United Specialty Insurance Company v. Petersen

Filing 14

STIPULATION AND ORDER signed by District Judge Kimberly J. Mueller on 8/2/2017 ORDERING the plaintiff to file its First Amended Complaint (attached hereto as Exhibit B); ORDERING the defendant to file its Answer to the First Amended Complaint (attached hereto as Exhibit D) thereafter. (Michel, G.)

1 THOMAS E. MULVIHILL, ESQ. (SBN 129906)
TAMIKO A. DUNHAM, ESQ. (SBN 233455)
2 BOORNAZIAN, JENSEN & GARTHE
A Professional Corporation
3 555 12th Street, Suite 1800
P. O. Box 12925
4
Oakland, CA 94604-2925
5 Telephone: [phone]
Facsimile: [phone]
6
Attorneys for Plaintiff
7 UNITED SPECIALTY INSURANCE COMPANY
8
UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

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11

UNITED SPECIALTY INSURANCE
12 COMPANY, a Delaware corporation,
13
Plaintiff,

14 v.

15 DEAN PETERSEN dba PETERSEN
CONSTRUCTION SERVICES, a citizen of
16 the State of California;
17

Defendants.

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Case No.: 2:16-CV-02480-KJM-GGH
STIPULATION AND ORDER FOR FILING
FIRST AMENDED COMPLAINT AND
ANSWER TO FIRST AMENDED
COMPLAINT
The Hon. Kimberly J. Mueller
Action Filed: October 17, 2016

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20

Plaintiff UNITED SPECIALTY INSURANCE COMPANY (“Plaintiff”) and Defendant

21 DEAN PETERSEN dba PETERSEN CONSTRUCTION SERVICES (“Defendant”) (collectively,
22 the “Parties”) respectfully submit the following Stipulation and Proposed Order for Filing First
23 Amended Complaint and Answer to First Amended Complaint:
24

WHEREAS, on October 17, 2016, Plaintiff filed its Complaint in this action;

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WHEREAS, on December 27, 2016, Defendant filed its Answer to Plaintiff’s Complaint in

26 this action;
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U.S.D.C. Eastern District Case No. 2:16-CV-02480-KJM-GGH

1

WHEREAS, information concerning the claims at issue subsequently came to the attention

2 of the Parties, resulting in the Parties each desiring to amend their respective pleadings in this
3 action.
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NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by the Parties

5 through their undersigned counsel of record that the Parties will file concurrent limited
6 amendments to the pleadings, as follows:
7

1.

Plaintiff shall be allowed to file its First Amended Complaint. A copy of Plaintiff’s

8 First Amended Complaint, in draft with revisions shown in redline, is attached hereto as Exhibit
9 A. A clean copy of the First Amended Complaint, which will become the operative complaint, is
10 attached hereto as Exhibit B. Upon entry of the proposed order herein, Plaintiff will file a copy of
11 Exhibit B as its amended complaint;
12

2.

Defendant will then file its Answer to Plaintiff’s First Amended Complaint, a copy

13 of which, in draft with revisions shown in redline, is attached hereto as Exhibit C. A clean copy of
14 the Answer to Plaintiff’s First Amended Complaint is attached hereto as Exhibit D. Following
15 entry of the proposed order herein and Plaintiff’s filing of Exhibit B, Defendant will file a copy of
16 Exhibit D as its answer to the amended complaint.
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IT IS SO STIPULATED.

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20 Dated: July 13, 2017

BOORNAZIAN, JENSEN & GARTHE
A Professional Corporation

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By:

/ S / Tamiko A. Dunham, Esq.
THOMAS E. MULVIHILL, ESQ.
TAMIKO A. DUNHAM, ESQ.
Attorneys for Plaintiff
UNITED SPECIALTY INSURANCE
COMPANY

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U.S.D.C. Eastern District Case No. 2:16-CV-02480-KJM-GGH

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Dated: June 13, 2017

WEINSTEIN & NUMBERS, LLP

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By: _/ S / Shanti Eagle, Esq. (as authorized on 7/13/17)
BARRON L. WEINSTEIN, ESQ
SHANTI EAGLE, ESQ.
Attorneys for Defendant
DEAN PETERSEN dba PETERSEN
CONSTRUCTION SERVICES

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U.S.D.C. Eastern District Case No. 2:16-CV-02480-KJM-GGH

1

ORDER

2

PURSUANT TO STIPULATION, and for good cause shown, IT IS HEREBY

3 ORDERED that:
4

1.

Plaintiff shall be allowed to file its First Amended Complaint.

A copy of

5 Plaintiff’s First Amended Complaint, in draft with revisions shown in redline, is attached hereto as
6 Exhibit A. A clean copy of the First Amended Complaint, which will become the operative
7 complaint, is attached hereto as Exhibit B. Upon entry of the proposed order herein, Plaintiff will
8 file a copy of Exhibit B as its amended complaint;
9

2.

Defendant will then file its Answer to Plaintiff’s First Amended Complaint, a copy

10 of which, in draft with revisions shown in redline, is attached hereto as Exhibit C. A clean copy of
11 the Answer to Plaintiff’s First Amended Complaint is attached hereto as Exhibit D. Following
12 entry of the proposed order herein and Plaintiff’s filing of Exhibit B, Defendant will file a copy of
13 Exhibit D as its answer to the amended complaint.
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15

IT IS SO ORDERED.
DATED: August 2, 2017.

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UNITED STATES DISTRICT JUDGE

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U.S.D.C. Eastern District Case No. 2:16-CV-02480-KJM-GGH

1 THOMAS E. MULVIHILL, ESQ. (SBN 129906)
TAMIKO A. DUNHAM, ESQ. (SBN 233455)
2 BOORNAZIAN, JENSEN & GARTHE
A Professional Corporation
3
555 12th Street, Suite 1800
4 P. O. Box 12925
Oakland, CA 94604-2925
5 Telephone: [phone]
Facsimile: [phone]
6
Attorneys for Plaintiff
7
UNITED SPECIALTY INSURANCE COMPANY
8
9

UNITED STATES DISTRICT COURT

10

EASTERN DISTRICT OF CALIFORNIA

11
12 UNITED SPECIALTY INSURANCE
COMPANY, a Delaware corporation,
13
14

Plaintiff,
v.

15

DEAN PETERSEN dba PETERSEN
16 CONSTRUCTION SERVICES, a citizen of
the State of California;
17
Defendants.
18

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Case No.: 2:16-cv-02480-KJM-GGH
[PROPOSED] FIRST AMENDED
COMPLAINT FOR DECLARATORY
JUDGMENT AND REIMBURSEMENT

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COMES NOW Plaintiff UNITED SPECIALTY INSURANCE COMPANY (“USIC”) and

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complains of defendant DEAN PETERSEN dba PETERSEN CONSTRUCTION SERVICES
(“PETERSEN”) as follows:
JURISDICTIONAL ALLEGATION

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1.

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This is an action for declaratory judgment between citizens of different states in

which the amount in controversy exceeds $75,000, exclusive of costs and interest. This Court has
original jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a) (1) and (c)
(1).
-1FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1
2

VENUE ALLEGATION
2.

A substantial part of the events giving rise to this action occurred within this

3 judicial district, and defendant’s business activities and contacts within this judicial district are
4 sufficient to subject defendant to personal jurisdiction within this judicial district. Accordingly,
5 venue in the Eastern District of California is appropriate pursuant to 28 U.S.C. § 1391(b) (1) and
6 (2), and 28 U.S.C. § 1391 (d).
7
8

GENERAL ALLEGATIONS
3.

USIC is, and at all times relevant hereto was, an insurance corporation in good

9 standing, organized and existing under the laws of the State of Delaware. USIC is authorized to do
10 business and write insurance in the State of California, with its principal place of business in
11 Bedford, Texas. Accordingly, USIC is a citizen of the State of Delaware and the State of Texas
12 for the purpose of diversity jurisdiction.
13

4.

PETERSEN is an individual domiciled in the State of California and is a citizen of

14 the State of California for purposes of diversity jurisdiction.
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16

FACTUAL ALLEGATIONS
5.

