ViacomCBS Inc. v. Great Divide Insurance Company

Opinion

Case 2:21-cv-00400-ODW-AFM Document 64 Filed 11/10/22 Page 1 of 21 Page ID #:1852

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8 United States District Court 9 Central District of California

11 VIACOMCBS INC. Case № 2:21-cv-00400-ODW (AFMx)

12 Plaintiff, ORDER ON MOTIONS FOR 13 v. PARTIAL SUMMARY JUDGMENT GREAT DIVIDE INSURANCE [52] [53] 14 COMPANY, 15 Defendant. 16 AND RELATED COUNTERCLAIM 17 19 ViacomCBS, Inc. brings suit against Great Divide Insurance Company, seeking 20 insurance coverage for losses ViacomCBS incurred due to the COVID-19 global 21 pandemic. ViacomCBS and Great Divide each move for partial summary judgment 22 (“Motions”). (ViacomCBS Mot. Summ. J. (“VMPSJ”), ECF No. 52; Great Divide 23 Mot. Summ. J. (“GDMPSJ”), ECF No. 53.) The Motions are fully briefed. 24 (GD Opp’n, ECF No. 55; V Reply, ECF No. 58; V Opp’n, ECF No. 56; GD Reply, 25 ECF No. 57.) For the reasons discussed below, the Court GRANTS IN PART and 26 DENIES IN PART ViacomCBS’s Motion and GRANTS Great Divide’s Motion.1 27

28 1 Having carefully considered the papers filed in connection with the Motions, the Court deemed the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. Case 2:21-cv-00400-ODW-AFM Document 64 Filed 11/10/22 Page 2 of 21 Page ID #:1853

2 ViacomCBS is a global media and entertainment company that creates and 3 distributes content across various platforms to audiences around the world. 4 (VMPSJ 6.) In December 2018, ViacomCBS bought a Television Production 5 Portfolio Policy (the “Policy”) from Great Divide Insurance Company. (ViacomCBS 6 Statement of Uncontroverted Fact (“VSUF”) 1, ECF No. 52-2 (citing Decl. Barrie 7 Wexler ISO VMPSJ (“Wexler Decl. ISO VMPSJ”) Ex. A (Policy CIM 7508608-10), 8 ECF Nos. 52-21, 52-22).) 9 A. The Policy 10 ViacomCBS purchased the Policy to insure declared productions against delay, 11 cancellation, or abandonment caused by a covered cause of loss. (VSUF 2.) The 12 “Policy Period” was comprised of three annual anniversary policy periods. (Decl. 13 Michael A. Harris ISO GDMPSJ (“Harris Decl. ISO GDMPSJ”) Ex. A (Policy 14 CIM 7508608-11) at GD0074, GD0083, GD0119, ECF Nos. 53-5,2 53-11.) The 15 anniversary policy periods were: (1) December 1, 2018, to December 1, 2019 (CIM 16 7508608-10); (2) December 1, 2019, to December 1, 2020 (CIM 7508608-11); and 17 (3) December 1, 2020, to December 1, 2021. (Policy GD0119.) Policy rates were 18 guaranteed for the first and second annual policy periods, and Great Divide retained 19 the right after the second policy period to “review rates and revise for the third annual 20 policy period.” (Id.) 21 The Policy provides multiple coverages, including, as relevant here, Cast 22 Coverage and Extra Expense Coverage. (Policy GD0091, GD0103.) The Cast 23 Coverage Insuring Agreement covers losses resulting from any “Covered Person” or 24 “Undeclared Cast” “being necessarily prevented by their death, injury or sickness . . . 25

26 2 The material terms of the Policy document issued in 2018 and the Policy document dated as effective in 2019 are identical. (Compare Wexler Decl. ISO VMPSJ Ex. A, with Harris Decl. ISO 27 GDMPSJ Ex. A.) Unless otherwise noted, the Court cites to Policy document CIM 7508608-11, 28 effective December 1, 2019, as the “Policy,” using Great Divide’s Bates label numbers for any pincites.

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1 from commencing or continuing or completing their respective duties in an Insured 2 Production.” (Policy GD0091 (¶¶ I., I.B.).) The Extra Expense Insuring Agreement 3 covers losses sustained “by reason of such extra expense [ViacomCBS] necessarily 4 incur[s] in the event of the interruption, postponement or cancellation of an Insured 5 Production” as a direct result of, as relevant here, actions of a Civil Authority “that 6 revoke[] [ViacomCBS’s] permission to use or prohibits access” to its production 7 facilities, (Policy GD0103 (¶ V.B.4.)), and “imminent peril,” (Policy GD0104 8 (¶ V.B.5.)). 9 The Policy also includes a Due Diligence Clause, applicable to all coverages. 10 (Policy GD0085 (¶ I.L.).) Pursuant to the Due Diligence Clause, ViacomCBS “shall 11 use due diligence and do and concur in doing all things reasonably practicable to 12 avoid or diminish any loss or any circumstances likely to give rise to a loss or claim 13 insured under this [P]olicy.” (Id.) The provision continues, “This [P]olicy will 14 indemnify [ViacomCBS] for [its] ascertained net loss of additional incurred expenses 15 and/or increased costs necessarily incurred . . . to avoid or diminish any such loss or 16 claim, subject to” deductible and maximum liability limits. (Id.) 17 B. The Productions and the Pandemic 18 Two of the productions ViacomCBS declared under the Policy are (1) Goldie’s 19 Oldies, a Nickelodeon International sitcom series filmed outside Manchester, England, 20 (VSUF 30–31), and (2) the 2020 Kid’s Choice Awards (“2020 KCAs”), a live awards 21 ceremony produced in Los Angeles, California, (Great Divide Statement of 22 Uncontroverted Fact (“GDSUF”) 10–11, ECF No. 53-2). Both productions were 23 scheduled for production in 2020. 24 In January 2020, the Centers for Disease Control and Prevention and the World 25 Health Organization (“WHO”) confirmed the global person-to-person spread of a 26 highly contagious virus and its resulting disease, COVID-19. (VSUF 22–23, 25.) By 27 March 2020, the WHO declared the outbreak a global pandemic, (VSUF 26), and the 28 governments in the United Kingdom and the United States directed the public to stay

