaintiffs’ negligent acts. Plaintiffs also contend that Exchange had a duty to defend even
against a meritless suit. We agree because a triable issue of material fact exists as to
whether there is a potential for coverage. Accordingly, we reverse the judgment.
BACKGROUND
A. The policy
Exchange issued to plaintiffs a “Landlords Protector Package” policy covering the
insured rental property located in Malibu, California, from January 16, 2010, to
January 16, 2011 (policy). The policy included business liability coverage with a stated
limit of $1 million for each occurrence. The policy provided, “We shall pay all damages
from an occurrence which an insured is legally liable to pay because of bodily injury,
personal injury, or property damage arising out of the ownership, maintenance, or use of
the insured location covered by this policy. [¶] At our expense we shall defend an
insured against any covered claim or suit.” An occurrence was defined as “a sudden
event, including continuous or repeated exposure to the same condition, resulting in
bodily injury or property damage neither expected nor intended by the insured. It also
means an act or series of acts of the same or similar nature, resulting in personal injury.”
Bodily injury was defined as “bodily harm, sickness or disease, including care, loss of

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services and death resulting from the injury.” Property damage was defined as “physical
injury to or destruction of tangible property including loss of its use.” The policy also
contained an intentional acts exclusion, which stated in part, “We do not cover bodily
injury, personal injury or property damage: [¶] . . . [¶] 7. Arising from any
occurrence caused by an intentional act of any insured person where the results are
reasonably foreseeable.”
B. The Kalcheim complaint
On July 14, 2010, Bonnie Kalcheim, individually and as trustee of a family trust,
filed a complaint against Shelton, alleging causes of action for breach of covenants
running with the land, private nuisance, and public nuisance (Kalcheim complaint). The
Kalcheim complaint alleged as follows.
Title 22 of the Los Angeles County Code provided that “[f]ences and walls within
a required corner side yard shall not . . . exceed six feet in height where five feet or more
from said highway line.” (L.A. County Code, § 22.48.160.)~ (CT 82, 170)~ The Los
Angeles County Code further stated that “‘height restrictions applying to fences and walls
shall also apply to hedges planted within yards and forming a barrier serving the same
purpose as a fence or wall.’” (L.A. County Code, § 22.48.170.) The neighborhood in
which Shelton’s property was located was developed in 1962 and is governed by
covenants, conditions, and restrictions (CC&R’s) recorded the same year. The 1962
CC&R’s (1962 CC&R’s) provided that fences shall not exceed six feet in height and
hedges shall not exceed five feet in height and that fences, plants, or hedges shall not
“‘interfere with ocean views enjoyed by adjacent lots.’” A 2004 amendment and
restatement of the CC&R’s (2004 CC&R’s) similarly limited fence height to six feet and
hedge height to five feet but also provided that “‘no trees, fences, plants, hedges, or any
other structures or devices may be placed or maintained on any lot or any part thereof if
the placement or maintenance thereon will interfere with ocean views enjoyed by other
lots in the same Tract or lots in a contiguous Tract.’” Shelton’s property was located on a
corner lot and “ha[d] a tall, dense hedge and trees wrapping around the property that

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create[s] a blind corner for automobile drivers at the intersection.” “Shelton . . .
negligently allowed the trees and hedge on the Shelton Property to grow to violate Title
22, the 1962 CC&Rs and the 2004 CC&Rs, but now consciously maintained the Shelton
Property in knowing violation [of] them.” “[Kalcheim] and others asked, or tried to ask,
[Shelton] to trim the trees on Shelton Property so that [Kalcheim] and her terminally sick
daughter could enjoy the ocean view together.” Shelton “maliciously and despicably
called names and spewed obscenities at one or more people who requested that they cut
the ficus hedge and/or other trees on their property.”
As to the cause of action for public nuisance, the Kalcheim complaint alleged “the
hedge and trees are a public nuisance per se under Civil Code section 3479 because they
unlawfully obstruct[] the free use, in the customary manner,” of public roads and ingress
and egress from the Kalcheim property. The hedge and trees “are in excess of height
restrictions within Title 22” and cause a specific injury to Kalcheim by interfering with
sightlines from the street to the Kalcheim property. Kalcheim and others had given
notice to Shelton of the damages caused by the nuisance and requested abatement, but
Shelton refused to abate the nuisance.
As to the cause of action for private nuisance, Shelton maintained the hedge and
trees “in a manner that creates an unreasonable, dangerous condition in violation of Title
22 and an unreasonable interference” with Kalcheim’s view rights under the CC&R’s.
Shelton’s actions “constitute nuisances within the meaning of Section 3479 of the Civil
Code as an interference with the comfortable enjoyment of the Kalcheim property.”
Kalcheim and others repeatedly gave notice to Shelton of the damages caused by the
nuisance and requested their abatement, but Shelton refused and continues to refuse to
abate the nuisances.
As to the cause of action for breach of covenants running with the land, Shelton
and Kalcheim “held express contractual obligations and an implied covenant of good
faith and fair dealing between them” under the CC&R’s. Shelton “breached the express

