Sacramento Lopez brought an action against plaintiffs Elena Delgadillo and Jesus Cortes in 2009 (the Lopez litigation), alleging he had suffered injuries in a fall from the roof of plaintiffs’ property in Hayward, where he was working as their employee.

Lopez also alleged  Delgadillo and Cortes had violated Labor Code requirements to pay overtime wages and provide meal and rest breaks. Plaintiffs Delgadillo and Cortes tendered the defense of the Lopez litigation to their business owner’s insurance carrier, United States Liability Ins. Co. (USLI), which denied plaintiffs’ claim.

Plaintiffs’ insurance policy contained the following exclusions pertinent to this case: “d. Workers’ Compensation And Similar Laws [¶] Any obligation of the insured under a workers’ compensation, disability benefits or unemployment compensation law or any similar law. [¶] e. Employer’s Liability [¶] “Bodily Injury’ to: [¶] (1) An ’employee’ of the insured arising out of and in the course of: [¶] (a) Employment by the insured; or [¶] Performing duties related to the conduct of the insured’s business[.] [¶] . . . [¶] This exclusion applies: [¶] (1) Whether the insured may be liable as an employer or in any other capacity . . .”

Plaintiffs Delgadillo and Cortes brought this action against USLI. Their causes of action for breach of contract and breach of the covenant of good faith and fair dealing were based on the theory that USLI had a contractual obligation to defend and indemnify them in the Lopez litigation. The remaining causes of action alleged in addition that USLI, through an agent, misled plaintiffs as to the coverage it would provide.

USLI demurred to the second amended complaint, primarily on the ground the policy did not cover Lopez’s claims for bodily injury or Labor Code violations.

The trial court sustained the demurrer to the Delgadillo and Cortes action against USLI without leave to amend. It took judicial notice of the verdict form for the negligence claim in the Lopez litigation, which indicated Lopez sustained his injury during the course of his employment by Delgadillo and Cortes. Because the policy explicitly excluded coverage for bodily injury sustained by an employee in the course of employment, the court ruled, plaintiffs could not state a cause of action for breach of contract against USLI.

The court of appeal affirmed the dismissal in the unpublished case of Delgadillo v. United States Liability Ins. Co..

The trial court correctly concluded the policy provided no potential for coverage, and therefore USLI had no duty to defend plaintiffs in the Lopez litigation and there was no breach of contract. Plaintiffs suggest no theory upon which their remaining causes of action for breach of the implied covenant of good faith and fair dealing, fraud, deceit, and intentional infliction of emotional distress may be maintained in the absence of a duty to defend.