Facts

Scottsdale Insurance Company filed suit against Chitra Darke, Prakash Darke, Andrea Thomas-Paul, Sandra Hendrix, K. P., State Farm General Insurance Company, Mohmmed Alqaisi, S. O-P., D. P. and Y. P. in relation to Scottsdale's purported duty to defend in an underlying landlord-tenant action. This action arose from coverage disputes arising out of three related actions filed in the Alameda County Superior Court: "Andrea Thomas-Paul, et al. v. Prakash Darke, et al."; "Mohammed Alqaisi v. Prakash Darke, et al."; and "Sandra Hendrix v. Prakash Darke, et al." With regards to the underlying action relevant to Scottsdale's motion for summary judgment, Thomas-Paul had rented an apartment from Chitra and Prakash Darke, but discovered habitability issues that led to her filing suit against the Darkes. Scottsdale had issued two successive commercial general liability policies to the Darkes, effective from January 10, 2017 to January 10, 2018, and January 10, 2018 through January 10, 2019.

PLAINTIFF'S CONTENTIONS: Scottsdale filed a motion for summary judgment and argued it did not have a duty to defend the Darkes in the "Thomas-Paul" action. Scottsdale disagreed with State Farm's construction of the allegations in the underlying action and claimed there was no "occurrence" under the policies. Further, Scottsdale argued that the habitability exclusion in the policies precluded coverage.

DEFENDANTS' CONTENTIONS: State Farm contended that Scottsdale had a duty to defend based on the allegation that Thomas-Paul was forced out of her apartment because it was zoned for commercial use, not residential use, and was red-tagged by the city. State Farm claimed that the specific allegations raised a potential claim under Coverage A for "loss of use of tangible property not physically injured."

Result

The court granted Scottsdale's motion for summary judgment. The court concluded that the underlying action alleged the loss of a leasehold interest and did not raise a potentially covered claim under Coverage A in the policy for "loss of use of tangible property," so Scottsdale did not have a duty to defend the Darkes in the action.