Pulte Home Corp. v. TIG Ins. Co.

Decision Date16 May 2018
Docket NumberCase No.: 3:16–cv–02567–H–AGS
CourtU.S. District Court — Southern District of California
Parties PULTE HOME CORPORATION, Plaintiff, v. TIG INSURANCE COMPANY, Defendant.

Sharon Ann Huerta, Koeller Nebeker Carlson and Haluck LLP, San Diego, CA, for Plaintiff.

Robert Wayne Keaster, Chamberlin & Keaster LLP, Encino, CA, for Defendant.

ORDER:

(1) DENYING PLAINTIFF'S MOTIONS FOR PARTIAL SUMMARY JUDGMENT; and

[Doc. Nos. 37, 38.]

(2) GRANTING DEFENDANT'S CROSS–MOTION FOR SUMMARY JUDGMENT

[Doc. No. 42.]

MARILYN L. HUFF, District Judge

On February 8 and February 27, 2018, Plaintiff Pulte Home Corporation ("Pulte") filed two motions for partial summary judgment. (Doc. Nos. 37, 38.) On March 5, 2018, Defendant TIG Insurance Company ("TIG"), the successor by merger to the American Safety Indemnity Company ("ASIC"), filed its own cross-motion for summary judgment. (Doc. No. 42.) The parties filed their respective opposition papers on April 2, 2018, (Doc. Nos. 48, 49, 50), and their reply briefs on April 9, 2018. (Doc. Nos. 52, 53, 54.) The Court held a hearing on the motions on April 16, 2018. Robert C. Carlson and Sharon Ann Huerta appeared for Pulte, while Robert Wayne Keaster appeared for TIG. For the reasons below, the Court denies Pulte's motions, and grants summary judgment to TIG.

Background

This diversity action presents an insurance coverage dispute wherein Pulte asserts that it qualifies as an "additional insured" under several insurance policies issued by ASIC, and that TIG is now responsible for by merger. (Doc. No. 1, Compl. ¶ 8.) In its third partial summary judgment motion, Pulte asks the Court to bar TIG from re-litigating certain issues decided by the California Court of Appeal under California law in a related state court lawsuit between the parties. (Doc. No. 37.) See Pulte Home Corp. v. Am. Safety Indem. Co., 14 Cal. App. 5th 1086, 223 Cal.Rptr.3d 47 (2017) (" Pulte I"). In its fourth partial summary judgment motion, Pulte seeks a declaration that one of ASIC's insurance policies—issued to non-party Tunstill Plastering, Inc. ("Tunstill")—obligated ASIC to defend Pulte in Morris, et al. v. Pulte Home Corporation, et al., Case No. RIC1211981 ("Morris"), a settled action formerly pending in the San Diego County Superior Court. (Doc. No. 38.) TIG, by contrast, argues that the relevant insurance policies affirmatively exclude coverage for Pulte's claims, and seeks summary judgment against each of Pulte's causes of action. (Doc. No. 42–27.)

I. Relevant Facts

Pulte is a residential real estate developer. (Doc. No. 1 at ¶ 9.) Between 2003 and 2007, it served as the general contractor for two real estate development projects relevant to this lawsuit: (i) "The Reserve at the Woods" in Chula Vista, California, (id. ); and (ii) "The Meadows" in Temecula, California. (Id. at ¶ 10). Pulte hired numerous subcontractors to work on these projects, including non-parties Concrete Concepts, Inc. ("CCI"), Foshay Electric Co., Inc. ("Foshay"), MJW & Associates, Inc. ("MJW"), and Tunstill (collectively, "Pulte's subcontractors" or "the subcontractors"). (Id. at ¶ 19.)

Pulte required its subcontractors to maintain general commercial liability ("GCL") insurance, and to obtain additional insured endorsements ("AIEs") listing Pulte as an added beneficiary under the subcontractors' GCL policies. (Id. at ¶ 18.) The GCL policies provided that ASIC had a duty to defend insured parties against any lawsuit seeking damages for property damage.1 (See, e.g., Doc No. 20–26, CCI Policy, PageID 1892.) Each of the AIEs contained language extending coverage to Pulte, but "only" as to "ongoing" operations performed by the subcontractors for Pulte "on or after the effective date of" the AIEs. (See Doc. No. 42–2, CCI Policy Dated 10/20/2004, PageID 4400; Doc. No. 42–3, Foshay Policy Dated 7/3/2003, PageID 4471; Doc. No. 42–4, Foshay Policy Dated 7/3/2004, PageID 4531; Doc. No. 42–5, MJW Policy Dated 1/22/2006, PageID 4599; Doc. No. 42–6, MJW Policy Dated 1/22/2007, PageID 4665; Doc. No. 42–7, Tunstill Policy Dated 3/25/2006, PageID 4735; Doc. No. 42–8, Tunstill Policy Dated 3/25/2007, PageID 4800.)

