Film Allman, LLC v. New York Marine and General Insurance Company
Filing
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ORDER DENYING PLAINTIFFS MOTION FOR LEAVE TO AMEND 72 AND GRANTING DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT 66 by Judge Otis D. Wright, II . (lc) Modified on 12/8/2016 (lc).
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United States District Court
Central District of California
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FILM ALLMAN, LLC,
Plaintiff,
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Case № 2:14-cv-7069-ODW(KSx)
v.
ORDER DENYING PLAINTIFF’S
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NEW YORK MARINE AND GENERAL
MOTION FOR LEAVE TO AMEND
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INSURANCE COMPANY, INC.,
[72] AND GRANTING
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Defendant.
DEFENDANT’S MOTION FOR
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PARTIAL SUMMARY JUDGMENT
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[66]
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I.
INTRODUCTION
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Plaintiff Film Allman, LLC’s (“Film Allman”) Motion for Leave to Amend
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(ECF No. 72) and Defendant New York Marine and General Insurance Company’s
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(“New York Marine”) Motion for Partial Summary Judgment (ECF No. 66) are
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currently pending before the Court. In the interests of efficiency, the Court addresses
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both Motions together in this Order.1 For the reasons discussed below, the Court
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DENIES Film Allman’s Motion and GRANTS New York Marine’s Motion.
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II.
FACTUAL BACKGROUND
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This case relates to a dispute over insurance coverage for a party to a lawsuit,
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which in turn stems from a train accident on a film set. In 2013, filmmakers Randall
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Miller and Jody Savin established Film Allman as a production entity to create a
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biopoic about the formation of the musical group The Allman Brothers and the band’s
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explosion onto the music scene. (See First Am. Compl. (“FAC”) ¶ 1, ECF No. 31.)
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At the time, New York Marine insured Film Allman under a Motion
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Picture/Television Producers Portfolio Policy. (Id.) On February 20, 2014, a fatal
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accident occurred on the set of the film. (Statement of Uncontroverted Facts (“SUF”)
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¶ 1, ECF No. 67.) The accident occurred while Film Allman employees were filming
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a scene on a train trestle bridge and tracks in Wayne County, Georgia. (Id. ¶ 2.) On
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set were filmmakers Miller and Savin, director Hillary Schwartz, unit production
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manager and line producer Jay Sedrish, and location manager Charles Baxter, among
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others.
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Transportation (“CSX”) came through while the crew was still on the tracks, resulting
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in the death of an assistant camera technician. (Id. ¶¶ 38, 39.)
(Id. ¶¶ 3–8.)
The accident occurred when a train operated by CSX
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Baxter communicated with CSX prior to the accident regarding permission for
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Film Allman to film on the train tracks. (Id. ¶ 13.) However, CSX never gave such
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permission. (Id. ¶ 14.) Specifically, on the morning of February 20, 2014, the day of
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the accident, CSX sent Baxter an email denying permission to film on the tracks. (Id.
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¶ 31.) After the accident, Miller, Savin, Sedrish, and Schwartz were indicted for
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criminal trespass. (See id. ¶ 41.)
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Following the accident, Film Allman became the subject of several civil
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lawsuits. (FAC ¶ 5.) Due to disagreements with New York Marine over settlements
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After considering papers filed in support of and in opposition to the Motions, the Court deems both
matters appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.
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in the underlying actions and payment for the loss, Film Allman filed the instant
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action. (See id.)
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Film Allman asserts that it should be given leave to add parties and causes of
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action to its Complaint following New York Marine’s recent production of documents
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and information Film Allman learned in the course of litigating the underlying actions.
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(Mot. for Leave.) At the same time, New York Marine seeks to have this Court enter
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summary judgment as to Film Allman’s first, second, third, and eighth causes of
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action. (Mot. for Partial Summ. J. (“MPSJ”).)
III.
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DISCUSSION
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The Court will first discuss its reasons for denying Film Allman’s Motion for
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Leave to Amend before moving on to address New York Marine’s Motion for Partial
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Summary Judgment.
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A.
Leave to Amend
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Film Allman asserts that due to the recent discovery of facts supporting
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additional claims not pleaded in its First Amended Complaint, it should be allowed to
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add those claims now. (Mot. for Leave 2.) Further, it argues that because those
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additional claims should be brought on behalf of its “natural person managers,” Jody
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Savin and Randall Miller, those individuals should be added as plaintiffs in the action.
