LIBERTY SURPLUS INSURANCE v. LEDESMA AND MEYER CONSTRUCTIONAmicus Curiae Brief of United PolicyholdersCal.May 16, 2017SUPREME COURT | FILED No. 8236765 May 16 2017 ]IN THE SUPREMECOURT OF Jorge Navarrete Clerk THE STATE OF CALIFORNIA Deputy LIBERTY SURPLUS INSURANCECORPORATION,ET AL., Plaintiffs and Respondents, Vv. LEDESMA AND MEYER CONSTRUCTION COMPANY,INC., ET AL., Defendants and Appellants. After Order Certifying Question by the | U.S. Court of Appeals for the Ninth Circuit __ APPLICATIONOF UNITED POLICYHOLDERS FOR LEAVE _ TO FILE BRIEFAMICUS CURIAE INSUPPORTOF | APPELLANTS AND BRIEFAMICUS CURIAE . ; DAVID B. GOODWIN (No. 104469) dgoodwin@cov.com MICHAELS. GREENBERG(No. 99727) -mgreenberg@cov.com _ MARIENNA H. MURCH (No. 300551) mmurch@cov.com Covington & Burling LLP - One Front Street San Francisco, California 94111-5356 Telephone: 415.591.6000 Facsimile: 415.591.6091 AttorneysforAmicus Curiae— ——-=CEWED-— —ae United Policyholders . | Voy _ii SUPREMECOURT No. 8236765 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA LIBERTY SURPLUS INSURANCE CORPORATION,ETAL., Plaintiffs and Respondents, Vv. LEDESMA AND MEYER CONSTRUCTION COMPANY,INC., ETAL., Defendants and Appellants. After Order Certifying Question by the U.S. Court of Appeals for the Ninth Circuit APPLICATION OF UNITED POLICYHOLDERS FOR LEAVE TO FILE BRIEF AMICUS CURIAE IN SUPPORT OF APPELLANTS AND BRIEFAMICUS CURIAE DAVID B. GOODWIN(No. 104469) dgoodwin@cov.com MICHAEL S. GREENBERG(No. 99727) mgreenberg @cov.com MARIENNA H. MURCH(No. 300551) mmurch@cov.com Covington & Burling LLP One FrontStreet San Francisco, California 94111-5356 Telephone: 415.591.6000 Facsimile: 415.591.6091 Attorneysfor Amicus Curiae United Policyholders APPLICATION OF UNITED POLICYHOLDERS FOR LEAVE TO FILE BRIEF AMICUS CURIAE Pursuant to California Rules of Court, rule 8.520(f), proposed amicus, United Policyholders, hereby respectfully applies to this Court for leave to file the accompanying Brief of Amicus Curiae in Support of Defendants and Appellants Ledesma & Meyer Construction Company,Inc., et al. (“L&M”) in the above-captionedcase.' United Policyholders (“UP”) is a non-profit organization based in California that serves as a voice and information resource for insurance consumersin the 50 states. The organization is tax-exempt under Internal Revenue Code §501(c)(3). UP is funded by donations and grants and doesnotsell insurance or accept money from insurance companies. UP’s work is divided into three program areas: Roadmap to Recovery™(disaster recovery and claim help for victims of wildfires, floods, and other disasters); Roadmap to Preparedness (insurance and financial literacy and disaster preparedness); and Advocacy and Action (advancing pro-consumerlaws and public policy). UP hosts library of tips, sample forms andarticles on commercial and personallines insurance products, coverage and the claims processat www.uphelp.org. UP monitors the insurance sales, claims and law sectors, conducts surveys and hears from a diverse range of individual and business policyholders throughout California on a regular basis. The | Noparty or counsel for any party authored any portion ofthe brief. No party or counsel for any party made a monetary contribution intended to fund the preparation or submission of the brief. No person or entity other than the amicus curiae, its members and its counsel made a monetary contribution intended to fund the preparation or submission ofthe brief. (California Rules of Court, rule 8.520(f)(4).) organization interfaces with state regulators in its capacity asan official consumerrepresentative in the National Association of Insurance Commissioners. UP provides topical information to courts via the submission of amicus curiae briefs in cases involving insurance principles that matter to people and businesses. UP’s consumersurveys recently assisted this Court in Association of California Insurance Companies v. Jones (2017) 2 Cal.5th 376, and this Court has adopted UP’s arguments in TRB Investments, Inc. v. Fireman’s Fund Ins. Co. (2006) 40 Cal.4th 19 and Vandenberg v. Superior Court (1999) 21 Cal.4th 815. UP hasfiled amicus curiae briefs in nearly 400 cases throughout the United States. UP seeksto fulfill the “classic role of amicus curiae by assisting in a case of general public interest, supplementing the efforts of counsel, and drawing the court’s attention to law that escaped consideration.” (Miller-Wahl Co. v. Commissioner ofLabor & Indus. (9th Cir. 1982) 694 F.2d 203, 204.) This is an appropriate role for amicus curiae. As commentators have stressed, an amicus curiae is often in a superior position to “focus the court’s attention on the broad implications of various possible rulings.” (Robert L. Stern et al., Supreme Court Practice (6th ed. 1986) 570-571 (citation omitted).) UPis familiar with all the briefs that have been previously filed in this case. UP has experience with the legal issues of this case, and believes its experience in these issues will make its proposedbrief of assistance to this Court in deciding the importantcertified question on which the Ninth Circuit sought guidance from this Court. UP therefore respectfully requests leave to file the attached amicus curiae brief presenting additional authorities and discussion in support of Appellants’ arguments. DATE: May10, 2017 Respectfully submitted, COVINGTON & BURLING LLP DAVID B. GOODWIN MICHAEL S. GREENBERG MARIENNA H. MURCH Wad LibsoLr DAVID B. GOODWIN Attorneys for Amicus Curiae UNITED POLICYHOLDERS No. S236765 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA LIBERTY SURPLUS INSURANCE CORPORATION,ET AL., Plaintiffs and Respondents, V. LEDESMA AND MEYER CONSTRUCTION COMPANY,INC., ET AL., Defendants and Appellants. After Order Certifying Question by the U.S. Court of Appeals for the Ninth Circuit BRIEF AMICUS CURIAE OF UNITED POLICYHOLDERSIN SUPPORT OF APPELLANTS COVINGTON & BURLING LLP DAVID B. GOODWIN (No. 104469) dgoodwin@cov.com MICHAEL S. GREENBERG(No. 99727) mgreenberg @cov.com MARIENNA H. MURCH(No. 300551) mmurch@cov.com One FrontStreet San Francisco, California 94111-5356 Telephone: 415.591.6000 Facsimile: 415.591.6091 Attorneysfor Amicus Curiae United Policyholders TABLE OF CONTENTS INTRODUCTION....occccccecsccereeeeneseneeseecseessseeseseseeseassessisesseeonees 11 lL UH. THIS COURT ESTABLISHED THE DEFINITION OF “ACCIDENT” IN CGL POLICIES DECADES AGO, AND CONFIRMEDIN 2009 THAT THIS DEFINITIONIS INCORPORATED BY LAW INTO ALL CGLPOLICIES..... 16 A. An Accident Occurs Where Either The Act Of The Insured Or The Consequences Of The Insured’s Act Were Unintentional ......... cece ccceceeeeceeescsscecececeuucececscecseeceteceeseeneees 17 An Accident Must Be Evaluated From The Perspective Of The Insured, Not Another Actor .............:ccceseseeseeseeesseeeeees 19 Whether An Accident Occurred Turns On The Specific Conduct Of The Insured That Gave Rise To The Insured’s Underlying Liability... eeseeseessseeceeeeeserssesensseeseees 22 THE POLICY LANGUAGEAND THIS COURT’S PRIOR DECISIONS PRECLUDE LIBERTY’S LYNCHPIN ARGUMENTS 00... ceceecceccecsescesseeeseseceneaeesneesseseaeeeseesseseneaseeaaes 22 A. B. Neither The Insurance Policy’s Language Nor Existing Law Supports Liberty’s Attempt To Focus Solely On The “Immediate” Cause Of The Injury.............cccccccscesseeseeeeeees 22 1. Liberty’s One “Immediate” Cause Position Finds No Support In The Plain Language Of Its CGL Policy...23 2. Liberty’s “Immediate” Cause Position Is Inconsistent With This Court’s Prior Decisions As To What Is An “Accident” Or “‘Accidental’”...........cccccccscssscsssceeerseeeee 25 3. Liberty’s One “Immediate” Cause Position Contradicts This Court’s Concurrent Causation Rulings.............. 28 4. Liberty’s Reliance On “Trigger Of Coverage” Cases Undercuts [ts Position...cee eeeseeeeeeeeeeeeeceeneeeeene 30 This Court’s Prior Decisions Also Preclude A Rule That An “Accident” Cannot Occur When The Insured EngagedIn SomeSort Of Intentional Conduct...cccceccseeceeeseeeees 32 C. This Certified Question Provides An Opportunity For The Court To Confirm ThatIts Interpretation Of The Term “Accident”? GOVEENS..........cceeeeessreeceeseceeesecessateseseuneeeeeses 35 II. CGL POLICIES COVER AN EMPLOYER’S LIABILITY FOR NEGLIGENT HIRING, RETENTION AND SUPERVISION 40 A. This Court Has Repeatedly Held That Employers Vicariously Liable For An Employee’s Intentional Tort Are Entitled To CGL Coverage ou... ecccesscesessneeeesenecereneteeeesons 40 B. Since An Employer Has Coverage ForIts Vicarious Liability For An Employee’s Intentional Tort, It Necessarily Must Also Have Coverage For The Lesser Tort Of Negligent Hiring And Supervision ............ccseeseseeeeseeeeee 42 C. Cases Applying California Law Have Found Insurance Coverage For Negligent Supervision Claims...............04 45 CONCLUSION.......c cc ccccccescessneceseneseescneseneaeseeeaeeseessessesessseesaeeseseneeeaeens 46 TABLE OF AUTHORITIES Page(s) Cases AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807... cececsccsccceseeeeeeeceeeeeeeessecseenseeaeeseneesaeensaeras 37 Albert v. Mid-Century Ins. Co. (2015) 236 Cal.App.4th 1281 oeesseeeseeseereeeseeesesesnsesseegs 36 American States Ins. Co. v. Borbor by Borbor (9th Cir. 1987) 826 F.2d 888.0... eeceeeeceneeceteeteesseeseeseeeeaees 41, 46 Arenson vy. Nat. Automobile & Cas. Ins. Co. (1955) 45 Cal.2d 81 oo... ccccscesceecesssenessaceeeeeeseeenaetaeecesseeresaeesneaeenes 12 Brooks v. Metropolitan Life Ins. Co. (1945) 27 Cal.2d 305.0... ceeessccscccceeceeeeeeceecseeeeseesenesessaeeseeseseeeeasones 29 Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co. (1993) 14 CalApp.4th 1595 oececeeecesenecnecseessesseesenneveaeeees 46 Dart Indus., Inc. y. Liberty Mut. Ins. Co. (9th Cir. 1973) 484 F.2d 1295.eeecsssesceeseeereeeseerseveneeneeseneees 41 Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790 oo. cececeesesseessssseessesseseneeesseeeeaeenes 44 Delgadov. Interinsurance Exchange ofAutomobile Club ofSouthern California (2009) 47 Cal.4th 302 o.oo... ccccccccssecscssnceceeseseeteceteeeesseteeseeens passim Diaz v. Carcamo (2010) 51 Cal.4th 1148 oooceecesscecseesensessseeeaeeseeeseseneneee 44 Downey Venture v. LMI Ins. Co. (1998) 66 CalApp.4th 478cccceccseesseeesseeeessseeessecnesseesseeseeeate 4] Dyer v. Northbrook Property & Casualty Insurance Co. (1989) 210 Cal.App.3d 1540...eeeeeeeeeeeseetsseneeeneeeseees 36, 45 E.M.MLI. Inc. v. Zurich Am. Ins. Co. (2004) 32 Cal.4th 465 oo... ecceecescceeeeeeecessaeeeseeteceneseecseesseeeseeeseees 18 Va s i a a h E , o k t M e Fernelius v. Pierce (1943) 22 Cal.2d 226.00... cccccccssceeceeseceeeseceseeeesseeesceeeeeseaeeeaeenes 42, 43 Fireman’s Fund Ins. Co. v. National Bankfor Cooperatives (N.D. Cal. 1994) 849 