Opinion ID: 3051463
Heading Depth: 3
Heading Rank: 2

Heading: Breach of the Implied Covenant of Good Faith and

Text: Fair Dealing The entirety of the district court’s analysis regarding its decision to dismiss Manzarek’s and DTI’s claim for breach of the implied covenant of good faith and fair dealing is encapsulated in the following sentence: “St. Paul did not breach the covenant of good faith and fair dealing in denying coverage or in declining to defend the Underlying Actions as a matter of law.” This holding was in error. [8] California law is clear, that without a breach of the insurance contract, there can be no breach of the implied cov2988 MANZAREK v. ST. PAUL FIRE & MARINE INS. enant of good faith and fair dealing. Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 638-39 (Cal. 1995). In Waller, the California Supreme Court stated that: It is clear that if there is no potential for coverage and, hence, no duty to defend under the terms of the policy, there can be no action for breach of the implied covenant of good faith and fair dealing because the covenant is based on the contractual relationship between the insured and the insurer. Id. at 639; see also Am. Med. Int’l, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 244 F.3d 715, 720 (9th Cir. 2001) (“Without a right to coverage, the Waller court concluded, there is no obligation the insurer may frustrate.”). [9] As discussed above, the district court erred by dismissing the claim for breach of contract. In light of our holding regarding the viability of that claim, the district court also erred by summarily dismissing the claim for breach of the implied covenant of good faith and fair dealing.