Davis v. National Interstate Insurance Company

• Court: District Court, E.D. California
• Decided: August 11, 2023
• Docket: 1:23-cv-00936
• Status: Unknown

Opinion

8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10

11 ANTHONY DAVIS, Case No. 1:23-cv-00936-ADA-CDB

12 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS COMPLAINT 13 v. PURSUANT TO FED. R. CIV. P. 12(b)(6) AND GRANTING LEAVE TO AMEND 14 NATIONAL INTERSTATE INSURANCE COMPANY, (Doc. 3) 15 Defendant. 21-DAY DEADLINE 16 17 18 Pending before the Court is the motion by Defendant National Interstate Insurance 19 Company to dismiss the complaint of Plaintiff Anthony Davis, filed June 29, 2023, pursuant to 20 Fed. R. Civ. P. 12(b)(6). (Doc. 3).1 The Court has received and considered Plaintiff’s opposition 21 papers (Doc. 5) and Defendant’s reply (Doc. 8). 22 Background 23 On October 21, 2019, Plaintiff filed a personal injury lawsuit in the Superior Court for the 24 State of California, County of Kern, against Ten-West Towing, its alleged owner, James R. Cady, 25 and an employee, Brandon Edwards. See Complaint (Doc. 1-1) ¶ 10. Plaintiff amended the 26 complaint twice, and the operative, third amended complaint was filed on August 28, 2020 (the

27 1 Defendant’s motion to dismiss was assigned for decision to the undersigned following the parties’ filing of forms acknowledging their consent to the jurisdiction of a magistrate judge, 1 “Underlying Action”). Id. ¶ 17. In the Underlying Action, Plaintiff alleged he sustained personal 2 injuries while at Ten-West Towing’s property on or around April 15, 2019. Id. ¶ 11. Specifically, 3 Plaintiff alleged that on that date, he was directed to Ten-West Towing’s property when Cady 4 confronted him and began swearing and directing racial epithets towards Plaintiff. Id. ¶ 17. At 5 some point, Edwards allegedly “ran up to Plaintiff, and punched Plaintiff, dropping Plaintiff to 6 the ground without provocation.” Id. Plaintiff alleged that he was “viciously beaten up.” 7 Although Edwards allegedly claimed he merely was trying to “get in between [Plaintiff] and 8 [Cady]” during the engagement, according to Plaintiff’s allegations, “video footage shows that 9 [Edwards] did not take any action to separate Plaintiff from the owner.” Id. Further, Plaintiff 10 alleges that “Edwards’ excuse of ‘protecting the owner’ is not substantiated by the actual video 11 footage and it can be reasonably inferred that [Edwards] was irrationally angry and motivated to 12 hurt Plaintiff.” Id. Plaintiff alleged that “the assault” by Edwards caused him both physical 13 injury and mental and emotional distress. Id. 14 Defendant National Interstate Insurance Company (“NIIC” or “Defendant”) issued an 15 insurance policy to Ten-West Towing for the policy period of November 1, 2018 to November 16 1, 2019 (the “Policy”). The Policy included a Commercial General Liability Coverage Form that 17 provides, in general, that NIIC will pay those sums that Ten-West Towing becomes legally 18 obligated to pay as damages because of “bodily injury” or “property damage” to which the Policy 19 applies. Complaint ¶ 9 & Exhibit A (Doc. 1-1 at ECF p. 82). The Policy further provides that 20 NIIC will have the right and duty to defend the insured against any “suit” seeking those damages. 21 Complaint Exhibit A (Doc. 1-1 at ECF p. 82). The Policy also includes an “Expected or Intended 22 Injury” exclusion, which states that: “This insurance does not apply to ... ‘Bodily injury’… 23 expected or intended from the standpoint of the insured. This exclusion does not apply to ‘bodily 24 injury’ resulting from the use of reasonable force to protect persons or property.” Id. at ECF p. 25 83. 26 Additionally, the Policy included an endorsement entitled “EXCLUSION – ASSAULT & 27 BATTERY.” Complaint Exhibit A (Doc. 1-1 at ECF p. 112). That endorsement modified the 1 other violent crime, and (2) “Any act or omission in connection with the prevention or 2 suppression of assault, battery or any other violent crime.” Id. 3 In connection with the Underlying Action, Ten-West Towing and/or Cady notified NIIC 4 and requested coverage and defense under the Policy from NIIC. Complaint ¶ 12. On January 5 27, 2020, NIIC issued a letter to Ten-West Towing asserting its “Reservation of Rights.” Id. 6 NIIC initially accepted tenders of defense, subject to reservations of its rights, but on January 26, 7 2021, declined to continue providing coverage or a defense to the insureds after discovering 8 information it claimed precluded coverage under the aforementioned assault and battery 9 endorsement/exclusion. Id. ¶¶ 12, 14, 15, 18. 