OneBeacon Insurance Company v. Probuilders Specialty Insurance Company, No. 3:2009cv00036 - Document 19 (D. Nev. 2009)
Court Description: ORDER denying 5 Motion for Summary Judgment.; denying 10 Motion to Dismiss. Signed by Judge Edward C. Reed, Jr on 08/03/09. (Copies have been distributed pursuant to the NEF - LG)
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1 1 1 2 3 4 UNITED STATES DISTRICT CODRT DISTR ICT OF NW ADA 5 RENO , NEVADA 6 7 ONEBEACON TNSUM NCE COMPANY, 8 Plaintiff, 9 vs. 10 PRQBUILDERS SPECIALTY INSURANCE 11 COMPANY, FORMERLY KNOWN AS BUTLDERS & CONTRACTORS INSURANCE 12 CQMPANY, 13 Defendant. 14 15 ) ) ) ) ) ) ) ) ) ) ) ) ) ) 3 :09-CV-36-ECR-M M Order This diversity case is a dispute between two insurers regarding 16 litigation expenses incurred in the defense of a conmton insured . 17 Plaintiff OneBeacon Insurance Company (uOneBeacon'') alleges that it 18 incurred defense fees and costs of at least $470,000 in connection 19 with defending the insured . OneBeacon seeks reimbursement of some OneBeacon Insurance Company v. Probuilders Specialty Insurance Company Doc. 19 20 of that amount from Defendant ProBuilders Specialty Insurance 21 Company (A%ProBuilders''). ProBuilciers denies that it had any 22 obligation to contribute to the defense of the insured . 23 Now pending are Probuilders' motion to dismiss (#l0) and motion 24 for summary judgment (#5), both of whic;h were filed on March 4, 25 200 9 . For the reasons stated below , both motions will be denied . 26 27 28 . Dockets.Justia.com 1 2 1 . Factuai Backcround OneBeacon is the transferee of certain rights and obligations 3 of Hawkeye-security Insurance Company , which had insured Jess 4 Arndell Construction Company CsArndell Construction'o . (Complaint % 5 5 (#1).) CneBeacon alleges that ProBuilders (under its previous 6 name, Builders & Contractors Insurance Company) also issued ''not 7 less than two annual liability insurance policies'' to Arndell 8 Construction. 9 (Id. % 6.) Arndell Construction was sued for alleged defects in the 10 construction of homes in a development called Hidden Meadows, 11 located in Reno, Nevada. (Id. % 7.) OneBeacon, together with other 12 insurers not involved in this lawsuit, provided Arndell Construction 13 with a defense in that litigation, resulting in QneBeacon incurring 14 nnot less than $470,000.00'' in defense fees and costs. 15 9.) (1d. %% 8- OneBeacon notified ProBuilders of the litigation and demanded 16 that ProBuilders participate in the defense pursuant to the 17 ProBuilders insurance policies covering Arndell Construction . 18 % 10.) ProBuilders declined. (ld . (Td. % 11.) This lawsuit ensued. 19 20 21 II . Procedurai Backcround OneBeacon's complaint (#1), filed on January 21, 2009, asserts 22 three causes of action . The first, for declaratory relief, seeks a 23 declaration that ProBuilders was obliged to ''equitably contribute 24 toward the attorneys fees, costs, and expenses incurred'' by 25 OneBeacon in defending Arndell Construction. (ld. % 18.) 26 OneBeacon 's second cause of action , for equitable eontribution, 27 alleges that ProBuilders owes OneBeacon nnot less than $118,000.00'' 28 z 1 as its contribution to the defense of Arndell Construction . 2 23.) (Id. % The third cause of action , for equitable subrogation , is pled 3 in the alternative to ProBuilders' equitable contribution claim . 4 (Id. % 26.) In its equitable subrogation claim, OneBeacon alleges 5 that a portion of the fees and costs in the Hidden Meadows 6 litigation fell outside of the scope of the OneBeacon policies, but 7 that ProBuilders was required under its policies to bear that 8 portion of the litigation expenses. (Id. % 26.) OneBeaconr having 9 already paid al1 of the litigation expenses, is therefore equitab ly 10 subrogated to Arndell Construction's rights against ProBuilders for 11 that portion of the expenses. 