Langill v. Allstate Insurance Company ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 EDWARD LANGILL and TRICIA Case No: 3:20-cv-000176-LAB-DEB LANGILL, 12 ORDER: Plaintiffs, 13 v. (1) GRANTING PLAINTIFFS’ 14 MOTION TO SEAL [DKT. 41]; ALLSTATE INSURANCE 15 COMPANY OF CALIFORNIA, and (2) DENYING PLAINTIFFS’ 16 DOES 1 through 10, inclusive, MOTION FOR PARTIAL 17 Defendants. SUMMARY JUDGMENT [DKT. 44]; AND 18 19 (3) GRANTING DEFENDANT’S MOTION FOR SUMMARY 20 JUDGMENT OR, IN THE 21 ALTERNATIVE, PARTIAL SUMMARY JUDGMENT 22 [DKT. 43]. 23 24 Plaintiffs Edward and Tricia Langill (collectively, the “Langills”) are the 25 owners of a condominium located in Coronado, California. When their back deck 26 was damaged by a water leak, their Homeowner’s Association (“HOA”) hired a 27 repair company to fix the damage. The HOA also hired another company to 28 remove asbestos they discovered in the walls surrounding the deck. But when the 1 condominium’s interior was contaminated with asbestos after the removal 2 company transported the debris through it, the Langills’ tenants, who were 3 occupying the condominium at the time, filed a lawsuit against them. The Langills 4 first hired a defense attorney to defend them, and then later tendered a claim with 5 their insurance company, Defendant Allstate Insurance Company (“Allstate”). 6 Allstate opened a claim and assumed coverage for the third-party lawsuit, but 7 refused to pay for the Langills’ pre-tender defense fees. 8 The Langills filed this suit against Allstate for claims related to Allstate’s 9 refusal to cover their defense costs. The parties now move for summary judgment 10 on the Langills’ claims for breach of contract and breach of the implied covenant 11 of good faith and fair dealing. Allstate also moves for summary judgment on 12 Plaintiffs’ request for punitive damages. For the reasons discussed herein, the 13 Langills’ Motion is DENIED and Allstate’s Motion is GRANTED. 14 I. FACTUAL BACKGROUND1 15 A. The Policy 16 In 2015, the Langills purchased a condominium located at 46 Antigua Court 17 in Coronado, California (“Property”), for which they purchased a homeowner’s 18 insurance policy (“Policy”) from Allstate. (Dkt. 1-2, First Amended Complaint 19 (“FAC”) ¶ 6). The Policy states, in relevant part: 20 Subject to the terms, conditions and limitations of this 21 22 23 1 Allstate objects to various evidence offered by the Langills in support of their Motion. (Dkt. 48-1, 48-2, and 53-2). Most, if not all, of the evidentiary objections 24 pertain to underlying exhibits or characterizations made in the Langills’ proffered 25 declarations. Allstate’s objections are OVERRULED as moot because the Court doesn’t rely on the objected-to evidence in ruling on the instant Motions. And to 26 the extent the objections overlap with any of the statements made in the parties’ 27 respective joint statements of undisputed fact, those statements were waived by the parties’ joint signatures on the statements, and Allstate’s objections are thus 28 1 policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury 2 or property damage arising from an occurrence, to which 3 this policy applies, and is covered by this part of the policy. 4 (Dkt. 43-2, Defendant’s Joint Statement of Undisputed Facts (“Def.’s JSUF”) ¶ 2).2 5 It also states: 6 We do not cover any bodily injury which results in any 7 matter from the discharge, dispersal, release, or escape of . . . toxic chemicals, . . . toxic solids, waste materials or 8 other irritants, contaminants or pollutants. We do cover 9 bodily injury which results from such discharge if the discharge is sudden and accidental. 10 11 (Dkt. 44-1, Plaintiffs’ Joint Statement of Undisputed Facts (“Pls.’ JSUF”) ¶ 1). The 12 Policy additionally provides that Allstate “will provide a defense with counsel of [its] 13 choice” if “an insured person is sued for these damages,” but the insured must 14 “promptly send [Allstate] any legal papers relating to the accident.” (Def.’s JSUF 15 ¶¶ 3–4). 16 B. Damage to the Property 17 In December 2016, the Langills learned of a water leak in the back of their 18 Property, (Pls.’ JSUF”) ¶¶ 2–3), and that their HOA would need to repair the 19 ensuing damage to their back deck (Def.’s JSUF ¶ 8). This repair work began in 20 January 2017, and the tenants who were occupying the Property, Steve and Yukari 21 Trubow (collectively, the “Trubows”), moved out while the repairs were being 22 performed. (Pls.’ JSUF ¶ 4; Def.’s JSUF ¶ 9). In addition, the HOA hired an 23 asbestos removal company, JJ&S Asbestos (“JJ&S”), to demolish and remove 24 25 26 2 In violation of the Court’s Civil Standing Order, the parties each submit a separate 27 joint statement of undisputed facts in support of their respective motions for summary judgment. For purposes of the Court’s analysis, and despite the parties’ 28 1 some of the surrounding stucco walls which contained asbestos fibers. (Pls.’ JSUF 2 ¶ 4). However, during this asbestos removal process, JJ&S staged its removal 3 equipment in the interior of the Property and carried the stucco debris from the 4 back of the Property through its interior and out the front door. (Id. ¶ 6). Later 5 testing revealed that the interior Property had been contaminated with asbestos 6 fibers. (Id. ¶ 5). 7 On January 20, 2017, after the Trubows’ discovery that the interior of the 8 Property had been contaminated with asbestos, Mr. Trubow left Mrs. Langill a 9 voicemail regarding his concerns about the health dangers associated with any 10 level of asbestos exposure, stating, “I am really going to go to a lawyer now. I am 11 very, very concerned.” (Id ¶ 11). The next day, Mr. Trubow sent an email to 12 Mrs. Langill, copying his attorney, Kenneth Gross, restating his concerns that any 13 level of asbestos exposure is unsafe and providing links to online articles 14 supporting these safety concerns. (Id. ¶¶ 12–14). 15 C. Allstate Insurance Claim 16 On January 20, 2017, the Langills called their Allstate insurance agent, 17 Jordie Fuller, who submitted a claim on their behalf for the damage to their deck. 18 (Id. ¶¶ 15–16). The claim was later assigned to a property claims adjustor, named 19 Sandra Mendoza, who spoke with Mrs. Langill on January 24, 2017. (Id. ¶¶ 21– 20 23). In her written notes from that call, Ms. Mendoza wrote that the “rot [on the 21 deck] has been going on long before [Mrs. Langill] purch[ased] the home in May 22 2015,” and that “asbestos is definitely outside on the stucco,” forcing “the tenant [ ] 23 to move out” even though “he paid 6 months upfront before he moved in.” (Id. 24 ¶ 24). Ms. Mendoza also noted that the “HOA told [the] tenant he needed to move 25 out,” but that Mrs. Langill “does not know what the unliveable situation is.” (Id. 26 ¶ 24). Ms. Mendoza did not open a bodily injury claim for the Langills at the time. 27 (Id. ¶ 25). 28 On February 15, 2017, Allstate denied the Langills’ property damage claim 1 based on a Policy exception relating to pre-existing, long-term deterioration to the 2 Property. (Id. ¶ 29; Def.’s JSUF ¶ 13–14). Allstate’s denial letter stated: “If you 3 believe this claim has been wrongfully denied or rejected, in whole or part, you 4 may contact the California Department of Insurance.” (Def.’s JSUF ¶ 15). The 5 Langills didn’t file a complaint against Allstate with the California Department of 6 Insurance. (Id. ¶ 17). 7 D. Trubow Lawsuit 8 On April 7, 2017, Mrs. Langill called her insurance agent to discuss potential 9 claims filed by the Trubows against the Langills. (Id. ¶ 18; Pls.’ JSUF ¶ 55). 10 Mrs. Langill informed Mr. Fuller that “her attorney feels [the Langills] may get 11 named in a suit regarding the asbestos abatement issue.” (Def.’s JSUF ¶ 18). The 12 Langills were indeed sued by the Trubows on May 15, 2017, and later served with 13 the complaint on May 23, 2017. (Id. ¶¶ 19–20). On July 20, 2018, the Langills 14 informed Mr. Fuller that they were sued (“July 2018 Tender”). (Id. ¶¶ 21–28). Mr. 15 Fuller asked them to send him a copy of the complaint, which they did. (Id. ¶ 22). 16 Following the July 2018 Tender, Allstate opened a claim, retained defense counsel 17 to represent the Langills, and ultimately settled the Trubow lawsuit on the Langills’ 18 behalf. (Id. ¶ 24; Pl.’s JSUF ¶ 62). 