“On summary judgment, . . . the plaintiff can no longer rest on the pleadings.”
How later courts described this case
- “On summary judgment, . . . the plaintiff can no longer rest on the pleadings.”
- holding the phrase “‘results 23 from’ imposes…a requirement of actual causality”
Written by the judges who cited it.
The opinion
1
2
3
4
5
6
7
8
9
10 UNITED STATES DISTRICT COURT
11 SOUTHERN DISTRICT OF CALIFORNIA
12
13 BALDWIN ACADEMY, INC. and Case No.: 3:20-cv-02004-H-AGS
PERICO HOLDINGS USA, LLC,
14
ORDER DENYING PLAINTIFFS’
Plaintiffs,
15 MOTION FOR PARTIAL
v. SUMMARY JUDGMENT
16
MARKEL INSURANCE COMPANY and
17 [Doc. No. 40.]
DOES 1 through 10, inclusive,
18 Defendants. ORDER GRANTING DEFENDANT’S
19 MOTION FOR SUMMARY
JUDGMENT
20
21 [Doc. No. 41.]
22
23
On October 4, 2021, Plaintiffs Baldwin Academy, Inc. and Perico Holdings USA,
24
LLC (“Plaintiffs”) filed a motion for partial summary judgment, (Doc. No. 40), and
25
Defendant Markel Insurance Company (“Defendant”) filed a motion for summary
26
judgment. (Doc. No. 41.) On November 1, 2021, the parties filed their responses. (Doc.
27
Nos. 42, 43.) On November 8, 2021, the parties filed their replies. (Doc. Nos. 46, 47.) On
28
1 December 6, 2021, the Court held a hearing on the motions. Laleaque Grad appeared on
2 behalf of Plaintiffs. (Doc. No. 49.) Bennett Evan Cooper appeared on behalf of Defendant.
3 (Id.) For the following reasons, the Court denies Plaintiffs’ motion for partial summary
4 judgment and grants Defendant’s motion for summary judgment.
5 Background
6 This action involves an insurance dispute between Plaintiffs and Defendant. Plaintiff
7 Baldwin Academy (“Baldwin”) is a preschool in the Pacific Beach community of San
8 Diego County, California. (Doc. No. 40-1 at 1.) Defendant issued an insurance policy,
9 Policy No. CCP20038076-02 (the “Policy”), to Baldwin for the policy period of June 12,
10 2019 to June 12, 2020. (Id. at 3, SUF 5, Ex. A.) In early March 2020, San Diego County
11 reported its first confirmed positive cases of COVID-19. (Doc. No. 40-1 at 5–6, SUF 24.)
12 As of Friday, March 13, 2020, Baldwin was not aware of any cases of COVID-19 among
13 anyone who had visited Baldwin’s campus. (Doc. No. 40-1 at 6, SUF 25.) That same day,
14 Baldwin staff notified parents that it would remain open for the week commencing
15 Monday, March 16, 2020. (Doc. No. 40-1 at 6, SUF 27.) On Saturday, March 14, 2020, the
16 parent of one of Baldwin’s students notified Baldwin staff by email that she and the
17 student’s grandfather had tested positive for COVID-19. (Doc. No. 40-1 at 6, SUF 28.) The
18 infected parent and other members of the same household had allegedly dropped off and
19 picked up the student at Baldwin’s campus several times during the preceding two weeks.
20 (Doc. No. 40-1 at 7; SUF 35, 37; Ex. Q.) The following day, on Sunday, March 15, 2020,
21 Baldwin staff notified its families by email that Baldwin would be closed until the morning
22 of Sunday, March 29, 2020. (Doc. No. 40-1 at 8, SUF 34.) During the week commencing
23 Monday, March 16, 2020, state and local government agencies issued several orders and
24 guidelines related to the COVID-19 pandemic. (Doc. No. 40-1 at 8–9; SUF 40–44; Ex. S,
25 T, U, V, W, X, Y, OO.) Baldwin remained closed from March 16, 2020 through July 1,
26 2020. (SUF 68.)
