St. Paul Fire and Marine Insurance Company v. Kinsale Insurance Company

Opinion

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 ST PAUL FIRE AND MARINE Case No. 1:20-cv-00967-CDB INSURANCE COMPANY and NEW 9 YORK MARINE AND GENERAL ORDER HOLDING PLAINTIFFS’ MOTION INSURANCE COMPANY, FOR SUMMARY JUDGMENT AND 10 DEFENDANT’S MOTION FOR EQUITABLE Plaintiffs, CONTRIBUTION ALLOCATION IN 11 ABEYANCE v. 12 (Docs. 103, 104) KINSALE INSURANCE COMPANY, 13 ORDER DIRECTING PARTIES TO SUBMIT Defendant, SUPPLEMENTAL BRIEFING 14 TRC OPERATING COMPANY, INC. ORDER CONTINUING PRE-TRIAL 15 and TRC CYPRESS GROUP, LLC., CONFERENCE AND TRIAL DATES

(Doc. 96) 16

Real Parties in Interest. 21-DAY DEADLINE 17

19 Pending before the Court is the motion for summary judgment by Plaintiffs New York 20 Marine and General Insurance Company (“NY Marine”) and St. Paul Fire and Marine Insurance 21 Company (“St. Paul”) (Doc. 103) and the motion for equitable contribution allocation by Defendant 22 Kinsale Insurance Company (“Kinsale”) (Doc. 104). 23 I. Background 24 This consolidated action is a dispute between three insurance companies over their coverage 25 of legal defense costs of TRC Operating Company, Inc. and TRC Cypress Group, LLC 26 (collectively, “TRC”), the real parties in interest in this case. In 2014, TRC initiated a state court 27 suit against Chevron USA, Inc. (“Chevron”), captioned TRC Operating Co. v. Chevron, Kern 1 damages resulting from Chevron’s alleged conduct and operations on its property. (Doc. 1 ⁋ 6). 2 The Underlying Lawsuit includes Chevron’s crossclaims against TRC in which Chevron alleges 3 that TRC’s conduct on their property, including their use of cyclic steaming methods to harvest and 4 extract oil, caused physical injury to Chevron’s property. Id. ⁋ 7. 5 On July 10, 2020, St. Paul initiated this action with the filing of a complaint against Kinsale. 6 (Doc. 1). The complaint asserts that Kinsale has a duty to share with St. Paul and NY Marine in 7 the defense of TRC until the Underlying Lawsuit has concluded. Id. The St. Paul complaint does 8 not assert any claims relating to any duty to indemnify TRC. On August 5, 2020, NY Marine also 9 filed a complaint against Kinsale in this Court similarly asserting that Kinsale has a duty to defend 10 TRC in the Underlying Lawsuit. The NY Marine complaint also seeks adjudication as to whether 11 Kinsale owes a duty to indemnify TRC if Chevron prevails on its cross-complaint. This portion of 12 NY Marine’s complaint currently is stayed pending the conclusion of the Underlying Lawsuit. 13 (Doc. 65 at 6). 14 On February 2, 2021, the Court consolidated the separate actions commenced by St. Paul 15 and NY Marine against Kinsale. (Doc. 12). The consolidated action was stayed until March 10, 16 2023, when the Court granted Plaintiffs motion to lift the stay “for the limited purpose of permitting 17 the parties to conduct discovery relating to and file dispositive motions on the discrete questions of 18 whether and the extent to which Kinsale owes a duty to defend the TRC Entities in the Underlying 19 Matter.” (Doc. 65 at 7). 20 NY Marine and St. Paul filed a joint motion for partial summary judgment on January 8, 21 2024. (Doc. 83). Kinsale filed a motion for summary judgment that same day. (Doc. 82). The 22 parties filed oppositions on January 29, 2024 (Docs. 87, 88), and replies on February 9, 2024 (Docs. 23 89, 90). On June 10, 2024, the Court granted NY Marine and St. Paul’s motion and denied 24 Kinsale’s motion, finding that the cross-complaint presented at least some claims covered by the 25 Kinsale Policy and, thus, Kinsale has a duty to defend the action in its entirety. See (Doc. 94). 26 On April 18, 2025, Plaintiffs filed their motion for summary judgment, arguing Kinsale 27 must pay an equal one-third share of the defense fees and costs incurred in the Underlying Lawsuit, 1 in support. (Doc. 103-2). On the same day, Kinsale filed its motion for equitable contribution 2 allocation, requesting the Court to impose a “time-on-the-risk” method of allocation. (Doc. 104). 3 Kinsale did not attach a separate statement of facts to its motion. However, in its opposition to 4 Plaintiff’s motion filed May 9, 2025, it included a response to Plaintiffs’ separate statement, stating 5 each fact as undisputed. (Doc. 106-1). Plaintiffs filed their opposition to Kinsale’s motion that 6 same day. (Doc. 105). 7 The parties’ motions came for hearing before the undersigned on June 2, 2025. Garrett 8 Owens appeared on behalf of St. Paul and Lawrence Allen Tabb appeared on behalf of NY Marine. 9 Alexander M. Baggio appeared on behalf of Kinsale. (Doc. 108). 