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1 at home and avoid large gatherings, (VSUF 38; ViacomCBS Statement of Genuine 2 Disputes and Additional Material Facts (“VAMF”) 42–44, ECF No. 56-16). 3 1. Goldie’s Oldies 4 Filming for Goldie’s Oldies began in January 2020 and was scheduled to end by 5 August 3, 2020. (VSUF 31–32.) However, in March 2020, the producers shut down 6 production after (1) learning that cast members had been exposed to COVID-19, and 7 (2) in light of UK government directives. (VSUF 33–38.) The production team 8 developed COVID-19 safety protocols in consultation with medical experts and 9 guidance from the UK government and National Health Service. (VSUF 40–49.) The 10 protocols included maintaining a COVID-19 team on set, designating working zones 11 and on-set traffic flow patterns, administering daily temperature checks and 12 COVID-19 questionnaires, testing cast and crew for COVID-19 weekly, and cleaning 13 and disinfecting all set materials regularly. (VSUF 50–59.) When Goldie’s Oldies 14 resumed filming in August 2020, the production implemented these COVID-19 15 protocols. (VSUF 50.) Filming concluded on November 24, 2020. (VSUF 60.) 16 ViacomCBS requested coverage for the costs incurred due to the COVID-19 17 protocols pursuant to the Due Diligence provision of the Policy. (See VSUF 61.) 18 Great Divide responded with a letter reserving its rights, but has not yet approved or 19 denied the claim. (Great Divide Statement (“GDAMF”) 35–41, ECF No. 55-2.3) 20 2. 2020 Kid’s Choice Awards 21 The 2020 KCAs was scheduled to take place live on March 22, 2020, at the Los 22 Angeles Forum. (GDSUF 11.) The Kid’s Choice Awards event features between 75 23 and 100 celebrity guests and performers and traditionally draws a live audience of 24 tens of thousands. (VAMF 31–36.) However, in March 2020, government officials in 25 3 Great Divide confusingly titles its document raising additional material facts as a “Statement of 26 Genuine Disputes,” (ECF No. 55-2), and its document raising genuine disputes as a “Response,” (ECF No. 55-1). Great Divide also does not comply with the Court’s requirement that additional 27 material facts be numbered consecutively following the moving party’s facts. (See Scheduling 28 Order 7, ECF No. 25.) For clarity and consistency, the Court cites Great Divide’s additional facts as “GDAMF,” (ECF No. 55-2), and its “Response” as “GDSGD,” (ECF No. 55-1).

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1 California and Los Angeles directed that, due to the spread of COVID-19, large 2 gatherings should be rescheduled or cancelled. (VAMF 42–44.) Accordingly, 3 Nickelodeon postponed, and ultimately cancelled, the 2020 KCAs. (VAMF 45–49; 4 GDSUF 13.) 5 ViacomCBS submitted an abandonment claim for the costs incurred prior to 6 and after abandoning the 2020 KCAs, pursuant to Extra Expense Coverage. (VAMF 7 50–51.) Great Divide has not paid this claim and denies that costs incurred prior to 8 abandonment come within the Policy’s Extra Expense Coverage. (VAMF 53; 9 GDMPSJ 8; see also Countercl. ¶¶ 43–48, ECF No. 18.) 10 C. The Notice of Non-Renewal 11 On September 28, 2020, Great Divide sent ViacomCBS a “Notice of 12 Nonrenewal of Insurance” regarding the Policy. (VSUF 63–64; GDAMF 17–18.) 13 The Notice stated that Great Divide would “not renew” the Policy “when it expires,” 14 and that coverage would therefore cease on December 1, 2020. (Wexler Decl. ISO 15 VMPSJ Ex. B (“Nonrenewal Notice”), ECF No. 52-23.) 16 D. This Litigation 17 ViacomCBS brings claims against Great Divide for breach of contract, breach 18 of the duty of good faith and fair dealing, and declaratory relief with respect to 19 coverage for its COVID-19-related claims on more than 100 productions. (See 20 VMPSJ 7.) Great Divide brings a counterclaim against ViacomCBS for declaratory 21 relief regarding Great Divide’s obligations regarding coverage and the validity of its 22 nonrenewal. (See Countercl. ¶¶ 1, 25–58.) 23 The parties have resolved more than 95 of the approximately 145 television 24 production claims made under the Policy. (GDSUF 1.) However, with respect to 25 some of the remaining larger claims, they disagree about which losses are covered and 26 to what extent. (See Joint Stip., ECF No. 61.) Thus, to streamline this litigation, the 27 parties now focus on the claims regarding Goldie’s Oldies and the 2020 KCAs, as “test 28 claims” that present issues common to the remaining claims in dispute. (Id.) The