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(Id.)
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1.
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When a party moves to amend a pleading beyond the deadline set in the
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scheduling order, it must first show “good cause” for relief from the deadline. Fed. R.
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Civ. P. 16(b)(4); Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th
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Cir. 1992). “Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of
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the party seeking the amendment.” Johnson, 975 F.2d at 609. “[C]arelessness is not
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compatible with a finding of diligence and offers no reason for a grant of relief.
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Although the existence or degree of prejudice to the party opposing the modification
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might supply additional reasons to deny a motion, the focus of the inquiry is upon the
Legal Standard
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moving party’s reasons for seeking modification. If that party was not diligent, the
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inquiry should end.” Id. (citations omitted).
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If the moving party establishes good cause, the party opposing amendment must
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then show that the proposed amendment should not be allowed under Federal Rule of
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Civil Procedure 15. See id. at 608 (citing Forstmann v. Culp, 114 F.R.D. 83, 85
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(M.D.N.C. 1987)). Under Rule 15, “[f]our factors are commonly used to determine
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the propriety of a motion for leave to amend. These are: bad faith, undue delay,
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prejudice to the opposing party, and futility of amendment.” DCD Programs, Ltd v.
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Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (citations omitted). While the Rule 15
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factors should be analyzed with “extreme liberality” toward favoring amendment,
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United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981), the moving party cannot
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“appeal to the liberal amendment procedures afforded by Rule 15” unless it first
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“satisf[ies] the more stringent ‘good cause’ showing required under Rule 16.”
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AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 952 (9th Cir. 2006)
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(original emphasis).
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2.
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Film Allman incorrectly argues that Federal Rule of Civil Procedure 15(a)(2)
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applies in this case. (See Mot. for Leave at 6.) Because Film Allman is asking for
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leave to add parties beyond the date set in the Scheduling Order, Rule 16 applies,
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requiring “good cause” for doing so. Fed. R. Civ. P. 16(b)(4); Johnson, 975 F.2d at
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607–08.
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Analysis
The Court determines that Film Allman has not adequately shown good cause
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for such an amendment.
Film Allman states that it has discovered additional
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information giving rise to claims on behalf of putative plaintiffs Savin and Miller, but
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it does not specifically describe how that information changed the scope of its
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knowledge or makes adding parties appropriate at this late date. (See Mot. for Leave
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2.) Film Allman has known about these putative plaintiffs since the beginning of this
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action, and their alleged status as insureds does not arise from the facts recently
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discovered but has been present throughout the litigation. (FAC ¶¶ 2, 34.) In sum,
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Film Allman has not carried its burden of showing it was diligent despite not adding
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these parties before the cut-off date set in the Scheduling Order.
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The defective nature of Film Allman’s Motion for Leave to Amend is reflected
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in the fact that Film Allman does not style its request as one to add parties, nor does it
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include the names of the putative plaintiffs on the caption of its proposed amendment
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as required by Federal Rule of Civil Procedure 10. (See Mot. for Leave; Proposed
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Second Am. Compl., Ex. 11, ECF No. 72.) Moreover, Film Allman’s Reply does not
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even address New York Marine’s extensive arguments regarding the applicability of
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Rule 16. (See Reply, ECF No. 80.) As a result, the Court is left to conclude that Film
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Allman is attempting to circumvent the rules on adding parties to this action.
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Finally, as Film Allman acknowledges, putative plaintiffs Savin and Miller can
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bring their action against New York Marine separately. (Mot. for Leave 7.) Because
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Film Allman has not established good cause for adding them to this action at such a
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late date, the Court DENIES the Motion for Leave to Amend.
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B.
Partial Summary Judgment
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New York Marine seeks partial summary judgment as to Film Allman’s first,
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second, and third causes of action, as well as its eighth cause of action insofar as it
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concerns the “Producer’s Policy” of the insurance contracts at issue. (See MPSJ.)
