Interstate Fire & Casualty Company v. First Specialty Insurance Company

• Court: District Court, E.D. California
• Decided: August 31, 2020
• Docket: 2:17-cv-01795
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 INTERSTATE FIRE & CASUALTY No. 2:17-cv-01795-KJM-AC INSURANCE COMPANY, 12 ORDER Plaintiff, 13 v. 14 FIRST SPECIALTY INSURANCE 15 COMPANY et al., 16 Defendants. 17 18 In this insurance coverage dispute, plaintiff Interstate Fire & Casualty Insurance 19 Company (“Interstate”) and defendant First Specialty Insurance Company (“First Specialty”) both 20 move for summary judgment on Interstate’s claims with respect to six of the underlying 21 construction defect cases at issue. For the foregoing reasons, the court GRANTS Interstate’s 22 motion in part and DENIES it in part, and also GRANTS First Specialty’s motion in part and 23 DENIES it in part. 24 I. BACKGROUND 25 This case arises out of 15 underlying construction defect actions in Nevada and 26 California. See First Am. Compl. (“FAC”), ECF No. 19-1. Due to the number of underlying 27 cases and issues, the court bifurcated discovery into two phases. ECF No. 28 at 2. Phase I, 28 relevant here, is limited to six underlying cases involving subcontractors insured by commercial 1 general liability (CGL) policies issued by both plaintiff Interstate Fire & Casualty Insurance 2 Company (“Interstate”) and First Specialty Insurance Company (“First Specialty” or “FS”). Id. 3 The six cases are: (1) Allred v. Ranchwood Homes Corp., Merced County Superior 4 Court, Case No. CVM 019667 (“Allred”); 5 (2) Alstatt v. Centex Homes, District Court of Clark County, 6 Nevada, Case No. A-13-683173-D (“Alstatt”);

7 (3) Baker v. Mello, Merced County Superior Court, California, Case No. CVM014943 (“Baker”); 8 (4) Ceccarelli Living Trust v. Centex Homes, District Court of Clark 9 County, Nevada, Case No. A-15-722350-D (“Ceccarelli”); 10 (5) Paradise Court HOA v. DR Horton, Inc, District Court of Clark 11 County, Nevada, Case No. A-09-590365 (“Paradise Court”); and 12 (6) Wigwam Ranch East Twilight HOA v. DR Horton, District Court 13 of Clark County, Nevada, Case No. A-14-710333-D (“Wigwam 14 Ranch”). 15 See generally Interstate Mot. for Summ. J. (“Interstate MSJ”), ECF No. 40. It is undisputed that 16 the relevant provisions of the insured’s First Specialty CGL policy in the six underlying actions 17 are the same. Specifically, all of the First Specialty CGL policies at issue included the following 18 provisions: 19 1.a. We will pay those sums that the insured becomes legally 20 obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will 21 have the right and duty to defend the insured against any “suit” seeking those damages. 22

23 1.b. This insurance applies to . . . “property damage” only if: . . . . [t]he . . . “property damage” occurs during the policy period[.] 24 25 First Specialty Statement of Undisputed Material Facts (“FSUMF”) 2, ECF No. 43-2. Each First 26 Specialty policy includes the following definitions of “property damage” and “occurrence”: 27 ///// 28 ///// 1 2 17. “Property damage” means:

3 a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at 4 the time of the physical injury that caused it; or

5 b. Loss of use of tangible property that is not physically injured. All 6 such loss of use shall be deemed to occur at the time of the “occurrence” that caused it. 7 8 Interstate Fire Statement of Undisputed Material Facts (“IUMF”) 46, ECF No. 40-2.

9 13. “Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful 10 conditions. 11 12 Id. “Physical injury to tangible property,” a standard definition in the insurance industry, is 13 generally interpreted to cover damage caused “when the insured’s defective materials or work 14 cause injury to property other than the insured’s own work or products,” and not the cost 15 associated with the defective or inferior work itself. F & H Constr. v. ITT Hartford Ins. Co., 16 118 Cal. App. 4th 364, 371–73 (2004) (citing, inter alia, Aetna Cas. & Sur. Co. v. McIbs, Inc., 17 684 F. Supp. 246, 248 (D. Nev. 1988), aff’d sub nom. Aetna Cas. & Sur. Co. v. Arc Materials, 18 878 F.2d 385 (9th Cir. 1989)). 19 The First Specialty policies at issue in the Paradise Court and Wigwam Ranch 20 cases included the following Prior Completed Work Exclusion and Condominium Exclusions: 21 [Prior Completed Work Exclusion:] 22 This insurance does not apply to 23 . . . “Bodily injury,” “property damage,” or “personal and advertising injury” arising out of your work that, 24 a. is completed prior to the date shown in the schedule of this 25 endorsement; or 26 b. is abandoned by the insured prior to the date reflected in the 27 schedule of this endorsement. 28 . . . . 1 [Condominium Exclusion:] 2 This policy does not apply to “property damage”, “bodily injury”, or “personal and advertising injury” arising out of, or related in any way 3 to “your work” or “your product” within the “products-completed operation hazard” when “your work” or “your product” are part of or 4 incorporated into the following: 5 a. a condominium or condominium project; or 6 b. a townhouse or townhouse project. 7 This endorsement does not apply if “your work” occurs or “your 8 project” is supplied or incorporated after such condominium or townhouse was certified for occupancy, except if “your work” or 9 “your product” is performed or installed after the certificate of occupancy is effective in order to repair or replace “your work” or 10 “your product” that was completed or incorporated prior to the 11 effective date of the certificate of occupancy. 12 IUMF 47. 13 Though the parties pointed to other provisions of the First Specialty policies at 14 hearing, the court only addresses those that were raised in the parties’ briefing.1 15 As to each of the six underlying actions, Interstate Fire moves for summary 16 judgment on its declaratory relief claims that (1) First Specialty owed a duty to defend the insured 17 and/or2 (2) First Specialty owed the insured a duty to indemnify the insured. Interstate further 18 claims First Specialty is liable for equitable contribution for the amount Interstate paid for 19 defense costs and indemnification upon settlement in each of the underlying cases. See Interstate 20 MSJ at 2. First Specialty opposes, FS Opp’n, ECF No. 46, and Interstate filed a reply, Interstate 21 Reply, ECF No. 51. First Specialty also moves for summary judgment on Interstate’s duty to 22 defend and duty to indemnify declaratory relief claims in the six underlying actions. First 23 ///// 24 25 1 To the extent any party raised contract provisions as relevant for the first time at hearing, the parties did not fully develop these arguments and the court does not analyze them here. 26 27 2 As to Allred and Ceccarelli, Interstate only claims First Specialty had a duty to indemnify, and as to Baker, Interstate only claims First Specialty had a duty to defend. See 28 generally Interstate MSJ. 1 Specialty Mot. for Summ. J. (“FS MSJ”), ECF No. 43. Interstate Fire opposes, Interstate Opp’n, 2 ECF No. 47, and First Specialty filed a reply, FS Reply, ECF No. 50. 3 The court heard oral argument on both motions on July 17, 2019, and resolves 4 them here. 5 II. INTERSTATE’S REQUEST FOR JUDICIAL NOTICE 6 In conjunction with its motion for summary judgment, Interstate also filed a 7 request for judicial notice of the following documents filed in the underlying cases: the complaint 8 filed in Allred, Req. for Judicial Not., ECF No. 42, Ex. 1; the amended complaint and amended 9 third-party complaint filed in Alstatt, id., Exs. 2–3; the first amended complaint and cross- 10 complaint filed in Baker, id., Exs. 4–5; the complaint and Centex Homes’ answer to the first 11 amended complaint and third-party complaint, filed in Ceccarelli, id., Exs. 6–7; the complaint 12 and third-party complaint filed in Paradise Court, id., Ex. 8–9; and the complaint and D.R. 13 Horton’s answer to the complaint and third-party complaint filed in Wigwam Ranch, id. Exs. 10– 14 11. First Specialty does not oppose this request. Each document covered by Interstate’s request 15 is a court document and a matter of public record subject to ready determination of its accuracy. 16 See Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). 17 Accordingly, the request for judicial notice is GRANTED, with the limitation that the judicially 18 noticed fact in each instance is the existence of a document, not the truth of the matters asserted in 19 the documents. See Rowland v. Paris Las Vegas, No. 3:13–CV–02630, 2014 WL 769393, at *3 20 (S.D. Cal. Feb. 25, 2014). 21 III. LEGAL STANDARD 22 A court will grant summary judgment “if . . . there is no genuine dispute as to any 23 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 24 The “threshold inquiry” is whether “there are any genuine factual issues that properly can be 25 resolved only by a finder of fact because they may reasonably be resolved in favor of either 26 party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). 27 As a general matter, the moving party bears the initial burden of showing the 28 district court “that there is an absence of evidence to support the nonmoving party’s case.” 1 Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The burden then shifts to the nonmoving 2 party, which “must establish that there is a genuine issue of material fact . . . .” Matsushita Elec. 3 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585 (1986). In carrying their burdens, both 4 parties must “cit[e] to particular parts of materials in the record . . . ; or show[] that the materials 5 cited do not establish the absence or presence of a genuine dispute, or that an adverse party 6 cannot produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1); see also 7 Matsushita, 475 U.S. at 586 (“[The nonmoving party] must do more than simply show that there 8 is some metaphysical doubt as to the material facts.”). Moreover, “the requirement is that there 9 be no genuine issue of material fact . . . . Only disputes over facts that might affect the outcome 10 of the suit under the governing law will properly preclude the entry of summary judgment.” 11 Anderson, 477 U.S. at 247–48 (emphasis in original). 12 In deciding a motion for summary judgment, the court draws all inferences and 13 views all evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 14 587–88; Whitman v. Mineta, 541 F.3d 929, 931 (9th Cir. 2008). “Where the record taken as a 15 whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine 16 issue for trial.’” Matsushita, 475 U.S. at 587 (quoting First Nat’l Bank of Arizona v. Cities Serv. 17 Co., 391 U.S. 253, 289 (1968)). Where a genuine dispute exists, the court draws inferences in the 18 plaintiff’s favor. Tolan v. Cotton, 572 U.S. 650, 660 (2014). 19 The Supreme Court has taken care to note that district courts should act “with 20 caution in granting summary judgment,” and have authority to “deny summary judgment in a case 21 where there is reason to believe that the better course would be to proceed to a full trial.” 22 Anderson, 477 U.S. at 255. A trial may be necessary “if the judge has doubt as to the wisdom of 23 terminating the case before trial.” Gen. Signal Corp. v. MCI Telecomm. Corp., 66 F.3d 1500, 24 1507 (9th Cir. 1995) (quoting Black v. J.I. Case Co., 22 F.3d 568, 572 (5th Cir. 1994)). This may 25 be the case “even in the absence of a factual dispute.” Rheumatology Diagnostics Lab., Inc v. 26 Aetna, Inc., No. 12-05847, 2015 WL 3826713, at *4 (N.D. Cal. June 19, 2015) (quoting Black, 22 27 F.3d at 572); accord Lind v. United Parcel Serv., Inc., 254 F.3d 1281, 1285 (11th Cir. 2001). 28 ///// 1 IV. ANALYSIS 2 A. Declaratory Relief Claims 3 Interstate claims First Specialty had both a duty to defend and/or a duty to 4 indemnify their mutual insureds in the underlying cases. Because these are two separate duties 5 with different legal requirements, see Century Sur. Co. v. Andrew, 134 Nev. 819, 823 (2018), the 6 court addresses the claims regarding First Specialty’s duty to defend first, followed by the claims 7 regarding its duty to indemnify. 8 1. Duty to Defend 9 a. Applicable Law 10 As to the duty to defend claims, the parties agree, as confirmed at hearing, that the 11 court should apply the substantive law of the state in which each of the underlying cases occurred. 12 See Vacation Village, Inc. v. Clark County, Nev., 497 F.3d 902, 913 (9th Cir. 2007) (citing Hanna 13 v. Plumer, 380 U.S. 460, 465 (1965)). Accordingly, the court need not engage in a choice of law 14 determination as to the Nevada cases. In re DirecTV Early Cancellation Litig., 738 F. Supp. 2d 15 1062, 1080 (C.D. Cal. 2010) (“Because the parties agree that the home state’s laws should be 16 applied to those Plaintiffs who filed in states other than California, the Court need not make a 17 choice of law determination as to those plaintiffs.”). To the extent there is any difference in the 18 states’ laws regarding the duty to defend, the court will apply Nevada law to the three duty-to- 19 defend claims arising out of Nevada cases (Alstatt, Paradise Court, and Wigwam), and California 20 law to the one claim arising out of a California case (Baker). 21 Under both California and Nevada law, “[a]n insurer must defend its insured 22 against claims that create a potential for indemnity under the policy.” Scottsdale Ins. Co. v. MV 23 Transportation, 36 Cal. 4th 643, 654 (2005) (citations omitted) (emphasis in original); see also 24 United Nat’l Ins. Co. v. Frontier Ins. Co., 120 Nev. 678, 687 (2004) (“[A]n insurer . . . bears a 25 duty to defend its insured whenever it ascertains facts which give rise to the potential of liability 26 under the policy.” (quoting Gray v. Zurich Insurance Company, 65 Cal. 2d 263 (1966))). In both 27 jurisdictions, the determination of whether the insurer owes a duty to defend is initially made “by 28 comparing the allegations of the complaint with the terms of the policy.” Montrose Chem. Corp. 1 v. Superior Court, 6 Cal. 4th 287, 295 (1993) (citation omitted); see also United Nat’l Ins. Co., 2 120 Nev. at 687 (same). 3 In California, extrinsic evidence may also be considered to determine whether 4 there is a potential for liability under the policy, and therefore a duty to defend. See MV 5 Transportation, 36 Cal. 4th at 655. In a relatively recent case, Century Surety Co. v. Andrew, 6 134 Nev. 819 (2018), Nevada’s Supreme Court took a different approach from California, and 7 held “as a general rule, facts outside of the complaint cannot justify an insurer’s refusal to defend 8 its insured.” Id. 822 n.4 (citing Restatement of Liability Insurance § 13 cmt. c (Am. Law Inst., 9 Proposed Final Draft No. 2, 2018) (“The general rule is that insurers may not use facts outside the 10 complaint as the basis for refusing to defend . . . .”)3). Thus, California allows consideration of 11 extrinsic evidence in determining duty to defend, whereas Nevada generally does not. 12 b. Nevada Cases 13 i. Nevada’s Four Corners Rule 14 Interstate argues that the court should not consider First Specialty’s evidence 15 regarding its duty to defend in the underlying Nevada cases, because Century Surety Co. v. 16 Andrew announced a clear rule limiting the analysis to the “four corners” of the complaint and the 17 ///// 18 /////

