Garrison Property and Casualty Insurance Co. v. McIntire

Background

Garrison Property and Casualty Insurance Company, doing business as United States Automobile Association (USAA), sued the Estate of Lisa Biakanja through its co-administrators, Kenneth M. McIntire and Joan McIntire, and sued Kenneth M. McIntire and Joan McIntire individually and on behalf of all wrongful-death beneficiaries of Lisa Biakanja. USAA sought a declaration that its automobile policy did not require it to defend or indemnify the Estate in connection with claims pending in state court.

Lisa Biakanja’s policy was effective from March 1, 2022, through September 1, 2022. It covered liability for bodily injury or property damage for which a covered person became legally liable because of an automobile accident, subject to exclusions. One exclusion barred bodily-injury coverage for the policyholder or a family member when the ultimate benefits of the insurance would accrue directly or indirectly to a covered person. The policy defined “family member” as someone related to the policyholder by blood, marriage, registered domestic partnership under California law, or adoption who primarily resided in the policyholder’s household.

On August 14, 2022, Lisa Biakanja and her three children died in a car accident. Steven Biakanja later brought a creditor’s claim in Lisa Biakanja’s probate proceeding seeking damages from the accident and the wrongful deaths of the children. The Estate also filed a civil action against the California Department of Transportation. In that action, the Department asserted affirmative defenses of contributory negligence and apportionment against Lisa Biakanja through her Estate and filed a cross-complaint.

The Estate sought defense services from USAA for the creditor’s claim and the Department of Transportation litigation. USAA defended the Estate against the creditor’s claim under a reservation of rights but denied the Estate’s request for a defense in the civil action. USAA then filed this federal action seeking a declaration that it owed no coverage for either the creditor’s claim or the affirmative defenses and cross-complaint.

Motion and legal issue

USAA moved for summary judgment. Summary judgment is a decision entered without a trial when the undisputed facts show that one side is entitled to judgment under the law. The parties agreed that the dispute presented a legal question governed by California law: whether the phrase “resides primarily” applied when children divided their time between divorced parents.

The defendants acknowledged the exclusion but argued that the phrase did not address their shared-custody circumstances. The evidence showed that the children resided more often with Lisa Biakanja, spent an estimated 56% of the year with her and 44% with Steven Biakanja, and had spent about 60% of the time with Lisa in the few years before their deaths. The opinion also states that Lucy Biakanja had lived exclusively with Lisa since at least January 4, 2022. The children were living with Lisa when the accident occurred.

Court’s ruling

The court held that no reasonable interpretation of “resides primarily” supported finding that the children did not primarily reside with Lisa Biakanja. It concluded that the family-member exclusion applied to the claims at issue and that USAA was entitled to judgment as a matter of law.

The court granted Plaintiff’s motion for summary judgment. It declared that USAA did not owe the Estate coverage for the creditor’s claim or for the affirmative defenses and cross-complaint in the civil action against the California Department of Transportation. The court vacated the scheduled hearing because it determined that oral argument was unnecessary.