Blazona Concrete Construction, Inc. v. American Safety Indemnity Company et al

Filing 24

ORDER signed by District Judge John A. Mendez on 12/16/2016 ORDERING that the Court DISMISSES WITHOUT LEAVE TO AMEND Count 1 of the Complaint. This case will proceed only on Plaintiff's claim for declaratory relief regarding the duty to indemnify in Count 2. (Jackson, T)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 BLAZONA CONCRETE CONSTRUCTION, INC., a California corporation 13 Plaintiff, 14 15 16 17 No. 2:16-cv-00216-JAM-CKD ORDER DISMISSING COUNT ONE AS MOOT v. AMERICAN SAFETY INDEMNITY COMPANY, a Georgia Corporation; AMERICAN SAFETY CASUALTY INSURANCE COMPANY, a Georgia Corporation; and DOES 1-100, inclusive, 18 Defendants. 19 Upon denying Blazona Concrete Construction’s (“Plaintiff”) 20 21 Motion for Leave to File Second Amended Complaint, this Court 22 ordered the parties to submit briefs on whether or not the 23 present action is moot. 24 Court dismisses Plaintiff’s first cause of action, Declaratory 25 Relief re Duty to Defend, as moot. 26 Declaratory Relief re Duty to Indemnify, will be the sole cause 27 of action. 28 /// For the reasons described below, the 1 Moving forward, Count 2, 1 2 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND Plaintiff filed for declaratory relief against American 3 Safety Indemnity Company—now represented by TIG Insurance 4 Company, successor by merger—(“Defendant”) in the Superior Court 5 of the State of California for the County of Sacramento. 6 Notice of Removal, Exh. A, ECF No. 1-1. 7 Defendant denied Plaintiff’s tender of defense in a lawsuit in 8 violation of the Commercial General Liability Insurance contracts 9 between the parties. See id. See Plaintiff alleges The underlying action for which 10 Plaintiff tendered defense reached final judgment—at least with 11 respect to Plaintiff—on February 5, 2016. 12 Katy A. Nelson in Support of Opposition, Exh. 1, ECF No. 18-1. 13 Two days before that judgment, Defendants removed this action to 14 federal court. 15 Joint Status Report and the Court issued a Status/Pre-trial 16 Scheduling Order on April 5, 2016. 17 months later, Plaintiff moved for leave to file an amended 18 complaint that would allege a single cause of action for breach 19 of contract and no longer assert claims for declaratory relief. 20 See Proposed Second Amended Complaint, ECF No. 17. 21 denied Plaintiff’s motion because Plaintiff was not diligent in 22 meeting the Court’s deadline for amendments. 23 Motion to Amend the Complaint, ECF No. 21. 24 further briefing on whether the case is moot. See Notice of Removal. See Declaration of The parties submitted a ECF Nos. 13 & 14. Five This Court See Order Denying The Court ordered See id. 25 26 27 28 II. OPINION “In determining whether a request for declaratory relief has become moot, [] the question in each case is whether the facts 2 1 alleged, under all the circumstances, show that there is a 2 substantial controversy, between parties having adverse legal 3 interests, of sufficient immediacy and reality to warrant the 4 issuance of a declaratory judgment.” 5 of Cal. v. F.E.R.C., 100 F.3d 1451, 1458 (9th Cir. 1996) 6 (citation and quotation marks omitted). 7 Public Util. Com’n of State Plaintiff alleges two causes of action for declaratory 8 relief. Declaratory relief is available pursuant to both federal 9 and California law. See 28 U.S.C. § 2201; Cal. Code Civ. Pro. 10 § 1060. California also provides that a court “may refuse to 11 exercise the power . . . in any case where its declaration or 12 determination is not necessary or proper at the time under all 13 the circumstances.” 14 sitting in diversity vary in which statute they apply, but the 15 distinctions, if any, are immaterial to the outcome in this case. 16 See In re Adobe Systems, Inc. Privacy Litigation, 66 F. Supp. 3d 17 1197, 1219 (N.D. Cal. 2014) (finding that the Declaratory 18 Judgment Act is procedural in nature and applying it in a 19 diversity case; noting that the two statutes are broadly 20 equivalent); Public Storage v. Sprint Corp., No. CV 14-2594-GW 21 (PLAx), 2015 WL 1057923, at *20 (C.D. Cal. Mar. 9, 2015) 22 (recognizing that federal courts have frequently applied 23 California’s declaratory judgment statute but finding that the 24 differences between the statutes were not meaningful in that 25 case). Cal. Code Civ. Pro. § 1061. Federal courts 26 A. Declaratory Relief: Duty to Defend 27 Plaintiff concedes that its cause of action regarding 28 Defendant’s duty to defend would provide Plaintiff with “little 3 1 to no” remedy. 2 Declaratory Relief Causes of Action are Moot (“P. Brief”) at 1, 3 ECF No. 22. 4 no longer defend Plaintiff in that lawsuit. 5 substantial controversy of sufficient immediacy that warrants 6 declaratory relief on this claim. 7 action is dismissed. Plaintiff’s Brief re Whether Plaintiff’s The underlying action has resolved and Defendant can Thus, there is not a Plaintiff’s first cause of 8 B. Declaratory Relief: Duty to Indemnify 9 The parties dispute whether or not the Court should retain 10 this case in order to resolve the second cause of action. 