19 3 The current edition of the Restatement, updated in 2019, adopts this language: 20 The general rule is that insurers may not use facts outside the complaint as the basis for refusing to defend, with the result that even 21 an insurer with a strong factual basis for contesting coverage must defend under a reservation of rights and then file a declaratory- 22 judgment action to terminate the duty to defend. Only in a declaratory-judgment action filed while the insurer is defending, or 23 in a coverage action that takes place after the insurer has fulfilled the duty to defend, may the insurer use facts outside the complaint as the 24 basis for avoiding coverage. 25 Restatement of the Law of Liability Insurance § 13 cmt. c (2019). The updated Restatement also 26 acknowledges “it is anticipated that courts will consider additional exceptions through a common- law process of reasoning by analogy.” Id. cmt. a. 27

28 1 policy at issue.4 Interstate Mot. at 23; see also United Nat’l Ins. Co. v. Frontier Ins. Co., 2 120 Nev. 678, 681 (Nev. 2004) (“We also conclude that the duty to defend arises when there is a 3 potential for coverage based on the allegations in a complaint.”); but see Maryland Cas. Co. v. 4 Am. Safety Indem. Co., No. 2:10-CV-02001-MMD, 2013 WL 1007707, at *5 (D. Nev. Mar. 12, 5 2013) (without citing to any Nevada precedent, opining that “[u]nder the Nevada standard for 6 duty to defend, Defendant would need to set forth specific facts either indicating that coverage 7 was impossible, or tending to establish that the property damage occurred outside the policy 8 period.”). 9 First, First Specialty urges the court to read into Century Surety’s holding some 10 common exceptions, such as allowing consideration of facts outside the complaint “when they go 11 solely to an issue of coverage that does not overlap with the merits of, or relate to the truth or 12 falsity of any factual allegations in, the action against the insured.” FS MSJ at 9. First Specialty 13 points to several other jurisdictions who have adopted the “four-corners” rule that have also 14 adopted such an exception. Id. (citing Pompa v. Am. Family Mutual Ins. Co. 520 F.3d 1139, 1147 15 (10th Cir. 2008) (applying Colorado law); Julio & Sons Co. v. Travelers Cas. & Sur. Co. 16 591 F. Supp. 2d 651, 658–659 (S.D.N.Y. 2008) (applying Texas law); Blake v. Nationwide Ins. 17 Co. 904 A.2d 1071, 1076 (Vt. 2006); Nationwide Mut. Fire Ins. Co. v. Keen 658 So.2d 1101, 18 1102–03 (Fla. App. 1995)). 19 However, rather than presume the Nevada Supreme Court would create an 20 exception were it given an opportunity, this court is inclined to follow its sister courts in taking 21 the Nevada Court’s holding at face value. See OneBeacon Ins. Co. v. Probuilders Specialty Ins. 22 Co., No. 3:09-CV-36-ECR-RAM, 2009 WL 2407705, at *8 (D. Nev. Aug. 3, 2009) (“Nevada has 23 adopted the ‘complaint rule,’ pursuant to which an insurer that seeks to avoid its duty to defend 24 4 To be clear, the court in Century Surety also clarified that “facts outside the complaint 25 may be used in an action brought by the insurer seeking to terminate its duty to defend its insured in an action whereby the insurer is defending under a reservation of rights.” Century Sur. Co., 26 134 Nev. at 822 n.4 (emphasis added) (citing Restatement of Liability Insurance § 13 cmt. c (Am. 27 Law Inst., Proposed Final Draft No. 2, 2018) (“Only in a declaratory-judgment action filed while the insurer is defending, or in a coverage action that takes place after the insurer fulfilled the duty 28 to defend, may the insurer use facts outside the complaint as the basis for avoiding coverage.”)). 1 its insured may only do so by comparison of the complaint in the underlying litigation to the 2 terms of the policy.” (citing United Nat’l Ins. Co., 120 Nev. at 686)); Beazley Ins. Co. v. Am. 3 Econ. Ins. Co., No. 2:12-CV-01720-JCM, 2013 WL 2245901, at *4 (D. Nev. May 21, 2013); 4 Liberty Ins. Underwriters Inc. v. Scudier, 53 F. Supp. 3d 1308, 1315 (D. Nev. 2013); see also 5 Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 884 n.7 (9th Cir. 2000) (directing, in 6 absence of precedent from the state Supreme Court, the court “must make a reasonable 7 determination of the result the highest state court would reach if it were deciding the case”). 8 Accordingly, the court limits its examination to the four corners of the relevant complaint and the 9 CGL policy in the underlying cases to determine whether First Specialty owed the insured a duty 10 to defend. 11 Second, First Specialty argues the Century Surety decision should not be applied 12 retroactively. FS Reply at 14. “Although not constitutionally mandated, retroactive application 13 of judicial decisions is the rule and not the exception” in civil cases. Coopers & Lybrand v. Sun- 14 Diamond Growers of CA, 912 F.2d 1135, 1138 (9th Cir. 1990) (internal quotation marks omitted) 15 (quoting United States v. Gonzalez–Sandoval, 894 F.2d 1043, 1052 (9th Cir. 1990)). First 16 Specialty has not shown why the court should make an exception to this rule here, arguing only 17 that “it would be inequitable to retroactively apply this ruling,” FS Reply at 14. See Coopers & 18 Lybrand, 912 F.2d at 1138 (listing factors to consider). Moreover, at least one federal district 19 court recognized Nevada as having adopted a “four-corners” or “complaint” rule as early as 2009, 20 many years before Interstate filed this case and before many of the underlying cases were filed. 21 See OneBeacon Ins. Co., 2009 WL 2407705, at *8 (D. Nev. Aug. 3, 2009) (citing United Nat’l 22 Ins. Co., 120 Nev. at 686). Accordingly, the court applies the four corners rule to the underlying 23 Nevada cases. 24 ii. Alstatt 25 In Alstatt, Carl and Terry Alstatt and other homeowners in Clark County, Nevada, 26 sued Centex Homes, alleging property damage related to construction defects caused by 27 contractors hired by Centex Homes. Alstatt Compl., ECF No. 42-2; IUMF 7. Centex Homes 28 filed a cross-complaint for indemnity from the contractors, including Interstate’s and First 1 Specialty’s mutual insured, MS Concrete. Centex Cross Compl., ECF No. 42-3; IUMF 8. 2 Neither dates of work performed nor dates of incidents of damage are alleged in the complaint or 3 cross-complaint. Alstatt Compl., ECF NO. 42-2; Centex Cross Compl., ECF No. 42-3; IUMF 9 4 (disputed). First Specialty declined to defend or indemnify MS Concrete in connection with the 5 Alstatt case based on its conclusion there was no potential for the “property damage” alleged in 6 the complaint to have occurred during First Specialty’s policy period, April 15, 2004 through 7 April 15, 2005, and the Prior Completed Work Exclusion Applied. Nelson Decl., Ex. L (First 8 Specialty Declination Letter), ECF No. 41-12; id. Ex. M (First Specialty Policy), ECF No. 41-13; 9 IUMF 10; FSUMF 64. In so concluding, First Specialty relied on a homeowners’ matrix showing 10 the close of escrow dates for the homes in question occurred roughly three months after the 11 policy’s expiration. Nelson Decl., Ex. L; IUMF No. 11 (disputed). 12 For the court to grant summary judgment on Interstate’s duty to defend claim in 13 Alstatt, Interstate has the burden to show that First Specialty’s policy could have potentially 14 covered MS Concrete’s liability in Alstatt. See Safeco Ins. Co. v. Sup. Ct. (Century Sur. Co.), 15 140 Cal. App. 4th 874, 879 (2006) (“[I]n an action for equitable contribution by a settling insurer 16 against a nonparticipating insurer, the settling insurer has met its burden of proof when it makes a 17 prima facie showing of coverage under the nonparticipating insurer’s policy—the same showing 18 of potential coverage necessary to trigger the nonparticipating insurer’s duty to defend . . . .”). 19 MS Concrete’s two CGL policies issued by First Specialty covered damages from “property 20 damage” caused by an “occurrence” during the policy period. See Nelson Decl., Ex. M at 16. As 21 noted above, “Property damage” is defined as: 22 a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at 23 the time of the physical injury that caused it; or 24 b. Loss of use of tangible property that is not physically injured. All 25 such loss of use shall be deemed to occur at the time of the “occurrence” that caused it. 26 27 ///// 28 1 IUMF 46. An “occurrence” is “an accident, including continuous or repeated exposure to 2 substantially the same general harmful conditions.” Id. Also as noted above, the policies also 3 contained the following Prior Completed Work Exclusion:

