Skanska USA Civil W. Cal. Dist. Inc. v. Nat'l Interstate Ins. Co.
| Citation | 551 F.Supp.3d 1010 |
| Decision Date | 20 May 2021 |
| Docket Number | Case No. 20-cv-367-WQH-AHG |
| Parties | SKANSKA USA CIVIL WEST CALIFORNIA DISTRICT INC., Plaintiff, v. NATIONAL INTERSTATE INSURANCE COMPANY, Defendant. |
| Court | United States District Courts. 9th Circuit. United States District Court (Southern District of California) |
Ramiro Morales, Elizabeth Bell Celniker, Morales Fierro & Reeves, Concord, CA, Patrick Quigley, Morales, Fierro & Reeves, Pleasant Hill, CA, for Plaintiff.
Bruce D. Celebrezze, Matthew S. Harvey, Clyde & Co. US LLP, San Francisco, CA, for Defendant.
The matters before the Court are the Motion for Partial Summary Judgment filed by Plaintiff Skanska USA Civil West California District Inc. (ECF No. 46) and the Motion for Sanctions filed by Defendant National Interstate Insurance Company (ECF No. 54).
On February 27, 2020, Plaintiff Skanska USA Civil West California District Inc. ("Skanska") filed a Complaint against Defendant National Interstate Insurance Company ("National Interstate"). (ECF No. 1). Skanska alleged that in 2016 it was sued in California state court and tendered the defense of the lawsuit to its insurers, National Interstate and Zurich American Insurance Company ("Zurich"). Skanska alleged that Zurich provided a defense subject to a $500,000 deductible. Skanska alleged that National Interstate failed to provide a defense and unreasonably agreed to a policy-limits settlement on behalf of other insureds. Skanska alleged that Zurich paid a settlement on behalf of Skanska and "assigned to Skanska all of [Zurich's] rights and claims against National Interstate regarding the [state court lawsuit]." (Id. ¶ 100). Skanska brought claims against National Interstate including a claim for breach of the implied covenant of good faith and fair dealing, an assigned claim for equitable indemnity, and an assigned claim for equitable contribution.
On August 19, 2020, National Interstate filed a Motion for Partial Summary Judgment on the issue that National Interstate did not breach the implied covenant of good faith and fair dealing by agreeing to a policy-limits settlement that did not include a release of the claims against Skanska. (ECF No. 15). On November 24, 2020, the Court issued an Order denying the Motion for Partial Summary Judgment. (ECF No. 31).
The parties engaged in fact discovery.
On January 8, 2021, Skanska filed an Amended Complaint against National Interstate, alleging that "all prior assignments between Skanska and Zurich have been revoked."1 (ECF No. 42 ¶ 6). Skanska alleges that National Interstate breached the terms of the National Interstate policies by failing to defend Skanska in the state court action from the date of the initial tender, failing to pay defense costs incurred by Skanska, and failing to indemnify Skanska. Skanska alleges that National Interstate breached the implied covenant of good faith and fair dealing by failing to reasonably investigate Skanska's claims for coverage, failing to defend Skanska in the state court action from the date of the initial tender, and agreeing to a policy-limits settlement on behalf of other insureds.
Skanska brings the following claims against National Interstate: 1) request for declaratory relief—National Interstate's duty to defend since tender; 2) breach of insurance contract; and 3) breach of the implied covenant of good faith and fair dealing. On the first claim for declaratory relief, Skanska seeks "a declaration and determination that National Interstate owes or owed a duty to defend Skanska in the [state court action] since the initial tender of the original Complaint" and "a declaration and determination that National Interstate owes reimbursement to Skanska for Skanska's payments within its deductible for its defense and/or indemnity in the [state court action]." (Id. at 22). On the second claim for breach of contract, Skanska seeks damages and costs. On the third claim for breach of the implied covenant of good faith and fair dealing, Skanska seeks damages, attorneys’ fees, and costs.
On January 20, 2021, National Interstate filed an Answer to the Amended Complaint. (ECF No. 45).
On February 4, 2021, Skanska filed a Motion for Partial Summary Judgment. (ECF No. 46). Skanska moves for summary judgment "on the following issues:" 1) National Interstate "had a duty to defend Skanska in the underlying action from the date of initial tender;" 2) National Interstate "breached the implied covenant of good faith and fair dealing by failing to defend Skanska in the underlying action from the date of initial tender;" and 3) National Interstate "breached the implied covenant of good faith and fair dealing by agreeing to settle the underlying action without obtaining a release in favor of Skanska or otherwise protecting the interests of Skanska." (Id. at 1-2).
