Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-04410/USCOURTS-cand-4_18-cv-04410-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Declaratory Judgement

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

MESA UNDERWRITERS SPECIALTY 

INSURANCE COMPANY, 

Plaintiff, 

vs. 

BLACKBOARD INSURANCE SPECIALTY 

COMPANY, ET AL., 

Defendants.

CASE NO. 18-cv-04410-YGR 

ORDER GRANTING MOTION OF MESA AND 

NDO GROUP FOR PARTIAL SUMMARY 

JUDGMENT AND DENYING CROSS-MOTION 

OF BLACKBOARD FOR SUMMARY 

JUDGMENT

Re: Dkt. No. 49, 51 

The Court herein considers two pending motions: one joint motion for partial summary 

judgment brought by plaintiff Mesa Underwriters Specialty Insurance Company (“Mesa”) and 

nominal defendants NDO Group, LLC, Danny Haber, Alon Gutman, and Dion Ross (collectively 

“NDO Group”), and the other, a motion for summary judgment by defendant Blackboard 

Insurance Specialty Company (“Blackboard”)1. Both motions concern Blackboard’s alleged duty 

to defend NDO Group against the claims asserted in an underlying action filed in the Superior 

Court of the State of California, County of Alameda, Action No. RG16-822634, entitled Knapp, et 

al., v. Haber, et al. The Court heard oral argument on the cross-motions on May 28, 2019. 

Having duly considered the parties’ written and oral arguments, and the admissible 

evidence submitted, and for the reasons set forth herein, the Court ORDERS as follows: Mesa 

Underwriters’ motion for partial summary judgment on the issue of Blackboard’s duty to defend is 

GRANTED and Blackboard’s cross-motion for summary judgment is DENIED. The allegations of 

the complaint in the underlying action included claims as to which Blackboard owed a duty to 

defend NDO Group under Coverage A (bodily injury and property damage) and Coverage B 

(personal and advertising injury). 

 1

 Defendant Blackboard Insurance Specialty Company was formerly known as Hamilton 

Specialty Insurance Company. (See, e.g., Opposition, Dkt. No. 51, 2:4-6.) 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 1 of 16
2 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

I. SUMMARY OF FACTS2 

A. The Underlying Action 

On April 1, 2016, NDO acquired a “single room occupancy,” long-term residential hotel 

located at 392 11th Street, Oakland, California (“Hotel”), in which a number of low-income 

tenants were residing. NDO group began renovations on common areas and some units in the 

Hotel shortly thereafter. While NDO negotiated buyouts with 20-25 tenants, several tenants 

continued to reside in the Hotel under the terms of their leases. 

On July 8, 2016, some tenants of the Hotel filed a complaint in Alameda County Superior 

Court, Knapp, et al. v. Haber, et al., Case No. RG16822634, alleging eight causes of action: (1) 

violation of the Oakland Tenant Protection Ordinance; (2) breach of covenant of quiet use and 

enjoyment; (3) breach of implied warranty of habitability; (4) intentional infliction of emotional 

distress; (5) nuisance; (6) negligence; (7) wrongful eviction; and (8) elder abuse. (Jones Decl. Exh 

1, “Tenants’ Complaint.”) The tenants alleged in pertinent part: 

Since the Defendants purchased the Property . . . they have engaged in a pattern or 

practice to create, or have by their actions and/or omissions allowed to exist, 

conditions, conduct and a climate at the Property which have and continued to 

adversely affect Plaintiffs, in violation of Oakland’s Tenant Protection Ordinance 

(Oakland Municipal Code§§ 8.22.600, et seq.) TPO and other state and local 

laws. 

(Id. ¶ 16(h).) The tenants amended their complaint on July 21, 2016, to add a claim for violation 

of the Fair Employment and Housing Act. (Jones Decl. Exh. 2, “Tenants’ FAC”.) The tenants 

alleged that, among other things, the following: 

NDO Group directed ongoing construction and renovation activities that disrupted the 

quiet enjoyment of the plaintiffs’ homes and resulted in the constructive and wrongful evictions of 

tenants. (Id. at ¶ 16.) The tenants were no longer being supplied heat, garbage pickup, or secure 

mail delivery. (Id. ¶ 16 (k), (m), (n).) The apartments all around them were gutted to the studs, 

large holes were created in the ceilings of apartments (including apartment of a tenant-plaintiff), 

and construction debris was dumped down the holes. (Id. at 7-8.) Some of the tenants were 

 2

 All facts are undisputed unless otherwise noted. 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 2 of 16
3 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

forced to vacate their units due to water leaks, failure to repair habitability defects, ongoing 

wrongful entries to their apartments, noise, dust, and a continuing nuisance resulting from the 

construction activities. (Id. at ¶ 16.) 

