635 F. App'x 351
9th Cir.2015Background
- The dispute centers on whether Hartford and Zurich had a duty to defend Big 5 in underlying actions.
- District court held there was no duty because the claims were barred by policy exclusions for statutory violations.
- The alleged underlying actions arise from ZIP Code/privacy issues related to the Song-Beverly Act.
- The district court found no cognizable common law or constitutional privacy claims in garden-variety ZIP Code cases.
- California law does not recognize non-statutory privacy claims in ZIP Code marketing contexts; only statutory penalties may lie.
- The appellate court affirms the district court, concluding exclusions foreclose coverage and the claims lack cognizable privacy bases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend when claims are excluded | Big 5 argues insurers must defend groundless claims unless outside coverage. | Hartford/Zurich argue no duty where exclusions bar coverage as a matter of law. | No duty to defend where exclusions bar coverage. |
| Scope of statutory-violation exclusions | Exclusions may not foreclose coverage for non-Song-Beverly privacy theories. | Exclusions apply to violations of statutes including privacy under Song-Beverly and related acts. | Exclusions encompass Song-Beverly violations and related privacy claims. |
| Existence of cognizable privacy claims in ZIP Code cases | Big 5 asserts additional common-law/privacy theories separate from Song-Beverly. | California does not recognize such common-law or constitutional privacy claims in ZIP Code cases. | No cognizable common-law or constitutional privacy claims exist; only statutory penalties may apply. |
Key Cases Cited
- Venoco, Inc. v. Gulf Underwriters Ins. Co., 175 Cal. App. 4th 750 (2009) (duty to defend applies only to covered claims)
- Scottsdale Ins. Co. v. MV Transp., 36 Cal. 4th 643 (2005) (no duty to defend where no potential for coverage due to exclusions)
- Montrose Chem. Corp. v. Sup. Ct., 6 Cal. 4th 287 (1993) (no duty to defend when underlying claim cannot come within policy coverage)
- Fogelstrom v. Lamps Plus, Inc., 195 Cal. App. 4th 986 (2d Dist. 2011) (ZIP Code privacy claims not recognized as serious privacy invasions)
- Swain v. Cal. Cas. Ins. Co., 99 Cal. App. 4th 1 (2002) (avoidance of artful negligence pleadings to circumvent exclusions)
- Fire Ins. Exch. v. Jiminez, 184 Cal. App. 3d 437 (1986) (disfavoring superfluous negligence claims to erase exclusions)