State Farm Mut. Auto. Ins. Co. v. Martinez-Lozano

• Decision Date: 08 February 1996
• Docket Number: No. CV-F-94-5823.,CV-F-94-5823.
• Citation: 916 F. Supp. 996
• Court: U.S. District Court — Eastern District of California
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Plaintiff, v. Alfredo Jose MARTINEZ-LOZANO; Myrna Martinez; Gerawan Ranches, a California General Partnership; Gerawan Farming, Inc., formerly known as Gerawan Company, Inc., a California Corporation; Ray M. Gerawan; Star R. Gerawan; Mike Gerawan; and Dan Gerawan, Defendants.

916 F. Supp. 996

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Plaintiff, v. Alfredo Jose MARTINEZ-LOZANO; Myrna Martinez; Gerawan Ranches, a California General Partnership; Gerawan Farming, Inc., formerly known as Gerawan Company, Inc., a California Corporation; Ray M. Gerawan; Star R. Gerawan; Mike Gerawan; and Dan Gerawan, Defendants.

No. CV-F-94-5823.

United States District Court, E.D. California.

February 8, 1996.

COPYRIGHT MATERIAL OMITTED

Thomas Elmer Campagne, Thomas E. Campagne Law Firm, Fresno, CA, for defendants.

Philip David Kopp, Dowling Magarian Aaron and Heyman, Fresno, CA, for plaintiff.

MEMORANDUM OPINION AND ORDER RE: PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

WANGER, District Judge.

I. Introduction

Plaintiff State Farm Mutual Automobile Insurance Company ("State Farm") moves for summary judgment establishing that it has no duty to defend Alfredo Jose Martinez-Lozano ("Martinez") and Gerawan Ranches, Gerawan Farm, Ray Gerawan, Star Gerawan, Mike Gerawan and Dan Gerawan ("Gerawan") in the claims against Defendants in Leal, et al. v. Gerawan Ranches, et al., CV-F-93-5804 and Martinez v. Gerawan Ranches, et al., CV-F-94-6098 ("the Underlying Actions"). State Farm claims that it has no duty to defend because no potential for coverage exists under the policy. Defendants Gerawan oppose the motion.

II. Background

Plaintiffs are insurers of Defendant Martinez in the Underlying Actions. Martinez is employed as a crew leader by one of the Gerawan Defendants. On July 23, 1993 Martinez was transporting his wife and eight other farm workers to work in a truck insured by State Farm when the truck was hit by an uninsured vehicle that ran a stop sign. The truck was not equipped with seats or safety restraints; as a result, the farm workers were injured. All eight farm workers filed damage actions for bodily injuries against Mr. Martinez and the Gerawan Defendants in Leal et al v. Gerawan Ranches, et al. Mrs. Martinez filed a separate suit for damages against the Gerawan Defendants in Martinez v. Gerawan Ranches, et al. The two actions were consolidated for all purposes by Stipulation and Order filed January 31, 1995.

The underlying actions assert claims under the Migrant and Seasonal Agricultural Workers Protection Act (29 U.S.C. §§ 1801, et seq. "MSAWPA"), as well as on a loss of consortium claim.¹ Plaintiff is providing a defense to the Defendants in the Underlying Actions under a reservation of rights.

State Farm contends there is no potential for coverage under the applicable policy for a MSAWPA violation which requires proof of an intentional violation and that plaintiffs are employees; both elements are said to be excluded under the policy.

The Gerawan Defendants oppose the motion. Martinez did not file a notice of opposition or non-opposition.

III. Jurisdiction

The court has original jurisdiction over this action under 28 U.S.C. § 1332. The action is a civil one between citizens of differing states, and the matter in controversy exceeds $50,000.00.

IV. Summary Judgment

Summary judgment is appropriate only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A genuine issue of fact exists when the non-moving party produces evidence on which a reasonable trier of fact could find in its favor viewing the record as a whole in light of the evidentiary burden the law places on that party. Anderson v. Liberty Lobby, 477 U.S. 242, 252-56, 106 S.Ct. 2505, 2512-14, 91 L.Ed.2d 202 (1986). The non-moving party cannot simply rest on its allegation without any significant probative evidence tending to support the complaint. Id. at 249, 106 S.Ct. at 2510-11.

The more implausible the claim or defense asserted by the opposing party, the more persuasive its evidence must be to avoid summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Nevertheless, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in its favor." Liberty Lobby, 477 U.S. at 255, 106 S.Ct. at 2513. Even where the basic facts are undisputed, if reasonable minds could differ as to the inferences to be drawn from those facts, summary judgment should be denied. Hopkins v. Andaya, 958 F.2d 881, 888 (9th Cir. 1992).

