Assurance Company of America et al v. National Fire & Marine Insurance Company, No. 2:2009cv01182 - Document 114 (D. Nev. 2011)
Court Description: ORDER Denying 82 MOTION for Partial Summary Judgment No. 1, Denying without Prejudice 83 MOTION for Partial Summary Judgment No. 2, Granting 85 MOTION for Partial Summary Judgment as to the Sixth Cause of Action, Granting 86 MO TION for Partial Summary Judgment as to the Thirty-Ninth Cause of Action, and Granting 87 MOTION for Partial Summary Judgment as to the Forty-Fifth Cause of Action. Signed by Judge James C. Mahan on 7/28/11. (Copies have been distributed pursuant to the NEF - ASB)
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Assurance Company of America et al v. National Fire & Marine Insurance Company Doc. 114 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 ASSURANCE CO. OF AMERICA, et al., 2:09-CV-1182 JCM (PAL) 8 Plaintiffs, 9 10 v. 11 NATIONAL FIRE & MARINE INS. CO., 12 Defendant. 13 14 15 ORDER 16 Presently before the court is plaintiffs Assurance Company of America, Maryland Casualty 17 Company, Northern Insurance Company of New York, Steadfast Insurance Company, Zurich 18 American Insurance Company, and Zurich Specialities of London’s motion for partial summary 19 judgment number one. (Doc. #82). Defendant National Fire & Marine Insurance Company has 20 responded (doc. #93), and plaintiffs have replied (doc. #97). 21 Also before the court is plaintiffs’ motion for partial summary judgment number two. (Doc. 22 #83). The defendant has objected to the motion (doc. #92) and responded to the motion (doc. #94). 23 The plaintiffs have replied. (Doc. #98). 24 Also before the court is defendant’s motion for partial summary judgment as to plaintiffs’ 25 sixth claim for relief. (Doc. #85). Plaintiffs have responded (doc. #91), and defendant has replied 26 (doc. #103). 27 Also before the court is defendant’s motion for partial summary judgment as to plaintiffs’ 28 James C. Mahan U.S. District Judge Dockets.Justia.com 1 thirty-ninth claim for relief. (Doc. #86). Plaintiffs have responded (doc. #91), and the defendant has 2 replied (doc. #103), 3 Finally before the court is defendant’s motion for partial summary judgment as to plaintiffs’ 4 forty-fifth claim for relief. (Doc. #87). Plaintiffs have responded (doc. #91), and the defendant has 5 replied. (Doc. #103). DISCUSSION 6 7 Plaintiff insurance companies filed the instant complaint for declaratory relief and monetary 8 damages against defendant National Fire & Marine Insurance Company alleging that National Fire 9 improperly denied the parties’ mutual insureds a defense in several underlying Nevada state cases. 10 Each claim herein is premised on the assumption that the defendant had an obligation to defend in 11 one of the underlying actions, the denial of which caused plaintiffs to incur sums in excess of their 12 equitable share of the defense fees and costs. From these facts, the parties have filed five motions 13 for summary judgment, which are the subject of the instant order. 14 Summary judgment is appropriate when, viewing the facts in the light most favorable to the 15 nonmoving party, there is no genuine issue of material fact, and the moving party is entitled to 16 judgment as a matter of law. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996); FED. R. CIV. P. 17 56(c). The moving party bears the burden of presenting authenticated evidence to demonstrate the 18 absence of any genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 19 (1986); see Orr v. Bank of America, 285 F.3d 764 (9th Cir. 2002) (articulating the standard for 20 authentication of evidence on a motion for summary judgement). 21 I. Plaintiffs’ First Motion For Summary Judgment Against Defendant National Fire 22 Plaintiff’s first motion for summary judgment requests a declaration that defendant National 23 Fire had a duty to defend in underlying the “Amber Ridge” action, which is the basis of plaintiffs’ 24 seventh claim for relief. The Amber Ridge litigation resulted from construction defects related to the 25 Amber Ridge condos; the complaint in which implicated Johnson Electric, the parties’ mutual 26 insured. Johnson Electric requested that National Fire tender a defense, but National Fire responded 27 with a nineteen-page declination letter, explaining that the case was not covered under the benefits 28 James C. Mahan U.S. District Judge -2- 1 articulated in National Fire’s policy. 