10 II. Standard of Law 11 Summary judgment is appropriate where there is “no genuine dispute as to any material fact 12 and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Washington 13 Mutual Inc. v. United States, 636 F.3d 1207, 1216 (9th Cir. 2011). An issue of fact is genuine only 14 if there is sufficient evidence for a reasonable fact finder to find for the non-moving party, while a 15 fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. 16 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Wool v. Tandem Computers, Inc., 818 F.2d 1422, 17 1436 (9th Cir. 1987). 18 Each party’s position must be supported by: (1) citing to particular portions of materials in 19 the record, including but not limited to depositions, documents, declarations, or discovery; or 20 (2) showing that the materials cited do not establish the presence or absence of a genuine dispute 21 or that the opposing party cannot produce admissible evidence to support the fact. See Fed. R. Civ. 22 P. 56(c)(1). The court may consider other materials in the record not cited to by the parties, but it 23 is not required to do so. See Fed. R. Civ. P. 56(c)(3); Carmen v. San Francisco Unified School 24 Dist., 237 F.3d 1026, 1031 (9th Cir. 2001) (on summary judgment, “the court has discretion in 25 appropriate circumstances to consider other materials, [but] it need not do so”). Furthermore, “[a]t 26 summary judgment, a party does not necessarily have to produce evidence in a form that would be 27 admissible at trial.” Nevada Dep’t of Corr v. Greene, 648 F.3d 1014, 1019 (9th Cir. 2011) (citations 1 than its form. Fonseca v. Sysco Food Servs. of Arizona, Inc., 374 F.3d 840, 846 (9th Cir. 2004). 2 “The moving party initially bears the burden of proving the absence of a genuine issue of 3 material fact.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex 4 Corp. v. Catrett, 477 U.S. 317, 323 (1986)). To meet its burden, “the moving party must either 5 produce evidence negating an essential element of the nonmoving party’s claim or defense or show 6 that the nonmoving party does not have enough evidence of an essential element to carry its ultimate 7 burden of persuasion at trial.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 8 1099, 1102 (9th Cir. 2000). If the moving party meets this initial burden, the burden then shifts to 9 the non-moving party “to designate specific facts demonstrating the existence of genuine issues for 10 trial.” In re Oracle Corp. Sec. Litig., 627 F.3d at 387 (citing Celotex Corp., 477 U.S. at 323). The 11 non-moving party must “show more than the mere existence of a scintilla of evidence.” Id. (citing 12 Anderson, 477 U.S. at 252). However, the non-moving party is not required to establish a material 13 issue of fact conclusively in its favor; it is sufficient that “the claimed factual dispute be shown to 14 require a jury or judge to resolve the parties’ differing versions of the truth at trial.” T.W. Elec. 15 Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). 16 The court must apply standards consistent with Rule 56 to determine whether the moving 17 party has demonstrated the absence of any genuine issue of material fact and that judgment is 18 appropriate as a matter of law. See Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir. 1993). 19 “[A] court ruling on a motion for summary judgment may not engage in credibility determinations 20 or the weighing of evidence.” Manley v. Rowley, 847 F.3d 705, 711 (9th Cir. 2017) (citation 21 omitted). The evidence must be viewed “in the light most favorable to the nonmoving party” and 22 “all justifiable inferences” must be drawn in favor of the nonmoving party. Orr v. Bank of Am., NT 23 & SA, 285 F.3d 764, 772 (9th Cir. 2002); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 24 2000). 25 In addition, when the parties submit cross-motions for summary judgment, as they have 26 done here, each motion must be considered on its own merits. Fair Hous. Council of Riverside 27 Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). 1 III. Discussion 2 As the Court has determined that Kinsale has a duty to defend, the pending motions concern 3 the remaining question of the proper method to be used to allocate fees and costs related to said 4 defense. 