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1 parties each move for partial summary judgment, seeking adjudication of discrete 2 issues material to the test claims. 4 ViacomCBS and Great Divide each request judicial notice of various materials. 5 (ViacomCBS Reqs. Judicial Notice (“VRJN”), ECF Nos. 52-3, 56-11; Great Divide 6 Reqs. Judicial Notice (“GDRJN”), ECF Nos. 53-3, 55-22.) The Court GRANTS 7 ViacomCBS’s motion RJN, ViacomCBS’s opposition RJN, and Great Divide’s 8 opposition RJN, (ECF Nos. 52-3, 55-22, 56-11), because the Court may judicially 9 notice information made publicly available by government entities as well as 10 publications introduced to indicate what was in the public realm at the time. Fed. R. 11 Evid. 201(b); Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998–99 (9th Cir. 12 2010); Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 13 (9th Cir. 2010). The Court DENIES Great Divide’s motion RJN, (ECF No. 53-3), 14 because the Court need not judicially notice the parties’ representation to the Court to 15 consider them, and because judicial notice is not appropriate for information found in 16 wikis and similar crowdsourced third-party websites. See Cruz v. Mercedes-Benz 17 USA, LLC, No. 5:21-cv-809-JGB (SHKx), 2021 WL 4816862, at *1 n.1 (C.D. Cal. 18 Aug. 12, 2021) (court record); Gerritsen v. Warner Bros. Ent. Inc., 112 F. Supp. 3d 19 1011, 1028–29 (C.D. Cal. 2015) (wiki). 20 ViacomCBS and Great Divide each object to specific items of evidence. 21 (ViacomCBS Objs., ECF Nos. 56-17, 58-9; Great Divide Objs., ECF Nos. 55-3, 57-1, 22 60.) The Court has reviewed and evaluated each of the objections and finds it 23 “unnecessary and impractical . . . to methodically scrutinize each objection and give a 24 full analysis of each argument raised.” See Doe v. Starbucks, Inc., No. 8:08-cv-0582- 25 AG (CWx), 2009 WL 5183773, at *1 (C.D. Cal. Dec. 18, 2009). Accordingly, the 26 Court addresses the objections in the following categories. First, where the challenged 27 evidence is unnecessary to the resolution of the summary judgment motions or 28 supports facts not in dispute, the Court need not resolve objections to that evidence

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1 here. Burch v. Regents of Univ. of Cal., 433 F. Supp. 2d 1110, 1122 (E.D. Cal. 2006). 2 Additionally, evidence that could be presented in an admissible form at trial may be 3 considered on summary judgment and therefore objections on this basis are 4 OVERRULED. See Fraser v. Goodale, 342 F.3d 1032, 1036–37 (9th Cir. 2003). 5 Moreover, the Court disregards all boilerplate objections and improper argument, 6 statements of law, or legal conclusions in statements of fact or of dispute. (See 7 Scheduling Order 7–9.) Finally, to the extent the Court relies on challenged evidence 8 without discussion, objections to that evidence are OVERRULED. The Court will 9 rule on any remaining objections, as necessary, below. See Burch, 433 F. Supp. 2d 10 at 1122 (ruling on evidentiary objections only as necessary). 12 A court “shall grant summary judgment if the movant shows that there is no 13 genuine dispute as to any material fact and the movant is entitled to judgment as a 14 matter of law.” Fed. R. Civ. P. 56(a). A disputed fact is “material” where it might 15 affect the outcome of the suit under the governing law, and the dispute is “genuine” 16 where “the evidence is such that a reasonable jury could return a verdict for the 17 nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The 18 burden of establishing the absence of a genuine issue of material fact lies with the 19 moving party. See Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). 20 Once the moving party satisfies its initial burden, the nonmoving party cannot 21 simply rest on the pleadings or argue that any disagreement or “metaphysical doubt” 22 about a material issue of fact precludes summary judgment. See id.; Matsushita Elec. 23 Indus. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a “non-moving party 24 must show that there are ‘genuine factual issues that . . . may reasonably be resolved 25 in favor of either party.’” Cal. Architectural Bldg. Prods., Inc. v. Franciscan 26 Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) (quoting Anderson, 477 U.S. 27 at 250 (emphasis omitted)). Courts should grant summary judgment against a party 28

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1 who fails to make a sufficient showing on an element essential to her case when she 2 will ultimately bear the burden of proof at trial. Celotex, 477 U.S. at 322–23. 3 In ruling on summary judgment motions, courts “view the facts and draw 4 reasonable inferences in the light most favorable” to the nonmoving party. Scott v. 5 Harris, 550 U.S. 372, 378 (2007) (internal quotation marks omitted). Thus, when 6 parties file cross-motions for summary judgment, the court “evaluate[s] each motion 7 separately, giving the nonmoving party in each instance the benefit of all reasonable 8 inferences.” ACLU of Nev. v. City of Las Vegas, 466 F.3d 784, 790–91 (9th Cir. 9 2006). The court considers “each party’s evidence, regardless under which motion the 10 evidence is offered.” Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir. 11 2011). The Court may assume that material facts claimed and adequately supported 12 are undisputed except to the extent that such material facts are (a) included in the 13 opposing party’s responsive statement of disputes and (b) controverted by declaration 14 or competent written evidence. C.D. Cal. L.R. 56-3. 16 ViacomCBS and Great Divide move for partial summary judgment on issues 17 that require the Court to interpret the Policy terms. Interpretation of an insurance 18 policy, including whether a contract provision is ambiguous, is a question of law. 19 Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1, 18 (1995). “While insurance contracts 20 have special features, they are still contracts to which the ordinary rules of contractual 21 interpretation apply.” Powerine Oil Co., Inc. v. Superior Ct., 37 Cal. 4th 377, 390 22 (2005). 23 Under California’s “statutory rules of contract interpretation, the mutual 24 intention of the parties at the time the contract is formed governs interpretation.” AIU 25 Ins. Co. v. Superior Ct., 51 Cal. 3d 807, 821 (1990) (citation omitted). Courts “look 26 first to the language of the contract in order to ascertain its plain meaning or the 27 meaning a layperson would ordinarily attach to it.” Waller, 11 Cal. 4th at 18; AIU, 28 51 Cal. 3d at 825–27. The “clear and explicit” language of the contract is construed in