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obligations and the implied covenant of good faith and fair dealing owed to [Kalcheim]”
by placing and maintaining trees and the hedge in violation of the CC&R’s.
As to all causes of action, Kalcheim suffered “annoyance, inconvenience,
discomfort, and interference with her rightful use and enjoyment of the Kalcheim
Property constituting damages in an amount not yet known but to be determined
according to proof.”
A statement of damages was served in connection with the Kalcheim complaint,
claiming $300,000 in emotional distress damages and $1 million in punitive damages.
Sometime later, Kalcheim added Sherman as a defendant.
C. The tender of defense by plaintiffs and rejection by Exchange
On July 23, 2010, plaintiffs notified Exchange of the Kalcheim complaint and
requested defense and indemnification from Exchange.
On September 2, 2010, Exchange recorded a statement by Shelton.
On November 19, 2010, Exchange sent a letter to plaintiffs, stating that it had
completed its investigation and determined it had no duty to defend or indemnify
plaintiffs because “[t]he claim for your refusal to cut back the foliage on your property
does not meet the definition of an ‘occurrence’ which is defined to mean a sudden event
that results in bodily injury or property damage neither expected or intended by you. . . .
[¶] . . . The referenced policy only provides coverage for bodily injury caused by an
occurrence. The Policy was not intended to cover emotional distress damages that flow
from an uncovered claim . . . . Since the claims asserted do not meet the definition of
bodily injury, personal injury or property damage caused by an occurrence, the claims do
not meet the insuring agreement of the Policy and no coverage is available under the
Policy. [¶] . . . To the extent you intended or expected to cause injury or damage,
[Insurance Code] Section 533 would be an additional basis to preclude indemnity
coverage for those claims.”
On January 10, 2011, plaintiffs wrote a letter to Exchange noting that the policy
covers claims for bodily injury and property damage caused by “continuous or repeated

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exposure to the same condition, resulting in bodily injury . . . neither expected nor
intended by the insured.” Plaintiffs argued that Exchange was required to defend
plaintiffs because Kalcheim alleged she had suffered emotional distress as well as
property damage and loss of use of her property arising from “continuous and repeated
exposure to the blind corner, allegedly caused by the foliage,” which was caused by
plaintiffs’ negligence and nonfeasance, rather than intentional acts. In a letter dated
January 19, 2011, Exchange reaffirmed its prior denial on the same grounds and
additionally stated that the Kalcheim complaint “contains no allegations of physical
injury to property” and therefore does not state a covered claim.
D. The Shelton complaint
On January 18, 2011, plaintiffs filed a complaint against Exchange for declaratory
relief, bad faith breach of insurance contract, and breach of contract (Shelton complaint).
The Shelton complaint alleged as follows. As to the cause of action for declaratory relief,
beginning in 2000, plaintiffs and Exchange had entered into a yearly policy of insurance
covering plaintiffs’ insured property. Kalcheim had filed a complaint against Shelton for
private nuisance and public nuisance, alleging that the insured property contained a tree
and bushes that created a dangerous condition and seeking emotional distress damages
and property damages. Thereafter, Kalcheim had added Sherman to the complaint. On
November 19, 2010, Exchange refused to defend plaintiffs and denied coverage.
Plaintiffs requested a declaration of the rights and duties of the parties under the policy
and an award of damages and possible indemnification based on Exchange’s failure to
provide a defense and coverage.
As to the cause of action for breach of the implied covenant of good faith and fair
dealing, the Shelton complaint alleged that Exchange’s “failure to defend and denial of
coverage is a breach of good faith and fair dealing.” Exchange wrongfully sent a letter to
Kalcheim’s attorney, stating that Sherman was a named insured, resulting in Kalcheim
adding Sherman as a defendant. Exchange then wrongfully denied Sherman coverage.
Plaintiffs defended against the Kalcheim complaint. As to the breach of contract cause of