10 According to Plaintiff’s allegations, on November 14, 2022, the parties in the Underlying 11 Action settled the case. Complaint ¶ 22. A copy of the settlement agreement is attached to and 12 incorporated in Plaintiff’s complaint in the instant action. Among other things, the settlement 13 agreement provides that Plaintiff is assigned Ten-West Towing and Cady’s rights under the 14 Policy for breach of NIIC’s duty to defend, bad faith, “and any other applicable claims both in 15 contract and tort.” Id. The parties agreed to the terms of a stipulated judgment in the amount of 16 $5 million in Plaintiff’s favor, but also agreed that the final judgment in the Underlying Action 17 “be held and not entered pending resolution of the Assigned Claims against NIIC.” Id. Exhibit 18 B ¶ 1. In exchange for a payment of $200,000 from NIIC, Plaintiff agreed not to attempt to 19 collect on the final judgment in the Underlying Action. Id. ¶ 4. 20 On May 10, 2023, Plaintiff filed this action against Defendant in the Superior Court for the 21 State of California, County of Kern. In the complaint, Plaintiff asserts four causes of action: (1) 22 breach of contract; (2) breach of implied covenant – unreasonable failure to defend; (3) breach 23 of implied covenant – refusal to accept reasonable settlement demand; (4) declaratory judgment. 24 On June 22, 2023, Defendant removed the action to this Court. 25 Party Contentions 26 In its pending motion, Defendant argues that Plaintiff’s breach of contract claim should be 27 dismissed because Defendant did not have a duty to defend in the Underlying Action. 1 to certain of its terms, exclusions and endorsements. Defendant asserts that the Policy’s 2 “Exclusion – Assault & Battery” endorsement and “Expected or Intended Injury” exclusion apply 3 to preclude coverage. Defendant separately argues that California Insurance Code § 533 applies 4 to preclude coverage, and also, that the Policy is inapplicable because the Underlying Action was 5 predicated on events that do not constitute a coverable “Occurrence” under the policy. 6 In opposition, Plaintiff argues that the Policy is ambiguous and, accordingly, must be 7 construed in accordance with Plaintiff’s reasonable expectations. (Doc. 5 pp. 11-13). 8 Specifically, Plaintiff asserts that the “Expected or Intended Injury” exclusion expressly excepts 9 “bodily injury resulting from the use of reasonable force to protect persons or property.” (Id. p. 10 11). Under the facts and circumstances that Plaintiff proffers concerning the events in the 11 Underlying Action, this “reasonable force” exception “creates a potential for coverage” and that 12 such exceptions are interpreted broadly under California law in favor of coverage. Further, 13 Plaintiff argues that the assault and battery exclusion is an “inconsistent” and “competing 14 provision[]” and that the resulting ambiguity requires an interpretation of the Policy that favors 15 finding a duty to defend. (Id. pp. 12-13). Additionally, Plaintiff argues that Insurance Code § 16 533 does not apply because that policy’s named insureds (a corporate entity and its CEO) are not 17 alleged to have engaged in willful conduct, but rather, would be liable (if at all) vicariously. 18 In its reply, Defendant points out that Plaintiff does not challenge the effectiveness or 19 enforceability of the assault and battery exclusion. (Doc. 8 pp. 5-6) Further, Defendant argues 20 that while the Policy is not ambiguous, even if there was an ambiguity due to the two exclusions 21 Plaintiff asserts are inconsistent and in conflict, under California law, the assault and battery 22 exclusion takes precedence because it is contained in an endorsement to the Policy. Defendant 23 urges the Court to disregard the extrinsic evidence Plaintiff proffers in his opposition papers. (Id. 24 p. 7). Defendant also argues that Plaintiff is incorrect to assert that California Insurance Code § 25 533 is no bar to coverage because, here, the named insureds ratified the tortfeasor’s willful 26 conduct. (Id. pp 8-10). 