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1 its “ordinary and popular sense,” unless “used by the parties in a technical sense or a 2 special meaning is given to them by usage.” AIU, 51 Cal. 3d at 822; see id. at 825–27 3 (looking to dictionary definitions for “ordinary and popular” meaning). In insurance 4 cases, courts must interpret policy language “in context, with regard to its intended 5 function in the policy,” Bank of the W. v. Superior Ct., 2 Cal. 4th 1254, 1265 (1992), 6 and “interpret the policy as a whole, in a manner which gives force and effect to every 7 clause,” Martin Marietta Corp. v. Ins. Co. of N. Am., 40 Cal. App. 4th 1113, 1122 8 (1995). 9 Where a provision is capable of more than one reasonable construction, it is 10 considered ambiguous. Waller, 11 Cal. 4th at 18. Courts may not find language in a 11 contract ambiguous in the abstract or strain to create an ambiguity where none exists. 12 Id. at 18–19. “[A]mbiguous language is construed against the party who caused the 13 uncertainty to exist.” AIU, 51 Cal. 3d at 822 (citing Cal. Civ. Code § 1654). 14 However, in the absence of evidence establishing one party as the primary author or 15 “suggesting that the provisions in question were actually negotiated or jointly 16 drafted,” courts interpret any ambiguities in favor of coverage. Id. at 823–24; Martin 17 Marietta, 40 Cal. App. 4th at 1135. 18 A. ViacomCBS’s Motion4 19 ViacomCBS seeks summary adjudication of two issues: One—that the costs 20 ViacomCBS incurred in developing and implementing COVID-19 safety protocols for 21 Goldie’s Oldies are covered under the Policy’s Due Diligence Clause and mitigation 22 doctrine such that Great Divide must indemnify ViacomCBS for those costs, and 23 Two—that Great Divide’s September 28, 2020 Notice of Nonrenewal of Insurance 24 was invalid. (ViacomCBS Notice VMPSJ 2, ECF No. 52.) Great Divide opposes 25 both issues. (GD Opp’n 1–3.)5 26

4 In analyzing ViacomCBS’s Motion, the Court gives Great Divide “the benefit of all reasonable 27 inferences.” ACLU of Nev., 466 F.3d at 790–91; Scott, 550 U.S. at 378. 28 5 Great Divide also contends ViacomCBS’s Motion is procedurally deficient under Local Rule 7-3 and Federal Rule of Civil Procedure 56(a). Neither argument has merit.

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1 1. Issue One—Goldie’s Oldies Safety Protocols 2 ViacomCBS argues the Court should find as a matter of law that, first, 3 ViacomCBS acted with due diligence in developing and implementing the COVID-19 4 safety protocols for Goldie’s Oldies, which protocols were reasonably practicable 5 measures taken to avoid or diminish covered losses, meaning that, second, Great 6 Divide must indemnify ViacomCBS for these additional costs pursuant to (a) the Due 7 Diligence Clause and (b) the common law doctrine of mitigation. (VMPSJ 7.) 8 a. Due Diligence Clause 9 The Due Diligence Clause requires ViacomCBS to “use due diligence” and do 10 “all things reasonably practicable to avoid or diminish any loss or any circumstances 11 likely to give rise to a loss or claim insured under this policy.” (Policy GD0085.) The 12 clause unequivocally states that the Policy “will indemnify” ViacomCBS for its 13 “ascertained net loss of additional incurred expenses and/or increased costs 14 necessarily incurred . . . to avoid or diminish any such loss or claim.” (Id.) 15 Here, there is no dispute that ViacomCBS developed COVID-19 safety 16 protocols for the Goldie’s Oldies production, or that it did so in consultation with 17 medical experts and guidance from the UK government. (See VSUF 40–59; 18 GDSGD 40–59 (purporting to dispute ViacomCBS’s statements of fact concerning the 19 protocols, but only on the basis that Great Divide did not learn of the protocols’ 20 existence sooner).) Nor does Great Divide dispute that the protocols were reasonable 21 or that they enabled the production to resume filming in August 2020, thereby 22 reducing the insured loss ViacomCBS was then incurring due to the shutdown and 23 filming delay. (See GDSGD 40–60.) Moreover, ViacomCBS designed and 24 implemented its COVID-19 safety protocols to reduce the risk of COVID-19 exposure 25 and infection amongst the cast and crew. Thus, the protocols also served to “avoid or 26 diminish . . . circumstances likely to give rise to a loss or claim insured under this 27 policy,” in that the protocols reduced the likelihood that a cast or crew member would 28 become infected or spread the infection to others, giving rise to a claim under the