19 E. Present Lawsuit Against Allstate 20 On July 1, 2019, the Langills filed a complaint against Allstate for claims of 21 breach of contract and breach of the implied covenant of good faith and fair dealing 22 in Superior Court for the County of San Diego. (Dkt. 1-2). The Langills requested 23 general damages, attorneys’ fees and litigation costs, pre-judgment interest, and 24 punitive damages. (Id. at 9). Allstate removed the state court action to the Southern 25 District of California. (Dkt. 1). After engaging in discovery, the parties filed the 26 instant motions for summary judgment. (Dkt. 43, 44). 27 II. MOTION TO SEAL 28 In support of their Motion for Partial Summary Judgment, the Langills have 1 filed a motion for leave to file documents under seal. (Dkt. 41). 2 There is a strong underlying presumption that the public will have access to 3 any document filed with the Court. See Phillips v. Gen. Motors Corp., 307 F.3d 4 1206, 1210 (9th Cir. 2002). The standard for sealing documents in support of 5 briefing on a dispositive motion is high, and requires a showing that “compelling 6 reasons” support a need for secrecy. Kamakana v. City & County of Honolulu, 447 7 F.3d 1172, 1180 (9th Cir. 2006). If the request is granted, the Court’s sealing order 8 must weigh the competing interests and articulate the factual basis for its ruling 9 without relying on hypothesis or conjecture, and the order must be narrowly 10 tailored. Id. at 1179; Press-Enterprise Co. v. Super. Ct., 478 U.S. 1, 13–14 (1986). 11 The only reason the motion gives for sealing is that the protective order 12 entered in this case requires it. (Dkt. 42 ¶ 3). But the protective order was issued 13 pursuant to the parties’ joint motion and doesn’t include enough analysis to show 14 that the high standard is met for sealing documents filed in support of briefing on 15 a dispositive motion. Nevertheless, because the Court hasn’t considered the 16 information contained in the relevant documents for purposes of its analysis of the 17 parties’ summary judgment motions, nor has the Court relied on them in rendering 18 its ruling, the public access concern is minimal under the circumstances. Thus, the 19 Langills’ motion to seal is GRANTED. 20 III. MOTION FOR SUMMARY JUDGMENT 21 A. Standard of Review 22 Summary judgment is appropriate under Rule 56(a) where the movant 23 “shows that there is no genuine dispute as to any material fact and the movant is 24 entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In order to prevail, 25 a party moving for summary judgment must show the absence of a genuine issue 26 of material fact with respect to an essential element of the non-moving party’s 27 claim, or to a defense on which the non-moving party will bear the burden of 28 persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once 1 the movant has made this showing, the burden then shifts to the party opposing 2 summary judgment to identify “specific facts showing there is a genuine issue for 3 trial.” Id. at 324. 4 The party opposing summary judgment must then present affirmative 5 evidence from which a jury could return a verdict in that party’s favor. Anderson v. 6 Liberty Lobby, 477 U.S. 242, 257 (1986). On summary judgment, the Court draws 7 all reasonable factual inferences in favor of the non-movant. Id. at 255. “Credibility 8 determinations, the weighing of the evidence, and the drawing of legitimate 9 inferences from the facts are jury functions, not those of a judge.” Id. (citation 10 omitted). “The mere existence of a scintilla of evidence in support of the plaintiff’s 11 position will be insufficient; there must be evidence on which the jury could 12 reasonably find for the plaintiff.” Id. at 242. 13 The Court does not make credibility determinations or weigh conflicting 14 evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Rather, the 15 Court determines whether the record “presents a sufficient disagreement to require 16 submission to a jury or whether it is so one-sided that one party must prevail as a 17 matter of law.” Id. at 251–52. 18 B. Breach of Contract Claim 19 Both Allstate and the Langills move for summary judgment on the Langills’ 20 claim for breach of contract. The parties don’t appear to dispute that the claims 21 asserted in the Trubow lawsuit were covered under the Langills’ Policy with 22 Allstate. However, the parties do dispute whether Allstate had a duty to defend; 23 when the Langills tendered their defense to Allstate; and whether Allstate failed to 24 investigate the Langills’ asbestos-related claims. 