Philadelphia Indemnity Insurance Company v. City Of Fresno

Filing 49

ORDER signed by District Judge John A. Mendez on 10/3/2019 GRANTING 36 Motion to Vacate; VACATING 21 Order; DENYING 1 Petition to Compel Arbitration as moot; ORDERING that this case remain closed. (Michel, G.)

1
2
3
4
5
6
7
8
9

UNITED STATES DISTRICT COURT

10

EASTERN DISTRICT OF CALIFORNIA

11
12

PHILADELPHIA INDEMNITY INSURANCE
COMPANY, a Pennsylvania
corporation,

13
14

Petitioner,

15

v.

16

No.

2:16-cv-00495-JAM-KJN

ORDER GRANTING RESPONDENT’S
MOTION TO VACATE ORDER FILED
ON JULY 13, 2016 (ECF No. 21)

THE CITY OF FRESNO, a municipal
corporation,

17

Respondent.

18
19
20

The City of Fresno (“Fresno”) moves this Court to vacate its

21

July 13, 2016 Order (ECF No. 21) compelling arbitration of an

22

insurance coverage dispute between Fresno and Philadelphia

23

Indemnity Insurance Company (“Philadelphia”).

24
25

ECF No. 36.

For the reasons set forth below, this Court GRANTS Fresno’s
motion.1

26
27
28

This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for August 13, 2019.
1
1

1
2

I.

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Fresno, through SMG Holdings, Inc. (“SMG”), entered into a

3

licensing agreement with the California Association of Future

4

Farmers of America (“Future Farmers”) for Future Farmers to use a

5

portion of the Fresno Convention and Entertainment Center.

6

Petition to Compel Arbitration (“Petition”), ECF No. 1, ¶ 5.

7

licensing agreement required Future Farmers to obtain liability

8

insurance.

9

Farmers entered into a liability insurance agreement with

Id.

The

In accordance with this requirement, Future

10

Philadelphia (the “Future Farmers Policy”).

Id. ¶ 8.

The Future

11

Farmers Policy states that either party may demand arbitration if

12

a dispute arises over “whether coverage is provided under this

13

[policy] for a claim made against the insured.”

Id. ¶ 10.

14

In April 2013, Timothy Sailors (“Sailors”) allegedly

15

sustained injuries after stepping into a large pot hole in the

16

parking lot of the Fresno Convention Center on his way to a

17

Future Farmers event.

18

employer, Reef Sunset Unified School District (“Reef”), sued

19

Fresno and SMG to recover for his injuries and for the employment

20

benefits Reef paid to Sailors after he was injured.

21

The cases, filed in Fresno County Superior Court and later

22

consolidated, are captioned Timothy Sailors vs. City of Fresno,

23

et al., Case No. 14CECG00069 (the “Sailors Action”) and Reef

24

Sunset vs. City of Fresno, et al., Case No. 14CECG00807 (the

25

“Reef Action”).

26

Petition ¶ 7.

Both Sailors and his

Id. ¶¶ 6-7.

Id ¶ 6.

Facing the Sailors and Reef Actions, Fresno demanded that

27

Philadelphia defend and indemnify Fresno as an additional insured

28

under the Future Farmers Policy.

See Petition.
2

Philadelphia

1

refused on the grounds, among others, that Fresno was not named

2

as an insured in the Future Farmers Policy.

3

then sought an order from this Court requiring Fresno to submit

4

the coverage dispute to arbitration pursuant the policy’s

5

arbitration clause.

6

on July 13, 2016, this Court issued an order compelling

7

arbitration on “whether Philadelphia must indemnify and defend

8

Fresno in the underlying Sailors litigation .”

9

Arbitration (the “Arbitration Order”), ECF No. 21, at 6.

10
11

Id.

Id.

Philadelphia

Fresno did not oppose the petition and,

Order Compelling

Fresno now moves to vacate the Arbitration Order.
ECF No. 37.

Philadelphia opposes the motion.

Mot.,

Opp’n, ECF No. 43.

12
13

II.

OPINION

14

A.

Judicial Notice

15

Fresno asks this Court to take judicial notice of five

16

California state court documents: (1) Opinion of the California

17

Court of Appeal in Timothy Sailors v. City of Fresno, et al.,

18

Case No. F074944; (2) online case docket for the Sailors Action;

19

(3) Amended Cross-Complaint by SMG and Fresno in the Sailors

20

Action; (4) online case docket for the Reef Action; and (5)

21

online docket for California Court of Appeal case Philadelphia

22

Indemn. Ins. Co. vs. SMG Holdings, Inc., Case No. C082841.

23

ECF No. 40.

24

since requests for judicial notice of court records are routinely

25

accepted, Fresno’s request is granted as to the existence of the

26

documents but not as to the truth of their contents.

Philadelphia does not oppose this request.

RJN,

And

27

B.

Relief from Final Judgment

28

Federal Rule of Civil Procedure 60(b)(5) authorizes a court
3

1

to relieve a party from a final judgment, order, or proceeding if

2

“applying it prospectively is no longer equitable.”

3

P. 60(b)(5).

4

establishing that a “significant change in facts or law warrants

5

[the] revision.”

6

367, 384, 393 (1992).

7

a court abuses its discretion “when it refuses to modify [the

8

judgment or order] in light of such changes.”

9

Felton, 521 U.S. 203, 215 (1997).

10

Fed. R. Civ.

