The Metaphysics of When an Accident is an “Accident” (or Not) Under Your Insurance Polic

As an undergrad, I remember taking an introductory philosophy class. When we came to the chapter on metaphysics our professor asked what makes an apple an apple? “We have a specific name for it, presumably, to distinguish it from other things,” she said. “But what makes an apple an apple?”

From there we went into a rabbit hole. With some students describing an apple by its colors, shape, size, smell and that it grows on trees and others trying to distinguish an apple from other things, which in turn led to further discussions such as  why we believe apples come in red, green and yellow, whether an apple is still an apple if a person was colorblind, etc. In the end, we were questioning whether we were even in existence and sitting in a university classroom.

Insurance can be a bit like that sometimes. When is an accident an accident? If you engage in an intentional act that results in an unintended consequence, is it an accident? In Navigators Specialty Insurance Company v. Moorefield Construction, Inc. (December 27, 2016) 6 Cal.App.5th 1258, the Court of Appeals for the Fourth District, while not answering the question of the nature of existence, did shed some light on when an accident is an accident.

Navigators Specialty Insurance Company v. Moorefield Construction, Inc.

In 2003, general contractor Moorefield Construction, Inc. entered into a construction contract with developer D.B.O. Development No. 28 for the construction of a Best Buy store in Visalia, California. The construction was completed and the store opened later that year.

As early as the grand opening of the store and through 2009, Best Buy noticed that carpet tiles were not sticking to the floor, that the edges of the carpet tiles were curling, that moisture and adhesive were oozing through the carpet tile edges, and that there was staining along the edges of the carpet tiles as well as odors. In 2009, Best Buy notified the building owner JSL Properties, LLC that it would be replacing the carpet tiles and withholding rent under its lease. Best Buy completed the flooring repairs later that year and withheld $377,404 from rent.

In 2010, JSL filed suit against Moorefield and DBO to recover the rental amounts withheld by Best Buy. DBO, in turn, filed a cross-complaint against Moorefield and others asserting various causes of action including equitable indemnity. Moorefield tendered JSL’s complaint and DBO’s cross-complaint to its commercial general liability insurer, Navigators Specialty Insurance Company, which accepted tender under a reservation of rights.

During the course of litigation it was discovered that prior to installing the carpet tiles Moorefield ran two series of moisture tests on the underlying concrete slab. Under the terms of the construction contract, the slab on grade’s maximum moisture content was not to exceed five pounds per 1,000 square feet of slab. Both moisture tests revealed that the moisture content exceeded the contract limit. However, rather than wait for the moisture content to fall, and to avoid a potential delay in the store opening, Moorefield directed its flooring subcontractor to install the carpet tiles.

In 2013, the parties settled for $1.3 million with JSL receiving $885,000 and DBO receiving $425,000. Navigators, on behalf of Moorefield, contributed its policy limit of $1 million. Thereafter, Navigators filed suit against Moorefield seeing an order from the court that it had no duty to defend or indemnify Moorefield under its commercial general liability policy.

Specifically, Navigators argued that coverage Section A of the policy only applied to bodily injury or property damage that “is caused by an ‘occurrence'” and that the term “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Navigators further argued that, because Moorefield deliberately decided to direct its flooring subcontractor to install the carpet tiles despite the higher than contractually permitted moisture content of the concrete slab, there was no “occurrence” giving rise to coverage under the policy.

Following a six-day bench trial, the trial court found in favor of Navigators and Moorefield appealed.

The Court of Appeals Decision

On appeal, the Court of Appeals affirmed and reversed in part.

While Navigator’s policy did not define “accident,” explained the Court, California law does. “In the context of liability insurance, an accident is ‘an unexpected, unforeseen, or undesigned happening or consequence from either a known or unknown clause'” and “[t]his common law construction of the term ‘accident’ becomes part of the policy and precludes any assertion that the term is ambiguous.” “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 imposed on the insured” and “[a]n accident does not occur when the insured performs a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage.”

And here, explained the Court, Moorefield knew the vapor emission test results exceeded the specifications yet directed its subcontractor to install the carpeting tiles anyway. Moreover, explained the Court, the testimony of Moorefield’s President, Michael Moorefield, and project manager,  Jay Cote, that there was little to no risk installing the carpet tiles was irrelevant since “[a]n insured’s mistake of fact or law does not transform and intentional act into an accident.”

The Building Industry Legal Defense Foundation filed an amicus curiae brief arguing that construction defects should always be deemed an “occurrence” under a commercial general liability policy, even when a contactor intentionally performs work with knowledge that its work could lead to harm, since the harm itself is fortuitous and unintended and therefore an “accident.”

In response, the Court emphasized that it was not deciding whether all construction defects are “occurrences” under a commercial general liability policy, but rather, only whether Moorefield’s conduct constituted  an accident under the policy. And, here, concluded the Court, Moorefield’s conduct was not an accident because it was a deliberate decision made with knowledge that the test results exceeded specifications.


Moorefield sets a benchmark against which the obligation of insurance carriers to defend a claim will be measured. Where an insured engages in a deliberate act with knowledge that a particular harm is likely to occur no coverage will be found to exist. However, this is just one point, and an extreme one at that, along a spectrum of possibilities, with unanswered questions such as when a harm is considered to be foreseeable, how certain must it be that a harm will occur, etc.? Metaphysical enough for you?

#Navigators #Accident #Occurrence #Moorefield #Insurance

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