25 An insurer’s “duty to defend arises when the insured tenders defense of the 26 third party lawsuit to the insurer.” Foster-Gardner, Inc. v. Nat’l Union Fire Ins. Co., 27 18 Cal. 4th 857, 886, 959 P.2d 265 (1998). “[W]hen a suit against an insured 28 alleges a claim that potentially or even possibly could subject the insured to liability 1 for covered damages, an insurer must defend unless and until the insurer can 2 demonstrate, by reference to undisputed facts, that the claim cannot be covered.” 3 Borg v. Transamerica Ins. Co., 47 Cal. App. 4th 448, 455, 54 Cal. Rptr. 2d 811 4 (1996). The duty to defend is determined from the policy, the complaint, and all 5 facts known to the insurer. Montrose Chem. Corp. v. Superior Ct., 6 Cal. 4th 287, 6 300, 861 P.2d 1153 (1993). To prevail on a duty to defend claim, an insured need 7 only show that the underlying claim may fall within policy coverage, while insurers 8 must prove that the underlying claim cannot fall within policy coverage. Ameron 9 Int. Corp. v. Ins. Co. of State of Pennsylvania, 50 Cal. 4th 1370, 1378 (2010). 10 The defense duty is a continuing one, arising on tender of defense and 11 lasting until the underlying lawsuit is concluded or until it has been shown that there 12 is no potential for coverage. Montrose Chemical Corp., 6 Cal. 4th at 300. An insurer 13 need not have actual notice of claims triggering the duty to defend. California 14 Shoppers v. Royal Globe Ins. Co., 175 Cal. App. 3d 1, 37 (1985). Rather, 15 constructive notice of such claims is sufficient to trigger the duty. Id. Notice of the 16 summons or complaint of the underlying action may suffice as constructive notice. 17 OneBeacon Am. Ins. Co. v. Fireman’s Fund Ins. Co., 175 Cal. App. 4th 183, 200, 18 95 Cal. Rptr. 3d 808 (2009). Crucially, the insured must make a “showing of 19 potential for coverage” to trigger the duty. The Hous. Grp. v. PMA Capital Ins. Co., 20 193 Cal. App. 4th 1150, 1156, 123 Cal. Rptr. 3d 603 (2011). “Any doubt as to 21 whether the facts give rise to a duty to defend is resolved in the insured’s favor.” 22 The Upper Deck Co., LLC v. Fed. Ins. Co., 358 F.3d 608, 612 (9th Cir. 2004) 23 (citation omitted). 24 Allstate doesn’t appear to challenge that it would have owed the Langills a 25 duty to defend had they promptly tendered a defense to it when they were served 26 with the Trubow lawsuit. Instead, Allstate argues that any duty it had is triggered 27 only by the Langills’ tender, and that any fees incurred prior to the date of tender 28 are not covered under the Policy. Although the Langills were sued by the Trubows 1 in May 2017, Allstate maintains that the Langills didn’t tender their claim for the 2 Trubow lawsuit until July 2018, over a year later. (Dkt. 43-1 at 4). Allstate 3 acknowledges that the Langills had previously communicated to Allstate’s agents 4 their concerns about the Trubows’ potential asbestos-related claims, but argues 5 that the Langills didn’t send the Trubow complaint or request coverage from 6 Allstate until Mrs. Langill called her Allstate agent in June 2018 and sent him the 7 complaint. (Dkt. 48 at 8–9). 8 The Langills instead suggest they “repeatedly” provided Allstate with actual 9 notice—or, at least, constructive notice—prior to July 2018, including back in 10 January 2017 when the Langills first called Allstate about a claim for damage to 11 their back deck and they mentioned that the asbestos on the Property was a 12 concern for their tenant, as well as in April 2017 when Mrs. Langill called Allstate 13 and reported “that she may be sued as a result of the asbestos contamination 14 issue.” (Dkt. 44-1 at 14–15). The Langills also vaguely allude to “several 15 conversations” they had with their Allstate agent between May 2017 and July 2018, 16 after they’d been served with the Trubow complaint, but they concede that these 17 conversations were about “other insurance issues” and never suggest that they 18 attempted to tender a claim at any point during these conversations. (Dkt. 44-4, 19 Declaration of Tricia Langill (“T. Langill Decl.”) ¶ 20). The Langills even admit that 20 the first time they ever sent Allstate a copy of the Trubow complaint was in July 21 2018. Mrs. Langill admits: 22 Q: Okay. In July of 2018, [Jordie Fuller] instructed you to send him a copy [of the Trubow lawsuit], though; right? 