Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-03630/USCOURTS-cand-3_18-cv-03630-1/pdf.json

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

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

GREAT AMERICAN ASSURANCE 

COMPANY,

Plaintiff,

v.

JOVITA M. BISHOP, et al.,

Defendants.

Case No.18-cv-03630-JSC 

ORDER RE: PLAINTIFF’S MOTION 

FOR PARTIAL SUMMARY 

JUDGMENT

Re: Dkt. No. 54

Plaintiff Great American Assurance Company filed this action against Jovita M. Bishop and 

David Bishop d.b.a. Bishop’s Care Home seeking a determination that it has no duty to defend or 

indemnify the Bishops in a state court negligence and wrongful death lawsuit. Great American’s

motion for partial summary judgment arguing that it is entitled to judgment as a matter of law that it 

owes no continuing defense or indemnity obligation to Jovita Bishop in the underlying action is now 

pending before the Court.1(Dkt. No. 54.) Having considered the parties’ briefs and having had the 

benefit of oral argument on February 21, 2019, the Court DENIES the motion. Great American has 

failed to show that as a matter of law all of Ms. Bishop’s conduct at issue in the underlying state 

court action falls within either the criminal act or abuse exclusions of the relevant policy.

SUMMARY JUDGMENT EVIDENCE

In 2007, Jovita Bishop and her husband, David Bishop, opened Bishop’s Care Home in 

Rohnert Park, California. (Dkt. No. 60-3 at ¶ 3.) At the time she opened the facility, Ms. Bishop 

obtained a business insurance package from Great American. (Id. at ¶ 6.) In 2014, Marie 

Giordano became a resident of Bishop’s Care Home. (Id. at ¶ 13.) Ms. Giordano had Parkinson’s 

 

1 All parties have consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 

636(c). (Dkt. Nos. 6, 10 & 17.) 

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disease, Alzheimer’s and cardiac conditions. (Id.) In December 2015, Ms. Bishop’s staff alerted 

her that Ms. Giordano had a skin tear which had developed into a pressure sore. (Id. at ¶ 15.) Ms. 

Bishop instructed her staff to reposition her every few hours and notified Ms. Giordano’s son of 

the pressure sore. (Id.) On December 23, 2015, Ms. Giordano was transported to Sutter Regional 

Hospital for evaluation and was diagnosed with a stage IV pressure sore as well as other sores and 

admitted to the hospital for treatment. (Id. at ¶¶ 19-20.) A week later, Ms. Giordano was 

discharged from Sutter Regional Hospital and transferred to Creekside Convalescent Hospital. 

(Id. at ¶ 20.) On January 12, 2016, Ms. Giordano died at Creekside Convalescent Hospital. (Id. at 

¶ 22.) 

Six months later, Ms. Giordano’s sons filed a complaint against Jovita Bishop doing 

business as Bishop’s Care Home in the Sonoma County Superior Court (the “Giordano action”). 

(Dkt. No. 60-2 at 2 (Ex. A).

2

) The Giordano action initially pled five causes of action: (1) neglect; 

(2) elder abuse; (3) negligence; (4) breach of written contract; and (5) wrongful death.3 The 

complaint alleges that Bishop’s care home was understaffed and inadequately trained, and that 

while in Bishop’s care Ms. Giordano’s condition declined to such an extent that she had to be 

taken to an acute care facility where she was found to be malnourished and to have pressure sores. 

(Id. at ¶ 13.) The complaint references an attached Coroner’s report which indicates that Ms. 

Giordano’s cause of death was “Organizing Bronchopneumonia” with the “Other Significant 

Conditions [of] multiple decubitus ulcers, dementia, and cirrhosis.” (Dkt. No. 60-2 a 22.) 

Bishop tendered the defense of the action to Great American. Great American responded 

by issuing a reservation of rights letter to Ms. Bishop. (Dkt. No. 57 at 275.) The letter accepted 

tender of defense for the Giordano action “under a full and complete reservation of rights...fully 

and expressly reserve[ing] all of its rights as to indemnity.” (Id.) 

 

2 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 

ECF-generated page numbers at the top of the documents.)

3 Ms. Bishop’s unopposed request for judicial notice of the complaint filed in the Giordano action 

is GRANTED. (Dkt. No. 60-1.) See United States ex. rel. Robinson Rancheria Citizens Council 

v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992) (“we may take notice of proceedings in other 

courts, both within and without the federal judicial system, if those proceedings have a direct 

relation to the matters at issue.”) 