In 2012 and 2013, several persons who purchased homes in "The Reserve at the Woods" and "The Meadows" contacted Pulte seeking damages for alleged construction defects. (See Doc. No. 20–3, Pulte Statement of Facts, at ¶ 3; Doc. No. 38–27, Pulte Statement of Facts, at ¶ 2.) Homeowners at "The Meadows" filed the Morris lawsuit against Pulte on August 7, 2012, (Doc. No. 38–27 at ¶ 2), and homeowners at "The Reserve at the Woods" filed a separate lawsuit, Salazar, et al. v. Pulte Home Corp., et al., Case No. 37–2013–00079447–CU–CD–CTL ("Salazar"), against Pulte in the San Diego County Superior Court on December 10, 2013. (Doc. No. 20–3 at ¶ 4.) Pulte tendered both lawsuits to ASIC seeking a defense, but ASIC denied coverage in letters dated January 11, 2013 and January 9, 2014, respectively. (Doc. No. 20–3 at ¶¶ 12–13; Doc. No. 38–27 at ¶¶ 12–13.) Pulte subsequently settled both actions.

II. Procedural History

On October 14, 2016, Pulte filed the instant lawsuit, seeking: (i) declarations that ASIC had a duty to defend Pulte in the Salazar and Morris actions under the AIEs for ASIC's policies with CCI, Foshay, MJW, and Tunstill, (Doc. No. 1 at ¶¶ 25–44); (ii) breach of contract damages stemming from ASIC refusal to tender a defense in Salazar and Morris, (id. at ¶¶ 45–50); and (iii) damages for breach of the implied covenant of good faith and fair dealing. (Id. ¶¶ 51–60.) ASIC answered the suit on December 16, 2017, (Doc. No. 2, Answer), and the parties proceeded to discovery.

On May 26, 2017, Pulte filed a partial summary judgment motion asking the Court to declare that the Georgia choice of law provisions in ASIC's insurance policies were invalid and unenforceable, and to apply California law to this dispute instead. (Doc. No. 11.) The Court denied this motion on June 28, 2017, and determined that Georgia law should govern the construction of ASIC's policies. (Doc. No. 19.) Pulte Home Corp. v. Am. Safety Indem. Co., 268 F.Supp.3d 1091, 1099 (S.D. Cal. 2017) ( Pulte II ).

Pulte then filed a second partial summary judgment motion on August 8, 2017, seeking a declaration that ASIC owed Pulte a duty to defend the Salazar lawsuit pursuant to CCI's GCL policy. (Doc. No. 20.) The Court denied the motion on September 13, 2017, concluding that the j(5) and j(6) business risk exclusions in ASIC's policies with CCI unambiguously excluded coverage for the construction defects referenced in the Salazar complaint. (Doc. No. 25) Pulte Home Corp. v. Am. Safety Indem. Co., 264 F.Supp.3d 1073, 1082–83 (S.D. Cal. 2017) ( Pulte III ). The Court denied reconsideration on October 17, 2017. (Doc. No. 33.)

While this federal lawsuit was pending, the parties litigated substantially similar claims in the San Diego County Superior Court stemming from ASIC's refusal to tender a defense in two other lawsuits alleging construction defects at Pulte-built properties in Southern California. On August 30, 2017, the California Court of Appeal rejected ASIC's various coverage defenses under California law, and held that ASIC had a duty to defend Pulte under GCL policies and AIEs substantially similar to those at issue in this suit. Pulte I, 14 Cal. App. 5th 1086, 223 Cal.Rptr.3d 47 (2017). The California Supreme Court denied review on November 15, 2017.2

On February 8, 2018, Pulte filed a third partial summary judgment motion, which argues that the California Court of Appeal's judgment in Pulte I should be given preclusive effect under the doctrine of collateral estoppel, and control most of the contract interpretation issues in this suit. (Doc. No. 37.) On February 27, 2018, Pulte filed a fourth partial summary judgment motion seeking a declaration that ASIC owed Pulte a duty to defend the Morris action under ASIC's policy with Tunstill. (Doc. No. 38.) On March 5, 2018, TIG filed a cross-motion for summary judgment as to each of Pulte's causes of action, arguing that coverage for the Salazar and Morris lawsuits was unambiguously excluded under various provisions in the GCL policies and AIEs. (Doc. No. 42.) The parties have completed their briefing, and the matter is ripe for disposition.3

Discussion
I. Legal Standards for Summary Judgment

Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the moving party demonstrates that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1031 (9th Cir. 2010). "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Fortune Dynamic, 618 F.3d at 1031 (internal quotation marks and citations omitted); accord Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case that the nonmoving party bears the burden of proving at trial. Id. at 322–23, 106 S.Ct. 2548 ; Jones v. Williams, 791 F.3d 1023, 1030 (9th Cir. 2015). Once the moving ...

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