4 This insurance does not apply to 5 . . . “Bodily injury,” “property damage,” or “personal and advertising 6 injury” airing out of your work that,

7 a. is completed prior to the date shown in the schedule of this endorsement; or 8

9 b. is abandoned by the insured prior to the date reflected in the schedule of this endorsement. 10 11 IUMF 47. The first of MS Concrete’s policies covered the time period April 15, 2004 to 12 April 15, 2005, and the second covered April 15, 2008 to April 15, 2009. FSUMF 47–48. 13 The third-party complaint filed against MS Concrete and others alleges, “While 14 working at the site, Third-Party Defendants, . . . caused damages to Plaintiffs as alleged in 15 Plaintiff’s Amended Complaint.,” and “Plaintiffs’ Amended Complaint alleges that defects exist 16 which relate to each of the Third-Party Defendants’ respective scopes of work at the Subject 17 Properties.” Centex Cross Compl., ECF No. 42-3, at 10. The Alstatt plaintiffs’ amended 18 complaint against Centex Homes alleges construction defects caused by Centex and its 19 subcontractors, and “damages, including new damages, are occurring, continuing to occur, 20 ongoing progressive and worsening as time continues to pass.” Alstatt Compl., ECF No. 42-2, at 21 17. 22 Interstate argues the complaint in Alstatt created the potential that MS Concrete 23 would be liable for damages, and that liability would be covered by First Specialty’s CGL policy. 24 First Specialty’s position is that the homes at issue in the underlying case “were completed during 25 the three-year gap between the two First Specialty policy periods,” so none of the alleged 26 “property damage” could have occurred during the first policy period, and the Prior Completed 27 Work Exclusion precluded coverage under the later policy. FS MSJ at 7. Because Nevada 28 follows the four-corners rule, First Specialty’s duty to defend is determined only by looking at the 1 complaint and First Specialty’s policy. See Century Surety Co., 134 Nev. at 822 n.4. As 2 explained above, neither the homeowners’ complaint nor Centex’s cross-complaint provides 3 specific dates on which the damage allegedly occurred, so First Specialty’s argument is 4 unavailing. See Alstatt Compl., ECF No. 42-25; Centex Cross-Compl., ECF No. 42-3; IUMF 8–9 5 (disputed). The complaint and cross-complaint create the potential for a covered claim under one 6 of First Specialty’s policies, because, together, they allege that property damage occurred as a 7 result of MS Concrete’s work on the development at issue. Therefore, First Specialty had the 8 duty to defend MS Concrete in the Alstatt action under at least one of its policies. See Assurance 9 Co. of Am. v. Ironshore Specialty Ins. Co., No. 2:13-CV-2191-GMN-CWH, 2015 WL 4579983, 10 at *7 (D. Nev. July 29, 2015) (finding duty to indemnify where complaint lacked “specific 11 reference to when the alleged property damage arose”). 12 Furthermore, even if MS Concrete’s work had concluded during the three-year gap 13 between policies, this would not rule out the possibility that the “occurrence” of “property 14 damage” took place before the first policy concluded in April 2005 but was only discovered after 15 the policy expired. As the District Court of Nevada explained when applying Nevada law to a 16 nearly identical policy, “the date on which a homeowner discovers the damage does not 17 necessarily correlate with the date on which the damage occurred. Under [the policy], the duty to 18 defend is triggered by the occurrence of property damage, not the discovery of property damage.” 19 Nat’l Fire & Marine Ins. Co. v. Redland Ins. Co., No. 3:13-CV-00144-LRH, 2014 WL 3845153, 20 at *5 (D. Nev. Aug. 5, 2014). Furthermore, the fact that the plaintiffs in the underlying action did 21 not own the homes in question until after the first policy expired does not necessarily mean the 22 insured subcontractor could not be liable to the homeowners for work that caused damage during 23 the policy period. See McMillin Mgmt. Servs., L.P. v. Fin. Pac. Ins. Co., 17 Cal. App. 5th 187, 24 192 (Ct. App. 2017). In other words, even if the court considered them, the close of escrow dates 25 First Specialty relies on are not dispositive of First Specialty’s duty to defend. 26

27 5 Plaintiffs state they initially became aware of certain defects “within the last year,” and the complaint was filed in 2014.” Alstatt Compl., ECF No. 42-2, at 18. However, the date of 28 discovery is not dispositive in determining coverage, as explained above. 1 First Specialty’s motion for summary judgment on Interstate’s declaratory relief 2 claim is DENIED as to First Specialty’s duty to defend in Alstatt. Interstate’s motion for 3 summary judgment of the same is GRANTED. 4 iii. Wigwam Ranch 5 In Wigwam Ranch, the Wigwam Ranch East Twilight Home-Owners Association 6 served on the developer, D.R. Horton, a Chapter 40 Notice of Construction Defect,6 and later a 7 formal complaint in Clark County District Court of Nevada, alleging “property damage” arising 8 from construction defects. Nelson Decl., Ex. NN (Chapter 40 Notice), ECF No. 41-40; Wigwam 9 Ranch Compl. ¶¶ 32–39 (alleging “latent deficiencies” caused by developers due to, inter alia, 10 faulty repairs), ECF No. 42-10; see also D.R. Horton Cross Compl., ECF No. 42-11. D.R. 11 Horton then provided notice of the claim to the relevant contractors, including Sunstate, an 12 Interstate and First Specialty mutual insured, which performed landscaping and flat work. Nelson 13 Decl., Ex. OO (Notice to Sunstate), ECF No. 41-41; IUMF 38. Again, the complaint and the 14 cross-complaint did not include precise dates of work or incidents of damage. Wigwam Ranch 15 Compl., ECF No. 42-10, at 12 (“Within the past five years, Plaintiff discovered that the 16 Community was experiencing defective conditions . . . .”);7 D.R. Horton Cross Compl., ECF No. 17 42-11; IUMF 39 (disputed). 18 First Specialty declined to defend or indemnify D.R. Horton, citing, among other 19 things, the Prior Completed Work Exclusion, on the basis that all work was completed before the 20 commencement of either of D.R. Horton’s two year-long First Specialty policies, covering July 21 20, 2008, through July 20, 2010 continuously. Nelson Decl., Ex. RR (Wigwam Ranch First 22 Specialty Declination Letter), ECF No. 41-44; id. Ex. II (First Specialty Policy), ECF No. 41-35;

23 6 A “Chapter 40 Notice” is a notice of construction defects created by Nevada Revised 24 Statutes § 40.649. The statute encourages informal resolution of homeowner complaints regarding construction defects by requiring homeowners to send a Chapter 40 Notice to their 25 contractor(s) before filing a lawsuit, to give the contractors an opportunity to inspect and repair defects. See Cincinnati Ins. Co. v. AMSCO Windows, 921 F. Supp. 2d 1226, 1239 (D. Utah 26 2013), supplemented, No. 2:10-CV-00542-BSJ, 2013 WL 12141330 (D. Utah Sept. 23, 2013).

