Premier Pools Management Corp. v. Colony Insurance Co.

Filing 20

ORDER signed by Judge John A. Mendez on 4/4/14 DENYING 12 Motion for Partial Summary Judgment; GRANTING 14 Motion for Summary Judgment. CASE CLOSED. (Meuleman, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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PREMIER POOLS MANAGEMENT
CORP., a Nevada corporation,

No.

2:13-cv-02038-JAM-EFB

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Plaintiff,
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v.
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COLONY INSURANCE COMPANY, a
Virginia corporation,

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ORDER GRANTING DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFF’S MOTION FOR
PARTIAL SUMMARY JUDGMENT

Defendant.

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This matter is before the Court on Plaintiff Premier Pools

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Management Corp.’s (“Premier Pools”) Motion for Partial Summary

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Judgment (Doc. #12) and Defendant Colony Insurance Company’s

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(“Colony”) Motion for Summary Judgment (Doc. #14). 1

Colony filed

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an opposition to Premier Pools’ motion (Doc. #13).

Premier Pools

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filed an opposition to Colony’s motion and a Reply to its

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opposition (Doc. #16).

Colony replied (Doc. #17) to Premier

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for March 26, 2014.
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Pools’ opposition.

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law applies to determine whether a duty to defend exists.

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Civ. Code § 1646; Frontier Oil Corp. v. RLI Ins. Co., 153

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Cal.App.4th 1436, 1448 (2007).

Both parties correctly agree that California
Cal.

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I.

FACTUAL AND PROCEDURAL BACKGROUND

The First Amended Complaint (Doc. #8) (“FAC”) states a sole

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cause of action against Colony for declaratory relief regarding

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Colony’s alleged breach of its duty to defend Premier Pools.

In

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the FAC, Premier Pools states that it was sued by Premier Pools,

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Inc. (“PPI”) in another action, Premier Pools, Inc. v. Premier

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Pools Management Corp., dba Premier Pools and Spas, Inc., et al.

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(“PPI Action”), and, after being notified, Colony refused to

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observe its duty to defend Premier Pools in the PPI Action.

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Premier Pools is a corporation organized under the laws of

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the State of Nevada.

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Undisputed Facts (Doc. #13-1) #1.

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corporation.

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effective November 8, 2010; the policy was later renewed with all

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relevant terms identical in both policies (collectively “the

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Policies”), thereby extending the continuous coverage under the

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Policies through November 8, 2012.

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Certificate lists “DP Aquatics Inc. dba Premier Pools Spas &

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Patio” (“DP Aquatics”) as the insured entity under the Policies.

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Porter Decl. (Doc. #12-3) ¶¶ 3-4, Exh. 1-2. (Doc. #12-4 & 12-5).

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The application submitted for the Policies listed DP Aquatics as

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the applicant.

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undisputed that DP Aquatics is a corporation organized under the

Id. #2.

Colony Resp. to Premier Pools’ Statement of
Colony is a Virginia

Colony issued an insurance policy

Id. 3-4.

The Declarations

Porter Decl. ¶ 5, Exh. 9 (Doc. #12-12).

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It is

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laws of the State of California.

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Colony’s Statement of Facts (Doc. #16-1) #24.

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Premier Pools’ Response to

Colony had previously defended Premier Pools in another

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matter, Davis v. Premier Pool and Spas, Gregg Gray, and Premier

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Pools Management Inc. (“Davis Suit”), even though DP Aquatics was

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not named as a defendant.

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Statement of Undisputed Facts (Doc. #13-1) #7-8.

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Action, PPI accuses Premier Pools of improperly using its

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trademark and name among other claims.

Colony’s Resp. to Premier Pools’
In the PPI

Resp. to SUF (Doc. #16-1)

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#2.

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was filed and four months prior to the commencement of trial,

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Premier Pools provided notice to Colony of the suit and requested

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defense under the terms of the Policies.

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dated March 28, 2013, Colony notified Premier Pools that it was

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denying coverage and defense of the PPI Action.

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submitting proof of a name change request, on September 19, 2013,

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the named insured in the Policies was changed to “DP Aquatics

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Inc./Premier Pools Management Company dba: Premier Pools and

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Spas.”

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On March 1, 2013, about eight months after the PPI Action

Id. #26.

By letter

Id. #27.

After

Id. #30-33.

Plaintiff brings the present motion seeking a declaratory

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judgment that Colony owed Premier Pools a defense in the PPI

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Action and is required to pay all reasonable defense expenses.

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Premier Pools MSJ at p. 25.