This declaratory relief action arises out of a construction defect lawsuit filed on

17 November 12, 2014 by plaintiffs David and Michelle Finkelstein (collectively, “Finkelsteins”) in
18 the Superior Court of the State of California, County of Placer, Case No. SCV 0035325, styled
19 David Finkelstein and Michelle Finkelstein v. Dean Petersen, et al. (“Underlying Action”). A true
20 and correct copy of the Complaint in the Underlying Action is attached hereto as Exhibit A.
21

6.

The Complaint in the Underlying Action alleged that the Finkelsteins entered into a

22 written agreement dated August 15, 2013 with PETERSEN, in which PETERSEN agreed to
23 construct a single-family residence at 8360 Rustic Woods Way, Loomis, California (“Property”)
24 for $1,110,398.
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7.

The Complaint in the Underlying Action alleged that construction at the Property

26 continued through June of 2014, at which time the Finkelsteins moved into the Property even
27 though not all work had been completed.
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-2FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1

8.

The Complaint in the Underlying Action alleged the Property was negligently built,

2 resulting in significant construction defects and resultant damages. The alleged damages include
3 defects relating to the foundation, hardscape, driveway, concrete, siding and trim, exterior
4 balconies, wrought iron, roofing, finish carpentry, cabinets, electrical, painting, windows, doors,
5 sheet metal, appliances, framing, and other components of the Property as yet unknown, resulting
6 in significant expense to repair the Property. The amount in controversy in the Underlying Action
7 allegedly exceeds $75,000.
8

9.

PETERSEN retained independent contractors to perform all of the construction

9 work and supply all of the materials for the Property with respect to the alleged defects, including
10 but not limited to, work and/or materials related to the foundation, hardscape, driveway, concrete,
11 siding and trim, exterior balconies, wrought iron, roofing, finish carpentry, cabinets, electrical,
12 painting, windows, doors, sheet metal, appliances, and framing of the Property.
13

10.

The damages at issue in the Underlying Action arose, in whole or in part, out of the

14 actions or inactions of or the materials provided by the independent contractors performing work
15 on behalf of PETERSEN, or the actions or inactions of the independent contractors’ employees,
16 laborers, suppliers or vendors.
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11.

PETERSEN did not secure from each independent contractor prior to construction

18 of the Property the following documents: (1) a written agreement requiring the independent
19 contractor to indemnify and hold harmless PETERSEN against all liability arising out of or related
20 to the work or products of the independent contractor; (2) a written agreement requiring the
21 independent contractor, at its own expense, to defend any suit brought against PETERSEN
22 founded upon a claim for damage sustained by any third party arising out of or related to the work
23 or product of the independent contractor; (3) a written agreement requiring the independent
24 contractor to defend and indemnify PETERSON at the time written notice of the claim or suit is
25 first provided to PETERSEN regardless of whether the independent contractor is named as part to
26 the claim or suit; (4) a written agreement requiring the independent contractor to name
27 PETERSEN an additional insured on its Commercial General Liability policy; and (5) a valid and
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-3FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1 enforceable Certificate of Insurance and Additional Insured Endorsement issued by or on behalf of
2 the insurance carrier for the independent contractor indicating that PETERSEN is named as an
3 additional insured for coverage equal to or greater than the coverage provided by the Commercial
4 General Liability issued by USIC to PETERSON (Policy No. DSI-GL-CA-00545) for the entire
5 time the independent contractor is performing work or providing materials on behalf of
6 PETERSON, including coverage for both on-going and products-completed operations hazards.
7

12.

USIC insured PETERSEN pursuant to a Commercial General Liability policy of

8 insurance, Policy No. DSI-GL-CA-00545, effective August 28, 2013 to August 28, 2014
9 (“Policy”). A true and correct copy of the Policy in redacted form is attached hereto as Exhibit B.
10

13.

PETERSEN tendered its defense and indemnity of the Underlying Action to USIC

11 under the Policy. USIC agreed to defend PETERSEN in the Underlying Action under the Policy
12 pursuant to a full reservation of rights to disclaim any obligation to defend or indemnify
13 PETERSEN in connection with the Underlying Action.

USIC retained counsel to defend

14 PETERSEN in the Underlying Action and is currently defending PETERSEN against the
15 Underlying Action.
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FIRST CAUSE OF ACTION

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DECLARATORY JUDGMENT

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(Against All Defendants)

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14.

USIC incorporates the allegations contained in paragraphs 1 through 13, inclusive,

20 of this First Amended Complaint as though fully set forth herein.
21

15.

The Policy contains an Independent Contractors Exclusion (“ICE”).

The ICE

22 expressly excludes coverage as follows:
23

49.

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Any claim or suit arising, in whole or in part, out of the actions or inactions of or
the materials provided by an independent contractor performing work on behalf of
an insured or the actions or inactions of the independent contractor’s employees,
laborers, suppliers or vendors.

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INDEPENDENT CONTRACTORS

This exclusion will not apply if:
-4FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

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(a)

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3

Prior to an independent contractor commencing work, services, or
operations or supplying products or materials for or on behalf of any
insured, the insured receives a written agreement providing that:
(1) The independent contractor will indemnify and hold the insured, its
partners, officers, agents and employees harmless against all liability,
claims, judgments, suits or demands by any third party, including any
other insureds, arising out of or related to the work or product of the
independent contractor; and

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(2) The independent contractor will at its own expense defend any suit
brought against the insured founded upon a claim for damage sustained
by any third party arising out of or related to the work or product of the
independent contractor; and

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(3) The independent contractor’s obligation to defend and indemnify will
arise at the time written notice of the claim or suit is first provided to an
insured regardless of whether the independent contractor is named as
part to the claim or suit; and

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(4) The independent contractor will name the insured as an additional
insured on the independent contractor’s Commercial General Liability
policy, the endorsement will provide coverage for the independent
contractor’s completed work and will specify that the independent
contractor’s insurance is primary to any insurance issued by us to the
insured.

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(b)

Prior to an independent contractor commencing work, services, or
operations or supplying products or materials for or on behalf of any
insured, the insured will obtain and thereafter maintain valid and
enforceable Certificates of Insurance and Additional Insured Endorsements
issued by or on behalf of the insurance carrier from each and every
independent contractor indicating that the insured is named as an additional
insured and that the coverage maintained is equal to or greater than
provided by this policy for the entire time the independent contractor is
performing work or providing materials on behalf of the insured and that
coverage is provided for both on-going and products-completed
operations hazard. The policy carried by the independent contractor shall
be primary and non-contributory as regards the insured’s policy as well as
containing a waiver of subrogation against the insured.

(c)

It is expressly agreed by the insured that if the insured fails to comply with
the conditions stated in paragraphs (a) and (b) above, then the exclusion
remains effective.

(d)

It is expressly agreed by the insured that if the insured fails to comply with
the conditions stated in paragraphs (a) and (b) above, then there is no

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-5FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

coverage for any claim or suit arising out of or related in any way to the
work of or materials provided the insured even if the work or materials of
the insured is independent of or separate from the work or of materials
provided by the independent contractor.

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(e)

It is expressly agreed by the insured that the consequences set forth in
paragraph (c) and (d) will apply even if the independent contractor is a party
to the claim, demand or suit and has insurance which is participating in the
defense and indemnification of the independent contractor.

(f)

It is further expressly agreed by the insured that the consequences set forth
in paragraph (c) and (d) will apply even if the failure to comply with the
conditions of paragraph (a) and (b) do not increase our monetary obligation
for defense or indemnification

(g)

The coverage provided by this policy shall apply excess over and above any
other valid and collectible insurance available to the insured by virtue of the
additional insured endorsements provided by an independent contractor.

(h)

Paragraphs (a) through (g) apply even if the work commenced or the
products were supplied prior to the inception of this policy.

(i)

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For purposes of this exclusion, any individuals, entities or companies,
whether appropriately licensed or not, doing work or performing services
for the insured:

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(i) who are not specifically identified on the insured’s employment records
as employees, are not compensated as employees and for which the
insured has not obtained worker’s compensation insurance; or
(ii) which are not compensated through a payroll/staffing or PEO service
under contract to the insured are independent contractors for purposes
of this exclusion and the provisions of this exclusion apply in full.

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16.