27 / / / 1 Legal Standard 2 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) asks a court to dismiss 3 a plaintiff’s complaint for failing “to state a claim upon which relief can be granted.” Fed. R. 4 Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint’s sufficiency. N. 5 Star Int’l v. Ariz. Corp. Comm’n., 720 F.2d 578, 581 (9th Cir. 1983) (citing Peck v. Hoff, 660 6 F.2d 371, 374 (8th Cir. 1981)). A complaint may be dismissed as a matter of law either for lack 7 of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal 8 theory. Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990) (citing Robertson 9 v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984)) 10 To survive a motion to dismiss under Rule 12(b)(6), a complaint must provide sufficient 11 factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 12 662, 678 (2009); see Fed. R. Civ. P. 8(a)(2) (a complaint must contain a short and plain statement 13 of the claim showing that the pleader is entitled to relief). A complaint satisfies the plausibility 14 requirement if it contains sufficient facts for the court to “draw [a] reasonable inference that the 15 defendant is liable for the misconduct alleged.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 16 (2007). 17 When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court 18 must accept as true all allegations put forth in the complaint and construe all facts and inferences 19 in favor of the non-moving party. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citations omitted); 20 Hebbe v. Pliler, 627 F.3d 338, 340 (9th Cir. 2010). The complaint need not include “detailed 21 factual allegations,” but must include “more than an unadorned, the-defendant-unlawfully- 22 harmed-me accusation.” Iqbal, 556 U.S. at 678 (citations omitted). The Court is “not ‘required 23 to accept as true allegations that contradict exhibits attached to the Complaint or matters properly 24 subject to judicial notice, or allegations that are merely conclusory, unwarranted deductions of 25 fact, or unreasonable inferences.’” Seven Arts Filmed Entm’t, Ltd. v. Content Media Corp. PLC, 26 733 F.3d 1251, 1254 (9th Cir. 2013) (quoting Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 27 998 (9th Cir. 2010)). 1 complaint.” Hamilton v. Bank of Blue Valley, 746 F. Supp.2d 1160, 1167 (E.D. Cal. 2010) (citing 2 Van Winkle v. Allstate Ins. Co., 290 F. Supp.2d 1158, 1162, n.2 (C.D. Cal. 2003)). “Nonetheless, 3 a court may consider exhibits submitted with the complaint.” Id. In addition, a “court may 4 consider evidence on which the complaint ‘necessarily relies’ if: (1) the complaint refers to the 5 document; (2) the document is central to the plaintiff’s claim; and (3) no party questions the 6 authenticity of the copy attached to the 12(b)(6) motion.” Id. at 1168 (quoting Marder v. Lopez, 7 450 F.3d 445, 448 (9th Cir. 2006)). Accord, Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994) 8 (“[D]ocuments whose contents are alleged in a complaint and whose authenticity no party 9 questions, but which are not physically attached to the pleading, may be considered in ruling on 10 a Rule 12(b)(6) motion to dismiss.”), overruled on other grounds by Galbraith v. County of Santa 11 Clara, 307 F. 3d 1119 (9th Cir. 2002) “A court may treat such a document as ‘part of the 12 complaint, and thus may assume that its contents are true for purposes of a motion to dismiss 13 under Rule 12(b)(6).” Hamilton, 746 F. Supp.2d at 1168 (quoting United States v. Ritchie, 342 14 F.3d 903, 908 (9th Cir. 2003)). 15 Discussion 16 A. The Court Declines to Convert the Motion to a Motion for Summary Judgment 17 In his opposition to Defendant’s motion to dismiss, Plaintiff proffers three documents that 18 were neither attached to nor referenced in the complaint: (1) an answer purportedly filed in the 19 Underlying Action; (2) excerpts from the deposition of Cady in the Underlying Action; and (3) 20 excerpts from the deposition of Edwards in the Underlying Action. (Doc. 5-1 Exhibits 3-5). 