27 On March 16, 2020, Baldwin initiated a business income loss claim under the Policy
28 with Defendant. (Doc. No. 40-1 at 10, SUF 51.) On April 20, 2020, Defendant denied
1 Baldwin’s claim. (Doc. No. 40-1 at 12, SUF 60.) Baldwin appealed the denial three times,
2 and Defendant reaffirmed its denial each time. (Doc. No. 40-1 at 12, SUF 61–67.) On
3 September 9, 2020, Plaintiffs filed a complaint against Defendant in California state court
4 for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing,
5 and (3) declaratory relief. (Doc. No. 1-3, Ex. 2, Compl.) On October 13, 2020, Defendant
6 removed the action to federal court on the basis of diversity jurisdiction. (Doc. No. 1.) On
7 October 23, 2020, Defendant filed a motion to dismiss Plaintiffs’ compliant pursuant to
8 Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 7.) On December 21, 2020, the Court
9 denied Defendant’s motion to dismiss. (Doc. No. 16.) By the present motions, Plaintiffs
10 move for partial summary judgment and Defendant moves for summary judgment pursuant
11 to Federal Rule of Civil Procedure 56. (Doc. Nos. 40, 41.)
12 Discussion
13 I. Legal Standards
14 A. Motion for Summary Judgment
15 Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the
16 moving party demonstrates that there is no genuine issue of material fact and that it is
17 entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477
18 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could
19 affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);
20 Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1031
21 (9th Cir. 2010). “A genuine issue of material fact exists when the evidence is such that a
22 reasonable jury could return a verdict for the nonmoving party.” Fortune Dynamic, 618
23 F.3d at 1031 (internal quotation marks and citations omitted); accord Anderson, 477 U.S.
24 at 248. “Disputes over irrelevant or unnecessary facts will not preclude a grant of summary
25 judgment.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th
26 Cir. 1987).
27 A party seeking summary judgment always bears the initial burden of establishing
28 the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party
1 can satisfy this burden in two ways: (1) by presenting evidence that negates an essential
2 element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving party
3 failed to establish an essential element of the nonmoving party’s case that the nonmoving
4 party bears the burden of proving at trial. Id. at 322–23; Jones v. Williams, 791 F.3d 1023,
5 1030 (9th Cir. 2015). Once the moving party establishes the absence of a genuine issue of
6 material fact, the burden shifts to the nonmoving party to “set forth, by affidavit or as
7 otherwise provided in Rule 56, ‘specific facts showing that there is a genuine issue for
8 trial.’” T.W. Elec. Serv., 809 F.2d at 630 (quoting former Fed. R. Civ. P. 56(e)); accord
9 Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007). To carry this
10 burden, the nonmoving party “may not rest upon mere allegation or denials of his
11 pleadings.” Anderson, 477 U.S. at 256; see also Behrens v. Pelletier, 516 U.S. 299, 309
12 (1996) (“On summary judgment, . . . the plaintiff can no longer rest on the pleadings.”).
13 Rather, the nonmoving party “must present affirmative evidence . . . from which a jury
14 might return a verdict in his favor.” Anderson, 477 U.S. at 256.
15 When ruling on a summary judgment motion, the court must view the facts and draw
16 all reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris,
17 550 U.S. 372, 378 (2007). The court should not weigh the evidence or make credibility
18 determinations. See Anderson, 477 U.S. at 255. “The evidence of the non-movant is to be
19 believed.” Id. Further, the Court may consider other materials in the record not cited to by
20 the parties, but it is not required to do so. See Fed. R. Civ. P. 56(c)(3); Simmons v. Navajo
21 Cnty., 609 F.3d 1011, 1017 (9th Cir. 2010).
22 B. California Insurance Contract Interpretation
23 Since federal jurisdiction in this action is based on diversity of citizenship, the
24 substantive law of California governs the interpretation of insurance policy provisions.