The damages at issue in the Underlying Action arose, in whole or in part, out of the

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actions or inactions or the materials provided by the independent contractors of PETERSEN, or the
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actions or inactions of the independent contractor’s’ employees, laborers, suppliers or vendors, so
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as to trigger the ICE; and PETERSEN failed to satisfy the conditions necessary to overcome the
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exclusionary impact of the ICE.

Based on the ICE, USIC avers that no duty to defend or

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indemnify is triggered under the Policy against the claims asserted in the Underlying Action.
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17.

An actual controversy now exists in that USIC contends, and PETERSEN denies,

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that USIC owes no duty to defend or indemnify PETERSEN under the Policy against the claims
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-6FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

Formatted: Not Highlight

1 asserted in the Underlying Action based upon the ICE.
2

18.

USIC desires a judicial determination with respect to the rights, duties and

3 obligations of USIC as to the duty to defend or indemnify PETERSEN against the claims asserted
4 in the Underlying Action under the terms and conditions of the Policy, including the ICE. Such a
5 determination is necessary and appropriate at this time in order that the parties may ascertain their
6 respective rights, duties and obligations.
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19.

USIC has no other adequate remedy at law to resolve the aforesaid controversy.

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SECOND CAUSE OF ACTION

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REIMBURSEMENT OF DEFENSE COSTS

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20.

USIC incorporates the allegations contained in paragraphs 1 through 19, inclusive,

11 of this First Amended Complaint as though fully set forth herein.
12

21.

In providing a defense to PETERSEN under the Policy in connection with the

13 Underlying Action, USIC fully reserved all rights of reimbursement from PETERSEN of any
14 defense costs paid on PETERSEN’s behalf upon adjudication by this Court that no duty to defend
15 PETERSEN was ever triggered under the Policy with respect to the Underlying Action.
16

22.

USIC’s reservation of rights created an implied contractual obligation on the part of

17 PETERSEN to reimburse USIC upon adjudication by this Court that no duty to defend
18 PETERSEN was ever triggered under the Policy with respect to the Underlying Action
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23.

By accepting the defense under the Policy, PETERSEN received the benefits under

20 the Policy to which it was not entitled and would be unjustly enriched by the retention of those
21 benefits at the expense of USIC upon adjudication by this Court that no duty to defend
22 PETERSEN was ever triggered under the Policy with respect to the Underlying Action.
23

24.

USIC contends that it never owed a duty to defend PETERSEN under the Policy in

24 connection with the Underlying Action and is therefore is entitled to a monetary judgment against
25 PETERSEN according to proof equal to the sum expended by USIC in the defense of PETERSEN
26 under the Policy in the Underlying Action.
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-7FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

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PRAYER FOR RELIEF

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WHEREFORE, USIC prays for judgment as follows:

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1. For a declaration of this court binding as to all defendants which directs that the Policy

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provides no coverage in connection with the Underlying Action based upon the ICE;

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2. For USIC’s costs of suit incurred herein;

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3. For monetary judgment in favor of USIC and against PETERSEN for reimbursement of

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the cost of defense of PETERSEN in the Underlying Action for which USIC had no

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duty to provide under the Policy; and

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4. For all such other and further relief as the court may deem just and proper.

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11 DATED: October 17, 2016DRAFT
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BOORNAZIAN, JENSEN & GARTHE
A Professional Corporation

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By: _______________________________

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THOMAS E. MULVIHILL, ESQ.
TAMIKO A. DUNHAM, ESQ.
IAN E. ANDERSON, ESQ.
Attorneys for Plaintiff
UNITED SPECIALTY INSURANCE
COMPANY

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27582\736318

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-8FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1 THOMAS E. MULVIHILL, ESQ. (SBN 129906)
TAMIKO A. DUNHAM, ESQ. (SBN 233455)
2 BOORNAZIAN, JENSEN & GARTHE
A Professional Corporation
3
555 12th Street, Suite 1800
4 P. O. Box 12925
Oakland, CA 94604-2925
5 Telephone: [phone]
Facsimile: [phone]
6
Attorneys for Plaintiff
7
UNITED SPECIALTY INSURANCE COMPANY
8
9

UNITED STATES DISTRICT COURT

10

EASTERN DISTRICT OF CALIFORNIA

11
12 UNITED SPECIALTY INSURANCE
COMPANY, a Delaware corporation,
13
14

Plaintiff,
v.

15

DEAN PETERSEN dba PETERSEN
16 CONSTRUCTION SERVICES, a citizen of
the State of California;
17
Defendants.
18

)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No.: 2:16-cv-02480-KJM-GGH
[PROPOSED] FIRST AMENDED
COMPLAINT FOR DECLARATORY
JUDGMENT AND REIMBURSEMENT

19
COMES NOW Plaintiff UNITED SPECIALTY INSURANCE COMPANY (“USIC”) and

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21
22

complains of defendant DEAN PETERSEN dba PETERSEN CONSTRUCTION SERVICES
(“PETERSEN”) as follows:
JURISDICTIONAL ALLEGATION

23
1.

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27
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This is an action for declaratory judgment between citizens of different states in

which the amount in controversy exceeds $75,000, exclusive of costs and interest. This Court has
original jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a) (1) and (c)
(1).
-1FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1
2

VENUE ALLEGATION
2.

A substantial part of the events giving rise to this action occurred within this

3 judicial district, and defendant’s business activities and contacts within this judicial district are
4 sufficient to subject defendant to personal jurisdiction within this judicial district. Accordingly,
5 venue in the Eastern District of California is appropriate pursuant to 28 U.S.C. § 1391(b) (1) and
6 (2), and 28 U.S.C. § 1391 (d).
7
8

GENERAL ALLEGATIONS
3.

USIC is, and at all times relevant hereto was, an insurance corporation in good

9 standing, organized and existing under the laws of the State of Delaware. USIC is authorized to do
10 business and write insurance in the State of California, with its principal place of business in
11 Bedford, Texas. Accordingly, USIC is a citizen of the State of Delaware and the State of Texas
12 for the purpose of diversity jurisdiction.
13

4.

PETERSEN is an individual domiciled in the State of California and is a citizen of

14 the State of California for purposes of diversity jurisdiction.
15
16

FACTUAL ALLEGATIONS
5.

This declaratory relief action arises out of a construction defect lawsuit filed on

17 November 12, 2014 by plaintiffs David and Michelle Finkelstein (collectively, “Finkelsteins”) in
18 the Superior Court of the State of California, County of Placer, Case No. SCV 0035325, styled
19 David Finkelstein and Michelle Finkelstein v. Dean Petersen, et al. (“Underlying Action”). A true
20 and correct copy of the Complaint in the Underlying Action is attached hereto as Exhibit A.
21

6.

The Complaint in the Underlying Action alleged that the Finkelsteins entered into a

22 written agreement dated August 15, 2013 with PETERSEN, in which PETERSEN agreed to
23 construct a single-family residence at 8360 Rustic Woods Way, Loomis, California (“Property”)
24 for $1,110,398.
25

7.

The Complaint in the Underlying Action alleged that construction at the Property

26 continued through June of 2014, at which time the Finkelsteins moved into the Property even
27 though not all work had been completed.
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-2FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1

8.

The Complaint in the Underlying Action alleged the Property was negligently built,

2 resulting in significant construction defects and resultant damages. The alleged damages include
3 defects relating to the foundation, hardscape, driveway, concrete, siding and trim, exterior
4 balconies, wrought iron, roofing, finish carpentry, cabinets, electrical, painting, windows, doors,
5 sheet metal, appliances, framing, and other components of the Property as yet unknown, resulting
6 in significant expense to repair the Property. The amount in controversy in the Underlying Action
7 allegedly exceeds $75,000.
8

9.

PETERSEN retained independent contractors to perform construction work and

9 supply materials for the Property, including but not limited to, work and/or materials related to the
10 foundation, hardscape, driveway, concrete, siding and trim, exterior balconies, wrought iron,
11 roofing, finish carpentry, cabinets, electrical, painting, windows, doors, sheet metal, appliances,
12 and framing of the Property.
13

10.

The Underlying Action arose, in whole or in part, out of the actions or inactions of

14 or the materials provided by independent contractors performing work on behalf of PETERSEN,
15 or the actions or inactions of independent contractors’ employees, laborers, suppliers or vendors.
16

11.