V. Choice of Law

Under the mandate of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), a district court sitting in diversity jurisdiction must interpret and apply the substantive law of the forum state. The district court must apply the same choice of law analysis that would be applied by state courts in the jurisdiction in which the district court is situated. Liew v. Official Receiver & Liquidator, 685 F.2d 1192, 1195 (9th Cir.1982) citing Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). The court applies the choice of law rules of the state of California.

California choice of law rules are founded upon a "governmental interest analysis." Offshore Rental Co. v. Continental Oil Co., 22 Cal.3d 157, 161-165, 148 Cal.Rptr. 867, 583 P.2d 721 (1978). Under the governmental interest analysis, it must first be determined if the laws of the two jurisdictions differ. In this case, the two jurisdictions are Texas, where the insurance policy was issued, and California, where the cause of action arose, and the insured resides.

If the laws of the two jurisdictions differ, it must be determined if both jurisdictions have an interest in having their law applied to the action at hand. If only one jurisdiction has such an interest, there is no true conflict and the court applies the law of that jurisdiction. Liew v. Official Receiver and Liquidator, 685 F.2d at 1196. However, if the two competing states' laws differ and both states have an interest in having their law applied, then the court must apply the "comparative impairment approach" to determine which jurisdiction's interest would be more impaired if its policy were subordinated to the policy of the other state. Clemco Industries v. Commercial Union Ins. Co., 665 F.Supp. 816, 818 (N.D.Cal.1987) citing Liew, 685 F.2d at 1196, n. 6.

In making the required analysis, the "relevant contacts" identified by the Restatement (Second) of Conflicts of Laws are considered. They are: 1) the place of contracting; 2) the place of negotiating; 3) the place of performance; 4) the location of the subject matter of the contract; and 5) the domicile, residence, nationality, place of incorporation and place of business of the parties. Robert McMullan & Son, Inc. v. United States Fidelity and Guaranty Co., 103 Cal.App.3d 198, 204-205, 162 Cal.Rptr. 720 (1980).

A. California And Texas Laws on Interpreting Insurance Policies

The fact that two states are involved does not in itself indicate that there is a conflict of laws problem. There is obviously no problem where the laws of the two states are identical. Hurtado v. Superior Court, 11 Cal.3d 574, 580, 114 Cal.Rptr. 106, 522 P.2d 666 (1974).

California and Texas laws regarding interpretation of insurance contracts appear to be substantially the same. According to Texas case law, insurance policies are controlled by rules of construction which are applicable to contracts generally. Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987). In interpreting a policy, the court construes all parts of the document together, giving effect to the intent of the parties. Travelers Indem. Co. v. Lucas, 678 S.W.2d 732, 734 (Tex. App. — Texarkana, 1984).

Terms used in an insurance contract, like any other contract, are to be given their plain, ordinary and generally accepted meaning unless the policy itself shows them to have been meant in a technical or different sense. Underwriters at Lloyds, London v. Harkins, 427 S.W.2d 659 (Tex.Civ.App. — Houston, 1968.)

California's laws on insurance policy interpretation are similar to those of Texas. Under California's statutory rules of insurance contract interpretation, the written provisions of the insurance policy are to be "interpreted in their ordinary and popular sense," unless "used by the parties in a technical sense or a special meaning is given to them by usage." California Civil Code § 1644. "The words used in an insurance policy are to be interpreted according to the meaning which an insured would reasonably expect. Courts will not adopt a strained or absurd interpretation in order to create an ambiguity where none exists." Reserve Insurance Co. v. Pisciotta, 30 Cal.3d 800, 807, 180 Cal. Rptr. 628, 640 P.2d 764 (1982).

California and Texas law also share a similar interpretation of the term "intentional" as used in the insurance policy context. According to California law, an intentional act subject to an appropriate policy exclusion is one done with a "preconceived design to inflict injury." Clemmer v. Hartford Insurance Co., 22 Cal.3d 865, 887, 151 Cal.Rptr. 285, 587 P.2d 1098 (1978). Under Texas law, to take an event out of coverage based on an "intentional" exclusion an insurer must show an intent to injure or damage. Trinity Universal Insurance Co., v. Cowan, 906 S.W.2d 124 (Tex.App. — Austin 1995).

Plaintiff asserts there is no conflict between Texas law and California law on the specific issues raised by the motion for summary judgment. (Plaintiff's motion, 2:24-26, n. 2.) The two jurisdictions' laws on interpretation of insurance contracts and the terms "intentional" are substantially the same. There is no reason to choose Texas law over California law. The policy will be interpreted under the law of the forum state, California.

VI. Discussion

The Parties' arguments center on the interpretation of the insurance policy language....