California Fire Coverage Exclusion, Summary Judgment on Good Faith.

   In Download Bishara v. Century Surety Co. (C.D. Cal. Case No. EDCV 09.01745, Order Filed April 6, 2011) PUBLIC ACCESS, also published as 2011 WL 1334406 (C.D. Cal. April 6, 2011)(authorized password required to access Westlaw), three rulings in particular deserve to be highlighted.  This is a case in which the Insurance Company issued a Policy which provided Coverage for loss  by Fire, but in which the Insurance Company denied all Coverage under an Exclusion for loss or damage caused by or resulting from a dishonest or criminal act by or on behalf of the Insured, among other provisIons.

   The Federal Court applied California Law and granted the Defendant Insurance Company's Motion for Summary Judgment of Good Faith, holding in pertinent part:

1. The Court held that the Exclusion was properly applied by the Insurance Company to deny all Coverage, carefully pointing out that in doing so, "the Court does not opine or make any findings as to whether Swidan actually set fire to the Restaurant.  Rather, the Court finds only that the uncontroverted evidence satisfies Defendant's burden of demonstrating there is an absence of evidence establishing Defendant breached the Policy" by denying Plaintiff's Coverage Claim.  Bishara v. Century Surety Co., 2011 WL 1334406 at *9.
2. As there was no Coverage, there could be no Bad Faith in this case under California Law, the Federal Court concluded.  Id. at *10.
3. Even if there could be a legally cognizable Bad Faith Claim in this case, said the Federal Court, California law would still impel the grant of Summary Judgment to the Insurance Company because of the California "genuine dispute" rule.  In this case, the Insurance Company relied on the Report of an Expert as to the cause of the Fire Loss in question before the Insurance Company denied all Coverage for the Fire Loss.  Under the California "genuine dispute" rule, Coverage may be genuinely disputed on the basis of "'a single, thorough report by an independent expert'".  Id. at *11.  So it was in this case.

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