1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 TRAVELERS PROPERTY CASUALTY Case No. 20-cv-03656-HSG COMPANY OF AMERICA, 8 ORDER DENYING CROSS-MOTIONS Plaintiff, FOR SUMMARY JUDGMENT AND 9 DENYING MOTIONS TO SEAL v. 10 Re: Dkt. Nos. 105, 106, 111, 114, 115, 116 TOLL BROTHERS, INC., et al., 11 Defendants. 12 13 Pending before the Court are the parties’ cross-motions for summary judgment in this 14 insurance action. Dkt. Nos. 106, 115. The Court finds this matter appropriate for disposition 15 without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons 16 detailed below, the Court DENIES the motions. 17 I. BACKGROUND 18 The facts are largely undisputed. A third-party company, Marble Palace, Inc., 19 subcontracted with Defendant Shapell1 to furnish and install bathroom tile at a housing 20 development in San Ramon, called “Abbington at Gale Ranch.” See Dkt. No. 112-1 (“Plante 21 Decl.”) at ¶¶ 2–3, 9; see also Dkt. No. 36 (“FAC”) at ¶ 34. Plaintiff Travelers Property Casualty 22 Company of America issued insurance policies to Marble Palace for this project (the “policies”). 23 See Dkt. No. 106-1 (“Vandermoore Decl.”) at ¶ 3; id. Exs. L–N. Under Marble Palace’s 24 subcontract with Shapell, Shapell had to be included as an additional insured under the policies. 25 See Dkt. No. 106-1 (“Vandermoore Decl.”), Ex. P at 120–22 (subcontractor agreement with 26 27 1 Shapell); Plante Decl. at ¶ 9.2 The parties appear to agree that Shapell is in fact an additional 2 insured under these policies. See, e.g., Dkt. No. 106 at 3–4. 3 In March 2018, the Abbington Owners’ Association served Shapell with a Notice of 4 Claims under California Civil Code §§ 910, 6000, asserting that numerous construction defects 5 existed in the housing development (the “Abbington action”). See Plante Decl., Ex. 1. Shapell 6 retained Plante Lebovic LLP. See Plante Decl. at ¶ 4. On April 13, 2018, Plante Lebovic 7 responded to the notice, commencing the pre-litigation process under California Civil Code § 910. 8 See id. at ¶¶ 5–6, 8, & Ex. 2 at 20–21. As part of this process, Plante Lebovic attended an 9 inspection of the housing development on May 4, 2018, and observed testing of the buildings on 10 June 6 and 7, 2018, with Shapell’s consultant. See id. at ¶ 6. 11 On August 16, 2018, Shapell tendered the Abbington action to Travelers as an additional 12 insured under the policies. See id. at ¶ 9; see also Vandermoore Decl., Ex. O at 84–86. In the 13 tender letter, Shapell explained the status of the pre-litigation process and invited Travelers to 14 contact Plante Lebovic if it required more information. See Vandermoore Decl., Ex. O at 86. On 15 August 23, 2018, Travelers acknowledged receipt of the tender letter and requested a copy of the 16 subcontract, which Shapell provided the next day. See Vandermoore Decl. at ¶ 5, & Ex. P at 102– 17 35. Shapell further noted that a complaint had not yet been filed and the case remained in the pre- 18 litigation process. See id., Ex. P at 102. From September 2018 to January 2019, Travelers 19 requested additional information from Shapell, and Shapell provided it. See id. at ¶¶ 6–7, & Exs. 20 Q–R at 137–45. 21 On January 30, 2019, Matthew S. Constantino from Clapp, Moroney, Vucinich, Beeman & 22 Scheley advised Shapell through its counsel, Plante Lebovic, that Clapp Moroney had been 23 retained by Travelers to represent Shapell in the Abbington action. See Dkt. No. 106-3 24 (“Constantino Decl.”) at ¶ 3, & Exs. A–B at 4–15. Mr. Constantino indicated that the firm would 25 send over “an Association of Counsel pleading” for Shapell’s signature. See id., Ex. A at 4. 26 27 1 Shapell responded by requesting Travelers’ reservation of rights letter. See id., Ex. B at 6–12, 14. 2 Travelers sent the reservation of rights letter to Plante Lebovic on February 14, 2019. See 3 Vandermoore Decl. at ¶ 9, & Ex. S at 147–53. The letter stated in relevant part: 4 Travelers will participate in the defense of your client Shapell in [the 5 Abbington action] under a full “reservation of rights” letter. . . .