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1 Cast, Extra Expense, or other Coverages in the Policy. In light of the undisputed facts 2 of this case and of the evolving global pandemic at that time, no reasonable jury could 3 find that developing and implementing the Goldie’s Oldies COVID-19 safety 4 protocols was other than reasonably practicable to avoid or diminish a loss or claim 5 under the Policy. See West v. State Farm Fire & Cas. Co., 868 F.2d 348, 351 (9th Cir. 6 1989) (“[R]easonableness becomes a question of law appropriate for determination on 7 motion for summary judgment when only one conclusion about the conduct’s 8 reasonableness is possible.”). 9 Great Divide raises a host of distractions, arguing that partial summary 10 judgment is not appropriate because ViacomCBS “cannot prove all the elements of 11 breach of contract.” (GD Opp’n 16.) Specifically, Great Divide argues that 12 (1) ViacomCBS has not complied with conditions precedent; (2) Great Divide has not 13 breached the Policy because it has not yet denied ViacomCBS’s COVID-19 safety 14 protocol claim; and (3) ViacomCBS has not established that its “ascertained net loss” 15 was “necessarily incurred,” or that the amount of the loss is within Policy limits, as 16 required by the Due Diligence Clause. (GD Opp’n 16–24.) These arguments miss the 17 mark. None are necessary or material to resolving the issue raised in ViacomCBS’s 18 Motion: that developing and implementing COVID-19 safety protocols for Goldie’s 19 Oldies was reasonably practicable to avoid or diminish insured loss or potential loss. 20 Questions regarding compliance with conditions precedent, the “ascertained” amount 21 of loss, and whether costs were “necessarily incurred,” are immaterial to the Court’s 22 resolution of the issue ViacomCBS presented in its Motion. 23 Accordingly, the Court finds that there is no genuine dispute of material fact, 24 and ViacomCBS is entitled to a finding as a matter of law that, pursuant to the Due 25 Diligence Clause of the Policy, ViacomCBS’s efforts in developing and implementing 26 COVID-19 safety protocols for the production of Goldie’s Oldies were reasonably 27 practicable efforts taken to avoid or diminish loss or circumstances likely to give rise 28 to a loss or claim insured under the Policy. Additionally, ViacomCBS’s reliance on

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1 medical experts and government guidance to develop the protocols, as well as the 2 implemented protocols themselves, were reasonably practical as a matter of law for 3 purposes of the Due Diligence Clause. Consequently, Great Divide must indemnify 4 ViacomCBS pursuant to the Due Diligence Clause for the costs ViacomCBS incurred 5 to develop and implement COVID-19 safety protocols for Goldie’s Oldies.6 6 b. Mitigation Doctrine 7 ViacomCBS additionally contends that, independent of the Policy, “the 8 common law doctrine of mitigation also requires Great Divide to reimburse 9 ViacomCBS for expenses it incurred to reduce a greater loss.” (VMPSJ 20–22.) 10 ViacomCBS provides over a page of secondary authority and case law reciting the 11 common law doctrine of mitigation, including from other states and Circuits. (Id.) 12 However, ViacomCBS’s brief is devoid of any independent analysis applying the 13 mitigation doctrine. (See id.) The Court declines to assume sua sponte that 14 ViacomCBS’s Due Diligence Clause analysis, (VMPSJ 23–24), applies wholly and 15 equally to the mitigation doctrine. Consequently, the Court finds that ViacomCBS 16 fails in its burden of showing it is entitled to judgment as a matter of law on this issue. 17 2. Issue Two—Notice of Nonrenewal 18 On September 28, 2020, Great Divide sent ViacomCBS a Notice of Nonrenewal 19 of Insurance. (Nonrenewal Notice.) It stated, “This Notice is to advise you that we 20 will not renew the above captioned policy when it expires. Your insurance will cease 21 on [12/1/2020].” (Id.) The Notice explained that “[t]his policy is being non-renewed 22 due to loss experience and the current uncertainty around COVID-19 exposures and 23 their impact on coverage and liability.” (Id.) 24 ViacomCBS contends that Great Divide’s Nonrenewal Notice is invalid and 25 without force or effect because the Policy is a three-year policy which Great Divide 26 could not non-renew until the Policy’s expiration in 2021, the third year. (See 27 6 This conclusion does not in any way vitiate or lessen the requirements of the Due Diligence Clause 28 that “additional incurred expenses” be “ascertained,” and any increased costs be “necessarily incurred.”

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1 VMPSJ 25 (relying on Endorsement No. 6—Anniversary Policy Periods and Rating 2 Review).) In contrast, Great Divide contends the Policy is three, one-year policies, 3 each with a separate expiration date on the annual anniversary, and Great Divide was 4 therefore entitled to non-renew the Policy in 2020, the second year. (GD Opp’n 24 5 (relying on Endorsement No. 5—NY Changes Cancellation and Non-Renewal”).) 6 Endorsement No. 5 states that “[t]he insurer can non-renew the policy by 7 mailing or delivering written notice to the Named Insured . . . [a]t least sixty (60) days 8 but not more than one hundred and twenty (120) days . . . before: (1) The expiration 9 date, or (2) The anniversary date if this is a continuous policy.” (Policy GD0117.) 10 Significantly, neither party asserts, or even suggests, that the Policy qualifies as a 11 “continuous policy” for purposes of Endorsement No. 5.7 As a result, for Great 12 Divide’s Notice of Nonrenewal to be effective, Great Divide must have sent it at least 13 60 days but not more than 120 days before the “expiration date” of the policy. 14 Therefore, the effectiveness of the Notice of Nonrenewal hinges on whether the 15 Policy is a single policy with a three-year policy period expiring on December 1, 16 2021, as ViacomCBS argues, (VMPSJ 25; V Reply 11–13), or three separate policies, 17 each with a one-year policy period, the second of which expired on December 1, 18 2020, as Great Divide argues, (GD Opp’n 24). The Policy’s Declarations page states 19 that the Policy Period is “December 1, 2019 to December 1, 2020,” which initially 20 supports Great Divide’s position. (Policy GD0074.) However, Endorsement No. 6 21 revises this Policy Period to “December 1, 2018 to December 1, 2019,” and 22 immediately clarifies that “[t]he Policy Period . . . is comprised of three annual policy 23 periods as follows: December 1, 2018 to December 1, 2019 CIM 7508608-10[;] 24 December 1, 2019 to December 1, 2020 CIM 7508608-11[;] December 1, 2020 to 25 December 1, 2021.” (Policy GD0119 (emphasis added).) As the Policy does not 26

7 Neither ViacomCBS in its moving papers nor Great Divide in its opposition acknowledge the 27 language in Endorsement No. 5 regarding “the anniversary date of a continuous policy.” (See 28 generally VMPSJ 25–26; GD Opp’n 24–25.) ViacomCBS quotes the language in its Reply, (V Reply 12), but does not otherwise address the notion of a “continuous policy.”