12 (ld .) On March 4, 2009, ProBuilders filed 170th a motion for surnmary 13 judgment (#5) and a motion to dismiss (#lO), accompanied by 14 separately filed memoranda of points and authorities (##6, 11). On 15 March 19, 2009, OneBeacon filed oppositions (##12, 13) to b0th 16 motions . On March 23, 2009, ProBuilders replied (##17, l 8) . 17 18 III . Motion to Dism iss 19 ProBuilders argues in its motion to dismiss (#l0) and the 20 memorandum of points and authorities in support thereof (#11) that 21 OneBeacon 's complaint fails to state a claim pursuant to Federal 22 Rule of Civil Procedure 12 (b) (6). In tine alternative, ProBuilders 23 seeks a more definite statement pursuant to Federal Rule of Civil 24 Procedure 12 (e).: 25 1 Because we also rule on ProBuilders ' mot ion for summary 26 judgment (#5) in this Order, ProBuilders' request for a stay of the requirement of filing an answer pending the outcom e of that motion is 27 moot . 28 3 1 A . Rule l2 (b) (6) Standard 2 A motion to dism iss under Federal Rule of Civil Procedure 3 12(b) (6) will only be granted if the complaint fails to ''state a 4 claim to relief that is plausible on its face .'' Bell Atl. Corr . v . 5 Twomblv, 550 U.S. 544, 570 (2OO7)J see also Asheroft v. Iabal, l29 6 S. Ct . 1937, 1953 (2009) (clarifying that Twomblv applies to 7 pleadings in Mall civil actions''). On a motion to dismiss, nwe 8 presum ge) that general allegations embrace those specific facts that 9 are necessary to support the claim .'' Lun'an v . Defenders of 10 W ildlife, 504 U .S . 555, 56l (1992) (quoting Lun'an v . Nat'l Wildlife 11 Fed'n, 497 U .S. 871, 889 (1990)) (alteration in original); see also 12 Erickson v. Fardus, 551 U.S. 89, 93 (2007) (notlng that ''Eslpecific 13 facts are not necessary; the statement need only give the defendant 14 fair notice of what the . . . claim is and the grounds upon which it 15 rests./') (internal quotation marks omitted). Moreover, ''galll 16 allegations of material fact in the complaint are taken as true and 17 construed in the light most favorable to the non-moving party.'' In 18 re Stac Elecs. Sec. Liticw 89 F.3d 1399, 1403 (9th Cir. 1996) 19 (citation omitted). 20 Although courts generally assume the facts alleged are true, 21 courts do not nassume the truth of legal conclusions merely because 22 they are cast in the form of factual allegations .'' W . Minin? 23 Council v . Watt, 643 F.2d 618, 624 (9th Cir. 1981). Accordingly, 24 ''gcjonclusory allegations and unwarranted inferences are 25 insufficient to defeat a motion to dism iss .'' ln re Stac Elecs ., 89 26 F.3d at 1403 (citation omitted). 27 28 4 1 Review on a motion pursuant to Fed. R. Civ . P. 12 (b)(6) is 2 normally lim ited to the complaint itself . See Lee v . Citv of L .A ., 3 250 F.3d 668, 688 (9th Cir. 2001). If the district court relies on 4 materials outside the pleadings in making its ruling, it must treat 5 the motion to dismiss as one for summary judgment and give the non6 moving party an opportunity to respond. FED. R. Czv. P. l2 (d); 7 see United States v . Ritchie, 342 F .3d 903 , 907 (9th Cir . 2003). '%A 8 court may, however, consider certain materials - documents attached 9 to the complaint, documents incorporated by reference in the 10 complaint, or matters of judicial notice - without converting the 11 motion to dismiss into a motion for summary judgment.'' Ritchie, 342 12 F.3d at 908. 13 lf documents are physically attached to the complaint, then a 14 court m ay consider them if their Mauthenticity is not contested/' and 15 nthe plaintiff's complaint necessarily relies on them .'' Lee, 250 16 F.3d at 688 (citation, internal quotations, and ellipsis omitted). 