PETERSEN did not secure from each independent contractor prior to construction

17 of the Property the following documents: (1) a written agreement requiring the independent
18 contractor to indemnify and hold harmless PETERSEN against all liability arising out of or related
19 to the work or products of the independent contractor; (2) a written agreement requiring the
20 independent contractor, at its own expense, to defend any suit brought against PETERSEN
21 founded upon a claim for damage sustained by any third party arising out of or related to the work
22 or product of the independent contractor; (3) a written agreement requiring the independent
23 contractor to defend and indemnify PETERSON at the time written notice of the claim or suit is
24 first provided to PETERSEN regardless of whether the independent contractor is named as part to
25 the claim or suit; (4) a written agreement requiring the independent contractor to name
26 PETERSEN an additional insured on its Commercial General Liability policy; and (5) a valid and
27 enforceable Certificate of Insurance and Additional Insured Endorsement issued by or on behalf of
28

-3FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1 the insurance carrier for the independent contractor indicating that PETERSEN is named as an
2 additional insured for coverage equal to or greater than the coverage provided by the Commercial
3 General Liability issued by USIC to PETERSON (Policy No. DSI-GL-CA-00545) for the entire
4 time the independent contractor is performing work or providing materials on behalf of
5 PETERSON, including coverage for both on-going and products-completed operations hazards.
6

12.

USIC insured PETERSEN pursuant to a Commercial General Liability policy of

7 insurance, Policy No. DSI-GL-CA-00545, effective August 28, 2013 to August 28, 2014
8 (“Policy”). A true and correct copy of the Policy in redacted form is attached hereto as Exhibit B.
9

13.

PETERSEN tendered its defense and indemnity of the Underlying Action to USIC

10 under the Policy. USIC agreed to defend PETERSEN in the Underlying Action under the Policy
11 pursuant to a full reservation of rights to disclaim any obligation to defend or indemnify
12 PETERSEN in connection with the Underlying Action.

USIC retained counsel to defend

13 PETERSEN in the Underlying Action and is currently defending PETERSEN against the
14 Underlying Action.
15

FIRST CAUSE OF ACTION

16

DECLARATORY JUDGMENT

17

(Against All Defendants)

18

14.

USIC incorporates the allegations contained in paragraphs 1 through 13, inclusive,

19 of this First Amended Complaint as though fully set forth herein.
20

15.

The Policy contains an Independent Contractors Exclusion (“ICE”).

The ICE

21 expressly excludes coverage as follows:
22

49.

23

Any claim or suit arising, in whole or in part, out of the actions or inactions of or
the materials provided by an independent contractor performing work on behalf of
an insured or the actions or inactions of the independent contractor’s employees,
laborers, suppliers or vendors.

24
25

INDEPENDENT CONTRACTORS

26

This exclusion will not apply if:

27

(a)

28

Prior to an independent contractor commencing work, services, or
-4FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

operations or supplying products or materials for or on behalf of any
insured, the insured receives a written agreement providing that:

1
2

(1) The independent contractor will indemnify and hold the insured, its
partners, officers, agents and employees harmless against all liability,
claims, judgments, suits or demands by any third party, including any
other insureds, arising out of or related to the work or product of the
independent contractor; and

3
4
5
6

(2) The independent contractor will at its own expense defend any suit
brought against the insured founded upon a claim for damage sustained
by any third party arising out of or related to the work or product of the
independent contractor; and

7
8
9

(3) The independent contractor’s obligation to defend and indemnify will
arise at the time written notice of the claim or suit is first provided to an
insured regardless of whether the independent contractor is named as
part to the claim or suit; and

10
11

(4) The independent contractor will name the insured as an additional
insured on the independent contractor’s Commercial General Liability
policy, the endorsement will provide coverage for the independent
contractor’s completed work and will specify that the independent
contractor’s insurance is primary to any insurance issued by us to the
insured.

12
13
14
15
16

(b)

Prior to an independent contractor commencing work, services, or
operations or supplying products or materials for or on behalf of any
insured, the insured will obtain and thereafter maintain valid and
enforceable Certificates of Insurance and Additional Insured Endorsements
issued by or on behalf of the insurance carrier from each and every
independent contractor indicating that the insured is named as an additional
insured and that the coverage maintained is equal to or greater than
provided by this policy for the entire time the independent contractor is
performing work or providing materials on behalf of the insured and that
coverage is provided for both on-going and products-completed
operations hazard. The policy carried by the independent contractor shall
be primary and non-contributory as regards the insured’s policy as well as
containing a waiver of subrogation against the insured.

(c)

It is expressly agreed by the insured that if the insured fails to comply with
the conditions stated in paragraphs (a) and (b) above, then the exclusion
remains effective.

(d)

It is expressly agreed by the insured that if the insured fails to comply with
the conditions stated in paragraphs (a) and (b) above, then there is no
coverage for any claim or suit arising out of or related in any way to the

17
18
19
20
21
22
23
24
25
26
27
28

-5FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

work of or materials provided the insured even if the work or materials of
the insured is independent of or separate from the work or of materials
provided by the independent contractor.

1
2
3

(e)

It is expressly agreed by the insured that the consequences set forth in
paragraph (c) and (d) will apply even if the independent contractor is a party
to the claim, demand or suit and has insurance which is participating in the
defense and indemnification of the independent contractor.

(f)

It is further expressly agreed by the insured that the consequences set forth
in paragraph (c) and (d) will apply even if the failure to comply with the
conditions of paragraph (a) and (b) do not increase our monetary obligation
for defense or indemnification

(g)

The coverage provided by this policy shall apply excess over and above any
other valid and collectible insurance available to the insured by virtue of the
additional insured endorsements provided by an independent contractor.

(h)

Paragraphs (a) through (g) apply even if the work commenced or the
products were supplied prior to the inception of this policy.

(i)

For purposes of this exclusion, any individuals, entities or companies,
whether appropriately licensed or not, doing work or performing services
for the insured:

4
5
6
7
8
9
10
11
12
13
14

(i) who are not specifically identified on the insured’s employment records
as employees, are not compensated as employees and for which the
insured has not obtained worker’s compensation insurance; or
(ii) which are not compensated through a payroll/staffing or PEO service
under contract to the insured are independent contractors for purposes
of this exclusion and the provisions of this exclusion apply in full.

15
16
17
18
19

16.

The Underlying Action arose, in whole or in part, out of the actions or inactions or

20 the materials provided by independent contractors of PETERSEN, or the actions or inactions of
21 independent contractors’ employees, laborers, suppliers or vendors, so as to trigger the ICE; and
22 PETERSEN failed to satisfy the conditions necessary to overcome the exclusionary impact of the
23 ICE. Based on the ICE, USIC avers that no duty to defend or indemnify is triggered under the
24 Policy against the claims asserted in the Underlying Action.
25

17.

An actual controversy now exists in that USIC contends, and PETERSEN denies,

26 that USIC owes no duty to defend or indemnify PETERSEN under the Policy against the claims
27 asserted in the Underlying Action based upon the ICE.
28

-6FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1

18.

USIC desires a judicial determination with respect to the rights, duties and

2 obligations of USIC as to the duty to defend or indemnify PETERSEN against the claims asserted
3 in the Underlying Action under the terms and conditions of the Policy, including the ICE. Such a
4 determination is necessary and appropriate at this time in order that the parties may ascertain their
5 respective rights, duties and obligations.
6

19.

USIC has no other adequate remedy at law to resolve the aforesaid controversy.

7

SECOND CAUSE OF ACTION

8

REIMBURSEMENT OF DEFENSE COSTS

9

20.

USIC incorporates the allegations contained in paragraphs 1 through 19, inclusive,

10 of this First Amended Complaint as though fully set forth herein.
11

21.

In providing a defense to PETERSEN under the Policy in connection with the

12 Underlying Action, USIC fully reserved all rights of reimbursement from PETERSEN of any
13 defense costs paid on PETERSEN’s behalf upon adjudication by this Court that no duty to defend
14 PETERSEN was ever triggered under the Policy with respect to the Underlying Action.
15

22.

USIC’s reservation of rights created an implied contractual obligation on the part of

16 PETERSEN to reimburse USIC upon adjudication by this Court that no duty to defend
17 PETERSEN was ever triggered under the Policy with respect to the Underlying Action
18

23.