27 7 Because the complaint was filed in 2014, this range is not dispositive of the coverage 28 issue here, given the dates of the policy. 1 IUMF 40–41 (disputed). In so concluding, First Specialty relied on communications with 2 Sunstate’s counsel, retained by Interstate. FSUMF 44–46. 3 Here, as in Alstatt, the complaint and cross-complaint together allege “property 4 damage” caused by D.R. Horton’s work on the homeowner-plaintiffs’ properties. See Wigwam 5 Ranch Compl., ECF No. 42-10; D.R. Horton Cross-Compl., ECF No. 42-11. The homeowners’ 6 association’s complaint against D.R. Horton states the plaintiffs are “unaware of when all of the 7 defective conditions alleged first occurred or manifested themselves or caused physical injury to 8 or destruction of tangible property . . . but asserts that the construction deficiencies . . . have 9 developed and occurred over a number of years since substantial completion of the Community, 10 said deficiencies and resulting physical injuries being continuous and progressive.” Wigwam 11 Ranch Compl. ¶ 23, ECF No. 42-11. The complaint also alleges that D.R. Horton made “certain 12 repairs” to the properties “since the original construction of the Community and for a period of 13 several years thereafter.” Id. ¶ 24. D.R. Horton’s cross-complaint alleges Sunstate, among 14 others, performed negligent work, which partly caused the damage at issue in the homeowners’ 15 complaint. D.R. Horton Cross-Compl., ECF No. 42-11, ¶¶ 12–17. First Specialty concedes that 16 “nothing in the pleadings indicated when the project at issue was completed.” FS Opp’n at 20. 17 Based on these facts alone, First Specialty had a duty to defend Sunstate in the Wigwam Ranch 18 case under Nevada law. See Century Surety Co., 134 Nev. at 822 n.4. 19 First Specialty’s motion for summary judgment on Interstate’s duty to defend 20 claim is DENIED as to Wigwam Ranch, and Interstate’s motion for summary judgment is 21 GRANTED as to First Specialty’s duty to defend in Wigwam Ranch. 22 iv. Paradise Court 23 On October 23, 2007, Paradise Court Home-Owners Association filed a Chapter 24 40 Notice of Construction Defect against D.R. Horton, alleging property damage related to 25 construction defects caused by contractors hired by D.R. Horton. Nelson Decl., Ex. DD (Chapter 26 40 Notice), ECF No. 41-30; IUMF 30. The association then filed a formal complaint against D.R. 27 Horton in Nevada state court, with similar allegations. Paradise Court Compl. ¶¶ 3, 11, ECF No. 28 42-8. D.R. Horton filed a third-party complaint for indemnity from various contractors, including 1 the mutual assured of Interstate and First Specialty, Sunstate, which performed landscaping and 2 flatwork. D.R. Horton Compl., ECF No. 42-9; IUMF 31; FSUMF 35. Neither the third-party 3 complaint nor the homeowners’ complaint contained precise dates of work performed or dates of 4 incidents of damage in the text of the pleading itself. See D.R. Horton Compl., ECF No. 42-9; 5 Paradise Court Compl., ECF No. 42-8 (“Within three years past [of 2009], Plaintiff discovered 6 the [development] has been experiencing defective conditions . . . .”); IUMF No. 32 (disputed). 7 However, the homeowners’ complaint attaches a homeowners’ matrix showing the close of 8 escrow dates for the homes in question, Paradise Court Compl., ECF No. 42-8, at 13–36, and a 9 Chapter 40 Notice dated October 2007, id. at 37–45. 10 First Specialty declined to defend or indemnify D.R. Horton in connection with the 11 Paradise Court case, citing the applicable policy’s Condominium or Townhouse Exclusion. 12 Nelson Decl., Ex. HH (Paradise Court First Specialty Declination Letter), ECF No. 41-34. First 13 Specialty based this conclusion on correspondence with Sunstate’s defense counsel, FSUMF 36, 14 38–40, and it appears undisputed that the case involved a townhouse project. See FS MJS, Ex. 15 GG (Barnes Dep.), at 53:8–118 (Interstate’s Rule 30(b)(6) witness testifying that development in 16 Paradise Court was townhouse project). In its briefing, First Specialty also argues the Chapter 40 17 Notice “functions as the complaint” and shows that Sunstate’s work must have been completed 18 by October 2007, the date of the Notice. Because First Specialty’s policy only covers July 20, 19 2008, through July 29, 2010, First Specialty argues, the Prior Completed Work Exclusion applies. 20 See FS Opp’n at 24; FS MSJ at 21. 21 As in Alstatt and Wigwam Ranch, on the face of the homeowners’ complaint and 22 D.R. Horton’s cross-complaint, First Specialty had a duty to defend Sunstate in Paradise Court, 23 because the pleadings alleged property damage caused by Sunstate’s work and did not specify 24 precisely when the work was completed. First Specialty’s argument with respect to the Chapter 25 40 Notice of Defect hinges on the assumption that, “if the Association was initiating a 26 construction defect action in October 2007,” the date of the Notice, “the project was complete by 27

28 8 All citations to deposition testimony refer to the deposition’s internal pagination. 1 then. And if the project was complete by October 2007, Sunstate’s work must have been 2 completed by then as well.” FS MSJ at 21–22. Because the Chapter 40 Notice of Defects is 3 attached to the homeowners’ complaint, and is comparable to a pleading itself,9 First Specialty 4 properly considered it in evaluating whether it had a duty to defend under Nevada law. However, 5 nothing in the Notice of Defect implies that all the homes in the development were necessarily 6 finished at the time of the Notice. The Chapter 40 Notice only includes a “preliminary list of 7 defects,” Paradise Court Compl., ECF No. 42-8, at 38, and the homeowner complaint alleges 8 D.R. Horton “failed to adequately correct [the] property damage and deficiencies thereby 9 resulting in further property damages,” and that the defects were attributable not only to the 10 original defective construction but also to “any repairs of the Association Development,” id. 11 ¶¶ 17–19. D.R. Horton’s third-party complaint attempted to shift that claim to Sunstate and the 12 other subcontractors. See D.R. Horton Compl. ¶ 11, ECF No. 42-9. Therefore, the complaints 13 create the possibility that Sunstate conducted repairs on the properties and caused damages. For 14 these reasons, the court cannot assume at this stage that all of Sunstate’s work was necessarily 15 completed by the time the Chapter 40 Notice issued. 16 Furthermore, because First Specialty’s determination that the Condominium 17 Exclusion applied to the Paradise Court case depended solely on extrinsic evidence of 18 communications with Interstate’s counsel, and was not evident on the face of the complaint, First 19 Specialty’s argument that it did not have a duty to defend based on the Condominium Exclusion 20 is unavailing. That the fact is now undisputed does not change this analysis, especially given that 21 First Specialty has conceded only that the exclusion applies to completed condominium or 22 townhouse projects. FS Opp’n at 19 n. 7. 23 First Specialty makes no argument regarding the homeowners’ matrix attached to 24 the complaint, so the court does not analyze its effect here. 25 ///// 26