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action, “[i]n failing to defend and to provide the benefits of the coverage paid for by
plaintiffs,” Exchange breached the contract of insurance between Exchange and
plaintiffs.
E. The Kalcheim first amended complaint
On March 14, 2011, Kalcheim filed a first amended complaint, adding as
coplaintiffs Philip George, individually and as a trustee of a family trust, and Jack A.
Panaro, who lived with Kalcheim (FAC).1 The FAC alleged causes of action for public
nuisance, private nuisance, breach of covenants running with the land, and breach of
equitable servitudes. The FAC essentially repleaded the allegations of the Kalcheim
complaint with the exception that the FAC alleged that George owned real property
within the housing tract and was also affected by plaintiffs’ wrongful conduct, and that
plaintiffs “intentionally” rather than “negligently” “allow the trees and hedge on the
Shelton Property to violate Title 22 and the 1962 CC&Rs and the 2004 CC&Rs.” As to
the cause of action for breach of covenants running with the land, the FAC added the
allegation that the CC&R’s gave rise to covenants running with the land. The FAC added
the cause of action for breach of equitable servitudes, alleging that plaintiffs “breached
the obligations and also the implied covenant of good faith and fair dealing owed to
[Kalcheim] through the Equitable Servitudes” that “exist . . . due to” the CC&R’s by
placing and maintaining trees and the hedge in violation of the CC&R’s.
A statement of damages was served in connection with the FAC, claiming
$300,000 in emotional distress damages and $1 million in punitive damages.
F. Plaintiffs’ May 9, 2011 letter
On May 9, 2011, plaintiffs wrote a letter to Exchange, requesting that it reconsider
its denial of a duty to defend plaintiffs against the FAC. Plaintiffs asserted that the FAC
gave rise to bodily injury claims, because on May 5, 2011, Kalcheim testified in

1 Although the FAC contained in the record does not show a file stamp date, it was
signed by Kalcheim’s counsel on March 10, 2011, and Exchange claims in its brief that it
was filed on March 14, 2011. Kalcheim, George, and Panaro are not parties to this
appeal.
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deposition that her “repeated and continuous exposure to the public nuisance” caused her
to suffer stress, which “in turn helped cause diverticulitis, a stress-related condition in the
intestines. [Kalcheim] had to have a 9” section of her colon removed surgically to repair
the stress-caused problem.” Kalcheim testified that “[d]ue to the occurrences alleged in
the complaint, she has suffered headaches, for which she took aspirin; and stomach pains,
for which she took antacids. She suffered a loss of appetite and could not sleep.” And
Panaro claimed to have suffered stiff muscles as a result of the stress caused by
continuous exposure to the “conditions” on Shelton’s property. On May 31, 2011,
plaintiffs sent Exchange another letter attaching excerpts from Kalcheim’s deposition
transcript and stating that Kalcheim claimed she had suffered “a mitral valve prolapse,
and that ‘stress is one of the elements of it.’” On July 7, 2011, Exchange reaffirmed its
denial.
G. The motion for summary judgment
On September 23, 2011, Exchange filed a motion for summary judgment,
asserting that the FAC’s claims against plaintiffs did not fall within the policy’s liability
coverage because plaintiffs’ refusal to reduce the height of the hedge and trees did not
qualify as an occurrence in that the FAC did not allege a sudden event; plaintiffs’ actions
were intentional and could not “satisfy the definition’s requirement that [the] conduct be
‘neither expected nor intended’”; the emotional distress claims did not qualify as bodily
injury; the emotional distress claims flowed from an intangible property loss which was
not covered; and the policy’s intentional acts exclusion provision and Insurance Code
section 533 barred coverage. Exchange also argued that because its interpretation of the
policy was reasonable, plaintiffs’ cause of action for bad faith was without merit.
Shelton’s recorded statement was attached to Exchange’s motion for summary
judgment. In her recorded statement, Shelton stated that neither Kalcheim nor others had
ever asked her to cut, trim, or remove the hedge. Shelton stated that Kalcheim had never
talked to her other than “once in about 1985 when her car ran into my fence.” Shelton
also stated that the tenants employed their own gardener, Shelton’s own workers trim the

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trees once a year, and she did not know whether Kalcheim had ever approached her
tenants. The workers had trimmed the trees around January 2010 when the current
tenants had moved in.
In opposition to the motion for summary judgment, plaintiffs argued that
Exchange had a duty to defend plaintiffs against claims of bodily injury allegedly arising
from emotional distress resulting from “continuous and repeated exposure to the same
condition”—the untrimmed foliage and resulting blind intersection caused by plaintiffs’
negligent acts. In support of the opposition to Exchange’s motion for summary
judgment, plaintiffs attached Shelton’s declaration; plaintiffs’ May 31, 2011 letter to
Exchange; excerpts from Kalcheim’s deposition taken on May 6, 2011; and excerpts
from Kalcheim’s responses to interrogatories.
Shelton’s declaration stated that Exchange’s claims agent did not ask Kalcheim’s
counsel whether Kalcheim was “alleging emotional distress with physical
manifestations.” Shelton also declared that she “did not foresee that not trimming my
plants to suit [Kalcheim] would cause emotional distress nor did I intend to cause
distress. I was unaware of their claims until a few days before they filed suit. I trimmed
my oleanders down [to] the fence line only 2 days after I received their letter threatening
lawsuit, but that did not placate them.” She declared that the hedge and trees do not
create a blind intersection and do not hinder Kalcheim’s and George’s ingress and egress
to their driveways; and the “CC&R’s are not applicable, for they only potentially grant a
view easement to adjacent properties, and the 2 properties at issue are between 60 and
100 feet away from mine, and separated by a street.”
Kalcheim testified in deposition that the blind spot caused by the hedge caused her
emotional distress because “[e]very time I pull out the car, every time [my husband] pulls
out of the driveway, I’m worried.” Kalcheim further testified that due to the foliage
blocking her ocean view, she became stressed, angry, depressed, frustrated, and suffered
sleep and appetite problems. Kalcheim had “surgery to remove nine inches of my colon
from a severe case of diverticulitis which perforated my colon and went into my ovaries