25 Stanford Univ. Hosp. v. Fed. Ins. Co., 174 F.3d 1077, 1083 (9th Cir. 1999); Humboldt
26 Bank v. Gulf Ins. Co., 323 F. Supp. 2d 1027, 1032 (N.D. Cal. June 3, 2004). Interpretation
27 of an insurance policy is a question of law for the court. Powerine Oil Co., Inc. v. Superior
28 Court, 118 P.3d 589, 597 (Cal. 2005). Such interpretation must give effect to “the mutual
1 intention of the parties at the time the contract is formed . . . .” Id. To determine the intent
2 of the parties behind an insurance contract, the court “look[s] first to the language of the
3 contract in order to ascertain its plain meaning,” reading the language in its “ordinary and
4 popular sense, unless used by the parties in a technical sense or a special meaning is given
5 to them by usage.” Id. (internal citations and quotation marks omitted). “A policy provision
6 will be considered ambiguous when it is capable of two or more constructions, both of
7 which are reasonable.” Id. (citing Bay Cities Paving Grading, Inc. v. Lawyers’ Mutual Ins.
8 Co., 855 P.2d 1263, 1271 (Cal. 1993)). Language in an insurance contract “must be
9 interpreted as a whole, and in the circumstances of the case, and cannot be found to be
10 ambiguous in the abstract.” Id.
11 “Insurance coverage is interpreted broadly so as to afford the greatest possible
12 protection to the insured.” MacKinnon v. Truck Ins. Exch., 73 P.3d 1205, 1213 (Cal. 2003)
13 (citations omitted). When there is ambiguity in an insurance policy, the policy’s exclusions
14 and exceptions are strictly construed against the insurer and liberally interpreted in favor
15 of the insured in order to protect the insured’s reasonable expectation of coverage. La Jolla
16 Beach & Tennis Club, Inc. v. Indus. Indem. Co., 884 P.2d 1048, 1053 (Cal. 1994); see also
17 Delgado v. Heritage Life Ins. Co., 203 Cal. Rptr. 672, 677 (Ct. App. 1984). Any limitation
18 of coverage must be “stated precisely and understandably, in words that are part of the
19 working vocabulary of the average layperson.” Haynes v. Farmers Ins. Exch., 89 P.3d 381,
20 385 (Cal. 2004). Furthermore, the burden is on the insurer to “phrase exceptions and
21 exclusions in clear and unmistakable language.” MacKinnon, 73 P.3d at 1213 (quoting
22 State Farm Mut. Auto. Ins. Co. v. Jacober, 514 P.2d 953, 957–58 (Cal. 1973)). But “[a]n
23 insurance company can choose which risks it will insure and which it will not, and coverage
24 limitations set forth in a policy will be respected.” Fidelity & Deposit Co. v. Charter Oak
25 Fire Ins. Co., 78 Cal. Rptr. 2d 429, 432 (Ct. App. 1998) (citing Legarra v. Federated Mutual
26 Ins. Co., 42 Cal. Rptr. 2d 101, 105 (Ct. App. 1995)).
27 The insured bears the burden of establishing that a claim is within the basic scope of
28 coverage. MacKinnon, 73 P.3d at 1213. But the burden is on the insurer to establish that
1 the claim is specifically excluded. Id. (citing Aydin Corp. v. First State Ins. Co., 959 P.2d
2 1213, 1215 (Cal. 1998)).
3 II. Breach of Contract Analysis
4 Both parties move for summary judgment on Plaintiffs’ breach of contract claim.
5 (Doc. Nos. 40-1 at 2; 41-1 at 1.) Plaintiffs allege Defendant breached its contractual
6 obligations under the Policy by denying Baldwin’s loss of business income claim. (Doc.
7 No. 1-3, Ex. 2, Compl. ¶¶ 33–37.) The parties’ arguments center on whether the Policy’s
8 “California Business Income Changes – Communicable Disease and Food
9 Contamination” Endorsement (the “CA-CDE”) provides coverage for Baldwin’s claim.1
10 Section A.1 of the CA-CDE provides:
11 We will pay for the actual loss of Business Income you sustain as a result of a
temporary shutdown or “suspension of your entire “operations” at your described
12
premise during the “period of restoration.” The shutdown or “suspension” of your
13 “operations” must be the result of an order or recommendation from a local, state
or federal Board of Health or any other governmental authority having jurisdiction
14
over your “operations”. Such shutdown or “suspension” must be caused by or
15 result from a Covered Cause of Loss as described in Paragraph 3. Below.