27 9 See Restatement of the Law of Liability Insurance § 13 (2019) (“For the purpose of determining whether an insurer must defend, the legal action is deemed to be based on . . . Any 28 allegation contained in the complaint or comparable document stating the legal action . . . .”). 1 Accordingly, First Specialty’s motion for summary judgment on Interstate’s duty 2 to defend claim is DENIED as to Paradise Court, and Interstate’s motion on the same 3 GRANTED. 4 c. California Case, Baker v. Mello 5 Next, the court turns to the only California case for which Interstate claims First 6 Specialty owed a duty to defend, Baker v. Mello.10 In Baker, Eddie and Donna Baker, along with 7 other homeowners, filed suit in Merced County Superior Court of California against Mello Ranch 8 130 LLC and Syncon Homes, alleging property damage related to construction defects. Baker 9 Compl., ECF No. 42-4; IUMF 15; FSUMF 14. Syncon Homes and Mello Ranch filed a cross- 10 complaint seeking indemnity from contractors that worked on the homes in question, including 11 the mutual assured of Interstate and First Specialty, Blue Mountain Air, which performed HVAC 12 and sheet metal work. See Syncon Cross Compl., ECF No. 42-5; IUMF 16; FSUMF 16. Neither 13 precise dates of work performed nor precise dates of incidents of damage are alleged in the 14 complaint or cross-complaint. Syncon Cross Compl., ECF No. 42-5; Baker Compl., ECF No. 42- 15 411; IUMF No. 17 (disputed). First Specialty declined to defend or indemnify Blue Mountain Air 16 in the Baker case on the ground there were no allegations of “property damage” related to Blue 17 Mountain Air’s HVAC work, and there was no potential the “property damage” occurred during 18 First Specialty’s policy period, February 15, 2005 through May 25, 2005. Nelson Decl., Ex. U 19 (Baker First Specialty Declination Letter), ECF No. 41-21; id. Ex. V (First Specialty Policy), ECF 20 No. 41-22; IUMF 18; FSUMF 23. In support, First Specialty relied on a homeowners’ matrix 21 showing the close of escrow dates for the homes in question were approximately five months 22 after the policy’s expiration. Nelson Decl., Ex. U (Baker First Specialty Declination Letter); 23 10 For the other California case, Allred, Interstate is only claiming First Specialty owed a 24 duty to indemnify. 25 11 The complaint states: “Within the last ten years, the [defendants] developed . . . the 26 PROPERTY and/or otherwise participated in . . .. the projects where the PROPERTY is located,” 27 and “[a]t the time of purchase by Plaintiffs, the PROPERTY was defective . . .” but “[t]he defects alleged herein . . . were not apparent by reasonable inspection of the PROPERTY at the time of 28 the purchase. The defects thereafter manifested.” Baker Compl., ECF No. 42-4, at 5–7. 1 IUMF No. 19 (disputed). In its motion, First Specialty also offers evidence suggesting Blue 2 Mountain did not order materials for the HVAC work until after First Specialty’s policy expired 3 on May 25, 2005. FSUMF 20 (disputed). 4 Under California law, “[a]n insurer has a duty to defend an insured if it becomes 5 aware of, or if the third-party lawsuit pleads, facts giving rise to the potential for coverage under 6 the insuring agreement.” Food Pro Int’l, Inc. v. Farmers Ins. Exch., 169 Cal. App. 4th 976, 985 7 (2008) (citing Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1, 19, as modified on denial of reh’g, 8 (Cal. 1995)); Montrose Chem. Corp. v. Superior Court, 6 Cal. 4th 287, 295 (Cal. 1993)). It is 9 undisputed that First Specialty was provided with various documents related to Interstate’s claim, 10 including certain job file documents. FSUMF 18. First Specialty offers evidence from the job 11 file documents to show Blue Mountain did not order the HVAC materials in question until after 12 the expiration of First Specialty’s policy on May 25, 2005, implying Blue Mountain’s HVAC 13 work could not have occurred during the covered period. See FS MSJ at 16; FSUMF 20 14 (disputed) (citing FS MSJ, Ex. R (“Job File Docs.”), ECF No. 43-11, at 158–21812). Interstate 15 disputes this fact, citing its own objections to the job file documents. Interstate Opp’n to FSUMF 16 20, ECF No. 47-1, at 5. However, in its objections to evidence, Interstate does not object to 17 Exhibit R, pages 158–218. See Interstate Objs., ECF No. 47-2, at 2 (lodging an objection only to 18 pages 74–79). The exhibit in question is the contract between contractor H&C of Northern 19 California, Inc. and subcontractor Blue Mountain Air, Inc. for the HVAC work in question. 20 Without any explanation supporting Interstate’s objection, the court overrules it and considers 21 Ex. R, pages 158–218, as Blue Mountain’s subcontractor agreement. 22 Though First Specialty claims that accounting records show the materials were not 23 ordered until after May 2005, it does not provide the court with the precise location of that 24 information, and the information is not readily apparent in the sixty-page contract. What is 25 readily apparent is that the effective date of the contract is listed as March 2005, the contract was 26 not signed by the President of H&C Construction until June 1, 2006, after the expiration date of 27 12 These page numbers refer to the document’s internal pagination. All other citations are 28 to the ECF pagination, except where noted. 1 the First Specialty Policy. Job File Docs., ECF No. 43-11, at 158, 179. These conflicting dates 2 are not enough to create a genuine dispute of material fact regarding whether Blue Mountain’s 3 work occurred before the expiration of the policy in May 2005. 4 First Specialty’s second argument is that the complaint against Blue Mountain did 5 not allege “property damage” within the meaning used in the policy, because it only alleged the 6 HVAC systems themselves were defective. See FS MSJ at 16. However, as Interstate counters, 7 the homeowners’ complaint against Mello Ranch 130 alleged the “defects” caused by defendants’ 8 work “have resulted in damage to the homes and their component parts.” Baker Compl. ¶ 45, 9 ECF No. 42-4; see Interstate Opp’n at 13. 10 The fact that Blue Mountain’s contract was effective starting March 2005 and that 11 the complaint and third-party complaint in Baker allege property damage from Blue Mountain’s 12 installation work raises the potential the claims in Baker would be covered under First Specialty’s 13 policy. First Specialty has not met its burden of showing there is no dispute of material fact that 14 the claims are not covered by First Specialty’s policy. Accordingly, First Specialty had a duty to 15 defend Blue Mountain in the Baker suit, and Interstate’s motion for summary judgment on that 16 claim is GRANTED. First Specialty’s motion on the same is DENIED. 17 d. Conclusion 18 For the foregoing reasons, Interstate’s motion for summary judgment of its 19 declaratory relief claims is GRANTED with respect to First Specialty’s duty to defend in Alstatt, 20 Baker, Paradise Court and Wigwam Ranch, and First Specialty’s motion for the same in its favor 21 is DENIED. 22 2. Duty to Indemnify 23 With respect to the law on an insurer’s duty to indemnify, the parties have not 24 identified, nor has the court found, any relevant difference in the law of Nevada and the law of 25 California. An insurer’s duty to indemnify is narrower than the duty to defend, see 26 Schimmelfennig v. State Farm Fire & Cas. Co., 60 F.3d 834 (9th Cir. 1995) (citation omitted), 27 because it only arises if the underlying claims are actually covered by the insurer’s policy, Safeco 28 Ins. Co. of America v. Superior Court, 140 Cal. App. 4th 874, 879–81 (Cal. 2006); see also 1 United Nat’l Ins. Co., 120 Nev. at 686. Furthermore, the duty to indemnify arises “only after 2 damages are fixed in amount (e.g., by a settlement or judgment).” Travelers Indem. Co. of 3 Connecticut v. Walking U. Ranch, LLC, No. 218CV02482 CAS PJW X, 2018 WL 3768421, at *8 4 (C.D. Cal. Aug. 6, 2018) (citing Cal. Practice Guide: Insurance Litigation ¶ 7:501 (The Rutter 5 Group 2015)); see also United Nat’l Ins. Co., 120 Nev. at 686 (“The duty to indemnify arises 6 when an insured becomes legally obligated to pay damages in the underlying action that gives rise 7 to a claim under the policy.” (internal quotation marks and citation omitted)). 8 “When a duty to defend is shown, nonparticipating coinsurers are presumptively 9 liable for both the costs of defense and settlement.” Safeco Ins. Co. of America, 140 Cal. App. 10 4th at 880–81; see also Assurance Co. of Am. v. Ironshore Specialty Ins. Co., No. 2:13-CV-2191- 11 GMN-CWH, 2015 WL 4579983, at *9 (D. Nev. July 29, 2015) (“[I]n cases in which a 12 nonparticipating co-insurer is found to have had a duty to defend in an already settled action, the 13 insurer attempting to disclaim coverage bears the burden of proving the applicability of any 14 policy exclusions.”). “[W]here an insurer refuses to defend its insured against a covered claim, 15 and the insured then settles the underlying action, the settlement ‘becomes presumptive evidence 16 of the [insured’s] liability and the amount thereof, which presumption is subject to being 17 overcome by proof.’” Am. Cas. Co. v. Int’l Creative Mgmt., Inc., No. CV 09-6321 PA (PJWX), 18 2010 WL 11519591, at *4 (C.D. Cal. Sept. 10, 2010) (internal quotations and citations omitted); 19 Assurance Co. of Am., 2015 WL 4579983, at *9 (analyzing insurance dispute over Nevada 20 construction defect claims and noting “[i]f an insurer wrongfully denies coverage or refuses to 21 provide a defense, the insured is free to negotiate a settlement with the plaintiff, and that 22 settlement creates an evidentiary presumption of liability and damages for purposes of a 23 subsequent suit against the insurer” (quoting Tilden–Coil Constructors, Inc. v. Landmark Am. Ins. 24 Co., 721 F. Supp. 2d 1007, 1013 (W.D. Wash. 2010))). 25 Therefore, once Interstate has met its burden to show First Specialty’s duty to 26 defend, “it has met its burden of proof—and the alleged absence of actual coverage under the 27 nonparticipating coinsurer’s policy is a defense which [First Specialty] must raise and prove.” 28 Safeco Ins. Co. of America, 140 Cal. App. 4th at 879 (emphasis in original); see also Travelers 1 Prop. Cas. Co. of Am. v. Safeco Ins. Co. of Illinois, 468 F. App’x 689, 691 (9th Cir. 2012) (“[t]he 2 nonparticipating insurer[] bore the ultimate burden of proving the absence of liability coverage 3 under its policies”); Assurance Co. of Am., 2015 WL 4579983, at *9 (applying similar proposition 4 to Nevada case). 5 Interstate claims First Specialty had a duty to indemnify the companies’ mutual 6 insureds in Allred, Alstatt, Ceccarelli, Paradise Court and Wigwam Ranch. As described above, 7 Interstate has met its burden of showing First Specialty had a duty to defend for Alstatt, Paradise 8 Court and Wigwam Ranch, and the court explains below why the burden on duty to defend has 9 been met in Allred and Ceccarelli. For the purpose of Interstate’s motion for summary judgment 10 on the duty to indemnify, the question is whether First Specialty has met its burden to show there 11 is a triable issue of fact regarding whether the claims are actually covered. See Safeco Ins. Co. of 12 America, 140 Cal. App. 4th at 881; Anderson v. Liberty Lobby, Inc., 477 U.S. at 250. For the 13 purpose of First Specialty’s motion for summary judgment, the question is whether First 14 Specialty has shown there is no dispute of material fact that the underlying claims are not covered 15 by its policies. Id. 16 a. Close of Escrow Dates 17 First, the court addresses an issue common to several of the underlying cases. In 18 Allred, Alstatt, Baker and Ceccarelli, First Specialty relies on close of escrow dates, reflected in 19 homeowner’s matrices, to show the “property damage” or work performed occurred outside the 20 policies’ coverage periods. FSUMF 5 (citing FS MSJ., Ex. N (Allred Homeowner Matrix), ECF 21 No. 43-10; FSUMF 64 (citing FS MSJ, Ex. L, ECF No. 43-9, at 114–12813 (Alstatt declination 22 letter citing close of escrow dates from homeowner matrix)); FSUMF 22 (citing FS MSJ, Ex. R, 23 ECF No. 43-11, at 77–7914 (Baker Homeowner Matrix)); FSUMF 53–56 (citing FS MSJ, Ex. CC 24 (Ceccarelli Homeowner’s Matrix), ECF No. 43-12, at 178–80). 25 Interstate argues the homeowner’s matrices are not admissible, based on the Best 26 Evidence rule, hearsay, and because they lack foundation. Interstate’s Objs. to Evidence, ECF

