The Fourth District Court of Appeal in an unpublished July 11 opinion affirmed a summary judgment ruling that no coverage exists for three underlying firearms actions alleged against an insured because the suits seek only declaratory relief and do not claim any monetary loss for bodily injury or property damage (Admiral Insurance Co. v. North American Arms Inc., et al., No. E032304, Calif. App., 4th Dist., Div. 2).
Admiral Insurance Co. seeks a declaration that no coverage exists to North American Arms Inc. and Phoenix Arms Inc. for three underlying firearms actions filed by the cities of San Francisco and Los Angeles and the County of Los Angeles. The suits assert causes of action for public nuisances and unfair business practices.
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Admiral argued that the California Insurance Code precludes coverage, that there is no duty to defend the public nuisance cause of action, that there is no duty to defend Phoenix Arms because it does not and cannot seek money damages and that the actions do not seek to recover damages because of bodily injury or property damage.
North American Arms argued that Admiral's duty to defend is found by examining the underlying complaints' factual allegations and not the labels attached to the causes of action. The underlying actions are mirror images of other public entity actions that have been filed nationwide by governmental entities and courts have uniformly found a duty to defend, the insured maintained.
The trial court noted that none of the three complaints asserts a cause of action for negligence, nor do any of them seek negligence damages. They assert only claims for public nuisance and unfair business practices, it said.
On appeal, North American and Phoenix argued that Admiral owed a duty to defend because the underlying claims are negligence-based claims that are potentially covered under the policy. The appellants further argued that the allegations in the county's action are covered under the policy even though the county does not directly assert a monetary claim for bodily injury or property damages.
The appeals court rejected the gun manufacturers' arguments, finding that there is no duty to defend because there is no insurable claim for damages alleged in the underlying suits. The panel noted that the prayers of the complaints only seek declaratory and injunctive relief and abatement of the alleged public nuisance.
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