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New York Marine argues that Film Allman’s employees committed a criminal act,
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and thus an exclusion of the insurance policy applies and voids coverage. (See id. at
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1.) Film Allman’s first and second causes of action are for breach of contract and
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anticipatory breach of contract; New York Marine argues that because the criminal act
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exclusion applies, there can be no breach, anticipatory or otherwise. (See FAC ¶¶ 58–
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71; MPSJ 14–24.) Similarly, New York Marine contends that the third cause of
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action for breach of the implied covenant of good faith and fair dealing must fail as a
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matter of law because of a lack of contractual obligation on New York Marine’s part.
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(See FAC ¶¶ 72–77; MPSJ 25–28.) Finally, New York Marine’s position is that there
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can be no declaratory relief (Film Allman’s eighth cause of action) where there is no
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underlying contractual obligation. (See FAC ¶¶ 106–115; MPSJ 28–29.)
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1.
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A motion for summary judgment shall be granted when there is no genuine
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issue as to any material fact and the moving party is entitled to judgment on the
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asserted causes of action as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty
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Lobby, Inc., 477 U.S. 242, 247–48 (1986). The moving party must show that “under
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the governing law, there can be but one reasonable conclusion as to the verdict.”
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Anderson, 477 U.S. at 250. The burden is on the moving party to demonstrate that it
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is entitled to summary judgment. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir.
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1998); Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033
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(9th Cir. 1983). That is, the moving party bears the initial burden of identifying the
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elements of the claim or defense and evidence that it believes demonstrates the
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absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
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(1986).
Legal Standard
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Where the moving party has the burden at trial, “that party must support its
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motion with credible evidence . . . that would entitle it to a directed verdict if not
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controverted at trial.” Celotex, 477 U.S. at 331. The burden then shifts to the non-
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moving party “and requires that party . . . to produce evidentiary materials that
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demonstrate the existence of a ‘genuine issue’ for trial.” Id.; Anderson, 477 U.S. at
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256; Fed. R. Civ. P. 56(c). A genuine issue of material fact will exist “if the evidence
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is such that a reasonable jury could return a verdict for the non-moving party.”
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Anderson, 477 U.S. at 248.
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In ruling on a motion for partial summary judgment, the Court construes the
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evidence in the light most favorable to the non-moving party. Barlow v. Ground, 943
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F. 2d 1132, 1135 (9th Cir. 1991); T.W. Elec. Serv. Inc. v. Pacific Elec. Contractors
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Ass’n, 809 F.2d 626, 630–31 (9th Cir. 1987). Conclusory or speculative testimony in
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affidavits and moving papers is insufficient to raise genuine issues of fact and defeat
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summary judgment. Thornhill’s Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir.
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1979). Moreover, though the court may not weigh conflicting evidence or make
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credibility determinations, there must be more than a mere scintilla of contradictory
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evidence to survive summary judgment. Addisu v. Fred Meyer, 198 F.3d 1130, 1134
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(9th Cir. 2000).
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2.
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Because the Court determines that the relevant facts in the context of these
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causes of action are undisputed, it concludes that partial summary judgment is
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warranted on those counts.
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i.
Analysis
No Dispute as to Relevant Facts
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The relevant facts for these causes of action boil down to two basic elements:
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first, whether the policy at issue contains a valid exclusion for loss resulting from
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criminal activity, and second, whether the loss at issue did in fact result from criminal
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activity.
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a.
The policy contains a valid exclusion for loss resulting
from criminal activity
The parties do not dispute that the policy contains the following language:
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V. EXCLUSIONS APPLICABLE TO ALL COVERAGES OF
THIS POLICY . . . .
b. We will not pay for loss or damage caused by or resulting
from any of the following:
(1) Dishonest or criminal acts committed by:
(a) You, any of your partners, members, officers, managers,
employees, leased employees . . . .
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(SUF ¶ 64.) However, Film Allman argues that the policy contains a “saving clause”
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that obfuscates the meaning of the criminal act exclusion. (Opp’n to MPSJ 3, ECF
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No. 74.) The portion of the policy that Film Allman calls a “saving clause” states,
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“But if any of these results in a Covered Cause of Loss, we will pay for the loss or
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damage caused by that Covered Cause of Loss.” (Exhibit Producers Portfolio Policy
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18, Ex. 1, FAC.)
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ambiguous, requiring analysis beyond what a court can undertake at the summary
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judgment stage. (See Opp’n to MPSJ 3–4.)
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Film Allman argues that this language renders the exclusion
The problem with Film Allman’s argument is that it cites the “saving clause”
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out of context.