16 (Doc. No. 40-8, Ex. A at 124.) Section A.3 of the CA-CDE provides:
17 A Covered Cause of Loss is an outbreak at premises described in the Declarations,
of a “Communicable Disease” such as, but not limited to, meningitis, measles or
18
Legionnaire’s disease…
19 (Id. at 125.) The Section F.1.3 of the CA-CDE defines “period of restoration” as:
20 [T]he period of time that…(a) [b]egins the number of hours shown in the Schedule
21 of this endorsement after the shutdown or “suspension” of your “operations” by a
jurisdictional Board of Health or any other government authority and your
22 premises are evacuated caused by or resulting from a Covered Cause of Loss at the
23 described premises; and…(b) [e]nds on the earlier of …(1) [t]he day before your
“operations resume, either fully or partially; or…(2) [t]he day the jurisdictional
24
25 1 The Policy contains three provisions related to communicable diseases: (1) the CA-CDE, (2) a second
general communicable disease endorsement, “Business Income Changes – Communicable Disease and
26 Food Contamination Extension,” (Doc. No. 40-8, Ex. C), and (3) a virus exclusion exemption,
“Exclusion for Loss Due to Virus or Bacteria.” (Doc. No. 40-8, Ex. D.) The parties agree Baldwin’s
27
claim should be analyzed under the CA-CDE and that neither the second general communicable disease
28 endorsement nor the virus exclusion exemption apply to Baldwin’s claim. (Doc. Nos. 40-1 at 14; 43 at
1 Bhaobairtda bolfe Haneda lmtha oyr raenoyp eonth aesr fguollvye ronrm peanrttiaall layu othpoerriatyti ocneartli.f ies that your premise are
2
(Id.) The CA-CDE Schedule provides that the “period of restoration” begins after 72
3
hours. (Id. at 124.)
4
Defendant argues the CA-CDE requires three conditions for coverage: (1) that
5
Baldwin’s closure be “the result of an order or recommendation from…a governmental
6
authority,” (2) that there is an “outbreak” at Baldwin’s insured premise, and (3) that any
7
governmental orders or recommendations were “caused by” or “result from” something
8
that happened at Baldwin’s premise. (Doc. No. 41-1 at 6–7.) Defendant argues Baldwin’s
9
loss of business income claim does not satisfy any of the CA-CDE’s three conditions
10
necessary for coverage and so the Court should grant summary judgment for Defendant.
11
(Id. at 6.)
12
Plaintiffs argue the CA-CDE only requires two conditions for coverage: “(1) the
13
shutdown or ‘suspension’ of [Baldwin’s operations] must be the result of a government
14
recommendation or order; and (2) the shutdown or ‘suspension’ of [Baldwin’s operations]
15
be ‘caused by or result from’ a Covered Cause of Loss (i.e. outbreak at the premise).” (Doc.
16
No. 42 at 15.) Plaintiffs argue Baldwin’s claim satisfies both conditions necessary for
17
coverage and so the Court should grant summary judgment for Plaintiffs. (Doc. No. 40-1
18
at 14.) The Court next addresses each condition under the CA-CDE in turn.
19
A. Was there a shutdown or suspension of Baldwin’s entire operations as a result
20
of an order or recommendation from a government authority?