6 . . .
7 Travelers agrees to defend Shapell with regard to the referenced matter. Accordingly, please provide Travelers with a statement of the 8 amount your client contends Travelers currently owes for the defense of Shapell, the basis for the position, as well as the invoices for the 9 amounts incurred in defending Shapell. Travelers specifically requests copies of all bills from the date of tender through the current 10 time. In addition, please be advised that effective immediately, Travelers is asserting its right to appoint counsel of its choosing to 11 represent Shapell in the Abbington Owners Association v. Shapell Industries, Inc and Toll Brothers, Inc. matter, and will be retaining the 12 services of Mr. Matt Constantino of the law firm of Clapp, Moroney, Vucinich Beeman Scheley to handle the defense of Shapell in the 13 Abbington Owners’ Association v. Shapell Industries matter. If Shapell wishes to continue to retain their own counsel’s services, it 14 may do so, but at its own expense. From this date forward, Travelers will only pay for the defense fees and costs incurred by Mr. 15 Constantino. Mr. Constantino will be contacting you shortly to discuss the handling of the matter. 16
17 Id. at 147, 153. 18 That day, Mr. Constantino asked Plante Lebovic for a time to discuss Clapp Moroney 19 “associating in to this case and next steps.” See Constantino Decl., Ex. B at 11. Plante Lebovic 20 stated that it needed time to review the reservation of rights letter first. See id. at 6–10. On March 21 7, 2019, Plante Lebovic told Mr. Constantino: 22
23 [W]e’ve been tied up on some matters in the last few weeks and haven’t had a chance to fully touch base with the client regarding how 24 they wish to proceed with their defense going forward, but we’ll let you know as soon as we receive word. Thanks for your patience. 25 26 See id. Ex. B at 6. The parties did not reconnect before The Abbington Owners’ Association filed 27 the complaint against Shapell. See Plante Decl. at ¶ 18. 1 in the Abbington at Gale Ranch development in Contra Costa Superior Court, Abbington Owners’ 2 Assoc. v. Shapell Industries, Inc., Case No. MSC19-00503, on March 12, 2019. See Plante Decl. 3 at ¶¶ 18–19, & Ex. 4 at 27–63. What follows is a series of email correspondence between Plante 4 Lebovic and Clapp Moroney. 5 • On June 6, 2019, Clapp Moroney emailed Plante Lebovic, asking to confirm that a 6 complaint and demurrer were filed in the Abbington action, and requesting copies 7 of those documents. See Constantino Decl., Ex. D at 28. Clapp Moroney reached 8 out again on June 20, June 24, and July 10 “for an update on this matter.” See id. at 9 26–27. 10 • On August 28, 2019, Plante Lebovic provided Mr. Constantino with information 11 regarding a mediation session scheduled with JAMS for September 20, 2019. See 12 id., Ex. E at 40. Mr. Constantino requested mediation briefs and other related 13 documents “to get us up to speed for the 9/20 mediation session.” See id. at 39–40. 14 He explained that “[w]e have no information at this time.” See id. at 40. 15 • On September 11, Plante Lebovic responded that the mediation date was moved to 16 September 25, and provided the requested documents. See id. at 37–39. 17 • On October 7, after the mediation session, Clapp Moroney emailed Plante Lebovic 18 again “following up on whether our office will be associating in.” See id. at 36. 19 Clapp Moroney sent another email on December 15 asking “for any updates since 20 the September 25, 2019 mediation.” See id., Ex. F at 43. 21 • Clapp Moroney sent a letter on January 14, 2020, asking for updates regarding the 22 status of any settlement discussions or additional mediation dates.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 TRAVELERS PROPERTY CASUALTY Case No. 20-cv-03656-HSG COMPANY OF AMERICA, 8 ORDER DENYING CROSS-MOTIONS Plaintiff, FOR SUMMARY JUDGMENT AND 9 DENYING MOTIONS TO SEAL v. 10 Re: Dkt. Nos. 105, 106, 111, 114, 115, 116 TOLL BROTHERS, INC., et al., 11 Defendants. 