Navigators Specialty Ins. Co. v. Nationwide Mut. Ins. Co.

Decision Date25 September 2014
Docket NumberNo. CV–13–01062–PHX–GMS.,CV–13–01062–PHX–GMS.
CourtU.S. District Court — District of Arizona

Alison Rebecca Christian, Gena Lopresto Sluga, Christian Dichter & Sluga PC, Phoenix, AZ, for Plaintiff.

David M. Bell, David Bell & Associates PLLC, Phoenix, AZ, for Defendant.


G. MURRAY SNOW, District Judge.

Pending before the Court are Motions for Summary Judgment from Plaintiff and Defendant. (Docs. 35, 49.) For the following reasons, Defendant's Motion is granted in part and denied in part and Plaintiff's Motion is granted in part and denied in part.


Plaintiff Navigators Specialty Insurance Company (Navigators) is seeking contribution from Defendant Nationwide Mutual Insurance Company (Nationwide)1 for legal defense costs and a settlement payment made on behalf of Titan Framing Company (“Titan”). Both insurers had issued policies for the relevant period to Titan. (Doc. 1.) Navigators insured Titan under a General Commercial Liability Policy with $1,000,000 per occurrence limits and $2,000,000 general aggregate limits. (“GCI Policy”). (Doc. 43 at 2.) Nationwide insured Titan under a Business Auto Policy with a $1,000,000 liability limit (“Auto Policy”). (Id. )

On November 21, 2007, Titan held a Thanksgiving breakfast/lunch picnic at its office yard (the “Event”). (Id. ¶ 5; Doc. 36 ¶ 5.) The company provided food and non-alcoholic beverages and paychecks were distributed to employees. (Id. ) Titan prohibited the consumption of alcoholic beverages at the picnic. (Id. ¶ 9.) It had a company policy of “no alcohol” on Titan premises or any of the job sites, and this policy was well-known amongst the employees. (Id. ¶ 10.) The picnic was attended by the President and sole shareholder of Titan, David Williams. Between 1:00 and 2:00 pm Williams stated that he was going home and informed the rest of the attendees that [y]ou need to go home because you've been given the day off.” (Id. ¶¶ 11–12.) Some employees informed Mr. Williams that they would stay to clean up. (Id. ¶ 13; Doc. 43 at 6.) At approximately 3:00 p.m., between 10 to 12 employees who remained at the Titan premises began drinking beer they had brought with them. (Doc. 59 at 29.) The highest ranking employee who remained, Jaime Bencomo, stated that they knew they could not drink” on the premises, but he did not stop his fellow employees from drinking and consumed “six, seven, eight beers” himself. (Id. at 30.) No employee who remained, including Bencomo, had the authority to alter Titan's alcohol ban on its premises. (Id. at 31.)

One of the employees drinking alcohol after the Event was Ivan Cortes Aquino (“Aquino”). (Id. ¶ 18.) Another employee who remained at the yard was informed over the telephone by Aquino's brother not to let Aquino drive home intoxicated. (Id. ¶ 19.) Because Aquino was suspected of being intoxicated, Titan employee Eduardo Macias took Aquino's car keys away from him. (Id. ¶ 20.) Once Aquino agreed to not drive home, and accepted a ride from a fellow co-worker, Macias returned his car keys to him so he could return the next day to retrieve his vehicle. (Id. ¶ 21.) According to the deposition testimony, after Aquino received his keys, he escaped out of his co-worker's vehicle while it was stopped waiting for the gate to open at the exit of the Titan lot. (Id. ) He then jumped into the vehicle he had driven to the picnic, a 1995 Ford Explorer. (Id. ) After entering the Explorer, Aquino locked the doors and windows and sped away from the Titan premises. Aquino left the Titan premises sometime before 7:00 p.m., eventually drove the wrong direction on a highway, and hit a car driven by Sean McArdle head-on (the “Accident”). (Id. ¶ 25; Doc. 48 at 3.) Both McArdle and Aquino were killed. (Id. )

Toxicological tests revealed that Aquino's blood contained 0.201% w/v ethyl alcohol, indicating his ability to drive was impaired by alcohol. (Doc. 36 ¶ 29.) The Ford Explorer driven by Aquino was owned by Aquino's brother, Wilfredo Cortes Aquino, who lent the car to Aquino that day. (Id. ¶ 27.) On November 14, 2008, Susan McArdle, the mother of Sean McArdle, filed a wrongful death lawsuit against the Estate of Ivan Cortes Aquino, Titan, and Wilfredo Cortes Aquino in Maricopa County Superior Court, case number CV2008–027929 (the “McArdle Complaint”). (Id. ¶ 31; Doc. 43 ¶ 14.) The McArdle Complaint alleged that Titan hosted a party where it knowingly invited Ivan and permitted him to consume alcohol; that Titan assumed a duty to prevent Ivan from driving while intoxicated; that Titan's employees were negligent in allowing Aquino to drive away from Titan's premises after the Event knowing, or having reason to know, that Aquino was intoxicated; and that Titan was vicariously liable for the acts of its employees who were all acting within the scope of their employment. (Doc. 36 ¶ 32.)