17 A court may also treat certain documents as incorporated by 18 reference into the plaintiff's complaint if the complaint ''refers 19 extensively to the document or the document form s the basis of the 20 plaintiff's claim .'' Ritchie, 342 F.3d at 908. Finally, if 21 adjudicative facts or matters of public record meet the requirements 22 of Fed. R. Evid. 201, a court may judicially notice them in deciding 23 a motion to dismiss. Id. at 909: see FED. R. EvID. 2Ol(b) C'A 24 judicially noticed fact must be one not subject to reasonable 25 dispute in that it is either (l) generally known within the 26 territorial jurisdiction of the trial court or (2) capable of 27 28 5 1 accurate and ready determination by resort to sources whose accuracy 2 cannot reasonably be questioned.'o . 3 B . Analysis 4 ProBuilders' argument that OneBeacon's complaint (#1) fails to 5 state a claim is based on the lack of uany allegation of the terms 6 of the ProBuilders' gsic) policy or the reasons underscoring the 7 belief that EfneBeaconl is entitled to contribution.'' (D.'s Memo. 8 at 2 (#11).) ProBuilders cites a California case for the 9 proposition that A'contribution exists only between two insurers for 10 the same insured, who share the same level of risk, i.e ., primary or 11 excess coverage.'' (Id. (citing Md. Cas. Co. v . Nationwide Mut. Ins. 12 Co., 81 Cal. App. 4th 1082, 1089 (2000)).) Because the complaint 13 (#1) does not allege details such as nthe policy numbers, the policy 14 years, the terms of the coverage , whether it is primary or excess, 15 or other critical information,'' ProBuilders argues that OneBeacon 16 has failed to state a claim for contribution. (D.#s Memo. at 2 17 (#11).) 18 The Federal Rules of Civil Procedure describe ''a liberal system 19 of 'notice pleading .''' Leatherman v . Tarrant Countv Narcotics 20 Intellicence & Coordination Unit, 507 U.S. 163, 168 (1993). Federal 21 Rule of Civil Procedure 8(a) (2) requires only na short and plain 22 statement of the claim showing that the pleader is entitled to 23 relief.'' Even after Twomblv, as noted above, n Esqpecific facts are 24 not necessary; the statement need only give the defendant fair 25 notice of what the . . . claim is and the grounds upon which it 26 rests.'' Erickson 551 U.S. at 93 (2007) (internal quotation marks 27 omitted). 28 6 1 Here, OneBeacon's complaint (#1) provides a short and plain 2 statement of its claim that is more than adequate . ProBuilders has 3 received fair notice of what OneBeacon's claim is and the grounds 4 upon which it rests , namely, that ProBuilders was contractually 5 obligated to contribute to the defense of Arndell Construction , but 6 it failed to do so , to OneBeacon 's detriment . Specific facts , such 7 as policy numbers and the precise language of the policies giving 8 rise to the alleged contractual obligation , need not be pleaded . 9 Thus, ProBuilders' motion to dismiss pursuant to Rule 12 (b)(6) will 10 be denied . 11 C . M otion for a More Definite Statement 12 In the alternative to its motion to dism iss pursuant to Rule 13 12 (b ) (6), ProBuilders moves for a more definite statement pursuant 14 to Rule 12 (e). ProBuilders' argument again rests on the lack of 15 detail in the eomplaint : ProBuilders argues that the ''requisite 16 terms of the contract under which goneBeacon) seeks contribution'' 17 must be alleged in the complaint . 18 (D.'s Memo . at 3 (#11).) ProBuilders' argument fails because uRule 12 (e ) is designed to 19 strike at unintelligibi lity, rather than want of detail .'' Woods v . 20 Reno Commodities, Inc ., 600 F. Supp . 574, 58O (D. Nev . l984). 21 nParties are expected to use discovery, not the pleadings, to learn 22 the specifics of the claim s being asserted .'' Sacan v . Arrle 23 Com uter Inc ., 874 F. Supp . 1072, 1077 (C .D . Cal. 1994). If a 24 complaint is A'specific enough to apprise the defendant of the 25 substance of the claim asserted against Eitq,'' a Rule 12 (e ) motion 26 should be denied. San Bernardino Pub . Emplovees ' A ss 'n v . Stout, 27 946 F. Supp . 790, 804 (C .D. Cal. l996). 