The Travelers Indemnity Company of Connecticut v. Walking U Ranch, LLC

Opinion

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘

Seem CHRISTINA A SNYDER Catherine Jeang Not Present N/A Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Not Present Not Present Proceedings: (IN CHAMBERS) - MOTION FOR RECONSIDERATION (Dkt. 215, filed on November 8, 2023) The Court finds this motion appropriate for decision without oral argument. See Fed. R. Civ. P. 78: C.D. Cal. L.R. 7-15. Accordingly, the hearing date of December 18, 2023, is vacated, and the matter is hereby taken under submission. I. INTRODUCTION & BACKGROUND On March 27, 2018, The Travelers Indemnity Company of Connecticut and Travelers Causality Insurance Company of America (collectively, “Travelers’”) filed the complaint in this action against Walking U Ranch, LLC, Kathleen P. March, Patrick F. Bright, and Does | through 10, Inclusive, (collectively, “Ranch-March-Bright” or “the Insureds”). Dkt. 1 (“Compl.”). The history of this case is well-known to the parties and set forth in the Court’s March 10, 2022, order. See dkt. 138. On May 14, 2018, the Insureds filed an answer and asserted counterclaims against Travelers for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) unfair, deceptive, unlawful, and fraudulent business practices in violation of California Business & Profession Code § 17200 ef seg. Dkt. 12. On June 15, 2018, Travelers moved for summary judgment and to compel arbitration. Dkt. 19, 21. On August 6, 2018, the Court denied Travelers’ motion for summary judgment, concluding that Travelers owes a duty to defend the Insureds with respect to the underlying action. Dkt. 35 at 13. Additionally, the Court partially granted the Insureds’ Fed. R. Civ. P. 56(f) request based on the Court’s conclusion that Travelers

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘2860.” Dkt. 214. On November 8, 2023, Travelers filed the instant motion for reconsideration. Dkt. 215 (“Mot.”). On November 27, 2023, the Insureds filed an opposition. Dkt. 217 (“Opp.”). On December 4, 2023, Travelers filed a reply. Dkt. 218 (“Reply”). Having carefully considered the parties’ arguments and submissions, the Court finds and concludes as follows. II. LEGAL STANDARD Local Rule 7-18 sets forth the bases upon which the Court may reconsider the decision on any motion: A motion for reconsideration of the decision on any motion may be made only on the grounds of: (a) a material difference in fact or law from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision. No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion. 7-18. Il. DISCUSSION Travelers requests that the Court “provide clarification of its Order . . . requiring the parties to participate in arbitration and to provide the basis for its Order.” Mot. at 3. It argues that the Court “d[id] not contain any explanation for the basis of [its] finding”

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘

court sitting in diversity must apply California law. See Karsant Fam. Ltd. P’ship v. Allstate Ins. Co., No. C 08-01490 SI, 2009 WL 188036, at *6 (N.D. Cal. Jan. 27, 2009) (“Compulink|] . . . does not change the result in this case, because this case was not a Cumis fee dispute ‘filed in federal court’ [but rather was] removed to federal court pursuant to diversity jurisdiction. This Court, sitting in diversity, must apply California law.”). Accordingly, the Court is bound by the plain language of Section 2860 requiring “Ta|ny dispute concerning attorney’s fees . . . [to be] resolved by final and binding arbitration.” Cal. Civ. Code § 2860. The Court also finds that, if the arbitrator determines the reasonable Cumis counsel rate was greater than $200/hour, the Insureds may claim rermbursement for the shortfall between the rate determined by the arbitrator and the $200/hour rate the Insureds paid. Travelers’ res judicata argument is premised on the Court’s March 10, 2022, order granting Travelers’ motion for partial summary judgment. Dkt. 173. However, “[t|he issue before th[e] Court [regarding the March 10, 2022 order] [wa|s whether Travelers is required to pay attorneys’ fees to March and Bright, who assisted the successive Cumis counsel that represented the Insureds in the underlying action.” Id. at 1. The Court did not address the dispute over the appropriate rate for Cumis counsel. In fact, the Court explicitly recognized that the Insureds believed that “the [appropriate] hourly rate . . . [for Cumis counsel] was more than $200 per hour” and that they intended to “seek to increase the $200 per hour rate for all Cumis counsel . . . further on in this suit.” Id. at 14-15 n_2. Similarly, the Ninth Circuit’s opinion addressed only the Court’s “grant of summary judgment to Travelers . . . on the Insureds’ claim for a bad faith breach of the insurance policy and request for attorney’s fees.” Dkt. 196 at 2. It did not address any aspect of the Cumis fees dispute. Accordingly, neither ruling should not be construed as resolving the Cumis rate issue. Additionally, earlier in this case, the Court denied Travelers’ motion to compel arbitration regarding the Cumis fees dispute because the “threshold issues of whether Travelers breached its duty to defend and breach[ed] the implied covenant of good faith and fair dealing [were] unresolved [at that time]” and arbitration would “potentially prejudic[e]” the Court’s findings on these counterclaims. Dkt. 35 at 16-17. Now that both threshold issues have been resolved, arbitration on the Cumis fees dispute is appropriate.

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