Skanska USA Civil West California District Inc. v. National Interstate Insurance Company

Opinion

1 2 3 4 5 6 7 10 11 SKANSKA USA CIVIL WEST Case No.: 20-cv-367-WQH-AHG CALIFORNIA DISTRICT INC., 12 ORDER Plaintiff, 13 v. 14 NATIONAL INTERSTATE 15 INSURANCE COMPANY, 16 Defendant. 17 HAYES, Judge: 18 The matters before the Court are 1) the Motion for Partial Summary Judgment filed 19 by Defendant National Interstate Insurance Company (ECF No. 15); and 2) the Motion to 20 Strike the Declaration of James M. McFaul filed by Plaintiff Skanska USA Civil West 21 California District Inc. (ECF No. 24). 22 I. BACKGROUND 23 On February 27, 2020, Plaintiff Skanska USA Civil West California District Inc. 24 (“Skanska”) filed a Complaint against Defendant National Interstate Insurance Company 25 (“National Interstate”). (ECF No. 1). In the Complaint, Skanska alleges that it is insured 26 under primary and excess insurance policies issued by National Interstate. Skanska alleges 27 that in 2016, it was sued in state court and tendered the defense of the lawsuit to National 28 1 Interstate. Skanska alleges that National Interstate failed to reasonably investigate 2 Skanska’s request for coverage and failed to provide a defense, “causing Skanska to have 3 to pay significant sums attributable to the costs of its defense.” (Id. ¶ 144). Skanska alleges 4 that National Interstate unreasonably and in bad faith agreed to a settlement on behalf of 5 insureds other than Skanska, which exhausted the limits of the National Interstate insurance 6 policies, allowed the action against Skanska to continue, and provided no indemnity to 7 Skanska. Skanska brings claims against National Interstate for 1) declaratory relief; 2) 8 breach of insurance contract; 3) breach of the implied covenant of good faith and fair 9 dealing; 4) assigned claim for equitable indemnity; and 5) assigned claim for equitable 10 contribution. 11 On April 16, 2020, National Interstate filed a Motion to Dismiss. (ECF No. 7). 12 On August 19, 2020, National Interstate filed a Motion for Partial Summary 13 Judgment “on the following issue: that [National Interstate] did not breach the implied 14 covenant of good faith and fair dealing in the primary and excess automobile liability 15 policies it issued to Reeve Trucking Company by agreeing to a $6,000,000 policy limits 16 settlement that included releases of both Reeve Trucking and its driver, but not Skanska.” 17 (ECF No. 15 at 5). National Interstate contends that its acceptance of the settlement demand 18 on behalf of Reeve Trucking Company and its employee, Christopher Collins, was 19 reasonable as a matter of law. 20 On September 3, 2020, the Court issued an Order denying National Interstate’s 21 Motion to Dismiss. (ECF No. 17). 22 On September 4, 2020, Skanska filed an Opposition to the Motion for Partial 23 Summary Judgment. (ECF No. 18). Skanska contends that National Interstate’s Motion for 24 Summary Judgment is premature because no discovery has been conducted, and National 25 Interstate improperly seeks summary judgment on one allegation of the breach of good 26 faith and fair dealing claim. Skanska contends that National Interstate acted in bad faith 27 when it failed to defend Skanska and when it settled the claims against Reeve Trucking 28 Company and Christopher Collins, leaving Skanska exposed to liability. 1 On September 14, 2020, National Interstate filed a Reply in support of the Motion 2 for Partial Summary Judgment.1 (ECF No. 19). 3 On September 17, 2020, National Interstate filed an Answer to the Complaint. (ECF 4 No. 20). 5 On October 27, 2020, Skanska filed a Motion to Strike the Declaration of James M. 6 McFaul. (ECF No. 24). On the same day, National Interstate filed an Opposition to the 7 Motion to Strike. (ECF No. 25). 8 On October 29, 2020, the Court heard oral argument on the Motion for Partial 9 Summary Judgment. (ECF No. 28). 10 On November 4, 2020, Skanska filed a Reply in support of the Motion to Strike. 11 (ECF No. 29). 13 Plaintiff Skanska is a contractor that was involved in a highway reconstruction 14 project near Sorrento Valley, California. In February 2016, Skanska hired Reeve Trucking 15 Company (“Reeve”) to transport several 100-foot I-beams from the construction site to a 16 storage site on State Route 67 in Lakeside, California. 17 In the early morning of February 12, 2016, Peter Chavarin was driving a motorcycle 18 northbound on State Route 67 when he collided with a Reeve tractor-trailer carrying the I- 19 beams, driven by Reeve employee Christopher Collins, as the tractor-trailer was making a 20 left turn from southbound State Route 67 towards the entrance of the storage site. Chavarin 21 sustained severe injuries, including traumatic brain injury, coma, thoracic spine fracture, 22 and other bone fractures. 23 At the time of the accident, Reeve and its employees, including Collins, were insured 24 under two policies issued by Defendant National Interstate covering liability for bodily 25 injury: a primary commercial motor carrier liability insurance policy and an excess policy 26

