Reno Contracting, Inc. v. Crum & Forster Specialty Ins. Co.

359 F. Supp. 3d 944
CourtDistrict Court, S.D. California
DecidedFebruary 21, 2019
DocketCase No.: 18-CV-0450 W (JLB)
StatusPublished

This text of 359 F. Supp. 3d 944 (Reno Contracting, Inc. v. Crum & Forster Specialty Ins. Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reno Contracting, Inc. v. Crum & Forster Specialty Ins. Co., 359 F. Supp. 3d 944 (S.D. Cal. 2019).

Opinion

Hon. Thomas J. Whelan, United States District Judge

Pending before the Court is Defendant's motion for partial summary judgment. [Doc. 29.] The Court decides the matter on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons that follow, the Court GRANTS IN PART AND DENIES IN PART Defendant's motion.

I. BACKGROUND

A. The Coyle/Reno Joint Venture

On August 12, 2011, Plaintiff Reno Contracting entered into a joint venture agreement with Coyle Residential, Inc. for the purpose of engaging in a construction project at 3471 North First Street, San Jose, California, and 251 Brandon Street, San Jose, California ("the Riverview Project"). (Joint Statement of Disputed and Undisputed Facts ("JSDUF") [Doc. 41] ¶¶ 1, 3.)

The Coyle/Reno joint venture ("Coyle/Reno") was to serve as the general contractor for the Riverview Project, with Silverline Construction, Inc. ("Silverline") serving as a subcontractor. (JSDUF [Doc. 41] ¶¶ 4-5, 9.) According to Plaintiff, the terms of the joint venture agreement were such that Coyle Residential was responsible for on-site supervision of construction activities of the Riverview Project (including subcontractors), while Reno Contracting handled off-site administrative duties. (JSDUF [Doc. 35] ¶¶ 86-871 .)

*946Coyle/Reno and Silverline entered into a Master Subcontract Agreement ("MSA") that governed their respective rights and obligations as to the Riverview Project. (JSDUF [Doc. 41] ¶ 10.) The MSA specified:

Subcontractor shall not make any changes to the work set forth in the Subcontract Documents, either as additions or deletions, without the written direction of Contractor.

(Id. [Doc. 41] ¶ 12.) It further specified:

Subcontractor shall immediately provide written notification to Contractor if a written direction could result in additional costs or time of performance so that Contractor has sufficient time to take actions to minimize any additional costs or time, and has sufficient time to provide notification to Owner in accordance with the Contract.

(Id. [Doc. 41] ¶ 13.)

On March 19, 2013, Silverline executed a stop payment notice on the Riverview Project. (JSDUF [Doc. 41] ¶¶ 14-15.) This notice asserted that Silverline "ha[d] furnished work, labor, equipment, material, and/or services" for the Riverview Project and that Coyle/Reno owed Silverline $ 3,895,214.00 for these labor and services. (Id. [Doc. 41] ¶ 17.)

Reno Contracting contends that Coyle Residential failed to "competently provide supervision of the construction activities at the Riverview Project[,]" which caused "significant problems on the construction site[.]" (JSDUF [Doc. 41] ¶ 98.) It contends that in June of 2013, "Coyle Residential effectively abandoned the joint venture, leaving Reno Contracting solely responsible for the on-site supervision of the construction activities at the Riverview Project moving forward." (Id. [Doc. 41] ¶ 100.)

Silverline, the subcontractor, asserted in correspondence with the Coyle/Reno joint venture during the months of June and July 2013 that Coyle/Reno was improperly refusing to pay it for "extra work" that it had directed Silverline to do during the course of the project. (JSDUF [Doc. 41] ¶¶ 19-23.) It accused Coyle/Reno of negligence and bad faith with respect to its management of changes to the MSA and its payments to Silverline. (Id. [Doc. 41] ¶ 24.) Silverline demanded mediation of its claims, and it threatened to sue Coyle/Reno if the disputes could not be resolved informally. (Id. [Doc. 41] ¶¶ 25-27.)

B. The Insurance Policies at Issue

There are two insurance policies at issue in this case.

The first was a policy issued by Crum & Forster to the Coyle/Reno joint venture, covering the policy period June 8, 2012 to June 8, 2014 ("the Coyle/Reno Policy"). (JSDUF [Doc. 41] ¶ 50.) This policy provided general commercial liability coverage with a general aggregate limit of $ 1,000,000, Errors and Omissions coverage with a $ 1,000,000 per-claim limit, and a per-claim liability deductible of $ 10,000. (Id. [Doc. 41] ¶ 51.) This was a "burning limits" policy-defense costs reduced the policy limits. (See id. [Doc. 41] ¶ 53.) This policy provided that the joint venture's members were also insured, "but only with respect to the conduct of [Coyle/Reno's] business." (Id. [Doc. 41] ¶ 54.)

The second policy was issued by Crum & Forster to Reno Contracting, covering the policy period August 1, 2013 to August 1, 2014 ("the Reno Contracting Policy").2

*947(JSDUF [Doc. 41] ¶ 66.) This policy had general aggregate and per-claim limits of $ 5,000,000. (Id. [Doc. 41] ¶ 66.) It required that claims be made and reported during the policy period. (Id. [Doc. 41] ¶¶ 69, 71.) As relevant here, it covered "damages" resulting from "wrongful act[s]." (Id. [Doc. 41] ¶ 70.) "Damages were defined as follows:

"Damages" means the monetary amount of any judgment, award or settlement that an insured becomes legally obligated to pay as a result of a "claim" or "suit." "Damages" does not include "cleanup costs," equitable or nonpecuniary relief, disgorgement of profits, sanctions, fines or penalties.

(Id. [Doc. 41] ¶ 76.) "Wrongful act" was defined as follows:

"Wrongful act" means an act, error or omission in the rendering or failure to render "professional services" by any insured covered under the Insuring Agreement of the Errors and Omissions Liability Coverage Part[.]

(Id. [Doc. 41] ¶ 77.)

The policy required Reno Contracting to "see to it that [Crum & Forster was] notified, in writing, as soon as practicable of an 'occurrence', offense, 'wrongful act' or 'pollution condition' which may result in a 'claim' or 'suit' against any insured."

(JSDUF [Doc. 41] ¶ 74.)

This policy explicitly stated:

No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations.

(Policy No. PKC-100538 [Doc. 29-5, Exh. 4] 6.) The Coyle/Reno joint venture was not a named insured on this policy. (JSDUF [Doc. 41] ¶ 78.)

C. The Underlying Litigation

On September 16, 2013, the Coyle/Reno joint venture filed suit against Silverline in San Diego Superior Court, alleging, inter alia , breach of the MSA. (JSDUF [Doc. 41] ¶ 28.) Silverline filed a cross-complaint against Coyle/Reno, alleging that the joint venture had failed to pay for services rendered pursuant to the MSA. (Id. [Doc. 41] ¶ 30.) Silverline alleged that Coyle/Reno had modified the construction plans for the Riverview Project by directing Silverline to perform extra work without confirming the changes in writing, as the MSA would require. (Id.

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Bluebook (online)
359 F. Supp. 3d 944, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reno-contracting-inc-v-crum-forster-specialty-ins-co-casd-2019.