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COVERAGES OF THIS POLICY” section as a whole, the cited language does not
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refer to the criminal activity exclusion. (Exhibit Producers Portfolio Policy 18, Ex. 1,
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FAC.) Instead, it directly follows language regarding an exclusion for “Discharge,
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dispersal, seepage, migration, release or escape of ‘Pollutants’ or environmental
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impairment of any kind.” (See id.) In reading the full section, it is clear that the
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“saving clause” applies only to the pollution exclusion section. (See id.) In addition,
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the “saving clause” is immediately followed by a definition of the word “pollutants.”
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(Id.) The exclusions section then goes on to describe two additional, separate types of
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exclusions. (Id.) This context demonstrates that Film Allman’s argument regarding
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the “saving clause” is unsupported by the policy itself. Thus, the Court determines
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that there is no genuine dispute or ambiguity concerning the policy’s criminal act
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exclusion.
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Looking at the “EXCLUSIONS APPLICABLE TO ALL
b.
The loss at issue resulted from criminal activity
Georgia’s statute for criminal trespass states in relevant part:
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(b) A person commits the offense of criminal trespass
when he or she knowingly and without authority: . . . .
(2) Enters upon the land or premises of another person
. . . after receiving, prior to such entry, notice from the
owner, rightful occupant, or, upon proper identification,
an authorized representative of the owner or rightful
occupant that such entry is forbidden . . . .
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Ga. Code Ann. § 16-7-21.
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Here, the Court determines that Film Allman’s employees entered onto the land
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in question. That the film crew was present on the train tracks is not disputed; indeed,
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the train accident in question could not have happened but for the crew’s presence on
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the tracks. (See SUF ¶¶ 35, 36.) Further, there is no contention that Film Allman
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owned the land or the train tracks in question. Thus, the Court can establish that the
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land and tracks constitute “the land or premises of another person.” See Ga. Code
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Ann. § 16-7-21. Specifically, the land was owned by CSX. Film Allman argues that
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the owner of the tracks is unknown (see Opp’n to MPSJ 11–12), but the evidence
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directly contradicts this and supports the conclusion that CSX is the owner. (See
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Miller Depo. 24, Ex. A, ECF No. 68 (Miller admitting he learned after the accident
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that the site was an active CSX line).)
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In addition, Film Allman’s employees received notice from CSX prior to entry
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that such entry was forbidden. Film Allman’s film crew knew that CSX owned the
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tracks.
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Under Oath of Hillary Beth Schwartz 132–144, Ex. G, ECF No. 68 (director Schwartz
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admitting knowledge, prior to the accident, of CSX’s ownership of the tracks); Baxter
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Depo. 74–76, Ex. D, ECF No. 68 (location manager Baxter admitting knowledge,
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prior to the accident, of CSX’s ownership of the tracks).)
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employees received denials every time they solicited permission from CSX to use the
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tracks, including on the morning of the accident. (Baxter Depo. 59 (referencing an e-
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mail in which CSX advised Film Allman of its no-film policy); OSHA Examination
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Under Oath of Jay Sedrish 116–17 (acknowledging the e-mail received from CSX the
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morning of February 20, 2014, denying access to film on the tracks in question).)
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Moreover, Baxter acknowledged forwarding the e-mail to Miller, Savin, Sedrish,
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Schwartz, and others within minutes of his having received it. (Baxter Depo. 94.)
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Film Allman’s arguments that it was not denied permission to film on the tracks prior
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to the accident are conclusory and unsupported.
(Occupational Safety and Health Administration (“OSHA”) Examination
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And, Film Allman’s
The evidence shows that Film
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Allman employees knew that they had been denied permission to film on the tracks
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prior to the accident on February 20, 2014.
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Finally, Film Allman’s presence on the tracks resulted in the loss at issue in the
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underlying insurance disputes. Film Allman attempts a semantics argument to refute
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this, stating that the presence of the train in the area where the crew was filming was
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the intervening cause of the accident. (See Opp’n to MPSJ 17.) Film Allman invokes
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a California common law rule providing for insurance coverage when an “efficient”
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cause of a loss is a risk covered under the policy, even if excluded risks may have also
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contributed to the loss. (See id. at 9.) Film Allman’s argument appears to be that
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although its employees’ presence on the tracks is an excluded cause of the loss, the act
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of the train striking people and objects would be a covered cause of loss. (See id.)
