Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-00728/USCOURTS-casd-3_18-cv-00728-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332in Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Sarah Aislinn Flynn Thomas,

Plaintiff,

v.

State Farm Insurance Company,

 Defendant.

Case No. 18-cv-00728-BAS-BGS

SUPPLEMENTAL ORDER RE: 

MOTION FOR SUMMARY 

JUDGMENT

The Court issued an initial Order denying Defendant’s Motion for Summary 

Judgment and Granting Plaintiff’s Motion for Summary Judgment on December 10, 2019, 

and requesting that the parties file a joint report advising the status of the claims. (ECF 

No. 35.) The parties informed the Court that Plaintiff’s claim for a breach of the implied 

covenant of good faith and fair dealing remained unresolved.1

 (ECF No. 36.) 

After reviewing the issues, the Court finds that summary judgment in favor of 

Defendant is appropriate on this claim. The Ninth Circuit has held that “[a]n insurer is 

entitled to summary judgment on a claim that it breached the covenant of good faith and 

fair dealing where its interpretation of the policy at issue, though incorrect, was 

reasonable.” Aurafin-OroAmerica, LLC v. Fed. Ins. Co., 188 F. App’x 565, 567 (9th Cir. 

2006). A district court “can conclude as a matter of law that an insurer’s denial of a claim 

 1 The Court’s initial Order granted Plaintiff’s Summary Judgment Motion and denied Defendant’s 

Summary Judgment Motion solely as to the breach of contract claim. 

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is not unreasonable, so long as there existed a genuine issue as to the insurer’s liability.” 

Am. Cas. Co. v. Krieger, 181 F.3d 1113, 1123 (9th Cir. 1999) (quoting Lunsford v. Am. 

Guar. & Liab. Ins. Co., 18 F.3d 653, 656 (9th Cir. 1994)). The Ninth Circuit has repeatedly 

held that a genuine issue exists where there is “a question concerning an insurer’s liability 

under California law.” Guebara v. Allstate Ins. Co., 237 F.3d 987, 999 (9th Cir. 2001)

(Fletcher, J., dissenting in part) (citing cases).

The genuine dispute in this case did not concern the existence of coverage liability 

afforded under the life insurance policies or the amount or extent of the claimed loss. See, 

e.g., Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 1062, 1072 (2007), as modified on denial 

of reh’g (Apr. 20, 2007). Rather, at the core of this case was a legal question about statutory 

applicability; namely, whether two provisions of the California Insurance Code applied to 

the policies at issue, and thus whether liability attached to Defendant under those statutes. 

Therefore, because this case presented a genuine issue as to Defendant’s liability under law, 

Defendant’s denial of benefits, though incorrect, was reasonable. This is supported by the 

fact that at the time of Defendant’s denial of benefits, no state court had definitively 

addressed the issues of retroactivity or renewal as to these two provisions.

2

 Thus, the Court 

finds that as a matter of law, summary judgment is appropriate as to Plaintiff’s claim of 

breach of good faith and fair dealing. See Safeco Ins. Co. of America v. Guyton, 692 F.2d 

551, 557 (9th Cir. 1982) (bad faith claims are untenable where “there exist[s] a genuine 

issue as to [an insurer’s] liability under California law”); see also Opsal v. United Services 

Auto. Ass’n, 2 Cal. App. 4th 1197, 1205 (Ct. App. 1991) (citing Safeco).

Accordingly, the Court GRANTS Defendant’s Motion for Summary Judgment as to 

the good faith and fair dealing claim. If Plaintiff wishes to object to this Order, Plaintiff 

may submit a brief exceeding no more than five pages by January 15, 2020. If the Court 

 2 Defendant did not pay out the policies in 2017 on the basis that the policies had lapsed and ultimately 

terminated for nonpayment of premiums. The California Court of Appeal’s decision in Hugh v. Protective 

Life Insurance, finding that the statutes in question have no retroactive application, was not issued until 

October 2019. 40 Cal. App. 5th 1166 (Ct. App. 2019).

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does not receive a timely objection from Plaintiff, the Court will instruct the Clerk to enter 

judgment in this case.

IT IS SO ORDERED.

DATED: January 7, 2020

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