9
and the rest of my body, and it was suggested at the time that it certainly could have been
brought on by stress.” She took aspirin for headaches and antacid medication for her
upset stomach. She also had a mitral valve prolapse and believed that “[s]tress is one of
the elements of it.” In her response to interrogatories, Kalcheim stated that her damages
included “[e]motional distress including without limitation, frustration, anxiety, anger,
and disappointment, causing physiological symptoms, including, but not limited to,
depression and sleeplessness.”
In their opposition, plaintiffs cited Shelton’s recorded statement in which she
stated that Kalcheim had never asked her to trim the foliage, Shelton trimmed the trees
every year, and Shelton had trimmed the oleanders down to the fence line in July 2010.
Plaintiffs argued that Exchange had not “proven that plaintiffs intended to cause harm.”
The trial court granted Exchange’s motion for summary judgment, holding, “Since
the Kalcheim complaint is predicated only on allegations of intentionally wrongful
conduct by [plaintiffs], causing her severe emotional distress, none of the damages
asserted by Ms. Kalcheim arise from an accidental ‘occurrence’ within the meaning of
the insuring clause.” The court noted, “Whether emotional distress accompanied by
physical manifestations, illness and/or injury qualifies as ‘bodily injury’ raises an
ambiguity that should be resolved in favor of the insured. (See Employers Cas. Ins. Co.
v. Foust (1972) 29 Cal.App.3d 382 [coverage for bodily injury in an automobile liability
insurance policy applies to emotional distress sustained by an accident victim’s mother,
who suffered shock and emotional distress resulting in physical injury when she
witnessed the victim being struck by the insured’s automobile].)” The court found that
“[t]here is no dispute in the parties’ evidence that Ms. Kalcheim provided discovery
responses in the underlying action stating that her emotional distress did result in physical
injury and illness—including appetite problems and sleeplessness, diverticulitis resulting
in the removal of 9 inches of colon, headaches and upset stomach and a mitral valve
prolapse,” and there was no basis to adjudicate the “‘bodily injury’” issue in favor of
Exchange. But the court stated such a finding was “superfluous to the court’s analysis

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and findings above regarding ‘occurrence’ and below regarding the intentional acts
exclusion.” The court also determined that the intentional acts exclusion of the policy
and Insurance Code section 533 barred coverage because, “[v]iewed in conjunction with
the ‘occurrence’ analysis, the court finds that the undisputed facts support a finding that
plaintiffs’ actions do not fall within the ‘neither expected nor intended’ language of the
policy.” Judgment was entered and this appeal followed.
DISCUSSION
A. Standard of review
“‘It is by now a familiar principle that a liability insurer owes a broad duty to
defend its insured against claims that create a potential for indemnity. [Citation.] . . . “the
carrier must defend a suit which potentially seeks damages within the coverage of the
policy.” [Citation.] Implicit in this rule is the principle that the duty to defend is broader
than the duty to indemnify; an insurer may owe a duty to defend its insured in an action
in which no damages ultimately are awarded. [Citations.] [¶] The determination
whether the insurer owes a duty to defend usually is made in the first instance by
comparing the allegations of the complaint with the terms of the policy. Facts extrinsic to
the complaint also give rise to a duty to defend when they reveal a possibility that the
claim may be covered by the policy. [Citation.]’ (Horace Mann Ins. Co. v. Barbara B.
(1993) 4 Cal.4th 1076, 1081, original italics.) The insurer is relieved of its duty only
where ‘the third party complaint can by no conceivable theory raise a single issue which
could bring it within the policy coverage.’ [Citation.] Any doubt as to whether the
insurer has a duty to defend is resolved in the insured’s favor. (Horace Mann Ins. Co. v.
Barbara B., supra, 4 Cal.4th at p. 1081.)” (Maryland Casualty Co. v. National American
Ins. Co. (1996) 48 Cal.App.4th 1822, 1830–1831.)
“Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287 (Montrose I),
explains the parties’ burdens of proof in a declaratory relief action regarding the duty to
defend. ‘To prevail, the insured must prove the existence of a potential for coverage,
while the insurer must establish the absence of any such potential. In other words, the