23 A: Well, somebody instructed me, yes. 24 Q: Okay. Did he ever tell you that Allstate denied coverage for the Trubow lawsuit at any time? 25 A: Not that I’m aware of. 26 Q: Did you ever ask Allstate for coverage for the Trubow lawsuit any time prior to July of 2018? 27 A: Not that I recall. 28 Q: Okay. So you never instructed Jordie Fuller prior to July 1 2018 to submit a claim to Allstate on your behalf for the Trubow lawsuit; correct? 2 A: Correct. 3 (Dkt. 43-10 at 138:20–139:1). 4 The Langills next contend that even if Allstate didn’t have actual notice of the 5 Trubow lawsuit, the notice requirement was waived because Allstate previously 6 denied the Langills insurance coverage in February 2017. But this argument is 7 directly contradicted by the record. Mrs. Langill admits in her deposition that the 8 claim she made in January 2017, and which was denied in February 2017, was 9 only related to the damage to her back deck, and not about anything relating to 10 asbestos. (Dkt. 48-8 at 62:4–7 (“Q: So did you think that your claim that you 11 submitted, Claim No. 0443331038, had anything to do with anything other than a 12 water leak on your deck? A: No.”)). 13 The Court finds that, at a minimum, notice of the Trubow lawsuit could not 14 have been given to Allstate prior to May 2017 because the lawsuit didn’t even exist 15 before that time. The Trubows may have complained about safety issues, 16 expressed their concerns related to asbestos contamination, and threatened to 17 sue, but they didn’t actually file the lawsuit until May 2017. Before that, no claim 18 existed for Allstate to defend, and therefore, their duty couldn’t have been triggered 19 before that time. The Langills point to no authority to suggest otherwise, and the 20 Court is likewise unable to identify any case that proposes such an overbroad 21 interpretation of the established tender rule. Cf. Foster-Gardner, Inc., 18 Cal. 4th 22 at 886 (“Prior to the filing of a complaint, there is nothing for the insured to tender 23 defense of, and hence no duty to defend arises.”) (emphasis in original); Montrose 24 Chem. Corp, 6 Cal. 4th at 295 (“The determination whether the insurer owes a duty 25 to defend usually is made in the first instance by comparing the allegations of the 26 [third-party] complaint with the terms of the policy.”) (citations and internal 27 quotation marks omitted). Nor is it plausible to suggest that Allstate had a 28 1 continuing duty to investigate potential coverage before it had even found out 2 about the lawsuit. Cf. Daniels v. Allstate Ins. Co., No. 14-CV-00824-LHK, 2014 WL 3 4954826, at *6 (N.D. Cal. Oct. 1, 2014) (“Defendant satisfied its obligation to 4 investigate Plaintiffs’ claim by comparing the terms of the Policy with the underlying 5 complaint filed by the Kennedys, taking into account all extrinsic facts provided by 6 Plaintiffs. Under California law, the duty of the insurer is fully discharged by review 7 of the underlying complaint and the insurance policy.”); Baroco W., Inc. v. 8 Scottsdale Ins. Co., 110 Cal. App. 4th 96, 103, 1 Cal. Rptr. 3d 464, 469 (2003) 9 (“After receiving a tender of defense, the insurer satisfies its duty to investigate by 10 considering the complaint and the terms of the policy.”). 11 And even after the Trubow lawsuit was filed, the Langills concede that they 12 didn’t request that their claim be covered until they spoke to their Allstate agent in 13 July 2018 and sent him a copy of the complaint. Thus, Allstate’s duty to defend 14 was not triggered until the Langills tendered their claim in July 2018. See 15 Czerwinski v. Scottsdale Ins. Co., No. CV 17-4408 PA (MRWX), 2017 WL 16 8116235, at *6 (C.D. Cal. Sept. 11, 2017) (“Contrary to Plaintiffs’ suggestion that 17 the insurers’ constructive notice of the existence of the Cross-Complaint was 18 sufficient to trigger the insurers’ duties to defend them, the duty to defend is 19 triggered by tender of the claim by the insureds