12 13 Pending before the Court are the parties’ cross-motions for summary judgment in this 14 insurance action. Dkt. Nos. 106, 115. The Court finds this matter appropriate for disposition 15 without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons 16 detailed below, the Court DENIES the motions. 17 I. BACKGROUND 18 The facts are largely undisputed. A third-party company, Marble Palace, Inc., 19 subcontracted with Defendant Shapell1 to furnish and install bathroom tile at a housing 20 development in San Ramon, called “Abbington at Gale Ranch.” See Dkt. No. 112-1 (“Plante 21 Decl.”) at ¶¶ 2–3, 9; see also Dkt. No. 36 (“FAC”) at ¶ 34. Plaintiff Travelers Property Casualty 22 Company of America issued insurance policies to Marble Palace for this project (the “policies”). 23 See Dkt. No. 106-1 (“Vandermoore Decl.”) at ¶ 3; id. Exs. L–N. Under Marble Palace’s 24 subcontract with Shapell, Shapell had to be included as an additional insured under the policies. 25 See Dkt. No. 106-1 (“Vandermoore Decl.”), Ex. P at 120–22 (subcontractor agreement with 26 27 1 Shapell); Plante Decl. at ¶ 9.2 The parties appear to agree that Shapell is in fact an additional 2 insured under these policies. See, e.g., Dkt. No. 106 at 3–4. 3 In March 2018, the Abbington Owners’ Association served Shapell with a Notice of 4 Claims under California Civil Code §§ 910, 6000, asserting that numerous construction defects 5 existed in the housing development (the “Abbington action”). See Plante Decl., Ex. 1. Shapell 6 retained Plante Lebovic LLP. See Plante Decl. at ¶ 4. On April 13, 2018, Plante Lebovic 7 responded to the notice, commencing the pre-litigation process under California Civil Code § 910. 8 See id. at ¶¶ 5–6, 8, & Ex. 2 at 20–21. As part of this process, Plante Lebovic attended an 9 inspection of the housing development on May 4, 2018, and observed testing of the buildings on 10 June 6 and 7, 2018, with Shapell’s consultant. See id. at ¶ 6. 11 On August 16, 2018, Shapell tendered the Abbington action to Travelers as an additional 12 insured under the policies. See id. at ¶ 9; see also Vandermoore Decl., Ex. O at 84–86. In the 13 tender letter, Shapell explained the status of the pre-litigation process and invited Travelers to 14 contact Plante Lebovic if it required more information. See Vandermoore Decl., Ex. O at 86. On 15 August 23, 2018, Travelers acknowledged receipt of the tender letter and requested a copy of the 16 subcontract, which Shapell provided the next day. See Vandermoore Decl. at ¶ 5, & Ex. P at 102– 17 35. Shapell further noted that a complaint had not yet been filed and the case remained in the pre- 18 litigation process. See id., Ex. P at 102. From September 2018 to January 2019, Travelers 19 requested additional information from Shapell, and Shapell provided it. See id. at ¶¶ 6–7, & Exs. 20 Q–R at 137–45. 21 On January 30, 2019, Matthew S. Constantino from Clapp, Moroney, Vucinich, Beeman & 22 Scheley advised Shapell through its counsel, Plante Lebovic, that Clapp Moroney had been 23 retained by Travelers to represent Shapell in the Abbington action. See Dkt. No. 106-3 24 (“Constantino Decl.”) at ¶ 3, & Exs. A–B at 4–15. Mr. Constantino indicated that the firm would 25 send over “an Association of Counsel pleading” for Shapell’s signature. See id., Ex. A at 4. 26 27 1 Shapell responded by requesting Travelers’ reservation of rights letter. See id., Ex. B at 6–12, 14. 2 Travelers sent the reservation of rights letter to Plante Lebovic on February 14, 2019. See 3 Vandermoore Decl. at ¶ 9, & Ex. S at 147–53. The letter stated in relevant part: 4 Travelers will participate in the defense of your client Shapell in [the 5 Abbington action] under a full “reservation of rights” letter. . . .