21
Plaintiffs argue that the first two sentences of Section A.1 of the CA-CDE do not
22
impose “a specific timing element stating the recommendation or order must pre-date
23
Baldwin’s closure.” (Doc. No. 40-1 at 20.) As a result, Plaintiffs argue the CA-CDE
24
covers Baldwin’s claim even though Baldwin closed on Sunday, March 15, 2020 and the
25
government orders and recommendations cited by Plaintiffs as affirming Baldwin’s need
26
to closed were issued beginning the next day, Monday, March 16, 2020. (Id.) Defendant
27
argues the phrase “the result of” in the second sentence of Section A.1 of the CA-CDE
28
1 does impose a temporal requirement. (Doc. No. 43 at 6.) Defendant argues “Baldwin
2 closed its facilities before it received any government order or recommendation,” and
3 instead voluntarily closed as a precautionary measure in response to a parent’s email
4 reporting her positive COVID-19 test. (Doc. 41-1 at 8–9.) Defendant argues the
5 necessary “causal link” between Baldwin’s closure and the government orders cited by
6 Plaintiffs cannot exist “where the purported cause occurred after the supposed result,”
7 and so the CA-CDE does not cover Baldwin’s claim (Doc. No. 43 at 5–6.)
8 In construing insurance contracts, the goal is “to give effect to the parties’ mutual
9 intentions.” Minkler v. Safeco Inc., 232 P.3d 612, 617 (Cal. 2010) (citing Bank of the
10 West v. Superior Court, 833 P.2d 545, 552 (Cal. 1992)). “To determine the intent of the
11 parties, courts ‘look first to the language of the contract in order to ascertain its plain
12 meaning or the meaning a layperson would ordinarily attach to it,’ reading the language
13 in its ‘ordinary and popular sense.’” See In re United Specialty Ins. Co. Ski Pass Ins.
14 Litig., 2021 WL 4974981, at *3 (N.D. Cal. Oct. 26, 2021) (quoting Waller v. Truck Ins.
15 Exch., Inc., 11 Cal. 4th 1, 18 (1995)).
16 The second sentence of Section A.1 of the CA-CDE provides that:
17 The shutdown or ‘suspension’ of your ‘operations’ must be the result of an order or
recommendation from a local state or federal Board of Health or any other
18
governmental authority having jurisdiction over your ‘operations’.
19
(Doc. No. 40-8, Ex. A at 124.) The Court agrees with Defendant that the plain meaning
20
of the phrase “the result of” imposes a causal requirement between the issuance of an
21
order or recommendation from a government authority and Baldwin’s closure. See
22
Burrage v. United States, 571 U.S. 204, 210–11 (2014) (holding the phrase “‘results
23
from’ imposes…a requirement of actual causality”). Baldwin’s closure must have been in
24
response to a government order or recommendation that predated Baldwin’s decision to
25
close for coverage under the CA-CDE.
26
On Friday, March 13, 2020, Baldwin staff notified its families by email that
27
Baldwin would remain open during the week of Monday, March 16, 2020. (Doc. No. 47-
28
1 1, SUF 27.) On Saturday, March 14, 2020, Baldwin received an email from a parent of
2 one of its students notifying Baldwin that the parent had tested positive for COVID-19.
3 (Doc. No. 47-1, SUF 28.) On Sunday, March 15, 2020, Baldwin staff notified its families
4 Baldwin would close starting that day and remain closed until Sunday, March 29, 2020.
5 (Doc. No. 47-1, SUF 34.) The parties agree that there was no government orders or
6 recommendations issued between March 13, 2020 and March 15, 2020 that caused
7 Baldwin to alter its decision to closed. (Doc. Nos. 40-1 at 20–21; 41-1 at 9.) The only
8 government order or recommendation cited by Baldwin that predates Baldwin’s closure
9 on March 15, 2020 is an order by the San Diego County Health officer dated March 12,
10 2020. (Doc. No. 40-9 at 54, Ex. S.) The order banned “large gatherings” of over 250
11 people. (Id.) As of March 2020, Plaintiff had approximately 86 students and 20 staff, and
12 so Baldwin did not fall under the “large gathering definition.” (Doc. No. 40-1 at 2; SUF
13 2.) As a result, Baldwin’s closure on Sunday, March 15, 2020 was not the “the result of
14 an order or recommendation from a local state or federal Board of Health or any other
15 governmental authority.”
16 B. Was there an outbreak of a communicable disease at Baldwin’s premise?
17 The parties agree that COVID-19 is a “Communicable Disease” under the CA-
18 CDE. (Doc. Nos. 40-1 at 15; 40-1 at 15.) The Policy defines “premise” as Baldwin’s four
19 buildings at 1752, 1760, 1762, and 1772 Hornblend St., San Diego, CA 92109. (Doc. No.
