Excel Test Prep. v. Scottsdale Insurance Company
- Jon Tigar
- 4:25-cv-00037
- U.S. District Court · Northern District of California
- 7
In Excel Test Prep. v. Scottsdale Insurance Company, Judge Tigar granted Scottsdale’s dismissal motion, dismissed the complaint without prejudice, and allowed amendment.
Excel Test Prep.’s breach-of-contract and implied-covenant claims against Scottsdale Insurance Company were dismissed without prejudice, with leave to amend within 28 days.
What happened
Excel Test Prep. sued Scottsdale Insurance Company over insurance coverage for a $200,000 settlement of a former employee’s class action. Excel claimed Scottsdale owed more under the policy.
Excel argued that some claims in the earlier lawsuit were not wage claims and should have received the policy’s higher coverage limits. Scottsdale argued that the policy’s wage-and-hour provision covered all of the claims, including reimbursement claims.
Judge Tigar ruled that the policy clearly included reimbursement claims in its definition of wage-and-hour claims. He granted Scottsdale’s motion to dismiss both claims, dismissed the complaint without prejudice, and allowed Excel 28 days to amend.
The detailed version
- Excel Test Prep. v. Scottsdale Insurance Company · No. 4:25-cv-00037
- Jon Tigar
- Aug. 25, 2025
Background
Excel Test Prep. provides standardized test-preparation services and entered into an insurance contract with Scottsdale Insurance Company. The policy covered employment-practices and third-party claims, subject to specified limits and retentions. Endorsement 17 separately addressed wage-and-hour claims and imposed a $150,000 aggregate limit for costs, charges, and expenses arising from those claims.
In 2019, a former employee filed a class action against Excel alleging violations of California wage-and-hour laws, including claims involving overtime, minimum wages, timely payment of wages, wage statements, recordkeeping, and reimbursement. Scottsdale defended Excel but applied Endorsement 17. The class action later settled for $200,000. Scottsdale did not contribute to the settlement, taking the position that the $150,000 limit applied to the entire action.
Excel sued Scottsdale for breach of contract and breach of the implied covenant of good faith and fair dealing, including bad-faith liability. Excel argued that the reimbursement and other non-wage claims were subject to the policy’s higher limits rather than Endorsement 17’s lower limit.
Court’s Analysis
The court applied Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not allege enough facts to state a legally plausible claim. It also interpreted the insurance policy under California law.
The court held that Endorsement 17’s definition of “Wage and Hour Claims” expressly included claims relating to “reimbursement of expenses” and other reimbursement or compensation of employees. The court found that this language unambiguously covered the reimbursement claims in the earlier class action. The court distinguished a case involving policy language that did not expressly address reimbursement because Endorsement 17 did contain that express language.
Because Endorsement 17 applied to the class action, the court concluded that Excel had not alleged that Scottsdale withheld benefits actually due under the policy. The court therefore dismissed Excel’s breach-of-contract claim. The court also dismissed the implied-covenant and bad-faith claim because withholding benefits due under the policy is a threshold requirement for that claim, and Excel had not alleged that requirement.
Disposition
The court granted Scottsdale’s motion to dismiss and dismissed the complaint without prejudice. It granted Excel leave to amend solely to cure the deficiencies identified in the order. Any amended complaint had to be filed within 28 days of the order. Judge Jon S. Tigar also continued the case-management conference from August 26, 2025, to November 4, 2025, at 2:00 p.m.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.