The tenants filed a Second Amended Complaint on May 1, 2017, alleging ongoing 

construction activities that disrupted the tenants’ quiet enjoyment and the habitability of their 

apartments. (Jones Decl. Exh. 4, “Tenants’ SAC”.) The SAC added allegations that: defendants 

demolished communal bathrooms in the Hotel; defendants created holes in the walls of the 

apartments, including a tenant-plaintiff’s room; and one tenant plaintiff (Howe) fell and injured his 

knee on or about November 2, 2016, in an unlit stairwell and eventually was forced to vacate his 

unit on January 29, 2017, due to the dangerous living conditions. (Id. at 9-10.) The SAC further 

alleged that one of the remaining tenant-plaintiffs (Chavez) endured “gaping holes in the walls 

allowing the cold air to penetrate his unit and preventing him protection from the elements while 

being unable to plug in his wall heater because Defendants construction efforts cut-off the 

electricity. . . . personal belongings [being] ruined due to water leaks in his closet . . . [, and] days 

when the water supply was completely cut off.” (Id. at 11.) 

The tenants filed a Third Amended Complaint on May 22, 2018. (Jones Decl. Exh. 11, 

“Tenants’ TAC”.) As to remaining tenant-plaintiff Prather, the TAC added new allegations that he 

had lost use of a toilet, sink, and shower due to lack of sufficient water pressure; and that he was 

coerced to vacate his room temporarily for repairs only to find upon his return that his belongings 

had been thrown out. (Id. at 11.) As to tenant-plaintiff Chavez, the TAC alleged that he had been 

forced to vacate his unit as of July 25, 2017, after having been physically assaulted at the hands of 

one of the construction workers who had blocked his entry and shouted “this is a construction 

zone! No one lives here.” (Id. at 11-12.) In the July 12, 2017 assault, the TAC alleges that the 

construction worker choked Chavez, pushed him against a wall, forced him down a stairwell and 

shoved him to the ground. (Id. at 12.) Chavez sustained injuries and was taken away in an 

ambulance for treatment. (Id. at 12.) The TAC alleged that a member of the NDO Group (Ross) 

was seen talking with the construction worker who assaulted Chavez before the police arrived on 

the scene. (Id. at 12.) Chavez never returned to sleep at the Hotel thereafter. (Id. at 12-13.) 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 3 of 16
4 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

B. The Policy 

On November 18, 2016, a few months after NDO Group had begun its ongoing work on 

the Hotel Traveler, NDO Group purchased a commercial general liability insurance policy from 

Blackboard. (Jones Decl. Exh. 3.) One year later NDO Group purchased a renewal policy from 

Blackboard. (Jones Decl. Exh. 5.) The Blackboard policies share the same coverage form (CG 00 

00 04 13), which contains two basic coverages—Coverage A, liability for bodily injury and 

property damage, and Coverage B, liability for personal and advertising injury. The relevant 

Coverages sections of the policies state as follows: 

COVERAGE A: BODILY INJURY AND PROPERTY DAMAGE LIABILITY 

1. Insuring Agreement 

a. We will pay those sums that the insured becomes legally obligated to 

pay as damages because of “bodily injury” or “property damage” to which this 

insurance applies. We will have the right and duty to defend the insured against 

any “suit” seeking those damages. However, we will have no duty to defend the 

insured against any “suit” seeking damages for “bodily injury” or “property 

damage” to which this insurance does not apply. 

* * * 

b. This insurance applies to “bodily injury” or “property damage” only if: 

(1) The “bodily injury” or “property damage” is caused by an 

“occurrence” that takes place in the “coverage territory”; 

(2) The “bodily injury” or “property damage” occurs during the policy 

period; and 

(3) Prior to the policy period, no insured listed under Paragraph 1. of 

Section II-Who Is An Insured and no “employee” authorized by you to give or 

receive notice of an “occurrence” or claim, knew that the “bodily injury” or 

“property damage” had occurred, in whole or in part. If such a listed insured or 

authorized “employee” knew, prior to the policy period, that the “bodily injury” 

or “property damage” occurred, then any continuation, change or resumption of 

such “bodily injury” or “property damage” during or after the policy period will 

be deemed to have been known prior to the policy period. 

* * * 

2. Exclusions 

This insurance does not apply to: 

a. Expected Or Intended Injury 

“Bodily injury” or “property damage” expected or intended from the 

standpoint of the insured. This exclusion does not apply to “bodily injury” 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 4 of 16
5 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

resulting from the use of reasonable force to protect persons or property. 