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1 define “expiration date,” based on the foregoing, Endorsement No. 6 could be read to 2 mean the Policy expires at the end of the multi-year “Policy Period,” or at the end of 3 any of the three annual “policy periods.” 4 Yet, the above language cannot be read in isolation; it must be read in context 5 with other provisions and endorsements. Martin Marietta, 40 Cal App. 4th at 1122 6 (instructing courts to “interpret the policy . . . in a manner which gives force and effect 7 to every clause.”); see Cal. Civ. Code § 1641. Endorsement No. 6 also states that the 8 Policy is “subject to guaranteed rates for the first and second annual policy periods,” 9 and that Great Divide has the right, “at the end of the second annual policy period,” 10 “to review rates and revise for the third annual policy period.” (Policy GD0119.) 11 Nothing in Endorsement No. 6, or Endorsement No. 5 for that matter, expressly 12 authorizes Great Divide to “non-renew” “at the end of the second annual policy 13 period.” Reading the endorsements to permit Great Divide to do so would require 14 rewriting the contract, either by inserting “or non-renew” in Endorsement No. 6,8 or 15 inserting “at the end of an annual policy period” in Endorsement No. 5.9 Such 16 revision is impermissible. See Rosen v. State Farm Gen. Ins. Co., 30 Cal. 4th 1070, 17 1073 (2003) (“[W]e do not rewrite any provision of any contract, [including an 18 insurance policy], for any purpose.” (alterations in original)). 19 As Great Divide’s construction of the Policy’s terms is internally inconsistent 20 when the endorsements are read together, the Court finds it unreasonable. That leaves 21 only ViacomCBS’s construction at issue: that the Policy is a single policy with a 22 three-year policy period expiring on December 1, 2021. This interpretation permits 23 the endorsements to be read in harmony, giving meaning to Endorsement No. 6’s 24

25 8 This revision would read: “At the end of the second annual policy period, we have the right to review rates and revise [or non-renew] for the third annual policy period if necessary.” (See Policy 26 GD0119 (revised).) 9 This revision would read: “If the Insurer decides not to renew the policy . . . the Insurer will mail or 27 deliver written notice . . . at least sixty (60) days but not more than one hundred and twenty (120) 28 days before: (1) The expiration date; or (2) The anniversary date if this is a continuous policy[; or (3) the end of an annual policy period].” (See Policy GD0117 (revised).)

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1 potential rate revision “at the end of the second annual policy period,” as well as 2 Endorsement No. 5’s non-renewal in advance of the “expiration date.” As 3 ViacomCBS’s construction does not require any strained reading or revision, the Court 4 finds it reasonable. 5 Accordingly, ViacomCBS demonstrates that it is entitled to a finding that Great 6 Divide was not permitted under the Policy to non-renew in 2020, and its Notice of 7 Nonrenewal is invalid as a matter of law. 8 3. Conclusion—ViacomCBS’s Motion 9 In summary, ViacomCBS’s Motion is GRANTED IN PART and DENIED IN 10 PART. (ECF No. 52.) Specifically, the Court grants the Motion in part and finds the 11 costs ViacomCBS incurred in developing and implementing COVID-19 safety 12 protocols for Goldie’s Oldies are covered under the Policy’s Due Diligence Clause 13 such that Great Divide must indemnify ViacomCBS for those costs, subject to the 14 specifications of the Due Diligence Clause. However, the Court denies the Motion in 15 part and finds that ViacomCBS does not establish that Great Divide must reimburse 16 ViacomCBS for these costs under the doctrine of mitigation. Finally, the Court grants 17 the Motion in part and finds that Great Divide’s September 28, 2020 Notice of 18 Nonrenewal of Insurance was invalid, and without force or effect. 19 B. Great Divide’s Motion10 20 Great Divide seeks partial summary judgment on a single issue: that 21 ViacomCBS’s pre-production costs incurred prior to its abandonment of the 2020 22 KCAs due to the COVID-19 pandemic do not come within the Policy’s “Definition of 23 Loss” under Extra Expense Coverage.11 (Great Divide Notice GDMPSJ 2–3, ECF 24 No. 53.) 25

26 10 In analyzing Great Divide’s Motion, the Court gives ViacomCBS “the benefit of all reasonable inferences.” ACLU of Nev., 466 F.3d at 790–91; Scott, 550 U.S. at 378. 27 11 The parties dispute whether ViacomCBS’s 2020 KCAs claim consists solely of costs incurred prior 28 to abandonment, (GDMPSJ 11), or includes expenditures incurred after abandonment as well, (V Opp’n 16 n.5; GD Reply 4 n.4). This dispute is immaterial for purposes of this Motion because