Shortly after the McArdle Complaint was filed, Titan tendered the matter to Navigators and Navigators agreed to defend Titan under a reservation of rights. (Id. ¶ 33.) On April 28, 2010, Nationwide (then as Allied Insurance) was contacted by Navigators' attorney, James Evans, requesting via letter that Nationwide take over defense and indemnity obligations in the McArdle matter. (Id. ¶ 34.) The letter advised that the parties were attempting to schedule a settlement conference, and requested Nationwide's participation in the mediation. (Id. ¶ 36.) On May 18, 2010, Ann Conroy from Nationwide acknowledged the tender from Mr. Evans and stated We further understand that there is a settlement conference being scheduled shortly.” (Doc. 59 at 10.) Ms. Conroy also stated that Nationwide would provide a substantive response to the tender after concluding its coverage investigation. (Doc. 43 at 16.) On June 7, 2010, the McArdles' lawyer requested a copy of the Auto Policy from Nationwide. (Doc. 59 at 10.) On June 24, 2010, Ms. Conroy sent a letter to Mr. Evans with a copy of the Auto Policy. (Doc. 59 at 10.) Nationwide did not respond to the substance of Mr. Evans' prior tender request in this letter. (Id. at 24.) Mr. Evans sent a letter on July 19, 2010 to Nationwide stating that the McArdle case had settled on July 15, 2010 for $400,000.00. (Id. at 44.)

On November 23, 2010, counsel retained by Navigators sent a letter to Nationwide, claiming that coverage existed under the Nationwide Auto Policy and requested payment of half the amounts paid to defend and settle the claims in the McArdle Complaint for a total requested amount of $253,718.82. (Id. at 44–45.) On February 15, 2011, Navigators reiterated its request that Nationwide share in the defense fees and costs incurred in representing Titan. (Id. at 12.) On December 12, 2011, Navigators' counsel again requested that Nationwide share in the defense fees and costs, and included a draft complaint for equitable contribution and indemnification that it intended to file within 30 days. (Id. at 12–13.) On December 16, 2011, Ms. Conroy responded to Navigators' counsel via telephone and stated that she had been “procrastinating” on this file. (Id. at 13.) On January 13, 2012, Nationwide denied coverage under the Auto Policy. (Id. at 13–14.) On January 13, 2012, Nationwide responded that it was not going to provide any amounts to Navigators as a contribution for defense and indemnity obligations because, Nationwide claimed, the Auto Policy did not provide coverage. (Id. at 45.)

After some correspondence regarding contribution, Navigators filed the present action on May 24, 2013. (Id. at 45–46; Doc. 1.) Navigators' Motion for Summary Judgment requests payment of $418,357.462 (the full settlement paid, plus half of the post-tender defense costs). (Doc. 48 at 21.) Nationwide's Motion for Summary Judgment contends that the Auto Policy issued to Titan (the “Auto Policy”) does not provide coverage for the claims in the McArdle Complaint, and alternatively that the claims were not properly nor timely tendered to them, defeating or limiting the amount of indemnity to which Navigators is entitled. (Doc. 35.)

I. Legal Standard

Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law determines which facts are material, and [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “A fact issue is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ). Thus, the nonmoving party must show that the genuine factual issues ‘can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.’ Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987) (original emphasis omitted) (quoting Anderson, 477 U.S. at 250, 106 S.Ct. 2505 ).

The interpretation of an insurance contract is a question of law to be determined by the court. Sparks v. Republic National Life, 132 Ariz. 529, 534, 647 P.2d 1127, 1132 (Ariz.1982). The provisions of an insurance contract are interpreted according to their plain and ordinary meaning. National Bank of Arizona v. St. Paul Fire and Marine Insurance Co., 193 Ariz. 581, 584, 975 P.2d 711, 713 (Ct.App.1999). [T]o determine the meaning of a clause which is subject to different interpretations or constructions, [courts] examin[e] the purpose of the clause, public policy considerations, and the transaction as a whole.” Arizona...

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