COVERAGE B: PERSONAL AND ADVERTISING INJURY LIABILITY 

1. Insuring Agreement 

a. We will pay those sums that the insured becomes legally obligated to 

pay as damages because of “personal and advertising injury” to which this 

insurance applies. We will have the right and duty to defend the insured against 

any “suit” seeking those damages.... 

* * * 

2. Exclusions 

This insurance does not apply to: 

a. Knowing Violation Of Rights Of Another 

“Personal and advertising injury” caused by or at the direction of the 

insured with the knowledge that the act would violate the rights of another and 

would inflict “personal and advertising injury”. 

(Jones Decl. Exh 2, 3.) The Policy defined key terms as follows: 

2. “Bodily injury” means bodily injury, sickness or disease sustained by a person, 

including death resulting from any of these at any time. 

* * * 

13. “Occurrence” means an accident, including continuous or repeated exposure 

to substantially the same general harmful conditions. 

14. “Personal and advertising injury” means injury including consequential 

“bodily injury” arising out of one or more of the following offenses: 

* * * 

c. The wrongful eviction from, wrongful entry into, or invasion of the 

right of private occupancy of a room, dwelling or premises that a person 

occupies, committed by or on behalf of its owner, landlord or lessor; 

* * * 

17. “Property damage” means: 

a. Physical injury to tangible property, including all resulting loss of use of 

that property. All such loss of use shall be deemed to occur at the time of 

such physical injury that caused it; or 

b. Loss of use of tangible property that is not physically injured. All such 

loss of use shall be deemed to occur at the time of the “occurrence” that 

caused it. 

(Id.) 

B. Defense of the Underlying Action 

The tenants filed their initial complaint in the Underlying Action on July 8, 2016 and filed 

a first amended complaint shortly thereafter on July 21, 2016. Mesa accepted the defense of NDO 

Group in the Underlying Action in October 2016. 

On February 8, 2018, Blackboard received notice of the Underlying Action. (Jones Decl. 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 5 of 16
6 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

Exh 8.) Mesa tendered the defense of NDO Group to Blackboard on February 26, 2018. Having 

received no response to the tender letter, Mesa again contacted Blackboard on April 12, 2018, and 

detailed the basis for its assertion that Blackboard had a duty to defend NDO Group for some or 

all of the period starting from the date of purchase of the CGL policy. Blackboard denied tender. 

Despite Mesa’s requests that Blackboard reconsider, both before and after the filing of a Second 

and a Third Amended Complaint in the Underlying Action, Blackboard denied having a duty to 

defend. 

II. APPLICABLE STANDARDS 

A. Summary Judgment 

The parties each have filed motions for summary judgment on the issue of whether 

Blackboard had a duty to defend the NDO Group in the Underlying Action. Summary judgment is 

appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to 

judgment as a matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is mandated “against a 

party who fails to make a showing sufficient to establish the existence of an element essential to 

that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. 

Catrett, 477 U.S. 317, 322 (1986). “[W]hen parties submit cross-motions for summary judgment, 

each motion must be considered on its own merits.” Fair Hous. Council of Riverside Cty., Inc. v. 

Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (alteration and internal quotation marks 

omitted). Thus, “[t]he court must rule on each party’s motion on an individual and separate basis, 

determining, for each side, whether a judgment may be entered in accordance with the Rule 56 

standard.” Id. (quoting Wright, et al., FEDERAL PRACTICE AND PROCEDURE § 2720, at 335–36 (3d 

ed. 1998)). If, however, the cross-motions are before the court at the same time, the court must 

consider the evidence proffered by both sets of motions before ruling on either one. Riverside 

Two, 249 F.3d at 1135–36. 

B. Duty to Defend 

An “insurer has a duty to defend an insured if it becomes aware of, or if [a] third party 

lawsuit pleads, facts giving rise to the potential for coverage under the insuring agreement.” 

Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1, 19 (1995), as modified on denial of reh’g (Oct. 26, 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 6 of 16
7 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

1995) (internal citations omitted). Under well-established California law, “the duty to defend is 

broader than the duty to indemnify.” Montrose Chem. Corp. v. Superior Court, 6 Cal.4th 287, 

299–300 (1993) (Montrose I); see also Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 59 

Cal.4th 277, 287 (2014) (duty to defend interpreted broadly). It need not be shown that coverage 

is likely or even “reasonably” likely. Montrose I, 6 Cal.4th at 299-300. “If any facts stated in or 

fairly inferable from the complaint, or otherwise known or discovered by the insurer, suggest a 

claim potentially covered by the policy, the insurer’s duty to defend arises.” Albert v. Truck Ins. 

Exch., 23 Cal.App.5th 367, 377–78 (2018) quoting McMillin Management Services, L.P. v. 