6 . . .
7 Travelers agrees to defend Shapell with regard to the referenced matter. Accordingly, please provide Travelers with a statement of the 8 amount your client contends Travelers currently owes for the defense of Shapell, the basis for the position, as well as the invoices for the 9 amounts incurred in defending Shapell. Travelers specifically requests copies of all bills from the date of tender through the current 10 time. In addition, please be advised that effective immediately, Travelers is asserting its right to appoint counsel of its choosing to 11 represent Shapell in the Abbington Owners Association v. Shapell Industries, Inc and Toll Brothers, Inc. matter, and will be retaining the 12 services of Mr. Matt Constantino of the law firm of Clapp, Moroney, Vucinich Beeman Scheley to handle the defense of Shapell in the 13 Abbington Owners’ Association v. Shapell Industries matter. If Shapell wishes to continue to retain their own counsel’s services, it 14 may do so, but at its own expense. From this date forward, Travelers will only pay for the defense fees and costs incurred by Mr. 15 Constantino. Mr. Constantino will be contacting you shortly to discuss the handling of the matter. 16
17 Id. at 147, 153. 18 That day, Mr. Constantino asked Plante Lebovic for a time to discuss Clapp Moroney 19 “associating in to this case and next steps.” See Constantino Decl., Ex. B at 11. Plante Lebovic 20 stated that it needed time to review the reservation of rights letter first. See id. at 6–10. On March 21 7, 2019, Plante Lebovic told Mr. Constantino: 22
23 [W]e’ve been tied up on some matters in the last few weeks and haven’t had a chance to fully touch base with the client regarding how 24 they wish to proceed with their defense going forward, but we’ll let you know as soon as we receive word. Thanks for your patience. 25 26 See id. Ex. B at 6. The parties did not reconnect before The Abbington Owners’ Association filed 27 the complaint against Shapell. See Plante Decl. at ¶ 18. 1 in the Abbington at Gale Ranch development in Contra Costa Superior Court, Abbington Owners’ 2 Assoc. v. Shapell Industries, Inc., Case No. MSC19-00503, on March 12, 2019. See Plante Decl. 3 at ¶¶ 18–19, & Ex. 4 at 27–63. What follows is a series of email correspondence between Plante 4 Lebovic and Clapp Moroney. 5 • On June 6, 2019, Clapp Moroney emailed Plante Lebovic, asking to confirm that a 6 complaint and demurrer were filed in the Abbington action, and requesting copies 7 of those documents. See Constantino Decl., Ex. D at 28. Clapp Moroney reached 8 out again on June 20, June 24, and July 10 “for an update on this matter.” See id. at 9 26–27. 10 • On August 28, 2019, Plante Lebovic provided Mr. Constantino with information 11 regarding a mediation session scheduled with JAMS for September 20, 2019. See 12 id., Ex. E at 40. Mr. Constantino requested mediation briefs and other related 13 documents “to get us up to speed for the 9/20 mediation session.” See id. at 39–40. 14 He explained that “[w]e have no information at this time.” See id. at 40. 15 • On September 11, Plante Lebovic responded that the mediation date was moved to 16 September 25, and provided the requested documents. See id. at 37–39. 17 • On October 7, after the mediation session, Clapp Moroney emailed Plante Lebovic 18 again “following up on whether our office will be associating in.” See id. at 36. 19 Clapp Moroney sent another email on December 15 asking “for any updates since 20 the September 25, 2019 mediation.” See id., Ex. F at 43. 21 • Clapp Moroney sent a letter on January 14, 2020, asking for updates regarding the 22 status of any settlement discussions or additional mediation dates. The letter 23 further asked “[w]hether the client and AIG have indicated how to proceed with 24 regard to Clapp Moroney associating in or substituting in as counsel.” See id., Ex. 25 G at 51–52. 26 • Clapp Moroney sent another letter on February 7, 2020, asking whether Clapp 27 Moroney would be associating in or substituting in as counsel in the Abbington 1 On February 13, Plante Lebovic responded: 2 At this point we believe it makes sense to hold off on having Clapp 3 Moroney associate into the case as we are close to completing our efforts at resolving the case through the development of a mediated 4 scope of repair. We are currently waiting for the HOA’s expert to provide his response to the defense cost of repair which we are 5 hopeful will become the mediated scope of repair. 