2 3 One of the grounds for disclaiming coverage cited by National Fire in the declination letter is an exclusion based on the existence of a consolidated wrap-up insurance program: [This policy] does not apply to . . . property damage arising out of either your ongoing operations or operations included within the “products completed operations hazard” at the location described in the schedule of this endorsement as a consolidated (wrap-up) insurance program has been provided. . . . 4 5 6 7 (Plaintiff’s appendix, exhibit #20, NF0014000). The “endorsement” includes Westmark Homes, the 8 party for whom Johnson Electric performed the disputed work. The court does not find this to be an 9 “escape clause,” which would be void as against public policy, but rather a bargained-for exclusion 10 where secondary insurance is already in place. This exclusion was mentioned in the declination letter 11 as a basis for denying coverage. (See plaintiff’s appendix, exhibit #108 at NF005945) (“Policy 12 72LPS000632 contains an Exclusion-Consolidated (Wrap UP) Insurance Programs Endorsement, 13 Form M-5222 (01/2006). . . .”). 14 The court finds that a genuine dispute of material fact exists regarding whether this exclusion 15 applies to bar coverage. The dispute concerns the application of the wrap-up exclusion, and whether 16 the occurrence/damage at issue in Amber Ridge arouse out of either “ongoing operations” or 17 “operations included within the ‘products completed operations hazard’” at the Westmark location, 18 such that the endorsement excludes coverage. Accordingly, the motion for summary judgment is 19 denied. 20 II. Plaintiffs’ Second Motion For Summary Judgment Against National Fire 21 In this motion, plaintiffs lump nearly half of the claims in the complaint together with only 22 four pages of explanatory factual background. As defendant notes, the plaintiffs are essentially 23 asking the court to distill four-thousand pages of evidence to conclude, as a matter of law, that 24 plaintiffs are entitled to prevail on this claim. Accordingly, the court declines to grant the motion at 25 this time, and it is denied without prejudice. 26 III. 27 Defendant’s Motion For Partial Summary Judgment On the Sixth Claim Plaintiff’s sixth claim for relief seeks a declaration that the defendant had a duty to defend 28 James C. Mahan U.S. District Judge -3- 1 in the Allen action, a construction defect lawsuit brought by homeowners in the Meadows at Elkhorn 2 Springs development in Las Vegas, Nevada. Defendant National Fire had issued three policies in this 3 case, with the first incepting on May 18, 2002, and the last ending on November 21, 2004. Each 4 policy obligated the defendant to pay for damages due to bodily injury or property damage to which 5 the insurance applied. Each policy is also modified by an endorsement that eliminates the 6 defendant’s duty to defend where the property damage commenced prior the first day of the policy 7 period. 8 In March 2005, the insured tendered for defense and immunity the first amended complaint 9 in Allen. The complaint alleged that the insured had been aware of the construction defects at the 10 development for more than two years before National Fire issued its first policy: Plaintiffs have previously provided to [d]efendants herein an exhaustive preliminary list of defects according to the requirements of NRS 40.600, et seq., and [d]efendants are already aware of the nature of the said defects and have inspected and tested sister homes in the Meadows development which are subject to separate litigation involving [d]efendants and have been since 2000. 11 12 13 14 (Doc. #89-4). 15 Ascertaining whether a duty to defend exists is achieved by comparing the allegations in the 16 complaint with the terms of the policy. United Nat’l Ins. Co. v. Frontier Ins. Co., 99 P.3d 1153, 1158 17 (Nev. 2004). Considering the language of the insurance policies and the allegations in the underlying 18 complaint, there is no genuine issue of material fact that the alleged property damage in Allen began 19 prior to the policy date if the defendants were “already aware of the nature of the said defects . . . and 20 have been since 2000” when the first National Fire policy incepted in 2002. Accordingly, the motion 21 for summary judgment is granted. 