Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_19-cv-02141/USCOURTS-cand-3_19-cv-02141-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CALIFORNIA CAPITAL INSURANCE 

COMPANY,

Plaintiff,

v.

REPUBLIC UNDERWRITERS 

INSURANCE COMPANY,

Defendant.

Case No. 19-cv-02141-SI 

ORDER GRANTING DEFENDANT'S 

MOTION FOR SUMMARY 

JUDGMENT

Re: Dkt. No. 28

Defendant Republic Underwriters Insurance Company (“Republic”) has filed a motion for

summary judgment. Pursuant to Civil Local Rule 7-1(b), General Order No. 72, and the 

undersigned’s scheduling Notice dated March 19, 2020, the Court finds this matter suitable for 

resolution on the papers and VACATES the hearing set for April 17, 2020. For the reasons set forth 

below, the Court GRANTS Republic’s motion for summary judgment.

BACKGROUND

On March 14, 2019, plaintiff California Capital Insurance Company (“California Capital”), 

on its own behalf and as assignee of The Golf Club at Boulder Ridge, LLC, filed this lawsuit in 

Santa Clara County Superior Court against defendant Republic. Republic removed the case to this 

Court on April 19, 2019. Dkt. No. 1, Compl. The complaint alleges that on July 2, 2014, the date 

of the underlying incident, Republic insured The Golf Club at Boulder Ridge under a Workers 

Compensation policy and that California Capital insured The Golf Club at Boulder Ridge under 

Commercial General Liability Coverage. Id. ¶¶ 6-7. 

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I. The Schrick Lawsuit

The background facts of this case are not in dispute. The complaint alleges that “[o]n July 

2, 2014, Alexander Schrick, an employee of The Golf Club at Boulder Ridge, was injured while 

exercising a benefit of his employment at The Golf Club at Boulder Ridge, when his coworker 

George Talaat struck him in the head with a golf club when taking a full swing, causing Schrick 

serious injuries.”1 Id. ¶ 8. The parties agree that on the day Schrick was injured, Schrick was not 

working. As a benefit, the Golf Club at Boulder Ridge permitted its employees to golf in the 

afternoons on certain days of the week. Alfonzo Decl., Ex. 1 at 10.2 On that particular day, Schrick 

had reserved a 4:30 p.m. tee time to play golf with his father. Id. at 12; Dkt. No. 30, Req. Jud. Not., 

Ex. F (“Schrick Dep.”) at 88:18-21.3 

After Schrick filed a claim for workers’ compensation, Republic’s workers’ compensation 

administrator found that Schrick’s injury did not result from his employment at The Golf Club at 

Boulder Ridge and denied the claim by letters dated September 29, 2014, and November 18, 2014. 

Dkt. No. 28-2, Calderwood Decl. ¶¶ 5-7 & Ex. S, U.4 

On June 12, 2015, Schrick filed a first amended complaint in Santa Clara County Superior 

Court, bringing a claim for negligence against The Golf Club at Boulder Ridge and against Talaat 

(“the Schrick lawsuit”). Dkt. No. 30, Req. Jud. Not., Ex. A (“Schrick Compl.”).

5 Schrick alleged: 

1 From documents submitted in support of the motion for summary judgment, it appears 

Schrick’s name was in fact Alessandro and that he at times went by “Alex.” California Capital’s 

opposition brief to the motion for summary judgment also erroneously lists the date of the incident 

as June 2, 2014, but the documents it files in support of its brief show that the incident occurred on 

July 2, 2014. See Dkt. No. 31, Opp’n at 5, 8; Dkt. No. 31-1, Alfonzo Decl., Ex. 1.

2 For ease of reference, citations to the docket refer to the page numbers stamped at the top 

of the page by the Court’s Electronic Case Filing system.

3 The Schrick deposition appears to have been taken in the underlying lawsuit, not in this 

lawsuit. Both parties rely on this deposition testimony to support their arguments here.

4

It is unclear whether Schrick pursued the denial with the Workers’ Compensation Appeals 

Board. California Capital states that he did, but cites no evidence showing this. See Opp’n at 5. 

Republic states that he did not. See Calderwood Decl. ¶ 10 & Ex. X.