21 In the Ninth Circuit, “a motion to dismiss is not automatically converted into a motion for 22 summary judgment whenever matters outside the pleading happen to be filed with the court and 23 not expressly rejected by the court.” North Star Int'l v. Arizona Corp. Comm’n, 720 F.2d 578, 24 582 (9th Cir. 1983) (holding that district court properly treated motion as motion to dismiss, 25 despite presence of affidavits, where there was no indication of the court’s reliance on outside 26 materials and the court expressly stated that it was dismissing for failure to state a claim upon 27 which relief could be granted); see Keams v. Temple Technical Institute, Inc., 110 F.3d 44, 46 1 when matters outside the pleading are introduced, provided that ‘nothing in the record suggest[s] 2 reliance’ on those extraneous materials”). Rather, a motion to dismiss supplemented by a party’s 3 extraneous materials is regarded as one for summary judgment only when the court “acts to 4 convert the motion by indicating, preferably by an explicit ruling, that it will not exclude those 5 materials from its consideration.” Swedberg v. Marotzke, 339 F.3d 1139, 1146 (9th Cir. 2003). 6 No such action is taken in this case. The Court will exclude Plaintiff’s proffered information 7 presented outside of the complaint and declines to convert Defendant’s motion to dismiss into a 8 motion for summary judgment. 9 B. Because It Has No Duty to Defend, NIIC Did Not Breach the Contract 10 Plaintiff’s breach of contract claim is based on his allegation that NIIC failed to provide a 11 litigation defense and wrongfully withdrew its defense to its insureds in the Underlying Action. 12 Complaint ¶¶ 52, 55. 13 1. Governing Law 14 “The interpretation of an insurance policy is governed by state law.” Northfield Ins. Co. v. 15 Sandy’s Place, LLC, 530 F. Supp.3d 952, 962 (E.D. Cal. 2021) (citation omitted). Under 16 California law, “[t]he duty to defend is determined by reference to the policy, the complaint, and 17 all facts known to the insurer from any source.” Zelda, Inc. v. Northland Ins. Co., 56 Cal App.4th 18 1252, 1261 (citing Montrose Chem. Corp. v. Superior Court, 6 Cal.4th 287, 300 (1993) (emphasis 19 in original)). “For an insurer, the existence of a duty to defend turns not upon the ultimate 20 adjudication of coverage under its policy of insurance, but upon those facts known by the insurer 21 at the inception of a third party lawsuit.” Montrose Chem. Corp., 6 Cal.4th at 295 (citations 22 omitted). In other words, “the duty to defend runs to claims that are merely potentially covered, 23 in light of facts alleged or otherwise disclosed.” State Farm Gen. Ins. Co. v. Phillips, 591 F. 24 Supp.3d 680, 686 (C.D. Cal. 2022) (quotation and citation omitted). 25 “However, the insurer’s duty to defend does not extend to claims for which there is no 26 potential for liability coverage under the policy; this includes claims which fall outside the scope 27 of the policy or are expressly excluded under the policy.” Kaufman v. Chubb Ltd., 386 F. Supp.3d 1 App.4th 1390, 1401–02 (2015) (emphasis added)). “Further, ‘[a]n insured may not trigger the 2 duty to defend by speculating about extraneous ‘facts’ regarding potential liability or ways in 3 which the third party claimant might amend its complaint at [] some future date.’” Id. (quoting 4 Gunderson v. Fire Ins. Exch., 37 Cal. App. 4th 1106, 1114, (1995)). 5 In determining whether a claim gives rise to a duty to defend under an insurance policy, 6 courts are guided by the principle “that interpretation of an insurance policy is a question of law.” 7 Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 18 (1995). “Under statutory rules of contract 8 interpretation, the mutual intention of the parties at the time the contract is formed governs 9 interpretation.” AIU Ins. Co. v. Superior Court, 51 Cal.3d 807, 821–822 (1990) (citation omitted). 10 In determining this intent, courts “look first to the language of the contract in order to ascertain 11 its plain meaning or the meaning a layperson would ordinarily attach to it.” Waller, 11 Cal.4th at 12 18. The “clear and explicit” language of the policy is considered and interpreted in its “ordinary 13 and popular sense,” unless “used by the parties in a technical sense or a special meaning is given 14 to them by usage.” AIU, 51 Cal.3d at 822. Courts “interpret the language in context, with regard 15 to its intended function in the policy.” Bank of the West v. Superior Court, 2 Cal.4th 1254, 1256 16 (1992). 