“Catch-All” Exclusions as Currently Written Are Not “Conspicuous, Plain, and Clear”

By David A. Gauntlett*

Introduction

This blog supplements the analysis in the thoughtful article by Dominic Nesbitt published in the LA Daily Journal[1] addressing the rise of “Catch-All” language added to Intellectual Property and Habitability exclusions. He focused primarily on the potential conflict with California statutory authority, but case law also shows the language and presentation of these provisions renders them unenforceable under the “conspicuous, plain, and clear” requirement developed in California case law.[2]

“Catch-All” Exclusions Attempt to Dodge the “Mixed Action” Rule

As used here, a “Catch-All” exclusion is one in which the presence of an excluded claim eliminates coverage for an entire lawsuit, regardless of whether covered claims are also present. To date, the language creating this effect has generally only been incorporated into Intellectual Property[3] and Habitability[4] exclusions.  

These exclusions reverse a settled rule of policy construction under case law in California and nationwide that the duty to defend any potentially covered claim includes the duty to defend the entire suit.[5] Evisceration of potential coverage for an entire lawsuit based on a singular excluded IP or Habitability claim cannot be enforceable when it does not describe what diminution in coverage arises and fails to call special attention to this reduction in coverage when initially introduced.

California Case Law Requires Special Notice of Such Broad Reductions in Coverage

In Classic Distrib. & Bev. Grp., Inc. v. Travelers Cas. & Sur. Co. of Am.,[6] the court considered whether an insured was given proper notice of a “Wage and Hour” exclusion. The court concluded the exclusion was unenforceable because:

[T]he Endorsement, along with other such modifications, are attached to the end of the Policy . . . . Steven Spiegler, [the insured’s broker], states in his declaration that “Travelers provided Classic with no specific notice separate from the Policy to direct Classic's attention to the Endorsement.”[7]

The court also reviewed California case law determining that an exclusion is invalid if the insured is not “notified of the specific reduction in coverage.”[8] It highlighted that “‘California courts have long been disinclined to effectuate clauses of limitation of liability which are unclear, unexpected, inconspicuous or unconscionable.’”[9] The court specifically noted the following fact scenarios that failed to meet the applicable standard

In Fibus, the Court of Appeals held that a paragraph printed on the first page of an eight-page “Amendatory Endorsement” was insufficiently conspicuous to provide the requisite notice to the policyholder. 855 F.2d at 663. Addressing similar facts in Devaney, the Ninth Circuit found that the district court had properly concluded that the notice of coverage reduction was not plain, clear and conspicuous as a matter of law. 50 F.3d at * 1. In that case, the new exclusion was contained in one of four paragraphs set out in a separate endorsement. Id. Although “the cover letter referred to ‘changes’ and the endorsement page used the term ‘amended,’ no document explicitly state[d] that there had been a ‘reduction’ or ‘diminishment’ of coverage....” Id. In this case, the Endorsement was included as one of several such amendments, attached to the end of a nearly one hundred-page policy. Moreover, as noted above, the body of the Policy does not refer to the Endorsement, let alone in a “clear and conspicuous” fashion. Accordingly, the notice provided in this case was, if anything, less conspicuous than that provided in Fibus and Devaney, each of which held that the amendment was invalid as a matter of law.[10]

As in Fibus, the relevant language is usually introduced in the context of an “Amendatory Endorsement.” And like in Devaney, the endorsement will provide no indication of a “reduction” or “diminishment” in coverage, instead using only words like “modifies” and “changes” in its preamble. By failing to provide this requisite clarity, insurers fail to address the “reasonable expectations” of an insured and do not plainly set forth the limited coverage left available under the policy. Nor does it explain what the insured lost by its sub silentio evisceration of the duty to defend all claims where any is potentially covered.

None of the previous cases upholding a “Catch-All” exclusion have addressed and rejected this legal argument. Rosen v. State Farm Gen. Ins. Co., 30 Cal. 4th 1070, 1076 (2003) (“It is a well-established rule that an opinion is only authority for those issues actually considered or decided.”)

 Policy Exclusions Must Explain a Right before Removing It

The current implementation of “Catch-All” exclusions does not address the requirement to explain in laymen’s terms what is covered after this exclusion is applied so comparison policy shopping is facilitated.[11] A more appropriate version would include text in bold or otherwise designed to call special attention to itself that explains the insured’s normal entitlement to a defense in any “mixed action” and how this exclusion would eliminate that right.