F.Supp. 1347 occeeeceeceseseeeesseeseeeeeeneees 45 Geddes & Smith, Inc. v. St. Paul Mercury Indemnity Co. (1959) 51 Cal.2d 558.0.eecceeececeeeeseeceeeseeteneeeneeees 16, 31, 36, 37 Haynes v. Farmers Ins. Exch. (2004) 32 Cal.4th 1198 occeecseeesessaceeeaeeeeseeeeseeeeessaneseeseeeneees 24 Hinman v. Westinghouse Elec. Co. (1970) 2 Cal.3d 956... cecceseeseesceeseceeeceeaceceneeeeeeeessecesecesseeseeseneeraeens 40 Hoyem v. Manhattan Beach City SchoolDist. (1978) 22 Cal.3d 508.000... eecsecceseeeseeeeeceeeerseceseesnecesaeeeeeeaes 27, 28 Insurance Co. ofN. Am. v. Sam Harris Constr. (1978) 22 Cal.3d 409.0... ceccceeseseeeeeeesececesseeneeeeeeeeaeeeseaeensaeeneeee 18 Keating v. National UnionFire Ins. Co. (C.D.Cal. 1990) 754 F.Supp. 1431, rev’d on other grounds, 995 F.2d 154 (9th Cir. 1993) we.hesuecaaneaeeseeeees 41, 45 L.A. Checker Cab v. First Specialty Ins. Co. (2010) 184 Cal.App.4th 767 o0.....ccecesccsscecescceecseeeseeeeceneecseceaseeneees 15 Liberty Ins. Corp. v. L&M & Meyer Construction Co. (C.D. Cal., Jan. 23, 2013) 2013 WL 121439580ees 23,31 Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal4th 291 oooeeeeeeeeeeceeeeseeteeeseeesenees 11, 14, 41, 45 MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635 oo... cccccccesssecessetssececeaseseceneesseeessneeseaseesseenes 24 Melugin v. Zurich Canada (1996) 50 Cal.App.4th 658 occccesecesececeeereceeeeseseeeseesseeseeseaes 41 Merced Mut. Ins. Co. v. Mendez (1989) 213 CalApp.3d 41oecceeeeseeseeesetecseeaseessseeeeeeeaeeers 26, 31 Minkler v. Safeco Ins. Co. ofAmerica (2010) 49 Cal.4th 315 oooeceeeesseesseseeeeeeeeeeseeeseesseeseeeeaes passim -9- Montrose Chem. Corp. of Cal. v. Admiral Ins. Co. (1995) 10 Cal.4th 645 weeccecessecsseeescseeeetseeeeeessenseeseenes 31, 32 Nuffer v. Insurance Co. ofN. Am (1965) 236 Cal.App.2d 349...ec eescceceessssssssseessesssesseeseeeresseesseees Al Powerine Oil Co. v. Superior Court (2005) 37 Cal.4th 377 oo. ceeeesccesscceeceeseesssssseesseneesseseessseenseseseneaee 25 Quan v. Truck Ins. Exchange (1998) 67 CalApp.4th 583 ooo. ccccscsceeseeeeeseesseeneesseseressesseseneaes 20 Safeco Ins. Co. ofAm. vy. RobertS. (2001) 26 Cal.4th 758 oesee eecsseseeeeneeeeseeeseeseeneees 14, 19, 24, 44 State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008 occcessscssscseneesseesaeeeseeeesseeseeeees passim State Farm GeneralIns. Co. v. Frake (2011) 197 Cal.App.4th 568 oo... eeeeeecesssssssceeesessesseeseeesees 35, 36 State Farm Mutual Automobile Insurance Co.v. Partridge (1973) 10 Cal.3d 94...eeeeeeessceeeseesseeeetssssseessaeesees 28, 29, 30, 34 State v. Continental Ins. Co. (2012) 55 Cal.4th 186eeccceceescesseseeseneeeseeseeseeesreneenesseegs 25 Unigard Mut. Ins. Co. v. Spokane School Dist. (Wash. App. 1978) 579 P.2d 1015 weeecssesseeeeteeesteeeeeteesseeeeess 31 Westfield Ins. Co. v. TWT, Inc. (N.D. Cal. 1989) 723 F.Supp. 492 oo... eececceeeeeseseeseeeterseeees 45, 46 -10- INTRODUCTION California courts have long held thatliability insurance covers an employer’s vicariousliability not just for its employee’s negligence, but also for the employee’s intentional torts: “{NJeither [the statutory exclusion for willful injuries in] Insurance Code section 533 norrelated policy exclusions for intentionally caused injury or damage preclude a California insurer from indemnifying an employer held vicariously liable for an employee’s willful acts.” (Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 305 fn.9 (citing Arenson v. Nat. Automobile & Cas. Ins. Co. (1955) 45 Cal.2d 81, 83-84).) Thus, in countless decisions over the years, California courts have allowed employers to obtain insurance to cover their vicariousliabilities for the intentional, willful acts and torts of their employees under standard commercial or comprehensive general liability (““CGL”) insurance policies, which typically provide coverage for bodily injury or property damagecaused by an “accident.” The courts have ruled in favor of coverage even though the law ascribes the employee’s intentional tort to the vicariously liable employer. (1) Ignoring those cases—indeed, never mentioning them anywherein its brief—Respondents Liberty Surplus Insurance Corporation and Liberty Insurance Underwriters (“Liberty”) argue that this Court should reject coverage as a matter of law when an employer is found liable for a /esser tort than the employee’s willful misconduct: where the conduct for which the employeris held liable is not that of the employee but the employer’s own negligencein hiring, supervising or retaining its employee. Liberty says that a negligent supervision claim can never be an “accident” for purposes of CGL coverageif a negligently supervised employee committed an intentional act with the -[1- intent or expectation of causing harm. That has never beenthe rule in California and this Court should reject Liberty’s attempt to rewrite the CGLpolicies that Liberty and scores of other insurers have sold to California businesses and individual consumers. A fundamentalrule of California insurance law, enunciated in many decisions, including this Court’s latest discussion of the issue, is that an “accident” is viewedfrom the perspective of the insured who is seeking coverage, not from the perspective of someoneelse. Thus the starting point for determining whether an accident has taken place is the conductof the insured. If the insured did not intend the act that caused the injury, or did not intend the consequencesthat resulted from the act, the injury was caused “by accident”as that term is used in standard CGLpolicies, even if someone else may have acted willfully, with intent to harm. (See Delgado v. Interinsurance Exchange of Automobile Club ofSouthern California (2009) 47 Cal.4th 302, 311 (“Under California law, the word ‘accident’ in the coverage clause of a liability policy refers to the conduct of the insured for which liability is sought to be imposedonthe insured....This view is consistent with the purpose ofliability insurance.”) (citations omitted); see also Arenson, 45 Cal.2d at p. 84.) Thus, although the employee who committed a willful assault may notbe entitled to coverage underhis or her own CGLpolicy, the employer who boughtinsuranceto protectitself from its own negligence would have coverageforits liability for negligent supervision of that employee. California’s tort system is constructed on that basis. (2) Liberty not only seeks to deprive California employers of insurance coverage forthe torts of their employees,it also mounts full scale assault on this Court’s longstanding definition of “‘accident”—a definition that this Court held, just eight years ago, is incorporated by -12- law into every California CGL policy: “‘an unexpected, unforeseen, or undesigned happening or consequence from either a known or an unknown cause.’” (Delgado, 47 Cal.4th at 309, quoting Geddes & Smith, Inc. v. St. Paul Mercury Indemnity Co. (1959) 51 Cal.2d 558, 563-564.) Underthe express words ofthis definition, which has been the law in California for nearly 60 years, there is an accidentif either a “happening” (the eventor act) or a “consequence”(the result of the event or act) was unexpected, unforeseen or undesigned from the perspective of the insured. Liberty tries to read half of the Court’s definition (“consequence’’) out of the CGL policy, arguing that if the person whoinflicted the injury did so as the result of an intentional act, there can never be an “accident,” regardless of whether the consequenceof that conduct was unexpected or unforeseen bythe | insured. Liberty’s argument defies commonsense: it would eliminate insurance coverage for the accidental consequencesofa host of everydayintentionalacts, like driving well above the speed limit (not knowing that a car is about to pull out of a driveway with no time for the speedingdriver to stop) or striking a match (without knowing that there was a gas leak that will explode whenignited) or intentionally swinging a golf club (not knowing that someoneis standing right behind the golfer). Of course, an ordinary, layperson insured—the person from whoseperspective insurance policy languageis construed—would understand that the unexpected and unintended consequencesof these and countless other intentionalacts are “accidents.” Yet, if Liberty has its way, the Court would revolutionize insurance policies in California and deprive hundreds of thousands of -|3- California businesses and individuals of insurance coverage for what everyone—apart from Liberty—knowsfull well is an accident. (3) Liberty also argues that in determining whether an insured has CGL coverageforits liability arising from an injury to a third party, the Court can only consider the most immediate cause of the injury (here, the employee’s assault, even though that act was not by the insured/employer). It argues that any earlier-in-time contributing cause (e.g., the negligent supervision that allowed the assault to occur) is too “remote” or “attenuated” from the injury to serve as the source of insurance coverage. But Liberty’s insurance policy does not say that. It nowherelimits the term “accident”to the event that is the “immediate” cause of the third party’s injuries, and this Court “cannot read into the policy what [Liberty] has omitted” now that a claim has arisen. (Safeco Ins. Co. ofAm. v. Robert S. (2001) 26 Cal.4th 758, 763.) Moreover, adopting Liberty’s argument would require this Court to disavow decades of California insurance coverage jurisprudence holding that courts must determine whether an accident took place based on the range of causesthat are sufficiently connected to the injury “that the law is justified in imposing liability” on the insured. (Delgado, 47 Cal.4th at 315 (citation omitted).) L&M’s negligent hiring and supervision is the “cause”at issue here for which L&M was liable to the injured party, and is precisely the type of causethatthis Court has held sufficient to support CGL coverage. Remarkably, in making its arguments, Liberty says nothing about Lisa M.and the other vicariousliability cases; ignores Delgado’s direction to focus on the cause of the injury that wasthe basis for the insured’s tort liability; suggests that only one negligent supervision case found CGL coverage whenthere are many; invokes “trigger of -14- coverage”casesthat, in fact, are contrary to Liberty’s theory in this appeal; andrelied, in convincing the federal district court to supportits position, on L.A. Checker Cab v. First Specialty Ins. Co. (2010) 184 Cal.App.4th 767, which this Court had previously depublished.' (4) Inshort, Liberty’s position is not only inconsistent with the language ofits standard form CGL policy,it also effectively asks the Court to reject or disapprove at least four