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Six months after Great American accepted the defense of the civil action, a criminal 

complaint was filed against Ms. Bishop and Lauro Frias Llanda, another staff member at the care 

facility. (Dkt. No. 55 at 26.4) The complaint charged Ms. Bishop and Mr. Llanda with violations of 

California Penal Code Section 368(b)(1) with enhancements. (Id. at 27.) In February 2018, Ms. 

Bishop pled no contest to a violation of Section 368(b)(1), but not the enhancements. (Id. at 30.)

In 2018, the plaintiffs in the Giordano action dismissed their causes of action for neglect 

and elder abuse, but maintained their claims for negligence and wrongful death. (Dkt. No. 60-2 at 

30 (Ex. B).) 

PROCEDURAL BACKGROUND

Great American filed this action for declaratory relief against Jovita and David Bishop 

doing business as Bishop’s Care Home. (Dkt. No. 1.) Great American seeks a declaration that it 

is not required to defend or indemnify the Bishops because it is not obligated to defend or 

indemnify lawsuits seeking damages arising out of a criminal act or abuse. The Bishops thereafter 

filed a counterclaim for breach of contract, breach of the covenant of good faith and fair dealing, 

and declaratory relief against Great American and their insurance broker NEK Insurance. (Dkt. 

No. 8.) Great American then filed a motion for partial summary judgment as to its duty to defend 

and indemnify Ms. Bishop. (Dkt. No. 21.) The Court thereafter granted Ms. Bishop’s motion to 

continue the motion for summary judgment under Federal Rule of Civil Procedure 56(d). (Dkt. 

No. 454.) Great American then filed the now pending amended motion for partial summary 

judgment which is fully briefed. (Dkt. Nos. 54 and 60.)

The Giordano action was set for trial on March 1, 2019; however, on February 20, 2019, 

Great American notified the Court that the Giordano action had settled in principle. (Dkt. No. 67.)

 

4 Great American requests that the Court take judicial notice of the complaint in the Giordano

action, the criminal complaint, Ms. Bishop’s “Felony Advisement of Rights, Waiver, and Plea,” 

and a print out of the docket in the criminal case. (Dkt. No. 55.) Judicial notice is appropriate for 

“undisputed matters of public record, including documents on file in federal or state courts.” 

Harris v. Cty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (internal citation omitted). Ms. 

Bishop has not objected to Great American’s request for judicial notice. Accordingly, the Court 

GRANTS the Request for Judicial Notice as to Exhibits B, C, and D which are part of the public 

record and easily verifiable. See Fed. R. Evid. 201. The copy of the complaint in the Giordano

action attached to the request for judicial notice does not include all the pages and the Court thus 

declines to take judicial notice of this version of the complaint. 

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DISCUSSION

Great American insists that it does not owe Ms. Bishop a continuing defense or indemnity 

obligation because of her criminal conviction for felony elder abuse. Ms. Bishop counters that Great 

American is estopped from enforcing the criminal act or abuse exclusions because it delayed in raising 

the exclusions and she detrimentally relied on Great American’s failure to invoke the exclusions when 

she entered a no contest plea to the elder abuse offense. In the alternative, Ms. Bishop contends that 

the Court cannot conclude as a matter of law that the either exclusion applies based on the evidence 

currently before the Court. Because the Court agrees with Ms. Bishop on this latter question, Great 

American’s motion for summary judgment must be denied.

A. The Criminal Act and Abuse Exclusions

“It has long been a fundamental rule of law that an insurer has a duty to defend an insured 

if it becomes aware of, or if the third party lawsuit pleads, facts giving rise to a potential for 

coverage under the insuring agreement.” Waller v. Truck Ins. Exchange, 11 Cal.4th 1, 19 (1995).

“This duty, [ ] applies even to claims that are groundless, false, or fraudulent, [and] is separate 

from and broader than the insurer’s duty to indemnify.” Id. (internal citation and quotation marks 

omitted). “Thus, when a suit against an insured alleges a claim that potentially could subject the 

insured to liability for covered damages, an insurer must defend unless and until the insurer can 

demonstrate, by reference to undisputed facts, that the claim cannot be covered. In order to 

establish a duty to defend, an insured need only establish the existence of a potential for coverage; 

while to avoid the duty, the insurer must establish the absence of any such potential.” Palp, Inc. v. 

Williamsburg Nat’l Ins. Co., 200 Cal. App. 4th 282, 289 (2011) (internal citation omitted). 

“However, where there is no possibility of coverage, there is no duty to defend.” Waller, 11 

Cal.4th at 19.