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1 Great Divide argues that the language of the Extra Expense Coverage’s 2 “Definition of Loss” provision is clear and explicit, and when the language is 3 construed in its ordinary sense, ViacomCBS’s pre-production costs do not qualify as 4 “Loss” under Extra Expense Coverage. (GDMPSJ 3.) ViacomCBS contends the 5 plain language of the Extra Expense Coverage “Definition of Loss” does not support 6 Great Divide’s interpretation, which ViacomCBS argues fails to consider the Policy 7 language as a whole. (V Opp’n 5.) ViacomCBS also offers extrinsic evidence and 8 argues it reveals a latent ambiguity, to be construed in ViacomCBS’s favor, regarding 9 the proper interpretation of the Extra Expense Coverage’s “Definition of Loss.” 10 (V Opp’n 5, 21–23.) 11 1. Plain Meaning 12 The words of a policy should be interpreted in accordance with their “ordinary 13 and popular sense, unless used by the parties in a technical sense or a special meaning 14 is given to them by usage.” AIU, 51 Cal. 3d at 822 (internal quotation marks omitted); 15 Cal. Civ. Code § 1644. If contractual language is clear and explicit and does not 16 involve an absurdity, the plain meaning governs. Cal. Civ. Code § 1638. 17 As used in Extra Expense Coverage, the Policy defines “loss” in three ways. 18 The first defines loss as “any extra expenditure” ViacomCBS incurred “in completing 19 an Insured Production over and above” what it would have incurred, but for the 20 happening of an insured peril. (Policy GD0106 (¶ VII.A.).) The second defines 21 “loss” as “such actual expenditure incurred by [ViacomCBS] in an Insured Production 22 solely and directly by reason of the happening of” the insured peril. (Id.) The third is 23 what ViacomCBS refers to as the abandonment provision, and it provides that, “In the 24 event that [an insured peril] reasonably, practically and necessarily prevents the 25 completion of an Insured Production,” ViacomCBS “will have the right to abandon 26 production and claim under this coverage for such actual expenditures [ViacomCBS] 27

28 Great Divide seeks partial summary judgment only as to expenditures incurred prior to the abandonment. (Great Divide Notice GDMPSJ 2–3.)

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1 incur[s] in an Insured Production solely and directly by reason of the happening of” 2 the insured peril.12 (Id. (¶ VII.B.).) 3 The Court finds that the loss which ViacomCBS claims arose from abandoning 4 the 2020 KCAs—and here, by “loss,” the Court means only those costs expended 5 before the abandonment—does not come within the clear, ordinary meaning of any of 6 these three definitions. The first definition requires extra expenditures incurred in 7 completing the production. The 2020 KCAs were abandoned; ViacomCBS does not 8 contend here that it incurred extra expenditures in completing the 2020 KCAs. The 9 first Definition of Loss does not apply. 10 The second and third definitions require actual expenditures, and the parties do 11 not dispute that ViacomCBS’s pre-production costs qualify as such. However, both 12 definitions also require that the expenditures be incurred solely and directly by reason 13 of the insured peril. ViacomCBS does not contend that usage gives the terms “solely” 14 or “directly” special meaning, so the ordinary and popular sense governs. AIU, 15 51 Cal. 3d at 822. As the Policy does not define “solely” or “directly,” (see Policy 16 GD0089), resort to dictionary definitions is appropriate, AIU, 51 Cal. 3d at 825–27. 17 “Solely” means “to the exclusion of all else,” and “directly” means “in a 18 straightforward manner.” Solely, Merriam-Webster, https://www.merriam- 19 webster.com/dictionary/solely (accessed Nov. 4, 2022); Directly, Black’s Law 20 Dictionary (11th ed. 2019); see also Directly, Cambridge Dictionary, 21 https://dictionary.cambridge.org/us/dictionary/english/directly (accessed Nov. 4, 2022) 22 (defining “directly” as “without anything else being involved or in between”). Here, 23 12 For purposes of this Motion, the Court considers “insured peril” to mean the postponement and 24 abandonment (together, “the abandonment”) of the 2020 KCAs as a result of the COVID-19 25 pandemic. The Court acknowledges that the parties’ evidence reveals a lack of clarity regarding what, precisely, Great Divide contends is the “insured peril” for purposes of the 2020 KCAs claim. 26 (See V Opp’n 16 n.4.) However, this lack of clarity is immaterial to the Court’s disposition of Great Divide’s Motion. Relatedly, the Court need not specify within which “extension of coverage” the 27 abandonment falls, as the parties do not dispute that it does come within a covered occurrence. (See 28 GDMPSJ 5 n.5 (asserting the “Civil Authority” coverage applies); V Opp’n 15 n.3 (asserting that, at least, both the “Civil Authority” and the “Imminent Peril” coverages apply).)

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1 ViacomCBS did not incur the 2020 KCAs pre-production costs exclusively or 2 straightforwardly by reason of the abandonment. Rather, ViacomCBS incurred the 3 costs in the ordinary course of preparing to produce a live event, before the pandemic 4 caused California and Los Angeles to restrict gatherings and before ViacomCBS was 5 forced to abandon the production. ViacomCBS would have incurred the 2020 KCAs 6 pre-production costs regardless of COVID-19, the pandemic, or the abandonment. As 7 such, the second and third definitions of loss do not apply. 8 Based on the “ordinary and popular sense” of the Policy terms, AIU, 51 Cal. 3d 9 at 822, ViacomCBS’s pre-production costs incurred prior to its abandonment of the 10 2020 KCAs due to the COVID-19 pandemic do not come within the Policy’s Extra 11 Expense Coverage Definition of Loss. 12 2. Policy as a Whole 13 Construing the Extra Expense Coverage Definition of Loss in context and with 14 the Policy as a whole, see Cal. Civ. Code § 1641, does not disturb the above 15 conclusion. For instance, the Insuring Agreement for Extra Expense Coverage 16 provides that Great Divide will pay the loss sustained “by reason of such extra 17 expense as [ViacomCBS] necessarily incur[s]” in the event of cancellation “as a direct 18 result of” an insured peril. (Policy GD0103.) Thus, the Insuring Agreement of Extra 19 Expense Coverage only covers expenses that are extra, necessary, and incurred as a 20 direct result of the abandonment. 21 ViacomCBS points to language in other sections and coverages within the 22 Policy, and argues these other provisions reveal inconsistencies with the “ordinary and 23 popular sense” construction above. (V Opp’n 18–21.) But none of the provisions on 24 which ViacomCBS relies sufficiently undermines the direct causality required in the 25 Definition of Loss abandonment provision under Extra Expense Coverage. For 26 example, ViacomCBS argues that the definition of Loss in Cast Coverage supports its 27 position, but that definition only further bolsters the Court’s conclusion in favor of 28 Great Divide. The Cast Coverage “Loss” definition provides that, in the event of the