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Film Allman misstates the law. For this “efficient proximate cause” rule to apply,
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there must be two separate and distinct risks, one covered and one excluded by the
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policy, either one of which could have occurred independently of the other and caused
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the damage at issue. Finn v. Continental Ins. Co., 218 Cal. App. 3d 69, 72 (1990).
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That is not the case here. The train did not run off its tracks, nor were the film crew
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pushed onto the tracks by some force beyond their control. Without the crew’s
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unauthorized presence on the tracks, the accident would not have occurred. Any
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argument to the contrary regarding causation is illogical.
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In conclusion, the Court determines that there is a valid exclusion in the
insurance policy for criminal acts, and that exclusion was triggered here.
ii.
Appropriateness of Summary Judgment on these Causes of
Action
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Because the exclusion applies to the loss at issue, Film Allman cannot prevail
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on its first cause of action for breach of contract. In order to show that a defendant
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has breached a contract, a plaintiff must prove that nonperformance of the contract is
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unjustified. See, e.g., Central Valley General Hops. V. Smith, 162 Cal. App. 4th 501,
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514 n.3 (2008); Restatement (Second) of Contracts § 251, subd. (1).
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Here, the
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application of the criminal acts exclusion justifies New York Marine’s
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nonperformance. As such, the Court GRANTS New York Marine’s Motion for
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Partial Summary Judgment as to Film Allman’s first cause of action.
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Film Allman’s second cause of action for anticipatory breach of contract cannot
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survive summary judgment for similar reasons. An anticipatory breach occurs “when
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the promisor without justification and before he has committed a breach makes a
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positive statement to the promise indicating he will not or cannot substantially
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perform his contractual duties.” Daum v. Superior Court, Sutter Cnty., 228 Cal. App.
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2d 283, 288 (1964). In the facts of this case, the “without justification” aspect of
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anticipatory breach is missing. As established above, New York Marine was justified
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in failing to carry out the terms of the contract, since Film Allman’s conduct triggered
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the criminal acts exclusion. Thus, its statements to Film Allman that it would not
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carry out the terms (FAC ¶¶ 69, 71) were not “without justification.” Therefore, the
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Court GRANTS New York Marine’s Motion for Partial Summary Judgment as to
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Film Allman’s second cause of action.
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Next, Film Allman’s third cause of action also fails because the criminal acts
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exclusion of the policy applies. The third cause of action is for breach of the implied
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duty of good faith and fair dealing, or insurance bad faith. (FAC ¶¶ 72–77.) Because
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coverage is excluded, New York Marine’s refusal to pay cannot have been in bad
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faith. A cause of action for insurance bad faith is “auxiliary” to the primary right of
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receiving the benefits of the contract. Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136,
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1153 (1990). Where the primary right is absent, “the auxiliary implied covenant has
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nothing upon which to act as a supplement, and should not be endowed with an
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existence independent of its contractual underpinnings.” Id. The primary right of
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receiving the benefits of the contract is absent here because the criminal act exclusion
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applies. Therefore, there can be no implied covenant of good faith and fair dealing,
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and the Court thusly GRANTS New York Marine’s Motion for Partial Summary
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Judgment as to Film Allman’s third cause of action.
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Finally, Film Allman’s eighth cause of action asks for declaratory relief as to
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each of the four insurance policies attached to the First Amended Complaint. (FAC
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¶¶ 107, 108, 115.) However, there can be no rights or obligations to declare where
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coverage is excluded. Because the criminal acts exclusion appearing in the Producer’s
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Policy has been triggered, the Court GRANTS New York Marine’s Motion for Partial
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Summary Judgment as to Film Allman’s eighth cause of action as it relates to the
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Producer’s Policy.
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IV.
CONCLUSION
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For the reasons discussed above, the Court DENIES Plaintiff’s Motion for
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Leave to Amend (ECF No. 72) and GRANTS Defendant’s Motion for Partial
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Summary Judgment as to Film Allman’s first, second, and third causes of action, as
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well as the eighth cause of action insofar as it concerns the Producer’s Policy. (ECF
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No. 66).
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IT IS SO ORDERED.
December 7, 2016
____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE
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