5 A. Allocating Costs Between Coinsurers – Governing Law 6 “The right to equitable contribution arises when several insurers are obligated to indemnify 7 or defend the same loss or claim, and one insurer has either paid more than its share of the claim in 8 question or defended the action without participation from the other carrier or carriers obligated to 9 do so. Equitable contribution permits reimbursement to the carrier paying in excess of its 10 proportionate share of the obligation in question, and serves the equitable objective of equalizing 11 the common burden shared by coinsurers and preventing one insurer from profiting at the expense 12 of others.” Am. States Ins. Co. v. Ins. Co. of the State of Pennsylvania, No. 2:12-cv-01489-MCE- 13 AC, 2017 WL 2257138, at *5 (E.D. Cal. May 23, 2017) (citing Scottsdale Ins. Co. v. Century Surety 14 Co., 182 Cal. App. 4th 1023, 1031 (2010)). 15 “California law does not impose any fixed method for allocating defense costs between 16 insurers. Instead, any determination in that regard is subject to the court’s sound discretion in 17 achieving just apportionment … There is consequently no ‘correct’ or even preferred method of 18 allocating defense costs between coinsurers.” Id. 19 Additionally, under California law, “reciprocal rights and duties of several insurers who 20 have covered the same event do not arise out of contract, for their agreements are not with each 21 other … Their respective obligations flow from equitable principles designed to accomplish 22 ultimate justice in the bearing of a specific burden. As these principles do not stem from agreement 23 between the insurers their application is not controlled by the language of their contracts with the 24 respective policy holders.” USF Ins. Co. v. Clarendon Am. Ins. Co., 452 F. Supp. 2d 972, 999– 25 1000 (C.D. Cal. 2006) (quoting Signal Companies v. Harbor Ins. Co., 27 Cal.3d at 359, 369 26 (1980)). “[E]quity overrides the terms of the insurance policies.” Id. (quoting Commerce & 27 Industry Ins. Co. v. Chubb Custom Ins. Co., 75 Cal.App.4th 739, 749 (1999)). 1 of the underlying claim, the relationship of the insured to the various insurers, the particulars of 2 each policy, and any other equitable considerations.” Residence Mut. Ins. Co. v. Travelers Indem. 3 Co. of Connecticut, 26 F. Supp. 3d 965, 978 (C.D. Cal. 2014). 4 B. Relevant Factors 5 Here, the parties fail to include in their briefing important factors relevant to the Court’s 6 allocation determination. As such, there are not sufficient facts before the Court to conduct a proper 7 equitable analysis. See, e.g., Employers Ins. Co. of Wausau v. Pac. Employers Ins. Co., No. 8 B204712, 2009 WL 1363475, at *10 (Cal. App. May 18, 2009) (reversing trial court’s pro-rata-by- 9 time-on-the risk allocation because more fact-finding was required before an equitable method of 10 apportionment could be selected) (unpublished). 11 First, the parties provide no clear details or chronology of the events that are the subject of 12 the Underlying Lawsuit (and Chevron’s crossclaims). The parties represent in their motions that 13 they stipulated to use of the joint statement of undisputed facts that accompanied the earlier motions 14 for summary judgment (Doc. 80) in connection with their present motions. (Doc. 103-1 at 4 n.5; 15 Doc. 104 at 7 n.1). Among numerous other documents, the parties attached Kinsale’s response to 16 NY Marine’s interrogatories to said statement. (Doc. 80-13). Therein, Kinsale refers to a “June 17 21, 2011 sinkhole incident and related Orders and repairs.” (Doc. 80-13 at 6). However, the Court 18 can locate no further elaboration as to this incident in the record. 19 Additionally, during the hearing on the motions, counsel for Kinsale mentioned “well 20” 20 beginning production in 2007. The complaint and cross-complaint filed in state court include no 21 further details regarding these events or any specifics regarding any other events at issue. See (Doc. 22 80-2, 80-3). As such, the parties have failed to provide sufficient information regarding the nature 23 of the underlying claim, such as applicable triggering events, or any other details regarding the facts 24 that are the subject of the Underlying Lawsuit. 25 Second, the parties provide no clear information regarding when and for how long the 26 policies at issue were implicated. Plaintiffs state that St. Paul issued policies to TRC from July 1, 27 2000, to March 17, 2013, then Kinsale issued a policy to TRC from March 17, 2013, to March 17, 1 105 at 7-8; Doc. 80 at 3, ¶ 1). St. Paul and NY Marine’s motion and opposition each include a 2 footnote stating St. Paul believes only its policies from February 15, 2011, to March 17, 2013, 3 potentially provide coverage for the Underlying Lawsuit, and any prior policies are not relevant. 4 (Doc. 103-1 at 5 n.6; Doc. 105 at 8 n.5; id. at 12 n.7). St. Paul provides no facts, arguments, or 5 reasoning to support its contention that only its policies from said period should apply. 