Toll Ca, L.P. v. Am. Safety Indem. Co., Case No.: 16-cv-1523-BTM-AGS

Decision Date16 June 2017
Docket NumberCase No.: 16-cv-1523-BTM-AGS
PartiesTOLL CA, L.P., a California limited partnership; TOLL CA GP CORP., a California corporation; TOLL BROS., INC., a Delaware corporation; TOLL BROTHERS, INC., a Delaware corporation, Plaintiff, v. AMERICAN SAFETY INDEMNITY COMPANY, an Oklahoma corporation; AMERICAN SAFETY RISK RETENTION GROUP, INC., a Vermont corporation, Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)


Plaintiffs Toll CA, L.P., a California limited partnership, Toll CA GP Corp., a California corporation, Toll Bros., Inc. ("Toll Bros."), a Delaware corporation, and Toll Brothers, Inc. ("Toll Brothers"), a Delaware corporation (collectively, "Plaintiffs"), have filed a motion for leave to amend their complaint and remand this action to state court. For the reasons discussed below, the motion will be denied.


This insurance bad faith case was originally filed May 11, 2016, in the Superior Court of California, County of San Diego against American Safety Indemnity Company ("ASIC"), an Oklahoma corporation, and American Safety Risk Retention Group, Inc. ("ASRRG"), a Vermont corporation (collectively, "Defendants"). Plaintiffs allege Defendants wrongfully denied their tender of defense and indemnification in connection with a construction defect action filed on August 17, 2012 by Yvette and Keith Palmquist in Ventura County Superior Court (the "Palmquist action"). The Palmquists sued Plaintiffs for construction defects in a housing development in Moorpark, California, including defects within the scope of work of one of Plaintiffs' project subcontractors, Ebensteiner Co. LLC ("Ebensteiner"). Pursuant to the requirements of the subcontract, Ebensteiner named Plaintiffs as additional insureds on commercial general liability ("CGL") insurance policies covering Ebensteiner's work at the Project, including two primary CGL insurance policies issued by ASRRG effective between August 1, 1999 and August 1, 2001, and four ASIC primary CGL policies that were effective between August 1, 2001 and August 5, 2005. Plaintiffs tendered their defense and indemnity under the policies to ASRRG and ASIC, but both ASRRG and ASIC denied coverage.

Plaintiffs' complaint states claims against Defendants for breach of written contract (failure to defend), declaratory relief (failure to defend), breach of written contract (failure to indemnify), declaratory relief (failure to indemnify), breach of the implied covenant of good faith and fair dealing, and violation of California Business & Professions Code § 17200. Plaintiffs seek damages, declaratory relief, and injunctive relief, including an injunction requiring ASIC "to review and re-evaluate its No Additional Insured Coverage Company Policy and adopt new, written company policies that are lawful and do not unreasonably deprive [Plaintiffs] coverage they are entitled to receive...." Compl. at 28:9-12.

On June 17, 2016, ASIC filed a notice of removal asserting jurisdiction on the basis of diversity of citizenship. The Court found the diversity allegations in the notice of removal deficient, and on June 27, 2016, issued an order to show cause ("OSC") requiring ASIC to respond by July 18, 2016 and provide information regarding the citizenship of the members of the limited partnership, as well as the principal places of business of the party corporations. ASIC responded on June30, 2016, with the responsive information. (ECF No. 8.) The Court found the diversity requirements satisfied and vacated the OSC. (ECF No. 11.)

On January 6, 2017, Plaintiffs filed the instant motion. Plaintiffs state they discovered in November 2016 that ASIC had entered into a merger agreement with TIG Insurance Company ("TIG"), a California corporation, that took effect midnight June 30, 2016. Pursuant to the merger agreement, TIG is the surviving corporation, and TIG acquired all debts, liabilities, and duties of ASIC. Pls.' Mot. Ex. C (Merger Agreement) at § 2.4. Plaintiffs seek leave to add TIG as a defendant to the claims in their original complaint, and to assert new claims based on ASIC's and TIG's alleged denial of insurance coverage in connection with a second construction defect action currently pending in the Superior Court of California for the County of Contra Costa, Seacliff at Point Richmond Owners Assoc. v. Toll Brothers, Inc., et al., Case No. C14-01267) (the "Seacliff action"). To the extent the Court grants their motion for leave to amend, Plaintiffs also move to remand on the ground that adding TIG as a defendant to this action results in the loss of diversity jurisdiction, since TIG and Plaintiff Toll CA GP Corp. are both California corporations.

TIG has appeared to respond to Plaintiffs' motion. TIG indicates it does not oppose being substituted as a defendant to the claims in Plaintiffs' operative complaint, but it maintains that its post-removal substitution as a defendant does not destroy diversity. However, TIG does oppose amending the complaint to add Plaintiffs' proposed new claims arising out of the Seacliff action.

