Cases

An insured sued an insurer in state court, seeking a declaration that his homeowner’s policy afforded him coverage for his former girlfriend’s claim that the couple had entered into an express oral or implied quasi-marital agreement to share equally all property acquired by the “community” during their relationship.  He also alleged that insurer breached its implied covenant of good faith and fair dealing by failing to undertake the defense in a timely manner.

The insurer removed the action to federal court, and filed a counterclaim seeking a declaration that the policy did not cover the girlfriend’s claim.

The district court granted summary judgment for the insurer on the insured’s bad faith complaint and on its counterclaim for declaratory relief.

On appeal, the Court of Appeals court affirmed.  It held that: (1) the insured did not show that the insurer was dilatory in providing a defense; (2) there was no potential for coverage under the policy; and (3) the district court properly exercised jurisdiction to decide the insurer’s counterclaim involving the same state law coverage questions as the insured’s declaratory relief action pending in state court.