Great American Assurance Company v. Zurich American Insurance Company

• Court: District Court, N.D. California
• Decided: January 9, 2023
• Docket: 3:21-cv-01135
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 GREAT AMERICAN ASSURANCE 10 COMPANY, Case No. 21-cv-01135-RS

11 Plaintiff, ORDER FOR FURTHER BRIEFING 12 v.

13 ZURICH AMERICAN INSURANCE COMPANY, et al., 14 Defendants. 15 16 The parties’ various cross-motions in this matter were heard in August of 2022. The parties 17 were directed to engage in further efforts to resolve their disputes through mediation, which they 18 did. At a further case management conference in November of 2022, the parties reported that they 19 had been unable to reach a resolution and were unlikely to make further progress absent a court 20 decision on the merits of the pending motions or at a minimum, court “guidance” on evidentiary 21 issues and the scope and extent of the mediation privilege. 22 In Montrose Chem. Corp. v. Superior Ct., 9 Cal. 5th 215, 226 (2020), the California 23 Supreme Court articulated a rule under which, “the insured has access to any excess policy once it 24 has exhausted other directly underlying excess policies with lower attachment points, but an 25 insurer called upon to indemnify the insured’s loss may seek reimbursement from other insurers 26 that issued policies covering relevant policy periods.” Plaintiff Great American Assurance 27 Company contends it has followed the direction of the Montrose court exactly, by paying out 1 bringing this action to seek reimbursement from lower-level insurers who issued policies covering 2 an earlier time period that Great American contends was implicated by the claims against the 3 insured. 4 The Montrose court, however, explained that the issue it was addressing was a “follow-on 5 question” that resulted from prior decisions adopting “an all-sums-with-stacking approach to the 6 coverage of long-tail injuries.” Id. at 228. Great American explicitly contends that the “all-sums- 7 with-stacking” approach does not apply to any of the policies in dispute here, because they all 8 include language deliberately adopted to avoid that result. Great American Motion at p. 21. (“The 9 language of the policies here places coverage for all subsequent damage caused by an occurrence 10 in the policies in force when damage begins.”) Thus, the choice between “vertical stacking” and 11 “horizontal stacking” at the heart of the Montrose decision does not appear to be present here. 12 Great American seems to be contending that the claims for subsidence should have been 13 covered only under the ’07-’08 policy stack, which did not include any policy issued by Great 14 American. In Montrose, in contrast, lower-level insurers were liable for multiple years, such that if 15 those policy limits were aggregated, the higher-level excess insurance policies might not have 16 been triggered. The rights of the excess insurers in Montrose to seek reimbursement from the 17 lower-level insurers would appear to stand on a theoretical basis that is not present here. While 18 Great American argues the lower-level insurers in this case were obligated to pay for multiple 19 occurrences, it is not immediately clear how Montrose might apply under these differing 20 circumstances. 21 Accordingly, within one-week Great American shall file a supplemental brief, not to 22 exceed 12 pages addressing these issues. Defendants may file a joint response not to exceed 12 23 pages, or separate responses, not to exceed 8 pages each, at their election, within one week 24 thereafter. The matter will then be resubmitted for decision. 25 26 27 1 IT IS SO ORDERED. 2 3 Dated: January 9, 2023 4 RICHARD SEEBORG 5 Chief United States District Judge 6 7 8 9 10 11 12

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Z 18 19 20 21 22 23 24 25 26 27 28 CASE No. 21-cv-01135-RS