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insured need only show that the underlying claim may fall within policy coverage; the
insurer must prove it cannot. Facts merely tending to show that the claim is not covered,
or may not be covered, but are insufficient to eliminate the possibility that resultant
damages . . . will fall within the scope of coverage, therefore add no weight to the scales.
Any seeming disparity in the respective burdens merely reflects the substantive law.’ (Id.
at p. 300, original italics.)” (Maryland Casualty Co. v. National American Ins. Co.,
supra, 48 Cal.App.4th at p. 1831.)
“Once a prima facie showing is made that the underlying action fell within
coverage provisions, an insurer may defeat a motion for summary judgment only by
producing undisputed extrinsic evidence conclusively eliminating the potential for
coverage under the policy. (Montrose I, supra, 6 Cal.4th at pp. 298–299.) Evidence that
merely ‘placed in dispute whether [the insured’s] actions would eventually be determined
not to constitute an occurrence or to fall within one or more of the exclusions contained
in the policies’ is insufficient to defeat the insured’s right to summary judgment. (Id. at
p. 304.)” (Maryland Casualty Co. v. National American Ins. Co., supra, 48 Cal.App.4th
at p. 1832).
B. A triable issue of material fact exists as to whether there is a potential for
coverage
Plaintiffs contend that the court erred in granting summary judgment because
Exchange had a duty to defend plaintiffs against the neighbor’s claim that she allegedly
had suffered bodily injury arising from emotional distress resulting from “continuous and
repeated exposure to the same condition”—the untrimmed foliage and resulting blind
intersection caused by plaintiffs’ negligent acts. Plaintiffs also contends that Exchange
had a duty to defend even against a meritless suit. We agree because a triable issue of
material fact exists as to whether there is a potential for coverage.
We first examine the allegations of the FAC. The FAC alleged causes of action
for public nuisance, private nuisance, breach of covenants running with the land, and
breach of equitable servitudes.

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 According to Civil Code section 3479, “Anything which is injurious to health,
including, but not limited to, the illegal sale of controlled substances, or is indecent or
offensive to the senses, or an obstruction to the free use of property, so as to interfere
with the comfortable enjoyment of life or property, or unlawfully obstructs the free
passage or use, in the customary manner, of any navigable lake, or river, bay, stream,
canal, or basin, or any public park, square, street, or highway, is a nuisance.” “A public
nuisance is one ‘which “affects at the same time an entire community or neighborhood,
or any considerable number of persons.”’ [Citation.]” (Kempton v. City of Los Angeles
(2008) 165 Cal.App.4th 1344, 1348.) “A private person may maintain an action for a
public nuisance, if it is specially injurious to himself, but not otherwise.” (Civ. Code,
§ 3493.) “Interference with the ingress and egress to and from a public street constitutes
‘both a private and a public nuisance’ and may constitute a special injury actionable by
an individual.” (Kempton, at p. 1349.)
California requires “the following elements for a covenant to run with the land:
(1) the instrument containing the covenant must describe both the dominant estate and the
servient estate; (2) the instrument must expressly provide that all successive owners of
the servient estate are to be bound by the covenant, and the deed must refer to the
recorded restrictions to show the intent of the parties that the covenant run with the land;
(3) each act required by the covenant must relate to the use, repair, maintenance, or
improvement of, or payment of taxes and assessments on, the land described; (4) the
instrument containing the covenant must be recorded in the office of the county recorder
of the county where the land is situated.” (In re Snow (Bankr. C.D.Cal. 1996) 201 B.R.
968, 972; Civ. Code, § 1468.)
“An equitable servitude arises where one or more of the requirements of a
covenant running with the land are not met, but the following conditions are met: (1) the
subsequent owner of the servient estate has notice of the covenant; (2) the holder of the
servitude is seeking equitable relief only (as opposed to a remedy at law); and (3) it is