While insurance contracts have special features, “they are still contracts to which the 

ordinary rules of contractual interpretation apply.” Bank of the West v. Sup. Ct., 2 Cal.4th 1254, 

1264 (1992). Generally, “[u]nder statutory rules of contract interpretation, the mutual intention of 

the parties at the time the contract is formed governs interpretation” and that intent is to be 

inferred wherever possible solely from the written contract provisions. Waller, 11 Cal.4th at 18

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(citing Cal. Civ. Code, §§ 1636, 1639.) “The ‘clear and explicit’ meaning of these provisions, 

interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or 

a special meaning is given to them by usage’, controls judicial interpretation.” Id. (quoting Cal. 

Civ. Code §§ 1644, 1638). “A policy provision will be considered ambiguous when it is capable 

of two or more constructions, both of which are reasonable.” Id. In interpreting the language of 

an insurance policy, a court should give the words used their plain and ordinary meaning. See 

Giddings v. Indus. Indem. Co., 112 Cal.App.3d 213, 218 (4th Dist.1980). “Any ambiguous terms 

are resolved in the insureds’ favor, consistent with the insureds’ reasonable expectations.” Safeco 

Ins. Co. of Am. v. Robert S., 26 Cal. 4th 758, 763 (2001) (internal citation and quotation marks 

omitted). Likewise, exclusionary clauses in insurance contracts are interpreted narrowly against 

the insurer and in favor of the insured. See Arenson v. Nat’l Automobile & Cas. Ins. Co., 45 

Cal.2d 81, 83 (1995).

1. Which Policy Governs

Before the Court can address the substance of the exclusions, it must resolve the question 

of which exclusions apply. Ms. Bishop contends that Great American substantively amended her 

policy, and in particular, the at-issue professional liability coverage, abuse coverage, and criminal 

act and abuse exclusions without providing notice and therefore the amended language does not 

apply. 

a. The 2007 Policy Language

When Ms. Bishop first obtained her Great American BusinessPro Policy in 2007 she 

purchased both professional liability coverage and separate abuse coverage. (Dkt. No. 60-4 at 

124, 135.) The professional liability coverage was contained in the “Health Care Services 

Insurance Coverage C” Form CG 78 75. (Id. at 124.) As relevant here, the professional liability 

coverage contains two exclusions: “[d]amages arising directly or indirectly out of...[1] The 

performance by any insured of a criminal or fraudulent act” or “[2] bodily injury...arising out of 

the actual, threatened or alleged abuse, molestation, harassment or sexual conduct by any one of 

any person.” (Id. at 125 (Sec. I.2.e(3)-(4)).) The separate abuse coverage was provided through 

“The Abuse or Molestation Coverage Form” which only applied to “‘damages’ because of any 

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actual, threatened, intentional or unintentional sexual conduct or misconduct, sexual or physical 

abuse or sexual molestation by anyone, of any person to which this insurance applies.” (Id. at 135

(Sec.I.1.a).) The 2007 policy did not define the terms “abuse,” “physical abuse,” “performance,” 

and “damages” as they were used in either the professional liability coverage or the separate abuse 

coverage. 

b. The 2015 Policy Language

The 2015 Great American BusinessPro Policy which was in effect at the time of incident 

no longer included the Health Care Services Insurance Coverage C Form CG 78 75. Instead, the 

professional liability coverage was provided through “Professional Liability Insurance” Form CG 

87 10. (Dkt. No. 60-14 at 72 (Duke Depo. at 90:6-23.)) The criminal act and abuse exclusion 

language was also modified as follows:

2. Exclusions

This insurance does not apply to any:

...

b. “Damages” because of any liability arising out of any criminal or 

fraudulent act committed by or at the direction of the insured. This 

exclusion applies regardless of:

(1) whether or not the criminal or fraudulent act constitutes a felony, 

misdemeanor, violation, or any other particular type, grade, or level 

of offense; and

(2) whether or not the insured is prosecuted for, pleads guilty to, or is 

convicted of any offense.

...

s. “Damages” because of any liability arising out of “Abuse.”

(Dkt. No. 60-5 at 219 (Professional Liability Insurance, Sec. I.2).) The section elsewhere defines 

“Abuse” in relevant part as “any actual, threatened, or alleged act, error, omission, conduct, or 

misconduct, that a claim or ‘suit’ alleges to be, or to constitute, any form of abuse (including but 

not limited to, elder abuse, child abuse, patient abuse, or abuse of a dependent person) under any 

applicable state or federal statute or regulation” and “any actual, threatened, or alleged act, error, 

omission, conduct, or misconduct, of one or more of the following kinds...non-sexual assault, 

non-sexual battery, or non-sexual abuse, of or directed at a person.” (Id. at 225 (Sec. VI.1.a-b).) 

