Acceptance Cas. Ins. Co. v. MRVK Hosp. Grp. Liab. Co.
| Decision Date | 06 December 2022 |
| Docket Number | 1:21-cv-01359-ADA-EPG |
| Parties | ACCEPTANCE CASUALTY INSURANCE COMPANY, Plaintiff, v. MRVK HOSPITALITY GROUP LIMITED LIABILITY COMPANY, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
ACCEPTANCE CASUALTY INSURANCE COMPANY, Plaintiff,
v.
MRVK HOSPITALITY GROUP LIMITED LIABILITY COMPANY, et al., Defendants.
No. 1:21-cv-01359-ADA-EPG
United States District Court, E.D. California
December 6, 2022
FINDINGS AND RECOMMENDATIONS TO GRANT PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS AND DENY DEFENDANT'S REQUEST FOR JUDICIAL NOTICE
(ECF NOS. 18, 22-1)
OBJECTIONS, IF ANY, DUE WITHIN FOURTEEN DAYS
This case concerns an insurance coverage dispute over whether Plaintiff Acceptance Casualty Insurance Company (ACIC) has a duty to defend a state court lawsuit alleging that Defendant MRVK Hospitality Group Limited Liability Company (MRVK) is liable for injuries that two people sustained from a shooting occurring on its property.
ACIC moves for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), seeking a declaration that it has no duty to defend MRVK because the policy excludes coverage for claims arising out of assault and/or battery. (ECF No. 18). Additionally, ACIC seeks a declaration that it is entitled to reimbursement for defense costs that it has paid in the state court case. Citing various affirmative defenses from its answer, MRVK argues that the motion should not be granted because there are outstanding factual issues that need to be resolved. (ECF No. 22). In support of its opposition, MRVK includes a request for judicial notice of two California Department of Insurance licensing records. (ECF No. 22-1).
For the reasons explained below, the Court will recommend that ACIC's motion for judgment on the pleadings be granted and that the District Court enter an order declaring that MRVK is not entitled to coverage under the policy and that ACIC is entitled to reimbursement for the defense costs it has paid in the state court case. Additionally, the Court will recommend that MRVK's request for judicial notice be denied.
I. BACKGROUND
On September 9, 2021, ACIC filed a complaint for declaratory judgment against MRVK, Vanessa Miranda, Tyme Nassim, and Does 1-50. (ECF No. 1). ACIC voluntarily dismissed Miranda and Nassim on January 20, 2022, and it has not identified any of the Doe Defendants. (ECF No. 16). The pertinent allegations in the complaint are as follows.
ACIC is an insurance company and issued a commercial general liability policy, effective from November 8, 2018 to November 8, 2019, to “MRVK Hospitality Group, LLC, Travelers Motel-Modesto,” with the business description on the policy being listed as “Motel and LRO Bar.” (Id. at 3, 6). MRVK is the owner of a property in Modesto, California. On or around April 21, 2019, a large concert was held at the property, and a person shot Miranda and Nassim.[1]
Miranda and Nassim filed a personal injury lawsuit against MRVK (and other defendants not at issue here) in the Stanislaus County Superior Court (Case Number CV-19-006990), alleging negligence and premises-liability claims based on the alleged failure to provide adequate security at the concert.[2] MRVK tendered its defense and indemnity for the state court suit, and on or about August 5, 2020, ACIC agreed to defend the state court case under a reservation of rights, noting an exclusion in the policy for any claims arising out of “assault and/or battery.”[3] (Id. at 5). ACIC appointed the law firm of Clinton & Clinton to defend MRVK, which defense has continued to the filing of the complaint.[4]
ACIC brings two causes of action for declaratory relief. The first seeks a declaration that MRVK is not entitled to coverage under the policy, including defense and/or indemnity, in connection with the state court case. The second seeks a declaration that it is entitled to reimbursement for the costs it has expended in defending MRVK in the state court case.
On January 4, 2022, MRVK filed an answer admitting, among other things, the following: (1) ACIC issued it a commercial general liability policy effective from November 8, 2018 to November 8, 2019; (2) this policy contained an exclusion for claims arising from assault and/or battery; (3) it owned at all times relevant in the complaint the property that is the subject of the state court case; (4) it tendered a defense and indemnity of the state court case to ACIC; (5) ACIC agreed to defend it under a reservation of rights regarding the assault and/or battery exclusion; and (6) and ACIC appointed the law firm of Clinton and Clinton to defend it in the state court case. (ECF No. 15). Additionally, MRVK's answer raises ten affirmative defenses, including waiver, estoppel, and unclean hands.
On January 26, 2022, ACIC filed its motion for judgment on the pleadings. (ECF No. 18). On February 15, 2022, MRVK filed its opposition and request for judicial notice. (ECF No. 22). On February 21, 2022, ACIC filed its reply. (ECF No. 23).
On August 24, 2022, this case was reassigned to District Judge Ana de Alba. (ECF No. 24). On September 12, 2022, Judge de Alba referred the motion for judgment on the pleadings for preparation of findings and recommendations and/or other appropriate action. (ECF No. 27).
II. OVERVIEW OF THE PARTIES' POSITIONS
A. Motion for Judgment on the Pleadings
ACIC argues that it has no duty to defend MRVK in the state court action because the shooting at the rap concert falls within the policy's exclusion for claims arising from assault and/or battery. (ECF No. 18). In support, ACIC primarily relies on Northfield Ins. Co. v. Sandy's Place, LLC, 530 F.Supp.3d 952 (E.D. Cal. 2021), which determined that a similarly-worded-policy exclusion exempted an insurance company from having to defend its insured in a state court action involving a shooting at a bar. Additionally, ACIC argues that, because it has no duty to defend the state court action, California law authorizes it to seek reimbursement for the defense
costs it has paid in the state court case on MRVK's behalf.
B. Opposition and Request for Judicial Notice
MRVK offers no opposition to ACIC's arguments that the shooting falls within the terms of the assault and/or battery exclusion and that California law allows ACIC to seek reimbursement for its defense costs. (ECF No. 22). However, MRVK argues that its affirmative defenses turn on factual issues that preclude judgment on the pleadings. Specifically, it states that there may be issues relating to: when or how it was notified of the assault and/or battery exclusion; the conduct of third parties who were involved in issuing the policy; and, ACIC's failure to provide it independent counsel in the state court case.
In support of its opposition, MRVK asks the Court to take judicial notice of two licensing records from the California Department of Insurance regarding the third parties that were involved in issuing the policy and whom MRVK suggests could have misrepresented the scope of coverage in this case as agents of ACIC.
C. Reply
ACIC's reply argues that MRVK has not adequately pled any of its affirmative defenses in its answer and that, in any event, the affirmative defenses do not preclude judgment on the pleadings. (ECF No. 23).
III. STANDARDS
Federal Rule of Civil Procedure 12(c) provides that “a party may move for judgment on the pleadings” “[after the pleadings are closed-but early enough not to delay trial.” A motion for judgment on the pleadings “is functionally identical to a Rule 12(b)(6) motion.” Gregg v. Hawaii, Dep't of Pub. Safety, 870 F.3d 883, 887 (9th Cir. 2017) (internal citations and quotation marks omitted). “Judgment on the pleadings is proper when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). When ruling on such a motion, “courts must consider the complaint in its entirety, as well as other sources . . ., in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Webb v. Trader Joe's Co., 999 F.3d 1196, 1201 (9th Cir. 2021)
(quoting Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 322 (2007)).
IV. DISCUSSION
A. Material Facts
1. Undisputed facts
The Court first considers whether, on the face of the pleadings, any material issue of fact remains to be resolved. Notably...
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