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inequitable to deny the enforcement of the servitude.” (In re Snow, supra, 201 B.R. at
pp. 972–973.)
The FAC alleged that the hedge and trees are a public nuisance under Civil Code
section 3479 because they obstructed the free use of public roads and ingress and egress
from the Kalcheim property, exceeded the height restrictions of the Los Angeles County
Code, and caused a specific injury to Kalcheim by interfering with sightlines from the
street to the Kalcheim property. The FAC alleged that the hedge and trees were a private
nuisance under Civil Code section 3479 because they created an unreasonable, dangerous
condition and an unreasonable interference with Kalcheim’s view rights. The FAC
alleged that plaintiffs’ maintenance of the hedge and trees breached express obligations
and the implied covenant of good faith and fair dealing “through equitable servitudes”
under the CC&R’s.
We next examine the terms of the policy, keeping in mind that “interpretation of
an insurance contract, like any contract, is governed by the mutual intent of the parties at
the time they form the contract. [Citation.] The parties’ intent is found, if possible,
solely in the contract’s written provisions. [Citation.] ‘The “clear and explicit” meaning
of these provisions, interpreted in their “ordinary and popular sense,” unless “used by the
parties in a technical sense or a special meaning is given to them by usage” [citation],
controls judicial interpretation. [Citation.]’ [Citation.] Thus, if a layperson would give
the contract language an unambiguous meaning, we apply that meaning. [Citation.]
Only these basic principles are needed to interpret contract language that is clear and
unambiguous. [¶] The rules for recognizing ambiguity are also straightforward.
Ambiguity exists when an insurance policy provision is susceptible to two or more
constructions that are reasonable and not based on strained interpretations. [Citation.]
Contract language interpretation involves considering the whole instrument and the
circumstances of the case; ambiguity is not an abstract question. [Citation.] . . . [¶]
When particular policy language is ambiguous, it is interpreted in the sense the insurer
believed the insured understood it at the time of formation. [Citation.] If that principle

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cannot remove an ambiguity, as when there is no basis for a belief that the insured
understood a term in a specific sense, then the ambiguity is construed against the party
who caused the uncertainty to exist.” (Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993)
12 Cal.App.4th 715, 736–737 (Shell Oil).)
The policy stated, “We shall pay all damages from an occurrence which an
insured is legally liable to pay because of bodily injury, personal injury, or property
damage arising out of the ownership, maintenance, or use of the insured location
covered by this policy. [¶] At our expense we shall defend an insured against any
covered claim or suit.” An occurrence was defined in the policy as “a sudden event,
including continuous or repeated exposure to the same condition, resulting in bodily
injury or property damage neither expected nor intended by the insured. It also means
an act or series of acts of the same or similar nature, resulting in personal injury.” The
policy defined property damage to mean “physical injury to or destruction of tangible
property including loss of its use.”
Thus, we must determine whether the hedge and trees that allegedly blocked
Kalcheim’s ocean view, created a blind intersection, and interfered with Kalcheim’s
driveway sightlines was “a sudden event, including continuous or repeated exposure to
the same condition . . . .” “[I]n standard pre-1986 policies, [‘occurrence’] was defined as
an ‘accident, including continuous or repeated exposure to conditions, which results in
bodily injury or property damage neither expected nor intended from the standpoint of
the insured.’ Although more recent policies . . . have replaced the term ‘accident’ with
‘event’ (to include gradual events within the concept of accident), the phrase ‘neither
expected nor intended’ focuses coverage on unexpected or accidental injuries that are
fortuitous and not planned or intended. This concept of fortuity is basic to insurance
law.” (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 16–17 (Waller).)
In Shell Oil, the Court of Appeal noted that “‘including’ is a word of
enlargement.” (Shell Oil, supra, 12 Cal.App.4th at p. 749.) Thus, a change in the terms
of the policy “from ‘accident, or’ to ‘accident, including’ . . . ¶] . . . [enlarged] the

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meaning of ‘accident’ to add exposure to damaging conditions; gradual events can then
be ‘accidents’ and ‘occurrences’ under the policies. This change broadened the scope of
covered events because some courts required that ‘accidents’ be ‘sudden.’” (Id. at
pp. 748–749.) And the court held that the use of the term “sudden” in a jury instruction
“did not preclude coverage for an ‘occurrence’ that was gradual and not abrupt in
nature.” (Id. at p. 751.) “The ‘occurrence’ definitions therefore encompassed both
sudden and gradual events.” (Id. at p. 752.)
Here, the policy defined occurrence as “a sudden event, including continuous or
repeated exposure to the same condition . . . .” Under Shell Oil, the policy’s definition of
occurrence included gradual events that are not abrupt in nature. Because the FAC
alleged the event to be the growth of the hedge and trees, which by nature are gradual
events, we conclude the FAC alleged an occurrence within the meaning of the policy.
We next decide whether the “sudden event, including continuous or repeated
exposure to the same condition”—the trees and hedge— resulted in “bodily injury or
property damage neither expected nor intended by the insured.” As defined in the
policy, bodily injury is “bodily harm, sickness or disease, including care, loss of services
and death resulting from the injury.” Chatton v. National Union Fire Ins. Co. (1992) 10
Cal.App.4th 846 states that “[t]he bodily injury clause in the [comprehensive general
liability] policy has been interpreted on numerous occasions. The cases overwhelmingly
hold that the phrase ‘bodily injury, sickness or disease’ is plain and unambiguous and that
coverage under the bodily injury clause is limited to physical injury to the body and does
not include nonphysical, emotional or mental harm.” (Id. at p. 854.) But “bodily injury
includes physical injury resulting from emotional distress.” (Id. at p. 857.)
As the trial court noted, it was undisputed that Kalcheim had provided discovery
responses stating that her emotional distress resulted in physical injury and illness,
including appetite problems and sleeplessness, headaches, upset stomach, a mitral valve
prolapse, and diverticulitis resulting in the removal of nine inches of colon. And Panaro
claimed stress-related stiff muscles caused by the continuous exposure to the conditions

