Hawker et al v. BancInsurance, Inc. et al

Filing 135

ORDER GRANTING 134 Motion for Certification of Judgment as Final and Appealable. The Court VACATES the hearing set for 7/18/2014 before Magistrate Judge Stanley A. Boone. Signed by Magistrate Judge Stanley A. Boone on 7/15/2014. (Hernandez, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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THOMAS T. HAWKER, et al.,
Plaintiffs,

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Case No. 1:12-cv-01261-SAB
ORDER GRANTING MOTION FOR
CERTIFICATION OF JUDGMENT AS
FINAL AND APPEALABLE

v.
BANCINSURANCE, INC., et al.,

ECF NO. 134

Defendants.

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On June 20, 2014, the parties in this action filed a joint motion for certification of

18 judgment in this action as final and appealable. (ECF No. 134.) The Court finds it appropriate
19 for the motion to be submitted upon the record and briefs on file and therefore vacates the
20 hearing on the motion scheduled for July 18, 2014.
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For the reasons set forth below, the Court grants the motion.

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I.

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BACKGROUND

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This action was filed on August 1, 2012. (ECF No. 1.) Plaintiffs Thomas T. Hawker

25 John J. Incandela, Dave Kraechan, Edwin Jay Lee, and Edward Rocha (“the County Bank
26 Officers”) filed suit against Defendant BancInsure, Inc. (“BancInsure”) for the alleged wrongful
27 denial of insurance coverage. The County Bank Officers are all former officers of County Bank,
28 a California state-chartered bank. The County Bank Officers were named as defendants in a civil

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1 action filed by Plaintiff Federal Deposit Insurance Corporation (“FDIC”), who alleged that the
2 County Bank Officers were negligent and breached their fiduciary duties to County Bank. The
3 County Bank Officers contend that the insurance policy covers civil actions brought by the FDIC
4 whereas BancInsure contends that the insurance policy does not cover civil actions brought by
5 the FDIC due to an Insured versus Insured Exclusion in the policy.
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On April 7, 2014, the Court granted Defendant BancInsure Inc.’s motion for summary

7 judgment. (ECF No. 125.) At a status conference on May 27, 2014, the parties informed their
8 Court of their intent to appeal the Court’s order. After a second status conference on June 6,
9 2014, the Court set a briefing schedule on the issue of whether the order could be appealed. The
10 parties filed a joint motion on June 20, 2014. (ECF No. 134.) No party in this action opposes
11 this motion.
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The joint motion sets forth two avenues by which the parties seek to appeal the Court’s

13 order. First, the parties request that the Court certify the order granting summary judgment as
14 final and appealable pursuant to Federal Rule of Civil Procedure 54(b) and 28 U.S.C. § 1292.
15 Alternatively, the parties request that the remaining claims in this action be dismissed without
16 prejudice pursuant to Federal Rule of Civil Procedure 41(a) and appealing this action thereafter.
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II.

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DISCUSSION

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For the reasons set forth below, the Court will certify the order as final and appealable

20 pursuant to Federal Rule of Civil Procedure 54(b) and 28 U.S.C. § 1292. Accordingly, the Court
21 will decline to address whether voluntary dismissal under Rule 41(a) is appropriate.
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Federal Rule of Civil Procedure 54(b) states:
(b)
Judgment on Multiple Claims or Involving Multiple
Parties. When an action presents more than one claim for relief—
whether as a claim, counterclaim, crossclaim, or third-party
claim—or when multiple parties are involved, the court may direct
entry of a final judgment as to one or more, but fewer than all,
claims or parties only if the court expressly determines that there is
no just reason for delay. Otherwise, any order or other decision,
however designated, that adjudicates fewer than all the claims or
the rights and liabilities of fewer than all the parties does not end
the action as to any of the claims or parties and may be revised at
any time before the entry of a judgment adjudicating all the claims
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and all the parties’ rights and liabilities.

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2 “A district court must first determine that it has rendered a ‘final judgment,’ that is, a judgment
3 that is an ultimate disposition of an individual claim entered in the course of a multiple claims
4 action.”

