Haskins v. Emp'rs Ins. of Wausau
| Decision Date | 26 August 2015 |
| Docket Number | Case No. 14–cv–01671–JST |
| Citation | 126 F.Supp.3d 1117 |
| Court | U.S. District Court — Northern District of California |
| Parties | Richard E. Haskins, et al., Plaintiffs, v. Employers Insurance of Wausau, et al., Defendants. |
Bret Adam Stone, John Richard Till, Brian Robert Paget, Paladin Law Group, LLP, Walnut Creek, CA, for Plaintiffs.
Bryan M. Barber, Barber Law Group, Palo Alto, CA, Sonia Renee Martin, Dentons US LLP, San Francisco, CA, for Defendants.
ORDER 1) DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND 2) GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Before the Court are cross-motions for partial summary judgment. Plaintiffs Richard E. Haskins, Arthur L. Haskins, and the estate of Arthur "Buzz" Haskins, Jr. (collectively, "Plaintiffs") seek summary judgment that Defendant Employers Insurance of Wausau ("Wausau") breached its duty to defend them against a counterclaimfiled against them in an underlying environmental cleanup action. Wausau seeks summary judgment that it did not breach its duty to defend. Because the Court concludes that Wausau satisfied its duty to defend by settling all claims against Plaintiffs, it will deny Plaintiffs' motion and grant Wausau's motion.
Plaintiffs own commercial property in South San Francisco. Haskins v. Employers Ins. of Wausau, No. 14–CV–01671–JST, 2015 WL 831184, at *1 (N.D.Cal. Feb. 23, 2015). Wausau provided Plaintiffs with policies covering comprehensive general liability insurance for this property from 1958 to 1986 ("the policy"). Id. Cherokee Acquisition Corp., Cherokee San Francisco LLC, and Cherokee Grand Avenue LLC ("Cherokee") purchased property adjoining Plaintiffs' in 1999, at which time they performed an environmental cleanup before selling the property in 2000. Id. Cherokee failed to complete the cleanup prior to the sale and entered into a workplan with Plaintiffs to address remaining contamination at the Site. Id.
When Cherokee failed to perform as Plaintiffs expected under the plan, Plaintiffs sued them on October 20, 2011. Haskins v. Cherokee Grand Avenue LLC, Case No. 3:11–cv–05142–JST ("HaskinsI ") at ECF No. 1. Cherokee answered and filed a "counterclaim for cost recovery and contribution" on January 30, 2012, seeking declaratory relief under 42 U.S.C. Section 9613(g)(2) and cost recovery under 42 U.S.C. 9607(a). Haskins I at ECF No. 18.
Plaintiffs tendered the counterclaim to Wausau on January 30, 2012 and requested a defense. ECF No. 67–3. Harold Moore, a claims handler for Wausau, responded to the notice letter on February 13, 2012, stating that Wausau was "conducting a policy search to determine policies that may or may not potentially apply" to the underlying litigation and stating that Wausau reserved its rights. ECF No. 41–1 at 1. Moore's letter noted that, because Cherokee acquired title to the property in June of 1999 and the Wausau policies were issued prior to 1986, it appeared Wausau had "no duty to defend." Id. The letter requested additional information from Plaintiffs regarding the claim. Id. at 3–5. Plaintiffs responded on February 21, 2012, providing Wausau with answers in response to some of its inquiries, but also stating that the letter "asks for a great deal of information that is not readily available" to Plaintiffs. ECF No. 67–5.
On March 21, 2012, Moore sent another letter to Plaintiffs, representing that Wausau continued to reserve its rights. ECF No. 41–2. The letter again requested substantial amounts of information from Plaintiffs regarding the claim. Id. Plaintiffs responded that Wausau's letter requested some information that Plaintiffs had already provided to Wausau in response to their previous letter, but also provided responses regarding the new information requested. ECF No. 67–7.
In April 2012, Moore directed Bryan Barber, Wausau's coverage attorney, to approach Cherokee's attorneys regarding the possibility of settling the counterclaim. ECF No. 41 at ¶ 5. On April 26, 2012, Barber wrote to Plaintiffs' lawyer Bret A. Stone regarding the possibility of settlement. ECF No. 67–8. Barber informed Stone that Wausau intended to contact Cherokee's attorney regarding settling the counterclaim. Id. Barber recalled that Stone had previously stated that he would object to such a settlement and asked Stone to "detail in writing any objections to our contribution." Id.
On May 7, 2012, Stone responded that Plaintiffs did "not object to Wausau's efforts to settle the counterclaim," but that they desired "to be included in all communications with opposing counsel in order to make sure their interests are protected and would not be prejudiced by any potential settlement." ECF No. 67–9.
