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Scottsdale Insurance Co. v. Darke

United States District Court, N.D. California

November 22, 2019

Scottsdale Insurance Company, Plaintiff,
v.
Chitra Darke, et al., Defendants.

          ORDER GRANTING SCOTTSDALE INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT RE: DKT. NO. 43

          YVONNE GONZALEZ ROGERS, UNITED STATES DISTRICT COURT JUDGE.

         Now before the Court is plaintiff Scottsdale Insurance Company's (“Scottsdale”) motion for summary judgment against defendant State Farm General Insurance Company (“State Farm”)[1]regarding the former's duty to defend in an underlying landlord-tenant action. (Dkt. No. 43.) The Court heard oral argument on the motion on November 12, 2019.

         Having considered the parties' written and oral arguments, and the admissible evidence submitted, and for the reasons set forth herein, the Court Grants Scottsdale's motion. Specifically, the Court finds that the undisputed material facts show that there is no potential for coverage under the insurance policies at issue for claims raised in the underlying litigation. Accordingly, Scottsdale does not have a duty to defend.

         I. Summary of Facts

         A. The Underlying Action

         The instant complaint stems from coverage disputes arising out of three related actions filed in the Superior Court for the State of California, County of Alameda, captioned Andrea Thomas-Paul, et al. v. Prakash Darke, et al., No. RG18917468; Mohmmed Alqaisi v. Prakash Darke, et al., No. RG18931635; and Sandra Hendrix v. Prakash Darke, et al., Case No. RG18926859. Per the parties' stipulation, the motion at issue addresses Scottsdale's duty to defend only with respect to the first of the three, Thomas-Paul (the “Underlying Action”).[2] The complaint in the Underlying Action, filed August 20, 2018, concerns a property located at 3610 Enos Avenue, #A, in Oakland, California. That complaint alleges, in relevant part, as follows:[3]

         On or about February 1, 2014, Andrea Thomas-Paul rented a two-bedroom apartment unit in a multiple-unit building from Chitra and Prakash Darke. After Thomas-Paul moved into the apartment with her minor children, she discovered that, among other issues, the heater did not work, the property was infested with mice and rats, hot water was routinely unavailable for weeks at a time, the ceiling leaked water, and the security bars on the windows were unsafe or inoperable. Despite Thomas-Paul's repeated complaints, the Darkes failed to correct the defects.

         Thomas-Paul complained to the city of Oakland. The city inspected the property and notified the Darkes, in writing, about the defective condition of the property, requesting that the Darkes correct the issues within a specified period. The Darkes failed to do so and continued demanding rent from Thomas-Paul. The city eventually “red tagged” the property “because [it] was not zoned for residential use” and required that Thomas-Paul and her children relocate “because the property was not zoned for residential use and or was not habitable.” The city also notified the Darkes, again in writing, that the property was not zoned for residential use, requesting that the Darkes “make appropriate modifications to the property with appropriate building permits, within a reasonable amount of time.” The Darkes failed to comply. Thomas-Paul and her children were forced to vacate the apartment on or about July 1, 2018 because of “[the Darke's] harassing and unlawful conduct . . . and or because the city of Oakland red tagged the property because the property was defective and or not zoned for residential use.”

         Thomas-Paul claims that she was displaced from the property, denied exclusive use of the property, and denied quiet enjoyment of the property from approximately July 1, 2018 through the present. The complaint alleges fourteen causes of action for, among other things, negligence, nuisance, violation of state and local habitability and zoning laws, constructive eviction, breach of contract, breach of implied warranty of habitability, and breach of employed warranty of quiet enjoyment.[4]

         B. The Policies

         Scottsdale issued two successive commercial general liability policies to the Darkes, with effective policy periods of January 10, 2017 to January 10, 2018, and January 10, 2018 through January 10, 2019. (IE, Exs. 1, 2 (collectively, the “Policies”).)[5] The relevant coverage sections of the policies state as follows:

SECTION I-COVERAGES
COVERAGE A-BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any ‘suit' seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any ‘occurrence' and settle any claim or ‘suit' that may result. . . .
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the ...

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