6 Kinsale’s representations regarding periods of insurance are in line with those in Plaintiffs’ 7 motion. See (Doc. 104 at 7). However, Kinsale later provides that “St. Paul Fire provided insurance 8 coverage for six years from 2007 to 2013 … Plaintiffs have ten years of time ‘on the risk’—and 9 received ten years of premiums—while Kinsale only has one.” (Doc. 104 at 9). Kinsale provides 10 no explanation as to its calculation of Plaintiffs receiving ten years of premiums. It is unclear why 11 Kinsale begins its counting in 2007 for St. Paul. Though counsel for Kinsale mentioned a “well 12 20” becoming operational in 2007 during the hearing, as noted above, the Court has no further 13 details regarding this event and its significance, if any, to the Underlying Lawsuit. Similarly, it is 14 unclear why St. Paul begins its counting in 2011. Further, Kinsale represents that a fourth insurer, 15 Lexington Insurance Company, “provided insurance to TRC for 3 years from 1996 to 1999.” Id. 16 at 9 n.2. Plaintiffs contest the relevance of any such policies and include a footnote stating that 17 Kinsale “was required to establish as much … through more than a mere footnote with no 18 evidence …” (Doc. 105 at 7 n.4). Thus, it is unclear to the Court what the relevant periods of 19 coverage are concerning the insurance for the Underlying Lawsuit. 20 Third, the parties provide no clear information regarding the amount of applicable 21 premiums paid to each insurer, such as billing records. The Court has no information before it to 22 compare the amount of premiums paid to each respective party for the time in which the applicable 23 policies were implicated in the Underlying Lawsuit. 24 Fourth, during the hearing on the motions, the parties represented that Plaintiffs’ and 25 Defendant’s policies had the same applicable policy limits. Nonetheless, the Court will direct the 26 parties to provide further information regarding potential differences, if any, regarding the 27 particulars of the policy limits at issue. 1 factor) to consider in seeing that “equity” prevails in the Court’s decision (Commerce & Industry 2 Ins. Co., 75 Cal.App.4th at 749) is the timing and duration of TRC’s misconduct alleged in or 3 implicated by Chevron’s crossclaims. It is this misconduct that implicates the parties’ duty to 4 defend, and, thus, is material to the Court’s assessment of the equities of allocating defense costs. 5 Yet, Chevron’s crossclaims do not refer to the relevant time period and the parties have not 6 proffered information (for instance, discovery materials exchanged or trial evidence presented in 7 the Underlying Lawsuit) sufficient for the Court to assess this factor. 8 Accordingly, the Court will order the parties to submit supplemental briefing regarding the 9 above factors, including a joint statement for those facts not in dispute and separate statements for 10 those facts which are disputed. 11 Additionally, to allow for said submissions, the Court will continue the pre-trial conference 12 and trial dates. 13 IV. Conclusion and Order 14 For the reasons set forth above, it is HEREBY ORDERED that: 15 1. Plaintiffs’ motion summary judgment (Doc. 103) and Defendant’s motion for equitable 16 contribution allocation (Doc. 104) are held in abeyance. 17 2. Within 21 days of issuance of this order, the parties shall file a joint statement for those 18 facts not in dispute and separate statements for those facts which are disputed 19 concerning: 20 a. The specific details and chronology of the events that are the subject of the 21 Underlying Lawsuit; 22 b. When and for what length of time each of the relevant policies were implicated 23 by said events, including any specific dates and the significance, if any, of “well 24 20” and the “June 21, 2011 sinkhole incident”; 25 c. The amount of applicable premiums paid to each insurer over the length of time 26 the policies were implicated; 27 d. Relevant differences, if any, in the applicable maximum policy limits; 1 concerning the Underlying Lawsuit; 2 f. The timing, duration, and scope of TRC’s misconduct alleged in or implicated 3 by Chevron’s crossclaims; and 4 g. Any other factors of relevance in an equitable analysis. 5 3. The operative scheduling order (Docs. 96, 102) is amended as follows: 6 a. Pre-trial conference: September 22, 2025 7 b. Trial: December 9, 2025 8 All other provisions of the operative scheduling order (Doc. 96) not in conflict 9 with this order remain in effect. 10 | IT IS SO ORDERED. Dated: _ July 9, 2025 | hr 12 UNITED STATES MAGISTRATE JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28