Financial Pacific Ins. Co.,17 Cal.App.5th 187, 191 (2017). 

“Any doubt as to whether the facts establish the existence of the defense duty must be 

resolved in the insured’s favor.” Montrose I, 6 Cal.4th at 299–300; see also Hartford Casualty v. 

Swift, 59 Cal.4th at 287 (same). The insured need only show a mere possibility of coverage under 

the policy to establish a duty to defend, while an insurer is entitled to summary judgment only 

upon a showing that no potential for coverage exists under the policy as a matter of law. Regional 

Steel Corp. v. Liberty Surplus Ins. Corp., 226 Cal.App.4th 1377, 1389 (2014); see also County of 

San Diego v. Ace Property & Casualty Ins. Co., 37 Ca1.4th 406, 414 (2005) (“Ace Property”); 

Montrose I, 6 Cal.4th at 300; Gray v. Zurich Ins. Co. 65 Cal.2d 263, 275 (1966). In other words, 

if the third-party complaint could not raise a single issue that would bring it within the policy’s 

coverage under any conceivable theory, the insurer need not defend. Gray, 65 Cal.2d at 276, fn. 

15; see also Hyundai Motor Am. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 600 F.3d 1092, 

1097 (9th Cir. 2010) (obligation to defend excused only when the complaint does not raise, by any 

conceivable theory, a single issue which could bring it within the policy coverage). 

“The duty to defend is determined by reference to the policy, the complaint, and all facts 

known to the insurer from any source.” Montrose I, 6 Cal.4th at 300 (emphasis in original). “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.” Id. “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 295, quoting Gray, 65 Cal.2d at 276. 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 7 of 16
8 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

If even a single claim in a multiple-claim complaint is potentially covered, the insurer has a 

duty to defend the entire action. Buss v. Sup.Ct. (Transamerica Ins. Co., 16 Cal.4th 35, 48-49 

(1997) (insurer has a “duty to defend the entire ‘mixed’ action prophylactically, as an obligation 

imposed by law in support of [public] policy. . . . it must defend entirely. It cannot parse the 

claims, dividing those that are at least potentially covered from those that are not.”); accord 

Hartford Cas. Ins. Co. v. J.R. Mktg., L.L.C., 61 Cal.4th 988, 992 (2015). Moreover, “[a]n insurer 

that has issued an insurance policy that includes a duty to defend must defend any legal action 

brought against an insured that is based in whole or in part on any allegations that, if proved, 

would be covered by the policy, without regard to the merits of those allegations.” RESTATEMENT 

OF THE LAW OF LIABILITY INSURANCE § 13 (June 2019 Update). “For the purpose of determining 

whether an insurer must defend, the legal action is deemed to be based on: (a) Any allegation 

contained in the complaint or comparable document stating the legal action; and (b) Any 

additional allegation known to the insurer, not contained in the complaint or comparable document 

stating the legal action, that a reasonable insurer would regard as an actual or potential basis for all 

or part of the action.” Id. 

“An insurer may rely on an exclusion to deny coverage only if it provides conclusive 

evidence demonstrating that the exclusion applies.” Atlantic Mut. Ins. Co. v. J. Lamb, Inc., 100 

Cal.App.4th 1017, 1038-1039 (2002). However, in determining whether a particular policy 

provides a potential for coverage, the Court is guided by the principle that interpretation of an 

insurance policy is a question of law. Ace Property, 37 Cal.4th at 414 (citing cases). “If coverage 

depends on an unresolved dispute over a factual question, the very existence of that dispute would 

establish a possibility of coverage and thus a duty to defend.” Mirpad, LLC v. Cal. Ins. Guarantee 

Ass’n, 132 Cal.App.4th 1058, 1068 (2005). Similarly, it is well-settled that an insurer must 

provide a defense “where an exclusion arguably applies but may reasonably be interpreted to be 

inapplicable to the alleged facts.” Aroa Marketing, Inc. v. Hartford Ins. Co. of Midwest, 198 

Cal.App.4th 781, 786 (2011). 

// 

// 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 8 of 16
9 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

III. DISCUSSION 

Mesa contends that Blackboard owed a duty to defend in light of a potential liability 

covered by either Coverage A or Coverage B of the Blackboard Policy. Blackboard counters that 

it owed no duty to defend because the Underlying Action alleged no “accident” but rather a 

conscious, preconceived course of conduct by NDO Group to drive the tenants out of the Hotel so 

that it could be renovated and rooms rented at market value rates, all of which predated the 

inception of the Blackboard policy. 