longstanding lines of cases emanating from this Court’s decisions: (1) those holding that an employer or other insured whodid not personally engage in the intentionally harmful act can have CGL coverageforthe intentionally harmful act of an employee; (2) those holding that there is an accident whenthere are either unintended happenings or unintended consequences;(3) those holding that whether something is an accident must be viewed from the perspective of the insured and the insured’s own conduct; and (4) those holding that insurance coverageis determined not by considering one so-called “immediate”(or closest in time) cause of the injury but by evaluating the causesthat serve as the basis for imposition ofliability on the insured. United Policyholders therefore asks this Court to answerthe Ninth Circuit’s certified question in the affirmative and reaffirm that there can be an “occurrence” under CGLpolicies that define “occurrence” to include an “accident” when an insured employer faces liability to third persons based on the employer’s negligent hiring, supervision or retention of an employee, even if the employee’s conduct wasanintentional tort. United Policyholdersalso asks the Court to resolve the confusion and conflicting decisions of the California Courts of Appeal as to whatis an “occurrence”or an ' Amicus United Policyholders, represented bythis firm, submitted the request for depublication that this Court granted. -15- “accident” by reaffirming its prior decisions adopting the Geddes/Delgado definition of “accident,” and clarifying that there is an ‘‘accident” when, from the perspective of the insured seeking CGL coverage for its ownliabilities, the “happening” (or conduct) or the “consequence”(or result) of the “happening” was unexpected, unforeseen, or undesigned. ARGUMENT I. THIS COURT ESTABLISHED THE DEFINITION OF “ACCIDENT” IN CGL POLICIES DECADES AGO, AND CONFIRMEDIN 2009 THAT THIS DEFINITIONIS INCORPORATED BY LAW INTO ALL CGL POLICIES CGLpolicies, like the Liberty policies at issue in this appeal, generally cover bodily injury and property damage “caused by an occurrence.” Such policies, as here, typically define “occurrence” as ‘an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” (ER 267-268, 289.) The key word is “accident,” which the policies do not define. But this Court definitively interpreted that term in the context of CGL policies nearly sixty years ago. In Geddes, 51 Cal.2d at pp. 563-564, the Court surveyed possible definitions of “accident” and, for purposes of CGL policies that cover “accidents,” adopted the following definition: “Accident, as a source and cause of damageto property, within the terms of an accidentpolicy, is an unexpected, unforeseen, or undesigned happening or consequencefrom either a known or an unknowncause.” This definition has stood the test of time. Just eight years ago, this Court reaffirmed that the quoted Geddes definitionis still the law of California, holding that this definition is incorporated by law intoall liability insurance policies covering “accidents” (at least where the policy does not define the term): -16- In the context of liability insurance, an accident is “an unexpected, unforeseen, or undesigned happening or consequence from either a knownor an unknowncause.” (Geddes & Smith, Inc. v. St. Paul Mercury Indemnity Co. (1959) 51 Cal.2d 558, 563-564 [334 P.2d 881] (Geddes); accord, Hogan v. Midland NationalIns. Co. (1970) 3 Cal.3d 553, 559 [91 Cal.Rptr. 153, 476 P.2d 825].) “This commonlaw construction of the term ‘accident’ becomes part of the policy and precludes any assertion that the term is ambiguous.” (Collin v. American Empire Ins. Co. (1994) 21 Cal.App.4th 787, 810 [26 Cal.Rptr.2d 391]; see Bartlome v. State Farm Fire & Casualty Co. (1989) 208 Cal.App.3d 1235, 1239 [256 Cal.Rptr. 719].) (Delgado, 47 Cal.4th at p. 308.) Thus, for purposes of the certified question that this Court agreed to decide, the Geddes/Delgado definition of “accident” shouldbe thestarting place. Specifically, under this Court’s precedent: (A) because the definition of “accident” is framed in the disjunctive, an “accident” takes placeif either the act or its consequences was unexpected, unforeseen, or undesigned; (B) whetherthe act or its consequences was unexpected, unforeseen, or undesigned is viewed from the perspective of the insured, not from that of a third party; and (C) the act or consequences that are relevant to whether an “accident” has taken place are those that form the basis for the imposition of liability on the insured, not the conduct for which a third party mightbe held liable. Liberty’s argument misunderstandsall three of theserules. A. An Accident Occurs Where Either The Act Of The Insured Or The Consequences Of The Insured’s Act Were Unintentional Underthe established definition of “‘accident”that is “part of the policy,” an accident has taken place if there was an unexpected, unforeseen, or undesigned “happening” or an unexpected, unforeseen, or undesigned “consequence” of a happening,even if the happening itself was intentional. (Delgado, 47 Cal4th at p. 308.) Liberty looks -|7- ~ only at the “happening” andnot the “consequences.” But the express wordsof the definition leave no room for an argumentthat both the happening and the consequence of the happening must be unexpected and unintended, nor do they leave room for an argumentthat only the “happening” (the event or act) is relevant to whether an “accident” occurred, as that would improperly read the “consequence”language out of the definition. (Cf. Insurance Co. ofN. Am. v. Sam Harris Constr. (1978) 22 Cal.3d 409, 411 (when an insurance policy provision is in the disjunctive, the Court applies the portion of the provision that supports coverage).) A “happening,” in lay terms (which is how insurancepolicies must be interpreted, see E.M.MLI. Inc. v. Zurich Am. Ins. Co. (2004) 32 Cal.4th 465, 471), is a broad term that simply meansan “an occurrence or event.” (Random HouseDict. of the English Language (1966),p. 644.) A “consequence,” again in lay terms,is the “effect, result or outcomeof something occurring earlier.” (Ud. at p. 312.) Because this Court has held that both prongs are part of the definition of “accident” and applyin the alternative—using “or”—a court must consider both prongsofthe definition. Using this appeal as an exampleto illustrate how the two prongs would apply, L&M’s negligent hiring, retention, and supervision of its employee Hecht was a “happening”; and Hecht’s molestation ofthe student was the unfortunate “consequence” of L&M’s negligent hiring, retention, and supervision of Hecht. Thus, under the Court’s longstanding definition of “accident,” as long as one prong of the definition—the “happening”or the “consequence”—was unexpected, unforeseen, or undesigned(e.g., if L&M negligently failed to supervise Hechtproperly, or if L&M acted negligently in hiring Hecht,orif the injury was unintended by L&M), those “happenings” or -18- “consequences” would comprise an “accident.” (See Safeco Ins. Co. of America v. Robert S., 26 Cal.4th at p. 765 (holding, with respect to a homeowner’s liability policy covering “accidents”: “Because the term ‘accident’ is more comprehensive than the term ‘negligence’ and thus includes negligence ..., Safeco’s homeowners policy promised coverage for liability resulting from the insured’s negligent acts.’’) (citation omitted).) In the underlying proceeding,the arbitration panel imposed liability on L&M solely for negligent hiring, retention, and supervision (4 AER 54), not for an intentional tort. Negligence is precisely the type of conductthat fits within this Court’s longstanding definition of ‘‘accident,” so L&M should have coverage. But even setting aside L&M’s negligent “acts” of hiring, retention, and supervision, the unintended and unforeseen “consequence”of thoseacts, i.e., Hecht’s misconduct, is also an “accident” because “accident” is viewed from the perspective of the insured, L&M,andthere is no evidence that L&M intended, or even expected, Hecht to commit an intentionaltort. As is discussed next, Liberty’s sole focus on the conduct of Hechtis inconsistent with established California law. B. An Accident Must Be Evaluated From The Perspective Of The Insured, Not Another Actor In Delgado, this Court followed decades of California precedent holding that whether an event or its consequencesare an “accident” must be evaluated from the perspective of the insured, not from the perspective of the injured victim or someotheractor in the chain of events that led to the injury. (Delgado, 47 Cal.4th at p. 311.) In Delgado,the insured, Reid, intentionally assaulted the victim, Delgado, intending to injure him. Delgadosettled with Reid, obtaining -19- an assignmentof Reid’s rights against Reid’s insurer. Delgado then sued Reid’s insurer, arguing that his claims against Reid were covered by Reid’s CGL policy because the injuries were an “accident”from his perspective as the victim, evenif there was no accident from the insured’s perspective. Rejecting that argument, this Court confirmed that the focusis on the insured’s conduct: | UnderCalifornia law, the word “accident”in the coverage Clauseof liability policy refers to the conduct of the insured for whichliability is sought to be imposed on the insured. (Quan v. Truck Ins. Exchange (1998) 67 Cal.App.4th 583, 596 [79 Cal.Rptr.2d 134]; Collin v. American Empire Ins. Co., supra, 21 Cal.App.4th at p. 804.) This view is consistent with the purpose ofliability insurance. Generally, liability insurance is a contract between the insured and the insurance company to provide the insured, in return for the payment of premiums,protection againstliability for risks that are within the scope of the policy’s coverage. (Ibid. (emphasis added).) In so holding, the Court rejected the argument that whetheran accidenttook placeis “to be determined from the perspective of the injured party independentofthe insured’s intention”(id. at p. 309 (emphasis added)), again confirming that CGL coverage must be determined from the insured’s perspective and intentions, not someoneelse’s perspective and intentions. (See also, e.g., Quan v. Truck Ins. Exchange (1998) 67 Cal.App.4th 583, 596 (“Under California law, the term [accident] refers to the nature ofthe insured’s conduct”) (citation omitted).) This Court again evaluated coverage based on the insured’s conduct in Minkler v. Safeco Ins. Co. ofAmerica (2010) 49 Cal.4th 315, which, like the present appeal, involved an insured’s liability for negligent supervision of another person who had committed an -20- intentional tort. The issue in Minkler was whether the exclusions in the insurance policy applied to every insured or just the insured seeking coverage.” The insurer—sensibly—did not even try to dispute that the conduct of the insured who faced negligent supervision liability was an accident, and this Court therefore did not address the issue, instead directing the reader to Delgado to determine the standard for whether an accident had taken place. (/d. at p. 322 & fn.3.) Thus, in its most recent decision in a case involving a claim of negligent supervision of someone who had committed an intentionaltort, this Court cited to Delgado, which heldthat the relevant conductis that of the insured whois seeking insurance coverage. In sum, in determining whether negligent hiring, retention, and supervision is an “accident,” the Court focuses on the perspective of the insured, here, L&M the employer, rather than on the non-insured Hecht’s perspective. Liberty’s arguments to the contrary cannot be squared with this Court’s precedent. 