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on plaintiffs’ property. But Exchange argues that “the policy defines ‘bodily injury’ as
‘bodily harm, sickness or disease, including care, loss of service and death resulting from
the injury.’ (Emphasis added.) Thus, under the definition’s plain meaning, the
claimant’s bodily harm, sickness, or disease, including its physical manifestations, must
be the result of a bodily injury, not an emotional distress injury.” Exchange urges that in
order for plaintiffs’ claim to be covered under the policy, Kalcheim had to allege that she
“suffered physical injury as a result of being struck by plaintiffs’ foliage.” While
Exchange’s interpretation may be reasonable, so is the interpretation of plaintiffs, that
because “Kalcheim asserted bodily injury arising from her emotional distress, bodily
injury was present, and coverage is triggered. No touching or physical contact is
required.” We agree with the trial court that “[w]hether emotional distress accompanied
by physical manifestations, illness, and/or injury qualifies as ‘bodily injury’ raises an
ambiguity that should be resolved in favor of the insured.” As stated, “the ambiguity is
construed against the party who caused the uncertainty to exist.” (Shell Oil, supra, 12
Cal.App.4th at p. 737.) Accordingly, we conclude that the physical injuries claimed by
Kalcheim and Panaro raise a possibility that the claim may be covered by the policy.
Having concluded that the extrinsic evidence in the form of Kalcheim’s deposition
testimony raised the possibility of coverage based on the bodily injury arising from her
emotional distress from the untrimmed foliage, we need not address Exchange’s assertion
that “because plaintiffs’ neighbors’ emotional distress and accompanying physical
manifestations flowed from noncovered intangible property losses, their distress is not
covered for this additional reason.”
Next, we determine whether the “bodily injury [was] neither expected nor
intended by the insured.” “[T]he phrase ‘neither expected nor intended’ focuses
coverage on unexpected or accidental injuries that are fortuitous and not planned or
intended. This concept of fortuity is basic to insurance law. [Citation.] Insurance
typically is designed to protect against contingent or unknown risks of harm (Ins. Code,
§§ 22, 250), not to protect against harm that is certain or expected. [Citation.] In other

17
words, such insurance generally protects against risks of loss rather than certainties of
loss.” (Waller, supra, 11 Cal.4th at pp. 16–17.) “[T]he terms ‘expected’ and ‘intended’
do not apply to ‘unexpected or accidental injuries that are fortuitous and not planned or
intended.’ [Citation.] Intent and expectation here are judged from the standpoint of the
insured, who must subjectively plan the injury or subjectively foresee the injury ‘as
practically certain.’ [Citations.] Thus, injuries that are planned or believed to be
substantially certain by the insured are ‘intended’ or ‘expected.’” (Zelda, Inc. v.
Northland Ins. Co. (1997) 56 Cal.App.4th 1252, 1261.)
Although the Kalcheim complaint alleged that Shelton “negligently” allowed the
trees and hedge to grow in violation of Title 22 of the Los Angeles County Code and the
CC&R’s, and the FAC alleged that plaintiffs acted “intentionally,” both the Kalcheim
complaint and the FAC alleged that plaintiffs “now consciously” maintain trees and a
hedge in excess of five feet and six feet, respectively, in violation of the CC&R’s.
Exchange contends that the FAC alleged that plaintiffs intentionally allowed the hedge
and trees to violate the Los Angeles County Code and the CC&R’s. It urges that “[t]he
events . . . may not be characterized as accidental . . . [because] plaintiffs refused to take
measures which reduced the height of their foliage so as to restore [Kalcheim’s] view,
improve the safety of the nearby intersection, and restore her driveway’s sightlines.”
According to Exchange, because plaintiffs’ refusal to trim the hedge and trees was
“obviously intentional conduct . . . [and] Kalcheim’s emotional distress was expected
after she advised plaintiffs of her daughter’s terminal illness and death . . . [p]laintiffs
therefore cannot satisfy the requirement of the insuring agreement that their conduct be
accidental.”
But extrinsic evidence shows that there is a triable issue of fact as to whether
plaintiffs intended or expected the bodily injuries asserted by Kalcheim. Shelton
declared that she did not foresee that her failure to trim her plants would cause emotional
distress and she did not intend to cause distress. In her recorded statement, Shelton stated
that neither Kalcheim nor others had ever asked her to cut, trim, or remove the hedge.

