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Insurance Law

Affiliated Carrier Dismissed from Action because it did not Issue the Policy in Question

In Wright v. Allstate Ins. Co. of Cal., the Northern District of California granted Allstate Insurance Company of California’s (“Allstate California”) motion to dismiss, agreeing with Allstate California’s argument that it could not be held liable for breach of contract and breach of the implied covenant of good faith and fair dealing because it was not a party to the insurance contract.

Wright was brought by an insured under an automotive policy issued by Allstate Insurance Company (“Allstate”). The insured filed suit against Allstate California and Allstate, asserting breach of contract and breach of the implied covenant of good faith and fair dealing arising out of the defendants’ alleged failure to properly investigate and adjust a claim involving a vandalized car. Allstate California filed a motion to dismiss, arguing that neither of the insured’s claims could proceed against it because it was not involved in the issuance of the policy and not a party to the insurance contract. The insured countered by arguing that Allstate California was a proper party because it handled his claim. The court agreed with Allstate California and held that “in order to be liable for breach of contract and breach of implied covenant of good faith and fair dealing, a defendant must have been a consenting party to the contract at issue.” In granting Allstate California’s motion to dismiss, the court also held that the insured failed to plead sufficient facts to establish “alter ego” liability because the complaint contained no facts suggesting that Allstate California was an agent of Allstate.

Wright v. Allstate Ins. Co. of Cal., 2015 U.S. Dist. LEXIS 45529 (N.D. Cal. Apr. 7, 2015), [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance].

Originally published in California Insurance Law Review - 2015

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