By accepting the defense under the Policy, PETERSEN received the benefits under

19 the Policy to which it was not entitled and would be unjustly enriched by the retention of those
20 benefits at the expense of USIC upon adjudication by this Court that no duty to defend
21 PETERSEN was ever triggered under the Policy with respect to the Underlying Action.
22

24.

USIC contends that it never owed a duty to defend PETERSEN under the Policy in

23 connection with the Underlying Action and is therefore is entitled to a monetary judgment against
24 PETERSEN according to proof equal to the sum expended by USIC in the defense of PETERSEN
25 under the Policy in the Underlying Action.
26 ///
27 ///
28

-7FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1

PRAYER FOR RELIEF

2

WHEREFORE, USIC prays for judgment as follows:

3

1. For a declaration of this court binding as to all defendants which directs that the Policy

4

provides no coverage in connection with the Underlying Action based upon the ICE;

5

2. For USIC’s costs of suit incurred herein;

6

3. For monetary judgment in favor of USIC and against PETERSEN for reimbursement of

7

the cost of defense of PETERSEN in the Underlying Action for which USIC had no

8

duty to provide under the Policy; and

9

4. For all such other and further relief as the court may deem just and proper.

10
11 DATED: DRAFT
12

BOORNAZIAN, JENSEN & GARTHE
A Professional Corporation

13
By: _______________________________

14

THOMAS E. MULVIHILL, ESQ.
TAMIKO A. DUNHAM, ESQ.
Attorneys for Plaintiff
UNITED SPECIALTY INSURANCE
COMPANY

15
16
17
18

27582\759363

19
20
21
22
23
24
25
26
27
28

-8FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT
U.S.D.C. Eastern District Case No. 2:16-cv-02480-KJM-GGH

1 MEREDITH, WEINSTEIN & NUMBERS, LLP
Barron L. Weinstein (Bar No. 067972)
2 [e-mail]
Shanti Eagle (Bar No. 267704)
3 [e-mail]
115 Ward Street
4 Larkspur, CA 94939
Telephone: [phone]
5 Facsimile: [phone]
6 Attorneys for Defendant
Dean Petersen dba
7 Petersen Construction Services
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

10
11 UNITED SPECIALTY INSURANCE
COMPANY, a Delaware corporation,
12
Plaintiff,
13
v.
14
DEAN PETERSEN dba PETERSEN
15 CONSTRUCTION SERVICES, a citizen of
the State of California;
16
Defendant.
17

CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH
DEFENDANT DEAN PETERSEN’S ANSWER
TO UNITED SPECIALTY INSURANCE
COMPANY’S FIRST AMENDED
COMPLAINT FOR DECLARATORY
JUDGEMENT AND REIMBURSEMENT
Assigned to: Hon. Kimberly J. Mueller
Action Filed: October 17, 2016
Jury trial demanded.

18
19

Defendant DEAN PETERSEN dba PETERSEN CONSTRUCTION SERVICES (“Petersen”

20 or “Defendant”) in response to the unverified First Amended Complaint (“FAC”) for Declaratory
21 Judgement and Reimbursement of Plaintiff UNITED SPECIALTY INSURANCE COMPANY
22 (“USIC” or “Plaintiff”), admits, denies and avers as follows:
23
24
25

JURISDICTIONAL ALLEGATION
1.

In response to Paragraph 1 of the ComplaintFAC, Defendant admits the allegations

26 contained therein.
27
28

VENUE ALLEGATION
1
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

2.

In response to Paragraph 2 of the ComplaintFAC, Defendant admits the allegations

2 contained therein.
GENERAL ALLEGATIONS

3
4

3.

In response to Paragraph 3 of the ComplaintFAC, Defendant is without sufficient

5 knowledge or information to form a belief as to the truth of the allegations, and on that basis denies
6 each and every allegation contained therein.
7

4.

In response to Paragraph 4 of the ComplaintFAC, Defendant admits the allegations

8 contained therein.
FACTUAL ALLEGATIONS

9
10

5.

In response to Paragraph 5 of the ComplaintFAC, Defendant, without admitting any

MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11 of the allegations in the Underlying Action, admits that this coverage dispute arises out of the
12 Underlying Action as identified in Paragraph 5. Defendant admits that Exhibit A contains the
13 complaint in the Underlying Action, among other documents. Defendant avers that the pleadings in
14 the Underlying Action speak for themselves. For each of these reasons Defendant denies each and
15 every remaining allegation contained in Paragraph 5.
16

6.

In response to Paragraph 6 of the ComplaintFAC, without admitting any of the

17 allegations in the Underlying Action, Defendant admits that the Underlying Action contains such
18 allegations, among others, but denies that Plaintiff has completely or accurately summarized those
19 allegations. Furthermore, Defendant avers that the pleadings in the Underlying Action speak for
20 themselves. For each of these reasons Defendant denies each and every allegation contained in
21 Paragraph 6.
22

7.

In response to Paragraph 7 of the ComplaintFAC, without admitting any of the

23 allegations in the Underlying Action, Defendant admits that the Underlying Action contains such
24 allegations, among others, but denies that Plaintiff has completely or accurately summarized those
25 allegations. Furthermore, Defendant avers that the pleadings in the Underlying Action speak for
26 themselves. For each of these reasons Defendant denies each and every allegation contained in
27 Paragraph 7.
28

2
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

8.

In response to Paragraph 8 of the ComplaintFAC, without admitting any of the

2 allegations in the Underlying Action, Defendant admits that the Underlying Action contains such
3 allegations, among others, but denies that Plaintiff has completely or accurately summarized those
4 allegations. Furthermore, Defendant avers that the pleadings in the Underlying Action speak for
5 themselves. For each of these reasons Defendant denies each and every allegation contained in
6 Paragraph 8.
9.

7

In response to Paragraph 9 of the ComplaintFAC, Defendant admits the allegations

8 contained therein.
10.

9

In response to Paragraph 10 of the ComplaintFAC, Defendant admits that the

10 Underlying Action contained allegations relating to work performed and materials provided by
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11 independent contractors on behalf of Defendant, or the actions or inactions of independent
12 contractors’ employees, laborers, suppliers, or vendors.Defendant admits the allegations contained
13 therein. Defendant denies each and every remaining allegation contained therein.
11.

14

In response to Paragraph 11, Defendant denies each and every allegation contained

15 therein.
12.

16

In response to Paragraph 12, Defendant admits that USIC insured PETERSEN

17 pursuant to a Commercial General Liability policy of insurance, Policy No. DSI-GL-CA-00545,
18 effective August 28, 2013 to August 28, 2014, but is without sufficient knowledge or information to
19 form a belief as to the truth of the remaining allegations and on that basis denies each and every
20 remaining allegation contained therein.
13.

21

In response to Paragraph 13, Defendant admits that Defendant tendered its defense

22 and indemnity of the Underlying Action to USIC under the Policy, and that USIC retained counsel to
23 defend PETERSEN in the Underlying Action and is currently defending PETERSEN against the
24 Underlying Action. Defendant denies each and every remaining allegation contained in Paragraph
25 13.
26

FIRST CAUSE OF ACTION

27

DECLARATORY JUDGMENT

28

3
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

14.

In response to Paragraph 14, Defendant incorporates the allegations contained in

2 paragraphs 1 through 13, inclusive, of this ComplaintFAC as though fully set forth herein.
3

15.

In response to Paragraph 15, Defendant avers that the Policy speaks for itself and

4 must be read and interpreted as a whole, and contains language that includes some or all of the
5 language quoted in Paragraph 15. Defendant is without sufficient knowledge or information to form
6 a belief as to the truth of the remaining allegations, and on that basis denies each and every
7 remaining allegation contained in Paragraph 15.
8

16.

In response to Paragraph 16, Defendant admits that the Underlying Action contained

9 allegations relating to work performed and materials provided by independent contractors on behalf
10 of Defendant, or the actions or inactions of independent contractors’ employees, laborers, suppliers,
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11 or vendors. Defendant USIC is making the contentions contained therein, but denies each and every
12 remaining allegation contained in Paragraph 16.
13

17.