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The language of the additional “Abuse or Molestation Coverage” Form CG 82 83 was also 

modified to exclude “bodily injury...arising out of...the actual, threatened or alleged abuse, 

molestation, harassment or sexual conduct by anyone of any person.” (Dkt. No. 60-5 at 168.) The 

Abuse or Molestation Coverage Form also excludes “Damages because of any liability arising out 

of any criminal or fraudulent act committed by or at the direction of the insured.” (Dkt. No. 60-5 

at 204 (Sec.I.2.b.).) Abuse has the same definition as it has under the Professional Liability 

provisions. (Id. at 211 (Sec. VI.1.a.).)

c. The 2007 Policy Language Governs

“[T]he general rule [is] that one who assents to a contract is bound by its provisions and

cannot complain of unfamiliarity with the language of the instrument.” Madden v. Kaiser Found. 

Hosps., 17 Cal. 3d 699, 710 (1976). “Thus, an insured has a duty to read his policy.” Fields v. 

Blue Shield of Cal., 163 Cal.App.3d 570, 578 (1985). However, “an insurance company is bound 

by a greater coverage in an earlier policy when a renewal policy is issued but the insured is not 

notified of the specific reduction in coverage.” Id. at 579. To be adequate, notice must be 

conspicuous, plain, and clear. Id.

Ms. Bishop contends that the 2015 policy changes were “huge” because the “Abuse 

coverage was made so expansive that operators of RCFEs no longer had any professional liability 

coverage if they were accused of negligence in the care of an elder.” (Dkt. No. 60 at 18:5-8.) It is 

undisputed that Great American did not notify Ms. Bishop (or any other policyholder) when it 

discontinued use of the Health Care Services Insurance, Coverage C form for professional liability 

coverage and “incorporated it” into other policy provisions. (Dkt. No. 60-14 at 72 (Duke Depo. 

90:1-23).) Nor did Great American provide notice of the changes in the policy language 

regarding coverage under the separate Abuse or Molestation Coverage Form. (Id. at 84:17-86:24.) 

The question then is whether the changes between 2007 and 2015 were significant enough to 

require notice. Great American insists that they were not.

While the 2007 Policy excluded damages caused by either the “performance by any 

insured of a criminal or fraudulent act” or “bodily injury” “arising out of” “actual, threatened or 

alleged abuse,” the 2015 Policy excludes damages “arising out of any criminal or fraudulent act 

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committed by or at the direction of the insured as well as damages because of “any liability arising 

out of abuse” which is defined to include “elder abuse.” Compare Dkt. No. 60-4 at 125 (Sec. 

I.2.e.) with Dkt. No. 60-5 at 218 (Sec. I.2.b-s.).) That is, the 2015 Policy explicitly excludes elder 

abuse from its professional liability coverage whereas the 2007 version excludes coverage for 

undefined “abuse.” Ms. Bishop argues the 2007 Policy is ambiguous as to “abuse”—an ambiguity 

which the 2015 amendments arguably corrected. Likewise, while the 2007 Policy excludes 

“criminal acts” generally, the 2015 Policy excludes criminal acts regardless of whether the insured

is prosecuted for, pleads guilty to, or is convicted of any offense. Ms. Bishop contends the changes 

mean that the criminal act exclusion under the 2007 Policy requires proof that the insured actually 

committed a criminal act while the 2015 Policy does not.

Great American argues the caselaw only requires notice for “elimination of previouslyprovided coverage” rather than its “rewording of existing exclusions which did not materially 

change the scope of the exclusions.” (Dkt. No. 62 at 19:13-15.) Great American’s disavowal of 

the materiality of its amendments is unpersuasive.5 Where an insurance company reduces 

coverage, it is required to provide notice. Fields, 163 Cal.App.3d at 579; Metro. Bus. Mgmt., Inc. 

v. Allstate Ins. Co., 448 F. App’x 677, 678 (9th Cir. 2011); Allstate Ins. Co. v. Fibus, 855 F.2d 

660, 663 (9th Cir. 1988). As in Fields, this includes where the policy is amended to clarify 

ambiguous language. Fields, 163 Cal. App. 3d at 584. In any event, as Great American conceded 

at oral argument, if the Court concludes that Great American had a duty to defend under the 2007 

Policy (or, to be more precise, that it cannot be granted summary judgment that it did not), it does 

not matter if there is no coverage under the 2015 Policy: if there is coverage under the 2007 Policy 

but there is no coverage under the 2015 Policy that means that the 2015 amendments were 

material and Great Amendment was required to give Ms. Bishop notice of the changes. The Court 

will thus examine Great American’s duty to defend under the 2007 Policy.