A. Coverage A 

Mesa first argues that Blackboard was required to defend NDO Group under Coverage A 

because the Underlying Action alleged “property damage” and “bodily injuries” caused by an 

“occurrence” within the policy period. Blackboard disagrees arguing that there was no 

“occurrence” within the policy period because the events alleged were (1) intentional and (2) a 

continuous pattern of conduct alleged to have begun prior to the coverage period; and (3) the 

policy exclusion for intentional conduct applies. The Court addresses each argument in turn. 

1. Potentially Covered “Occurrence” 

Blackboard contends that the allegations of the Underlying Action do not describe an 

“occurrence” because an occurrence can only be an “accident” and the conduct alleged is all part 

of an intentional scheme by NDO Group to force out the tenants. While Blackboard characterizes 

the “gist” or “theme” of the underlying litigation to be an intentional course of conduct undertaken 

to get the tenants out of the building, the tenants’ complaints all allege that the NDO Group 

“engaged in a pattern or practice to create[ ] or have by their actions and/or omissions allowed to 

exist” conditions that gave rise to property damage and physical injury. (Tenants’ FAC ¶ 16(h); 

Tenants’ SAC ¶ 14(f); Tenants’ TAC ¶ 15(f).) The latter language encompasses unintentional, 

negligent conduct. Indeed, the tenants included in their complaints a negligence claim based upon 

failure to maintain the property, failure to repair habitability defects, and creating a nuisance. (See

Tenants’ FAC ¶¶ 41-46; Tenants’ SAC ¶¶ 39-44; Tenants’ TAC ¶¶ 40-45.) The tenants in the 

Underlying Action based their claims on factual allegations that the NDO Group took actions 

injurious to their health and offensive to their senses, interfered with their comfortable enjoyment 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 9 of 16
10 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

of their personal property, and caused damage to that property by such allowing water leaks, 

removal of property by construction workers, and dust and debris intrusion. Further, the tenants in 

the Underlying Action alleged that the NDO Group hired and supervised construction workers 

who generated noise and dust, improperly entered units, and physically attacked a tenant, giving 

rise to NDO Group’s potential liability for negligent hiring and supervision of those workers. 

Even if some of the allegations in a complaint concern intentional conduct, so long as there 

are also factual allegations that could give rise to negligence liability, the insurer has a duty to 

defend. Fed. Ins. Co. v. Steadfast Ins. Co., 209 Cal.App.4th 668, 680–81 (2012) (insurer 

contended claims excluded from coverage because they involved willful and intentional acts, but 

complaint “included allegations that the [defendants] could be found liable on a theory of 

vicarious liability as well as for their own acts,” resulting in a duty to defend); see also Albert v. 

Mid-Century Ins. Co., 236 Cal.App.4th 1281, 1291–92 (2015) (coverage not always precluded 

when some portion of conduct is intentional since an accident may exist when any portion of the 

causal series of events leading to the injury or damage was unintended); Davidson v. Welch, 270 

Cal.App.2d 220, 234 (1969) (“[i]f the broad charge made, which claims an intentional or willful 

tortious act, contains within it the potentiality of a judgment based upon nonintentional conduct, 

the indemnitor becomes liable to defend.”).3 Here, the allegations of the Underlying Action 

included claims for bodily injury and property damage. 

Blackboard’s reliance on Delgado v. Interinsurance Exch. of Auto. Club of S. California, 

47 Cal.4th 302 (2009) does not persuade. That action considered whether an alleged assault by the 

insured could be considered an “accident” under the terms of a homeowner’s insurance policy and 

give rise to a potential for coverage. The complaint alleged that the insured physically struck, 

 3

 As recently explained by the California Supreme Court, “the term ‘accident’ is more 

comprehensive than the term ‘negligence’ and thus includes negligence. Accordingly, a policy 

providing a defense and indemnification for bodily injury caused by an accident promise[s] 

coverage for liability resulting from the insured’s negligent acts.” Liberty Surplus Ins. Corp. v. 

Ledesma & Meyer Constr. Co., Inc., 5 Cal.5th 216, 221-22 (2018). Moreover, injury-causing 

conduct of a third party “may be deemed an unexpected consequence of [the insured’s] 

independently tortious acts of negligence.” Id. at 229; see also Allstate Ins. Co. v. Overton, 160 

Cal.App.3d 843, 851 (1984) (the fact an intentional tort is alleged, e.g. “assault and battery,” does 

not eliminate insurer’s duty to defend because judgment ultimately recovered may be on a 

negligence theory). 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 10 of 16
11 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

battered, and kicked the plaintiff in the underlying action and “negligently and unreasonably” 

believed he was engaged in self-defense. Id. at 306. The California Supreme Court concluded 

that these allegations against the insured himself all arose from the insured’s intentional acts. 

