Rosen v. State Farm General Insurance
30 Cal. 4th 1070, 135 Cal. Rptr. 2d 361, 70 P.3d 351 (2003)
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Rule of Law:
An unambiguous insurance policy provision defining "collapse" as "actually fallen down or fallen into pieces" must be enforced as written, and courts may not rewrite the contract to include coverage for "imminent collapse" based on public policy considerations.
Facts:
- Rosen's homeowners insurance policy with State Farm provided coverage for "collapse," which the policy specifically defined as "actually fallen down or fallen into pieces."
- A contractor inspected two decks attached to Rosen's home and discovered severe deterioration of their supporting framing members.
- The contractor recommended that Rosen repair the decks due to their unsafe condition.
- Believing the decks were in a state of imminent collapse, Rosen had them repaired.
- Rosen submitted a claim to State Farm to cover the cost of the repairs.
- State Farm denied Rosen's claim on the grounds that the decks had not actually collapsed as required by the policy's definition.
Procedural Posture:
- Plaintiff Rosen sued defendant State Farm in a California trial court for breach of contract.
- Defendant State Farm moved for summary judgment, arguing there was no coverage because the decks did not actually collapse.
- The trial court denied the motion for summary judgment.
- The parties agreed to a bench trial on the limited legal question of whether the policy covered imminent collapse.
- The trial court found in favor of Rosen, ruling that public policy requires coverage for imminent collapse regardless of the policy's specific language.
- State Farm, as the appellant, appealed to the California Court of Appeal.
- The Court of Appeal affirmed the trial court's judgment, holding that public policy considerations mandated coverage for imminent collapse.
- The California Supreme Court granted review of the decision.
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Issue:
Does public policy require an insurance policy that explicitly defines "collapse" as "actually fallen down" to nonetheless provide coverage for "imminent collapse"?
Opinions:
Majority - Brown, J.
No. Public policy does not require an insurance policy that unambiguously defines "collapse" as an actual event to be judicially rewritten to cover an imminent one. When the language of an insurance policy is clear and explicit, it governs the agreement between the parties. Courts must infer the parties' intent from the written provisions and cannot rewrite the contract to conform to judicial notions of sound public policy. Here, the policy's definition of collapse as "actually fallen down or fallen into pieces" is unambiguous and cannot be interpreted to include "imminent" collapse. This case is distinct from prior cases like Doheny West, where ambiguous policy language like "risk of loss" and "involving collapse" permitted a broader interpretation. To rewrite this clear provision would compel the insurer to provide more coverage than it promised and allow the insured to receive a benefit for which they did not pay, undermining the freedom of contract.
Concurring - Moreno, J.
No. While I agree with the outcome, the majority's assertion that courts may never rewrite a contract for any purpose is overly broad. It is a well-settled principle that courts will not enforce contract terms that violate law or public policy. The Court of Appeal's public policy argument—that enforcing the "actual collapse" provision creates a perverse incentive for homeowners to wait for a disaster—has some merit. However, the judicial power to invalidate a contract on public policy grounds should be exercised with great caution. In this case, the insured has not met the high burden of demonstrating that the provision violates a settled public policy, especially given the countervailing disincentives for a property owner to maintain a hazardous condition, such as tort liability and personal safety concerns. Therefore, the strong policy in favor of enforcing unambiguous contractual terms prevails.
Analysis:
This decision reinforces the primacy of clear contractual language and the principle of freedom of contract in insurance law. It significantly curtails the ability of lower courts to use public policy as a tool to expand coverage beyond the explicit terms negotiated by the parties. The ruling provides insurers with greater certainty that unambiguous definitions and exclusions will be upheld, thereby stabilizing underwriting risk. For insureds, the case serves as a critical reminder that the precise wording of a policy is paramount, and courts will not intervene to save them from a bargain that is clearly, albeit narrowly, defined.