2. Whether the Exclusions Bar Coverage

 

5 Great American’s reliance on the Fourth Circuit Court of Appeal’s 1958 decision in Carva Food 

Corp. v. Equitable Fire & Marine Ins. Co. of Providence, R. I., 261 F.2d 254, 258 (4th Cir. 1958), 

a case decided under Virginia law, is puzzling as it irrelevant to the question of what is currently 

required under California law. 

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Generally, a “carrier must defend a suit which [p]otentially seeks damages within the 

coverage of the policy.” Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 275 (1966). Because “an insurer 

has a duty to defend the entire third party action if any claim encompassed within it potentially 

may be covered,” the Court does not look “to whether noncovered acts predominate in the third 

party’s action, but rather to whether there is any potential liability under the policy.” Horace 

Mann Ins. Co. v. Barbara B., 4 Cal. 4th 1076, 1084 (1993), as modified on denial of reh’g (May 

13, 1993). “The determination whether the insurer owes a duty to defend usually is made in the 

first instance by comparing the allegations of the complaint with the terms of the policy. Facts 

extrinsic to the complaint also give rise to a duty to defend when they reveal a possibility that the 

claim may be covered by the policy.” Id. Any doubt regarding coverage must be resolved in favor 

of the insured. CNA Cas. of California v. Seaboard Sur. Co., 176 Cal. App. 3d 598, 607 (1986). 

“The defense duty is a continuing one, arising on tender of defense and lasting until the 

underlying lawsuit is concluded or until it has been shown that there is no potential for coverage.” 

Montrose Chem. Corp. v. Superior Court, 6 Cal. 4th 287, 295 (1993) (internal citations omitted) 

(emphasis in original). Thus, to prevail in a lawsuit against an insurer alleging a breach of the 

duty to defend, “the insured must prove the existence of a potential for coverage, while the insurer 

must establish the absence of any such potential. In other words, the insured need only show that 

the underlying claim may fall within the policy coverage; the insurer must prove that it cannot.” 

Id. at 300 (emphasis in original). “[I]nsurers have a heavy burden when seeking summary 

judgment on the duty to defend.” Anthem Electronics, Inc. v. Pac. Emp’rs Ins. Co., 302 F.3d 

1049, 1056 (9th Cir. 2002).

a. Criminal Act Exclusion

The criminal act exclusion in the 2007 Health Care Services Liability Coverage portion of 

the Policy applies to “damages arising directly or indirectly out of...[t]he performance by any 

insured of a criminal or fraudulent act.” (Dkt. No. 60-4 at 125 (Sec.I.2.e(3).) Great American 

insists that there is no possibility of coverage because the criminal elder abuse statute Ms. Bishop 

pled no contest to encompasses all the Giordano complaint allegations. In other words, all of the 

damages that the Giordano plaintiffs seek arose directly or indirectly from a criminal act 

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performed by Ms. Bishop. The Court disagrees.

The record establishes that Ms. Bishop pled no contest to a violation of California Penal 

Code § 368(b)(1). That statute states:

A person who knows or reasonably should know that a person is an 

elder or dependent adult and who, under circumstances or conditions 

likely to produce great bodily harm or death, willfully causes or 

permits any elder or dependent adult to suffer, or inflicts thereon 

unjustifiable physical pain or mental suffering, or having the care or 

custody of any elder or dependent adult, willfully causes or permits 

the person or health of the elder or dependent adult to be injured, or 

willfully causes or permits the elder or dependent adult to be placed 

in a situation in which his or her person or health is endangered, is 

punishable by imprisonment in a county jail not exceeding one year, 

or by a fine not to exceed six thousand dollars ($6,000), or by both 

that fine and imprisonment, or by imprisonment in the state prison for 

two, three, or four years.

While it is undisputed that Ms. Bishop pled no contest to a violation of Section 368(b)(1), the 

record does not identify what conduct Ms. Bishop engaged in that constituted the criminal act; that 

is, what is it that Ms. Bishop did that violated Penal Code § 368(b)(1)? Without the record being 

undisputed as to the conduct to which Ms. Bishop admitted, Great American cannot meet its 

burden of proving that all of the damages sought in Giordano action arose from such conduct.