17 2. Analysis 18 Here, Plaintiff acknowledges the existence of the Policy’s assault and battery exclusion 19 (Doc. 5 p. 3) and accepts such exclusionary clauses are enforceable so long as they are 20 “conspicuous, plain and clear” (id. p. 10, citing State Farm Mut. Auto Ins. Co. v. Jacober, 10 21 Cal.3d 193, 202 (1973)). Moreover, Plaintiff raises no challenge that the appearance and 22 language of the Policy’s assault and battery exclusion is “conspicuous, plain and clear.” Rather, 23 Plaintiff argues that the Policy as a whole is ambiguous because the expected or intended injury 24 exclusion expressly excepts “bodily injury resulting from the use of reasonable force to protect 25 persons or property.” Based on the purported inconsistency between the two exclusionary 26 clauses and the claim that reasonable force was at issue in this case, Plaintiff asserts that there 27 was “a potential for coverage, and the ambiguity in the Policy based on the competing provisions 1 Contrary to Plaintiff’s characterization, this is not a case where an exclusion “arguably 2 applies but may reasonably be interpreted to be inapplicable to the alleged facts.” (Doc. 5 p. 9) 3 (citing Aroa Marketing, Inc. v. Harford Ins. Co. of Midwest, 198 Cal. App.4th 781, 786 (2011)). 4 Based on the allegations in Plaintiff’s own complaint that he was “viciously beaten” “without 5 provocation” during an “assault” by a person who was “motivated to hurt Plaintiff,” the assault 6 and battery exclusion set forth in an endorsement to the Policy unmistakably applies “in all 7 possible worlds.” (Id. at 10) (citing Atlantic Mut. Ins. Co. v. J. Lamb, Inc., 100 Cal. App.4th 8 1017, 1038-39 (2002)). 9 Relying on a withdrawn district court opinion interpreting Nevada law, Plaintiff argues that 10 the Policy’s assault and battery exclusion essentially should be disregarded because an ambiguity 11 is created by the separate, “inconsistent” exclusion for expected/intended injury (which precludes 12 coverage in the case of expected or intended bodily injury, but which does not apply where injury 13 results from the use of reasonable force to protect persons or property). (Doc. 5 pp. 11-12) (citing 14 Atain Specialty Ins. Co. v. Reno Cab Co., 341 F. Supp.3d 1168 (D. Nev. 2018)), vacated by 2019 15 WL 320825 (D. Nev. Jan. 25, 2019). In that case, the Court concluded that the policy’s 16 “reasonable force” limitation to the expected or intended injury exclusion “conflict[ed] with” the 17 assault and battery exclusion. Id. at 1172. The Court reasoned that the assaultive conduct at issue 18 was within the scope of both exclusions, resulting in “two competing interpretations” of the 19 policy. Id. at 1173. The Count found ambiguity in the policy because under one exclusion, 20 coverage was excepted, whereas under the other exclusion, coverage was required. Id. 21 This Court disagrees with the reasoning of Atain. No ambiguity is created in an insurance 22 policy where one exclusionary provision arguably does not apply (in this case, the 23 expected/intended injury exclusion if, in fact, there was reasonable force), but a separate 24 exclusionary provision unquestionably does apply (here, the assault and battery exclusion, for 25 which there is no reasonable force exception). These two policy exclusions do not conflict and 26 are not inconsistent: they simply apply to different events. See, e.g., Covington Specialty Ins. 27 Co. v. Rodney’s Loft, Inc., No. 21-11541, 2022 WL 1184326, at *3 (E.D. Mich. Apr. 21, 2022) 1 battery and (ii) excludes coverage for bodily injuries that are ‘expected or intended,’ except when 2 the ‘expected or intended’ bodily injuries result from the use of reasonable force to protect 3 persons or property. These two exclusions apply to different circumstances.”); Scottsdale Ins. 4 Co. v. Owl Nite Sec., Inc., No. 06-CV-0097-CVE-SAJ, 2006 WL 3742102, at *6 (N.D. Okla. 5 Dec. 15, 2006) (“The fact that the Expected and Intended Injury Exception contains a ‘reasonable 6 force’ exception in no way limits the effect of the separate and distinct Assault and Battery 7 Exclusion. The exception cannot be read to create an ambiguity in the Policy where one does not 8 exist.”). 