Stone wrote Barber on July 27, 2012, stating that Plaintiffs were concerned about the possibility that Wausau would stipulate to a dismissal of Cherokee's claims for future costs without prejudice. ECF No. 67–10. Stone stated that Plaintiffs "consider a complete dismissal with prejudice an essential term for both insured and insurer." Id. Stone further stated that, although plaintiffs had tendered their claim January 30, 2012, "Wausau has not accepted its defense obligation." Id. Stone stated the Plaintiffs' position that this was in violation of Title 10, Section 2695.7 of the California Code of Regulations, which Stone read to require an insurer "to accept or deny a claim within 40 days." Id. Stone asked Barber to provide Plaintiffs with Wausau's coverage position. Id.
On August 8, 2012, Barber responded that Wausau had successfully settled Cherokee's counterclaim for past costs, which would eliminate Plaintiffs' exposure for costs incurred by Cherokee as of the date of the settlement. ECF No. 67–11. Barber stated that Wausau intended to move forward with the settlement and would do so if it did not hear from Plaintiffs by the close of business that Friday, August 10, 2012. Id. Barber stated that if plaintiffs continued to object to the settlement, they would "be assuming defense and indemnity of the counterclaim at [Plaintiffs'] sole costs and Wausau would have no obligation to reimburse Haskins for any costs of defense or indemnity related to the tendered counterclaim." Id.
Stone responded on August 10, 2012, renewing Plaintiffs' argument that the counterclaim sought future costs and refusing to respond to Wausau's demand that Plaintiffs object by August 10, 2012. ECF No. 67–12. Barber countered that Plaintiffs' assent to the settlement was not required and Wausau intended to go forward with the settlement. ECF No. 67–13. Barber asked Stone to forward to Wausau information regarding any "reasonable and necessary defense costs that have been incurred to defend Haskins from Cherokee's counterclaim." Id.
Plaintiffs refused to sign the settlement agreement. Barber informed Plaintiffs on September 11, 2012 that they had breached their duty to cooperate in settling the Counterclaim and had thereby assumed their own defense. ECF No. 67–15. Wausau and Cherokee confirmed agreement to the settlement on February 4, 2013, and Cherokee filed a motion for leave to file a dismissal of the counterclaim without prejudice on February 5, 2013. See Haskins I at ECF No. 68. The motion stated that Cherokee would "dismiss their claims for recovery of environmental responses incurred on or before July 24, 2012 with prejudice," but sought "to dismiss their counterclaims without prejudice as to any claims for recovery of environmental responses costs that counterclaimants may incur after July 24, 2012." Id. at 2. Plaintiffs opposed the motion in the District Court, stating that "Haskins would suffer plain legal prejudice if Cherokee's counterclaim is dismissed without prejudice," because Haskins had already undertaken preparation for its defense against claims for future costs. Id. at ECF No. 75.
On March 8, 2013, Plaintiffs informed Wausau that Plaintiffs and Cherokee would be returning to mediation. Wausau declined to attend. At the mediation, Cherokee and Plaintiffs reached a settlement, which provided for: "(1) entry of judgment for Cherokee and against Plaintiffs on Cherokee's counterclaim in the amount of $1.7 million, executable only against Plaintiffs' insurance assets, with such recovery, if any, generally to be deposited in the San Bruno Channel Remediation Trust (‘Remediation Trust’); (2) assignment of such judgment to the Remediation Trust; (3) appointment of Plaintiff Richard Haskins as Trustee of the Remediation Trust generally without compensation; (4) dismissal with prejudice of Plaintiffs' First Amended Complaint; (5) deposit by Cherokee of $150,000 into an attorney trust fund; and (6) transfer of that money ($150,000) into the Remediation Trust if, within five years, $1.2 million is deposited into the Remediation Trust from any source." Haskins II at ECF No. 56; Haskins I at ECF No. 106.
On March 19, 2013, Cherokee withdrew its motion for leave to file dismissal of its counterclaims without prejudice. Haskins I at ECF No. 91. Cherokee subsequently filed a stipulation with a proposed order for entry of judgment outlining the settlement terms negotiated with Haskins. Haskins I at ECF No. 106. Wausau did not join the stipulation. Id. On August 12, 2013, this Court approved the stipulation. Haskins I at ECF No. 108.
On April 10, 2014, Plaintiffs filed the complaint in the instant litigation, seeking to recover the amount of the stipulated judgment from Wausau, as well as damages for the breach of the contractual duty to defend in the underlying litigation and the breach of the implied covenant of good faith and fair dealing. ECF No. 1.
On October 3, 2014, Plaintiffs filed a motion for partial summary judgment that Wausau had a contractual duty to defend Plaintiffs against Cherokee's counterclaim. ECF No. 35. The Court concluded that Wausau owed Plaintiffs a duty to defend against the counterclaim under the terms of the policy. See generally Haskins v. Employers Ins. of Wausau, No....
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