20 40-8, Ex. A at 35.) The parties primary dispute centers around the meaning of the phrase
21 “outbreak, at premise” in the third line of Section 1.A of the CA-CDE.
22 Plaintiffs, citing Merriam-Webster’s Dictionary, argue that the plain and ordinary
23 meaning of “outbreak” is “a sudden rise in the incidence of a disease.” (Doc. No. 40-1 at
24 15.) Under this definition, Plaintiffs argue “outbreak, at premise” only requires there to
25 be “one case of a communicable disease in an individual present on the premise.” (Doc.
26 No. 42 at 19.) Plaintiffs argue that prior to March 14, 2020, there were zero known cases
27 of COVID-19 at Baldwin’s premise (Doc. No. 40-1 at 15.) Plaintiffs argue on and after
28 March 14, 2020, Baldwin learned there had been several cases of COVID-19 at
1 Baldwin’s premise and the surrounding community. (Id.) Plaintiffs argue this rise in cases
2 constitutes an “outbreak, at premise” sufficient for coverage under the CA-CDE. (Id.)
3 Defendant argues for a narrower definition of “outbreak, at premise.” (Doc. No. 43
4 at 16–19.) First, Defendant argues that “outbreak, at premise” requires “a cluster from
5 which transmission ‘at’ the location may be inferred.” (Doc. No. 41-1 at 16.) Second,
6 Defendant argues that “outbreak, at premise” requires that a Baldwin child, teacher, or
7 staff member was infected at Baldwin’s premise. (Id.) Under this definition, Defendant
8 argues that a “single case of a visitor to a location” is not an “outbreak, at premise.” (Id.
9 at 15–16.)
10 The term “outbreak” is not defined anywhere in the Policy. But the absence of a
11 definition of a term in an insurance policy “does not by itself render the term
12 ambiguous.” Bay Cities Paving & Graving, 855 P.2d at 1270. The court must interpret
13 terms in an insurance policy in accordance with the term’s “plain meaning or the meaning
14 a layperson would ordinarily attach to it.” See In re United Specialty Ins. Co. Ski Pass
15 Ins. Litig., 2021 WL 4974981, at *3 (quoting Waller, 11 Cal. 4th at 18). “In seeking to
16 ascertain the ordinary sense of words [in an insurance policy], courts in insurance cases
17 regularly turn to general dictionaries.” Scott v. Cont’l Ins. Co., 44 Cal. App. 4th 24, 29
18 (1996); see also Northrop Grumman Corp. v. Factory Mut. Ins. Co., 563 F.3d 777, 784
19 n.4 (9th Cir. 2009). Statutory or regulatory definitions may also provide the common
20 usages of words. See AIU Ins. Co. v. Superior Court, 799 P.2d 1253, 1267 (Cal. 1990)
21 (citing a California statute for the plain and ordinary meaning of a term in an insurance
22 policy); see also H. Walter Croskey, et al., California Practice Guide: Insurance
23 Litigation (The Rutter Group 2020), ¶ 4:80 (“Statutes may provide the common usage of
24 words used in an insurance policy.”) But the “examination of various dictionary
25 definitions of a word…does not necessarily yield the ‘ordinary and popular’ sense of the
26 word if it disregards the policy’s context.” MacKinnon v. Truck Ins. Exch., 73 P.3d 1205,
27 1214 (Cal. 2003).
28
1 In support of Defendant’s interpretation, Defendant cite California Code of
2 Regulations, Title 22, section 101212, which includes reporting requirements for
3 California licensed childcare facilities. Section 101212(d)(1)(E) requires licensed
4 childcare facilities to report to the state “epidemic outbreaks” that occur “during the
5 operation of the childcare center.” Cal. Code Regs. Tit. 22, § 101212(d)(1)(E). Section
6 101212(d)(2) requires childcare facilities to provide a written report to the state in the
7 case of a “epidemic outbreak” with the “child’s name, age, sex and date of admission.”