to the insurer.”); Larkin v. ITT 20 Hartford, No. C 96-1575 CRB, 1999 WL 459351, at *8 (N.D. Cal. June 29, 1999) 21 (“The duty to defend arises upon the insured’s tender of a claim. Plaintiffs have not 22 cited any case, and the Court is aware of none, in which the duty to defend was 23 triggered by the insurer’s learning of a claim against the insured even though the 24 insured never attempted to tender the claim. Such a holding would place the 25 burden on the insurer to inquire if the insured wants a defense anytime the insurer 26 learns of a possible claim against the insured. The Court declines to create such 27 a burden.”); Aerojet-Gen. Corp. v. Transp. Indem. Co., 17 Cal. 4th 38, 58, 948 P.2d 28 909 (1997) (“[The duty to defend] arises as soon as tender is made, before liability 1 is established and apart therefrom. It is discharged when the action is concluded.”). 2 The Langills now seek recovery of the attorney’s fees they incurred to defend 3 the Trubow lawsuit during the intervening year between the commencement of the 4 Trubow lawsuit and their July 2018 tender. Allstate agues that their recovery is 5 foreclosed by the express language in the Policy which prohibits an insured person 6 from making any voluntary payments. (Dkt. 48 at 6–7). The Langills respond that 7 Allstate’s prior denial of coverage in February 2017 resulted in “the insurer’s 8 forfeiture of its right to control the defense of the action or settlement.” (Dkt. 52 at 9 11). But as explained previously, the evidence establishes that the February 2017 10 denial of coverage was related to damage to the Langills’ back deck and didn’t 11 have anything to do with asbestos-related claims. That the asbestos issue may 12 have been discussed with Allstate agents around that time is irrelevant where the 13 claim itself was made specifically in relation to the rot and deterioration of the back 14 deck. 15 For the reasons stated above, the Court finds that Allstate did not breach the 16 Policy. Allstate’s Motion for Summary Judgment as to the first cause of action is 17 GRANTED. 18 C. Breach of the Implied Covenant of Good Faith and Fair Dealing. 19 “[T]he covenant of good faith and fair dealing is implied in every contract, the 20 breach of which is a tort.” Hubka v. Paul Revere Life Ins. Co., 215 F. Supp. 2d 21 1089, 1092 (S.D. Cal. 2002) (citations omitted). “In order to establish a breach of 22 the implied covenant of good faith and fair dealing under California law, a plaintiff 23 must show: (1) benefits due under the policy were withheld and (2) the reason for 24 withholding benefits was unreasonable or without proper cause.” Guebara v. 25 Allstate Ins. Co., 237 F.3d 987, 992 (9th Cir. 2001). The covenant “has ‘particular 26 application’ to insurers because they are ‘invested with a discretionary power 27 affecting the rights of another,’ and the insurance business is ‘affected with a public 28 interest and offers services of a quasi-public nature[.]’” Amadeo v. Principal Mutual 1 Life Ins. Co., 290 F.3d 1152, 1161 (9th Cir. 2002) (citations omitted). 2 Although the issue of reasonableness “is ordinarily a question of fact,” 3 Highlands Ins. Co. v. Continental Casualty Co., 64 F.3d 514, 517 (9th Cir. 1995) 4 (citing Walbrook Ins. v. Liberty Mut. Ins., 5 Cal.App.4th 1445, 1454, 7 Cal. Rptr. 2d 5 513 (1992)), Allstate argues that it is entitled to judgment on this issue under the 6 genuine issue, or genuine dispute as to coverage, doctrine. This doctrine allows a 7 court to “conclude as a matter of law that an insurer’s denial of a claim is not 8 unreasonable, so long as there existed a genuine issue as to the insurer’s liability.” 