Opinion ID: 3052326
Heading Depth: 5
Heading Rank: 2

Heading: Physical damage claims

Text: [15] The Kim/Kaen complaints themselves did not allege any property damage to discs. In fact, in depositions, all three class representatives specifically denied any claims of physical injury to discs inserted into the PlayStation 2. Further, none of the customer statements in the original complaint or motions for class certification or jury trial referenced scratched or damaged discs. Despite the lack of reference to property damages in the lawsuit, Sony argues that the Kim/Kaen complaint potentially includes claims of physical damage to discs inserted into the PlayStation 2. It argues that merely because class plaintiffs did not suffer physical injury to the discs does not mean the class could not have recovered on such a theory, and that Sony’s retender of the Kim/Kaen complaint to American Home in October 2003 was accompanied by evidence of customer complaints of physical injury to discs and/or games.9 8 Sony also argues that the district court improperly placed the burden on Sony to establish that the “sudden and accidental” exception applies. While the district court cited a case dealing with an indemnity provision rather than a duty to defend provision, see Aydin, 18 Cal. 4th at 1188, Sony still bears the initial burden of proving that there is a possibility that the exception to the exclusion applies. See Anthem, 302 F.3d at 1059 & n.3. 9 The customer complaints are properly part of the duty to defend analysis because they were known to American Home at the time of tender. Montrose, 6 Cal. 4th at 295. SONY v. AMERICAN HOME ASSURANCE 8773 [16] We find these arguments unpersuasive. Though the duty to defend is broad, “the insured may not speculate about unpled third party claims to manufacture coverage.” Hurley Construction Co. v. State Farm Fire & Cas. Co., 10 Cal. App. 4th 533, 538 (Ct. App. 1992). California courts have held that no duty to defend attaches where, as here, the third party complaint did not allege the type of damages covered by the policy, and the class representatives explicitly disavowed any interest in the type of damages covered by the policy. See Low v. Golden Eagle Ins. Co., 99 Cal. App. 4th 109, 113-14 (Ct. App. 2002) (no duty to defend where “the . . . complaint is . . . couched overwhelmingly in class action terms, but the named plaintiff expressly disclaims any interest in seeking recovery of damages for [the type of damages] . . . required to trigger coverage and a related duty to defend under the policy”); see also The Upper Deck Co. v. Federal Ins. Co., 358 F.3d 608, 615 (9th Cir. 2004) (“Upper Deck asked us to remember that the underlying suit is a class action and that, even if the named plaintiffs did not suffer bodily injury, members of the class could have suffered bodily injury. This argument contradicts the complaint itself, which states [that the named class plaintiffs are typical of the class as a whole.]”). Moreover, the customer complaints of scratches and other damage to discs — which could potentially establish physical damage — were never incorporated into the third party lawsuit. Gunderson v. Fire Ins. Exch., 37 Cal. App. 4th 1106, 1116 (Ct. App. 1995) (no duty to defend where “none of the allegations concerning damage to the fence [which could have been covered under the policy] . . . were ever incorporated in [the] complaint against appellants”) (emphasis in original). Further, American Home need not rely on the assertions of Sony’s own counsel about potential covered claims in determining whether it has a duty to defend. Hurley, 10 Cal. App. 4th at 538. [17] Accordingly, we affirm the district court’s summary judgment in favor of American Home on the duty to defend issue. Sony has not established the potential for coverage either under the loss of use or physical damage provisions of 8774 SONY v. AMERICAN HOME ASSURANCE the policy. Sony’s indemnification claim fails as well for the duty to defend is broader than the duty to indemnify. Montrose, 6 Cal. 4th at 295. The bad faith claim against American Home is similarly rejected because if there is no coverage, there can be no bad faith in refusing coverage. Love, 221 Cal. App. 3d at 1153.