Phila. Indem. Ins. Co. v. Lakeside Heights Homeowners Ass'n
| Decision Date | 18 June 2015 |
| Docket Number | Case No. 14–cv–04450–WHO |
| Citation | 110 F.Supp.3d 965 |
| Parties | Philadelphia Indemnity Insurance Company, Plaintiff, v. Lakeside Heights Homeowners Association, Defendant. |
| Court | U.S. District Court — Northern District of California |
Christine B. Cusick, Nielsen, Haley and Abbott, San Rafael, CA, for Plaintiff.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
Plaintiff Philadelphia Indemnity Insurance Co. ("Philadelphia") contends that the "subsidence exclusion" in the insurance policy between it and defendant Lakeside Heights Homeowners Association ("the HOA") means that it is not obligated to defend or indemnify the HOA in an underlying state court action in which the County of Lake brought counterclaims for negligence and loss of lateral support, among other things. The crux of the dispute is over the breadth of the term "operations" in the subsidence exclusion. The evidence submitted with Philadelphia's motion, including especially the HOA's Declaration of Covenants, Conditions and Restrictions (CC & R's) establishes, that the HOA's "operations" include maintenance of its landscape, construction activities on its property, and its irrigation and drainage systems. All possible theories of liability against the HOA in the underlying state court action, including those based on negligence, arise from those operations. Accordingly, Philadelphia's motion for summary judgment is GRANTED.
The HOA and owners of property within the HOA asserted claims against Lake County in the Lake County Superior Court for inverse condemnation, dangerous condition of public property, and negligence in Lakeside Heights Homeowners Association v. County of Lake, Lake County Superior Court Case No. CV–413185. See Dkt. No. 33–2, Ex. A. That lawsuit arose out of a landslide, subsidence, and earth movement that occurred in 2013 and damaged the HOA's and owners' property. Id. ¶ 9. In response, Lake County filed a cross-complaint against the HOA and owners (collectively, "HOA") for negligence, equitable and comparative indemnity, declaratory relief, and failure of lateral support (negligence). Dkt. No. 33–2, Ex. B. The cross-complaint advances several theories against the cross-defendants involving the HOA's irrigation system, land development, and purported knowledge of a potential subsidence.
The HOA tendered the defense to Philadelphia, and Philadelphia agreed to defend the HOA with a full reservation of rights. Dkt. No. 30–3, Ex. 6, Ex. 9. Philadelphia subsequently filed a complaint for declaratory judgment in this Court on October 3, 2014. Compl. (Dkt. No. 1). Philadelphia seeks a declaration that it does not owe a duty to defend or indemnify the HOA in the underlying action.
The HOA moved to dismiss the action in November 2014, arguing alternatively that because the same facts are at issue in both the underlying state court action and in this action, the case should not proceed until the underlying action is resolved. See Dkt. No. 14. Philadelphia countered that the motion should be considered as one for summary judgment that should be decided in its favor. See Dkt. No. 16.
I heard the matter and denied both parties' motions. See Order at 1 (Dkt. No. 24). I declined to treat the matter as a motion for summary judgment and found that more documents—such as articles of incorporation or bylaws—were needed to determine whether the subsidence exclusion applies in this case. Id. at 4–6. I noted that "the duty to defend in this matter is not so clear" as the HOA suggested, and that the term "operations" in the subsidence exclusion did not appear to differ significantly from the term "work." Id. at 5. I concluded that I needed more information about Lake County's lateral support claim and Lake County's theory of liability for pre-development and development activities in order to determine whether the subsidence exclusion applies. Id. at 6–7. And I permitted discovery on "the scope of the HOA's operations as determined by its governing documents or state law, the contours of the County's failure of lateral support claim, and the responsibility of the HOA for pre-development and development activities as determined by its governing documents or state law." Id. at 7.
