Modern Development Co. operates a large swap meet in an open-air marketplace. Juan Moreno, a wheelchair visitor at the swap meet, alleged violations by Modern of the Americans with Disabilities Act (ADA) because he was unable to enter the restrooms, which lack wheelchair access.

In his lawsuit, Moreno said he was humiliated, embarrassed and frustrated, suffering serious emotional and physical injuries by being unable to enter the restroom.

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When Modern tendered defense of Moreno’s lawsuit to its liability insurer, Navigators Insurance Co., the insurer denied coverage and defense of the lawsuit. The reason for denial of defense and coverage was there was no accident or occurrence, as required by the insurance policy.

Modern’s attorney negotiated a settlement of the lawsuit for $9,750, plus $7,600 attorney fees. Then the swap meet owner, Modern, sued its insurer for bad faith denial of coverage and refusal to defend the lawsuit under the liability insurance policy.

IF YOU WERE THE JUDGE would you rule Navigators Insurance Co. had a duty to defend its insured for the alleged ADA violation?

The judge said NO!

The terms of the liability insurance policy determine if there is coverage applicable to this case, the judge began. Reading the policy, he continued, it says the insurer must defend general liability lawsuits and pay claims based on accidents or occurrences.

“Moreno’s allegations did not constitute an accidental, unforeseen occurrence sufficient to trigger Navigators’ duty to defend under Modern’s commercial general policy,” the judge ruled. Because there was no accident or event that might be covered under the insurance policy, the insurer had no duty to defend this lawsuit, the judge concluded.

Based on the 2003 California Court of Appeal decision in Modern Development Co. v. Navigators Insurance Co., 4 Cal.Rptr.3d 528.

(For more information on Bob Bruss publications, visit his
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