9 Plaintiff’s reliance on Atain for the proposition that the Policy at issue is ambiguous is 10 misplaced for the additional reason that Atain interpreted Nevada law. Under California law, to 11 the extent the language of an endorsement and in the body of the policy arguably conflict, the 12 endorsement prevails so long as it is conspicuous, plain and clear. Haynes v. Farmers Ins. Exch., 13 32 Cal.4th 1198, 1204 (2004); Estate of Murphy v. Gulf Ins. Co., 82 Cal. App.3d 304, 309 (1978). 14 Accord Price v. Zim Israel Navigation Co., Ltd., 616 F.2d 422, 427 (9th Cir. 1980) (“[T]he 15 paramount principle of insurance policy construction is that a policy should be interpreted to give 16 effect to the intention of the parties .... In ascertaining that intention, an endorsement normally 17 prevails over inconsistent provisions of the policy.”) (citations omitted). 18 Here, the Endorsement is attached to the Policy and is intended to modify the Policy. See 19 Complaint Exhibit A (Doc. 1-1 at ECF p. 111) (“THIS ENDORSEMENT CHANGES THE 20 POLICY. PLEASE READ IT CAREFULLY.”). Thus, by its terms and consistent with 21 California law, to the extent the Endorsement and the reasonable force exception to the bodily 22 injury exclusion conflict, the Endorsement trumps. Price, 616 F.2d at 427; Haynes, 32 Cal.4th 23 at 1204; Estate of Murphy, 82 Cal. App.3d at 309. Accord, Cohne v. Navigators Specialty Ins. 24 Co, 361 F. Supp.3d 132, 143 (D. Mass 2019) (same under Massachusetts law; assault and battery 25 endorsement given effect over reasonable force exception to the bodily injury exclusion).2 26

27 2 Plaintiff’s argument that the reasonable force exception to the expected/intended injury exclusion converts the exclusion into a “coverage clause” to be construed strictly against the 1 In the absence of coverage there can be no breach of contract on NIIC’s part.3 Accordingly, 2 because NIIC was relieved of any duty to defend by virtue of the Policy’s exclusion for assault 3 and battery, Plaintiff’s breach of contract cause of action shall be dismissed. 4 C. Without a Breach of Contract Claim, Plaintiff’s Other Claims Must Be Dismissed 5 Under California law, “without a breach of the insurance contract, there can be no breach 6 of the implied covenant of good faith and fair dealing.” Manzarek v. St. Paul Fire & Marine Ins. 7 Co., 519 F.3d 1025, 1034 (9th Cir. 2008) (citing Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1 8 (1995)); see Marks v. U.S. Life Ins. Co., 2014 WL 3401450, at *3 (E.D. Cal. July 11, 2014) 9 (“Because the Court has dismissed the claim for breach of contract with prejudice, the claim for 10 breach of the duty of good faith and fair dealing must also be dismissed.”). 11 Moreover, the implied covenant of good faith and fair dealing imposes a duty upon an 12 insurer to not unreasonably withhold payments due under a policy. Love v. Fire Ins. Exch., Co., 13 221 Cal.App.3d 1136, 1151 (1990). Naturally, “[t]here is no breach of the implied covenant when 14 an insurer withholds benefits for proper cause.” One West Bank v. Houston Casualty Co, No. 15 CV 14-00547 BRO (JCGx), 2015 WL 11090350, at *16 (C.D. Cal. Mar. 9, 2015). “This means 16 that without a viable breach of contract claim against the insurer, an insured’s cause of action for 17 breach of the implied covenant of good faith and fair dealing will fail as a matter of law.” Yahoo! 18 Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, No 5:17-cv-00489-EJD, 2018 WL 4962033, 19 at *4 (N.D. Cal. Oct. 12, 2018). Accord O’Keefe v. Allstate Indem. Co., 953 F. Supp.2d 1111, 20 1115 (S.D. Cal. 2013) (“Where benefits are withheld for proper cause, such as lack of coverage 21 under the policy, there is no breach of the implied covenant.”). 22 Thus, as set forth above, because Plaintiff’s breach of contract claim fails, so, too, do his 23 breach of implied covenant of good faith claims. Plaintiff likewise is not entitled to declaratory 24 1192 n.3 (1998) (characterizing as “unremarkable” the proposition that “[a]n exception to an 25 exclusion does not create coverage not otherwise available under the coverage clause.”).