In response to Paragraph 17, Defendant admits that USIC that is making the

14 contentions contained therein, and further admits that it denies that USIC owes no duty to defend or
15 indemnify PETERSEN under the Policy against the claims asserted in the Underlying Action based
16 upon the ICE. Defendant denies each and every remaining allegation contained in Paragraph 17.
17

18.

In response to Paragraph 18, Defendant avers that this paragraph contains a legal

18 conclusion which does not require a response but, to the extent otherwise, Defendant denies each
19 and every allegation contained in Paragraph 18.
20

19.

In response to Paragraph 19, Defendant denies each and every allegation

21 contained in Paragraph 19.
22

SECOND CAUSE OF ACTION

23

REIMBURSEMENT OF DEFENSE COSTS

24

20.

In response to Paragraph 20, Defendant incorporates the allegations contained in

25 paragraphs 1 through 19, inclusive, of this ComplaintFAC as though fully set forth herein.
26

21.

In response to Paragraph 21, Defendant denies each and every allegation contained

27 therein.
28

4
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

22.

In response to Paragraph 22, Defendant denies each and every allegation contained

2 therein.
3

23.

In response to Paragraph 23, Defendant denies each and every allegation contained

4 therein.
5

24.

In response to Paragraph 24, Defendant admits that USIC that is making the

6 contentions contained therein, but denies each and every remaining allegation contained in
7 Paragraph 24.
8
9

PRAYER FOR RELIEF
In response to the Prayer for Relief, Defendant denies that USIC is entitled to a judgment in

10 its favor against Defendant.
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11

1. In response to Paragraph 1 of the Prayer, Defendant denies that USIC is entitled to any relief.

12

2. In response to Paragraph 2 of the Prayer, Defendant denies that USIC is entitled to any relief.

13

3. In response to Paragraph 3 of the Prayer, Defendant denies that USIC is entitled to any relief.

14

4. In response to Paragraph 4 of the Prayer, Defendant denies that USIC is entitled to any relief.

15
PETERSEN’S AFFIRMATIVE DEFENSES:

16
17

FIRST AFFIRMATIVE DEFENSE

18
19

The ComplaintFAC and each and every allegation therein fail to state facts sufficient to state

20 a cause of action against Defendant.
SECOND AFFIRMATIVE DEFENSE

21
22

The ComplaintFAC is uncertain.
THIRD AFFIRMATIVE DEFENSE

23
24

All of the claims asserted in the ComplaintFAC are barred by operation of the doctrine of

25 unclean hands.
26
27
28

FOURTH AFFIRMATIVE DEFENSE
All of the claims set forth in the ComplaintFAC are barred by operation of the doctrine of
5
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1 laches.
2
3

FIFTH AFFIRMATIVE DEFENSE
Plaintiff has breached its contractual and extra contractual obligations under the applicable

4 insurance Policy and, accordingly, all of the claims set forth in the ComplaintFAC are barred by
5 Plaintiff’s breaches.
SIXTH AFFIRMATIVE DEFENSE

6
7

Plaintiff has breached its contractual and extra contractual obligations under the applicable

8 insurance Policy and, accordingly, any relief to which Plaintiff may be entitled should be offset by
9 Plaintiff’s comparative fault.
SEVENTH AFFIRMATIVE DEFENSE

10
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11

Plaintiff owes a duty to defend and indemnify Petersen in the Underlying Action, based on

12 all of the contentions made in the Underlying Action, including but not limited to the contentions
13 made in pleadings and discovery, and all extrinsic facts known to Plaintiff, under the terms of all
14 applicable insurance policies issued by Plaintiff.
EIGHTH AFFIRMATIVE DEFENSE

15
16

At all times material to the allegations of the ComplaintFAC herein, the conduct and actions

17 of Plaintiff and its agents, attorneys, representatives, and/or other individuals acting on its behalf,
18 and each of them, was such as to constitute an estoppel as to each of the claims asserted in the
19 ComplaintFAC.
NINTH AFFIRMATIVE DEFENSE

20
21

At all times material to the allegations of the ComplaintFAC herein, the conduct and actions

22 of Plaintiff and its agents, attorneys, representatives, and/or other individuals acting on its behalf,
23 and each of them, was such as to constitute a waiver as to each of the claims asserted in the
24 ComplaintFAC.
25
26

TENTH AFFIRMATIVE DEFENSE
Plaintiff failed to properly reserve its rights to deny coverage for defense and indemnity of

27 Petersen in the Underlying Action.
28

6
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

ELEVENTH AFFIRMATIVE DEFENSE

2

Plaintiff has failed to take reasonable steps to mitigate its alleged loss, if any, and such

3 conduct bars or reduces any recovery sought by Plaintiff herein.
4
5

TWELFTH AFFIRMATIVE DEFENSE
Plaintiff’s acts and omissions contributed as a proximate cause in bringing about Plaintiff’s

6 alleged loss, if any, and the total amount of loss to which Plaintiff is entitled, if any, should be
7 reduced in proportion to Plaintiff’s own fault.
8
9

THIRTEENTH AFFIRMATIVE DEFENSE
Portions of the applicable policies are ambiguous and unenforceable.
FOURTEENTH AFFIRMATIVE DEFENSE

11
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

10

Portions of the applicable policies are unenforceable because they defeat the reasonable

12 expectations of the insured(s).
13
14

FIFTEENTH AFFIRMATIVE DEFENSE
Plaintiff’s ComplaintFAC is barred because Plaintiff acted as a volunteer in connection with

15 the matters alleged in the ComplaintFAC.
16
17
18
19

SIXTEENTH AFFIRMATIVE DEFENSE
One or more of the controversies alleged in the ComplaintFAC is not ripe for adjudication.
SEVENTEENTH AFFIRMATIVE DEFENSE
Pursuit of the instant action is improper because the issues in this action overlap with issues

20 in the pending Underlying Action, and pursuit of this action would prejudice the rights of Petersen as
21 Plaintiff’s insured(s). Accordingly, the instant action should be dismissed or stayed pending a
22 resolution of the Underlying Action. Montrose Chem. Corp. v. Sup. Ct. 25 Cal. App. 4th 902, 910
23 (1994); Wilton v. Seven Falls Co. 515 U.S., 283 (1995); Allied Prop. & Cas. Ins. Co. v. Roberts
24 2011 WL 2495691, at *1 (E.D. Cal. June 21, 2011).
25
26

EIGHTEENTH AFFIRMATIVE DEFENSE
Plaintiff has breached its duty to defend Petersen in the Underlying Action by, among other

27 things, failing to advise Petersen of its right to independent counsel as required by California Civil
28

7
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1 Code Section 2860, and its claims herein are therefore barred.
2

NINETEENTH AFFIRMATIVE DEFENSE

3

Plaintiff’s claims are barred in whole or in part by the doctrine of unjust enrichment, as

4 Plaintiff’s retention of the premiums paid by Petersen for insurance coverage would be unjust if
5 Plaintiff refuses to acknowledge its obligations to Petersen.
6
7

TWENTIETH AFFIRMATIVE DEFENSE
Plaintiff’s claims are barred by Plaintiff’s failure to join one or more indispensable parties.

8

TWENTY-FIRST AFFIRMATIVE DEFENSE

9

Plaintiff’s ComplaintFAC, and each cause of action therein, is barred by the applicable

10 statutes of limitations, including without limitation Cal. Civ. Pro. Code §§ 337, 339, 343.
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11
12

TWENTY-SECOND AFFIRMATIVE DEFENSE
Plaintiff has failed to provide a proper and adequate defense to Defendant in the Underlying

13 Action and has therefore waived any coverage defenses.
14
15

TWENTY-THIRD AFFIRMATIVE DEFENSE
Plaintiff has failed to provide a proper and adequate defense to Defendant in the Underlying

16 Action and therefore is estopped to deny any defense or indemnity obligations.
17
18

TWENTY-FOURTH AFFIRMATIVE DEFENSE
Plaintiff has failed to provide a proper and adequate defense to Defendant in the Underlying

19 Action and, therefore, is not entitled to any reimbursement of defense costs.
20
21
22
23

TWENTY-FIFTH AFFIRMATIVE DEFENSE
Plaintiff failed to properly reserve its rights to seek reimbursement from Petersen.
TWENTY-SIXTH AFFIRMATIVE DEFENSE
Petersen asserts that they presently have insufficient knowledge or information on which to

24 form a belief as to whether they may have further, as yet unstated, defenses available. Petersen
25 therefore reserves herein the right to assert additional defenses if discovery and further investigation
26 indicates that further defenses would be appropriate.
27
28

8
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

PETERSEN’S PRAYER FOR RELIEF

2

WHEREFORE, Petersen prays for judgment as follows:

3

1.

