Belong, Inc. v. Nationwide Mut. Ins. Co.

• Court: U.S. District Court — Northern District of California
• Writing for the Court: JOSEPH C. SPERO UNITED STATES MAGISTRATE JUDGE
• Docket Number: 25-cv-01990-JCS
• Decision Date: 01 October 2026
• Citation: Belong, Inc. v. Nationwide Mut. Ins. Co., 25-cv-01990-JCS (N.D. Cal. Oct 01, 2026)
• Parties: BELONG, INC., Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, et al., Defendants.

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BELONG, INC., Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, et al., Defendants.

No. 25-cv-01990-JCS

United States District Court, N.D. California

October 1, 2026

ORDER DENYING MOTION TO DISMISS SCOTTSDALE INDEMNITY COMPANY'S COUNTERCLAIMS AND STRIKE AFFIRMATIVE DEFENSES

RE: DKT. NO. 103

JOSEPH C. SPERO UNITED STATES MAGISTRATE JUDGE

In this action, Plaintiff Belong, Inc. (“Belong”) has sued its insurers, including defendant Scottsdale Indemnity Company (“Scottsdale”), based on their denial of any defense or indemnity obligations in connection with a class action lawsuit brought against it (“the underlying action”). On May 28, 2026, Scottsdale filed an answer and counterclaims and Belong now brings a motion to dismiss asking the Court to dismiss three of Scottsdale's counterclaims and to strike all of its affirmative defenses. Dkt. no. 103 (“Motion”). The Court finds that the Motion is suitable for determination without oral argument and therefore vacates the motion hearing set for October 7 2026. For the reasons stated below, the Motion is DENIED.^[1]

Plaintiff makes three main arguments in the Motion. First, it argues that Scottsdale's claims for declaratory judgment (Counts I-II) fail because there is no actual, present controversy regarding insurance coverage as the underlying action has been fully resolved. Second, it contends Scottsdale's unjust enrichment counterclaim should be dismissed because unjust enrichment is not an independent cause of action and the counterclaim is not otherwise supported by allegations of mistake, fraud, coercion, or request. Third, it argues that Scottsdale's affirmative defenses should be stricken because they are either not true affirmative defenses or are insufficiently pleaded as a matter of law.

Plaintiff's first argument has no merit. In the operative complaint Belong seeks reimbursement of defense costs, settlement payments, indemnity amounts, and policy benefits allegedly owed under the policy issued by Scottsdale to Belong (“the Scottsdale Policy”). First Amended Complaint ¶¶ 22-25, 38, 40-41, 80, 85. In doing so, Belong has placed in issue the question of whether there was any potential for coverage under the Scottsdale Policy with regard to the underlying action based on the pleadings in that action. See Premier Constr. & Remodel, Inc. v. Mesa Underwriters Specialty Ins. Co., 2023 U.S. App. LEXIS 2938, *3 (9th Cir. Feb. 7, 2023)(“Under California law, the ‘settled rule' concerning an insurer's duty to defend is that the duty exists ‘where a pleading against the insured raises the potential for coverage.' ”) (quoting Continental Cas. Co. v. Super. Ct., 92 Cal.App.4th 430, 439 (2001)). If there was no potential for coverage, Scottsdale had no duty to defend Belong in the underlying action and Plaintiff's claims fail. Id. (“There is no such duty where the complaint in the underlying action ‘cannot by any conceivable theory raise a single issue' which would trigger coverage under the applicable policy.”) (citing Continental Cas. Co. v. Super. Ct., 92 Cal.App.4th at 438-39). Thus, Scottsdale's counterclaims seeking a declaratory judgment as to whether certain exclusions in the policy applied to the underlying action raise a justiciable controversy under the Declaratory Judgment Act regardless of whether or not Belong entered into a settlement with the plaintiff in the underlying action before this case was filed. See 28 U.S.C. § 2201(a) (authorizing courts to declare rights and legal relations of interested parties in “a case of actual controversy”).

Second while there is some confusion in the state and federal courts as to whether unjust enrichment may be asserted as a stand-alone cause of action under California law, courts have generally permitted such claims to go forward where they can be understood as a claim for restitution. See Nordberg v. Trilegiant Corp., 445 F.Supp.2d 1082, 1100 (N.D. Cal. 2006) (citing cases). For example, in McBride v. Boughton, the...