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And Shelton denied knowing if Kalcheim had ever approached her tenants. She declared
that the hedge and trees do not create a blind intersection, do not hinder Kalcheim’s and
George’s ingress and egress to their driveways, and the “CC&R’s are not applicable, for
they only potentially grant a view easement to adjacent properties.” In her recorded
statement, she also stated that she trimmed the trees every year, and had trimmed the
oleanders down to the fence line in July 2010 after receiving a demand letter on July 2,
2010. Accordingly, we conclude that whether plaintiffs intended or expected the bodily
injuries asserted by Kalcheim is a triable issue of material fact.
Exchange also contends that the intentional acts exclusion contained in the policy
barred coverage. The intentional acts exclusion stated in part, “We do not cover bodily
injury, personal injury or property damage: [¶] . . . [¶] 7. Arising from any
occurrence caused by an intentional act of any insured person where the results are
reasonably foreseeable.” But “[a] policy clause excluding intentional injury . . . is treated
as having the same meaning as the language in Insurance Code section 533, which
provides that an insurance company is not liable for a loss caused by a willful act of the
insured.” (Delgado v. Interinsurance Exchange of Automobile Club of Southern
California (2009) 47 Cal.4th 302, 313–314.) “The purpose of [Insurance Code] section
533 is to discourage willful torts. [Citation.] Indeed, section 533 ‘reflects a fundamental
public policy denying coverage for willful wrongs.’ [Citation.] Not all ‘intentional’ or
‘willful’ acts within the meaning of traditional tort principles fall within the purview of
the statute, however. In particular, a ‘wilful act’ within the meaning of section 533
means ‘“something more than the mere intentional doing of an act constituting [ordinary]
negligence,”’ and appears to be something more than the intentional violation of a statute.
For example, intentionally driving an automobile in excess of the statutory maximum
speed limit is not ‘wilful’ within the meaning of section 533. [Citation.]” (B & E
Convalescent Center v. State Compensation Ins. Fund (1992) 8 Cal.App.4th 78, 93–94,
italics omitted.) Accordingly, plaintiffs’ alleged violations of the Los Angeles County
Code and the CC&R’s, when considered with Shelton’s declaration and recorded

19
statement that she did not intend or expect to cause bodily injury, had never been asked
by Kalcheim or anyone else to trim the hedge and trees, and believed that the hedge and
trees did not obstruct her neighbors’ ingress and egress to their driveways or violate the
CC&R’s, persuade us that Exchange did not establish as a matter of law that this case
falls within the intentional injury exclusion of the policy or Insurance Code section 533.
We are not persuaded otherwise by Exchange’s citation to Fire Ins. Exchange v.
Superior Court (2010) 181 Cal.App.4th 388 for the proposition that “[w]here the insured
intended all of the acts that resulted in the victim’s injury, the event may not be deemed
an ‘accident’ merely because the insured did not intend to cause injury.” (Id. at p. 392.)
In that case, the court interpreted the term “accident” in the phrase “‘an accident
including exposure to conditions which results during the policy period in . . . property
damage.’” (Ibid.) It did not analyze, as we do here, a “sudden event . . . neither
expected nor intended by the insured.” (Italics added.)
We agree with plaintiffs’ argument that an insurer must defend a claim that would
be covered if true, even if the claim is in fact groundless. (Horace Mann Ins. Co. v.
Barbara B., supra, 4 Cal.4th at p. 1086.) Exchange states Kalcheim’s and Panaro’s
illnesses are “far-fetched”; even if true, plaintiffs are still entitled to a defense. In light of
our conclusion, we need not address plaintiffs’ additional argument that because intent
and negligence are not elements of a cause of action for private and public nuisance, the
FAC’s allegation of intentional acts on the part of plaintiffs were superfluous.
Finally, we deny Exchange’s request that, in the event we reverse the judgment,
we direct the trial court to enter an order summarily adjudicating plaintiffs’ bad faith
cause of action in Exchange’s favor. “On the insurer’s motion for summary judgment,
the insured’s bad faith claim stands or falls with the merits of [the insurer’s] duty to
defend. Clearly, the standard for bad faith imposes a heavy burden on the insured, and
often requires additional facts outside the insurer’s communications with the insured
regarding the claim.” (Allstate Ins. Co. v. Vavasour (1992) 797 F.Supp. 785, 789
[insurer’s motion for summary judgment on insured’s counterclaim for bad faith denied

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where insurer had duty to defend trespass; insured entitled to discovery on
counterclaim].) Exchange has failed to demonstrate in its terse and conclusory arguments
that a triable issue of material fact does not exist as to plaintiffs’ bad faith cause of action
and claim for punitive damages.
We reverse the judgment of the trial court.
DISPOSITION
The judgment is reversed. Shelton and Sherman are entitled to costs on appeal.

NOT TO BE PUBLISHED.

MALLANO, P. J.
We concur:

ROTHSCHILD, J.

JOHNSON, J.

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