Here, the party alleged to have assaulted tenant-plaintiff Chavez is not the insured, but a contractor 

or employee of the insured as to which the insured NDO Group was alleged to have vicarious 

liability for his conduct. Further, other allegations in the Underlying Action encompassed 

negligent conduct by NDO Group or its agents in carrying out the renovation of the Hotel. 

In sum, at least one of the claims here, and the facts alleged, could give rise to liability of a 

type that would be covered by Coverage A of the Blackboard Policy. The Underlying Action 

alleged “actions or omissions” by NDO Group which “allow[ed] conditions to exist” which 

resulted in injury. While NDO Group might ultimately have been liable for intentionally causing 

some of the injuries alleged, much of the conduct in the Underlying Action is not alleged to have 

been undertaken with the knowledge that it would cause all the injuries alleged. Indeed, the 

negligence and breach of implied covenant claims in the Underlying Action would require no 

showing of intent at all. Thus, the Underlying Action alleged a potential for a covered occurrence. 

2. Within the Policy Period 

Next, with respect to whether triggering events were alleged within the coverage period, 

Mesa contends that while the original complaint in the Underlying Action preceded the inception 

of the Blackboard policy, additional injuries were alleged to have occurred during Blackboard’s 

coverage period. Blackboard counters that the alleged injuries were all part of a course of conduct 

that began prior to the inception of their policy, and therefore had no potential for coverage. 

The Blackboard Policy Coverage A applies to “‘bodily injury’ or ‘property damage’ [that] 

occurs during the policy period.” (Jones Exh. 3 at MSJ00073 ¶ 1(b)(2).) An “occurrence” is 

defined as “an accident, including continuous or repeated exposure to substantially the same 

general harmful conditions.” (Id. at MSJ00087, ¶ 13.) Further, “property damage” is defined as

physical injury to or loss of use of tangible property and “loss of use” is deemed to have occurred 

at the time of the physical injury that caused it. (Id. at ¶ 17.) 

First, the allegations of the Tenants’ SAC and Tenants’ TAC stated additional physical 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 11 of 16
12 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

injuries and property damage occurring after the inception of the Blackboard policy on November 

18, 2016. Though prior complaints alleged that construction and resulting damage was ongoing, 

the additional conduct alleged is distinct and falls within the policy period which triggers a 

potential for liability under Coverage A. Moreover, Blackboard had a duty to undertake further 

investigation if the face of the complaints raised a question as to whether the ongoing construction 

activities caused new injury or property damage during the policy period. See Eigner v. 

Worthington, 57 Cal.App.4th 188, 198 (1997) (“State Farm assumed the risk of refusing to defend 

based solely on a review of the complaint which, on its face, should have alerted a reasonable 

insurer of the need to further investigate.”) 

Second, under a CGL policy like the one at issue here, where the “policy language 

unambiguously distinguishes between the causative event—an accident or ‘continuous and 

repeated exposure to conditions’—and the resulting ‘bodily injury or property damage’ [, i]t is the 

latter injury or damage that must ‘occur’ during the policy period.” Montrose Chem. Corp. v. 

Admiral Ins. Co., 10 Cal.4th 645, 669 (1995), as modified on denial of reh’g (Aug. 31, 1995) 

(Montrose II). Absent a contrary policy limitation, “bodily injury and property damage that is 

continuous or progressively deteriorating throughout successive CGL policy periods, is potentially 

covered by all policies in effect during those periods.” Id. at 673. The timing of the accident 

causing the bodily injury or property damage, or the date of discovery of the damage or injury, are 

immaterial. Id. at 669, 675. Thus, even if the bodily injury or property damage alleged in the 

Underlying Action were considered to be part of a “continuous” pattern of conditions, Blackboard 

still had a potential for coverage giving rise to a duty to defend. 

3. Known-Injury Exclusion 

Finally, Blackboard relies on the policy language excluding bodily injury and property 

damage where the insured “knew that the ‘bodily injury’ or ‘property damage’ had occurred, in 

whole or in part” including any “continuation, change or resumption of such ‘bodily injury’ or 

‘property damage’ . . . .” (Jones Decl. Exh. 3 at MSJ 00073, ¶ 1(b)(3).) Mesa argues each discrete 

injury claimed must be evaluated separately for this purpose. For the reasons set forth below, the 

Court agrees. 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 12 of 16
13 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

Interpreting identical CGL policy language, the Ninth Circuit held that “the known-loss 

provision bars coverage of ‘property damage’ if the insured “knew that the . . . ‘property damage’ 

had occurred . . . [and thus the u]se of the definite article ‘particularizes the subject which it 

precedes’ and indicates that the claimed damage must be the same as the known damage.” Kaady 

v. Mid-Continent Cas. Co., 790 F.3d 995, 998 (9th Cir. 2015) citing Gale v. First Franklin Loan 