The Giordano complaint does not allege that it is seeking damages arising from Ms. 

Bishop’s criminal act. Instead, in making claims for negligence and wrongful death, the Giordano 

complaint alleges: Ms. Bishop “constantly understaffed” the facility, Ms. Bishop “sacrificed 

MARIE’s medical needs in order to save money,” “[t]he staff, inexcusably failed to adequately 

administer and monitor MARIE’s medication and handled her roughly and caused unnecessary 

bruising,” and the staff “was not properly trained and oriented regarding the appropriate care 

levels of their residents and re treating, documenting and reporting the development of pressure 

sores.” (Dkt. No. 60-2 at 2 (Ex. A) at ¶¶ 10, 13.) Great American has no duty to defend only if all

of these alleged acts are the criminal act to which Ms. Bishop pled no contest and thus fall within 

the criminal act exclusion. See Horace Mann Ins. Co., 4 Cal.4th at 1081 (“the carrier must defend 

a suit which potentially seeks damages within the coverage of the policy”).

Great American argues that because all of the alleged conduct in the Giordano complaint 

could constitute criminal elder abuse under Penal Code section 368(b)(1), all of the damages 

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sought necessarily arose directly or indirectly from the criminal act to which Ms. Bishop pled no 

contest. Great American’s argument fails for two reasons. First, it does not cite anything to 

support its assertion that, for example, causing the death of a patient by understaffing the care 

facility—one of the complaint’s allegations—constitutes a violation of Penal Code Section 

368(b)(1). Second, even if everything alleged in the Giordano complaint could be a violation of 

Penal Code section 368(b)(1) under the right circumstances, it is not undisputed on the record 

before the Court that Ms. Bishop admitted to such criminal conduct. Again, Great American 

offers no evidence as to the facts underlying Ms. Bishop’s no contest plea, that is, the facts that 

she admitted. All the record shows is that Ms. Bishop pled no contest to a violation of Penal Code 

Section 368(b)(1) arising from her care of Ms. Giordano. Since Great American has not 

established what conduct Ms. Bishop admitted to through her no contest plea, it has not 

established that all of the damages sought in the Giordano complaint arise from her criminal act—

whatever it may be. 

Horace Mann is instructive. There, the insurer did not have a duty to defend an action 

seeking damages resulting from a teacher’s sexual molestation of a student. 4 Cal. 4th at 1081-82. 

The insured pled no contest to sexual molestation of the student and the insurer therefore denied 

any duty to defend. The California Supreme Court held, however, that because the underlying 

complaint sought damages for covered nonsexual misconduct, as well as noncovered sexual 

misconduct, and thus “evinced a possibility that [the insured] would be held liable for damages 

within the coverage of the policy stemming from [the insured’s] nonsexual conduct” with the 

student, the insurer had a duty to defend. Id. at 1083. In particular, the Court observed that the 

insured’s no contest plea established that there had been at least one instance of sexual misconduct

outside the policy’s coverage, but did not establish that the nonsexual misconduct alleged in the 

complaint fell outside the policy’s coverage. Id. Similarly, here, Ms. Bishop’s no-contest plea 

establishes that she engaged in at least one instance of elder abuse in violation of Penal Code 

section 368(b)(1), but it does not establish that all of the conduct alleged in the Giordano 

complaint is the criminal act to which she pled no contest. Accordingly, because Ms. Bishop is 

potentially liable for a non-criminal act—namely, conduct sounding in negligence to which she 

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did not plead no contest—Great American has a duty to defend the Giordano lawsuit.

The cases upon which Great American relies are inapposite. In 20th Century Insurance 

Company v. Schurtz, 92 Cal. App. 4th 1188 (2001), the insured entered the underlying plaintiff’s 

residence and shot at him, grazing his forehead and finger. The plaintiff sued the insured for 

assault, battery and intentional infliction of emotional distress and the insured subsequently pled 

no contest to a single felony for assault with a firearm and specifically admitted to personal use of 

the firearm. Id. at 1190. Following the no contest plea, the plaintiff amended the complaint to 

allege that the insured had negligently brandished the firearm which resulted in its discharge 

toward the plaintiff. Id. The insured policy included an exclusion for injury “which is a 

foreseeable result of an intentional or criminal act of [the] insured or which is in fact intended by 

[the] insured.” Id. at 1191. The court held that there was no duty to indemnify because it was 

undisputed that the act for which the plaintiff sought damages—the shooting—was a criminal act 

given that the insured had pled no contest to assault with a firearm. Id. at 1196. Here, the 