28 7 1 Here , as noted above , OneBeacon's complaint is sufficient to 2 apprise ProBuilders of the substance of the claim asserted against 3 it . Indeed , ProBuilders has dem onstrated that it does not find 4 OneBeacon's claims in any way unintelligible : it immediately moved 5 for summary judgment, making very specific arguments regarding 6 OneBeacon 's claims , instead of waiting to conduct discovery first . 7 Thus, ProBuilders' motion to dismiss (#10) will be denied . 8 9 10 IV . Motion for S'ammarv Judam ent E'roBuilders seeks suramary judgment based on the language of 11 ProBuilders' insurance policies covering Arndell Construction . 12 Specifically, ProBuilders argues that under its policies it was only 13 obligated to provicie a defense to Arndell Construction on a 14 cont ingent ba sis, if no other in surance coverage wa s avai lab le . 15 ProBuilders notes that A rndell Construction received a fu11 defense 16 frorn OneBeacon . Hence, according to ProBuilders, other insuranee 17 coverage was available , and ProBuilders' contingent duty to defend 18 was not tr iggered . 19 A . Standard 20 Suramary judgment allows courts to avoid unnecessary trials 21 where no material factual dispute exists . N .W . Motorevcle Ass'n nr. 22 United States Der't of Agric ., 18 F.3d 1468, l47l (9th Cir . 1994). 23 The court must view the evidence and the inferences arising 24 therefrom in the light most favorable to the nonmoving party, 25 Bagdadi v . Nazar , 84 F.3d 1194, 1197 (9th Cir . 1996), and should 26 award summary judgment where no genuine issues of material fact 27 remain in dispute and the moving party is entitled to judgment as a 28 8 1 matter of law. FED. R. CIV. P. 56(c). Judgment as a matter of 1aw 2 is appropriate where there is no legally sufficient evidentiary 3 basis for a reasonable jury to find for the nonmoving party. FED. 4 R. Clv. P. 50(a). Where reasonable minds could differ on the 5 material facts at issue, however, summary judgment should not be 6 granted . Warren v . Citv of Carlsbad , 58 F .3d 439, 44l (9th Cir . 7 1995), cert. denied, 116 S.Ct. 1261 (1996). 8 The moving party bears the burden of informing the court of the 9 basis for its m otion, together with evidence demonstrating the 10 absence of any genuine issue of material fact . Celotex Corr . v . 11 Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met 12 its burden , the party opposing the motion may not rest upon mere 13 allegations or denials in the pleadings, but must set forth specific 14 facts showing that there exists a genuine issue for trial. Anderson 15 v. Libertv Lobbv, lncw 477 U.S. 242, 248 (1986). Although the 16 parties m ay submit evidence in an inadm issible form - namely , 17 depositions, admissions, interrogatory answers, and affidavits 18 only evidence which might be admissible at trial may be considered 19 by a trial court in ruling on a motion for summary judgment. FED. R. 20 Clv. P . 56 (c); Bevene v . Coleman Securitv Services, Inc w 854 F .2d 21 1179, 1181 (9th Cir. 1988). 22 In deciding whether to grant summary judgment, a court must 23 take three necessary steps: (1) it must determine whether a fact is 24 material; (2) it must determine whether there exists a genuine issue 25 for the trier of fact , as determined by the documents submitted to 26 the court; and (3) it must consider that evidence in light of the 27 appropriate standard of proof . Anderson, 477 U .S. at 248 . 28 9 Summary 1 judgment is not proper if material factual issues exist for trial. 2 B.C. v. Plumas Unified Sch. Distw l92 F.3d 1260, 1264 (9th Cir. 3 1999). ''AZ to materiality, only disputes over facts that might 4 affect the outcome of the suit under the governing law will properly 5 preclude the entry of summary judgment.'' Anderson, 477 U.S. at 248. 