The party seeking relief bears the burden of

Rufo v. Inmates of Suffolk Cty. Jail, 502 U.S.
Once the moving party carries this burden,

Agostini v.

This Court is not persuaded by Philadelphia’s arguments that

11

the motion is untimely.

Opp’n at 3-4.

12

California Court of Appeal affirmed the trial court’s grant of

13

summary judgment in favor of Fresno and SMG in the consolidated

14

Sailors Action.

15

2019.

16

appeal the Arbitration Order, nor any basis to have this Court

17

reconsider the Arbitration Order before April 2019.

18

therefore finds the motion was filed within a reasonable time.

19

See United States v. Holtzman, 762 F.2d 720, 725 (9th Cir. 1985).

20

The Arbitration Order is subject to review under Rule 60(b)(5).

ECF No. 40-1.

On March 20, 2019, the

That order became final in April

Fresno would have had no basis in July or August 2016 to

This Court

21

C.

Mootness of Subject Arbitration

22

Fresno argues this Court should vacate the Arbitration Order

23

because a California court found Fresno not liable in the

24

underlying Sailors and Reef Actions, and therefore the compelled

25

arbitration regarding insurance coverage for any such liability

26

is moot.

27
28

Philadelphia opposes on several grounds.

Philadelphia argues any question regarding mootness must be
decided in arbitration, not by this Court.
4

Opp’n at 4-7.

This

1

Court disagrees.

A “question of arbitrability,” including

2

whether “an arbitration clause in a concededly binding contract

3

applies to a particular type of controversy,” is a matter “for

4

judicial determination unless the parties clearly and

5

unmistakably provide otherwise.”

6

Inc., 537 U.S. 79, 84 (2002) (quoting in part AT & T Techs., Inc.

7

v. Commc’ns Workers of Am., 475 U.S. 643, 651–52 (1986)).

8

Indeed, in deciding a petition to compel arbitration, the court’s

9

role is to determine “[1] whether a valid arbitration agreement

Howsam v. Dean Witter Reynolds,

10

exists and, if so, [2] whether the agreement encompasses the

11

dispute at issue.”

12

Inc., 363 F.3d 1010, 1012 (9th Cir. 2004).

13

answered both prongs in the affirmative.

14

at 6 (“Given that Philadelphia and Fresno dispute whether

15

coverage under the Future Farmers Policy extends to the area in

16

which Sailors was injured, the arbitration clause clearly

17

encompasses the dispute in this case.”).

18

raises questions as to whether the agreement still encompasses

19

the dispute at issue, and that question of arbitrability is

20

squarely within the purview of this Court.

21

at 84.

22

Lifescan, Inc. v. Premier Diabetic Sevs.,
This Court previously

See Arbitration Order

The instant motion now

See Howsam, 537 U.S.

The California Court of Appeal affirmed the trial court’s

23

grant of summary judgment in favor of Fresno and SMG in the

24

consolidated Sailors Action, and that judgment is now final.

25

ECF No. 40-1.

26

underlying plaintiff, “Fresno readily agrees it has no damage

27

claims to arbitrate” and “has nothing to seek indemnity for from

28

Philadelphia.”

Given that Fresno has no liability to the

Mot. at 1; Reply at 1.
5

Despite the final

1

judgment on underlying liability and Fresno’s statements to this

2

Court, Philadelphia asserts it may face liability in a

3

subrogation action for Fresno’s litigation costs from the Sailors

4

Action.

5

Fresno’s defense expenses in that case.

6

Fresno thus asserts that only Federal owns the right to bring a

7

claim against Philadelphia for those litigation costs.

8

It is this Court’s duty to determine questions of

Opp’n at 6.

Federal Insurance Company (“Federal”) paid
Mot. at 1; Reply at 1-2.

Id.

9

arbitrability, here the presence of a disagreement about “whether

10

coverage is provided . . . for a claim made against the insured.”

11

Petition ¶ 10.

12

between Philadelphia and Fresno regarding potential insurance

13

coverage.

14

therefore moot.

15

F.3d 1118, 1123 (9th Cir. 1997), as amended (Sept. 16, 1997) (“A

16

claim is moot if it has lost its character as a present, live

17

controversy.”).

This Court finds there is no live controversy

The arbitration previously compelled by this Court is
Am. Rivers v. Nat’l Marine Fisheries Serv., 126

18

D.

Conclusion

19

This Court previously compelled arbitration between Fresno

20

and Philadelphia on coverage for the Sailors incident, including

21

as to “whether Philadelphia must indemnify and defend Fresno in the

22

underlying Sailors litigation.”

23

Sailors Action has since been resolved in favor of Fresno, and

24

the arbitration compelled by this Court is now moot.

25

finds this to be a “significant change in facts” warranting

26

relief from the Arbitration Order, the application of which is no

27

longer equitable.

28

367, at 384.

Arbitration Order at 6.

The

This Court

Fed. R. Civ. P. 60(b)(5); see Rufo, 502 U.S.

Given this disposition, it is unnecessary for this
6

1

Court to reach Fresno’s other arguments for vacating the

2

Arbitration Order.

3
4
5

III.

ORDER

For the reasons set forth above, this Court GRANTS

6

respondent Fresno’s Motion to Vacate.

7

July 13, 2016 Order (ECF No. 21) is hereby VACATED.

8

(ECF No. 1) is hereby DENIED AS MOOT.

9
10
11

IT IS SO ORDERED.

12

Dated: October 3, 2019

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
7

ECF No. 36.

This Court’s
The Petition

This case remains CLOSED.