5 Republic seeks judicial notice of a number of documents filed in connection with the 

underlying Schrick lawsuit: the first amended complaint; the parties’ briefing on The Golf Club at 

Boulder Ridge’s motion for summary judgment; and the superior court’s order denying the motion 

for summary judgment. Dkt. Nos. 29, 30. California Capital does not object to the request for 

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On July 2, 2014, at approximately 5:00 p.m., plaintiff, ALESSANDRO J. SCHRICK, 

was hitting golf balls on the driving range located at The Golf Club at Boulder Ridge, 

LLC, dba The Golf Club at Boulder Creek, Boulder Creek Golf Club. At said time 

and place and during said activity, plaintiff was struck in the left side of the head by 

defendant GEORGE TALAAT, who had taken plaintiff's golf club out of his hands 

and while showing him the proper hand grip on said golf club, took a full golf swing 

therewith, striking plaintiff in the head as herein described. Due to said defendant 

GEORGE TALAAT's conduct, plaintiff suffered serious physical and psychological

injury.

Id. at 4.

According to the complaint filed in this case, California Capital agreed to defend The Golf 

Club at Boulder Ridge in the Schrick lawsuit under reservation of rights. Compl. ¶ 12. Neither 

party disputes the allegation “that Schrick, The Golf Club at Boulder Ridge and California Capital 

each did tender the Schrick claim and/or the Schrick lawsuit to Republic Underwriters but that 

Republic Underwriters denied coverage under its policy for Workers’ Compensation benefits and 

under the Republic Underwriters [Employers’] Liability coverage.” See id. ¶ 13; see also Alfonzo 

Decl. ¶¶ 2-3. California Capital funded a settlement of $500,000 to resolve the Schrick lawsuit, and 

The Golf Club at Boulder Ridge assigned to California Capital “all claims and causes of action 

which it may now have against Republic Underwriters based upon their failure and/or refusal to 

defend or indemnify [The Golf Club at Boulder Ridge] in connection with the Schrick lawsuit.” 

Dkt. No. 28-3, Blumhardt Decl., Ex. CC.

In this suit, California Capital brings four claims for relief against Republic: (1) 

reimbursement; (2) breach of contract; (3) breach of the implied covenant of good faith and fair 

dealing; and (4) declaratory relief. California Capital states that “the Schrick lawsuit alleged 

damages that were excluded by the California Capital policy and covered by the Republic 

Underwriters’ policy” and it therefore “seeks an equitable contribution from Republic Underwriters 

judicial notice and indeed relies on certain of these documents in its opposition brief. The Court 

GRANTS the request for judicial notice with the caveat that it does not take judicial notice of the 

truth of any facts contained within the documents. See Fed. R. Evid. 201; Marsh v. San Diego 

Cnty., 432 F. Supp. 2d 1035, 1043 (S.D. Cal. 2006) (While “a court may take judicial notice of the 

existence of matters of public record, such as a prior order or decision,” it should not take notice of 

“the truth of the facts cited therein.”) (citations omitted). To the extent the Court cites to facts 

contained within the documents judicially noticed, it does so for background purposes only.

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towards defense costs and indemnity payments made in connection with the Schrick lawsuit given 

the potential for coverage that existed under the Republic Underwriters policy.” Compl. ¶¶ 16, 18.

II. The Republic Policy

At the time of the incident, Republic insured The Golf Club at Boulder Ridge under a 

Workers Compensation and Employers Liability Insurance Policy, No. ATW 000884-02. 

Calderwood Decl., Ex. P. Part One of the policy provides, in part: 

PART ONE

WORKERS COMPENSATION INSURANCE

A. How This Insurance Applies

This workers compensation insurance applies to bodily injury by accident or 

bodily injury by disease. Bodily injury includes resulting death.

1. Bodily injury by accident must occur during the policy period.

. . . 

B. We Will Pay

We will pay promptly when due the benefits required of you by the workers 

compensation law.

C. We Will Defend[

6

]

We have the right and duty to defend at our expense any claim or proceeding 

against you before the California Workers’ Compensation Appeals Board or its 

equivalent in any other state (and any appeal of a decision therefrom) for the 

benefits payable by this workers’ compensation insurance. We have the right to 

investigate and settle claims or proceedings. 

We have no duty to defend a claim, proceeding, or suit that is not covered by this 

insurance.

. . .

Id. at 7, 13.

Part Two of the policy provides, in part: 

6 The Republic policy contains a policy amendment to Part One, Section C. The language 

quoted here is from the amended section. See Calderwood Decl., Ex. P at 13.

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PART TWO

EMPLOYERS LIABILITY INSURANCE

A. How This Insurance Applies[

7

]

This employers’ liability insurance applies to bodily injury by accident or bodily 

injury by disease. Bodily injury means a physical injury, including resulting 

death.

1. The bodily injury must arise out of and in the course of the injured employee’s 

employment by you. 

