Santa Clara Seeds, Inc. v. Mutual Service Casualty Insurance

MEMORANDUM ***

Appellant Santa Clara Seeds, Inc. (“SCS”) appeals the district court’s summary judgment against it and in favor of its commercial general liability insurer, Respondent Mutual Service Casualty Insurance Company (“MSI”), in an insurance bad faith action arising out of MSI’s refusal to defend SCS against claims asserted in an underlying action brought by Dole Fresh Fruit Company (“Dole”). We have jurisdiction pursuant to 28 U.S.C. § 1291 . We review de novo the district court’s decision to grant summary judgment, Kohler v. Inter-Tel Techs., 244 F.3d 1167, 1171 (9th Cir.2001), and we affirm.

The district court properly concluded that MSI had no duty to defend SCS in the underlying action because the claims asserted therein failed to raise a potential for coverage under the MSI policy. Under California law, an insurance company “must defend a suit which potentially seeks damages within the coverage of the policy.” Gray v. Zurich Ins. Co., 65 Cal.2d 263, 275 , 54 Cal.Rptr. 104 , 419 P.2d 168 (1966); see also Montrose Chemical Corp. v. Superior Ct., 6 Cal.4th 287, 295 , 24 Cal.Rptr.2d 467 , 861 P.2d 1153 (1993). Even if the underlying complaint does not clearly allege…