That Plaintiff take nothing by reason of its ComplaintFAC;

4

2.

For costs of suit incurred herein;

5

3.

For such other and further relief as the Court may deem just and proper.
JURY DEMAND

6
7

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure Defendant hereby demands a

8 trial by jury of all issues so triable.
9
10
MEREDITH, WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11

Respectfully Submitted,
DATED: December 27, 2016_______ MEREDITH, WEINSTEIN & NUMBERS, LLP

12
13
14
15
16

By: /s/ Barron L. Weinstein
Barron L. Weinstein
Shanti Eagle
Attorneys for Defendant
Dean Petersen dba
Petersen Construction Services

17
18
19
20
21
22
23
24
25
26
27
28

9
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1 WEINSTEIN & NUMBERS, LLP
Barron L. Weinstein (Bar No. 067972)
2 [e-mail]
Shanti Eagle (Bar No. 267704)
3 [e-mail]
115 Ward Street
4 Larkspur, CA 94939
Telephone: [phone]
5 Facsimile: [phone]
6 Attorneys for Defendant
Dean Petersen dba
7 Petersen Construction Services
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

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11 UNITED SPECIALTY INSURANCE
COMPANY, a Delaware corporation,
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Plaintiff,
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v.
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DEAN PETERSEN dba PETERSEN
15 CONSTRUCTION SERVICES, a citizen of
the State of California;
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Defendant.
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CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH
DEFENDANT DEAN PETERSEN’S ANSWER
TO UNITED SPECIALTY INSURANCE
COMPANY’S FIRST AMENDED
COMPLAINT FOR DECLARATORY
JUDGEMENT AND REIMBURSEMENT
Assigned to: Hon. Kimberly J. Mueller
Action Filed: October 17, 2016
Jury trial demanded.

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19

Defendant DEAN PETERSEN dba PETERSEN CONSTRUCTION SERVICES (“Petersen”

20 or “Defendant”) in response to the unverified First Amended Complaint (“FAC”) for Declaratory
21 Judgement and Reimbursement of Plaintiff UNITED SPECIALTY INSURANCE COMPANY
22 (“USIC” or “Plaintiff”), admits, denies and avers as follows:
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JURISDICTIONAL ALLEGATION
1.

In response to Paragraph 1 of the FAC, Defendant admits the allegations contained

26 therein.
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VENUE ALLEGATION
1
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

2.

In response to Paragraph 2 of the FAC, Defendant admits the allegations contained

2 therein.
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4

GENERAL ALLEGATIONS
3.

In response to Paragraph 3 of the FAC, Defendant is without sufficient knowledge or

5 information to form a belief as to the truth of the allegations, and on that basis denies each and every
6 allegation contained therein.
7

4.

In response to Paragraph 4 of the FAC, Defendant admits the allegations contained

8 therein.
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FACTUAL ALLEGATIONS
5.

In response to Paragraph 5 of the FAC, Defendant, without admitting any of the

WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11 allegations in the Underlying Action, admits that this coverage dispute arises out of the Underlying
12 Action as identified in Paragraph 5. Defendant admits that Exhibit A contains the complaint in the
13 Underlying Action, among other documents. Defendant avers that the pleadings in the Underlying
14 Action speak for themselves. For each of these reasons Defendant denies each and every remaining
15 allegation contained in Paragraph 5.
16

6.

In response to Paragraph 6 of the FAC, without admitting any of the allegations in the

17 Underlying Action, Defendant admits that the Underlying Action contains such allegations, among
18 others, but denies that Plaintiff has completely or accurately summarized those allegations.
19 Furthermore, Defendant avers that the pleadings in the Underlying Action speak for themselves. For
20 each of these reasons Defendant denies each and every allegation contained in Paragraph 6.
21

7.

In response to Paragraph 7 of the FAC, without admitting any of the allegations in the

22 Underlying Action, Defendant admits that the Underlying Action contains such allegations, among
23 others, but denies that Plaintiff has completely or accurately summarized those allegations.
24 Furthermore, Defendant avers that the pleadings in the Underlying Action speak for themselves. For
25 each of these reasons Defendant denies each and every allegation contained in Paragraph 7.
26

8.

In response to Paragraph 8 of the FAC, without admitting any of the allegations in the

27 Underlying Action, Defendant admits that the Underlying Action contains such allegations, among
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2
PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1 others, but denies that Plaintiff has completely or accurately summarized those allegations.
2 Furthermore, Defendant avers that the pleadings in the Underlying Action speak for themselves. For
3 each of these reasons Defendant denies each and every allegation contained in Paragraph 8.
4

9.

In response to Paragraph 9 of the FAC, Defendant admits the allegations contained

5 therein.
6

10.

In response to Paragraph 10 of the FAC, Defendant admits that the Underlying Action

7 contained allegations relating to work performed and materials provided by independent contractors
8 on behalf of Defendant, or the actions or inactions of independent contractors’ employees, laborers,
9 suppliers, or vendors.. Defendant denies each and every remaining allegation contained therein.
10

11.

In response to Paragraph 11, Defendant denies each and every allegation contained

WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11 therein.
12

12.

In response to Paragraph 12, Defendant admits that USIC insured PETERSEN

13 pursuant to a Commercial General Liability policy of insurance, Policy No. DSI-GL-CA-00545,
14 effective August 28, 2013 to August 28, 2014, but is without sufficient knowledge or information to
15 form a belief as to the truth of the remaining allegations and on that basis denies each and every
16 remaining allegation contained therein.
17

13.

In response to Paragraph 13, Defendant admits that Defendant tendered its defense

18 and indemnity of the Underlying Action to USIC under the Policy, and that USIC retained counsel to
19 defend PETERSEN in the Underlying Action and is currently defending PETERSEN against the
20 Underlying Action. Defendant denies each and every remaining allegation contained in Paragraph
21 13.
22

FIRST CAUSE OF ACTION

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DECLARATORY JUDGMENT

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14.

In response to Paragraph 14, Defendant incorporates the allegations contained in

25 paragraphs 1 through 13, inclusive, of this FAC as though fully set forth herein.
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15.

In response to Paragraph 15, Defendant avers that the Policy speaks for itself and

27 must be read and interpreted as a whole, and contains language that includes some or all of the
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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1 language quoted in Paragraph 15. Defendant is without sufficient knowledge or information to form
2 a belief as to the truth of the remaining allegations, and on that basis denies each and every
3 remaining allegation contained in Paragraph 15.
4

16.

In response to Paragraph 16, Defendant admits that the Underlying Action contained

5 allegations relating to work performed and materials provided by independent contractors on behalf
6 of Defendant, or the actions or inactions of independent contractors’ employees, laborers, suppliers,
7 or vendors. Defendant denies each and every remaining allegation contained in Paragraph 16.
8

17.

In response to Paragraph 17, Defendant admits that USIC that is making the

9 contentions contained therein, and further admits that it denies that USIC owes no duty to defend or
10 indemnify PETERSEN under the Policy against the claims asserted in the Underlying Action based

WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11 upon the ICE. Defendant denies each and every remaining allegation contained in Paragraph 17.
12

18.

In response to Paragraph 18, Defendant avers that this paragraph contains a legal

13 conclusion which does not require a response but, to the extent otherwise, Defendant denies each
14 and every allegation contained in Paragraph 18.
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19.

In response to Paragraph 19, Defendant denies each and every allegation

16 contained in Paragraph 19.
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SECOND CAUSE OF ACTION

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REIMBURSEMENT OF DEFENSE COSTS

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20.

In response to Paragraph 20, Defendant incorporates the allegations contained in

20 paragraphs 1 through 19, inclusive, of this FAC as though fully set forth herein.
21

21.

In response to Paragraph 21, Defendant denies each and every allegation contained

22 therein.
23

22.