27 13 Citation is to internal pagination. 28 14 Citation is to internal pagination. 1 No. 47-2 (objecting to, among others, FS MSJ Exs. N and CC). On summary judgment, a court 2 may only consider evidence that would be “admissible at trial.” Fraser v. Goodale, 342 F.3d 3 1032, 1036 (9th Cir. 2003). But the evidentiary standard for admission at the summary judgment 4 stage is lenient: A court may evaluate evidence in an inadmissible form if the evidentiary 5 objections could be cured at trial. See Burch v. Regents of Univ. of California, 433 F. Supp. 2d 6 1110, 1119–20 (E.D. Cal. 2006). In other words, admissibility at trial depends not on the form of 7 the evidence, but on its content. Block v. City of Los Angeles, 253 F.3d 410, 418–19 (9th Cir. 8 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). The party seeking admission 9 of evidence “bears the burden of proof of admissibility.” Pfingston v. Ronan Eng’g Co., 284 F.3d 10 999, 1004 (9th Cir. 2002). If the opposing party objects to the proposed evidence, the party 11 seeking admission must direct the district court to “authenticating documents, deposition 12 testimony bearing on attribution, hearsay exceptions and exemptions, or other evidentiary 13 principles under which the evidence in question could be deemed admissible . . . .” In re Oracle 14 Corp. Sec. Litig., 627 F.3d at 385–86. However, courts are sometimes “much more lenient” with 15 the affidavits and documents of the party opposing summary judgment. Scharf v. U.S. Atty. Gen., 16 597 F.2d 1240, 1243 (9th Cir. 1979). First Specialty argues the exhibits are from First Specialty’s 17 claim files, and are not offered for the truth of the content, but to show what information was 18 provided to First Specialty when it declined coverage. FS Reply at 5–6. Furthermore, it says 19 Interstate provided the documents to First Specialty by Interstate, and therefore they qualify as 20 admissions by Interstate, and so are not barred by the rule against hearsay. Id. With this 21 clarification, Interstate’s objection is OVERRULED, but the court considers the evidence only for 22 the purpose of showing what information First Specialty was provided, which is not dispositive of 23 whether First Specialty actually had a duty to indemnify. 24 Even if the court were to consider their contents, the homeowner’s matrices are not 25 sufficient to raise a genuine issue of material fact as to the timing of “property damage,” because, 26 as a general rule, the “occurrence” of property damage from construction work under CGL 27 policies such as those here “is not the time the wrongful act (such as performing defective work) 28 was committed, but the time the property damage actually resulted[.]” Insurance Coverage of 1 Construction Disputes (ICCDS) § 6:46 (2d ed. 2020) (for CGL policies that cover claims only if 2 the “property damage occurs during the policy period,” the time of performance is irrelevant, 3 unless that performance immediately caused property damage in question). Therefore, the 4 “property damage” could theoretically occur during construction of the home, or after completion 5 of the home but before close of escrow, or even after close of escrow. See Pepperell v. Scottsdale 6 Ins. Co., 62 Cal. App. 4th 1045, 1051–52 (Cal. 1998) (finding, in case involving “standard 7 occurrence-based CGL policy,” and allegations of construction defects and continuing damage 8 caused by defects, “continuous injury” trigger of coverage applied, and effect of accident or 9 occurrence triggers coverage, not timing of accident or date of discovery); Maryland Cas. Co. v. 10 Am. Safety Indem. Co., No. 2:10-CV-02001-MMD, 2013 WL 1007707, at *3 (D. Nev. Mar. 12, 11 2013) (“Under Nevada law, the timing of an ‘occurrence’ in CGL insurance policies has generally 12 been construed as the time of the property’s physical alteration, not the insured’s negligence.”); 13 Garriott Crop Dusting Co. v. Superior Court, 221 Cal App 3d 787 (1990) (finding “occurrence” 14 of property damage unrelated to date third-party complainant purchased relevant property); see 15 also Matsushita, 475 U.S. at 586 (“[The nonmoving party] must do more than simply show that 16 there is some metaphysical doubt as to the material facts.”). The court addresses each case in 17 more detail below. 18 b. Allred 19 Interstate has met its burden of showing the potential for coverage of the Allred 20 claims; First Specialty has not met its burden of showing there is a triable issue of fact regarding 21 whether the claims in Allred are covered by its policies. Because the burden is on First Specialty 22 to show the claims are not covered by the policy of the insured, Charles Wheeler, First 23 Specialty’s motion for summary judgment must be denied, and Interstate’s motion must be 24 granted. The complaint filed in Merced County Superior Court alleged property damage resulting 25 from Ranchwood Homes Corporations’ work on the homes at issue. IUMF 1 (citing Allred 26 Compl., ECF No. 42-1). The cross-complaint and subsequent correspondence with Ranchwood 27 show Ranchwood sued mutual insured Mr. Wheeler for property damage arising out of his 28 fencing work at the development, though dates of the work were not alleged in the complaint or 1 cross-complaint. IUMF 2, 3 (citing Allred Compl., ECF No. 42-115; Nelson Decl., Ex. B 2 (Ranchwood Correspondence to Interstate re: C. Wheeler)) (disputed). 3 In denying its duty to indemnify Wheeler, First Specialty relied on close of escrow 4 dates to show the homes the insured worked on were completed after the policy expired, so the 5 “property damage” could not have occurred during the policy period. FSUMF 1, 6, 9 (disputed). 6 Even if the court considered the close of escrow dates as evidence, they do not create a genuine 7 dispute of material fact as to coverage as explained above. 8 First Specialty’s only other argument is that the insured was responsible only for 9 fencing work, which was not mentioned in the complaint. See FS MSJ at 13. This, too, does not 10 create a material issue of fact, as it is merely pointing out a lack of specificity in the complaint. 11 First Specialty has not offered sufficient evidence to raise a triable issue of fact. 12 Matsushita, 475 U.S. at 586. Interstate has sufficiently shifted the burden on summary judgment 13 to First Specialty and shown First Specialty cannot meet its burden. Therefore, Interstate’s 14 motion for summary judgment on the duty to indemnify in Allred is GRANTED and First 15 Specialty’s motion is DENIED as to the same. 16 c. Alstatt 17 Similarly, Interstate has met its burden of showing the potential for coverage of the 18 Alstatt claims; First Specialty has not met its burden of showing there is a triable issue of fact 19 regarding whether the claims in Alstatt are covered by its policies. Because the burden is on First 20 Specialty to show the claims are not covered by the policy of the insured, Centex Homes, First 21 Specialty’s motion for summary judgment must be denied, and Interstate’s motion must be 22 granted. 23 In Alstatt, First Specialty denied coverage on the basis that the homes at issue were 24 completed during the gap between the two First Specialty policy periods, so none of the “property 25 damage” could have occurred during the first policy period, and the Prior Completed Work

26 15 The complaint states, “At the time of the purchase by Plaintiffs, the PROPERTY was 27 defective . . .” but goes on to explain “consequential damage” and defects that “were not apparent by reasonable inspection of the PROPERTY at the time of the purchase. The defects thereafter 28 manifested.” Allred Compl., ECF No. 42-1 at 8–10. 1 Exclusion precluded coverage in the second policy period. See FS MSJ at 28. Regardless of 2 whether the Prior Completed Work Exclusion may have applied in the second policy, First 3 Specialty has not raised a triable fact regarding whether the claim was covered under the first 4 policy. Again, First Specialty relies only on close-of-escrow dates to show the houses in question 5 were completed after July 2005, and therefore no property damage arising out of MS Concrete’s 6 work could have occurred during the April 15, 2004 to 2005 policy period. Id. For the reasons 7 explained above, the close-of-escrow dates are not enough to raise a triable issue of fact regarding 8 when the property damage occurred, and First Specialty has therefore not met its burden so as to 9 survive summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. at 250. 10 First Specialty also cites “accounting records” that purportedly show MS Concrete 11 completed its work at the homes before September 23, 2005, which is before the second policy 12 went into effect on April 15, 2008. FS MSJ at 28–29 (citing FSUMF 63); see FS MSJ, Ex. L, 13 ECF No. 43-9, at 24–29, 32–3316 (table of contractor payments in Alstatt and table of plaintiff’s 14 preliminary defect issues attributable to subcontractor MS Concrete), 82–11317 (Centex Homes 15 Master Construction Agreement)); FSUMF 64 (citing FS MSJ, Ex. L, ECF No. 43-9, at 114– 16 128)18 (Alstatt First Specialty Declination Letter)). Interstate objects to what appears to be the 17 relevant “accounting records,” Ex. L, ECF No. 43-9, at 24–29, comprising a table of payments 18 apparently made to MS Concrete for work done on the relevant properties. Interstate Objs., ECF 19 No. 47-2, at 3. Interstate argues the chart is inadmissible based on the Best Evidence rule, 20 hearsay and lack of foundation. Id. (citing Fed. R. Evid. 1001, 801). Again, First Specialty 21 responds that the exhibits are from First Specialty’s claim files, and are not offered for the truth of 22 the content, but to show what information was provided to First Specialty when it declined 23 coverage, FS Reply at 5–6, and that the documents are admissions by Interstate so are not barred 24 by the rule against hearsay. Id. With this clarification, Interstate’s objection is OVERRULED, 25 but the court only considers the evidence for the purpose of showing what information First 26 16 Citation is to internal pagination. 27 17 Citation is to internal pagination. 28 18 Citation is to internal pagination. 1 Specialty was provided, which is not dispositive of whether First Specialty actually had a duty to 2 indemnify, as noted above. 3 Without sufficient evidence to meet its burden to show a triable issue of fact 4 regarding coverage First Specialty, and a lack of any evidence to show when the “property 5 damage” at issue occurred, Interstate’s motion for summary judgment is GRANTED as to First 6 Specialty’s duty to indemnify in Alstatt, and First Specialty’s motion is DENIED as to the same. 7 d. Ceccarelli 8 The same reasoning also applies to Ceccarelli. 9 Interstate has met its burden of showing the claims at issue were potentially 10 covered by First Specialty’s policy. The complaint alleges property damage arising from 11 construction defects caused by Centex Homes and its subcontractors. IUMF 23 (citing Ceccarelli 12 Compl., ECF No. 42-6). Centex Homes’ cross-complaint sought indemnity from MS Concrete, 13 presumably for the concrete work it performed at the homes in question. IUMF 24 (citing Centex 14 Homes Cross-Compl., ECF No. 42-7). Precise dates of work and property damage are not alleged 15 in either complaint. IUMF 25 (citing Ceccarelli Compl., ECF No. 42-6;19 Centex Homes Cross- 16 Compl., ECF No. 42-7) (disputed). 17 First Specialty declined to defend or indemnify Interstate’s mutual insured, MS 18 Concrete, on the basis that the homes worked on by MS Concrete closed escrow during the three- 19 year gap between the two First Specialty policies issued to MS Concrete. FSUMF 53–56 (citing 20 FS MSJ, Ex. CC, ECF No. 43-12, at 178 (Ceccarelli Homeowner’s Matrix)) (disputed). 21 Therefore, First Specialty argues, there is no potential the “property damage” occurred during the 22 first of the policies, and the Prior Completed Work Exclusion applied. FS MSJ at 26–27. For the 23 same reasons reviewed above, Interstate objects to the use of Exhibit CC, the homeowners’ 24 matrix, and the court OVERRULES that objection, but considers the exhibit only for the limited 25 purpose suggested by First Specialty. Again, regardless of whether the Prior Completed Work 26