2 Minkler addressed a “‘severability clause,” which treated each insured underthe policyas if it had its own separate insurance policy whenapplying exclusionary languagebarring coverage for “an insured”or “the insured.” That distinctionis irrelevant to the “occurrence”definition in the Liberty policy, which doesnotuse the word “insured” in addressing whether an “accident” has taken place. In fact, in Delgado, the claimant arguedthat since prior versions of the definition of “occurrence” had included exclusionary language that barred coverage for bodily injury or property damage that was expected or intended from the standpoint of the insured, the current version of the “occurrence”definition should not be construed with the insured’s standpoint in mind—an argumentthat this Court had no trouble rejecting, based on long-standing California precedent assessing “accident” from the perspective of the insured. (Delgado, 47 Cal.4th at pp. 310-311.) -21- Cc. Whether An Accident Occurred Turns On The Specific Conduct Of The Insured That Gave Rise To The Insured’s Underlying Liability In determining whether an accidenthas taken place, the relevant conductof the insuredis the specific act or omission of the insured for which the injured party sought to hold the insured liable in the underlying tort case. It is worth quoting Delgado again: “Under California law, the word ‘accident’ in the coverage clause ofa liability policy refers to the conductofthe insuredfor which liability is sought to be imposed on the insured.” (Delgado, 49 Cal.4th at p. 311 (emphasis added).) In other words, if the basis for the insured’s liability to a third party is negligent hiring and supervision, a court must focus whether the negligent hiring and supervision was accidental. When,as here, the insured’s negligent hiring and supervision is the sole basis for the insured’s liability, the coverage question is relatively straightforward because that conducteasily fits within the definition of “accident”: the hiring and supervision wasa negligent “happening”(the insured did notintend tohire, retain and supervise Hecht in a way that allowed Hechtto assault a student), andit also led to an unexpected, unforeseen “consequence” from L&M’s perspective, i.e., Hecht’s tort. II. THE POLICY LANGUAGEAND THIS COURT’S PRIOR DECISIONS PRECLUDE LIBERTY’S LYNCHPIN ARGUMENTS A. Neither The Insurance Policy’s Language Nor Existing Law Supports Liberty’s Attempt To Focus Solely On The “Immediate” Cause Of The Injury Liberty argues that in determining whether the insured’s liability arose from an “accident,” a court must look only at the “immediate” (i.e., closest in time) cause of the injuries to the third party who sued -22- the insured, here, Hecht’s act of sexual molestation. Liberty contends that all other antecedent causesof the injuries are too “remote”(or “too attenuated” according to the district court’s summary judgment order that is on appealin the Ninth Circuit) to be relevant to insurance coverage. (E.g. RB, pp. 1, 2, 20; Liberty Ins. Corp. v. L&M & Meyer Construction Co. (C.D. Cal., Jan. 23, 2013) 2013 WL 12143958,at *3.)3 This argumentposits that in any given insurance coverage case, only one cause of injury, the “immediate” cause,is relevant to whether an accident took place, so courts should ignore other causes, even when they are the very acts or omissionsofthe insured that gaverise to the insured’s tort liability. The language of Liberty’s standard form CGL policy imposes no such requirement. And,to adopt Liberty’s “immediate cause” rule would require the Court to disavow its own prior rulings on the common law meaning of “accident,” whichthis Court has held are “‘part of the [CGL] policy’....” (Delgado, 47 Cal.4th at p. 308 (citation omitted).) 1. Liberty’s One “Immediate” Cause Position Finds No SupportIn The Plain Language OfIts CGLPolicy The insuring agreementat issue here, typical of most CGL policies, providesthat “(w]e will pay those sumsthat the insured becomeslegally obligated to pay as damages because of ‘bodily injury’ ... to which this insurance applies.” It goes on to state that “[t]his + Liberty alsotells the Court that the victim’s ““bodily injury’ was caused by Hecht’s molestation and rape, not L&M’s alleged negligent retention or supervision of Hecht.” (Respondent’s Answering Brief (“RB”), p. 2.) Liberty cites no authority for that remarkable statement and there is none. On the contrary, L&M washeldliable to the victim for her injuries, and substantial damages were awardedto the victim, based on a finding that negligent hiring, retention, and supervision were a cause of the victim’s injuries. (2 AER 54.) -23- insurance applies to ‘bodily injury’ ... only if: (1) “[t]he ‘bodily injury’ ... is caused by an ‘occurrence’that takes place in the ‘coverage territory.’” “Occurrence meansan accident, including continuousor repeated exposure to substantially the same general harmful conditions.” (Cert. Req., 834 F.3d at 1000, 1001 (ellipses in original).) Absentfrom the insuring agreement, from the definition of “occurrence,” from the Geddes/Delgado definition of “accident”that is incorporated into all CGL policies covering “accidents,” and indeed from any provision of the Liberty policy (or any other standard form CGLpolicy) is any reference, let alone the requisite conspicuous, plain and clear reference,to a restriction on coverage to the “immediate” or “closest in time” cause of the injuries. (See Haynes v. Farmers Ins. Exch. (2004) 32 Cal.4th 1198, 1204 (limitations on coverage must be “conspicuous,plain and clear” to be enforceable).) Nor does the CGL policy language anywhere suggest that “occurrence”is determined by reference to a single cause of the injuries. Rather, the CGLpolicy provides only that the bodily injuries must be “caused” by an occurrence, which, interpreted broadly in favor of coverage, as it must be (see MacKinnonv. Truck Ins. Exchange (2003) 31 Cal.4th 635, 648), includes the various causesofthe injury that led to the insured’s liability, not just the final cause. Liberty could have used languagelimiting its coverage obligationsto liability arising from one cause, or from the “immediate” cause of the injuries, but it did not. Having failed to do so, Liberty cannot ask the Court to rewrite its insurance policy now. (See Safeco Ins. Co. ofAm. v. Robert S., 26 Cal.4th at p. 764 (“courts are not to -24- insert [into an insurance policy] what has been omitted”) (citations omitted).)* 2. Liberty’s “Immediate” CausePosition Is Inconsistent With This Court’s Prior Decisions As To WhatIs An “Accident” Or “Accidental’’ If this Court were to adopt Liberty’s “immediate” cause position, the Court would also need to disavow keyaspects of at least two of its recent decisions. It should notdo so. First, in State of California vy. Allstate Ins. Co. (2009) 45 Cal.4th 1008, this Court held that the correct focus for determining CGL coverage is on any causeofthe injuries that givesrise to thetort liability of the insured seeking coverage, not necessarily the immediate cause Closest in time to the injury. This Court observed: “{T]he right to coverage in the third party liability insurance context draws on traditional tort concepts of fault, proximate cause and duty.” (dd.at p. 1031.) The Court then said that “the contractual scope of third party liability insurance coverage,as reflected in the policy language, dependsonthe tort law source of the insured’s liability,” and that “we look to whether a covered act or event subjected the insuredto liability for the disputed property damageor injury underthe law oftorts.” (Ibid.) Based on these principles, the Court held: 4 Amici Franciscan Friars of California, Inc. and Province of the Holy Name,Inc. correctly point out the absence of languagein the CGLpolicy supporting Liberty’s position. United Policyholders notes that an analysis of the CGL policy language would lead to a ruling in favor of coverage whether the Court relies on the cases from the early 1990s cited by those amici or under the somewhat broader standards for construing insurance policy language set forth in this Court’s more recent insurance coverage cases, such as State v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195-196 and Powerine Oil Co. v. Superior Court (2005) 37 Cal.4th 377, 390. -25- If the insured’s nonexcluded negligence “suffices, in itself, to render him fully liable for the resulting injuries” or property damage..., the insurer is obligated to indemnify the policyholder even if other, excluded causes contributed to the injury or property damage. ([bid. (citation omitted.)) In other words, courts must look to the multiple causes that, together, caused the injury for which the insured is liable, not just to one “immediate” cause of the injury. If one of those causes is covered, the insurance policy covers the claim. (/bid.) ‘Second, in Delgado, this Court again rejected the notion that in determining CGL coverage there can only be onerelevant cause of injury (like Liberty’s so-called “immediate” cause): Any given event, including an injury, is alwaysthe result of many causes.” (1 Dobbs, The Law of Torts (2001) § 171, p. 414.) For that reason, the law looks for purposes of causation analysis “to those causes which are so closely connected with the result and of such significance that the law is justified in imposing liability.” (Prosser & Keeton on Torts (Sth ed. 1984) § 41, p. 264.) (Delgado, 47 Cal.4th at p. 315.) Delgado also cited Merced Mut. Ins. Co. v. Mendez (1989) 213 Cal.App.3d 41, 50 for the proposition that “an ‘accident’ exists when any aspect in the causal series of events leading to the injury or damage wasunintendedbythe insured.” (/bid. (emphasis added).) Thus, in several parts of the Delgado opinion,this