6 Disputes over irrelevant or unnecessary facts should not be 7 considered . Id . Where there is a complete failure of proof on an 8 essential element of the nonmoving party's case, a11 other facts 9 become immaterial, and the moving party is entitled to judgment as a 10 matter of law. Celotex, 477 U .S. at 323. Summary judgment is not a 11 disfavored procedural shortcut, but rather an integral part of the 12 federal rules as a whole . 13 14 15 Id . B . Anaiysis 1 . Arrlicable Law A federal court sitting in diversity must apply the substantive 16 1aw of the forum state in which it resides . Vacation V illage , Inc . 17 v. Clark Countv, Nevw 497 F.3d 902, 913 (9th Clr. 2007) (citing 18 Hanna v. Plumer, 38O U.S. 460, 465 (1965)). Accordingly, we must 19 construe the policies at issue in this case as a Nevada state court 20 would if presented with the same question . Capitol Indem . Corr . v . 21 Blazer, 51 F. Supp . 2d, 1080, 1084 (D. Nev. 1999). In the absence 22 of Nevada Supreme Court precedent, we nmust make a reasonable 23 determination of the result Eitl would reach if it were deciding the 24 case .'' Kona Enters., Tnc . v . Estate of Bishor , 229 F .3d 877, 885 25 n.7 (9th Cir. 2000) (quoting Aetna Cas. & Sur. Co. v . Sheft, 989 26 F.2d 1105, 1108 (9th Cir. 1993)). 27 28 1: 1 2 2 . nRisk Retention Grour'' Before discussing ProBuilders' obligations under its policies, 3 we must first address its arguments related to its status as a nrisk 4 retention group ,'' rather than an ordinary insurance company . In 5 essence , ProBuilders takes the position that policies issued by risk 6 retention group s should be treated differently from those issued by 7 ordinary insurance companies. ProBuilders asserts that ulaws or 8 court decisions which may be intended to benefit other insurance 9 companies do not necessarily apply to Risk Retention Groups (D.'s 10 Memo. at 2-3 (#6)), and that the policies it issues are ''insurance 11 like product gsq'' (id. at 12), rather than simply insurance. 12 Risk retention groups function pursuant to the Liability Risk 13 Retention Act of 1986 IAALRRAF'I, 15 U.S.C. 55 3901-3906. They are 14 essentially insurance cooperatives, allowing groups of similarly 15 situated risk-bearers to share liability. See aenerallv Nat'l 16 Warrantv Ins. Co. RRG v. Greenfieldr 214 F.3d 1073, 1074 (9th Cir. 17 2000); Preferred Phvsicians Mut. Risk Retention Grour v . Pataki, 85 18 F.3d 913, 9l4 (2d Cir. 1996). Such groups would be illegal under 19 some state laws, so the LRRA provides that they are exempt from 20 certain state regulatory requirements relating to the formation and 21 operation of insurance companies. See 15 U.S.C. 55 3902 (a), 22 39O5 (d ). The LRRA also exempts risk retention groups from any state 23 1aw that would ndiscriminate'' against a risk retention group or any 24 of its members, though they are not exempted from nstate laws 25 generally applicable to persons or corporations.'' 15 U .S.C . 5 26 3902 (a)(4). 27 28 11 1 The policies that risk retention groups issue are not 2 uinsurance like products,'' they are insfrance . See 15 U .S .C . 5 3901 3 (a)(1) (u'insurance' means primary insurance, excess insurance, 4 reinsurance, surplus lines insurance , and any other arrangement for 5 shifting and distributing risk which is determ ined to be insurance 6 under applicable State or Federal 1aw''); see also Nat'l Warrantv 7 Ins. Co., 214 F.3d at 1082 (MWe believe that in passing the LRRA, 8 Congress decided that RRGS, as a group, were sufficiently 9 trustworthy providers of insurance . . .'') (emphasis added); Home 10 Warrantv Coro. v. Caldwell, 777 F.2d 1455, 1467 (11th Cir. 1985) (MA 11 risk-retention group, by definition , was an organization providing 12 insurance only to its members.'') (emphasis added); 15 U.S.C. 5 13 39O5 (c) C'The terms of any insurance rolicv provided by a risk 14 retention group shall not provide or be construed to provide 15 insurance policy coverage prohibited Eby State lawq'') (emphasis 16 added); Niv. REv. STAT. 5 695E.200 C'A risk retention group shall not 17 . . . (4) Issue any insurance rolicv coverage prohibited gby Nevada 18 lawq '') (emphasis added). Moreover, the ProBuilders policies 19 themselves repeatedly use the phrase nthis insurance,'' including in 20 the sections of the policies quoted above. (Podesta Declw Exs. A, 21 B (#9).) We conclude that Nevada law governing how insurance 22 policies are to be construed is fully applicable to the ProBuilders 23 policies at issue in this case . 