Atain Specialty Insurance Comp v. Dignity Housing West, Inc. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 3 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ATAIN SPECIALTY INSURANCE No. 21-15127
COMPANY,
D.C. No. 3:19-cv-07296-LB
Plaintiff-Appellee,
v. MEMORANDUM*
DIGNITY HOUSING WEST, INC., a
California nonprofit corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Laurel D. Beeler, Magistrate Judge, Presiding
Argued and Submitted November 18, 2021
San Francisco, California
Before: SCHROEDER, W. FLETCHER, and MILLER, Circuit Judges.
Dignity Housing West is a California nonprofit corporation that provides
low-income housing. Describing itself as a housing developer and listing its only
premises as 200 square feet of office space, it applied for and received a
commercial general liability insurance policy from Atain Specialty Insurance.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Though the application asked whether Dignity conducted any “lodging operations
including apartments,” Dignity did not disclose the three apartment buildings it
owned or maintained.
After a deadly fire broke out at Dignity’s apartment building on San Pablo
Avenue in Oakland, Dignity was named in several lawsuits by former tenants.
Atain initially tendered defense to Dignity in those actions, but it subsequently
withdrew. Invoking the district court’s jurisdiction under 28 U.S.C. § 1332, Atain
filed a complaint seeking a declaration that the policy did not cover the San Pablo
building. The district court granted summary judgment in Atain’s favor,
concluding that the policy did not cover the apartment building and that even if it
did, omissions in Dignity’s application entitled Atain to rescind the policy. Dignity
appeals. We have jurisdiction under 28 U.S.C. § 1291, and we affirm. Because we
agree with the district court’s interpretation of the scope of the policy, we do not
consider whether Atain was entitled to rescission.
1. On Dignity’s insurance application, it disclosed only 200 square feet
of office space and represented it was a tenant. The Commercial General Liability
Supplemental Declarations page of the policy lists that space as the only premises
that Dignity owns, rents, or occupies. In a deposition, however, a Dignity officer
stated that Dignity actually owned the building where the office was located.
Information in policy declarations controls the scope of insurance coverage, so if
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the declarations indicate that the policy does not provide coverage, “no further
review of the policy is necessary.” Fidelity & Deposit Co. v. Charter Oak Fire Ins.
Co., 78 Cal. Rptr. 2d 429, 432 (Cal. Ct. App. 1998). Because nothing in the
Declaration supports the view that the policy applied to any of Dignity’s three
undisclosed apartment buildings, the policy did not cover the San Pablo building.
The premium Dignity paid further supports the conclusion that coverage is
limited to its office. Dignity paid $360 to receive commercial general liability
coverage for a year. A $360 yearly premium could not reasonably be expected to
pay for general liability insurance for dozens of apartments in three separate
buildings. See Herzog v. National Am. Ins. Co., 465 P.2d 841, 843 (Cal. 1970)
(noting that the parties’ “reasonable expectations” suggested by “relatively small
premiums” did not contemplate extended coverage).
2. Dignity also argues that Atain acted in bad faith when it refused to
accept the tort plaintiffs’ settlement offer. But if there is no potential for coverage,
“there can be no action for breach of the implied covenant of good faith and fair
dealing.” Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 639 (Cal. 1995). Because
the policy did not cover the San Pablo building, Atain did not act in bad faith when
it did not accept the settlement offer.
AFFIRMED.
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