11 Plaintiff argues that there is a live controversy as to whether 12 Defendant must indemnify Plaintiff for the legal fees it incurred 13 in the underlying suit. 14 declaratory relief is meant to resolve questions regarding the 15 future conduct of the parties and is not a proper mechanism for 16 resolving fully mature claims. 17 Action (“D. Brief”), ECF No. 23. 18 Motion for Leave to File a Second Amended Complaint, Plaintiff’s 19 claim for declaratory relief could now be asserted as a breach of 20 contract claim for damages. 21 See P. Brief. Defendant argues that See Brief re Mootness of Entire As demonstrated in Plaintiff’s A district court has broad discretion to decline 22 jurisdiction over a declaratory judgment claim where it only 23 seeks to review the legality of past conduct. 24 v. Sprint Corp., 2015 WL 1057923, at *21 (collecting federal and 25 California cases). 26 California declaratory relief statutes permit a court to consider 27 declaratory relief claims whether or not further relief is or 28 could be sought. See Public Storage However, by their terms, both the federal and See 28 U.S.C. § 2201; Cal. Civ. Code § 1060. 4 1 High courts of each jurisdiction have confirmed such 2 availability. 3 (1969) (“The availability of declaratory relief depends on 4 whether there is a live dispute between the parties and a request 5 for declaratory relief may be considered independently of whether 6 other forms of relief are appropriate.”) (internal citation 7 omitted); McGraw-Edison Co. v. Preformed Line Prod. Co., 362 F.2d 8 339, 342 (9th Cir. 1966) (“[J]urisdiction is not to be declined 9 merely because of the existence of another adequate legal See Powell v. McCormack, 395 U.S. 486, 517–18 10 remedy[.]”); Filarsky v. Super. Ct., 28 Cal.4th 419, 433 (2002) 11 (“The mere circumstance that another remedy is available is an 12 insufficient ground for refusing declaratory relief, and doubts 13 regarding the propriety of an action for declaratory relief 14 pursuant to Code of Civil Procedure section 1060 generally are 15 resolved in favor of granting relief.”); Columbia Pictures Corp. 16 v. De Toth, 26 Cal.2d 753, 761 (1945) (“Hence a plaintiff’s right 17 to proceed is not barred by the fact that the contract sued upon 18 may have already been breached and that traditional or statutory 19 alternative remedies are available.”). 20 court may properly exercise its discretion to refuse relief on 21 the ground that other remedies are available to the plaintiff, 22 “it must clearly appear that the asserted alternative remedies 23 are available to the plaintiff and that they are speedy and 24 adequate or as well suited to the plaintiff’s needs as 25 declaratory relief.” 26 Cal.2d 719, 732 (1944). 27 28 In California, before a Maguire v. Hibernia Sav. & Loan Soc., 23 Defendant points the Court to three California cases in support of its contention that declaratory relief is improper 5 1 2 here. In Mascarin Prof’l Pharmacy v. Hart, the court opined that 3 “one who has a fully matured action at law or in equity cannot 4 secure an adjudication of rights by way of an action for 5 declaratory relief, since all of the issues that could be 6 involved in the declaratory relief action can equally be resolved 7 in the plenary action.” 8 the plaintiff sought a declaration that it was entitled to 9 indemnity from Hart for a judgment in an underlying lawsuit. 13 Cal.App.3d 462, 464 (1970). In Hart, The 10 underlying suit still had an appeal pending. 11 that until the judgment becomes final, plaintiff “has no matured 12 claim for indemnity against [defendant]” and “[t]he case is a 13 proper one for the use of the declaratory judgment procedure.” 14 13 Cal.App.3d at 465. 15 Hart’s discussion that a declaratory action is moot once a 16 judgment in the underlying action is final. 17 However, the Hart court did not address mootness or whether the 18 trial court would have abused its discretion by awarding relief 19 had the underlying judgment been final. The court concluded Defendant asks the Court to infer from D. Brief at 3. 20 In Bachis v. State Farm Mut. Auto. Ins. Co., the court held 21 that that the Superior Court lacked jurisdiction to entertain an 22 action for declaratory relief where the plaintiff had a fully 23 matured cause of action for damages in an amount that fell within 24 the municipal court’s jurisdiction. 25 (1968). 26 jurisdictional question: can a plaintiff plead around an amount 27 in controversy requirement by changing the label on its claim? 28 Id. at 723. 265 Cal.App.2d 722, 728 The Bachis court’s discussion primarily concerned the The court determined that, under California Supreme 6 1 Court precedent, the question of trying such a case in Superior 2 Court is a matter of “jurisdiction and not of discretion to 3 refuse declaratory relief.” 