27 19 The complaint alleges, “Plaintiffs have discovered defects and damages within the periods of the applicable statutes of limitations . . . .” Ceccarelli Compl., ECF No. 42-6, at 20. 28 The parties do not argue this precludes coverage. 1 Exclusion applies, the close-of-escrow dates are insufficient to create a triable issue of fact 2 regarding coverage under the first policy. 3 Interstate’s motion for summary judgment is GRANTED regarding First 4 Specialty’s duty to indemnify MS Concrete in Ceccarelli, and First Specialty’s motion on the 5 same issue is DENIED. 6 e. Paradise Court 7 Paradise Court involved a townhouse project in Nevada that resulted in litigation 8 against developer D.R. Horton, who, in turn, sued the parties’ mutual insured, Sunstate for its role 9 as a subcontractor. See FS MSJ at 19 (citing FSUMF 34–35). In Paradise Court, First Specialty 10 raises two different arguments with respect to coverage: (1) the Condominium Exclusion applies 11 to the claim, barring coverage; and (2) the property damage could not have occurred during the 12 policy period. FS MSJ at 20–21. In support of the latter argument, First Specialty cites the 13 relevant Chapter 40 Notice of Construction Defects, claiming that, because the Notice predates 14 the start of the First Specialty policy, Sunstate’s work must have been completed before the start 15 of the policy, and therefore the Prior Completed Work Exclusion applies. FSUMF 34 (citing FS 16 MSJ, Ex. S, ECF No. 43-12, at 18–2020 (Paradise Court Chapter 40 Notice); FS MSJ, Ex. GG, 17 ECF No. 43-13, at 2721 (Barnes Dep. authenticating Ex. 16), 82-8422 (Barnes Dep., Ex. 16 18 (Paradise Court Chapter 40 Notice)). 19 While the date of the Chapter 40 Notice does not conclusively establish that 20 Sunstate’s work was completed before the policy began for the reasons explained in the 21 discussion on duty to defend above, the Notice date does raise a question as to whether coverage 22 is precluded; absent any evidence from Interstate showing otherwise, it tends to show the work 23 was likely completed before then. See Matsushita, 475 U.S. at 586. The result of this analysis 24 differs from the analysis regarding duty to defend, because First Specialty had a duty to defend as 25 long as there was a potential of coverage, whereas the duty to indemnify can be avoided if First 26 20 Citation refers to internal pagination. 27 21 Citation refers to internal pagination. 28 22 Citation refers to internal pagination. 1 Specialty provides sufficient evidence to show the claims are not covered by the policy. See 2 United Nat’l Ins. Co, 120 Nev. at 687–89. 3 First Specialty has raised a genuine dispute of material fact going to coverage, and 4 Interstate’s motion for summary judgment on this issue must be DENIED. 5 In deciding whether to grant First Specialty’s motion for summary judgment on 6 the issue, the court must decide whether, drawing all inferences in Interstate’s favor, no 7 reasonable factfinder could find the claims were covered. See Matsushita, 475 U.S. at 587 8 (“Where the record taken as a whole could not lead a rational trier of fact to find for the non- 9 moving party, there is no ‘genuine issue for trial.’”). 10 On reply, First Specialty cites to the declaration of Chris Prostitis, Prostitis Decl., 11 ECF No. 43-5, who served as a claims administrator for First Specialty, in which he describes and 12 attaches an email he received from D.R. Horton’s counsel that suggests D.R. Horton’s concrete 13 work was performed before June 2007. See Prostitis Decl. ¶ 6; see also FS MSJ, Ex. V, ECF No. 14 43-12 at 78 (email from Sunstate’s defense counsel to First Specialty claim administrator). 15 However, the email actually states: 16 This email is a follow-up to your prior inquiry whether our client, Sunstate Companies, Inc., performed concrete work from September 17 2004 to June 2007 and landscaping work from August 2004 to May 2006 at the subject property. Attached please find relevant 18 subcontract agreements to assist you with your coverage position. 19 Id. The attachments are not included. 20 Interstate objects to the e-mail, arguing “there is no evidence or affidavit reflecting 21 the basis for provision of [the work dates] or its reliability.” Interstate Objs., ECF No. 47-2, at 3. 22 Interstate is correct that, without the underlying documents, there is no way to know whether the 23 dates are reliable, nor even whether Sunstate’s counsel intended to confirm them at all. This 24 objection is sustained. 25 The only remaining evidence is the declaration of Mr. Prostitis stating, “based on 26 my review of the other documents and information provided to First Specialty, it appeared to me 27 that Sunstate performed concrete work at the project from September 2004 to June 2007 and 28 1 landscaping work from August 2004 to May 2006.” Prostitis Decl. ¶ 4, ECF No. 43-5. The 2 earliest of Sunstate’s policies began in 2008. See FSUMF 26. 3 While this evidence is thin, the date of the Chapter 40 Notice and Mr. Prostitis’ 4 declaration support granting summary judgment, and Interstate does not offer any evidence as 5 when the work was performed. Even drawing all inferences in Interstate’s favor, no reasonable 6 jury would find the work was performed any other time. Accordingly, the Prior Completed Work 7 exception applies here, and First Specialty’s motion for summary judgment as to its duty to 8 indemnify in Paradise Court is GRANTED. 9 f. Wigwam Ranch 10 The facts as relevant to Wigwam Ranch are described in detail above. First 11 Specialty also declined to indemnify Sunstate in Wigwam Ranch based on communications from 12 Sunstate’s counsel representing the insured’s work was completed in December 2007, before the 13 policy’s start date, July 2008, triggering the Prior Completed Work Exclusion. FS MSJ at 22–23; 14 FS MSJ, Ex. X, ECF No. 43-12, at 116 (email from Sunstate’s defense counsel to First Specialty 15 claim administrator). The email from Sunstate’s counsel states, “I’ve reviewed the Sunstate job 16 files I have and it appears Sunstate performed work from 2004 to late 2007 (December 2007).” 17 FS MSJ, Ex. X, ECF No. 43-12, at 116. It is unclear whether the documents that follow in the 18 exhibit are the “job files” referenced. See id., Ex. X at 119–149. 19 Interstate objects to the email arguing the statement it contains is hearsay and there 20 is no “evidence or affidavit reflecting the basis for provision of this information or its reliability.” 21 Interstate Objs., ECF No. 47-2, at 3. First Specialty counters that, because Exhibit X is an email 22 from Interstate’s counsel to First Specialty, it is an admission by Interstate, through its counsel. 23 FS Reply at 6 (citing Fed. R. Evid. 801(d)(2)). The parties stipulated that Exhibit X in its entirety 24 was a true and correct copy of documents provided by First Specialty to Interstate pertaining to 25 Wigwam Ranch, and that the document was “genuine and authentic.” FS MSJ, Ex. G, ECF No. 26 43-8, at 42. Interstate’s objection is overruled for the purpose of summary judgment, and the 27 court considers the email as an admission by a party-opponent. See Fed. R. Evid. 801(d)(2); see 28 also Burch, 433 F. Supp. 2d at 1119–20 (court may evaluate evidence in an inadmissible form if 1 the evidentiary objections could be cured at trial); United States v. McKeon, 738 F.2d 26, 30 (2d 2 Cir.1984) (“Statements made by an attorney concerning a matter within his employment may be 3 admissible against the party retaining the attorney[.]” (citation omitted)). This e-mail is the only 4 evidence offered by either side to show when Sunstate’s work was completed; without 5 contradictory evidence or a reason to seriously doubt its authenticity, it is sufficient for First 6 Specialty to overcome the presumption of coverage in this case. See Safeco Ins. Co. of Am. v. 7 Superior Court, 140 Cal. App. 4th at 880 (“When a duty to defend is shown, nonparticipating 8 coinsurers are presumptively liable for both the costs of defense and settlement.”). Even drawing 9 all inferences in Interstate’s favor, on this scant evidentiary record, no reasonable trier of fact 10 could conclude D.R. Horton’s work was performed at any other time. Accordingly, the Prior 11 Completed Work Exception must apply because the policy did not begin until July 20, 2008, 12 FSUMF 46. 13 First Specialty’s motion for summary judgment on the issue is therefore 14 GRANTED and Interstate’s motion is DENIED. 15 g. Conclusion 16 For the foregoing reasons, Interstate’s motion for summary judgment on its 17 declaratory relief claims is GRANTED as to First Specialty’s duty to indemnify in Allred, Alstatt 18 and Ceccarelli and DENIED as to First Specialty’s duty to indemnify in Paradise Court and 19 Wigwam Ranch. First Specialty’s motion for summary judgment on Interstate’s declaratory relief 20 claims is DENIED as to its duty to indemnify in Allred, Alstatt, Ceccarelli and GRANTED as to 21 Paradise Court and Wigwam Ranch. 22 B. Equitable Contribution 23 Interstate’s amended complaint includes claims against First Specialty for 24 equitable indemnity, equitable contribution and equitable subrogation for both indemnity costs 25 and defense expenses paid in the underlying cases. See FAC at 1. However, in its motion for 26 summary judgment, Interstate discusses only equitable contribution; it does not expressly reserve 27 any of its other equitable claims. See Interstate MSJ at 35. Accordingly, the court addresses only 28 Interstate’s arguments regarding its equitable contribution claims. 1 “In the insurance context, the right to contribution arises when several insurers are 2 obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its 3 share of the loss or defended the action without any participation by the others.” Fireman’s Fund 4 Ins. Co. v. Maryland Cas. Co., 65 Cal. App. 4th 1279, 1293 (1998); see also Assurance Co. of 5 Am. v. Nat'l Fire & Marine Ins. Co., 595 F. App’x 670, 672 (9th Cir. 2014) (applying Fireman’s 6 Fund Ins. Co., 65 Cal. App. 4th at 1293, to insurance dispute over underlying Nevada state cases). 7 In a situation like this one, “where multiple insurance carriers insure the same insured and cover 8 the same risk each insurer has independent standing to assert a cause of action against [a] 9 coinsurer[] for equitable contribution when it has undertaken the defense or indemnification of 10 the common insured.” Id. Equitable contribution allows the coinsurer to sue the non- 11 participating insurer for the “excess it paid over its proportionate share of the obligation on the 12 theory that the debt . . . should be shared by them pro rata in proportion to their respective 13 coverage of the risk.” Id. The party seeking contribution bears the burden of “producing the 14 evidence necessary to calculate” what its “fair share” of the costs is and can only recover from a 15 co-insurer an amount that would “result in the first insurer paying less than its ‘fair 16 share.’” Scottsdale Ins. Co., 182 Cal. App. 4th at 1028 (emphasis in original); see also Assurance 17 Co. of Am. v. Nat’l Fire & Marine Ins. Co., No. 2:09-CV-01182-JCM, 2012 WL 2589883, at *3 18 (D. Nev. July 5, 2012) (applying Scottsdale Ins. Co. to insurance dispute involving Nevada state 19 cases), aff’d, 595 F. App’x 670 (9th Cir. 2014). Determining what “fair share” means is in the 20 discretion of the trial court. Scottsdale Ins. Co., 182 Cal. App. 4th at 1028 (“In choosing the 21 appropriate method of allocating defense costs among multiple liability insurance carriers, . . . a 22 trial court must determine which method of allocation will most equitably distribute the 23 obligation among the insurers pro rata . . as a matter of distributive justice and equity.” (internal 24 quotation marks and citations omitted)). 25 1. Effect of Deductible on Equitable Allocation 26 First Specialty argues the allocation of its share of expenses in the underlying 27 cases should be reduced based on the amount of the deductible in the First Specialty policies. 28 First Specialty does not point to any case law in which a court has actually taken a policy’s 1 deductible into account when equitably allocating defense expenses among co-insurers. See FS 2 Opp’n at 22–25 (citing Signal Cos. Inc. v. Harbor Ins. Co., 27 Cal. 3d 359, 369 (1980) (holding 3 “varying equitable considerations” affect the court’s determination of equitable allocation); 4 Montrose Chemical Corp. of Calif. v. Admiral Ins. Co., 10 Cal. 4th 645, 665 (1995) (noting 5 allocating cost of indemnity among co-insurers, “may require allocation of contribution amongst 6 all insurers on the risk in proportion to their respective policies’ liability limits (such as 7 deductibles and ceilings) . . . .”)). Because equitable contribution arises out of the court’s 8 equitable powers, not the insurers’ contracts, the deductible threshold contained in one insurer’s 9 policy is not dispositive of the amount it owes its co-insurer. See Companies, Inc. v. Harbor Ins. 10 Co., 27 Cal.3d 359, 369 (1980). Instead, it is governed by “equitable principles . . . [and] these 11 principles do not stem from agreement between the insurers[,] their application is not controlled 12 by the language of their contracts with the respective policy holders.” Id. Moreover, it is the 13 insurer’s responsibility to collect the deductible from its insured, the beneficiary of the insurance 14 contract. Therefore, it would be inequitable to reduce the amount of the equitable contribution 15 owed to Interstate based on the deductible amount in First Specialty’s policy. The court will not 16 reduce the equitable contribution owed to Interstate on this basis. 17 2. Equitable Contribution for Defense Expenses 18 Interstate seeks reimbursement from First Specialty, under a theory of equitable 19 contribution, in the amount of fifty percent of defense expenses it claims to have paid in Alstatt, 20 Baker, Paradise Court and Wigwam Ranch. See Interstate MSJ at 35. 21 a. Alstatt, Paradise Court and Wigwam Ranch 22 First Specialty argues Interstate has not met its burden of proof to show the proper 23 allocation of defense costs in Alstatt, Paradise Court, and Wigwam Ranch, because, in all three 24 cases, there is evidence to suggest another co-insurer contributed to the insured’s defense. 25 In Alstatt, First Specialty points out that Interstate has admitted another co-insurer, 26 Navigators, paid for a portion of the settlement, but Interstate has not provided evidence 27 regarding whether Navigators contributed to the insured’s defense expenses. See FS Opp’n at 28 31–32; FS Add’l UMF 57, ECF No. 46-2, at 21 (citing FS Opp’n, Ex. III, ECF No. 46-5, at 16, 1 1923 (Barnes testifying Navigators contributed $10,000 to settlement in Alstatt and Interstate 2 contributed $80,000)). 3 4 Similarly, in Paradise Court and Wigwam Ranch, First Specialty argues there is 5 evidence suggesting at least on other insurer, Dallas National Insurance Company, participated in 6 Sunstate’s defense. FS Add’l UMF 56 (citing FS Opp’n, Ex. GGG, ECF No. 46-5, at 82 (Dallas 7 National Insurance Company letter regarding participation in Sunstate Defense); Ex. JJJ, ECF No. 8 46-5, at 137 (letter to Fireman’s Fund Insurance Company from Interstate’s counsel noting Dallas 9 is participating in defense); Ex. III, ECF No. 46-5 (Barnes Dep.),24 at 2–6 (testifying that she 10 cannot recall if Dallas National’s contributed to defense of Sunstate); id. at 22–28 (testifying as to 11 potential Dallas National contributed); id. at 34 (Barnes Dep. Exhibit 22 (Dallas National 12 Insurance Company letter regarding participation in Sunstate defense))). 13 Yet, in all three cases, Interstate asks for fifty percent of the expenses it paid 14 defending the insured in both the actions, without presenting evidence whether Dallas National or 15 any other co-insurer paid a share of the defense costs. Interstate MSJ at 35. Hypothetically, if 16 Dallas National and Interstate contributed equally to the defense, for Interstate to receive fifty 17 percent from the third, non-participating insurer would be inequitable, because First Specialty 18 would owe both Dallas National and Interstate roughly thirty-three percent of each of their costs, 19 not fifty percent. See Scottsdale Ins. Co., 182 Cal. App. 4th at 1033, 10-35–36 (rejecting co- 20 insurer’s argument that “it should receive equitable contribution in the amount of half of the 21 amounts it had paid, regardless of whether any other insurers shared in the defense or indemnity 22 of any of the common insureds”). Similarly, without any evidence of the amounts paid by other 23 possible co-insurers, Interstate has not met its burden to show no genuine dispute of material fact 24 exists regarding the amount First Specialty owes as equitable contribution in Alstatt, Paradise 25 Court and Wigwam Ranch. See id. at 1028. 26 /////