8 Id. § 101212(d)(2). Section 101212(g)(1) requires licensed childcare facilities to report to
9 the local health officer outbreaks or suspected outbreaks involving “two or more children
10 of any communicable disease.” Id. § 101212(d)(2) California Code of Regulations, Title
11 7, section 2500(a)(2), which is cross referenced, defines “outbreak” as:
12 [T] occurrence of cases of a disease (illness) above the expected or baseline level,
usually over a given period of time, in a geographic area or facility, or in a specific
13
population group….. A single case of a communicable disease long absent from a
14 population or the first invasion by a disease not previously recognized may constitute
an outbreak and require immediate reporting and epidemiologic investigation.
15
Cal. Code Regs. Tit. 17, §2500(a)(2).
16
California Code of Regulations, Title 22, section 101212(d)(1)(E) and Tile 17,
17
section §2500 (a)(22) were first enacted in 2004. The CA-CDE was first included
18
Baldwin’s Policy with Defendant in 2008. (Doc. No. 47-1, SUF 15, Perico Decl. at ¶ 15.)
19
Because Baldwin is a California licensed childcare facility and the CA-CDE is related to
20
communicable disease outbreaks at Baldwin, how the government agency regulating
21
Baldwin defines “outbreak” is relevant in interpreting the term’s ordinary usage in the
22
Policy. In the context of California licensed childcare facilities, the phrase “outbreak, at
23
premise” requires that an individual such as a student, teacher, or staff member on
24
Baldwin’s premise have a case of a communicable disease, rather than just a short-term
25
visitor that later test positive.
26
The only alleged confirmed case of COVID-19 on Baldwin’s premise was a parent
27
that have been on Baldwin’s campus twice to drop off her child the week prior to testing
28
1 || positive. (Doc. No. 47-1, SUF 28.) Under the CA-CDE, this does not constitute an
2 || outbreak at Baldwin’s premise. As a result, Defendant has met its burden of showing
3 || there is no genuine issue of material fact remaining and that it is entitled to judgment as a
4 || matter of law on Plaintiffs’ breach of contract claim.” The Court grants Defendant’s
5 motion for summary judgment on Plaintiffs’ breach of contract claim.
6 ||III. Breach of Covenant of Good Faith and Fair Dealing Analysis
7 Defendant also seeks summary judgment on Plaintiffs’ breach of the covenant of
8 || good faith and fair dealing claim. (Doc. No. 41-1 at 20-21.) Under California law, a
9 || breach of covenant of food faith and fair dealing claim requires proving two elements:
10 benefits under the policy were withheld; and (2) the reason for withholding benefits
11 || was unreasonable or without proper cause.” Mudpie, Inc. v. Travelers Casualty Ins. Co.
12 America, 15 F.4th 885, 893 n.6 (9th Cir. 2021) (quoting Love v. Fire Ins. Exchange,
13 Cal. App. 3d 1136, 1151 (1990)). Plaintiff is not entitled to coverage under the
14 || Policy, and so the first element has not been met. As a result, the Court grants
15 || Defendant’s motion for summary judgment on Plaintiffs’ breach of the covenant of good
16 || faith and fair dealing claim.
17 Conclusion
18 For the reasons stated above, the Court denies Plaintiffs’ motion for partial summary
19 ||judgment and grants Defendant’s motion for summary judgment.
20 IT ISSO ORDERED.
21 || DATED: December 17, 2021
22 oth YN L. SuEr District J kd
23 UNITED STATES DISTRICT COURT
24
25. SO
The parties also dispute whether the CA-CDE imposes a third condition for coverage that “an order or
26 || recommendation to suspend operations result[] from what occurred on Baldwin’s premise.” (Doc. Nos.
42 at 14; 46 at 5.) Plaintiff is not entitled to coverage under the CA-CDE because its claim does not
27 || meet the other two conditions the parties agree are required by the CA-CDE for coverage. As a result,
28 cout declines to address whether this third condition is also required for coverage under the CA-