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1 disgrace of a Covered Person, ViacomCBS shall have the right to abandon the 2 production and “claim under this section for such actual expenditures it incur[s] in an 3 Insured Production.” (V Opp’n 20 (quoting Policy GD0094 (VI.C.)).) These “actual 4 expenditures” are considered a “Loss” even without the requirement that they be 5 “solely and directly by reason” of, for instance, the covered person’s disgrace. That 6 the Policy uses clear and unambiguous causality language in the Definition of Loss 7 abandonment provision under Extra Expense Coverage, but not for the corollary Loss 8 under Cast Coverage, supports that the contracting parties specifically intended, with 9 respect to Extra Expense Coverage, to link any Loss to the insured peril that prompted 10 it to be incurred. 11 Thus, considering the Policy as a whole does not disturb the conclusion above, 12 that the 2020 KCAs pre-production costs are not a covered “Loss” under Extra 13 Expense Coverage. 14 3. Industry Custom & Practice 15 Finally, ViacomCBS contends the Court should consider extrinsic evidence of 16 industry custom and usage in interpreting the Policy. (V Opp’n 21–22.) 17 Extrinsic evidence is not admissible to “add to, detract from, or vary the terms 18 of a written contract.” Pac. Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging Co., 19 69 Cal. 2d 33, 39 (1968). However, extrinsic evidence “is admissible to prove a 20 meaning to which the contract is reasonably susceptible.” Hewlett-Packard Co. v. 21 Oracle Corp., 65 Cal. App. 5th 506, 531 (2021). Thus, before a court can evaluate 22 whether proffered evidence is admissible or prohibited, the court must first determine 23 the parties’ intention with respect to the contract terms. Pac. Gas & Elec., 69 Cal. 2d 24 at 39–40; see also Hewlett-Packard, 65 Cal. App. 5th at 531 (“The court, at least 25 initially, considers all credible evidence offered to prove the intention of the parties.” 26 (internal quotation marks omitted)). 27 ViacomCBS offers the declarations of Robert Jellen and Barrie Wexler to 28 support the proposition that, “as a matter of custom and practice in the entertainment

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1 insurance industry, both insurers and insureds understand that an Abandonment Loss 2 Provision such as that contained in the Policy allows an insured to abandon a 3 production and recover under the policy all the costs incurred in the production.” 4 (V Opp’n 21; Decl. Robert Jellen (“Jellen Decl.”) ¶¶ 11–12, ECF No. 56-1; Decl. 5 Barrie Wexler ISO V Opp’n (“Wexler Decl. V Opp’n”) ¶¶ 8–9, ECF No. 56-3.) 6 ViacomCBS also offers Jellen’s and Wexler’s declaration testimony that ViacomCBS’s 7 prior insurer paid similar pre-production cost claims under the Cast Coverage of an 8 identical prior policy. (Jellen Decl. ¶ 13; Wexler Decl. V Opp’n ¶ 10.) 9 As noted, the parties’ inclusion of the language “solely and directly” indicates 10 their intent to require causality for a covered abandonment Loss under Extra Expense 11 Coverage. ViacomCBS does not explain, in its argument or the proffered declarations, 12 how its asserted industry custom and practice can effectively negate the clear and 13 unambiguous terms, “solely and directly.” Furthermore, that a previous insurer 14 covered similar pre-production claims under a different coverage section, Cast 15 Coverage, is immaterial here because, even assuming identical prior policy language, 16 as the Court noted above, the Cast Coverage abandonment provision does not include 17 the causality required in the Extra Expense Coverage. 18 Based on the clear and unambiguous language of the Extra Expense Coverage 19 Definition of Loss, the Court concludes that the parties intended to require causality 20 for this type of Coverage. Therefore, as the proffered extrinsic evidence seeks to 21 “detract from, or vary” those terms, Pac. Gas & Elec. Co., 69 Cal. 2d at 39, the Court 22 finds the declarations inadmissible.13 23 4. Conclusion—Great Divide’s Motion 24 In summary, ViacomCBS’s pre-production costs incurred prior to its 25 abandonment of the 2020 KCAs due to the COVID-19 pandemic do not come within 26 27 13 Great Divide’s evidentiary objections based on impermissible extrinsic evidence, to paragraphs 28 eleven through thirteen of the Jellen Declaration and paragraphs eight through ten of the Wexler Declaration in opposition, are SUSTAINED. (GD Evid. Objs. ISO GD Reply, ECF No. 57-1.)

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1 || the Policy’s Definition of Loss under the Extra Expense Coverage. Accordingly, the 2 || Court GRANTS Great Divide’s Motion. (ECF No. 53.) 4 For the reasons and as discussed above, the Court GRANTS IN PART AND 5 || DENIES IN PART ViacomCBS’s Motion for Partial Summary Judgment, (ECF 6 || No. 52), and GRANTS Great Divide’s Motion for Partial Summary Judgment. (ECF 7 || No. 53.) 10 me i November 10, 2022 a KG

13 OTIS D. GHT, I 14 UNITED STATES OISTRICT JUDGE

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