Devin

Robert and Susan Devin (Devins) appeal from a judgment entered in favor of United Services Automobile Association (USAA) after USAA's motion for nonsuit was granted. Devins' complaint sought recovery based on the allegedly wrongful refusal by USAA to defend or indemnify Devins in a third party action brought against them by the purchasers of Devins' house in Huntington Beach, the purchasers being Robert and Marilyn McNair (McNairs). We conclude USAA had no duty to defend Devins in the underlying lawsuit, and therefore the order granting nonsuit was proper.

Devins owned a home on Cavan Circle in Huntington Beach, which they sold to McNairs in 1984. Escrow closed September 5, 1984, and McNairs took possession four days later. Devins later bought a home on Basalto Street in Carlsbad.

In 1986, McNairs sued numerous parties. The complaint pleaded claims against Devins for intentional and negligent misrepresentation. The complaint alleged the house was sliding, slipping, settling, sinking, fracturing and buckling. McNairs further alleged Devins "... knew or should have known, that the property had experienced extensive subsidence damage and that said subsidence…

Robert and Susan Devin (Devins) appeal from a judgment entered in favor of United Services Automobile Association (USAA) *1153 after USAA’s motion for nonsuit was granted. Devins’ complaint sought recovery based on the allegedly wrongful refusal by USAA to defend or indemnify Devins in a third party action brought against them by the purchasers of Devins’ house in Huntington Beach, the purchasers being Robert and Marilyn McNair (McNairs). We conclude USAA had no duty to defend Devins in the underlying lawsuit, and therefore the order granting nonsuit was proper.

I

Factual And Procedural Background

1. The Third Party Lawsuit

Devins owned a home on Cavan Circle in Huntington Beach, which they sold to McNairs in 1984. Escrow closed September 5, 1984, and McNairs took possession four days later. Devins later bought a home on Basalto Street in Carlsbad.

In 1986, McNairs sued numerous parties. The complaint pleaded claims against Devins for intentional and negligent misrepresentation. The complaint alleged the house was sliding, slipping, settling, sinking, fracturing and buckling. McNairs further alleged Devins . . knew or should have known, that the property had…

I respectfully dissent. The Devins purchased a home in Huntington Beach and obtained an all risk homeowners’ policy from United Services Automobile Association (USAA). In 1984, the Devins sold the home to the McNairs and purchased another home in Carlsbad. Their homeowners’ insurance policy with USAA had been renewed annually since 1981 and basically contained identical indemnity and defense provisions. The relevant portions of the policies provide:

Personal liability coverage was excluded for liability on contracts, except “written contracts . . . that directly relate to the ownership ... of an insured location.”

“Accident” is not defined in the USAA policies, but in a “Quick Reference Policy Summary” provided to the Devins by USAA, it states:

In July 1986, the McNairs sued the Devins, alleging the house was damaged by sliding, slipping, settling, sinking, fracturing and buckling. The McNairs further alleged the Devins “knew or should have known, that the property had experienced extensive subsidence damage and that said subsidence problems were continuing, and would continue to cause severe structural damage to the house and the property.” According to the McNairs’ *1164…