27 23 Citations are to internal pagination. 28 24 Citations are to internal pagination. 1 Summary judgment on Interstate’s equitable contribution claim as to Alstatt, 2 Paradise Court and Wigwam Ranch is DENIED. 3 4 b. Baker 5 As to Baker, First Specialty argues there is not sufficient evidence to show 6 Interstate paid a settlement of $15,000 in Baker, and therefore its calculation of what First 7 Specialty owes, after subtracting the $25,000 deductible Interstate received from the insured, is 8 inaccurate. FS Opp’n at 30–31. Interstate’s only evidence of the settlement is a copy of the 9 global settlement agreement, which does not show precisely how much Interstate paid. See FS 10 Reply at 19; Nelson Decl., Ex. W (Baker Settlement Agreement), ECF No. 41-23. First Specialty 11 offers the deposition of Interstate’s Rule 30(b)(6) witness, Leslie Barnes, who reviewed the 12 relevant litigation record showing “payment history.” Barnes Dep., Ex. 30, ECF No. 43-13 at 153 13 (redacted). Barnes testified that the record “as it’s been reflected doesn’t reflect settlement 14 payments, just expense payments.” FS MSJ, Ex. GG (Barnes Dep.) at 40. This testimony 15 reinforces the absence of evidence supporting Interstate’s claim that it paid a $15,000 settlement 16 in the case. 17 Without more, Interstate has not met its burden of showing there is no genuine 18 dispute of material fact as to First Specialty’s equitable contribution, and summary judgment on 19 this claim is DENIED. 20 3. Equitable Contribution for Settlement Costs 21 Regarding indemnification, Interstate argues that First Specialty’s pro rata share of 22 the settlement costs should be determined by “pooling” occurrence limits of liability 23 and determining each carrier’s proportionate exposure. Interstate MSJ at 25 (citing CNA 24 Casualty of Calif. v. Seaboard Sur. Co 176 Cal. 3d 598, 619–20 (1986)). Interstate argues each 25 Interstate policy and each First Specialty policy has a “per occurrence” limit of $1,000,000, 26 therefore the insurers’ contributions should follow a one-to-one ratio. Id. at 35–36. In Allred, 27 Alstatt and Ceccarelli,, the three underlying cases for which the court has found First Specialty 28 had a duty to indemnify, only one First Specialty policy was implicated and one Interstate policy 1 was implicated, and therefore Interstate requests here fifty percent of the settlement costs it paid 2 in those cases. Id. 3 Interstate has provided evidence to show: (1) it settled the case against insured 4 Charles Wheeler in Allred for $1,500, IUMF 6 (citing Nelson Decl., Ex. G (Settlement 5 Agreement), ECF No. 41-7; Ex. H (proof of payment of $1,500), ECF No. 41-8) (disputed); (2) it 6 settled the case against insured MS Concrete in Alstatt by funding $80,000 of a $90,000 7 settlement payment, IUMF 13 (disputed); Nelson Decl., Ex. O (Allocation Demand), ECF No. 8 41-15; id. Ex. P (Proof of Payment), ECF No. 41-16; and (3) that it settled the case against 9 insured MS Concrete in Ceccarelli for $4,500, IUMF 29 (citing Nelson Decl., Ex. BB (Settlement 10 Demand), ECF No. 41-28; Ex. CC (Proof of Payment and Settlement Agreement), ECF No. 41- 11 29) (disputed). 12 First Specialty objects to all of Interstate’s evidence on the basis that it lacks 13 foundation, because Mr. Nelson, who authenticated the exhibits, “is not qualified to declare that 14 any portion of any claim file is a true and correct copy of what he believes it to be.” FS Evidence 15 Objs., ECF No. 46-1, at 2. Again, the parties stipulated to the authenticity of these documents. 16 Interstate Responses to Objs., ECF No. 51-2, at 2 (citing ECF No. 43-8 at 39). The court 17 overrules First Specialty’s objection, and considers the evidence in its current form, because the 18 evidentiary objections could be cured at trial. Burch, 433 F. Supp. 2d at 1119–20. Otherwise, 19 First Specialty does not make any argument against Interstate’s showing in Allred and Ceccarelli, 20 and the court finds Interstate has met its burden of demonstrating its settlement expenses for 21 purposes of summary judgment. The court finds a fifty-fifty split of those expenses is equitable. 22 Accordingly, Interstate’s motion for summary judgment on the equitable 23 contribution claims as to indemnification in Allred and Cecarrelli is GRANTED. 24 As explained above, Interstate’s claim regarding Alstatt faces the same infirmities 25 as its claims in Paradise Court and Wigwam Ranch, exacerbated by the fact that Interstate has not 26 explained why it was liable for nearly 90 percent of the settlement, while the co-insurer paid the 27 remaining 10 percent. See Scottsdale Ins. Co., 182 Cal. App. 4th at 1033. Without more 28 evidence as to what Interstate’s “fair share” should be, the court cannot conclude First Specialty 1 is required to contribute fifty percent of Interstate’s settlement cost. Interstate’s motion for 2 summary judgment as to its equitable contribution claim in Alstatt is DENIED. 3 4. Conclusion 4 Interstate’s motion for summary judgment of its equitable contribution claims is 5 DENIED as to Alstatt, Baker, Paradise Court and Wigwam Ranch. The motion is GRANTED as 6 to its equitable contribution claims for indemnity payments in Allred and Ceccarelli. 7 V. CONCLUSION 8 For the foregoing reasons, it is hereby ORDERED that: 9 1. Interstate’s motion for summary adjudication is GRANTED as to its claims that 10 First Specialty owed the insured a duty to defend in Alstatt, Baker, Paradise Court and Wigwam 11 Ranch. First Specialty’s motion is DENIED as to the same claims. 12 2. Interstate’s motion for summary adjudication is GRANTED as to its claims that 13 First Specialty owed the insured a duty to indemnify in Allred, Alstatt and Ceccarelli. First 14 Specialty’s motion is DENIED as to the same claims. 15 3. Interstate’s motion is DENIED as to its claims that First Specialty owed the 16 insured a duty to indemnify in Paradise Court and Wigwam Ranch. 17 4. First Specialty’s motion is DENIED as to Interstate’s claim that First Specialty 18 owed the insured a duty to indemnify in Paradise Court. 19 5. First Specialty’s motion is GRANTED as to Interstate’s claim that First Specialty 20 owed the insured a duty to indemnify in Wigwam Ranch. 21 6. Interstate’s motion is GRANTED as to its claims for equitable contribution from 22 First Specialty for Allred and Ceccarelli. Interstate’s motion is DENIED as to its equitable 23 contribution claims for Alstatt, Baker, Paradise Court and Wigwam Ranch. 24 DATED: August 28, 2020. 25 26 27 28