This particularly important to alert the uninformed layperson that certain coverage provisions for “personal and advertising injury” are effectively illusory. The average insured cannot be expected to know that intellectual property lawsuits are rarely limited to one asserted violation or form of infringement. Nor would the average insured be aware that “use of another’s ‘advertising idea’ or style of ‘advertisement’” is not even a tort that can be pled and must manifest in another form (often trademark infringement) in any pleading.

Any case authority supporting sub-limits rarely addresses these issues.[12]

Conclusion

Mr. Nesbitt’s article makes a compelling case that “Catch-All” provisions violate California Insurance Code § 530, but that is not the only argument against their enforceability. California case law imposes a high barrier to the enforcement of any exclusionary language that the present language used by insurers does not satisfy. Courts should not relax these standards that protect the average layperson from insurers seeking to remove one of the most important policyholder benefits developed by case law that only insurers and legal professionals are likely to understand.

*David A. Gauntlett is a principal of Gauntlett & Associates and represents policyholders in insurance coverage disputes regarding intellectual property, antitrust, and business tort claims, as well as in the underlying actions. Mr. Gauntlett can be reached at (949) 514-5662 or dag@gauntlettlaw.com. For more information, visit Gauntlett & Associates at www.gauntlettlaw.com.

[1] Dominic Nesbitt, Are “Catch-All” Exclusions Enforceable?, LA Daily Journal (Dec. 9, 2025), https://www.dailyjournal.com/article/388893-are-catch-all-exclusions-enforceable.

[2] E.M.M.I. Inc. v. Zurich American Ins. Co., 32 Cal. 4th 465, 469 (2004) (“‘This rule [that any policy provision, including endorsements thereto, must be ‘conspicuous, plain and clear’ when an insurer purports to change what is otherwise a policyholder’s reasonable expectation of coverage] applies with particular force when the coverage portion of the insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded.’”)

[3] See, e.g., My Choice Software, Ltd. Liab. Co. v. Travelers Cas. Ins. Co. of Am., 823 F. App'x 510, 511 (9th Cir. (Cal.) 2020) (exclusion precluded potential coverage for “‘Personal injury’ or ‘advertising injury’ arising out of any actual or alleged infringement or violation of any of the following rights or laws, or any other ‘personal injury’ or ‘advertising injury’ alleged in any claim or 'suit' that also alleges any such infringement or violation.”)

[4] See, e.g., 24th & Hoffman Inv'rs, LLC v. Northfield Ins. Co., 82 Cal. App. 5th 825, 831 (2022) (exclusion precluded potential coverage for all claims “[a]lleged in any claim or ‘suit’ that also alleges any violation, breach or wrongful eviction, entry or invasion as set forth in Paragraphs (1)(a)–(c) above.”)

[5] Buss v. Superior Court, 16 Cal. 4th 35, 49 (1997) (“[W]e can, and do, justify the insurer's duty to defend the entire ‘mixed’ action prophylactically, as an obligation imposed by law in support of the policy. To defend meaningfully, the insurer must defend immediately. (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal. 4th at p. 295.) To defend immediately, it must defend entirely.”)

[6] Classic Distrib. & Bev. Grp., Inc. v. Travelers Cas. & Sur. Co. of Am., No. CV 11-07075 GAF (RZx), 2012 WL 3860597 (C.D. Cal. Aug. 29, 2012).

[7] Id. at *6.

[8] Id. (quoting Fields v. Blue Shield of California, 163 Cal. App. 3d 570, 579 (1985)).

[9] Id. (quoting Steven v. Fidelity & Cas. Co. of New York, 377 P.2d 284, 295 (Cal.1963)).

[10] Id. at *6.

[11] Terra Nova Ins. Co. v. Fray-Witzer, 869 N.E.2d 565, 574 (Mass. 2007) (“[Courts] consider whether clearer draftsmanship by the insurer ‘would have put the matter beyond reasonable question,’ . . . it was incumbent on [the insurer] to draft explicit policies to that effect.”); see also MedeAnalytics, Inc. v. Fed. Ins. Co., No. 15-cv-04101-JST, 2016 U.S. Dist. LEXIS 21377, *16–17 (N.D. Cal. Feb. 19, 2016) (As Mede notes, ‘[i]f Federal had intended its Breach of Contract exclusion to apply to an “alleged” breach of contract, then it certainly knew how to say so . . . .’”)

[12] E.g., Burlington Insurance Co. v. De La Puente, 719 F. App’x 615, 617–18 (9th Cir. (Nev.) 2018) (failing to analyze the enforceability of the exclusionary language as a whole before applying it to the facts of the case).