On March 1, 2021, National Interstate filed an Opposition to the Motion for Partial Summary Judgment. (ECF No. 50).
On March 5, 2021, National Interstate filed a Motion for Sanctions. (ECF No. 54). National Interstate moves for monetary sanctions against Skanska and its counsel in the amount of $84,136.50 on the grounds that Skanska and its counsel unreasonably and vexatiously multiplied the proceedings, engaged in bad faith litigation conduct, and violated Civil Local Rule 40.1 by "making affirmative misrepresentations to and concealing important information from the Court and [National Interstate]" about the "purported ‘assignment’ of Zurich's rights." (ECF No. 54-1 at 6).
On March 8, 2021, Skanska filed a Reply in support of the Motion for Partial Summary Judgment. (ECF No. 56).
On March 29, 2021, Skanska filed an Opposition to the Motion for Sanctions. (ECF No. 61). On April 5, 2021, National Interstate filed a Reply in support of the Motion for Sanctions. (ECF No. 62).
On April 22, 2021, the Court heard oral argument on the Motion for Partial Summary Judgment and the Motion for Sanctions. (ECF No. 65).
Skanska contends that National Interstate had a duty to defend Skanska in the underlying state court action from the date of the initial tender. Skanska contends that National Interstate failed to defend Skanska from the date of the initial tender in violation of the National Interstate policies. Skanska contends that the failure to defend was unreasonable and violated the implied covenant of good faith and fair dealing. Skanska contends that National Interstate further violated the implied covenant of good faith and fair dealing by agreeing to a policy-limits settlement on behalf of other insureds. Skanska contends that National Interstate's actions caused Skanska to pay $500,000 out of pocket that it cannot recover from the other insureds.
National Interstate contends that it did not have a duty to defend Skanska in the underlying state court action from the date of the initial tender. National Interstate contends that the decision to reject the initial tender was proper and reasonable under the terms of the National Interstate policies. National Interstate contends that Skanska was not harmed by the settlement and would have had to pay $500,000 out of pocket regardless of National Interstate's actions.
Plaintiff Skanska is a contractor that was involved in a highway reconstruction project near Sorrento Valley, California. In February 2016, Skanska hired Reeve Trucking Company ("Reeve") to transport several 100-foot I-beams from the construction site to a storage site on State Route 67 in Lakeside, California.
In the early morning of February 12, 2016, Peter Chavarin was driving a motorcycle northbound on State Route 67 when he collided with a Reeve tractor-trailer carrying the I-beams, as the tractor-trailer was making a left turn from southbound State Route 67 toward the entrance of the storage site. The tractor-trailer was driven by Reeve employee Christopher Collins. Peter Chavarin sustained severe injuries, including traumatic brain injury
, coma, thoracic spine fracture, and other bone fractures.
At the time of the accident, Reeve and Collins were insured under primary and excess policies issued by Defendant National Interstate with collective policy limits of $6,000,000. The primary policy "affords coverage and a defense to an ‘insured’ for claims of bodily injury and property damage caused by an accident resulting from the ownership, maintenance, or use of a covered auto." (Pl.’s Statement of Undisputed Material Facts ("SUMF"), ECF No. 46-2 ¶ 11). The primary policy includes as an insured "[a]nyone liable for the conduct of an ‘insured’ ... but only to the extent of that liability." (Primary Policy, Ex. 15 to Celniker Decl., ECF No. 46-20 at 167).
At the time of the accident, Skanska was insured under a commercial general liability policy issued by Zurich with policy limits of $25,000,000 and a deductible that Skanska was obligated to pay toward the first $500,000 in defense expenses or indemnity payments incurred by Zurich. (See Zurich Policy, Def.’s Ex. 10, ECF No. 50-13 at 3, 46).
On April 6, 2016, Peter Chavarin and his wife filed a complaint for damages against Skanska, Reeve, Collins, and the owner of the Lakeside storage site in the San Diego Superior Court, Peter Chavarin, et al. v. Christopher Collins, et al. , Case No. 37-2016-00011241-CU-PA-CTL (San Diego Super. Ct. (2016)) (the "Chavarin Action"). The initial complaint in the Chavarin Action alleged claims against all defendants for negligence, negligence per se, and loss of consortium. The initial complaint alleged that all defendants were negligent in failing to operate the tractor-trailer in a safe manner and in failing to require and ensure that drivers delivering I-beams used the assistance of a pilot vehicle, spotters, or flagmen and used lights or other features to make the tractor, trailer, and I-beams visible to other motorists. The initial complaint alleged that all defendants "were the agents, employees, subcontractors, joint venturers, partners, officers, or directors, of each other." (Chavarin Action...
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