United States District Court, N.D. California
ORDER GRANTING MOTION TO STAY RE: DKT. NO.
WILLIAM H. ORRICK UNITED STATES DISTRICT JUDGE.
Insurance Company (“Northfield”) brought this
action for declaratory relief against defendants Civic Center
Hotel, LLC; Balvantsinh “Bill” Thakor; and U.A.
Local 38 Pension Trust Fund (collectively, “Civic
Center Defendants”) concerning its obligation to
provide insurance coverage for certain types of damages in
two underlying state court actions in which tenants of the
Civic Center Hotel allege inhabitable conditions. The
underlying actions are ongoing and Northfield does not deny
its duty to defend. However, it seeks a declaration that
certain damages are not covered under Northfield Insurance
Policies (2012/2013 Policy, 2013/2014 Renewal, and 2014/2015
Renewal), and now moves for summary judgment that
attorneys' fees, restitution, and penalties are not
covered under the policies. Concurrently, defendant U.A.
Local 38 moves to dismiss this action because it is not ripe,
or to stay pending resolution of the underlying actions.
Additionally, defendants Civic Center Hotel and Bill Thakor
move for summary judgment on plaintiffs' fifth cause of
action that the “habitability of premises”
exclusion is unenforceable as a matter of law.
justification for proceeding now is that a resolution on
coverage for the three categories of damages will help
facilitate settlement negotiations. That is not a persuasive
reason for the Court to exercise jurisdiction. While this
action satisfies constitutional and statutory jurisdictional
prerequisites, I will STAY it pending resolution of the
underlying actions in Superior Court. I do not reach the
merits of the pending motions for summary judgment.
The Northfield Insurance Policies
Insurance Company (“Northfield) is a surplus lines
insurer that uses Coastal Brokers Insurance Services, Inc.
(“Coastal Brokers”) as its California agent.
Northfield's Opp'n to Defs.' Mot. for P. Summ. J.
at 1 (Dkt. No. 61). Northfield provided the defendants with
insurance from 2012 to 2015. Compl. ¶¶ 10-13 (Dkt.
No. 1). The initial insurance policy includes general
commercial liability (“GCL”) and covers a period
of March 31, 2012 to March 31, 2013 (“Northfield
2012/2013 policy”), Compl., Ex. A (Dkt. No. 1-1);
see also Tucker Decl., Ex. A (Dkt. No. 24-1). This
policy was renewed for a coverage period of March 31, 2013 to
March 31, 2014 (“Northfield 2013/2014 policy”),
Compl., Ex. B (Dkt. No. 1-2); see also Tucker Decl.,
Ex. B; and again from March 31, 2014 to March 31, 2015
(“Northfield 2014/2015 policy”), Compl., Ex. C
(Dkt. No. 1-3); see also Tucker Decl., Ex. C. Aside
from one critical difference described below, the Northfield
Policies, naming as insured “Civic Center Hotel, LLC.
DBA: Civic Center Hotel, ” are “materially
identical in all relevant respects.” Compl. ¶ 13.
Under each of the policies, Local 38 Trust, owner of the
property, is named as an additional insured, “but only
with respect to liability for ‘bodily injury, '
‘property damage' or ‘personal and
advertising injury' caused, in whole or in part, by the
acts and omissions of Civic Center Hotel… .”
Id. ¶ 14.
policies cover “Bodily Injury and Property Damage
Liability” under Coverage A and “Personal and
Advertising Injury Liability” under Coverage B, and
provide that Northfield “will pay those sums that the
insured becomes legally obligated to pay as damages because
of ‘bodily injury' or ‘property damage'
[or ‘personal and advertising injury'] to which
this insurance applies.” Compl. ¶ 15 (quoting
policies); see also Pl.'s Mot. for Summ. J. at 2
(“Pl.'s MSJ”)(Dkt. No. 23); Local 38's
Mot. to Dismiss or Stay at 5 (“MTDS”)(Dkt. No.
26). The “bodily injury” or “property
damage” must be caused by an “occurrence, ”
defined as “an accident, including continuous or
repeated exposure to substantially the same general harmful
conditions.” Compl. ¶ 15-16 (quoting policies).
“Bodily injury” is defined as “bodily
injury, sickness or disease sustained by a person…
.” Id. ¶ 16.
alleges that the provision entitled “Supplementary
Payments” expressly excludes attorneys' fees.
1. [The insurer] will pay, with respect to any claim we
investigate or settle, or any “suit” against an
insured we defend:
e. All court costs taxed against the insured in the
“suit.” However, these payments do not include
attorneys' fees or attorneys' expenses taxed against
Tucker Decl., Exs. A, B, C (Dkt. No. 24-1). It also contends
that each of the Northfield Policies excludes coverage for
“punitive or exemplary damages, fines, penalties or
multiplied damages. Compl. ¶ 21; Tucker Decl.
¶¶ 2-4; Ex. A; Ex. B; Ex. C.
2014/2015 Northfield Policy differs from the prior policies
in that it includes an additional exclusion for both Coverage
A and Coverage B, entitled “Habitability of
Premises.” Defs.' Cross-Motion for Partial Summ. J.
at 6 (“Defs.' MPSJ”)(Dkt. No. 50).
Exclusion - Habitability of
The following exclusion is added to Paragraph 2.,
Exclusions, of SECTION I - COVERAGES - COVERAGE A BODILY
INJURY AND PROPERTY DAMAGE LIABILITY [and] COVERAGE B
PERSONAL AND ADVERTISING INJURY LIABILITY:
"Bodily injury" or "property damage" [or]
“Personal and advertising injury”:
(1) Arising out of the:
(a) Actual or alleged violation of any federal, state or
local law, code, regulation, ordinance or rule relating to
the habitability of any premises;
(b) Breach of any lease, rental agreement, warranty or
covenant to maintain a premises in a ...