24 ProBuilders' reliance on Alamo Rent-A -car, lnc . v . State Farm 25 Mut. Auto Ins. Co., 953 P.2d 1074 (Nev. 1998), is misplaced. Unlike 26 the car rental agency in A lamo, ProBuilders is primarily in the 27 business of underwriting insurance. 28 12 See 15 U.S.C. $ 39O1(a) (4) (A), 1 (G) (defining ''risk retention group'' as an organization nwhose 2 primary activity consists of assum ing, and spreading all, or any 3 portion, of the liability exposure of its group members'' and Mwhose 4 activities do not include the provision of insurance other than (i) 5 liability insuranee for assuming and spreading all or any portion of 6 the similar or related liability exposure of its group members; and 7 (ii) reinsurance with respect to the similar or related liability 8 exposure of any other risk retention group . . . .''). In contrast, 9 Alamo Rent-A -car was not primarily in the insurance business, and it 10 is this circumstance that provides the foundation for the Nevada 11 Supreme Court's decision in Alamo. See Alamo, 953 P.2d at 1077 (uWe 12 conclude it is better policy to m ake an insurance company the 13 primary insurer over a rental agency which is not in the business of 14 underwriting insurance for individual drivers .''). Alamo 's 15 discussion of the 1aw applicable to a self-insurance policy issued 16 by a car rental aqency to a renter simply does not apply to this 17 case . 18 Tn short , ProBuilders' arguments that its policies must be 19 treated differently under Nevada law from an insurance policy issued 20 by an ordinary insurance company are without m erit . W ith that issue 21 resolved, we now turn to an examination of ProBuilders' duty to 22 defend arising from its policies. 23 24 3 . The Policies at Issue Both ProBuilders and OneBeacon issued commercial general 25 liability insuranee policies to Arndell Construction . OneBeacon 26 issued three polieies to Arndell Construction , each covering one 27 year of the period July 1, 1997, to July 1, 2000. 28 j..y (Gothold Declw 1 Exs. l-3 (#16).) OneBeacon 's claims in the present action are based 2 on two of ProBuilders' policies with Arndell Construction , Policy 3 No . TRl 3600034 and Policy No . TRI 3600087. (Podesta Decl .r Exs . A , 4 B. (#9).) These policies contain (at least as relevant here) 5 identical terms, covering the periods July 19, 2002 , to July 19, 6 2003, and July 19, 2003, to July 19, 2004, respectivelyx 7 (Id.) The policy terms relevant here relate to ProBuilders' duty to 8 provide a defense against suit to Arndell Construction . Section 9 I (A ) (l) (a) of the nCommercial General Liability Coverage Form'' of 10 b0th ProBuilders policies states that ProBuilders is obligated to 11 defend Arndell Construction nagainst any suit seeking Edamages for 12 bodily injury or property damage to which this insurance applies! 13 provided that no other insurance affording a defense against such a 14 suit is available to Ethe insuredq.'' (Podesta Declw Exs. A, B 15 (#9).) The same section notes certain lim itations of this duty, 16 including that ProBuilders uwill have no duty to defend any insured 17 against any suit seeking damages . . . to which this insurance does 18 not apply.'' 