Imperium Ins. Co. v. Unigard Ins. Co.

• Decision Date: 28 April 2014
• Docket Number: Case No. 1:13–cv–01707–JLT.
• Citation: 16 F.Supp.3d 1104
• Court: U.S. District Court — Eastern District of California
• Parties: IMPERIUM INSURANCE COMPANY, Plaintiff, v. UNIGARD INSURANCE COMPANY, et al., Defendants.

16 F.Supp.3d 1104

IMPERIUM INSURANCE COMPANY, Plaintiff

v.UNIGARD INSURANCE COMPANY, et al., Defendants.

Case No. 1:13–cv–01707–JLT.

United States District Court, E.D. California.

Signed April 28, 2014.

Kevin P. McNamara, Traub Lieberman Straus & Shrewsberry LLP, Los Angeles, CA, for Plaintiff.

Barbara Kekich, Brown, Brown & Klass, Agoura Hills, CA, Roger Evan Booth, Booth & Koskoff, Torrance, CA, for Defendants.

ORDER GRANTING PLAINTIFF IMPERIUM INSURANCE COMPANY'S MOTION FOR SUMMARY ADJUDICATION AND DENYING DEFENDANT UNIGARD INSURANCE COMPANY'S CROSS–MOTION FOR SUMMARY JUDGMENT

JENNIFER L. THURSTON, United States Magistrate Judge.

Imperium Insurance Company, formerly known as Delos Insurance Company (“Imperium”) and Unigard Insurance Company (“Unigard”) have filed cross-motions for summary judgment or, in the alternative, summary adjudication of Imperium's claims. (Docs. 34, 39.) The Court heard the oral arguments of the parties on April 23, 2013. For the following reasons, Imperium's motion for summary judgment is GRANTED, and Unigard's cross-motion is DENIED.

I. Relevant Factual and Procedural History

Imperium issued insurance policy number DTP7400107 to Juarez Brothers Tucking, Inc. and Juarez Agri Mix Transport, Inc. (collectively, “Juarez”), for the period of March 1, 2010 to March 1, 2011. (Doc. 1 at 3.) According to Imperium, the policy “provides commercial auto liability insurance to Juarez.” (Id. ) Specifically, Imperium alleges:

Under Coverage A, the Imperium Policy obligates Imperium to pay those sums that the insured legally must pay as damages because of “bodily injury” or “property damage,” to which the Imperium Policy applies, caused by an “accident,” and “resulting from the ownership, maintenance or use of a covered ‘auto.’ ”

(Doc. 1 at 3.) Further, Imperium asserts Unigard Insurance Company “issued a multi-line commercial insurance policy, policy number CM004237 to Juarez for a policy period of March 1, 2010 to March 1, 2011.” (Id. at 4, footnote omitted.) Imperium alleges that the Unigard policy “provided commercial general liability insurance to Juarez.” (Id. )

Imperium reports that an action entitled Fernando Sanchez v. Seaco Technologies, Inc., et al., was filed on August 6, 2012 in Kern County Superior Court, Case No. S–1500–CV–277330–WDP. (Doc. 1 at 6.) Juarez is identified as a defendant in the action, in which it is alleged:

[O]n or about December 8, 2010, defendants IAN GALYAN, while in the course and scope of his employment with defendant SEACO TECHNOLOGIES, INC., and an individual known as “Mr. Pena,” who himself was acting in the course and scope of his employment with defendant, AGRI–M IX TRANSPORT, INC., formally [sic] known as JUAREZ BROTHERS TRUCKING, INC.[ ] JUAREZ BROTHERS TRUCKING, INC., AND DOES 1 to 75, inclusive, and each of them, negligently, carelessly and recklessly and without permission accessed a restricted access road on the private business premises of Grimmway Farms wherein they unpinned a control pole gate and removed fixed barriers from the roadway and left the pole gate unattended pointed diagonally towards the expected pathway of oncoming traffic and thereby created an extreme danger to unwary motorists. That on said date and time Plaintiff, Fernando Sanchez, was driving a forklift on said access road unaware of the hazard and subsequently was impaled by the pole gate.¹

(Doc. 1 at 7, Doc. 1–3 at 6.) Imperium reports that it “is currently providing Juarez with a defense to the Underlying action,” but asserts “Imperium has no duty to defend” because the plaintiff “alleges only injuries caused by acts relative to the operation of the pole gate.” (Id. at 7–8.) Imperium asserts, “Juarez formally tendered its defense and indemnity for the [state court action] to Unigard” on May 20, 2013. (Id. at 7.) According to Imperium, “Unigard has taken the position that it does not understand why the Underlying Action is not covered under the Imperium Policy, but has not otherwise responded to Juarez's tender under the Unigard Policy.” (Id. )

Based upon the foregoing, Imperium filed its complaint on October 23, 2013, seeking declaratory relief that: (1) Imperium has no duty to defend any insured in the state court action; (2) Imperium owes no duty to indemnify any insured in the state court action; (3) Unigard owes a duty to defend the insureds in the state court action; (4) Unigard owes a duty to indemnify the insureds in the state court action; and (5) Imperium is entitled to reimbursement from Unigard for defending Juarez in the state court action. (Doc. 1 at 7–10.)