2. The employment must be necessary or incidental to your work in California.

3. Bodily injury by accident must occur during the policy period.

. . .

B. We Will Pay

We will pay all sums that you legally must pay as damages because of bodily 

injury to your employees, provided the bodily injury is covered by this Employers 

Liability Insurance.

. . .

C. Exclusions

This insurance does not cover:

. . .

4. Any obligation imposed by a workers compensation, occupational disease, 

unemployment compensation, or disability benefits law, or any similar law; 

. . .

D. We Will Defend

We have the right and duty to defend, at our expense, any claim, proceeding or 

suit against you for damages payable by this insurance. We have the right to 

investigate and settle these claims, proceedings and suits. 

We have no duty to defend a claim, proceeding or suit that is not covered by this 

insurance. We have no duty to defend or continue defending after we have paid 

our applicable limit of liability under this insurance.

. . .

Id. at 8-9, 16.

LEGAL STANDARD

Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, 

7 The Republic policy contains a policy amendment to Part Two, Section A. The language 

quoted here is from the amended section. See Calderwood Decl., Ex. P at 16.

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and any affidavits show there is no genuine dispute as to any material fact and the movant is entitled 

to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The moving party bears the initial burden 

of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 

317, 323 (1986). The moving party has no burden to disprove matters on which the non-moving 

party will have the burden of proof at trial. The moving party need only demonstrate an absence of 

evidence to support the non-moving party’s case. Id. at 325. 

Once the moving party has met its burden, the burden shifts to the non-moving party to 

“designate ‘specific facts showing that there is a genuine issue for trial.’” Id. at 324 (quoting then 

Fed. R. Civ. P. 56(e)). To carry this burden, the non-moving party must “do more than simply show 

that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. 

Zenith Radio Corp., 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of evidence . . . 

will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). 

For summary judgment, the Court must view evidence in the light most favorable to the nonmoving party and draw all justifiable inferences in its favor. Id. at 255. “Credibility determinations, 

the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury 

functions, not those of a judge . . . ruling on a motion for summary judgment . . .” Id. However, 

conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine 

issues of fact and defeat summary judgment. Thornhill Publ’g Co., Inc. v. Gen. Tel. & Elec. Corp., 

594 F.2d 730, 738 (9th Cir. 1979). Parties must present admissible evidence. Fed. R. Civ. P. 56(c).

DISCUSSION

Republic moves for summary judgment, arguing that it had no duty to defend or indemnify 

The Golf Club at Boulder Ridge in the Schrick lawsuit under either the Workers Compensation (Part 

One) or Employers Liability (Part Two) policies that Republic provided. Dkt. No. 28-1, Mot. at 12. 

If the Court does not grant summary judgment as to the entire action, Republic alternatively seeks 

“an order adjudicating and entering judgment as to the second cause of action for breach of contract, 

and the third cause of action for breach of the covenant of good faith and fair dealing, for the reason 

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that in bringing such causes of action as the assignee of Boulder Ridge, the causes of action lack an 

essential element, i.e., damages suffered by the plaintiff’s assignor.” Dkt. No. 28, Not. of Mot. at 

2.

The central question that the parties dispute is whether Republic owed a duty to defend or 

indemnify The Golf Club at Boulder Ridge in the Schrick lawsuit and therefore whether Republic 

must reimburse any costs of the defense or of the settlement. California Capital forwards no 

argument that Republic owed a duty to defend or indemnify under the Workers Compensation part 

of its policy.

8

 Instead, California Capital focuses on the Employers Liability part. It argues that 

[a]lthough Mr. Schrick was not working at the time of his injury, there was a close 

connection between his injury and his employment and there is case authority that

injuries that occur during recreational activities can be considered within the course 

and scope of employment for purposes of workers’ compensation benefits. In these 

circumstances, the Schrick lawsuit presented at least the potential for recovery of 

damages covered by the Republic Employers Liability coverage. That is all that is 

required to trigger a duty to defend and participate.

Dkt. No. 31, Opp’n at 6.

“A liability insurer’s duty to defend will arise when a suit against an insured potentially

seeks damages within the coverage of the policy. An insurer, however, need not defend if the third 

party complaint cannot, by any conceivable theory, raise a single issue which would bring it within 

policy coverage. Thus, the settled rule is that where a pleading against the insured raises the 

potential for coverage, the insurer must provide a defense. In order to prevail on a motion for the 

summary adjudication of the duty to defend, ‘the insured need only show that the underlying claim 

may fall within coverage; the insurer must prove it cannot.’” Atl. Mut. Ins. Co. v. J. Lamb, Inc., 100 

Cal. App. 4th 1017, 1032 (2002) (internal citations omitted, quoting Montrose Chem. Corp. v. Super. 