19 (1d.) In addition, section IV (8)3 of the ncommercial General 20 Liability Coverage Form '? of ProBuilders' policies contains further 21 limitations on ProBuilders' obligations that apply ''Eilf other 22 23 2 proBuilders has also submitted evidence of two other insurance policies it issued to Arndell Construction , covering the following two 24 years until July 19, 2006. (Podesta Declw Exs. C, D (#9).) These two later policies, however, are not presently at issue in this case. 25 3 This section is titled nOther Insurance , Deductibles and Self26 Insured Retentions, '' a circumstance that is in some tension with ProBuilders' assertion that uthe provisions of the ProBuilders' policy 27 at issue are not Aother Insurance' clauses . /' (D.'s Memo. at 12 (#6).) 28 j4 1 insurance is available to an insured for a loss we cover under 2 Coverages A or B of this policy.'' (Id.) Specifically, where other 3 insurance is available, the ProBuilders policies are Mexcess over 4 any other insurance . . . whether such insurance is primary, excess, 5 contingent or contributing . . . .'' (Id.) Further, this section 6 states that ngwlhen this insurance is excess, we will have no duty 7 under Coverage A or B to defend any claim or suit that any other 8 insurer has a duty to defend .'' 9 10 (Id .) 4. Dutv to Defend An insurance company's duty to defend its insured arises from 11 the provisions of the insurance policy . United Nat'l Ins. Co . v . 12 Frontier Ins. Co., 99 P.3d 1153, 1158 (Nev. 2004); Allstate lns. 13 Co. v. Sanders, 495 F. Supp. 2d 1104, 1106 (D. Nev. 2007). 14 Ambiguous term s in an insurance policy will be construed broadly : 15 affording the greatest possible coverage to the insured . See 16 Harvev 's Waqon Wheel v . Macsween, 606 P.2d 1095, 1098 (Nev . 1980); 17 Farmers Ins. Groun v. Stonik, 867 P.2d 389, 391 (Nev . 1994). 18 Nevertheless, the Court must neither nrewrite contract provisions 19 that are otherwise unambiguous,'' nor uincrease an obligation to the 20 insured where such was intentionally and unambiguously limited by 21 the parties. Caritol Indem . Corr . v . Wright, 34l F . Supp . 1152 , 22 1156 (D. Nev. 2004) (internal citations omitted). 23 Under Nevada law , an insurer nmust defend any lawsuit brought 24 against its insured which potentially seeks damages within the 25 coverage of the policy.'' Allstate, 495 F. Supp . 2d at 1106 (quoting 26 Rockwood lns . Co . v . Federated Carital Coro w 694 F . Supp . 772, 776 27 (D. Nev . 1988).) Even if coverage is only narguable or possibler'' a 28 15 1 duty to defend arises. United Nat'l Insw 99 P.3d at 1158 (citing 2 Hecla Minin? Co. v. N .H. Ins. Co., 8ll P.2d 1083, 1090 (Colo. 1991) 3 (stating that uEtqhe appropriate course of action for an insurer who 4 believes that it is under no obligation to defend, is to provide a 5 defense to the insured under a reservation of its rights to seek 6 reimbursement should the facts at trial prove that the incident 7 resulting in liability was not covered by the policy, or to file a 8 declaratory judgment action after the underlying case has been 9 adjudicatedvl). 10 The primary thrust of ProBuilders' motion for summary judgment 11 is that there was N'other insurance'' available to Arndell 12 construction . It is undisputed that Arndell Construction receieved 13 a full defense in the Hidden Meadow s litigation from OneBeacon and 14 other insurance carriers . On this basis, ProBuilders argues that 15 under the policy terms quoted above it had no arguable or possible 16 duty to defend Arndell Construction . 17 ProBuilders' argument does not hold water : Nevada has adopted 18 the Mcomplaint rule ,'' pursuant to which an insurer that seeks to 19 avoid its duty to defend its insured may only do so by comparison of 20 the complaint in the underlying litigation to the terms of the 21 policy. See United Nat'l lnsw 99 P.3d at 1158 CADetermining 22 whether an insurer owes a duty to defend is achieved by comparing 23 the allegations of the complaint with the terms of the policy .'') 