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judgment as a matter of law in its favor on the grounds that

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Premier Pools is not an insured under the Policies, and that even

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if it was, the claims in the PPI Action do not fall within the

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Policies’ coverage for “personal and advertising injury” as

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alleged by Premier Pools and that any alleged coverage is

Colony brings its own motion seeking

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specifically excluded by the terms of the Policies.

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at p. 1.

Colony MSJ

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II.

OPINION

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A.

Legal Standard

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“An insurer has a very broad duty to defend its insured

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under California law.”

Anthem Electronics, Inc. v. Pac.

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Employers Ins. Co., 302 F.3d 1049, 1054-55 (9th Cir. 2002).

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California Supreme Court has stated that an insurer must defend

The

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an insured if the underlying suit even “potentially” seeks

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damages within the coverage of the policy at issue.

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Ins. Co. v. Barbara B., 4 Cal. 4th 1076, 1081 (1993) (citing Gray

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v. Zurich Ins. Co., 65 Cal.2d 263 (1966)).

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whether the insurer owes a duty to defend usually is made in the

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first instance by comparing the allegations of the complaint with

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the terms of the policy.”

Horace Mann

“The determination

Id.

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B.

Judicial Notice

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Colony requests judicial notice (Doc. #14-2) of two facts,

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and Premier Pools opposes the request (Doc. #16-4).

Colony

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desires the Court to take notice that Premier Pools is a Nevada

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corporation and DP Aquatics is a California corporation.

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Because these facts are undisputed in this case, the Court need

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not and does not grant the formal request for judicial notice

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presented by Colony.

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of Facts (Doc. #16-1) #1, #24.

Premier Pools’ Resp. to Colony’s Statement

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C.

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Colony filed Objections (Doc. #13-2) to the declaration of

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Evidentiary Objections

Paul Porter (Doc. #12-3), and Premier Pools responded (Doc. #164

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3).

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as they relate to Porter’s interpretation of the Policies.

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Court relies on the Policies themselves to determine whether

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Premier Pools was an insured under them, rather than conclusory

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statements made in a declaration.

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objection.

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to Porter’s Declaration is part of what the Court will consider

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the “application materials.”

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The Court hereby sustains the first two objections insofar
The

The Court overrules the third

The payment authorization form included in Exhibit 9

Premier Pools filed objections (Doc. #16-2) to the

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declaration of Suzanne Patton (Doc. #14-3).

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is sustained.

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case and the Policies themselves to determine whether Premier

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Pools is an insured under the Policies, rather than rely on

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conclusory statements in declarations interpreting them.

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Pools’ second objection is overruled.

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her company did not receive the information necessary to make the

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coverage determination until September 19, 2013, is a statement

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of fact based on her personal knowledge of what was necessary to

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make a coverage determination rather than an opinion.

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rendered an “inadmissible conclusion” pursuant to Federal Rule of

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Evidence 701.

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D.

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Colony bases its motion for summary judgment on three

The first objection

Again, the Court will rely on the facts of the

Premier

Patton’s statement that

It is not

Colony’s Motion for Summary Judgment

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grounds: (1) Premier Pools is not an insured under the Policies,

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and therefore, has no standing; (2) the claims in the underlying

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action do not fall within the Policies’ coverage under any of

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the offenses included in the definition of “personal and

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advertising injury”; and (3) even were the claims covered by
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certain provisions of the Policies, coverage is barred by

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Exclusion “i”.

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Standing

Colony first contends Premier Pools is not an insured under

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the Policies and therefore lacks standing to bring this action.

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Col. MSJ at pp. 9-13.

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named in the Policies is DP Aquatics.

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from the Policies defining who is covered by its terms:

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It points to the fact that the only entity
Colony relies on language

SECTION II - WHO IS AN INSURED

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1.

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. . .

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d. An organization other than a partnership, joint
venture or limited liability company, you are an
insured. Your “executive officers” and directors are
insureds . . . . Your stockholders are also insureds
. . . .

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If you are designated in the Declarations as:

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Undisputed Fact #25 (Doc. #16-1).

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Premier Pools is a separate corporation, organized under a

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different state’s laws, it does not qualify as an insured under

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the Policies as the only entity named in the Declarations

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Certificate is DP Aquatics.

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Colony argues that because

In the FAC, Premier Pools states that pursuant to the

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doctrine of equitable estoppel it is an insured under the

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Policies.

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this argument but also contends that Colony (or its agent)

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“mistakenly failed” to list Premier Pools on the Declarations

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Certificate.

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Pools insists the Court should therefore reform the Policies to

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list Premier Pools as an insured.

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assert a theory of its insured status by seeking a remedy,

FAC ¶ 16.