Giordano complaint seeks damages for Ms. Giordano’s physical and mental health deterioration 

and ultimate death; however, there can be multiple causes for her death and deterioration, some 

which may be the elder abuse to which she pled no contest (although the record does not identify 

what act(s) constitute the elder abuse) and some which may be acts which constitute negligence

but are not the criminal act to which she pled no contest. This case is thus unlike Schurtz where 

there was only one cause of the injury—the insured’s shooting which was indisputedly a criminal 

act—and more like Horace Mann where the student was allegedly damaged by sexual misconduct 

and covered nonsexual misconduct.

Century-National Insurance Company v. Glenn, 86 Cal. App. 4th 1392 (2001), similarly 

involved the same criminal act exclusion as Schurtz and a shooting. In particular, the insured pled 

no contest to felony willful discharge of a firearm arising from his shooting at a group of youths to 

frighten them. Id. at 1394. One of the youths sued the insured for injuries the youth sustained “as 

a result of the shooting.” Id. at 1395. As in Schurtz, then, it was undisputed that the damages 

sought in the underlying complaint arose from the admitted criminal act—the shooting. Again, 

here, in contrast, Great American has not established that all of the mental and physical 

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deterioration and ultimately death that Ms. Giordano suffered was a result of the conduct to which 

Ms. Bishop pled no contest.

At oral argument, Great American insisted that because all of Ms. Bishop’s conduct 

alleged in the complaint could constitute elder abuse under Penal Code section 368(b)(1), on 

summary judgment the Court must treat Ms. Bishop’s no contest plea as establishing that all of the 

damages sought in the Giordano action arose from a criminal act. There is much wrong with this 

argument. First, Great American does not cite anything to support its bald argument that all of the 

conduct alleged in the complaint could be found to be criminal elder abuse. Second, Great 

American turns the insurer’s duty to defend on its head: whereas under California law the insurer 

is obligated to defend if the underlying case potentially seeks damages covered by the policy, see 

Horace Mann, 4 Cal. 4th at 1081, Great American posits that there is no duty to defend if the 

lawsuit seeks damages that are potentially not covered. No caselaw supports Great American’s 

position. To the contrary, “[a]ny doubt as to whether the facts give rise to a duty to defend is 

resolved in the insured’s favor.” Id.

Great American has not met its burden of showing that the criminal act exclusion 

eliminates any potential coverage of the damages sought in the Giordano action.

b. Abuse Exclusion

Great American also contends that it has no duty to defend (and thus indemnify) pursuant 

to the abuse exclusion. That exclusion bars claims for “damages arising directly or indirectly out 

of...bodily injury...arising out of the actual, threatened or alleged abuse...by any one of any 

person.” (Id. at Sec. 2.e.(4).) As explained above, the 2007 Policy does not define “abuse.”

Great American argues: “The Giordanos alleged that Bishop’s subpar care caused 

Giordano to develop bedsores, for which Bishop did not seek timely medical treatment, and which 

contributed to Giordano’s death. These allegations constitute ‘abuse’ within its “ordinary and 

popular sense” and since Ms. Bishop pled no contest to felony elder abuse, all of the damages 

arise out of abuse and are excluded. (Dkt. No. 62 at 15.) Great American has not met its burden 

of proving application of this exclusion to all of the damages sought by the Giordano complaint 

for the same reason as the criminal act exclusion. Great American does not cite anything to 

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support its proclamation that all of the Giordano complaint’s alleged conduct constitutes “abuse”; 

it cannot meet its burden with attorney argument that it is just “common sense.” It is not common 

sense to this Court, in any event, that “subpar care” constitutes felony elder abuse. The Court 

cannot conclude as a matter of law that all of the conduct alleged in the Giordano complaint 

constitutes “abuse” as used in the 2007 Policy, especially since abuse is nowhere defined. 

Great American’s reliance on State Farm Fire & Cas. Co. v. Century Indem. Co., 59 Cal. 

