Shaub

FACTS AND PROCEEDINGS BELOW

In the underlying action, two home owners in the condominium development of Malibu Villas sued the Malibu Villas Owners Association (“MVOA”) for failing to prevent “continuing soil movement” that damaged their homes. The owners alleged causes of action for breach of contract, breach of fiduciary duty, injunctive relief, nuisance and negligence. MVOA tendered defense of the owners’ suit to the Praetorian Insurance Company under its commercial liability insurance policy in force at the time. The policy provided that Praetorian “will pay those sums that the insured becomes legally obligated to pay as damages because of . . . ‘property damage’ to which this insurance applies.” (Italics added.) “Property damage” is defined in the policy in relevant part as “[p]hysical injury to tangible property.” As pertinent to this appeal, Praetorian denied coverage and refused to defend MVOA on the basis that the liability coverage of the policy does not apply to claims for property damage “caused by, arising out of, relating to, resulting from, contributed to, or aggravated by any ‘movement of land or earth.’” (The parties refer to this provision as the Earth Movement…