In its opposition, Premier Pools restates

Opp. to Col. MSJ (Doc. #16) at pp. 1-6.

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Premier

However, Premier Pools may not

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reformation of the contract, which was not mentioned in its

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complaints, for the first time in its opposition to the opposing

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party’s motion for summary judgment.

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Dist., 955 F. Supp. 2d 1038, 1068-69 (E.D. Cal. 2013); Navajo

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Nation v. U.S. Forest Serv., 535 F.3d 1058, 1079-80 (9th Cir.

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2008).

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argument and moves to Premier Pools’ theory that it should be

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considered an insured based on the doctrine of equitable

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estoppel.

Oyarzo v. Tuolumne Fire

The Court therefore need not address the reformation

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“‘A valid claim of equitable estoppel consists of the

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following elements: (a) a representation or concealment of

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material facts (b) made with knowledge, actual or virtual, of the

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facts (c) to a party ignorant, actually and permissibly, of the

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truth (d) with the intention, actual or virtual, that the

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ignorant party act on it, and (e) that party was induced to act

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on it.’

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Equity, § 191, pp. 527–528.)”

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Ins. Co., 190 Cal. App. 4th 1054, 1067 n.5 (2010)

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(13 Witkin, Summary of Cal. Law [(10th ed. 2005)]
Advanced Network, Inc. v. Peerless

Premier Pools contends that the first element is established

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because Colony misrepresented or concealed the fact that Premier

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Pools was not an insured either (1) when Colony calculated the

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premiums on the Policies based on Premier Pools’ revenues and

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accepted payments from Premier Pools for those premiums, or

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(2) when Colony defended Premier Pools in the Davis Suit.

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12-17; Opp. at pp. 1-2, 4-6.

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FAC ¶¶

The Court finds there is no evidence that Colony ever

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misrepresented to Premier Pools that it was an insured under the

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Policies or concealed the fact that it was not.
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The Supreme

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Court of California has held:
Insurance policies are contracts and, therefore, are
governed in the first instance by the rules of
construction applicable to contracts. Under statutory
rules of contract interpretation, the mutual intention
of the parties at the time the contract is formed
governs its interpretation. ([Cal.] Civ.Code,
§ 1636.) Such intent is to be inferred, if possible,
solely from the written provisions of the contract.
(Id. § 1639.) The “clear and explicit” meaning of
these provisions, interpreted in their “ordinary and
popular sense,” controls judicial interpretation
unless “used by the parties in a technical sense, or
unless a special meaning is given to them by usage.”
(Id. §§ 1638, 1644.) If the meaning a layperson would
ascribe to the language of a contract of insurance is
clear and unambiguous, a court will apply that
meaning.

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Montrose Chem. Corp. v. Admiral Ins. Co., 10 Cal. 4th 645, 666-67

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(1995) (emphasis added).

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list DP Aquatics as the only insured.

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Policies clearly states that only the named insured (and its

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officers, directors, and shareholders) is covered by the terms of

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the Policies.

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were even renewed with the same party listed as the insured.

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The Declarations Certificate explicitly
Section II(1)(d) of the

Undisputed Fact #25 (Doc. #16-1).

The Policies

The Court does not find this language ambiguous or a

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misrepresentation or concealment of Premier Pools’ insured

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status.

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Pools in the previous matter, the Court cannot ignore the plain

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language of the contract to extend coverage to another, unnamed

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party.

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(discussing the well-settled principle that estoppel cannot be

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used to create coverage under an insurance policy where such

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coverage did not initially exist).

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not an insured under the Policies, and thus, Colony has no duty

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to defend it in the PPI Action.

Despite the curious decision of Colony to defend Premier

See Advanced Network, Inc., 190 Cal. App. at 1066-67

Therefore, Premier Pools is

Accordingly, Colony’s motion for
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summary judgment is granted on the sole cause of action in the

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FAC.

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Given that the Court finds Premier Pools is not an insured

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under the Policies, it is unnecessary to address Colony’s

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remaining arguments regarding the coverage provisions within the

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Policies upon which Premier Pools relies.

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Court finds Premier Pools is not entitled to coverage under the

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Policies, its Motion for Partial Summary Judgment seeking a

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declaratory judgment that Colony owed it a defense and is

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Similarly, because the

required to pay all reasonable defense expenses is denied.

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III.

ORDER

For the reasons set forth above, the Court GRANTS Colony’s

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Motion for Summary Judgment and DENIES Premier Pools’ Motion for

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Partial Summary Judgment.

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IT IS SO ORDERED.
Dated:

April 4, 2014

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