Wood v. GCC Bend, LLC, 422 F.3d 873, 878 (internal quotations and citations

5 omitted). “Then it must determine whether there is any just reason for delay.” Id. “‘It is left to
6 the sound judicial discretion of the district court to determine the “appropriate time” when each
7 final decision in a multiple claims action is ready for appeal. This discretion is to be exercised
8 “in the interest of sound judicial administration.”’” Id. (quoting Curtiss-Wright Corp. v. General
9 Electric Co., 446 U.S. 1, 8 (1980)). “Whether a final decision on a claim is ready for appeal is a
10 different inquiry from the equities involved, for consideration of judicial administrative interests
11 ‘is necessary to assure that application of the Rule effectively “preserves the history federal
12 policy against piecemeal appeals.”’” Id. (quoting Curtiss-Wright Corp., 446 U.S. at 8).
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Plaintiffs asserted multiple claims in this action. The First Amended Complaint asserted

14 four claims: first, for declaratory relief regarding Defendant’s obligation to provide insurance
15 coverage, second, for breach of contract stemming from Defendant’s failure to provide insurance
16 coverage, third, for insurance carrier bad faith, and fourth, for reformation of the insurance
17 contract.
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Further, at least one of the claims has been finally decided. In granting Defendant’s

19 motion to dismiss, the Court interpreted the insurance policy to state that actions by the FDIC are
20 not covered. Accordingly, the Court’s order granted judgment in favor of Defendant on the
21 breach of contract claim. The remaining claims are undecided, as Plaintiffs alternatively claimed
22 that the insurance contract should be reformed pursuant to California Civil Code § 3399 to cover
23 claims brought by the FDIC based upon BancInsure’s alleged representations regarding the
24 breadth of coverage of the insurance policy.
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Finally, the Court finds that there is no just reason for delay.

The parties both

26 characterize the breach of contract theory as the “driving force” of the case. (See Mem. of P. &
27 A. in Supp. of Joint Mot. for Cert. of Judg. as Final and Appealable 5:25-6:1.) The remaining
28 reformation claim was plead as an alternative. Permitting the parties to appeal the breach of

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1 contract issue immediately would likely be in the interest of judicial economy, as it may
2 materially advance the ultimate termination of litigation by alleviating the need to litigate the
3 reformation claim. In contrast, if the parties were forced to litigate the reformation claim in its
4 entirety before appealing the dismissal of the breach of contract claim, judicial resources may be
5 wasted because reversal on appeal would bring the parties back before this Court to litigate the
6 breach of contract claim.
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Additionally, the case meets all of the elements for certification of appeal under 28

8 U.S.C. § 1292(b). Under Section 1292(b):
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When a district judge, in making in a civil action an order not
otherwise appealable under this section, shall be of the opinion that
such order involves a controlling question of law as to which there
is substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation, he shall so state in writing in
such order.

13 Thus, the appealed issue must be one where there is a “controlling question of law,” a
14 “substantial ground for difference of opinion” and the appeal must “materially advance the
15 ultimate termination of the litigation.” In this case, there is a “controlling question of law”-16 whether the insured versus insured clause’s reference to “receivers” should be interpreted to
17 apply to the FDIC. There is also a “substantial ground for difference of opinion.” In their briefs
18 supporting their own motion for summary judgment and opposing Defendant’s motion for
19 summary judgment, the FDIC cited a number of cases where courts have held that insured versus
20 insured exclusions do not apply to the FDIC. See American Cas. Co. of Reading, Pennsylvania
21 v. Sentry Federal Sav. Bank, 867 F. Supp. 50 (D. Mass. 1994); American Cas. Co. v. FDIC, 791
22 F. Supp. 276 (W.D. Okla. 1992); FDIC v. American Cas. Co. of Reading, Pennsylvania, 814 F.
23 Supp. 1021 (D. Wyo. 1991); St. Paul Fire and Marine Ins. Co. v. Federal Deposit Ins. Corp., 765
24 F. Supp. 538 (D. Minn. 1991). This Court and at least one other court has held otherwise. See
25 Mt. Hawley Ins. Co. v. Federal Sav. & Loan Ins. Corp., 695 F. Supp. 469, 482 (C.D. Cal. 1987).
26 The parties have also identified a case from the Central District of California that reached a
27 different conclusion compared the this Court’s order, Federal Deposit Insurance Corporation v.
28 Bancinsure, Inc., Case No. CV 12-09882 DMG. Finally, as discussed above, the appeal would

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1 “materially advance the ultimate termination of the litigation.”
Based upon the foregoing, the Court grants the motion to certify the order on the motions

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3 for summary judgment as final and appealable.
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III.

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CONCLUSION AND ORDER

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Based upon the foregoing, it is HEREBY ORDERED that:

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1.

The July 18, 2014 hearing on the joint motion for certification of judgment as

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final and appealable is VACATED and the parties shall not appear at that time;

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and
2.

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The joint motion for certification of judgment as final and appealable is
GRANTED; and

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3.

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The Court certifies its April 7, 2014 order on the cross motions for summary

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judgment as final and appealable under Federal Rule of Civil Procedure 54(b) and

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28 U.S.C. § 1292.

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IT IS SO ORDERED.

17 Dated:

July 15, 2014
UNITED STATES MAGISTRATE JUDGE

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