Ct., 6 Cal. 4th 287, 300 (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 

8

It is well established that “[t]he civil and workers’ compensation systems are distinct. 

Therefore, there is no potential coverage under a workers’ compensation policy for damages 

awardable in a civil action.” Hon. H. Walter Croskey et al., California Practice Guide: Insurance 

Litigation § 7:1927.1 (2019) (citing La Jolla Beach & Tennis Club, Inc. v. Indus. Indem. Co., 9 Cal. 

4th 27, 42-43 (1994); Transamerica Ins. Co. v. Super. Ct., 29 Cal. App. 4th 1705, 1715 (1994)).

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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. at 1033 (citations omitted).

California Capital argues that there was a potential for coverage of the Schrick lawsuit under 

Republic’s Employers Liability policy. California Capital relies on two cases: Reinert v. Industrial 

Accident Commission, 46 Cal. 2d 349 (1956), and Winter v. Industrial Accident Commission, 129 

Cal. App. 2d 174 (1954). See Opp’n at 15-16. There are several problems with this reliance. First, 

as Republic notes, the cases pre-date the enactment of the workers’ compensation provision now 

codified at California Labor Code Section 3600(a)(9). Section 3600(a) outlines the conditions that 

must concur for an employee to obtain workers’ compensation. In 1978, the California legislature 

added what is now subdivision (a)(9). City of Stockton v. Workers’ Comp. Appeals Bd., 135 Cal. 

App. 4th 1513, 1519 n.1 (2006). It states, in relevant part, that workers’ compensation is not 

available if the injury “arise[s] out of voluntary participation in any off-duty recreational, social, or 

athletic activity not constituting part of the employee’s work-related duties, except where these 

activities are a reasonable expectancy of, or are expressly or impliedly required by, the employment.

. .” Cal. Lab. Code § 3600(a)(9). “[. . . S]ubdivision (a)(9) is not intended to replace the basic 

requirement that to be compensable, (1) an injury must occur while the employee is performing 

service growing out of and incidental to his or her employment and acting in the course of 

employment, and (2) the employment must be the proximate cause of the injury. Subdivision (a)(9) 

was intended to limit, rather than to expand, the scope of liability that an excessively liberal 

application of the basic test might support.” City of Stockton, 135 Cal. App. 4th at 1524 (internal 

citations omitted). Accordingly, it is unclear whether the courts would have found workers’ 

compensation available in Reinert—in which a Girl Scout camp counselor was thrown from a horse 

while riding during her free time—or in Winter—in which a caddy injured another caddy while 

golfing at the employer’s golf course on a day off—subsequent to the enactment of subdivision 

(a)(9).

Second, and more fundamentally, the cases on which California Capital relies examined 

whether workers’ compensation benefits were properly denied to the employees. Here, the question 

is not whether Republic properly rejected Schrick’s claim for workers’ compensation benefits, but 

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whether Republic’s Employers Liability policy provided any potential coverage for damages in 

Schrick’s civil suit against The Golf Club at Boulder Ridge. The Court concludes that it did not. 

“[. . . E]mployers’ liability insurance is traditionally written in conjunction with workers’ 

compensation policies, and is intended to serve as a ‘gap-filler,’ providing protection to the 

employer in those situations where the employee has a right to bring a tort action despite the 

provisions of the workers’ compensation statute or the employee is not subject to the workers’ 

compensation law.[] Generally, these two kinds of coverage are mutually exclusive. Most 

employers’ liability policies limit coverage to liability for which the insured is held liable as an 

employer.” Producers Dairy Delivery Co. v. Sentry Ins. Co., 41 Cal. 3d 903, 916 (1986) (internal 

citations omitted). In other words, employers’ liability coverage applies “in those relatively rare 

situations where the employee has the right to bring a civil action against the employer for conduct 

outside the normal risk of employment (e.g., violence or false imprisonment . . . .) or where the 

employee is not subject to the workers’ compensation law.” Hon. H. Walter Croskey et al., 

California Practice Guide: Insurance Litigation § 7:1936 (2019).