In response to Paragraph 22, Defendant denies each and every allegation contained

24 therein.
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23.

In response to Paragraph 23, Defendant denies each and every allegation contained

26 therein.
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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

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24.

In response to Paragraph 24, Defendant admits that USIC that is making the

2 contentions contained therein, but denies each and every remaining allegation contained in
3 Paragraph 24.
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PRAYER FOR RELIEF

5

In response to the Prayer for Relief, Defendant denies that USIC is entitled to a judgment in

6 its favor against Defendant.
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1. In response to Paragraph 1 of the Prayer, Defendant denies that USIC is entitled to any relief.

8

2. In response to Paragraph 2 of the Prayer, Defendant denies that USIC is entitled to any relief.

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3. In response to Paragraph 3 of the Prayer, Defendant denies that USIC is entitled to any relief.

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4. In response to Paragraph 4 of the Prayer, Defendant denies that USIC is entitled to any relief.

WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

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PETERSEN’S AFFIRMATIVE DEFENSES:

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FIRST AFFIRMATIVE DEFENSE

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The FAC and each and every allegation therein fail to state facts sufficient to state a cause of

15

16 action against Defendant.
SECOND AFFIRMATIVE DEFENSE

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The FAC is uncertain.

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THIRD AFFIRMATIVE DEFENSE

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All of the claims asserted in the FAC are barred by operation of the doctrine of unclean

21 hands.
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FOURTH AFFIRMATIVE DEFENSE

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All of the claims set forth in the FAC are barred by operation of the doctrine of laches.

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FIFTH AFFIRMATIVE DEFENSE

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Plaintiff has breached its contractual and extra contractual obligations under the applicable

26 insurance Policy and, accordingly, all of the claims set forth in the FAC are barred by Plaintiff’s
27 breaches.
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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

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SIXTH AFFIRMATIVE DEFENSE
Plaintiff has breached its contractual and extra contractual obligations under the applicable

3 insurance Policy and, accordingly, any relief to which Plaintiff may be entitled should be offset by
4 Plaintiff’s comparative fault.
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SEVENTH AFFIRMATIVE DEFENSE
Plaintiff owes a duty to defend and indemnify Petersen in the Underlying Action, based on

7 all of the contentions made in the Underlying Action, including but not limited to the contentions
8 made in pleadings and discovery, and all extrinsic facts known to Plaintiff, under the terms of all
9 applicable insurance policies issued by Plaintiff.
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WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

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EIGHTH AFFIRMATIVE DEFENSE
At all times material to the allegations of the FAC herein, the conduct and actions of Plaintiff

12 and its agents, attorneys, representatives, and/or other individuals acting on its behalf, and each of
13 them, was such as to constitute an estoppel as to each of the claims asserted in the FAC.
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NINTH AFFIRMATIVE DEFENSE
At all times material to the allegations of the FAC herein, the conduct and actions of Plaintiff

16 and its agents, attorneys, representatives, and/or other individuals acting on its behalf, and each of
17 them, was such as to constitute a waiver as to each of the claims asserted in the FAC.
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19

TENTH AFFIRMATIVE DEFENSE
Plaintiff failed to properly reserve its rights to deny coverage for defense and indemnity of

20 Petersen in the Underlying Action.
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ELEVENTH AFFIRMATIVE DEFENSE

22

Plaintiff has failed to take reasonable steps to mitigate its alleged loss, if any, and such

23 conduct bars or reduces any recovery sought by Plaintiff herein.
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25

TWELFTH AFFIRMATIVE DEFENSE
Plaintiff’s acts and omissions contributed as a proximate cause in bringing about Plaintiff’s

26 alleged loss, if any, and the total amount of loss to which Plaintiff is entitled, if any, should be
27 reduced in proportion to Plaintiff’s own fault.
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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

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2

THIRTEENTH AFFIRMATIVE DEFENSE
Portions of the applicable policies are ambiguous and unenforceable.

3

FOURTEENTH AFFIRMATIVE DEFENSE

4

Portions of the applicable policies are unenforceable because they defeat the reasonable

5 expectations of the insured(s).
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7

FIFTEENTH AFFIRMATIVE DEFENSE
Plaintiff’s FAC is barred because Plaintiff acted as a volunteer in connection with the matters

8 alleged in the FAC.
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WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

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12

SIXTEENTH AFFIRMATIVE DEFENSE
One or more of the controversies alleged in the FAC is not ripe for adjudication.
SEVENTEENTH AFFIRMATIVE DEFENSE
Pursuit of the instant action is improper because the issues in this action overlap with issues

13 in the pending Underlying Action, and pursuit of this action would prejudice the rights of Petersen as
14 Plaintiff’s insured(s). Accordingly, the instant action should be dismissed or stayed pending a
15 resolution of the Underlying Action. Montrose Chem. Corp. v. Sup. Ct. 25 Cal. App. 4th 902, 910
16 (1994); Wilton v. Seven Falls Co. 515 U.S., 283 (1995); Allied Prop. & Cas. Ins. Co. v. Roberts
17 2011 WL 2495691, at *1 (E.D. Cal. June 21, 2011).
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19

EIGHTEENTH AFFIRMATIVE DEFENSE
Plaintiff has breached its duty to defend Petersen in the Underlying Action by, among other

20 things, failing to advise Petersen of its right to independent counsel as required by California Civil
21 Code Section 2860, and its claims herein are therefore barred.
22

NINETEENTH AFFIRMATIVE DEFENSE

23

Plaintiff’s claims are barred in whole or in part by the doctrine of unjust enrichment, as

24 Plaintiff’s retention of the premiums paid by Petersen for insurance coverage would be unjust if
25 Plaintiff refuses to acknowledge its obligations to Petersen.
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TWENTIETH AFFIRMATIVE DEFENSE
Plaintiff’s claims are barred by Plaintiff’s failure to join one or more indispensable parties.
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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1

TWENTY-FIRST AFFIRMATIVE DEFENSE

2

Plaintiff’s FAC, and each cause of action therein, is barred by the applicable statutes of

3 limitations, including without limitation Cal. Civ. Pro. Code §§ 337, 339, 343.
4
5

TWENTY-SECOND AFFIRMATIVE DEFENSE
Plaintiff has failed to provide a proper and adequate defense to Defendant in the Underlying

6 Action and has therefore waived any coverage defenses.
7
8

TWENTY-THIRD AFFIRMATIVE DEFENSE
Plaintiff has failed to provide a proper and adequate defense to Defendant in the Underlying

9 Action and therefore is estopped to deny any defense or indemnity obligations.
10

WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

11

TWENTY-FOURTH AFFIRMATIVE DEFENSE
Plaintiff has failed to provide a proper and adequate defense to Defendant in the Underlying

12 Action and, therefore, is not entitled to any reimbursement of defense costs.
TWENTY-FIFTH AFFIRMATIVE DEFENSE

13
14

Plaintiff failed to properly reserve its rights to seek reimbursement from Petersen.
TWENTY-SIXTH AFFIRMATIVE DEFENSE

15
16

Petersen asserts that they presently have insufficient knowledge or information on which to

17 form a belief as to whether they may have further, as yet unstated, defenses available. Petersen
18 therefore reserves herein the right to assert additional defenses if discovery and further investigation
19 indicates that further defenses would be appropriate.
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21

PETERSEN’S PRAYER FOR RELIEF

22

WHEREFORE, Petersen prays for judgment as follows:

23

1.

That Plaintiff take nothing by reason of its FAC;

24

2.

For costs of suit incurred herein;

25

3.

For such other and further relief as the Court may deem just and proper.

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JURY DEMAND
Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure Defendant hereby demands a
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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH

1 trial by jury of all issues so triable.
2
3
4

Respectfully Submitted,
DATED: _______

WEINSTEIN & NUMBERS, LLP

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By:

_____________
Barron L. Weinstein
Shanti Eagle

Attorneys for Defendant
Dean Petersen dba
Petersen Construction Services

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WEINSTEIN & NUMBERS, LLP
115 WARD STREET
LARKSPUR, CALIFORNIA 94939

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PETERSEN’S ANSWER TO USIC’S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGEMENT &
REIMBURSEMENT
CIVIL ACTION NO.: 2:16-cv-02480-KJM-GGH