26 3 Given the Court’s conclusion that NIIC was under no duty to defend based on the prevailing, conspicuous, plain and clear assault and battery exclusion set forth in an 27 endorsement to the Policy, the Court declines to consider Defendant’s alternative grounds for dismissal (e.g., whether Ins. Code § 533 applies to preclude coverage and whether the relevant 1 relief. See, e.g., The Upper Deck Co., LLC v. Fed. Ins. Co., 358 F.3d 608, 610 (9th Cir. 2004) 2 (affirming dismissal of insured’s declaratory relief claim where insurer had no duty to defend). 3 Leave to Amend 4 Generally, Rule 15 provides that “leave [to amend] shall be freely given when justice so 5 requires.” Fed. R. Civ. P. 15(2); see Chodos v. W. Publ. Co., 292 F.3d 992, 1003 (9th Cir. 2002) 6 (“it is generally our policy to permit amendment with ‘extreme liberality’”) (quoting Morongo 7 Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.1990)). However, district courts 8 are only required to grant leave to amend if a complaint can be saved. Lopez v. Smith, 203 F.3d 9 1122, 1129 (9th Cir. 2000). “Courts are not required to grant leave to amend if a complaint lacks 10 merit entirely.” Id. When a complaint cannot be cured by additional facts, leave to amend need 11 not be provided. Doe v. United States, 58 F.3d 494, 397 (9th Cir. 1995). 12 As set forth above, the Policy does not, on the facts alleged, support Plaintiff’s coverage 13 claims. However, because this is the Court’s first review of the complaint, Plaintiff may seek to 14 amend if he believes other facts bring his claim within the Policy. Notwithstanding the Court’s 15 significant doubts that Plaintiff could plead around the Policy exclusion for injuries resulting 16 from assault and battery,4 the Court grants Plaintiff leave to amend. See Desalegn v. Century 17 Surety Co., No. 3:15-cv-05678-JD, 2016 WL 10721815, *2 (N.D. Cal. Sept. 12, 2016) (granting 18 insurer’s Rule 12(b)(6) motion based on assault and battery exclusion and extending to plaintiff 19 leave to file first amended complaint); Desalegn v. Century Surety Co., No. 3:15-cv-05678-JD, 20 2017 WL 6626672, *1 (N.D. Cal. Sept. 15, 2017) (dismissing amended complaint on the grounds 21 that (1) even actions taken in self-defense constituted assault, and separately, (2) judicial 22 estoppel), aff’d, 765 Fed. App. 191, 192 (9th Cir. 2019). 23 Given the nature of the admissions in the instant complaint, the parties are reminded of the 24 availability of Rule 11 sanctions should any amended complaint containing factual allegations 25 without sufficient evidentiary support be filed. See Maloney v. Scottsdale Ins. Co., 256 Fed. 26 4 Among other things, “[e]ven if [ ] a self-defense argument had a factual basis, the 27 [assault and battery] exclusion would still apply. An act of self-defense necessarily involves resistance to an assault and battery by another.” Century Transit Sys., Inc. v. Am. Empire 1 | Appx. 29, 33 (9th Cir. 2007) (citing Fed. R. Civ. P. 11)) (unpub.). 2 | Conclusion and Order 3 For the forgoing reasons, it is HEREBY ORDERED that Defendant’s motion to dismiss 4 | (Doc. 3) is GRANTED, and Plaintiff's complaint (Doc. 1-1) is DISMISSED. 5 Plaintiff is granted leave to amend and to file a first amended complaint to the extent in 6 | good faith he may cure the defects in the dismissed complaint as set forth above. Plaintiff 7 | SHALL FILE any first amended complaint within 21 days of the date of this Order. 8 IT IS SO ORDERED. Dated: _ August 11, 2023 | □□ D 10 UNITED STATES MAGISTRATE JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28