The Federal District Court granted the insurer’s motion to dismiss the insured’s complaint seeking a defense of the underlying case alleging fraud. Renovation Realty, Inc. v. Colony Ins. Co., 2026 U.S. Dist. LEXIS 21409 (S.D. Cal. Jan. 30, 2026).

Mara Fortin sued Renovation Realty and others (“Fortin litigation”) from the fraudulent sale of a residence. The underlying complaint alleged Renovation “deliberately misrepresented of the residence as ‘completely remodeled’ and ‘meticulously maintained’.” The defendants, however, including Renovation, “knew from sources including a pre-renovation termite report documenting fungus and dry rot . . . that the Property harbored pre-existing material defects.”

Renovation received a pre-suit written demand for damages from Fortin’s counsel, which allegedly “included claims of property damage and bodily injury.” Renovation was an additional insured under a policy issued to another party by Kinsale Insurance Company. Kinsale acknowledged the tender but delayed in making a coverage decision. Renovation sued Kinsale for breach of contract and bad faith.

Kinsale moved to dismiss. Renovation’s complaint was required to identify facts suggesting that the Fortin lawsuit involved “bodily injury” or “property damage” that was “caused by an ‘occurrence’.”

Here, however, Renovation’s complaint contained few facts concerning the Fortin litigation. The introduction of Renovation’s complaint simply stated that “this action arises ” from the Fortin litigation with no description of plaintiff’s claims against Renovation. Renovation’s complaint pointed to Fortin’s pre-suit demand for damages “including claims of property damage and bodily injury.” Aside from these conclusory statements, there was no discussion about what Fortin alleged caused her claims of property damage and bodily injury.

In turn, the Fortin complaint provided significant detail regarding the basis for her suit. For example, the complaint alleged that Renovation and other defendants “knew from sources including a pre-renovation termite report that the property harbored pre-existing material defects. The underlying complaint further alleged that Renovation’s conduct was intentional and part of a renovate-and-flip model that prioritized profit over mandatory disclosures and consumer safety.

Given that the Fortin complaint established that Renovation’s liability was based on intentional and non-accidental conduct, Ms. Fortin’s damages were economic. Accordingly, there was no potential for coverage under the Kinsale policy and Kinsale did not breach its duty to defend Renovation.

Because Renovation failed to allege a claim for breach of contract, its claim for bad faith also failed. The motion to dismiss was granted.