After Plaintiffs filed this motion, on May 15, 2017, Plaintiffs and ASRRG reached a settlement and jointly moved to dismiss ASRRG from this case. (ECF No. 32.) The Court granted the motion on May 17, 2017. (ECF No. 34.)

A. Plaintiffs' Requests for Judicial Notice

Plaintiffs have filed a request for judicial notice ("RJN"), which is unopposed.The RJN attaches four documents: the operative complaints in the Palmquist and Seacliff actions (Pls.' RJN, Exs. A, B), as well as two orders issued by the trial court in an unrelated insurance coverage action, Pulte Home Corp. v. Amer. Safety Indemn. Co., San Diego Sup. Ct. Case No. 37-2013-00050682-CU-IC-CTL (Pls.' RJN Exs. C, D).

Pursuant to Federal Rule of Evidence 201, a federal court may take judicial notice of matters of public record, including pleadings and decisions from state court proceedings, "if those proceedings have a direct relation to the matters at issue." U.S. ex rel Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992); Doran v. Aus, 308 Fed. Appx. 49, 50 (9th Cir. 2009) (citing Papai v. Harbor Tug & Barge Co., 67 F.3d 203, 207 n. 5 (9th Cir. 1995), rev'd on other grounds, 520 U.S. 548 (1997)). Judicial notice of official records extends only to the "existence of those matters of public record[, the] existence of a motion or of representations having been made therein...." United States v. S. Cal. Edison Co., 300 F. Supp. 2d 964, 974 (E.D. Cal. 2004). The scope of judicial notice does not encompass the veracity of disputed facts and opinions contained in the records. Id.

The Court grants Plaintiffs' RJN as to Exhibits A and B, since they are judicially-noticeable pleadings in the actions underlying Plaintiffs' current and proposed claims. With regard to Exhibits C and D, since TIG does not oppose the RJN, the Court will take judicial notice of the existence of both documents (including the title, author, and date of each order), but not of the truth of disputed findings therein. S. Cal. Edison Co., 300 F. Supp. 2d at 974.1



B. TIG's Requests for Judicial Notice

TIG requests judicial notice of five documents. The first four are unpublished trial court decisions in unrelated lawsuits. TIG appears to rely on the decisions for their precedential value. TIG's RJN Exs. A-D. Plaintiffs object to judicial notice of these documents because they are non-citable trial court opinions in unrelated actions.

It is not necessary for TIG to seek judicial notice of legal opinions relied on for their precedential value. Rule 201 allows for judicial notice of "adjudicative facts," Fed. R. Evid. 201(a), which "are simply the facts of the particular case," Fed. R. Evid. 201, Adv. Comm. Note to Subd. (a), "those to which the law is applied." Id. While it is true that judges "are engaged in 'judicial notice' when they pull a lawbook off the shelves...," 21B Wright and Graham, Fed. Practice and Proc. § 5103.1, at 114 (2d ed. 2005), a formal request is not required to invoke judicial notice of precedential court decisions. The Court thus denies TIG's request for judicial notice of Exhibits A through D as outside the scope of Rule 201, but will nevertheless consider them for the purpose for which they have been offered, namely, as judicial decisions supporting particular propositions of law, although the Court agrees with Plaintiffs that the precedential value of such unpublished trial court decisions is minimal.

The fifth document attached to TIG's RJN is a copy of the online docket of the pending appeal of the Pulte Home matter to the California Court of Appeal, Fourth Appellate District, Division One. TIG's RJN Ex. E. Plaintiffs do not oppose judicial notice of this document. The Court grants TIG's RJN as to Exhibit E.

C. Plaintiffs' Objections to Declaration of Robert Keaster

TIG has submitted a declaration from its counsel, Robert Keaster, who relates his efforts to meet and confer with Plaintiffs' counsel regarding substitution of TIG as a defendant. Plaintiffs object to Keaster's declaration statement that Plaintiffs' counsel "never responded to my ... offer to stipulate to substitute TIGinto the action," Keaster Decl. ¶ 7, as "conclusory, argumentative, self-serving, and lacks sufficient foundation." Pls.' Obj. at 2. The objections lack merit, and they were submitted as a separate document in violation of the Court's Chambers Rules. Hon. Barry Ted Moskowitz Civ. Chambers R. at 2, Objections, (Feb. 24, 2015), ("Any separately filed objections shall be stricken and will not be considered by the Court."). Accordingly, the objections are overruled.


Although Plaintiffs seek leave to amend the complaint to add TIG as a defendant, and to...

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