With its motion for summary judgment, Philadelphia submitted the HOA's maintenance bid to landscapers, landscaping maintenance instructions, a "Final Subdivision Public Report," and various discovery responses in the underlying action, as well as the HOA's by-laws, CC & Rs, corporate grant deed, and several public reports. See Dkt. Nos. 30–1, 30–2. I heard argument on May 27, 2015.
A court will grant a motion for summary judgment where the pleadings, discovery and affidavits show 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). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Where the moving party will have the burden of proof on an issue at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party." Noriga v. Ahmed, No. CV 12–0889 WHO (PR), 2013 WL 3461931, at *1 (N.D.Cal. July 9, 2013).
If the moving party meets its initial burden, the nonmoving party must then go beyond the pleadings and "set forth specific facts showing that there is a genuine issue for trial." Id. ; FED. R. CIV. P. 56(a). The court will consider only material facts and not "factual disputes that are irrelevant or unnecessary." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. In order to prevail, the nonmoving party must demonstrate with reasonable particularity that the evidence precludes summary judgment. Noriga, 2013 WL 3461931, at *1. Absent such a showing "the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal citations and quotations omitted).
Compl. ¶ 7; Dkt. No. 14–1, Ex. C at 28. As discussed in my prior order, this case hinges on whether the cross-claims brought by Lake County involve the "operations" of the HOA. Order at 5.
I first address the HOA's argument that Philadelphia has failed to present sufficient evidence of its position because its supporting documents are not made with personal knowledge, lack foundation, or are not authenticated. Oppo. 14–16 (Dkt. No. 33). The HOA points out that Philadelphia failed to provide or authenticate the insurance policies giving rise to this action and that the discovery responses Philadelphia provided are unverified. Id. at 14–15.
In response, Philadelphia argues that the evidence need only be admissible at trial in order to satisfy Rule 56. Reply 6 (Dkt. No. 34). It cites to McCarthy v. R.J. Reynolds Tobacco Co., which states: "[e]ven if the non-moving party's evidence is presented in a form that is currently inadmissible, such evidence may be evaluated on a motion for summary judgment so long as the moving party's objections could be cured at trial." 819 F.Supp.2d 923, 926 (E.D.Cal.2011). It asserts that it can cure evidentiary problems by properly authenticating the documents, and that they do not fail for lack of foundation, lack of personal knowledge, or hearsay. Reply 7–8; see also Joseph v. Target Corp., No. 2:12–CV–01962–KJM, 2015 WL 351444, at *2 (E.D.Cal. Jan. 23, 2015) () (internal quotations omitted).
I agree with Philadelphia. Both the Cusick declaration and the Meltvedt–Brown declaration state that "I have personal knowledge of the matters set forth below, and if called as a witness, could and would testify competently thereto." See Dkt. Nos. 30–1, 30–2. There is no other evidence that the documents would be inadmissible for lack of foundation, lack of personal knowledge, or hearsay.
Moreover, the HOA does not contest the authenticity or validity of the documents. I took judicial notice of the insurance policy in my Order denying the HOA's motion to dismiss, which the HOA itself submitted. See Order at 2; Dkt. No. 14–1. And although Philadelphia did not submit the policies with its motion for summary judgment, it referred to these prior submissions to this Court in support of its motion to dismiss. See Dkt. No. 14–1. In opposition to Philadelphia's motion for summary judgment, the HOA again submitted the policy. See Dkt. No. 33–2. At the hearing, Philadelphia indicated that it would be able to authenticate the documents if necessary. Because there is no substantive objection, and because the critical language relied upon by Philadelphia in the documents is not disputed, I OVERRULE the HOA's objection.
A court's interpretation of an insurance policy is a question of law. Powerine Oil Co. v. Superior Court, 37 Cal.4th 377, 390, 33 Cal.Rptr.3d 562, 118 P.3d 589 (2005). The ordinary rules of contractual interpretation apply to insurance contracts.
Id. Contractual language...
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