Utah Court of Appeals
When does an insurer have a duty to defend under a commercial general liability policy? Green v. State Farm Explained
Summary
Green developed property in Layton after receiving a soils report warning of landslide risk. When a landslide later damaged a home built on the property, the homeowner sued Green for failure to disclose and breach of warranty. State Farm initially defended but later withdrew coverage, arguing the claims did not constitute an ‘occurrence’ under the policy.
Analysis
The Utah Court of Appeals recently clarified when insurers must defend their insureds under commercial general liability policies in Green v. State Farm, reversing a trial court’s finding that State Farm had a duty to defend.
Background and Facts
Green developed property in Layton after commissioning a soils report that warned of landslide risk. The city engineer approved the development work. Years later, after significant rainfall, a landslide damaged a home on the property. The homeowner sued Green for intentional failure to disclose, negligent failure to disclose, and breach of implied warranty. State Farm initially provided defense but later withdrew, arguing the claims did not constitute an occurrence under the policy.
Key Legal Issues
The central issue was whether the underlying lawsuit’s allegations constituted an occurrence under State Farm’s commercial general liability policy, which defined occurrence as an accident. The court had to determine if claims for intentional conduct, negligent misrepresentation, and breach of warranty could qualify as accidents triggering the insurer’s duty to defend.
Court’s Analysis and Holding
Following Nova Casualty Co. v. Able Construction, the court held that intentional misrepresentation cannot be an accident because it involves willful conduct. For negligent misrepresentation, the court found it requires intent to induce reliance and therefore constitutes purposeful rather than accidental conduct. The court emphasized that effects which are natural and probable consequences of intentional acts are not accidents. The breach of warranty claim also failed because it sought only economic damages.
Practice Implications
This decision reinforces that the duty to defend depends on comparing policy language with complaint allegations. Even though the duty to defend is broader than the duty to indemnify, it has boundaries defined by the policy’s coverage. Practitioners should carefully analyze whether underlying claims involve truly accidental conduct or purposeful actions that fall outside policy coverage, particularly in construction and real estate contexts where disclosure obligations frequently arise.
Case Details
Case Name
Green v. State Farm
Citation
2005 UT App 564
Court
Utah Court of Appeals
Case Number
No. 20040776-CA
Date Decided
December 30, 2005
Outcome
Reversed
Holding
An insurer has no duty to defend when the underlying complaint alleges intentional failure to disclose, negligent failure to disclose, and breach of implied warranty because these claims do not constitute an ‘occurrence’ under a commercial general liability insurance policy that defines occurrence as an accident.
Standard of Review
Correctness for interpretation of contract terms and rulings on summary judgment motions
Practice Tip
When analyzing duty to defend cases, carefully examine whether the underlying complaint alleges conduct that constitutes an ‘occurrence’ under the policy’s definition, as claims involving intentional conduct or natural consequences of purposeful acts typically do not qualify as accidents.
Need Appellate Counsel?
Lotus Appellate Law handles appeals before the Utah Court of Appeals, Utah Supreme Court, California Court of Appeal, and the United States Court of Appeals for the Tenth Circuit.
Related Court Opinions
About these Decision Summaries
Lotus Appellate Law publishes these summaries to keep practitioners informed — not as legal advice. Each case turns on its own facts. If a decision here is relevant to your matter, we’re happy to discuss it.