27 1 National Interstate submitted evidentiary objections to the Declaration of Elizabeth Celniker, which have 28 1 (collectively, the “National Interstate Policies”). “Insureds” under the National Interstate 2 Policies include “[a]nyone liable for the conduct” of Reeve or its employees, “but only to 3 the extent of that liability.” (Primary Policy, Ex. A to Celniker Decl., ECF No. 18-3 at 148). 4 At the time of the accident, Skanska was insured under a commercial general liability 5 policy issued by Zurich American Insurance Company (“Zurich American”). 6 On April 6, 2016, Peter Chavarin and his wife filed a complaint for damages against 7 Skanska, Reeve, Collins, and the owner of the Lakeside storage site in the Superior Court 8 for the State of California County of San Diego, Peter Chavarin, et al. v. Christopher 9 Collins, et al., No. 37-2016-00011241-CU-PA-CTL (the “Chavarin Action”). 10 In response to an April 15, 2016, tender, National Interstate declined to defend or 11 indemnify Skanska in the Chavarin Action. After the Chavarins filed a first and second 12 amended complaint, National Interstate again declined to provide any coverage to Skanska. 13 On May 10, 2017, National Interstate agreed to pay $6,000,000 to settle the 14 Chavarins’ claims against Reeve and Collins. The settlement did not settle or release the 15 Chavarins’ claims against Skanska. 16 After National Interstate received a copy of the Chavarins’ third amended complaint, 17 it agreed to participate in Skanska’s defense. In April 2018, the Chavarins settled the case 18 against Skanska for $2,950,000, which was paid by Zurich American with no contribution 19 from National Interstate. 21 “A party may move for summary judgment, identifying each claim or defense—or 22 the part of each claim or defense—on which summary judgment is sought. The court shall 23 grant summary judgment if the movant shows that there is no genuine dispute as to any 24 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 25 56(a). A material fact is one that is relevant to an element of a claim or defense and whose 26 existence might affect the outcome of the suit. See Matsushita Elec. Indus. Co., Ltd. v. 27 Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The materiality of a fact is determined 28 1 by the substantive law governing the claim or defense. See Anderson v. Liberty Lobby, Inc., 2 477 U.S. 242, 248 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). 3 The moving party has the initial burden of demonstrating that summary judgment is 4 proper. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 153 (1970). Where the party moving 5 for summary judgment bears the burden of proof at trial, the moving party “must come 6 forward with evidence which would entitle it to a directed verdict if the evidence went 7 uncontroverted at trial.” Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992) (citation 8 omitted). If the moving party meets the initial burden, the burden shifts to the opposing 9 party to show that summary judgment is not appropriate. Anderson, 477 U.S. at 256; 10 Celotex, 477 U.S. at 322, 324. The nonmoving party cannot defeat summary judgment 11 merely by demonstrating “that there is some metaphysical doubt as to the material facts.” 12 Matsushita, 475 U.S. at 586; see Anderson, 477 U.S. at 252 (“The mere existence of a 13 scintilla of evidence in support of the [nonmoving party’s] position will be insufficient.”). 14 The nonmoving party must “go beyond the pleadings and by her own affidavits, or by the 15 depositions, answers to interrogatories, and admissions on file, designate specific facts 16 showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324 (citations omitted). 17 The nonmoving party’s evidence is to be believed, and all justifiable inferences are to be 18 drawn in its favor. Anderson, 477 U.S. at 256. 20 National Interstate requests that the Court take judicial notice of documents filed in 21 the Chavarin Action: 1) the original complaint; 2) the notice of settlement of the claims 22 against Reeve and Collins; 3) Skanska’s motion to contest the application for determination 23 of good faith settlement; 4) the order granting the application for determination of good 24 faith settlement; 5) and the third amended complaint. (Def.’s Request for Judicial Notice, 25 ECF No. 15-5). Skanska further requests that the Court take judicial notice of 1) the first 26 amended complaint; 2) the second amended complaint; and 3) the order denying Skanska’s 27 motion for summary judgment; and 4) the memorandum of points and authorities in support 28 of the Chavarins’ motion for leave to file a third amended complaint. (Pl.’s Request for 1 Judicial Notice, ECF No. 18-24). Under Rule 201 of the Federal Rules of Evidence, the 2 court may take judicial notice of “matters of public record.” Lee v. City of Los Angeles, 3 250 F.3d 668, 689 (9th Cir. 2001) (citation omitted). Matters of public record include court 4 filings and pleadings in related litigation. See Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 5 442 F.3d 741, 746 n.6 (9th Cir. 2006). The parties’ requests for judicial notice are granted. 7 Skanska brings a claim against National Interstate for breach of the implied covenant 8 of good faith and fair dealing. Skanska alleges that National Interstate breached the implied 9 covenant of good faith and fair dealing including by failing to reasonably investigate 10 Skanska’s claims under the National Interstate Policies, failing to defend Skanska in the 11 Chavarin Action, and settling the Chavarins’ claims against Reeve and Collins while 12 allowing the action to continue against Skanska. 