22 IV. Defendant’s Motion For Partial Summary Judgment On The Thirty-Ninth Claim 23 Plaintiffs’ thirty-ninth claim for relief seeks a declaration that the defendant had a duty to 24 defend in the Otto action, a construction defect lawsuit brought by homeowners in a custom 25 residence located in Henderson, Nevada. The policy issued by National Fire provided for a duty to 26 defend the insured in a suit alleging bodily injury or property damage but also contained an 27 endorsement excluding coverage of property damage “arising out of, resulting from, caused, 28 James C. Mahan U.S. District Judge -4- 1 aggravated or contributed to, directly or indirectly, by the subsidence, settling, sinking, slipping, 2 falling away, caving in, shifting, eroding, mud flow, rising, tilting, or any other movement of land 3 or earth.” (Doc. #89-7). 4 On March 25, 2005, the homeowners filed suit against the parties’ mutual insured alleging 5 that it was responsible for outside concrete flatwork, pool work, and landscape work which resulted 6 in “inadequate fill and/or soil . . . abnormal and severe settlement; improperly placed reinforced steel 7 in the concrete slab; . . . sloping to exterior ground surfaces; cracking . . . the flatwork around the 8 pool, the patio and the drain, the stem wall, the block walls, and/or perimeter walls . . . and/or 9 sloping of the pool.” (Doc. #89-8). 10 Ascertaining whether a duty to defend exists is achieved by comparing the allegations in the 11 complaint with the terms of the policy. United Nat’l Ins. Co., 99 P.3d at 1158. Considering the 12 language of the insurance policies and the allegations in the underlying complaint, there is no 13 genuine issue of material fact that the alleged property damage in Otto falls within the subsidence 14 exclusion of the National Fire policy. The court also finds that the exclusion was mentioned as a 15 reason for denying coverage in the declination letter issue to the insured. (See defendant’s ex. 1 at 16 NF009427). Accordingly, defendant’s motion for summary judgment is granted. 17 V. Defendant’s Motion For Partial Summary Judgment On The Forty-Fifth Claim 18 The forty-fifth claim for relief seeks a declaration that the defendant had a duty to defend in 19 the Sage Creek action, a construction defect lawsuit brought by the homeowners association in the 20 Sage Creek development in Las Vegas, Nevada. The case involved four consecutive commercial 21 general liability insurance policies issued by National Fire to the parties’ mutual insured, Johnson 22 Electric. The first incepted on April 5, 2003, and the last ended on April 5, 2007. Each policy 23 obligated National Fire to pay for property damage, but also contained an endorsement excluding 24 coverage for damage that commenced prior to the inception date of the policy. 25 Ascertaining whether a duty to defend exists is achieved by comparing the allegations in the 26 complaint with the terms of the policy. United Nat’l Ins. Co., 99 P.3d at 1158. Here, the first 27 amended complaint is dated September 6, 2001, two years before the first National Fire policy 28 James C. Mahan U.S. District Judge -5- 1 issued. Thus, the “commencement” exclusion operates to bar coverage here. 2 Plaintiffs cite Gary G. Day Construction Company v. Clarendon America Insurance 3 Company for the proposition that for a class action, coverage decisions must be made on an 4 individual, home-by-home basis. 459 F. Supp. 2d 1039, 1047 (D. Nev. 2006). The court agrees with 5 plaintiffs’ interpretation; however, the case does not operate to defeat defendant’s motion for 6 summary judgment. Here, in the 2001 complaint, plaintiffs purportedly filed on behalf of a class of 7 persons “similarly situated” which consists of “201 homeowners in Sage Creek.” (Doc. #89-14). 8 Thus, although the class was not certified until 2004, plaintiffs collectively alleged damages which 9 occurred before the inception of the National Fire policy. Accordingly, the motion for summary 10 judgment is granted. 11 Accordingly, 12 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiffs’ first motion for 13 14 15 16 17 18 19 20 21 22 summary judgment (doc. #82) be, and the same hereby is, DENIED; IT IS FURTHER ORDERED that plaintiffs’s second motion for summary judgment (doc. #83) be, and the same hereby is, DENIED without prejudice; IT IS FURTHER ORDERED that defendant’s motion for summary judgment on the sixth claim (doc. #85) be, and the same hereby is, GRANTED; IT IS FURTHER ORDERED that defendant’s motion for summary judgment on the thirtyninth claim (doc. #86) be, and the same hereby is, GRANTED; IT IS FURTHER ORDERED that defendant’s motion for summary judgment on the fortyfifth claim (doc. #87) be, and the same hereby is, GRANTED. DATED July 28, 2011. 23 24 UNITED STATES DISTRICT JUDGE 25 26 27 28 James C. Mahan U.S. District Judge -6-
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