24 (citing Hecla, 811 P.2d at 1090).1 The complaint rule is consistent 25 4 A lthough the Nevada Supreme Court did not address the issue in 26 united National Insurance - nor elsewhere , apparently - other 27 jurisdictions following the complaint rule have recognized some exceptions to it . 28 For example , where an insurer has provided a 16 1 with the principle that a duty to defend arises as soon as the 2 insurer uascertains facts which give rise to the potential of 3 liability under the policy'' and ncontinues throughout the course of 4 the litigation .'' Id. at 1158 (footnotes and internal quotation 5 marks omitted). Thus, the circumstance that Arndell Construction in 6 fact received a full defense in the Hidden Meadows litigation from 7 its other insurers is irrelevant to the inquiry into whether 8 ProBuilders, too, owed Arndell Construction a duty to defend . 9 The relevant complaint for determining whether ProBuilders had 10 a duty to defend is the complaint filed against Arndell Construction 11 in the Hidden Meadows litigation.s (Podesta Declw Ex. F (#9).) 12 This comp laint alleges property dam age occurring in the period from 13 1994 to the date of the complaint, which is August 4, 2004 . (Td . % 14 12-13.) The period covered by the ProBuilders policies at issue in 15 the present case - July 19, 2002, to July 19, 2004 - falls within 16 the temporal scope of the Hidden Meadows complaint. (Podesta Decl.r 17 Exs. A , B .) Though the ProBuilders policies are A'excess'' to any 18 other insurance that covers such claims, it is impossible to 19 ' defense and then seeks to recover defense costs, the insurer may rely 20 on facts outside of the complaint to show that the incident resulting in liability was not covered by the policy . See Pomra v . Am . Fam ilv 21 Mut . Ins. Co., 520 F.3d 1139, 1145 (10th Cir. 2008). No exception to the complaint rule, however, appears to apply in the present case . 22 5 There were , apparently, two such complaints, and the two 23 separate lawsuits were eventually consolidated . Although ProBuilders seems to have tried to submit b0th of these complaints as exhibits in 24 support of its motion for summary judgment, it failed; in place of one of the two complaints, it instead attached what appears to be an order 25 from the case issued by the Nevada state court . (Podesta Declw Ex. G (#9); see D.'s Memo at 3 (#6) (describing Exs. F and G to the 26 Podesta Decl . as ''the two Complaints'' from the Hidden Meadows litigationl.) For present purposes, however, the one complaint from 27 the Hidden Meadows litigation that is in our record is sufficient . 28 j7 ' 1 determine from the complaint against Arndell Construction what other 2 insurance, if any, was available to cover its potential liability in 3 the Hidden Meadows litigation . 4 We conclude , therefore , that the Hidden Meadows litigation 5 arguably or possibly sought damages within the coverage of the 6 ProBuilders policies , giving rise to a duty to defend under Nevada 7 law . In light of this conclusion , ProBuilders' motion for summary 8 judgment will be denied . 9 10 V . Conclusion 11 OneBeacon's complaint (#1) contains an adequate Mshort and 12 plain statement of the claim.'' Also, the complaint (#1) is not 13 unintelligible . so no more def inite statem ent is required . 14 ProBuilders' motion to dismiss (#lO) is without merit . Thus , Further, 15 ProBuilders had a duty to defend Arndell Construction in the Hidden 16 Meadows litigation; its motion for suramary judgment (#5 ), premised 17 on the notion that it did not have such a duty , must be denied . 18 19 IT IS , THEREFOM , HEREBY ORDERED THAT ProBuilders' Motion to 20 Dismiss (#10) is DENIED . 21 22 IT IS FURTHER ORDERED THAT ProBuilders' Mot ion for Summary 23 Judgment (#5) is DENIED. 24 25 DATED: August e3 , 2009. 26 @ 27 28 t UNITED STATES DISTR CT JUDGE lg
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