Court instructed the lower courts to look to the “causes” (using the plural) and “any aspectin the causal series of events”(again using the plural “events”) that provide a basis for tort law to imposeliability on the insured. Consistent with the statements quoted above, the Court also ruled in Delgadothat in deciding which of the many possible causes of an injury could be relevant to CGL coveragefor a particular insured, the courts should focus on those causes that involve the insured’s 26- conduct (not someoneelse’s conduct) and,in particular, the specific conductof the insured that gives rise to the insured’s liability: UnderCalifornia law, the word “accident” in the coverage clauseofa liability policy refers to the conduct of the insured for whichliability is sought to be imposed on the insured. (Id. at p. 311.) Hammering homethis point, this Court added: Here, Delgado’s complaint alleges acts of wrongdoing by the insured against him. Thoseare the acts that must be considered the starting point of the causal series of events, .... The term “accident” in the policy’s coverage clauserefers to the injury-producing acts of the insured, not those of the injured party.... (Id. at p. 315 (emphasis added).) The wrongful acts that were asserted against L&M were the negligenthiring, retention, and supervision of Hecht; and Hecht’s own jater misconduct did not sever the causal chain under which L&M was liable in tort for its own acts since the arbitration panel awarded damagesagainst L&M based on L&M’s own conduct. (4 AER 54.) That award is consistent with this Court’s ruling in Hoyem v. Manhattan Beach City School Dist. (1978) 22 Cal.3d 508 regarding liability for negligent supervision. In that case, the Court held that whena school was suedforinjuries to a student allegedly caused by the school’s negligent supervision, the subsequent wrongful conduct of a third party (the immediate cause of the injury) was not a “superseding cause” that rendered the school’s negligent supervision irrelevant or insufficient to be a basis for imposingliability on the school: “The fact that another student’s misconduct was the immediate precipitating cause of the injury does not compel a conclusion that negligent supervision was not the proximate cause of Michael’s death. Neither the mere involvementofa third party northat party’s wrongful conduct is sufficient in itself to absolve the defendants of liability, once a -27- O N O U A N I i n g p 6 8 r e P L O R R oy negligentfailure to provide adequate supervision is shown.” (Id. at p. 521 (emphasis added; footnote and citations omitted.) While Hoyem was not an insurance case, it confirms that negligent supervision can be a relevant cause ofinjury, evenif the chain of events might include subsequent wrongful conduct by someoneelse. Likewisein this case, the “starting point” for evaluating whether the cause of the injuries to the student was an accident must bethe acts of L&M for which L&M wasalleged to be liablein tort, i.e., its negligent hiring, supervision and retention of Hecht. As discussed above, even Liberty does not appear to dispute that this conduct was an “accident” underits policy. In sum, neither Al/state nor Delgado nor any other decision of this Court holds that whether the “accident” took place is determined solely by reference to the one “immediate” cause of the injuries, particularly when that cause is notthe one that resulted in the imposition oftort liability on the insured. And these cases certainly do not hold that the insured’s negligent hiring, retention and supervision of an employee who commitsanintentional tort is too “attenuated” from the injuries to constitute the basis for finding an accidentas to the insured. Onthe contrary, Allstate and Delgadodictate that if the law imposesliability on the insured for a particular act or omissionin the causative chain of events culminating in injury to a third party, that act or omissionis a cause relevant to insurance coverage. 3. Liberty’s One “Immediate” Cause Position Contradicts This Court’s Concurrent Causation Rulings Liberty’s attempt to focus on one causeof the injury to the exclusion ofall other causes contravenesyet anotherline ofthis Court’s cases. In State Farm Mutual Automobile Insurance Co.v. -28- Partridge (1973) 10 Cal.3d 94, reaffirmed in Allstate, 45 Cal.4th at p. 1029, this Court held that CGL policies provide coverage when a covered cause and a noncovered cause combine to produce injury. In so holding, the Court recognized that any given injury may bethe result of multiple causes andthat all contributing proximate causes, notjust the most “immediate” cause, must serve as the basis for determining whether coverage exists under a CGL policy. Liberty contendsthat this Court’s “concurrent cause”rule does not apply to the negligenthiring, retention and supervision claim against L&M because,in Liberty’s view, the rule applies only when the two causes are wholly independentof each other: “Withoutthe alleged intentional sexual assaults by Hecht, there is no injury, and thus no independentliability for L&M’s alleged negligence.” (RB p. 34.) But as explained in L&M_’s reply brief, this Court did not hold in Allstate or Partridge, or in any othercase, that the “concurrent cause” rule applies only when multiple causes are completely independent. Indeed, in Partridge itself the injury was not the result of two wholly independent causes, each of which alone would have caused the injury andliability. The Partridge insured’s act of filing a gun downto a hairtrigger would not alone haveled to liability since the insured would not have shot the victim but for combinationof the hair trigger and negligent driving; and the Partridge insured’s act of driving negligently would not alone have caused the victim’s injury since the gun would not have fired exceptfor the earlier filing of the hair trigger. The two acts in combination caused the injury. Thus, when two “risks constitute concurrent proximate causesof an accident, the insureris liable so long as oneof the causes is covered by the policy.” (Partridge, 10 Cal.3d at p. 102; see also Brooks v. Metropolitan Life Ins. Co. (1945) 27 Cal.2d 305, 309-310 (if an accident was a proximate causeof aninjury, the -29- policy provides coverage even though an excluded cause wasalso in the chain of events).) Likewise, in Allstate, the insurance policies covered liability for property damage caused byan accident, but not property damage caused by a non-accidentalrelease of pollutants. The question was whether coverage exists for “property damage caused bya set of pollutant discharges, some sudden andaccidental, and some gradual or nonaccidental.” (45 Cal.4th at p. 1030.) This Court applied the rule from Partridge: there is coverage “wheneveran insured risk constitutes a proximate cause of an accident, even if an excludedrisk is a concurrent proximate cause.” (Jd. at pp. 1029, 1032.) The insured would have beenfully liable for the damage based on the sudden and accidental releases (just as L&M wasfully liable based on its own negligence), and coverage wasnotbarred bythe fact that non- accidental, and thus not covered releases, also were causesof the property damage. Similarly here, the injury to the student occurred as the result of the combination of L&M’s negligence in hiring, retaining and supervising Hecht and Hecht’s intentional act. Hecht’s intentional act against the student would not have happened without L&M’s negligence, which allowed Hecht to committhe intentionaltort. Of the two causes, L&M washeldfully liable on the basis of its own negligence (2 AER 54), and that negligence fits squarely within the definition of “accident.” 4. Liberty’s Reliance On “Trigger Of Coverage” Cases Undercuts Its Position Liberty also invokes the federal district court opinion in this case to supportits argumentthat only the last, “immediate” cause in the chain of events is relevant to whether an accidenthas taken place. (RB, -30- pp. 14-15, 35-41; Liberty Ins. Corp. v. Ledesma & Meyer Construction Co., supra, 2013 WL 12143958, at *3.) But the district court misunderstoodthe issue. All but one of the cases on whichthe district court relied concerned the “trigger of coverage,”that is, under the specific terms of the policy what “must happen in the policy period in order for the potential of coverage to arise.” (Montrose Chem. Corp. of Cal. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 655 fn.2 (emphasis in original).)° The casesthe district court cited were weighing into a debate in the California courts concerning whether, under CGL policies covering injuries during the policy period, the “trigger” was a “wrongful act” during the policy period that subsequently led to bodily injury or property damageafter the policy period, or the occurrence of bodily injury or property damage during the policy period. (/d.atpp. 669-670.) The California courts eventually came to a consensusthat, for purposes of “trigger” (or timing), the injury—andnotthe events or acts that caused the injury—wasthe “trigger of coverage” underthe language of standard form CGLpolicies. ([bid.) Those courts were not addressing the issue here: what (not when) is an “accident” when the term “accident” (according to Geddes and Delgado) includes both the insured’s acts and the consequencesof those acts, so applying the “trigger” rule to the meaning of the term “accident” as Liberty proposes would, again, require the Court to disavow Geddes and Delgado. Critically, under the rule adoptedin the “trigger” cases, the wrongful acts of the insured (or of anyoneelse, for that matter) are not > The other case the district court cited, Merced Mut.Ins. Co. v. Mendez (1989) 213 Cal.App.3d 41, in turn relied on a Washingtonstate court decision that found coverage for the negligent supervision of a student who had committed an intentional tort. (See Unigard Mut. Ins. Co. v. Spokane School Dist. (Wash. App. 1978) 579 P.2d 1015.) -31- relevantat all; the “trigger” depends solely on the timing of the claimant’s resulting bodily injury or property damage. (/bid.) Thus,if the reasoning of the trigger cases on whichthe district court and Liberty rely were to govern, Liberty would be seeking ruling that the “accident” requirement should be measured from the perspective of the victim—the very position that this Court rejected in Delgado, 47 Cal.4th at p. 311. B. This Court’s Prior Decisions Also Preclude A Rule That An “Accident” Cannot Occur When The Insured Engaged In SomeSort Of Intentional Conduct That the insured’s conduct was intentional in the sense that the insured intendedto do anact(e.g., hire or supervise an employee, manufacture a product, send a contaminantto a waste disposalsite)is not, in and ofitself sufficient for a court to hold as a matter of law that there was no accident.