4 Id. at 723. Bachis does not control here. Although the Bachis dicta 5 lend support to Defendant’s position, there is no dispute over 6 whether this Court would have jurisdiction over Plaintiff’s 7 breach of contract claim. 8 did not address mootness or an abuse of discretion standard. 9 Travers v. Louden is the only case Defendant cites that Also, like Hart, the Bachis decision 10 stakes a firm position. 11 underlying issue concerned whether the defendant had breached a 12 contract by failing to perform. 13 however, merely sought declaratory relief and did not specify the 14 rights or duties as to which a declaration was sought, nor the 15 nature of the desired relief; “[i]t merely allege[d] a breach of 16 the contract as a foundation for some unspecified claim of a 17 right to redress.” 18 a proper action for declaratory relief could include redress for 19 past wrongs, the California Supreme Court cases applying that 20 principle had each involved an ongoing contractual relationship 21 between the parties. 22 26 Cal.2d 753; Ermolieff v. R.K.O. Radio Pictures, 19 Cal.2d 543 23 (1942)). 24 that “[t]he court has discretion to refuse to render a 25 declaratory judgment when it would not be necessary or proper 26 under all the circumstances.” 27 that the declaratory action would be futile and time consuming, 28 that the plaintiff had not been hurt by the dismissal, and that Id. 254 Cal.App.2d 926 (1967). Id. at 928. The The complaint, The Travers court reasoned that although Id. at 932 (citing Columbia Pictures Corp., Citing Cal. Code. Civ. Proc. § 1061, the court noted Id. at 932. 7 It further observed 1 the plaintiff could obtain any legal or equitable relief to which 2 he may be entitled in another action. 3 “Upon the facts that were before the trial court it appeared, as 4 a matter of law, that a declaratory judgment in the action would 5 not be necessary or proper. 6 discretion to retain the action and send it to trial.” 7 Thus, although Travers does specifically address abuse of 8 discretion, that statement appears to be dictum and the court 9 confined its holding to the facts of that case. 10 Id. The court concluded: It would have been an abuse of Id. The present case is distinct from Travers in several 11 respects. 12 Plaintiff’s declaratory relief claim, unlike in Travers, where 13 the plaintiff essentially alleged breach of contract in poorly 14 framed pleadings. 15 of Am., Inc. v. Discoveryortho Partners LLC, 191 Cal.App.4th 357, 16 367 (2010) (“Travers featured a plaintiff who failed miserably in 17 framing the pleadings.”). 18 that declaratory relief was proper at the time Plaintiff filed 19 suit, whereas the Travers plaintiff had a mature breach of 20 contract claim at the time of filing. 21 noted that the plaintiff’s claim was futile and the dismissal 22 would do plaintiff no harm. 254 Cal.App.2d at 932. 23 Plaintiff faces dismissal without leave to amend. 24 Court is particularly concerned with mootness, an issue not 25 before the Travers court. 26 The pleadings in this matter appear to support 254 Cal.App.2d at 928; see also Ossesous Tech. Relatedly, Defendant does not dispute The Travers court also Here, Finally, this The strong dictum in Travers remains confined to that case. 27 There do not appear to be any subsequent decisions that rely on 28 Travers to reverse a trial court’s grant of declaratory relief. 8 1 2 3 4 5 6 7 Indeed, one California Court of Appeals observed: [Travers is the] leading case for the proposition that a court abuses its discretion by failing to dismiss a declaratory relief action when a breach of contract action is available[.] . . . Some subsequent cases applied similar analyses in comparable fact patterns, but did not starkly assert (as Travers did) that a trial court would abuse its discretion by providing declaratory relief. . . . In sum, authority for the proposition that a trial court abuses its discretion by refusing to dismiss a declaratory relief claim because the claim amounts to a backward-looking breach of contract claim is underwhelming. 8 9 10 11 Ossesous Tech. of Am., Inc. v. Discoveryortho Partners LLC, 191 Cal.App.4th 357, 366–67 (2010). Thus, although Defendant’s cases suggest that declaratory 12 relief with respect to indemnification is disfavored in the 13 present circumstances, the Court finds it has discretion to 14 retain the case. 15 action is moot. 16 is still a controversy over whether Defendant must indemnify 17 Plaintiff for its legal expenses. 18 action will therefore not be dismissed at this time. The principal question here is whether the Although the circumstances have changed, there Plaintiff’s second cause of 19 20 21 III. ORDER For the reasons set forth above, the Court DISMISSES WITHOUT 22 LEAVE TO AMEND Count 1 of the Complaint. 23 only on Plaintiff’s claim for declaratory relief regarding the 24 duty to indemnify in Count 2: 25 26 IT IS SO ORDERED. Dated: December 16, 2016 27 28 9 This case will proceed

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