Government Employees Insurance Company v. Nadkarni

Background

GEICO brought this declaratory-relief action concerning whether its umbrella insurance policy required it to defend and indemnify Anshuman and Renuka Nadkarni, former landlords who were defending a wrongful-eviction lawsuit brought by former tenants. The complaint asserted three claims: a declaration about GEICO’s duty to defend, a declaration about its duty to indemnify, and reimbursement.

The Nadkarnis bought the residential property in February 2017. The tenancy was month-to-month. They served the tenants with a 60-day termination notice on March 13, 2018. The tenants apparently vacated on April 21, met with the Nadkarnis on April 29, surrendered their keys, and received their security deposit and additional relocation expenses. The tenants paid April rent but no rent afterward. The Nadkarnis instructed a contractor to dispose of personal property left at the property on or about May 13, 2018.

The Nadkarnis made statements to the San Francisco Rent Board that they obtained possession on May 1, 2018. Renuka Nadkarni also testified that the owner move-in had been completed when the Nadkarnis bought the GEICO policy. The tenants sued the Nadkarnis for wrongful eviction on November 7, 2018. Their operative state complaint alleged, among other things, that the Nadkarnis terminated the tenancy for an owner move-in but did not move in within the required period.

The Nadkarnis purchased the GEICO policy on May 7, 2018. The policy period was May 8, 2018 to May 8, 2019, and the policy was later canceled effective December 28, 2018. The policy covered certain personal injuries, including injury arising from wrongful eviction, and applied to covered personal injury or property damage taking place during the policy period.

Motion and governing law

GEICO moved for summary judgment on claim one, concerning its duty to defend. Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. GEICO argued that the wrongful eviction occurred before the policy period and separately argued that the destruction of the tenants’ personal property was not covered property damage. The Nadkarnis opposed the motion based on the possibility that the eviction occurred during a period overlapping the policy period. They did not dispute GEICO’s separate argument about the personal-property claims.

The court applied California substantive law. Under California law, an insurer’s duty to defend is broader than its duty to indemnify. The duty arises when the complaint or facts known to the insurer show a potential for coverage. But the duty does not arise when, as a matter of law, neither the complaint nor known facts indicate any possible coverage.

Analysis

The policy covered occurrences during the policy period. The court treated wrongful eviction as an offense-based occurrence, meaning the relevant event was the commission of the wrongful-eviction offense during the policy period. The parties agreed that the events completing an eviction under California law were the owners’ service of an eviction notice, the tenants’ departure under that notice, and the owners’ repossession after the departure.

The court held that all relevant events occurred before May 8, 2018. The notice was served on March 13; the tenants vacated by April 21; the Nadkarnis took possession and received the keys on April 29; and the Nadkarnis had regained possession by May 1. The court also relied on the Nadkarnis’ statements and testimony that they had repossessed the property before buying the policy on May 7.

The Nadkarnis argued that the tenants retained control during the first two weeks of May because personal property remained at the property and the 60-day notice period extended through May 12. The court rejected that argument. It concluded that the occurrence of the eviction was before the policy period, so there was no potential for coverage and no duty to defend. The court also rejected the argument that the owner-move-in requirements created a later occurrence or ambiguity. It explained that the 90-day period under the San Francisco Rent Ordinance was a safe harbor concerning the landlord’s good faith and did not make the earlier eviction a later event for purposes of this policy.

Disposition

The court granted GEICO’s motion for summary judgment on claim one and held, as a matter of law, that GEICO had no duty to defend the Nadkarnis in the underlying wrongful-eviction lawsuit. The opinion identifies the separate claims concerning the duty to indemnify and reimbursement but does not rule on them. The court did not separately resolve GEICO’s alternative argument about coverage for the destruction of the tenants’ personal property because the ruling on the timing of the eviction resolved claim one.

Judge Laurel Beeler signed the order on November 22, 2019.