6 7 See id., Ex. I at 58–59. Plante Lebovic further explained that they were selecting new dates for 8 mediation in April and May 2020, and would let Clapp Moroney know the details once confirmed. 9 Id. On March 10, 2010, Clapp Moroney confirmed, “[a]s recommended by your law office, we 10 are holding off on associating in at this time.” See id., Ex. J at 62–63. In the letter, Clapp 11 Moroney asked for further updates regarding the litigation, upcoming mediation session, and 12 settlement discussions. Id. Defendants assert that since then, Clapp Moroney has not made any 13 further requests to associate into the case or to participate in Shapell’s defense. See Plante Decl. at 14 ¶ 28. Rather, the firm has only requested status updates about the Abbington action, which Plante 15 Lebovic has provided monthly. See id. at ¶¶ 28–29, & Ex. 8 at 188–298. 16 Nevertheless, on June 2, 2020, Travelers filed this insurance action. See Dkt. No. 1. 17 Travelers claims that under the policies, it has the right to retain counsel of its own choosing to 18 represent Shapell, and that Shapell must cooperate in all aspects of the defense. See Vandermoore 19 Decl., Ex. L at 11, 23; Ex. M at 36, 48. Defendants do not appear to challenge that this is correct 20 under the language of the policies and under California law. See Dkt. No. 112 at 11–15; Dkt. No. 21 115 at 14–23. To the contrary, Defendants state that “Shapell had no objection to Clapp, Moroney 22 associating in as co-counsel with Plante Lebovic LLP” and “Shapell does not dispute that 23 Travelers may control whatever Clapp, Moroney does or does not do in conjunction with the 24 defense of Shapell since Travelers is paying Clapp, Moroney’s fees.” See Dkt. No. 115 at 15. 25 However, the parties dispute whether Shapell refused to accept Travelers’ chosen counsel—Clapp 26 Moroney—in the Abbington action. See Dkt. Nos. 106, 115. 27 Travelers thus brings causes of action against Defendants Toll Brothers and Shapell for 1 the right to control the defense in the Abbington action; (ii) Toll Brothers and Shapell are not 2 entitled to appoint independent counsel under California Civil Code § 2860; (iii) Toll Brother and 3 Shapell’s alleged insistence otherwise is a breach of its duty to cooperate; and (iv) Travelers is not 4 obligated to pay any fees and costs incurred in the Abbington action from the date Travelers 5 selected Clapp Moroney as counsel. See FAC at ¶¶ 38–60. Both parties now move for partial 6 summary judgment as to the claims involving Shapell and Toll Brothers. See Dkt. Nos. 106, 115. 7 II. CROSS-MOTIONS FOR SUMMARY JUDGMENT 8 A. Legal Standard 9 Summary judgment is proper when a “movant shows that there is no genuine dispute as to 10 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 11 A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson 12 v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is “genuine” if there is evidence in the 13 record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. The 14 Court views the inferences reasonably drawn from the materials in the record in the light most 15 favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 16 574, 587–88 (1986), and “may not weigh the evidence or make credibility determinations,” 17 Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v. 18 Schriro, 514 F.3d 878, 884–85 (9th Cir. 2008). 19 The moving party bears both the ultimate burden of persuasion and the initial burden of 20 producing those portions of the pleadings, discovery, and affidavits that show the absence of a 21 genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the 22 moving party will not bear the burden of proof on an issue at trial, it “must either produce 23 evidence negating an essential element of the nonmoving party's claim or defense or show that the 24 nonmoving party does not have enough evidence of an essential element to carry its ultimate 25 burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 26 (9th Cir. 2000). Where the moving party will bear the burden of proof on an issue at trial, it must 27 also show that no reasonable trier of fact could not find in its favor. Celotex Corp., 477 U.S. at 1 supporting its claim or defense simply by saying that the nonmoving party has no such evidence.” 