Hawker et al v. BancInsurance, Inc. et al
Filing
157
ORDER GRANTING 155 Motion for Certification of Judgment as Final and Appealable, signed by Magistrate Judge Stanley A. Boone on 4/17/2015. (Kusamura, W)
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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. 155
Defendants.
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On April 1, 2015, Defendant John D. Doak, as receiver for Red Rock Insurance
18 Company, formerly known as BancInsure, Inc. (“Defendant”) filed a motion for certification of
19 judgment as final and appealable.
(ECF No. 155.)
Plaintiff Federal Deposit Insurance
20 Corporation (“Plaintiff”) filed a non-opposition on April 9, 2015. (ECF No. 156.)
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The Court finds it appropriate for the motion to be submitted upon the record and briefs
22 on file and therefore vacates the hearing on the motion scheduled for April 22, 2015. For the
23 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
27 John J. Incandela, Dave Kraechan, Edwin Jay Lee, and Edward Rocha (“the County Bank
28 Officers”) filed suit against Defendant BancInsure, Inc. (“BancInsure”) for the alleged wrongful
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1 denial of insurance coverage. The County Bank Officers are all former officers of County Bank,
2 a California state-chartered bank. The County Bank Officers were named as defendants in a civil
3 action filed by Plaintiff Federal Deposit Insurance Corporation (“FDIC”), who alleged that the
4 County Bank Officers were negligent and breached their fiduciary duties to County Bank. The
5 County Bank Officers contend that the insurance policy covers civil actions brought by the FDIC
6 whereas BancInsure contends that the insurance policy does not cover civil actions brought by
7 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
9 judgment. (ECF No. 125.) At a status conference on May 27, 2014, the parties informed their
10 Court of their intent to appeal the Court’s order. After a second status conference on June 6,
11 2014, the Court set a briefing schedule on the issue of whether the order could be appealed. The
12 parties filed a joint motion on June 20, 2014. (ECF No. 134.) The Court granted the motion on
13 July 15, 2014. (ECF No. 135.)
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On August 5, 2014, Defendant filed a Notice of Show Cause Order informing the Court
15 that a state Court in Oklahoma issued an injunction against all persons from prosecuting actions
16 against Defendant as a result of pending liquidation proceedings. (ECF No. 136.) In light of the
17 injunction, the Court vacated the order granting certification and stayed this action pending the
18 resolution of the liquidation proceedings. (ECF No. 140.) On January 27, 2015, the stay was
19 lifted and the Court set a briefing schedule for a subsequent motion to certify. (ECF No. 147,
20 150.)
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II.
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DISCUSSION
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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
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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
and all the parties’ rights and liabilities.
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3 “A district court must first determine that it has rendered a ‘final judgment,’ that is, a judgment
4 that is an ultimate disposition of an individual claim entered in the course of a multiple claims
5 action.”
Wood v. GCC Bend, LLC, 422 F.3d 873, 878 (internal quotations and citations
6 omitted). “Then it must determine whether there is any just reason for delay.” Id. “‘It is left to
7 the sound judicial discretion of the district court to determine the “appropriate time” when each
8 final decision in a multiple claims action is ready for appeal. This discretion is to be exercised
9 “in the interest of sound judicial administration.”’” Id. (quoting Curtiss-Wright Corp. v. General
10 Electric Co., 446 U.S. 1, 8 (1980)). “Whether a final decision on a claim is ready for appeal is a
11 different inquiry from the equities involved, for consideration of judicial administrative interests
12 ‘is necessary to assure that application of the Rule effectively “preserves the history federal
13 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
15 four claims: first, for declaratory relief regarding Defendant’s obligation to provide insurance
16 coverage, second, for breach of contract stemming from Defendant’s failure to provide insurance
17 coverage, third, for insurance carrier bad faith, and fourth, for reformation of the insurance
18 contract.
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The breach of contract claim has been finally decided. The order granting Defendant’s
20 motion for summary judgment constitutes a final decision in favor of Defendant on the breach of
21 contract claim. The remaining claims are undecided, as Plaintiffs alternatively claimed that the
22 insurance contract should be reformed pursuant to California Civil Code § 3399 to cover claims
23 brought by the FDIC based upon BancInsure’s alleged representations regarding the breadth of
24 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. The reformation
27 claim was plead as an alternative ground for relief. Permitting the parties to appeal the breach of
28 contract issue immediately would likely be in the interest of judicial economy, as it may
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1 materially advance the ultimate termination of litigation by alleviating the need to litigate the
2 reformation claim. In contrast, if the parties were forced to litigate the reformation claim in its
3 entirety before appealing the dismissal of the breach of contract claim, judicial resources may be
4 wasted because reversal on appeal would bring the parties back before this Court to litigate the
5 breach of contract claim.
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Additionally, the case meets all of the elements for certification of appeal under 28
7 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.
12 Thus, the appealed issue must be one where there is a “controlling question of law,” a
13 “substantial ground for difference of opinion” and the appeal must “materially advance the
14 ultimate termination of the litigation.”
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In this case, there is a “controlling question of law”--whether the insured versus insured
16 clause’s reference to “receivers” should be interpreted to apply to the FDIC. There is also a
17 “substantial ground for difference of opinion.” In their briefs supporting their own motion for
18 summary judgment and opposing Defendant’s motion for summary judgment, the FDIC cited a
19 number of cases where courts have held that insured versus insured exclusions do not apply to
20 the FDIC. See American Cas. Co. of Reading, Pennsylvania v. Sentry Federal Sav. Bank, 867 F.
21 Supp. 50 (D. Mass. 1994); American Cas. Co. v. FDIC, 791 F. Supp. 276 (W.D. Okla. 1992);
22 FDIC v. American Cas. Co. of Reading, Pennsylvania, 814 F. Supp. 1021 (D. Wyo. 1991); St.
23 Paul Fire and Marine Ins. Co. v. Federal Deposit Ins. Corp., 765 F. Supp. 538 (D. Minn. 1991).
24 This Court and at least one other court has held otherwise. See Mt. Hawley Ins. Co. v. Federal
25 Sav. & Loan Ins. Corp., 695 F. Supp. 469, 482 (C.D. Cal. 1987).
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The parties have also identified a case from the Central District of California that reached
27 a different conclusion compared to this Court’s conclusion, FDIC as Receiver of Security Pacific
28 v. BancInsure, Inc., Case No. CV 12-09882 DMG. The parties inform the Court that the Central
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1 District action has been appealed to the Ninth Circuit. Finally, as discussed above, the appeal
2 would “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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4 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 April 22, 2015 hearing on the joint motion for certification of judgment as
final and appealable is VACATED and the parties shall not appear at that time;
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and
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2.
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The 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.
19 Dated:
April 17, 2015
UNITED STATES MAGISTRATE JUDGE
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