13 National Interstate moves for summary judgment on the “issue” of whether National 14 Interstate “breach[ed] the implied covenant of good faith and fair dealing in the primary 15 and excess automobile liability policies it issued to Reeve Trucking Company by agreeing 16 to a $6,000,000 policy limits settlement that included releases of both Reeve Trucking and 17 its driver, but not Skanska.” (ECF No. 15 at 5). National Interstate contends that accepting 18 the policy-limits demand to settle the claims against Reeve and Collins was reasonable as 19 a matter of law, and Skanska fails to identify specific facts that further discovery would be 20 expected to reveal to defeat summary judgment. 21 Skanska contends that National Interstate improperly seeks piecemeal adjudication 22 of the claim for breach of the implied covenant of good faith and fair dealing. Skanska 23 contends that it has not had opportunity to conduct discovery to adequately respond to the 24 Motion for Partial Summary Judgment. Skanska contends that it needs discovery on “the 25 nature, timing, and extent of the Chavarins’ claims against Skanska for vicarious liability 26 for the conduct of Reeve and Collins;” “evidence of the Chavarins’ communications and 27 negotiations with [National Interstate] and/or Reeve or Collins, including with respect to 28 the Chavarins’ claims and negotiation of the terms of the Reeve Settlement;” “information 1 explaining the differences between the Chavarins’ counsel’s declaration filed in support of 2 this motion and their letter, at the time of the April 3, 2017 mediation, in which it is stated 3 that, from the inception of the Chavarin action, the Chavarins had asserted that Skanska 4 was vicariously liable for the conduct of Reeve and/or Collins;” “the underwriting intent 5 of the [National Interstate] Policies and the meaning of ‘Each Incident’ in connection with 6 the limit of insurance;” and “the litigation budget or other information about the anticipated 7 fees and costs to defend Reeve and Collins in the Chavarin action from May 10, 2017 8 through trial and appeal.” (ECF No. 18 at 29-30). Skanska contends that the claim for 9 breach of the covenant of good faith and fair dealing requires a determination of 10 reasonableness that cannot be resolved on a motion for summary judgment, and National 11 Interstate acted in bad faith. 12 “Although [Rule 56 of the Federal Rules of Civil Procedure] allows a motion for 13 summary judgment to be filed at the commencement of an action, in many cases the motion 14 will be premature until the nonmovant has had time to file a responsive pleading or other 15 pretrial proceedings have been had.” See Fed. R. Civ. P. 65 Advisory Committee’s Notes 16 (2010 Amendments Subdivision (b)). The court may deny a motion for summary judgment 17 where the non-moving party shows that it has not had time to take discovery and “cannot 18 present facts essential to justify its opposition.” Fed. R. Civ. P. 56(d). 19 Rule 56(a) permits a party asserting a claim to move for summary judgment any time after the expiration of 20 days from the commencement of the action 20 . . . . Where, however, a summary judgment motion is filed so early in the 21 litigation, before a party has had any realistic opportunity to pursue discovery relating to its theory of the case, district courts should grant any Rule 56([d]) 22 motion fairly freely. See Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 846 23 (9th Cir. 2001) (“Although Rule 56([d]) facially gives judges the discretion to disallow discovery when the non-moving party cannot yet submit evidence 24 supporting its opposition, the Supreme Court has restated the rule as requiring, 25 rather than merely permitting, discovery ‘where the non-moving party has not had the opportunity to discover information that is essential to its 26 opposition.’”) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5, 27 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) . . . .

28 1 || Burlington N. Santa Fe. R. Co. v. Assiniboine & Sioux Tribes of Fort Peck Reservation, 2 F.3d 767, 773-74 (9th Cir. 2003) (construing Rule 56(f), now Rule 56(d)). 3 In this case, National Interstate filed the Motion for Partial Summary Judgment on 4 |/one discrete issue of the bad faith claim while the Motion to Dismiss was pending, and 5 || National Interstate seeks pre-discovery, piecemeal litigation of a complex insurance claim. 6 || Skanska’s response to the Motion for Partial Summary Judgment was due before National 7 ||Interstate filed an Answer to the Complaint. Discovery is in the early stages, the parties 8 ||have not submitted a joint discovery plan, and no scheduling order has been issued. In 9 ||/support of the Motion for Partial Summary Judgment, National Interstate relies on 10 || Declarations of the Chavarins’ attorney and National Interstate’s coverage counsel. These 11 ||declarants have not been deposed, and the documents they cite and rely on have not been 12 || subject to discovery. Skanska identifies specific discovery it needs in order to adequately 13 || oppose National Interstate’s Motion for Partial Summary Judgment. The Court concludes 14 || that the Motion for Partial Summary Judgment is premature under Rule 56(d). 15 || VI. CONCLUSION 16 IT IS HEREBY ORDERED that the Motion for Partial Summary Judgment filed by 17 || Defendant National Interstate Insurance Company (ECF No. 15) is denied. 18 IT IS FURTHER ORDERED that the Motion to Strike the Declaration of James M. 19 ||McFaul filed by Plaintiff Skanska USA Civil West California District Inc. (ECF No. 24) 20 denied as moot. 21 22 || Dated: November 17, 2020 BE: te Z. A a 23 Hon, William Q. Hayes United States District Court 25 26 27 28