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And especially where the party did obtain the insurance.
In an unreported decision, a California District Court of Appeal affirmed a trial court's order dismissing an implied covenant claim. Sartiaguda v. Ivy Bridge Grp. (West Coast), Inc., No. B294402, 2020 WL 7488140 (Cal. 2d DCA, Div. 5, December 21, 2020) (stated unofficially reported and may not be cited in California Courts).
The DCA refused to recognize a cause of action for alleged breach of the implied covenant of good faith and fair dealing in this case. The case was brought by a person who took in a student under a program sponsored by the defendant. The student's high heels allegedly harmed the plaintiff's hardwood floors. The defendant was obligated to obtain liability insurance, and did so.
However, the liability carrier denied coverage. The carrier took the position that the student intentionally caused the damage. The plaintiff did not contest the carrier's decision or reasons for the carrier's decision.
Instead, the plaintiff sued the defendant which ran the program that provided both the student lodger, and a policy of liability insurance, as agreed.
Under these facts, the appellate court affirmed the trial court's determination that there simply was no breach of the implied covenant under California law. Sartiaguda, 2020 WL 7488140, at *3-*5.
The attempt to extend the contours of an implied covenant breach to the defendant in this case ran afoul of the same issue that stands in the way of many implied-covenant-breach claims against insurance companies, which is that "where there is no coverage, there is no bad faith."
Parenthetically, the student's mother offered the plaintiff $8,000.00 to repair the floors, but the plaintiff refused to take her money. Sartiaguda, 2020 WL 7488140, at *2.
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