9 Guebara, 237 F.3d at 992 (quoting Lunsford v. Am. Guar. & Liab. Ins. Co., 18 F.3d 10 653, 656 (9th Cir.1994)). It allows a court to treat reasonableness as a question of 11 law if there is a genuine dispute as to coverage. See Feldman v. Allstate Insurance 12 Company 322 F.3d 660, 669 (9th Cir.), cert. denied, 540 U.S. 875 (2003) 13 (“Because the key to a bad faith claim is whether denial of a claim was reasonable, 14 a bad faith claim should be dismissed on summary judgment if the defendant 15 demonstrates that there was ‘a genuine dispute as to coverage.’”) (citation 16 omitted). But “where the insurer’s position is maintained in good faith and on 17 reasonable grounds,” there is no breach of the implied covenant even if the 18 insurer’s interpretation of the contract is erroneous. Wilson v. 21st Century Ins. 19 Co., 42 Cal. 4th 713, 723–24, 171 P.3d 1082, 1089 (2007); see also Chateau 20 Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335, 21 337, 108 Cal. Rptr. 2d 776 (2001) (“The mistaken or erroneous withholding of 22 policy benefits, if reasonable or based on a legitimate dispute as to the insurer’s 23 liability under California law, does not expose the insurer to bad faith liability.”). 24 Here, Allstate claims there is a genuine dispute among the parties 25 concerning (1) when the claim for coverage of the Trubow lawsuit was tendered; 26 (2) whether Allstate denied coverage for the asbestos claim in February 2017; and 27 (3) whether Allstate is obligated to provide coverage before July 2018. (Dkt. 43-1 28 at 11). Because there is a genuine dispute over these issues, Allstate argues, there 1 can be no finding of bad faith. The Langills, on the other hand, argue that Allstate’s 2 failure to defend them in the Trubow lawsuit was unreasonable and in bad faith 3 because although Allstate was made aware of the Trubows’ asbestos claim before 4 July 2018, it failed to properly investigate the claim. (Dkt. 44-1 at 18). They contend 5 that Allstate’s “lack of investigation was not simply bad judgment or inexperience,” 6 rather “it was a product of Allstate’s failure to implement procedures for its 7 adjusters as to the handling of claims under its policies.” (Id. at 20). The court is 8 not persuaded by this argument, nor does the evidence support such a conclusion. 9 Although an insurer’s failure to conduct a thorough investigation is one of the 10 situations where the question of whether there is a genuine coverage dispute could 11 remain a factual question for the jury, such is not the situation here. See Chateau 12 Chamberay Homeowners Ass’n, 348, 108 Cal. Rptr. 2d 776. As discussed 13 previously, the evidence indicates that the Langills were served with the Trubow 14 lawsuit in May 2017, but they didn’t inform Allstate of the lawsuit until over a year 15 later in July 2018. The Langills themselves admitted in their deposition testimony 16 that the initial claim they submitted to Allstate in January 2017 was related only to 17 the property damage to their back deck. Given that the Langills weren’t even sued 18 until May 2017, and they didn’t tender their claim until July 2018, the Langills 19 cannot plausibly argue that Allstate failed to investigate or take any action. See 20 Globe Indem. Co. v. Superior Ct., 6 Cal. App. 4th 725, 731, 8 Cal. Rptr. 2d 251, 21 255 (1992) (“The contractual duty to pay policy proceeds did not arise until plaintiffs 22 provided the information necessary to allow [the insurer] to determine whether the 23 accident on the stolen motorcycle was covered under the terms of the policy.”). 24 And the evidence indicates that upon the July 2018 tender, Allstate acted 25 reasonably in assuming coverage of the claims. At the very least, under these 26 circumstances, Allstate has demonstrated that there are triable issues of fact, thus 27 barring any bad faith claim. Allstate’s motion for summary judgment as to the 28 second cause of action is GRANTED. 1 D. Punitive Damages 2 Finally, Allstate moves for summary judgment on the Langills’ claim for 3 punitive damages. At the summary judgment stage, the Court must examine a 4 request for punitive damages under the “clear and convincing” standard. California 5 v. Altus Fin. S.A., 540 F.3d 992, 1000 (9th Cir. 2008). According to California Civil 6 Code § 3294, a plaintiff may only recover punitive damages under this heightened 7 standard if the plaintiff can demonstrate that “the defendant has been guilty of 8 oppression, fraud, or malice.” Cal. Civ. Code § 3294(a). Even proving bad faith, 9 without more, doesn’t establish the requisite evidence for a punitive damages 10 claim. Beck v. State Farm Mut. Auto Ins. Co., 54 Cal. App. 3d 347, 355–56, 126 11 Cal. Rptr. 602 (1976) (holding that “[p]roof of a violation of the duty of good faith 12 and fair dealing does not establish that the defendant acted with the requisite 13 intent” for a punitive damages award). However, “a plaintiff may meet the state of 14 mind requirement for an award of punitive damages by showing that the insurer’s 15 bad faith was ‘part of a conscious course of conduct, firmly grounded in established 16 company policy.’” Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, –65 (9th 17 Cir. 2002) (quoting Neal v. Farmers Ins. Exch., 21 Cal.3d 910, 148 Cal. Rptr. 389, 18 582 P.2d 980, 987 (1978)). 19 Allstate argues that there is no evidence, much less clear and convincing 20 evidence, that it perpetrated any fraud, oppression, or malice, and its mere refusal 21 to provide a pre-tender defense is insufficient to meet this standard. (Dkt. 43-1 22 at 11; Dkt. 53 at 9). In response, the Langills argue that Allstate’s “tortious conduct 23 cannot be considered anything but oppressive” because Allstate was put on notice 24 of the Trubows’ claim prior to the July 2018 tender and yet was deliberately 25 indifferent to the Langills’ claims. (Dkt. 52 at 20). They further argue that Allstate 26 had a clear profit motive in denying them coverage because Allstate has a bonus 27 structure that encourages the denial of benefits under its policies. (Id. at 21). 28 The California Code of Civil Procedure defines “malice” as “conduct which is 1 intended by the defendant to cause injury to the plaintiff or despicable conduct 2 which is carried on by the defendant with a willful and conscious disregard of the 3 rights or safety of others.” Cal. Civ. Code § 3294(c)(1). The Code also defines 4 “oppression” as “despicable conduct that subjects a person to cruel and unusual 5 hardship in conscious disregard of that person’s rights.” “Despicable conduct,” in 6 turn, is defined as conduct “so vile, base, contemptible, miserable, wretched or 7 loathsome that it would be looked down upon and despised by ordinary decent 8 people.” Stewart v. Truck Ins. Exch., 17 Cal. App. 4th 468, 483, 21 Cal. Rptr. 2d 9 338 (1993) (internal citations and quotation marks omitted). 10 Viewing the evidence in the light most favorable to the plaintiffs, the Court 11 finds that the Langills have not provided evidence that would allow a jury to find, 12 by clear and convincing evidence, that Allstate engaged in any such malicious or 13 oppressive conduct, as they claim. Even if a jury could find that Allstate’s actions 14 were unreasonable and in bad faith, there was nothing done here that rises to the 15 level of “despicable conduct.” See Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 16 4th 1269, 1288, 31 Cal. Rptr. 2d 433, 445 (1994) (“There was nothing done, 17 however, which could be described as evil, criminal, recklessly indifferent to the 18 rights of the insured, or with a vexatious intention to injure.”). Indeed, the record 19 demonstrates that when the Langills informed their Allstate agent that the Trubows 20 were threatening to sue them, they were told to notify Allstate when the lawsuit 21 was eventually filed. But the Langills didn’t do that for over a year after they were 22 served with the complaint. And yet, upon finally being notified of the Trubow 23 lawsuit, Allstate diligently opened a claim, retained counsel to represent the 24 Langills, and ultimately settled the Trubow lawsuit on the Langills’ behalf. (Def.’s 25 JSUF ¶ 24; Pl.’s JSUF ¶ 62). The Langills’ contentions that they repeatedly asked 26 Allstate to help defend them and that Allstate’s actions were part of a company- 27 wide policy to deny claims are simply not supported by the record before the Court. 28 Because the Langills have not shown that a genuine issue of material fact 1 ||exists as to whether punitive damages are warranted, the Court also GRANTS 2 ||Allstate’s motion for summary judgment on this claim. 3 IV. CONCLUSION 4 For the foregoing reasons, the Court DENIES Plaintiffs’ Motion for Partial 5 ||Summary Judgment and GRANTS Defendant’s Motion for Summary Judgment 6 || Or, In the Alternative, Partial Summary Judgment. 7 The Clerk is instructed to terminate this case. 8 IT IS SO ORDERED. 9 10 ||Dated: September 30, 2021 lau 4 (Ayn 11 Honorable Larry AlanBurns 42 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28