Servs., 701 F.3d 1240, 1246 (9th Cir. 2012). “[A]n insured’s knowledge of one type of damage to 

property doesn’t automatically constitute knowledge of any and all damage to the property; the 

claimed damage must be related to the known damage.” Id. at 998-99. Similarly, in under 

California law, knowledge of one type of property damage does not constitute knowledge or other, 

distinct kinds of injury or damage. Chu v. Canadian Indem. Co., 224 Cal.App.3d 86, 97–98 

(1990), modified (Oct. 5, 1990). In Chu, a construction defect case, the Court of Appeal 

overturned a trial court’s determination that the injury was “faulty construction” and additional 

defects nothing more than a “reoccurrence or further manifestation of the same defect of “faulty 

construction,” holding that “each set of distinct defects must be analyzed separately to determine 

whether Chu had knowledge of those defects at the time . . . .” Id. at 98. 

Here, while NDO Group may have been aware of some of the bodily injuries and property 

damage alleged before Blackboard’s coverage began on November 18, 2016, many of the alleged 

injuries and property damage occurred after the policy’s inception, including loss of electricity, 

bathroom facilities, damage to property due to water leaks in unit’s closet, a slip-and-fall injury to 

one tenant navigating an unlit stairwell, and a physical attack on another tenant by a construction 

worker on the Hotel project. These allegations raised a potential for coverage of new, distinct 

injuries and property damage not alleged to have been known to NDO Group prior to 

Blackboard’s policy period. 

B. Coverage B 

Blackboard further contends there was no duty to defend arising from Coverage B because 

the Underlying Action alleged knowing violations (wrongful eviction, wrongful entry, and 

invasion of private occupancy) done by NDO Group with the intent to violate the tenants’ rights. 

Coverage B provides that Blackboard will pay for damages “because of ‘personal and advertising 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 13 of 16
14 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

injury’” and “will have the right and duty to defend the insured against any ‘suit’ seeking those 

damages.” (Jones Decl. Exh 3 at MSJ00078, ¶ 1(a).) The Blackboard Policy defines “personal 

and advertising injury” as “injury including consequential “bodily injury” arising out of . . . 

wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a 

room, dwelling or premises that a person occupies, committed by or on behalf of its owner, 

landlord or lessor.” (Id. MSJ00087 ¶ 14(c).) The Blackboard Policy excludes “personal and 

advertising injury” caused by or at the direction of the insured with the knowledge that the act 

would violate the rights of another and would inflict ‘personal and advertising injury’.” (Id. at 

MSJ00078, ¶ 2(a).) 

Blackboard does not dispute that the Underlying Action alleges conduct that would 

constitute wrongful eviction, wrongful entry, or invasion of the tenants’ right to occupy their 

units.4 (See Blackboard Responsive Sep. Stmt., Dkt. No. 52, at ¶¶ 14, 17-22.) Instead, Blackboard 

relies on the “knowing violation” exclusion as the basis for its refusal to defend under Coverage B. 

“[An] insurer that wishes to rely on an exclusion has the burden of proving, through 

conclusive evidence, that the exclusion applies in all possible worlds.” J. Lamb, supra, 100 

Cal.App.4th at 1038-39. While “it may ultimately be determined that [an insurer] has a viable 

defense to coverage by virtue of the application of [an] exclusion, this can only affect its liability 

for indemnification,” not its duty to defend, because the “duty to defend depended on the existence 

of only a potential for coverage.” Id. at 1040. Under the standard described in J. Lamb, such 

“potential cannot be ‘conclusively negated’ by pointing to disputed allegations in the very 

complaint that [insureds] are seeking to defend against.” KM Strategic Mgmt., LLC v. Am. Cas. 

Co. of Reading, PA, 156 F.Supp.3d 1154, 1170 (C.D. Cal. 2015) (emphasis added). Courts will 

generally find a duty to defend regardless of the exclusion for knowing conduct since “‘[t]here is 

 4

 “Wrongful entry” under Coverage B includes trespass and nuisance claims even where 

those claims do not involve an intent to dispossess the occupant. See Martin Marietta Corp. v. Ins. 