On November 14, 2013, Unigard filed its answer to the complaint denying that its policy was implicated. (Doc. 6 at 8.) Accordingly, Unigard denied that Imperium was “entitled to the requested declaratory judgments, sums requested, or any relief from Unigard whatsoever.” (Id. at 10.) In addition, Unigard filed counterclaims against Imperium, seeking judicial declarations that (1) Imperium has a duty to defend in the underlying action, and (2) even if there is a potential for coverage under the Unigard policy, “the Imperium policy is primary to the Unigard policy,” and as such Imperium has a duty to defend and indemnify its insured parties. (Doc. 7 at 8–9.)

On March 19, 2014, Imperium and Unigard filed the cross-motions for summary judgment now pending before the Court. In its notice of motion, Imperium seeks judgment on its First, Second, Third and Fourth Claims for Relief, and a judicial determination that “Imperium has no duty under its policy to defend or indemnify any insured in the underlying action, and that such duties of defense and indemnity are properly the obligation of Unigard ... pursuant to the terms of both the Imperium and Unigard policies.” (Doc. 34 at 2.) On the other hand, Unigard seeks judicial determinations that it “owes no duty to defend Agri–Mix or any other insureds” and “owes no duty to indemnify Agri–Mix or any other insureds under the Unigard policy” in the state court action. (Doc. 39 at 2.) Rather, Unigard contends these duties belong to Imperium. (Id. )

Imperium filed an opposition to Unigard's motion on March 24, 2014 (Doc. 47), to which Unigard filed a reply on March 31, 2014 (Doc. 52). Unigard filed an amended opposition to Imperium's motion on March 25, 2014 (Doc. 50), to which Imperium replied on March 31, 2014. (Doc. 51.)

II. Declaratory Relief

The Declaratory Judgment Act allows a federal court to “declare the rights and other legal relations” of parties to a “case of actual controversy.” 28 U.S.C. § 2201 ; Spokane Indian Tribe v. United States, 972 F.2d 1090, 1091 (9th Cir.1992) ; see also Levin Metals Corp. v. Parr–Richmond Terminal Co., 799 F.2d 1312, 1315 (9th Cir.1986) (explaining the Declaratory Judgment Act “was enacted to afford an added remedy to one who is uncertain of his rights and who desires an early adjudication without having to wait until he is sued by his adversary”). The Court has the discretion to determine whether to entertain an action for declaratory relief, because the Declaratory Judgment Act “gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so.” Public Affairs Associates v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 7 L.Ed.2d 604 (1962) ; Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1223 (9th Cir.1998).

The Ninth Circuit determined that “[d]eclaratory relief is appropriate (1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.” Eureka Fed. Sav. & Loan Assn. v. American Cas. Co., 873 F.2d 229, 231 (9th Cir.1989). Here, declaratory relief is appropriate because judgment will clarify which insurance policy covers the claim made in the underlying action.

Moreover, despite that the underlying state action has not yet proceeded to judgment, the action here, to determine prospective liability as to the duty to indemnify, is ripe. In American States Ins. Co. v. Kearns, 15 F.3d 142, 144 (9th Cir.1994), the Ninth Circuit Court of Appeals specifically considered and determined that in cases of insurance coverage disputes related to the obligation to indemnify, the matter may be ripe for declaratory judgment. The Court cited its earlier decision in, Aetna Casualty and Sur. Co. v. Merritt, 974 F.2d 1196, 1199 (9th Cir.1992) and held,

First, we read Merritt to hold that a case or controversy existed in that action. Merritt's holding controls here as well. In Merritt, the insurer sought a declaration regarding its duty to defend and indemnify its insured in a pending state court liability suit. American States also seeks a declaration regarding its obligations in the pending state court liability suit against Tahoe Boat. Thus, Merritt controls our decision that there was a case or controversy when American States brought its declaratory judgment action to establish whether it had a duty to defend and to indemnify Tahoe Boat. In addition to Merritt, our conclusion follows from Maryland Casualty v. Pacific Coal & Oil Co., 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826 (1941), in which the Supreme Court held that an insurer's declaratory judgment action regarding its duty to defend and indemnify was sufficiently ripe, even when the underlying liability action in state court had not yet proceeded to judgment.

Second, we read Merritt to hold that there is no per se rule against the district court exercising its jurisdiction to resolve an insurance coverage dispute when the underlying liability suit is pending in state court.

American States, 15 F.3d at 144–145. Moreover, none of the Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), factors—which caution against a court declaring rights, even where there is an actual controversy—are present here. Brillhart instructs, “The district court should avoid needless determination of...