2 Nissan Fire & Marine Ins. Co., 210 F.3d at 1105. “If a moving party fails to carry its initial 3 burden of production, the nonmoving party has no obligation to produce anything, even if the 4 nonmoving party would have the ultimate burden of persuasion at trial.” Id. at 1102–03. 5 “If, however, a moving party carries its burden of production, the nonmoving party must produce 6 evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party “must do 7 more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita 8 Elec. Indus. Co., 475 U.S. at 586. A nonmoving party must also “identify with reasonable 9 particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 F.3d 1275, 10 1279 (9th Cir. 1996). If a nonmoving party fails to produce evidence that supports its claim or 11 defense, courts enter summary judgment in favor of the movant. Celotex Corp., 477 U.S. at 323. 12 B. Discussion 13 The parties appear to agree that under the policies, Travelers has the right to control the 14 defense in the Abbington action. See Centex Homes v. St. Paul Fire & Marine Ins. Co., 19 Cal. 15 App. 5th 789, 797 (Cal. Ct. App. 2018) (“Generally, an insurer owing a duty to defend an 16 insured . . . has the right to control defense and settlement of the third party action against its 17 insured, and is . . . a direct participant in the litigation.”) (quotations omitted); Safeco Ins. Co. v. 18 Superior Ct., 71 Cal. App. 4th 782, 787 (Cal. Ct. App. 1999) (“When the insurer provides a 19 defense to its insured, the insured has no right to interfere with the insurer’s control of the 20 defense . . . .”). However, the Court finds that there is a genuine factual dispute about whether 21 Defendants violated Travelers’ right to control the defense and thus breached the insurance policy. 22 Compare Dkt. No. 106 at 14–20, with Dkt. No. 115 at 15–23. 23 Travelers urges that the correspondence detailed in Section I above illustrates that 24 Defendants have not allowed Travelers’ chosen counsel to defend Defendants in the Abbington 25 action. Travelers points out that its reservation of rights letter explicitly stated that it was asserting 26 its right to appoint Mr. Constantino from Clapp Moroney as counsel in the Abbington action. See 27 Vandermoore Decl., Ex. S at 153. The letter further explained that although Defendants could 1 because “Travelers will only pay for the defense fees and costs incurred by Mr. Constantino.” See 2 id. Travelers thus suggests that Defendants had to decide whether to continue with Plante 3 Lebovic, or allow Clapp Moroney to defend them in the Abbington action. Mr. Constantino 4 accordingly reached out to Plante Lebovic to determine whether he should substitute or associate 5 in as counsel in the matter. See Constantino Decl., Ex. B at 11. Despite the correspondence from 6 Mr. Constantino, Travelers argues that “Clapp Moroney was not given permission to associate in” 7 and represent Defendants. See Dkt. No. 106 at 15. Instead, Travelers argues that Defendants 8 delayed and obfuscated. Id. Initially, Plante Lebovic said they had not “had a chance to fully 9 touch base with the client regarding how they wish to proceed with their defense going forward, 10 but we’ll let you know as soon as we receive word.” See Constantino Decl., Ex. B at 6. In the 11 interim, Plante Lebovic continued to represent Defendants, implementing its own defense strategy, 12 and incurring costs. See id. Approximately a year after Travelers asserted its right to appoint 13 counsel for Defendants, Plante Lebovic finally told Clapp Moroney that “[a]t this point we believe 14 it makes sense to hold off on having Clapp Moroney associate into the case as we are close to 15 completing our efforts at resolving the case . . . .” See Constantino Decl., Ex. I at 58–59. 16 Travelers urges that these facts show that Defendants never allowed Travelers to control the 17 defense. See Dkt. No. 106 at 15–16. Travelers further notes that in the meantime Defendants 18 were incurring defense costs associated with Plante Lebovic’s defense in the Abbington action.3 19 See id. at 17–18. 20 Defendants, in turn, assert that Clapp Moroney “was never prevented from participating” 21 in the Abbington action, and that Defendants kept Clapp Moroney apprised of the Abbington 22 action. See Dkt. No. 112 at 6, 10–13. Defendants further argue that Clapp Moroney never asked 23