Co. of North America 40 Cal.App.4th 1113, 1125 (1995). Invasion of right of private occupancy 

covers actions for nuisance or other torts based on interference with another’s use, enjoyment, or 

occupancy of real property other than “wrongful entry” or “wrongful eviction.” Waranch v. Gulf 

Ins. Co., 218 Cal.App.3d 356, 361 (1990); Fibreboard Corp. v. Hartford Acc. & Indem. Co., 16 

Cal.App.4th 492, 513 (1993); Acc. Ins. Co. v. West American Ins. Co. 42 Cal.App.4th 95, 103-104 

(1996) (noninvasive nuisance claims covered under invasion of right of private occupancy). 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 14 of 16
15 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

usually at least a possibility of coverage . . . [;] despite the allegations of intentional acts, the 

insured’s conduct may be shown to have been merely reckless or negligent.’” Id. (quoting J. 

Croskey, et al., CAL. PRAC. GUIDE: INS. LIT. ¶ 7:1066.2 (Rutter 2014)). The allegations in KM 

Strategic were that KM and its managers allegedly published knowingly false statements about the 

financial distress of a competitor in order to recruit physicians to contract with it. Despite these 

allegations of intentional conduct, the district court in KM Strategic concluded that “neither the 

‘knowing violation’ nor the ‘knowledge of falsehood’ exclusions excused [the insurer’s] denial of 

its duty to defend.” Id. at 1171. 

Here, the tenants in the Underlying Action need not prove knowing violations or conduct 

to establish liability on their claims. The allegations that NDO Group’s “first order of business” 

was to coerce the tenants to move are coupled with other allegations of acts and omissions which 

allowed conditions and conduct to occur that resulted in property damage and bodily injury. 

(Compare Tenants’ TAC ¶¶ 15(f) with 16(bb).) While Blackboard seizes on the notion that there 

was a coordinated “scheme” and “campaign” to drive the tenants out by causing the injuries 

alleged, the complaints in the Underlying Action are bereft of any allegations of such a scheme, 

just as Blackboard’s briefs are bereft of citations to any portions of the complaints so alleging. 

Moreover, a plan to coerce tenants to move out does not necessarily encompass constructive 

evictions occasioned, in part, by the alleged injuries here (falling down an unlit staircase, being 

attacked by a construction worker). As such, under J. Lamb, the knowing-violation exclusion 

could not eliminate Blackboard’s duty to defend under Coverage B. 

Blackboard’s reliance on cases dealing with intentional discrimination or sexual 

misconduct are distinguishable. For example, in Coit Drapery, the court held: “We emphasize 

that we are dealing here with a case in which the acts of sexual harassment alleged are, by their 

very nature, intentional and wrongful; it would be contrary to public policy to allow a wrongdoer 

which is directly and strictly liable for such wrongdoing, such as Coit, to shift the loss resulting 

from such an unlawful corporate practice to its insurer.” Coit Drapery Cleaners, Inc. v. Sequoia 

Ins. Co., 14 Cal.App.4th 1595, 1606–07 (1993). Similarly, in Northland Insurance, “all of the 

alleged physical injuries arose from the alleged sexual misconduct of the insured,” bringing the 

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 15 of 16
16 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of Californi

a

allegations squarely within the policy’s sexual misconduct exclusion and “the insured failed to 

show the possibility of extrinsic evidence that would show a potential for coverage under the 

policy,” leading the court to conclude “there was no duty to defend the claims made in the 

underlying action.” Northland Insurance Co. v. Briones, 81 Cal.App.4th 796 (2000). 

Here, many of the claims in the Underlying Action concern conduct not inherently 

intentional like discrimination or harassment, but habitability issues that could arise from 

negligent or intentional conduct. And while the Underlying Action alleges “defendants” took 

various steps, the allegations largely concern actions taken by third parties or other individuals, as 

to which the insured would only be liable under a negligence theory, such as the failure to 

supervise. Thus, the potential for coverage here stands in sharp contrast to the cited authorities. 

In sum, Blackboard has failed to meet its burden to provide conclusive evidence that the 

knowing violation exclusion would have precluded any chance of coverage for the various claims 

in the Underlying Action. 

IV. CONCLUSION 

At least one of the claims here, and the facts alleged, would give rise to liability of a type 

covered by Coverage B and/or Coverage A of the Blackboard Policy. Thus, Blackboard had a 

duty to defend its insured NDO Group. Mesa and NDO Group’s motion for partial summary 

judgment is GRANTED and Blackboard’s motion for summary judgment is DENIED. 

By no later than July 26, 2019, the parties shall submit a joint statement regarding their 

proposals as to how to proceed on the issue of the relief to which Mesa is entitled on the 

complaint. 

This terminates Docket Nos. 49, 51. 

IT IS SO ORDERED. 

Dated: July 15, 2019 

 YVONNE GONZALEZ ROGERS

 UNITED STATES DISTRICT COURT JUDGE

Case 4:18-cv-04410-YGR Document 57 Filed 07/15/19 Page 16 of 16