® Many cases have found coverage under “accident” policies for negligent hiring, retaining or supervision of another, even though,as here, the hiring, retaining and supervision 6 For example, in State of California v. Allstate Ins. Co., 45 Cal.4th at p. 1025, this Court held that even though the insured had intentionally released contaminants into the environment, causing damage, that release can be “accidental” because it was doneat the direction of state authorities to prevent potentially worse damage. While the context of this ruling in Allstate is different from the issue here—it involved the “accidental” requirementin the exception to the standard form pre-1985 pollution exclusion rather than the “accident” requirementin the “occurrence” definition—the Court recognized that an act that is intentionally performed, even onethat wasintentionally performed knowingthat it would cause someharm,can nonetheless be considered accidental. The point is that determining whether something is an accident requires more than looking at whether the insured acted intentionally; it also involves consideration of surrounding factors, such as whythe act was done, with what knowledge of its potential consequences, and with whatintentions. (See also cases cited in Section If infra.) -32- were, in a sense, intentional acts. (See Section II] infra.) That is because a rule focusing solely on whetherthe actitself was intentionally done would run afoul of the second prong of the definition of “accident”: there is an accidentif either the “happening”(e.g., the act) was unintentional or the “consequence”of the happeningor act was unintended when the act was done. (Delgado, 47 Cal.4th at p. 308.) In other words, the unintended consequenceof an intentionalact can be an accident underthis Court’s longstanding precedent. A few examples highlight the importance of the “consequence” language in protecting the reasonable expectations of hundreds of thousands of California businesses and individual insureds. e An insured lights a cigarette and throws the match on the ground, not knowing there was gasoline on the ground. The gasoline ignites, causing damage to an adjacent building. Under Liberty’s (and the federal district court’s) proffered rule, that would not be an accident, and the insured would have no coverage, becausethe insured intendedto light the cigarette and toss the match on the ground. There were no additional acts after the intentional tossing of the match. But any reasonable layperson insured would believe the explosion andfire were caused by an accident, and would expect insured’s the CGL policy to provide coverage, because the consequenceof the intended act was unintended. e Theinsured intends to swing a golf club, not realizing that someoneis standing close behind him,andthe golf club hits that person. Under Liberty’s rule, the insured intended to perform the act that was the immediate cause of the injuries, and the insured would have expected the -33- golf club to hit anyone whowasin the way, so there would be no coverage. Butthat is the classic example of an accident because, even though the act wasintentional, the consequencesofit were not. e A disgruntled chef decides to get back at the restaurant that employs him bydeliberately putting laxative in the soup, knowingthat this would upset the stomachs of the restaurant patrons. Of course, the restaurant would expect CGL coverageto apply if the patrons were to sue the restaurant owner for negligent supervision or for the restaurant’s vicariousliability. e Ortake Partridge itself, where the insured intentionally filed his gun downto a hair trigger and that act was a proximate cause of the injury. Yet this Court referred to the occurrenceof an “accident” 65 timesin its opinion becausethat is the natural, lay understanding of “accident.” These examples highlight why this Court was correctfifty-eight years ago, and wasagaincorrect eight years ago,in establishing and confirming that the meaning of “accident” in CGL policies encompasses not only happenings or acts of the insuredthatare unintended but also the unexpected, unintended consequences, or results, of intentional conduct. The Court should reject Liberty’s invitation to read the “consequences” language out of the CGL policy’s coverage for “accidents.” -34- C. This Certified Question Provides An Opportunity For The Court To Confirm That Its Interpretation Of The Term “Accident” Governs Asis reflected in the parties’ briefing, a number of Court of Appeal decisions, some from the 1980s and early 1990s, principally in the context of a claim for CGL coverage for the no-longer-recognized tort of wrongful termination, and again more recently after this Court issued its decision in Delgado, have misunderstood and misapplied this Court’s definition of “accident.” Those courts held that in determining whether an accidenttook place, the sole inquiry is whether the “happening”—i.e., the act that caused the injury—wasan intentional act by someone.If it was, they find no coverage, regardless of whether that act was committed by the insured seeking coverage, regardless of whether the insured intended to cause any harm,and regardless of whether the consequencesof the act were unexpected, unforeseen, or undesigned by the insured. This case provides the opportunity to bring this area of law backinto line with the reasonable expectations of insureds and this Court’s prior decisions, including Delgado, and to eliminate the current state of confusion about whatis or is not an “accident.” State Farm General Ins. Co. v. Frake (2011) 197 Cal.App.4th 568 is an example of a Court of Appeal that misunderstood Delgado and the definition of “accident.” There, some college students were horsing around whenone of them,the insured, threw “his arm out to — the side, where King wasstanding, and struck King in the groin.” (/d. at p. 572.) The testimony in the underlying tort case wasthat the insured did not intend in that instance to hit his friend in the groin, and did not intend to hurt him atall, but unfortunately he did. (Jd. at p. 573.) The jury in the tort action imposedliability solely on the basis of -35- negligent conduct. (/d. at p. 575.) In layperson terms, the injuries were caused by an accident, the insured’s negligent act. But the Court of Appeal held that there was no coverage because,in its view, “the term ‘accident’ does not apply to an act’s consequences, but instead applies to the act itself.” (/d. at p. 579 (emphasis added).) That court thus expressly read the “consequences” language outof the “accident” definition, notwithstanding this Court’s rulings in Geddes and Delgado. Another example is Albert v. Mid-Century Ins. Co. (2015) 236 Cal.App.4th 1281. In that case, the Los Angeles Fire Department directed a homeownerto clear the area around a small groveofolive trees on the property line with her neighbor. Believing the trees to be on her property, and that she was obligated to trim them to maintain safety, she did so year-after-year without complaint from her neighbor, and withoutthe neighbor’s claiming ownership of the trees. However, the neighborat somepointfiled suit, asserting that he ownedthetrees and that the insured homeowner had damaged them. (ld. at p. 1286.) The Court of Appeal concludedthat there was no “accident” because the physical act of trimming the trees wasintentional. Citing Frake, the court said: “The term ‘accident’ refers to the nature of the insured’s conduct, and notto its unintended consequences.” (Id. at p. 1291 (emphasis added).) In other words, the court acknowledged that the injury involved an unintended consequence,a key partof this Court’s definition of “accident.” But the court still found no accident, based on its view that an intentional act can never be an accidentunlessthere is a subsequent unintended “happening”(ibid.), which contradicts this Court’s ruling that either the happening or the consequence(the result) of the happening can be unintended. Or in Dyer v. Northbrook Property & Casualty Insurance Co. (1989) 210 Cal.App.3d 1540, 1547-1548, the Court of Appeal held that -36- an accident cannot occur whenaninsured intends to terminate an employee even if the employee then suffers severe emotionaldistress, whichthe insured did not expect to occur. The Court of Appeal acknowledgedthat this Court had defined “accident”to include either an unintentional act or unexpected consequencesof an intentionalact, but decided, for no valid reason,that the latter prong of the definition was limited to products liability cases. There are other similar examples but these three suffice to show that some courts have stripped from the definition of “accident” the concept of unintended “consequences.” Yet, in Delgado, this Court expressly reaffirmed, and imposed on every CGLpolicy, the Geddes definition that covers both unintended happenings and unintended consequences. (Delgado, 47 Cal.4th at p. 308.) So how did these lower courts erroneously conclude that Delgado and Geddesjettisoned the consequences prongofthe definition? They appear to have misconstrued certain other statements in Delgado by taking them outof context.’ In Delgado, the insured deliberately assaulted the victim, intending to cause injury. That, on its face, would not be an accident because both the act and the consequence were intended. Thus, in an effort to obtain coverage, the victim—-who was the person seeking 7 In the wrongful termination context, it appears that the lower courts were attempting to protect CGL insurers against liability for damagesthat might have been awarded in what then appeared to be a rapidly expanding tort of wrongful termination, which did not exist when the CGLpolicies were drafted (and which this Court then curtailed). As this Court subsequently held, however, CGLpolicies coverliabilities that fall within the policy language evenif the liabilities had not been created when the policies were drafted. (See AlU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822 fn.8.) -37- S A Q A D E coverage (standing in the shoes of the insured) because he had been assigned the insured’s rights against the insurance company—argued that the insured’s unreasonable belief in the need for self-defense, transformed the insured’s intentional act, committed with intentto harm, into an accident.’ The victim also argued that “accident” should be viewed from his perspective rather than thatof the insured. This Court rejected the victim’s argument, explaining that when the insured intended the act and the consequent harm,the victim’s earlier conduct (which supposedly led to the unreasonable belief in the need for the insured to defend himself) cannot save the day. In the course of focusing the inquiry on the acts of the insured rather than the acts of the victim, the Court stated: ““Under California law, the word ‘accident’ in the coverage clause ofa liability policy refers to the conductof the insured for which liability is sought to be imposed on the insured”(id. at p. 311), and “[t]he term ‘accident’ in the policy’s coverage clause refers to the injury-producing acts of the insured, not those of the injured party.” (/d. at p. 315.) Unfortunately, certain courts attempting to follow Delgado have erroneously focused on the Court’s references to “conduct” and “injury-producing acts,” mistakenly concluding that whether something is an accident depends only on whether any person’s act was intentional, trumping the “consequences” prongof this Court’s definition of ‘‘accident.” Those courts did not appreciate that the purpose of the Court’s statements, which the Court tied to “the 8 The Court did not decide whether an intentional assault might be an accidentif the insured had a reasonable belief in the need forself- defense. Finding that to be an accident would be consistent with this Court’s decision in Allstate that intentional releases of pollutants could be accidental where they were committed with a salutary purpose of avoiding worse harm. -38- insured,” was to focus the inquiry on the insured’s conduct and intentions, rather than on the victim’s. Read in context, then, these and other statements in Delgado were simply rejecting the argumentthat the victim’s earlier acts are relevant to whether an accident took place, and directing courts to focus instead on the acts “of the insured.” Thus, said Delgado, the “starting point” for determining whetherthere is an accidentis the acts of the insured for which the insuredis liable under tort law. (/d. at p. 315.) It cannot be the case that Delgado eliminatedthe critical “consequences” prong of the “accident”definition sub silentio while reaffirming that definition in its entirety elsewhere in that very same decision, and holding that the two-prong definition is incorporated by law into every CGL policy. In fact, the Court did not need to address the “consequences” prong in Delgado because there was no dispute that the insured intended the consequences(the injury) of his intentional assault.’ The Court should clarify that both the “happening” and “consequence” prongsof the accident definition muststill be considered, and, in so doing, instruct lower courts to focus on the happenings and the consequencesof the happeningsthat are closely ° In addition, in Delgado the act of the insured for which he was held liable, and for which coverage was soughtby the victim standing in his shoes, was the immediate cause of the injury. So the Court did not even have occasion to rule that the focus is only on the immediate cause, or on the conduct of the person committing the assault or other intentional tort even when the insured’s liability is based on a different tort, 7.e., its own negligent conduct. Thus, Delgado cannot be viewed as calling into question the manydecisions finding coverage for insureds who are vicariously liable for someoneelse’s intentionaltort, or directly liable for something other than the intentionaltort. -39- enoughrelated to the injury that the law mayor has imposedtort liability on the insured. Ill. CGL POLICIES COVER AN EMPLOYER’S LIABILITY FOR NEGLIGENT HIRING, RETENTION AND SUPERVISION A. This Court Has Repeatedly Held That Employers Vicariously Liable For An Employee’s Intentional Tort Are Entitled To CGL Coverage Underlying the question that the Ninth Circuit certified to this Court is a fundamental issue for California businesses and individual consumers whofaceliability for the acts of others, that is, whether CGLpolicies cover claims against an employer or other principal for negligent supervision of its employees or agents. This issue is far from novel, however. Nearly fifty years ago, this Court explained that California imposesliability on an employerfor the torts of its employees because the employer “is better able to absorb [losses caused by an employee’s torts], and to distribute them, through prices, rates or liability insurance, to the public, and so to shift them to society, to the community at large.” (Hinman v. Westinghouse Elec. Co. (1970) 2 Cal.3d 956, 960 (quoting Prosser, Law of Torts (3d ed. 1964), p. 471) (emphasis added).) In a long line of cases, starting with Hinman, this Court and many Courts of Appeal repeatedly held that an employer that is vicariously liable for the acts of its employeesis entitled to insurance coverageforthatliability under its own CGL policy. Indeed, the rationale for imposing vicarious liability was, in part, that the employer is better able to absorb and spread the losses, including through the purchase of insurance covering such liability. This Court also held that liability insurance will cover an employer’s vicariousliability not just for an employee’s negligence but -40- also for an employee’s intentional torts. As this Court said, “neither [the statutory exclusion for willful injuries in] Insurance Code section 533 nor related policy exclusions for intentionally caused injury or damagepreclude a California insurer from indemnifying an employer held vicariously liable for an employee’s willful acts.” (Lisa M.v. Henry Mayo Newhall Memorial Hospital, 12 Cal.4th at p. 305 fn.9 (citing Fireman’s Fund Ins. Co. v. City of Turlock, 170 Cal.App.3d at pp. 1000-1001 and Arenson v. Nat. Automobile & Cas. Ins. Co., 45 Cal.2d at pp. 83-84).)!° 10 See also, e.g., Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 513 (“Where a principalis heldvicariously liable for an agent’s act of malicious prosecution, section 533 poses no obstacle to indemnifying the principal”); Melugin v. Zurich Canada (1996) 50 Cal.App.4th 658, 666 (“section 533 would not necessarily bar coverage to Canada Life for its ownstrict liability as a result of [its employee] Melugin’s wrongful acts”); Keating v. National Union Fire Ins. Co. (C.D.Cal. 1990) 754 F.Supp. 1431, 1440, rev’d on other grounds, 995 F.2d 154 (9th Cir. 1993) (finding negligent supervision of employees who made false statements to investors can be a covered “occurrence” and not barred by section 533) (applying California law); American States Ins. Co. v. Borbor by Borbor (9th Cir. 1987) 826 F.2d 888, 894 (section 533 bars insurer from indemnifyingfirst partner who committed willful acts, but not second partner, who wasvicariously liable for those acts); Dart Indus., Inc. v. Liberty Mut. Ins. Co. (9th Cir. 1973) 484 F.2d 1295, 1297 (“[T]here is also a public policy and established business practice to permit persons including corporation to purchase insurance to indemnify them against damages which might be imposedfor not only tortious acts of agents or employees, but also willful acts of the agents or employees, for which vicariousliability may be imposed....[Absent a] showing that the corporation by some form of informal action had indicated prior approval or later acquiescence, section 533 did not constitute a legal defense.”) (applying California law); Nuffer v. Insurance Co. ofN. Am (1965) 236 Cal.App.2d 349, 356 (“The general rule codified in Insurance Code section 533 specifically does not foreclose recovery by an insured upon a fire insurance policy for a loss caused by arson of the insured’s agent, and the courts of many jurisdictions... have asserted as a general rule -4]- It thus is long settled in this State that an insured employer vicariously liable for the intentionaltort of its employee (including sexual assault, battery, etc.) can recover insurance benefits even though the only tort or conduct, i.e., the only “happening” underlying the employer’s liability. is the employee’s intentionaltort.'! B. Since An Employer Has Coverage ForIts Vicarious Liability For An Employee’s Intentional Tort, It Necessarily Must Also Have Coverage For The Lesser Tort Of Negligent Hiring And Supervision The present appeal concerns not the employer’s vicarious liability for an intentionaltort but its liability for somethingfar less: the employer’s ownnegligent hiring, retention or supervision of an employee who mightpresenta risk of harm to third parties. Nearly seventy-five years ago, in Fernelius v. Pierce (1943) 22 .Cal.2d 226, this Court explained the difference between the twotorts. Fernelius concerned whether, and on whatbasis, public officials in Oakland who supervisedpolice officer employees of the City could be liable for assaults that the police officers had committed. This Court first explained the basis for vicariousliability: Underthe rule of respondeat superior, as ordinarily understood, the master is held liable for the torts of his servants committed within the course of their employment.In the typical case the neglect is only that of the servant; the master is himself without fault. But because the servant is engaged in the master’s work and the right of such an insured to recoverfor such a loss.”’). '! Liberty tells the Court that sexualassault is “‘necessarily nonaccidental.’” (RB, p. 18 (citation omitted.)) Whetherthat is correct from the perspective of Hecht, the employee who committed the intentionaltort, is not the issue before this Court, however. The issue instead is whether Hecht’s conduct wasaccidental from the perspective of the insured—his employer, L&M—whichwasheld liable to pay damagesto the victim of the assault solely on a negligenthiring, retention and supervision theory. -42- is doing it in place of, or for, the master, the act of the servant is regarded as the act of the master. Responsibility devolves up throughtherelationship to the master and the question of proximate cause of the injury relates only to the act (or neglect) of the servant. (Id. at p. 233.) In other words, there is no “act” of the employer on which to base liability, so the law holds the employerliable only because “the act of the servant [the employee’s intentionaltort] is regardedas the act of the master [employer].” The Court then explained the difference between vicarious liability and liability based on the negligent acts of the supervisor that allowed the employee to cause the injury: In the case now presented byplaintiffs, however, we have a basically different factual pattern. The neglect charged here [against supervisory officials of Oakland] was not that of the subordinate [police] officers; they did what was reasonably to be expected of them in view oftheir knownpropensities. The neglect that is pleadedis that of the defendants themselves. The legalfault