24 3 Defendants repeatedly state that they have not asked—and are not asking—Travelers to reimburse them for Plante Lebovic’s attorneys fees. See, e.g., Dkt. No. 112 at 1, 5–8, 10–11, 16. 25 However, the record is clear that Defendants have sought reimbursement for costs incurred by Plante Lebovic as part of its defense of Defendants in the Abbington action, including consultant 26 and expert fees. See, e.g., id. at 7–8; Plante Decl. at ¶¶ 30–31, 35–36, & Exs. 9, 12 at 300–25, 609–62. Travelers’ reservation of rights letter stated: “Travelers will only pay for the defense 27 fees and costs incurred by Mr. Constantino” from Clapp Moroney. See Vandermoore Decl., Ex. S 1 Shapell to do—or refrain from doing—anything in conjunction with the defense in the Abbington 2 action. Id. In response to updates about the Abbington action, neither Clapp Moroney nor 3 Travelers objected to Plante Lebovic’s defense strategy or provided any substantive direction or 4 input into the Abbington action. See id. To the contrary, Clapp Moroney merely asked for further 5 updates and Travelers paid the defense costs that Defendants submitted without objection. See 6 Plante Decl. at ¶¶ 30–31, 35–36. Defendants point out that Travelers did not express any 7 objections to Plante Lebovic’s role in the Abbington action until the filing of this action. 8 Defendants maintain that “Clapp Moroney clearly elected to stay out of the action,” and if Plante 9 Lebovic had not continued to represent Defendants they would have “run the risk of having no 10 defense at all.” See Dkt. No. 119 at 5–6. In short, Defendants conclude that Clapp Moroney’s 11 passivity—not Defendants’ conduct—prevented Travelers from controlling the defense in the 12 Abbington action. 13 The parties’ arguments thus turn on the interpretation of the communications between 14 Clapp Moroney and Plante Lebovic detailed in Section I above. Travelers urges that the 15 communications show that it asserted its right for Clapp Moroney to control the defense of the 16 Abbington action, and Defendants did not allow it to do so. Defendants, on the other hand, 17 suggest that the communications show that Clapp Moroney elected to assume a passive role in the 18 Abbington action and never attempted to control the defense at all. The Court accordingly finds 19 that there is at least one genuine dispute of material fact precluding summary judgment in this 20 case. See Fed. R. Civ. P. 56(a). The parties’ motions for partial summary judgment are therefore 21 DENIED. 22 III. MOTIONS TO SEAL 23 The parties also filed administrative motions to file documents under seal in connection 24 with their summary judgment briefing. Dkt. Nos. 105, 111, 114, 116. Specifically, the parties 25 seek to file under seal the email communications between Defendants and Clapp Moroney 26 regarding the Abbington action, counsel’s billing records regarding the Abbington action, and 27 references to these emails. Id. 1 A. Legal Standard 2 Courts generally apply a “compelling reasons” standard when considering motions to seal 3 documents. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (quoting Kamakana 4 v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “This standard derives from the 5 common law right ‘to inspect and copy public records and documents, including judicial records 6 and documents.’” Id. (quoting Kamakana, 447 F.3d at 1178). “[A] strong presumption in favor of 7 access is the starting point.” Kamakana, 447 F.3d at 1178 (quotations omitted). To overcome this 8 strong presumption, the party seeking to seal a judicial record attached to a dispositive motion 9 must “articulate compelling reasons supported by specific factual findings that outweigh the 10 general history of access and the public policies favoring disclosure, such as the public interest in 11 understanding the judicial process” and “significant public events.” Id. at 1178–79 (quotations 12 omitted). “In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in 13 disclosure and justify sealing court records exist when such ‘court files might have become a 14 vehicle for improper purposes,’ such as the use of records to gratify private spite, promote public 15 scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 (quoting Nixon v. 16 Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)). “The mere fact that the production of records 17 may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, 18 without more, compel the court to seal its records.” Id. 19 Records attached to nondispositive motions must meet the lower “good cause” standard of 20 Rule 26(c) of the Federal Rules of Civil Procedure, as such records “are often unrelated, or only 21 tangentially related, to the underlying cause of action.” Id. at 1179–80 (quotations omitted). This 22 requires a “particularized showing” that “specific prejudice or harm will result” if the information 23 is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th 24 Cir. 2002); see also Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific 25 examples of articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 26 F.2d 470, 476 (9th Cir. 1992) (quotation omitted). 