App. 4th 648, 662 (1997), as modified on denial of reh’g (Dec. 23, 1997), is unpersuasive. In 

State Farm Fire, three former students sued four teachers and a school district alleging that one of 

the teachers sexually molested them, and the other defendant teachers failed to report the 

offending teacher to the proper authorities. Id. at 652. The underlying complaint alleged both 

sexual misconduct and nonsexual conduct arising from the insured’s failure to report the 

allegations of molestation. Id. at 661. The court found that unlike in Horace Mann, the nonsexual negligent failure to report was not separable from the sexual misconduct. In Horace Mann, 

“the victim sought compensation for damages arising from injury to an interest different from that 

injured by the molestation.” State Farm, 59 Cal. App. 4th at 662. In contrast, “the gravamen of 

[the] alleged negligent failure to report and the alleged molestation is essentially the same: an 

injury to the minor’s interest in protecting and preserving his or her physical integrity from sexual 

misconduct.” Id. at 663. In contrast to State Farm, here there is more than one injury: mental 

deterioration, physical deterioration, and ultimately death. Great American has not established as 

a matter of law that all of these alleged injuries were caused by “abuse” (whatever that means), as 

opposed to mere negligence covered by the 2007 Policy. Accordingly, Great American has not 

met its summary judgment burden.

***

On summary judgment, “the insured need only show that the underlying claim may fall 

within policy coverage.” Montrose, 6 Cal.4th at 300 (emphasis added). The burden then shifts to 

the insurer to “prove that it does not.” Id. Because Great American has not established as a matter 

of law that all of the conduct alleged in the Giordano action constitutes the criminal act to which 

Ms. Bishop pled no contest such that the criminal act exclusion would apply or “abuse” within the 

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meaning of the abuse exclusion, it has not met its burden of showing no duty to defend Ms. 

Bishop in the underlying action.6

C. Insurance Code Section 553 Does not Apply

Finally, Great American argues that Insurance Code § 533 excludes coverage because Ms. 

Bishop pled no contest to a crime requiring a willful act. Under Section 533 “[a]n insurer is not 

liable for a loss caused by the wilful act of the insured; but he is not exonerated by the negligence 

of the insured, or of the insured’s agents or others.” This provision does not save Great 

American’s summary judgment motion. First, as explained above, Great American has not 

established all of the Giordano complaint allegations are encompassed by Ms. Bishop’s no contest 

plea. Second, Penal Code Section 368(b)(1) covers both intentional and non-intentional conduct 

and thus Ms. Bishop’s no contest plea alone cannot satisfy the willfulness requirement. See Kerns 

v. CSE Ins. Grp., 106 Cal. App. 4th 368, 395 (2003). Third, Section 533 only applies to the duty 

to indemnify and not the duty to defend. See Republic Indem. Co. v. Superior Court, 224 Cal. 

App. 3d 492, 497 (Cal. Ct. App. 1990), reh’g denied and opinion modified (Oct. 11, 1990) 

(“section 533 precludes only indemnification of wilful conduct and not the defense of an action in 

which such conduct is alleged.”).

D. Estoppel/Waiver

Because Great American has not met its summary judgment burden of proving that the 

criminal act and/or abuse exclusion eliminated any duty to defend, the Court need not address Ms. 

Bishop’s argument that Great American has waived or is estopped from asserting these exclusions. 

The Court nonetheless makes two observations. First, any objections to evidence must be made in the 

parties’ motion briefs themselves and not in a separate pleading. See N.D. Cal. Civ. L.R. 7-3(c). 

Second, under California law, implied waiver and estoppel cannot create insurance coverage where 

 

6 Great American did not brief whether it owes a duty to indemnify separate from the duty to 

defend. Its proposed order on the motion for partial summary judgment only sought a declaration 

that it did not owe Ms. Bishop a duty to defend. (Dkt. No. 58.) “[T]he duty to defend is broader 

than the duty to indemnify; an insurer may owe a duty to defend its insured in an action in which 

no damages ultimately are awarded.” Horace Mann, 4 Cal. 4th 1076, 1081. “Once the defense 

duty attaches, the insurer is obligated to defend against all of the claims involved in the action, 

both covered and noncovered, until the insurer produces undeniable evidence supporting an 

allocation of a specific portion of the defense costs to a noncovered claim.” Id.

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none existed in the first instance. See, e.g., Advanced Network, Inc. v. Peerless Ins. Co., 190 Cal. App. 

4th 1054, 1066 (2010).

CONCLUSION

For the reasons stated above, Great American’s motion for summary judgment is 

DENIED. The Court will hold a further case management conference on April 4, 2019 at 1:30 

p.m. in Courtroom F, 450 Golden Gate Ave., San Francisco, California. The parties shall file a 

joint case management conference statement one week in advance.

This Order disposes of Docket Nos. 54, 60, and 64.

IT IS SO ORDERED.

Dated: March 11, 2019

JACQUELINE SCOTT CORLEY

United States Magistrate Judge

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