charged here as the groundofliability is directly and personally that of the superiorofficers (the defendants) ... and the question of proximate cause of the injury relates directly to the neglect of the defendants [the supervising officials]. (Id. at pp. 233-234 (emphasis added).) In other words, in a negligent supervision case, the focus is on the conduct of the employer—notthe conduct of the employee who committedthe intentionaltort. This Court reaffirmed the distinction between these twotorts in recent cases. For example, in Minkler, this Court acknowledged that an insured is sometimesliable vicariously for the intentional acts of those it supervises, but the insured also maybeliable, and reasonably expect insurance coverage,for direct liability based on the separate tort of negligence: | Safeco suggests Betty could not reasonably expect coveragefor “parasitic” claims against her arising from -43- David’s intentional acts. But this is not a situation where the only tort was the intentional act of one insured, and wheretheliability of a second insured, who claims coverage, is merely vicarious or derivative. On the contrary, Scott’s claim against Betty clearly depends upon allegations that she herself committed an independenttort in failing to prevent acts of molestation she had reason to believe were taking place in her home. Undersuch circumstances,she had objective groundsto assume she would be covered, so long as she herself had not acted in a mannerfor whichthe intentional acts exclusion barred coverage. (Minkler, 49 Cal.4th at p. 325; see Diaz v. Carcamo (2010) 51 Cal.4th 1148, 1157-1158 (distinguishing between vicariousliability for acts of an employee anddirectliability for the employer’s negligence in hiring orretaining the employee); see also Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 815 (“the liability for negligent supervision or retention of an employeeis one of direct liability for negligence, not vicariousliability’’).) In this appeal, Liberty asks this Court to strip the employer of insurance coverage when the employer’s liability is based not on the intentional tort of the employee but on the employer’s ownlessertort of negligent hiring, retention or supervision. In that situation, the employer’s conduct, which is the focus of the coverage question,is mere negligence—conductthat, this Court has held, is encompassed by the word “accident.” (Safeco, 26 Cal.4th at p. 765.) It would be strange indeed if insurance law were such that an employer can have coverage for vicarious liability based solely on the intentional torts of its employee but not have coverageforliability based on its own, lesser, negligent acts that contributed to the sameinjury.'* '2 Liberty’s brief attributes to L&M the argumentthat the employer’s vicariousliability for its employee’s intentional act is the -44- C. Cases Applying California Law Have Found Insurance Coverage For Negligent Supervision Claims Liberty implies that only one other California case has addressed whether insurance coverage is available for a negligent supervision claim. (RB, p. 43.) Not so. Many cases applying California law have found insurance coverage for negligent supervision. In Minkler, as described above, this Court found that negligent supervision is an independenttort that can be grounds for coverage. The insured accused of negligently failing to prevent acts of molestation in her home could reasonably expect coverage unless she herself acted in a way that barred coverage. (49 Cal.4th at p. 325.) Negligent supervision may also constitute an accident when an insured is alleged to have negligently allowed others to make false and misleading statements that cause bodily injury. (See, e.g., Keating v. National Union Fire Ins. Co. ofPittsburgh, Pa. (C.D. Cal. 1990) 754 F.Supp. 1431, 1441, rev’d on other grounds (9th Cir. 1993) 995 F.2d 154; see also Fireman’s Fund Ins. Co. v. National Bankfor Cooperatives (N.D. Cal. 1994) 849 F.Supp. 1347, 1368 (agreeing with Keating that negligent supervision is an accident and can constitute an occurrence).) An insured might be liable both for personally making false statements and also for negligently allowing others to do so. (Keating, 754 F.Supp.at p. 1440.) Similarly, in Westfield Ins. Co.v. “accident” for purposes of insurance coverage; Liberty then cites Dyer v. Northbrook Prop. & Cas. Ins. Co., 210 Cal.App.3d 1540 as authority purportedly refuting L&M’s purported argument. (RB,p. 19.) In fact, L&M’s liability was not vicarious but was based on L&M’s direct liability for its own negligent hiring, supervision and retention (2 AER 54), and that conduct is undeniably the “accident” here. And while touting Dyer, Liberty nevertells the Court about this Court’s subsequentdecision in Lisa M. and the pre- and post-Dyer cases upholding insurance coverage for vicariousliability. -45- TWT, Inc. (N.D. Cal. 1989) 723 F.Supp. 492, 495, someallegations involved intentional acts and others arose from acts that were “not necessarily intentional,” such as negligent supervision. “Negligent supervision could constitute an ‘occurrence’ underthe policy language.” (Ibid.)'? Liberty cites Minkler, albeit in a different context, but it never discusses the other cases finding coverage for negligent supervision claims, even though several were mentioned in the Ninth Circuit’s certification order. These cases find insurance coverage becausethey correctly view the “accident” from the perspective of the employer who faces vicariousliability or liability for its own negligent conduct;the employee or agent may engage in non-accidental conductbut, as far as the employeris concerned,the injury is caused accidentally." CONCLUSION Forall of the foregoing reasons andthe reasonsset forth in the Sections A and B of Appellant’s Opening and Reply Briefs, the Court 13 See also American States Ins. Co. v. Borbor by Borbor(9th Cir." 1987) 826 F.2d 888, 895 (the statutory exclusion in Ins. Code, § 533 for willful injuries does not bar coverage wheretheplaintiff alleges that the insured was “merely negligent in her supervision” of a person who committed an intentional tort). Of course, in some instances, the insured employeris liable not for negligence but for willful misconduct. (See Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co. (1993) 14 Cal.App.4th 1595, 1603 (Ins. Code, § 533 bars coverage when an employeris liable for the willful misconductof its CEO, whose misconduct was knownto andratified by the company’s board).) The victim did not allege such facts in the underlying arbitration against L&M, however. '4 Amicus notes that both L&M and Liberty have briefed additional issues (such as the burden of proving whether an accident took place or whether the “accident” is determined under a purely objective standard) that the Ninth Circuit did notcertify to this Court and, thus, are not properly before this Court. This brief does not address those issues. -46- Z e i t l i n Ra l os , should answerthe question that the Ninth Circuit certified in the affirmative and hold that there can be an occurrence under a CGL policy whenan injured third party brings claims against an employer for the negligent hiring, retention and supervision of an employee who intentionally injured the third party. DATE: May10, 2017. Respectfully submitted, COVINGTON & BURLING LLP DAVID B. GOODWIN MICHAEL S. GREENBERG yy By of 8 AA DaB. GoopWIN Attorneys for Amicus Curiae UNITED POLICYHOLDERS -47- CERTIFICATE OF COMPLIANCE PURSUANTTO CAL. R.CT. 8.520(c) Pursuant to California Rule of Court 8.520(c), and in reliance upon the word count feature of the software used to prepare this document,I certify that the foregoing BriefAmicus Curiae ofUnited Policyholders contains 11,136 words, exclusive of those materials not required to be counted under Rule 8.520(c)(3). DATED:May10, 2017. Dwg fhorace DAVID B. GOODWIN -48- PROOF OF SERVICE Case No.236765 I am a resident of the State of California and over the age of eighteen years, and not a party to the within action; my business addressis OneFrontStreet, 35th Floor, San Francisco, California 94111-5356. On May10, 2017, I served the following document(s) described as: APPLICATION OF UNITED POLICYHOLDERS FOR LEAVE TO FILE BRIEFAMICUS CURIAE IN SUPPORT OF APPELLANTS AND BRIEFAMICUS CURIAE BRIEFAMICUS CURIAE OF UNITED POLICYHOLDERSIN SUPPORT OF APPELLANTS By Hand Delivery I caused to be hand-delivered by a messenger to the address shown below: Clerk of the Supreme Court (Original and 8 copies / plus California Supreme Court electronic submission) 350 McAllister Street, Room 1295 San Francisco, CA 94102 By Mail I placed the above-documents in sealed envelope(s), with postage thereon fully prepaid, for collection and mailing at San Francisco, California, following ordinary business practices. I am readily familiar with the practices of Covington & Burling LLP for processing of correspondence, said practice being that in the ordinary course ofbusiness, correspondenceis deposited in the United States Postal Service the same day as it is placed for processing. -49. PARTIES SERVED Patrick P. Fredette, Esq. IMMCCORMICK BARSTOW SHEPPARD WAYTE & CARRUTH LLP 7647 North Fresno Street Fresno, CA 93720 Telephone:(559) 433-1300 Attorneys for Plaintiffs and Appellees Liberty Surplus Insurance Corporation and Liberty Insurance Underwriters, Inc. Christopher M. Ryan, Esq. IMCCORMICK BARSTOW SHEPPARD WAYTE & CARRUTH LLP 312 Walnut Street, Suite 1050 Cincinnati, OH 45202 , Telephone: (513) 762-7520 [Attorneys for Plaintiffs and Appellees Liberty Surplus Insurance Corporation and Liberty Insurance Underwriters, Inc. Michael J. Bidart Ricardo Echeverria SHERNOFF BIDART ECHEVERRIA LLP 600 S Indian Hill Blvd Claremont, CA 91711 (Telephone: (909) 621-4935 [Attorneys for Defendants and Appellants Ledesma and Meyer Construction Company,Inc.; Joseph Ledesma; and Kris Meyer Jeffrey I. Ehrlich THE EHRLICH LAW FIRM 16130 Ventura Blvd Ste 630 Encino, CA 91436 (Telephone: (818) 905-3970 Attorneys for Defendants and Appellants [Ledesma and Meyer Construction Company,Inc.; Joseph Ledesma; and Kris Meyer Hon. R. Gary Klausner (United States District Court Central District of California 350 West lst Street, Courtroom 9B, 9th Floor Los Angeles, CA 90012 Case No. 2:12-cv-00900-RGK-SP Brian P. Brosnahan IKasowitz Benson TorresInc. 101 California Street, Suite 2300 San Francisco, CA Province of the Holy NameInc. (Western [Dominican Province) : Amicus curiae -50- I declare under penalty of perjury under the laws ofthe State of California that the foregoing is true and correct and that this proof of service is executed at San Francisco, California on May 10, 2017. ionLehre um’ DawnHalverson ~5]-