APPELLATE LAW UPDATE: October-November 2025

The following published decisions may be of interest to attorneys practicing insurance law:

CALIFORNIA COURT OF APPEAL

Insured’s attack on his roommate “based on” gender and committed with malice and oppression was not a covered “occurrence” under a liability policy, even though the jury also found negligence.

State Farm Fire & Casualty v. Diblin (2025) 114 Cal.App.5th _1245

State Farm’s insured struck his housemate in the head with a mallet multiple times.  The housemate sued and obtained a judgment for over $2.5 million.  Meanwhile, State Farm filed an action against its insured and the housemate for declaratory relief that it owed no duty to indemnify for any judgment entered in the housemate’s favor.  After reviewing the pleadings, jury instructions, and special verdict form, the trial court entered declaratory relief for State Farm on the grounds that the damages did not arise from an “occurrence” because the insured’s conduct was not accidental.

The Court of Appeal (Fourth Dist., Div. One) affirmed.  The insured’s personal liability coverage applied to damages “because of  . . . an occurrence,” which was defined as an “accident.”  The jury’s verdict in the underlying action found that the insured had committed gender violence.  To commit that tort, a person must engage in conduct “based on” gender.  A person cannot engage in an act “based on” gender without intending the conduct.  The verdict in the underlying action also included a finding that the conduct was engaged in with malice or oppression.  The jury therefore found the conduct was deliberate and intentional, not accidental.  The fact the jury also found negligence did not mean the conduct was accidental; the conduct alleged in the housemate’s complaint and underlying every factual finding of liability was the same: the physical attack the jury found was deliberate. The insured’s theory that the jury could have found him liable for negligence based on evidence that his violent behavior flowed from a negligent failure to manage his medications did not create coverage, since any negligence along those lines would not be independent of the violent attack the jury concluded was intentional.

Under well-established law, coverage for the “sudden” discharge or dispersal of pollutants does not include coverage for pollutants that are released gradually, and an insured is not entitled to introduce extrinsic evidence to show it reasonably believed it would have coverage for “gradual” releases of pollutants.

Montrose Chemical Corp. of Cal. v. Superior Court (Canadian Universal Ins. Co.) (2025) 114 Cal.App.5th 889

Montrose Chemical sued its insurers for coverage related to environmental contamination around one of its plants. The insurers disclaimed coverage under the qualified pollution exclusion, which provides that the policy does not provide coverage “arising out of” the discharge or release of pollutants unless the discharge or release was “sudden.”  In the trial court, Montrose sought to introduce evidence about the drafting history of the exclusion, which Montrose maintained contained statements supporting its interpretation of the exclusion as applying to any discharge or release of pollutants that was “unforeseen,” and that a reasonable policyholder would have understood the exclusion to apply to an unanticipated discharge or release no matter how quickly it occurred.  The trial court excluded the evidence, reasoning that judicial decisions already have interpreted the term “sudden” in this exclusion and rejected any suggestion it could apply to “gradual” releases.

The Court of Appeal (Second Dist., Div. Three) denied the writ and issued an opinion on the merits.  The word “sudden” in a policy granting coverage for the “sudden discharge, dispersal, release, or escape of pollutants” cannot reasonably be construed to mean “gradual”—the terms are opposites.  Extrinsic evidence is not admissible to show the parties intended the policy to have a meaning to which the policy language is not reasonably susceptible.  The trial court did not err in following binding existing precedent that “sudden” cannot be reasonably construed to mean “gradual”—indeed, the trial court was obligated to follow that precedent. 

This e-Bulletin was prepared by Emily V. Cuatto, Certified Appellate Specialist and Partner of Horvitz & Levy LLP. Ms. Cuatto is a member of the Insurance Law Standing Committee of the Business Law Section of the California Lawyers Association.