Morris v. Employers Reinsurance Corp.

Opinion

McINTYRE, J.

In this insurance coverage dispute, Randy Morris, as the assignee of certain rights of Carmela Rincon Loelkes under her real estate agents and brokers professional liability policy, sued Employers Reinsurance Corporation (Employers) for breach of contract for failure to indemnify and

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defend Loelkes. The trial court granted summary judgment in favor of Employers, concluding that Loelkes’s policy did not provide coverage, based on an exclusion in the policy relating to property owned by the broker.

Morris appeals, contending the court erred in ruling that the ownership exclusion applied to the facts in this case. We agree and reverse the judgment. We express no opinion regarding whether any other exclusions in the policy might apply to preclude coverage.

Facts and Prior Proceedings

In 1988, Loelkes represented Koichi Shimazaki, the owner of a parcel of undeveloped real property, as his listing and selling agent for the property. Loelkes also represented Morris, a prospective buyer, and on December 17, 1988, on behalf of Morris, she presented an offer to purchase Shimazaki’s property. Shimazaki, through Loelkes, responded with a counteroffer. Morris maintains he told Loelkes that he wanted to accept the counteroffer before it expired, but she informed him that Shimazaki had agreed to sell the property to an unnamed third party and it was no longer for sale. Thereafter, Loelkes entered into a real estate purchase contract with Shimazaki on the same or similar terms and conditions as were contained in Shimazaki’s counteroffer to Morris. The sale was never completed, however.

Morris sued Loelkes for breach of the duty of loyalty and good faith, breach of fiduciary duty, negligent misrepresentation, intentional misrepresentation and constructive trust. Loelkes tendered her defense to Employers, which maintained she had an ownership interest in the property and denied coverage based on “Exclusion (e)” in the policy, which states:

“This policy does not apply to: [^] . . . [^]

“(e) any claim made against the Insured arising out of or in connection with any property, entity or enterprise controlled, managed, operated, or in which there is an ownership interest by: