Continental Casualty Company v. St. Paul Surplus Lines Insurance Company

Filing 289

ORDER signed by District Judge Troy L. Nunley on 6/19/15 GRANTING 273 Motion for Clarification. The 270 Findings of Fact and Conclusions of Law is hereby AMENDED as follows: The Court finds that the SIR within St. Paul's insurance polic y was satisfied by Continental's $750,000 settlement payment on Crown's behalf. Accordingly, St. Paul is HEREBY ORDERED to reimburse Continental in the amount of $1,875,000, which represents 75% of the $2,500,000 paid by Continental from its umbrella policy. (Meuleman, A)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 CONTINENTAL CASUALTY COMPANY, Plaintiffs, 13 14 15 16 17 No. 2:07-cv-01744-TLN-EFB ORDER CLARIFYING THIS COURT’S FINDINGS OF FACT AND CONCLUSION OF LAW v. ST. PAUL SURPLUS LINES INSURANCE COMPANY; DOES 1 through 10, inclusive, Defendants. 18 19 The instant matter is before the Court pursuant to Defendant St. Paul Surplus Lines 20 Insurance Company’s (“St. Paul”) Motion for Clarification of Findings of Fact and Conclusions 21 of Law. (ECF No. 273.) Plaintiff Continental Casualty Company (“Continental”) opposes St. 22 Paul’s interpretation of this Court’s Findings of Fact and Conclusions of Law. (ECF No. 281.) 23 The Court has considered the arguments presented by both parties’ briefing and hereby issues the 24 following order to clarify the Court’s Findings of Fact and Conclusions of Law. 25 The question presented by the parties is actually one that was not litigated or argued 26 before this Court—whether the $250,000 self-insured retention (“SIR”) clause within St. Paul’s 27 policy was satisfied through the $1,000,000 insurance policy that Continental exhausted in 28 defending their insured, Tasq Technology, Inc. (“Tasq”) and its lessor Crown Equipment 1 1 Corporation (“Crown”). The parties have requested the Court’s determination on this matter 2 which is appropriate and necessary since there are no material issues of fact, and since this 3 determination concerns a matter of law. For the reasons set forth below, the Court finds that the 4 SIR was satisfied by payments made by Continental on Crown’s behalf while defending the 5 wrongful death lawsuit brought against Crown and Tasq. 6 I. 7 As discussed in detail in the Court’s Findings of Fact and Conclusions of Law, this matter 8 involves a dispute between two insurance companies that issued policies for Crown and Tasq in a 9 wrongful death action. (Findings of Fact and Conclusions of Law, ECF No. 270.) Continental 10 issued a general liability insurance policy with a per occurrence limit of $1,000,000 that applied 11 to Tasq. (ECF No. 270.) This policy covered Crown as an additional insured. (ECF No. 270.) 12 Continental also provided a $25,000,000 umbrella policy to cover additional liability exceeding 13 the limits of its primary policy. St. Paul issued a general liability policy with limits of $5,000,000 14 to Crown. (ECF No. 270.) 15 BRIEF FACTUAL BACKGROUND In settling the underlying wrongful death lawsuit, Continental paid the entire $1,000,000 16 limit of its primary policy along with $2,500,000 of its umbrella policy to settle all claims against 17 both Crown and Tasq. St. Paul refused to contribute to that settlement despite its $5,000,000 in 18 general liability coverage inuring to Crown’s benefit. 19 20 21 22 23 24 25 26 On September 17, 2014, this Court found as follows: 29. [T]he Court finds that an appropriate allocation of the settlement paid to settle the Coupé action is 75% to Crown and 25% to Tasq. Although earlier estimates of fault opined that Tasq and Crown shared similar exposure, Continental has put on persuasive evidence that the Coupé plaintiffs were shifting their trial strategy focusing on a purported malfunction of the forklift to the refusal of Crown to incorporate vertical posts in its design. 30. Therefore, Continental shall recover judgment from St. Paul in the amount of $1,875,000, which represents 75% of the $2,500,000 paid by Continental from its umbrella policy. (See RT 874:13-22 (setting forth damages calculations incorporating pro rata share of policies and $250,000 self-insured retention).) 27 28 (ECF No. 270.) The Court did not decide the matter of whether the $250,000 SIR had been paid 2 1 because the parties did not address this matter during the trial. Although, the SIR was mentioned 2 during trial, the parties’ counsel did not address whether Continental’s payments in defending 3 Crown sufficed to satisfy the SIR clause in the insurance policy issued by St. Paul. 4 II. LEGAL STANDARD 5 After a nonjury trial, the court may, upon motion, clarify findings of fact, which 6 materially affect the parties’ rights and obligations. Fed. R. Civ. P. 52(b); Crane-McNab v. Cnty 7 of Merced, 773 F. Supp. 2d 861, 873 (E.D. Cal. 2011); Davis v. Mathews, 450 F. Supp. 308, 318 8 (E.D. Cal. 1978). Rule 52(b) provides: “On a party’s motion filed no later than 28 days after the 9 entry of judgment, the court may amend its findings—or make additional findings—and may 10 amend the judgment accordingly.” Fed. R. Civ. P. 52(b). Motions under Rule 52(b) are primarily 11 designed to correct findings of fact which are central to the ultimate decision; the Rule is not 12 intended to serve as a vehicle for a rehearing. See Davis v. Mathews, 450 F. Supp. at 318. 13 Here, the parties have differing interpretations of the Findings with respect to the 14 application of the SIR in St. Paul’s policy, which materially affect the amount of the Judgment. 15 Thus, clarification is in order so that the parties will know with certainty their rights and 16 obligations. 17 III. 18 The question here is whether the funds that Continental paid on behalf of Crown’s defense ANALYSIS 19 satisfies the SIR provision within St. Paul’s policy. At the outset, the Court notes that the policy 20 is silent as to whether the insured itself, not other insurers, must pay the SIR amount. Thus, the 21 facts of this case are analogous to those in Vons Companies v. United States Fire Company, 78 22 Cal. App. 4th 52 (2000). There, the Second District Court of Appeals held that the policy did not 23 preclude payment of the SIR through other insurance. For the reasons set forth below, this Court 24 finds that the holding in Vons applies to this case and thus the $250,0000 SIR requirement was 25 satisfied by Continental’s $1,000,000 payment on behalf of Tasq and Crown. 26 Insurance contracts are subject to the ordinary rules of contract interpretation. Gen. Star 27 Indem. Co. v. Superior Court, 47 Cal. App. 4th 1586, 1592 (1996). “The fundamental goal of 28 contractual interpretation is to give effect to the mutual intention of the parties, and such intent is 3 1 to be inferred, if possible, solely from the written provisions of the contract.” Id. “If contractual 2 language is clear and explicit, it governs.” Bank of the W. v. Superior Court, 2 Cal. 4th 1254, 3 1264 (1992). “Policy provisions are ambiguous only if they are capable of two or more 4 reasonable constructions.” Vons Companies, Inc., 78 Cal. App. 4th at 58. Policy terms must be 5 “construed in the context of the whole policy and the circumstances of the case and cannot be 6 deemed ambiguous in the abstract.” Id. (citing General Star, 47 Cal. App. 4th at 1592–93). “If 7 an ambiguity cannot be eliminated by the language and context of the policy, then the court must 8 invoke the principle that ambiguities are construed against the party who caused the uncertainty- 9 the insurer-in order to protect the insured’s reasonable expectations of coverage.” Id. 10 11 The St. Paul policy provides: 13 The self-insured retentions shown in the Coverage Summary and the information contained in this section fix the amount of damages which you’ll be required to pay, and over which the limits of coverage will apply in accordance with the Limits Of Coverage section, regardless of the number of. 14 • persons or organizations making claims or bringing suits. 15 We’ll consider any voluntary payment of, or assumption of any obligation to pay, damages for covered injury or damage above a self-insured retention without our consent to be your responsibility. 12 16 17 18 19 20 21 22 23 24 25 Bodily injury and property damage each event retention - other than products and completed work. You’ll be responsible for the amount of damage up to this retention for all covered bodily injury and property damage that: • results from other than your products and completed work; • is sustained by all persons and organizations; and • results from any one event. This retention is reduced up to the amount of the medical expenses each person retention paid by you. Products and completed work bodily injury and property damage each event retention. 26 You’ll be responsible for the amount of damages up to this retention for all covered bodily injury and property damage that 27 • results from our products or completed work; 28 • is sustained by all persons and organizations; and 4 1 • results from any one event. 2 ... 3 If there is any other valid and collectible insurance for injury or damage covered by this agreement, other than insurance specifically purchased to be excess over this agreement, the Other primary insurance section applies. 4 5 6 Other insurance means insurance, or the funding of losses, that’s provided by or through: 7 • another insurance company; 8 • a risk retention group; 9 • a self-insurance method or program, other than any funded by you and over which this agreement applies; or 10 • any similar risk transfer or risk management method. 11 ... 12 13 When this agreement is excess insurance over any other insurance, we’ll pay only the amount of damages that’s in excess of: 14 • the total amount that all such other insurance would pay if this agreement didn’t exist and 15 16 • the total of all deductible and self-insured amounts under all such other insurance. 17 Thus, like Vonn, 78 Cal. App. 4th at 60, and General Star National Insurance Corp. v. World Oil 18 Co., 973 F. Supp. 943, 947–48 (C.D. Cal. 1997) [hereinafter World Oil], the St. Paul policy is 19 silent as to whether payments from other insurance companies apply to the SIR provision and 20 thus ambiguous as to whether Crown was required to pay the deductible from its own funds or 21 could insure that amount elsewhere. Here, like in Vonn and World Oil that ambiguity is resolved 22 against the insurer. Vonn Companies Inc., 78 Cal. App. 4th at 60; World Oil Co., 973 F. Supp. at 23 947–48. 24 The SIR amount was $250,000. The Court has already determined that appropriate 25 allocation of the settlement paid to settle the Coupé action is 75% to Crown and 25% to Tasq. 26 (ECF No. 270 at ¶ 29.) Therefore, 75% of the $1,000,000 settlement paid by Continental was on 27 behalf of Crown, totaling $750,000. That $750,000 payment more than satisfies Crown’s 28 $250,000 SIR. Accordingly, the Court’s Findings of Fact and Conclusions of Law (ECF No. 5 1 2 270) is hereby amended as follows: The Court finds that the SIR within St. Paul’s insurance policy was satisfied by 3 Continental’s $750,000 settlement payment on Crown’s behalf. Accordingly, St. Paul is hereby 4 ordered to reimburse Continental in the amount of $1,875,000, which represents 75% of the 5 $2,500,000 paid by Continental from its umbrella policy. 6 IT IS SO ORDERED. 7 8 Dated: June 19, 2015 9 10 11 Troy L. Nunley United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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