Jaynes Corp. v. Am. Safety Indem. Co.
| Decision Date | 17 May 2013 |
| Docket Number | Case No. 2:10–cv–00764–MMD–GWF. |
| Citation | 925 F.Supp.2d 1095 |
| Parties | JAYNES CORPORATION, Plaintiff, v. AMERICAN SAFETY INDEMNITY COMPANY, et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
OPINION TEXT STARTS HERE
Nicholas M. Wieczorek, Morris Polich & Purdy, LLP, Las Vegas, NV, for Plaintiff.
Pamela A. McKay, McKay Law Firm, Chtd., Las Vegas, NV, for Defendant.
(Plf.'s Motion for Summary Judgment or Partial Summary Judgment—dkt. no. 29)
(Defs.' Motion for Summary Judgment—dkt. no. 38)
Before the Court are the parties' cross-Motions for Summary Judgment. (Dkt. nos. 29 & 38.)
On or about January 10, 2003, subcontractor Stewart & Sundell Concrete (“S & S”) entered into a written contract with general contractor Jaynes Corporation (“Jaynes”) for site concrete work at phases 1 and 2 of the Sun City Anthem (“SCA”) residential housing project in Henderson, Nevada. The project was to construct sidewalks, curbs, valley gutters, and sidewalk gravel in the SCA community. The project owner was Del Webb Communities, Inc. (“Del Webb”).
S & S's work on the SCA project was performed in 2003 and 2004. Pursuant to its contract with Jaynes, S & S furnished all labor, material, and equipment to complete the site concrete portion of the project, including sidewalks, curbs (roll curbs, L curbs, and A curbs), valley gutters, and sidewalk gravel.
S & S agreed to name Jaynes as an additional insured under liability policies issued to S & S by American Safety Indemnity Company (“ASIC”).1 ( See dkt. no. 34–13 at 23.) ASIC issued four commercial general liability (“CGL”) policies to S & S (“the Policies”):
• policy no. ESL001216–02–01 (effective 03/01/2002 to 03/01/2003);
• policy no. ESL001216–03–02 (effective 03/01/2003 to 03/01/2004);
• policy no. ESL001216–04–03 (effective 03/01/2004 to 03/01/2005); and
• policy no. ESL001216–05–04 (effective 03/01/2005 to 03/01/2006).
Jaynes was named as a third party defendant in Nevada Revised Statutes Chapter 40 proceedings and a subsequent lawsuit in state court, Sun City Anthem Community Association v. Del Webb Communities. There, plaintiff SCA alleged that its residential community had sustained property damage from defective construction.
SCA's damages are alleged to have occurred during the policy periods. The Policies generally provide defense and indemnification liability coverage, with “each occurrence” limits of $1 million, subject to the terms, conditions, and exclusions stated therein. The Policies require ASIC to defend the insured against any “suit” seeking damages because of “property damage” if the “property damage” is caused by an “occurrence” and occurs during the policy period and is otherwise covered. The ASIC policies contain an “additional insured endorsement” (“AIE”) provision. A primary issue disputed in the parties' Motions is whether Jaynes is covered under the AIE provision.
Jaynes tendered its defense of the state court action to its insurer, American Contractors Insurance Group (“ACIG”), which accepted Jaynes' tender. Jaynes tendered its defense to ASIC in October 2008. ASIC declined the tender. Jaynes asserts that as a result, it has incurred $106,760 in defense costs. The underlying litigation is currently pending before Eighth Judicial District Court.
Because ASIC denied Jaynes coverage under S & S's CGL Policies, Jaynes filed this case on May 24, 2010. Jaynes asks the Court to declare that ASIC owes Jaynes a duty to defend it in the Sun City Anthem litigation. Jaynes also alleges that ASIC breached the Policies by failing to defend Jaynes thus far in the underlying litigation, and seeks damages for the attorney fees and costs Jaynes has personally paid in that suit. The parties both move for summary judgment. While Jaynes argues that ASIC must defend it under the Policy, ASIC contends that Jaynes was not an additional insured under the Policies, and that several provisions of the CGL Policies provide that ASIC does not owe Jaynes a duty to defend.
II. DISCUSSIONA. Legal Standard
The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir.1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits “show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). An issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is “material” if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Where reasonable minds could differ on the material facts at issue, however, summary judgment is not appropriate. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995). “The amount of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or judge to resolve the parties' differing versions of the truth at trial.’ ” Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir.1983) (quoting First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 288–89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir.1986).
The moving party bears the burden of showing that there are no genuine issues of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir.1982). “In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir.2000). Once the moving party satisfies Rule 56's requirements, the burden shifts to the party resisting the motion to “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505. The nonmoving party “may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir.1991), and “must do more than simply show that there is some metaphysical doubt as to the material facts.” Orr v. Bank of Am., 285 F.3d 764, 783 (9th Cir.2002) (internal citations omitted). “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient.” Anderson, 477 U.S. at 252, 106 S.Ct. 2505.
Further, “when parties submit cross-motions for summary judgment, ‘[e]ach motion must be considered on its own merits.’ ” Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir.2001) (quoting William W. Schwarzer, et al., The Analysis and Decision of Summary Judgment Motions, 139 F.R.D. 441, 499 (Feb. 1992) (citations omitted)). “In fulfilling its duty to review each cross-motion separately, the court must review the evidence submitted in support of each cross-motion.” Id.
B. Standing
ASIC claims that ACIG has paid Jaynes' defense costs and Jaynes therefore lacks standing to pursue its claim for recovery of the defense costs it has incurred in connection with the underlying lawsuit, because ACIG is the real party in interest. See Valley Power Co. v. Toiyabe Supply Co., 80 Nev. 458, 396 P.2d 137, 138 (1964) ().
Jaynes informs the Court that this is not the case. Rather, under its Funded Deductible Policy with ACIG, Jaynes pays anticipated claim expenses in advance by way of high premium, and ACIG then refunds amounts later that are not used to pay claims or collects additional amounts if the costs exceed the $500,000 retention ($250,000 per occurrence for loss and $250,000 per occurrence for ‘allocated loss adjustment expense’). Accordingly, Jaynes submits that its defense in the underlying action was paid by ACIG with Jaynes' own money, and that Jaynes will always be responsible for its defense costs up to $500,000 of its $1,000,000 deductible.
In response, ASIC informs the Court that Jaynes has previously represented under oath that ACIG paid the fees and costs to defend Jaynes in the underlying action in full. ASIC argues that Jaynes cannot now create an issue of fact by submitting an affidavit contradicting previously-sworn testimony.
“The Supreme Court has explained that ‘[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action.’ ” Van Asdale v. Int'l Game Tech., 577 F.3d 989, 998 (9th Cir.2009) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)) (internal quotation marks omitted). “Some form of the sham affidavit rule is necessary to maintain this principle.” Van Asdale, 577 F.3d at 998. “This is because ... if a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact.” Id. (citations and quotation marks omitted).
“At the same time, however, it must be recognized that...
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