Sempra Energy v. Associated Elec. & Gas Ins. Servs. Ltd.
| Decision Date | 20 July 2020 |
| Docket Number | Case No. 2:19-cv-03340-ODW (JPRx) |
| Citation | 473 F.Supp.3d 1052 |
| Parties | SEMPRA ENERGY, et al., Plaintiffs, v. ASSOCIATED ELECTRIC AND GAS INSURANCE SERVICES LIMITED, et al. Defendants. |
| Court | U.S. District Court — Central District of California |
Sandra Smith Thayer, Anamay M. Carmel, Kirk A. Pasich, Christopher Thomas Pasich, Pasich LLP, Los Angeles, CA, for Plaintiffs.
Alan S. Rutkin, Pro Hac Vice, Anthony R. Bjelke, Pro Hac Vice, George D. Kappus, Pro Hac Vice, Gregory J. Klubok, Pro Hac Vice, Robert Tugander, Pro Hac Vice, Steven M. Zuckermann, Pro Hac Vice, Rivkin Radler LLP, Uniondale, NY, Larry Mark Golub, Vivian I. Orlando, Hinshaw and Culberson LLP, Los Angeles, CA, Sara M. Thorpe, Ethan Hansa Seibert, Nicolaides Fink Thorpe Michaelides Sullivan LLP, San Francisco, CA, for Defendants.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [88]
Plaintiffs Sempra and SoCal Gas face litigation for damages arising from natural gas leaks. Plaintiffs sued several insurance companies for breach of their contractual obligations to defend or pay for the defense of those suits. Pending before the Court is Defendant The Continental Insurance Company ("Continental")'s Motion for Summary Judgment ("Motion") for the right to control the defense. (Mot. for Summ. J., ECF No. 88.) On July 8, 2020, the Court had a video-conference hearing in which Continental and Plaintiffs were present. For the following reasons, the Court GRANTS Continental's Motion.
Plaintiffs Sempra Energy ("Sempra") and Southern California Gas Company ("SoCal Gas"), a subsidiary of Sempra, filed the instant lawsuit against several insurance companies, including Continental.
Since 1972, SoCal Gas has owned a natural gas storage facility in northwest Los Angeles. (Def.'s Statement of Uncontroverted Facts ("DSUF") ¶ 11, ECF No. 88-2.) On October 23, 2015, SoCal Gas discovered a gas leak at the facility. (DSUF ¶ 12.) Consequently, Plaintiffs faced lawsuits from over 36,000 individuals ("Individual Plaintiff Lawsuits"), firefighters who sustained damages while responding to the gas leak ("Firefighter Lawsuit"), real estate developers seeking damages for harm to property and loss of business ("Real Estate Lawsuit"), and the State of California for various code violations ("CA Lawsuit") (collectively, the "Underlying Lawsuits"). (DSUF ¶¶ 14, 17, 18, 20.)1 The parties dispute whether allegations of injuries in the complaints relate as far back as the 1970s. (Pl.s' Disputes of the DSUF and Statement of Uncontroverted Facts ("PSUF") ¶ 57, ECF No. 100 ; Def.'s Response to PSUF ¶ 57, ECF No. 98-1.) As early as 2016, SoCal Gas retained three law firms to defend against the lawsuits. (DSUF ¶¶ 21, 24.)
On September 21, 2018, SoCal Gas notified Continental, successor of the Harbor Insurance Company, of the lawsuits and requested that they defend or pay for the defense of the lawsuits under the Harbor Policies. (DSUF ¶ 30.) Decades ago, the Harbor Insurance Company issued insurance policies to Pacific Lighting Corporation, predecessor in interest of Sempra, under two contracts: One from October 5, 1971 to September 1, 1974 ("First Policy") and a second from September 1, 1974 to September 1, 1976 ("Second Policy"). .) Those two policies (collectively, the "Harbor Policies") insured occurrences defined as "a series of accidents or events arising out of an initial accident or event or originating cause, including all resultant or concomitant losses." (First Policy A 24; Second Policy B 22; DSUF ¶ 4.) The Harbor Policies state that the insurer agrees to pay:
on behalf of the insured all sums in excess of the insured's retention (hereinafter defined) which the insurer shall become obligated to pay: (A) by reason of the liability imposed by law (other than a workmen's compensation law or plan), or liability which is or may be assumed or imposed under contract, franchise warranty, conveyance or other agreement (oral or written, express or implied) for damages including damages for care and loss of services, because of personal injury, including death at any time resulting therefrom, sustained by any person or persons.... (C) by reason of the liability imposed by law upon the insured for loss of or damage to or destruction of tangible property of others (including but not limited to damage resulting from loss of use of said property damaged or destroyed and all other indirect or consequential damage for which legal liability exists in connection with such damage to or destruction of tangible property of others).