27 B. Discussion 1 apply the compelling reasons standard. The parties argue that the email communications contain 2 attorney-client privilege and attorney work product doctrine material regarding the Abbington 3 action. The Abbington action also remains in active litigation, as the arbitration is scheduled for 4 March 22, 2022. See Dkt. No. 109 at ¶ 3. “Courts have accepted attorney–client privilege and the 5 work-product doctrine as sufficient justifications for sealing, even under the higher ‘compelling 6 reason’ standard.” See In re Anthem, Inc. Data Breach Litig., No. 15-MD-02617-LHK, 2018 WL 7 3067783, at *3 (N.D. Cal. Mar. 16, 2018) (collecting cases). 8 However, the Court has reviewed in detail the documents that the parties claim are 9 privileged, and the communications do not meet the compelling reasons standard. Rather, as 10 discussed above, these communications involve discussions between Clapp Moroney and Plante 11 Lebovic about Clapp Moroney associating in as counsel and upcoming court and mediation dates. 12 At times, the parties request documents such as mediation prep materials that could provide unfair 13 insight into the defense strategy, but these documents are not included in the exhibits themselves. 14 The communications are critical to the dispute at issue in this case, but offer little by way of 15 insight into the actual defense strategy in the Abbington action. It is also not clear how the billing 16 records could potentially reveal or provide unfair insight into Defendants’ litigation strategy to the 17 opposing parties in the Abbington action. Although some portion of the billing records may be 18 privileged, the records also include a significant amount of non-privileged information, including 19 billing rates and the number of hours billed. The parties, however, request that these exhibits be 20 filed under seal in their entirety. As the Civil Local Rules explain, parties shall “avoid wherever 21 possible sealing entire documents (as opposed to merely redacting the truly sensitive information 22 in a document),” and “overly broad requests to seal may result in the denial of the motion.” See 23 L.R. 79-5(a), (f)(5). The motions are therefore DENIED. 24 IV. CONCLUSION 25 Accordingly, the Court DENIES the motions for summary judgment, Dkt. Nos. 106, 115. 26 The Court also DENIES the administrative motions to file under seal. Dkt. Nos. 105, 111, 114, 27 116. The Court DIRECTS the parties to file public versions of all documents for which the 1 motion to seal as to the billing records within seven days of this order. Any such motion must 2 || establish sufficient basis for narrowly tailored sealing in accordance with the requirements 3 discussed above. 4 The Court further SETS a telephonic case management conference for February 1, 2022, at 5 2:00 p.m. to discuss how to move this case forward efficiently. All counsel shall use the following 6 || dial-in information to access the call: 7 Dial-In: 888-808-6929; 8 Passcode: 6064255 9 For call clarity, parties shall NOT use speaker phone or earpieces for these calls, and where at all 10 || possible, parties shall use landlines. No further joint case management statement needs to be filed 11 before the conference. The Court has reviewed the parties’ stipulation and statement requesting 12 relief from the scheduling order deadlines. See Dkt. Nos. 124, 125. The case schedule, however, 5 13 remains in place and will be discussed during the upcoming case management conference. Unless 14 and until the Court modifies the scheduling order, the parties must continue to meet all existing 3 15 deadlines. a 16 IT IS SO ORDERED. 17 || Datea: 1/25/2022 Asperd 5 HAYWOOD S. GILLIAM, JR. 19 United States District Judge 20 21 22 23 24 25 26 27 28