In Culligan v. State Compensation Insurance Fund, 81 Cal. App. 4th 429 (2000), the 

California Court of Appeal examined an employers’ liability policy containing similar language to 

that contained in the Republic policy here.9 There, three former employees sued the insured 

employer in superior court, alleging they were terminated for having complained about noxious 

fumes at the workplace. Two of the plaintiffs had pursued and received workers’ compensation for 

the injury from the fumes themselves; the third plaintiff had not. The workers’ compensation and 

employers’ liability insurer refused to defend the civil lawsuit. The Court of Appeal rejected the 

employer’s argument that under the employers’ liability policy the insurer should have defended the 

lawsuit as to the employee who had not pursued workers’ compensation. The appellate court 

9 The employers’ liability policy in Culligan covered “bodily injury by accident or bodily 

injury by disease . . . caused or aggravated by the conditions or your employment” such that the 

insurer would pay “all sums you legally must pay as damages because of bodily injury to your 

employees eligible for benefits under this policy, provided the bodily injury is covered by this 

employer’s liability insurance.” 81 Cal. App. 4th at 435-36. The policy contained various 

exclusions, including for “any obligation imposed by a worker’ compensation . . . law . . . .” Id. at 

436.

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affirmed summary judgment in favor of the insurer. In so doing, the court explained, 

Culligan cites no case holding that exclusionary language like that used here- “any 

obligation imposed” by workers’ compensation- comes into play only where an 

employee has actually applied for or obtained benefits, and we find that construction 

unreasonable in light of the policy as a whole and the public policy . . . .

Part 1 [Workers Compensation] then covers actual benefit obligations incurred. Part 

2 [Employers Liability] covers situations where the employee, while not “excluded” 

from the workers’ compensation system, may not be required to use it exclusively 

(cf. La Jolla, supra, 9 Cal.4th at p. 36, 36 Cal.Rptr.2d 100, 884 P.2d 1048). Under 

Culligan’s construction, that structural distinction would be lost, for an employee 

required by the exclusivity rule to use only workers’ compensation could simply 

choose not to use it and consequently create a duty to defend. The cost limits of the 

compensation bargain would be lost, all at the whim of the employee.

Id. at 439; see also Transamerica Ins. Co. v. Super. Ct., 29 Cal. App. 4th 1705 (1994) (vacating trial 

court’s summary adjudication on whether the insurer owed a duty to defend a civil suit and instead 

finding there was no coverage for defense of the civil suit under the employers’ liability policy). 

In sum, Culligan clarified that the workers’ compensation exclusivity provisions apply 

whether or not the employee actually seeks or actually is awarded such compensation. Here, the 

fact that Schrick did not receive workers’ compensation is not determinative. Republic’s duty to 

defend in the civil suit does not rest on whether Schrick sought or was awarded workers’ 

compensation.

The Court agrees with Republic that California Capital’s attempt to show a potential for 

coverage under the Employers Liability policy relies on circular reasoning. California Capital 

appears to acknowledge that the Workers Compensation part of the Republic policy would not cover 

the Schrick lawsuit. Yet the Employers Liability part applies to “bodily injury by accident or bodily 

injury by disease[,]” and “[t]he bodily injury must arise out of and in the course of the injured 

employee’s employment by [the insured].” Calderwood Decl., Ex. P at 8. But nothing about the 

undisputed facts presented here raises the potential that, if Schrick’s injury did occur in the course 

and scope of his employment, it would fall outside the provisions of the Workers’ Compensation 

policy such that Employers Liability coverage would be available. California Capital’s construction 

would mean that an insurer would have to defend any subsequent civil action brought by an 

employee whose workers’ compensation claim had been denied. This is precisely the type of 

argument the Culligan court rejected. 

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Here, there was no potential coverage of the claims asserted in the Schrick lawsuit under

either the Workers’ Compensation or the Employers Liability part, and so Republic owed no duty 

to defend or indemnify. 

All of California Capital’s claims in this action (for reimbursement, breach of contract, 

breach of the covenant of good faith and fair dealing, and declaratory relief) depend on Republic 

owing a duty to defend or indemnify The Golf Club at Boulder Ridge in the Schrick lawsuit. 

Republic has shown there is no genuine dispute as to any material fact and that it is entitled to 

judgment as a matter of law. Accordingly, the Court GRANTS Republic’s motion for summary 

judgment. The Court need not reach Republic’s alternative argument that the claims for breach of 

contract and breach of the covenant of good faith and fair dealing fail for lack of damages.

CONCLUSION

For the reasons stated above and for good cause shown, the Court hereby GRANTS 

defendant’s motion for summary judgment.

IT IS SO ORDERED.

Dated: March 27, 2020

______________________________________

SUSAN ILLSTON

United States District Judge

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