(First Policy A 21–22; Second Policy B 17–18; DSUF ¶ 4 (emphasis added).) Furthermore, the policies indicate that:
[t]he insured shall have control and charge of any claim or suit or group of claims or suits resulting from a single occurrence and all litigation in respect thereto involving liability covered by this policy ... However, in the event of an occurrence resulting in claims or suits in excess of the insured's retention, the company shall upon the written request of a duly authorized officer of the insured, take full charge or such investigation or litigation at its own cost and expense.
(First Policy A 25; Second Policy B 23–24; DSUF ¶¶ 5–6 (emphasis added).) According to the policies, expenses incurred during the investigation or litigation of claims would be paid in addition to the policy's limit. (DSUF ¶ 7.) Other terms of the policies require that the insured provide written notice of any insurable occurrence within a reasonable time, forward any summons or complaints served and cooperate in the defense of the suit. (DSUF ¶¶ 9, 10.)
On January 23, 2019, Continental first responded to SoCal Gas's letter from September. (PSUF ¶ 60.) On March 11, 2019, Continental requested defense invoices and additional information about the claims and lawsuits. (DSUF ¶ 32.) The next day, despite having collected questionnaire responses from all individual plaintiffs since May 2017, SoCal Gas provided only the same two questionnaire responses attached to its 2018 letter and did not produce any invoices. (DSUF ¶¶ 22, 33.) On March 26, 2019, Plaintiffs filed the instant lawsuit seeking damages for Defendants' breach of their duties to defend the Underlying Lawsuits. (See Compl.) On April 24, 2019, AEGIS filed its answer alleging a number of affirmative defenses. (AEGIS Answer, ECF No. 1-2.) On May 2, 2019, Continental similarly filed its answer and asserted affirmative defenses. (Continental Answer, ECF No. 10.)
On July 26, 2019, Continental agreed to defend the suits against all individual plaintiffs but reserved the rights to assert that: (1) No personal injury or property damage occurred; (2) there was no "occurrence" (accident or event); (3) there was no occurrence or event during the Harbor Policies' periods of coverage; (4) coverage is barred by the policies' pollution and natural gas exclusion; and (5) there is no coverage for punitive damages. (PSUF ¶ 63; DSUF ¶ 36.) Continental has since waived the second and fourth reservations. (DSUF ¶ 53; Decl. of John R. Fitzgerald ("Fitzgerald Decl.") ¶ 40, ECF No. 88-3 ; Mot. 17.) Continental also reserved the right to be reimbursed for payments it did not owe under the policies. (DSUF ¶ 37.)
On August 8, 2019, Continental paid over $1.6 million, about two months after receiving the invoice. (DSUF ¶ 46; Fitzgerald Decl. ¶ 44.) On August 9, 2019, Plaintiffs rejected Continental's attempt to gain control of the defense and replace Plaintiffs' defense counsel. (PSUF ¶ 65; DSUF ¶ 55.) On September 5, 2019, Continental received a second batch of defense invoices and paid over $1.5 million about a month later in October 2019. (DSUF ¶¶ 42, 46; Fitzgerald Decl. ¶¶ 43, 44.) In December 2019, the third batch of defense invoices were sent and paid that month, bringing total defense invoice payments to over $8.2 million. (Supp. Decl. of John R. Fitzgerald ¶ 12, ECF No. 98-3 ).
On October 23, 2019, Plaintiffs filed a motion to stay the case pending resolution of the Underlying Lawsuits. (Mot. to Stay, ECF No. 73.) The Court denied the motion because Plaintiffs sought to sever and stay only the affirmative defenses while permitting their claims to continue. (Order Denying Stay, ECF No. 94.)
Now before the Court, Continental brings its Motion for Partial Summary Judgment seeking control of Plaintiffs' defense in the Underlying Lawsuits and enforcement of the duty to cooperate against SoCal Gas. (See Mot.)2
A court "shall grant summary judgment if the movant shows 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). Courts must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris , 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). A disputed fact is "material" where the resolution of that fact might affect the outcome of the suit under the governing law, and the dispute is "genuine" where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Conclusory or speculative testimony in affidavits is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ'g Co. v. GTE Corp. , 594 F.2d 730, 738 (9th Cir. 1979). Moreover, though the Court may not weigh conflicting evidence or make credibility determinations, there must be more than a mere scintilla of contradictory evidence to survive summary judgment. Addisu v. Fred Meyer, Inc. , 198 F.3d 1130, 1134 (9th Cir. 2000).
Once the moving party satisfies its burden, the nonmoving party cannot...
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