Travelers Property Casualty Company of America et al v. Centex Homes

Filing 192

Order by Hon. Samuel Conti denying 173 Motion for Civil Contempt Sanctions.(sclc1, COURT STAFF) (Filed on 6/24/2013)

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IN THE UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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Northern District of California

United States District Court

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TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA, FIDELITY &
GUARANTY INSURANCE COMPANY, THE
TRAVELERS INDEMNITY COMPANY OF
CONNECTICUT, AND ST. PAUL MERCURY
INSURANCE COMPANY,

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Plaintiffs,
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v.
CENTEX HOMES and DOES 1 through
10 inclusive,

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CENTEX HOMES,

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Counterclaimant,
v.

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TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA, et al.,

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Counterdefendants.
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Case No. 11-3638-SC
Related Cases: 12-0371-SC,
13-0088-SC
ORDER DENYING MOTION FOR
CIVIL CONTEMPT SANCTIONS

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I.

INTRODUCTION
The above-captioned plaintiffs (collectively, "Travelers") now

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move to find Defendant Centex Homes ("Centex") in civil contempt

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for failing to comply with a Court order regarding the filing of

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certain documents under seal.

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fully briefed.

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is appropriate for resolution without oral argument per Civil Local

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Rule 7-1(b).

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DENIED.

ECF No. 173 ("Mot.").

The motion is

ECF Nos. 177 ("Opp'n"), 180 ("Reply").1

The matter

For the reasons set forth below, the Motion is

United States District Court

For the Northern District of California

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II.

BACKGROUND
Centex, a general contractor and homebuilder, is named as an

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additional insured on a number of insurance policies issued by

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Travelers.

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defect actions, and Centex tendered those actions to Travelers for

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defense and indemnity.

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the parties over whether Travelers has breached its duty to defend;

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whether Centex has a right to appoint its own counsel, Newmeyer and

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Dillion LLP ("N&D"), to defend it in the underlying construction

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defect actions; and whether Travelers has a duty to pay for all the

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amounts billed by N&D, among other things.

Homeowners have sued Centex in several construction

This case arises out of a dispute between

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The parties recently filed cross-motions for summary judgment.

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In connection with those motions, Travelers filed invoices that N&D

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had submitted to Centex for its work on the underlying construction

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defect cases.

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order, Travelers brought an administrative motion to determine

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Pursuant to the parties' stipulated protective

Pursuant to a stipulation by the parties and with the Court's
leave, ECF No. 187, Centex also filed a surreply brief, ECF No. 190
("Surreply").

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whether those invoices should be filed under seal.

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("Admin. Mot.").

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attached to the declaration of Lindsee B. Falcone ("Falcone"), list

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the date of the work performed, the attorney that performed the

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work, a description of the work, the number of hours billed, and

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the total fees for professional services rendered.

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("Falcone Decl.") Exs. A-H.

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ECF No. 158

The invoices filed by Travelers, which were

ECF No. 158-2

The motion to seal was granted in part and denied in part.
ECF No. 163 ("Sealing Order").

The Sealing Order directed Centex

United States District Court

For the Northern District of California

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to file unredacted versions of the billing records under seal with

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the Court and redacted versions in the public record.

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Only the descriptions of the work performed were to be redacted

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from the billing records filed to the public record.

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4, 2013, Centex filed in the public record versions of the invoices

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which look identical to the invoices attached to the Falcone

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Declaration, except that the description of the work performed was

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redacted.

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Id. at 4.

Id.

On March

ECF No. 166.

Travelers now argues that the invoices Centex lodged with the

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Court on March 4, 2013 do not fully comply with the Court's Sealing

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Order.

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purportedly two sets of N&D invoices, and that Centex filed the

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first set when it should have filed the second (or perhaps both).

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The first set of invoices, the so-called "paper invoices," were

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attached to the Falcone Declaration.

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redacted copy of these invoices with the Court on March 4.

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second set, the so-called "electronic invoices," were purportedly

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produced later in discovery, after Travelers learned of their

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existence at the deposition of Centex's general counsel.

Mot. at 4.

The crux of the argument is that there are

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See id.

Centex lodged a
The

The

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electronic invoices, which Travelers filed in connection with the

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instant motion, do not appear to be formal invoices.

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appear to be spreadsheets containing data concerning N&D's billing

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that may have been used to generate the paper invoices.

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No. 173-1 ("Perea Decl.") Ex. E.

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discussed these spreadsheets at his deposition, he stated: "Well,

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it's not a printed bill.

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Decl. Ex. C at 10.

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Rather, they

See ECF

When Centex's general counsel

I get my bill electronically."

Perea

In its moving papers, Travelers argues that Centex should have

United States District Court

For the Northern District of California

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lodged the electronic invoices with the Court because, unlike the

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paper invoices, they show that N&D offered Centex a "line item

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discount."

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central to its claim that N&D was providing Centex with a discount

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for attorney services yet billing Travelers for the full

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undiscounted amount.

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held in civil contempt for "hiding the ball."

Mot. at 5.

Travelers contends that this discount is

Travelers concludes that Centex should be

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III. DISCUSSION
To prevail on its motion for civil contempt, Travelers must

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establish by clear and convincing evidence that (1) a Court order

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was in effect, (2) the order required specified conduct by Centex,

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and (3) the Centex failed to comply with the Court's order.

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United States v. City of Jackson, 359 F.3d 727, 731 (5th Cir.

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2004).

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proving the third element.

See

The Court finds that Travelers has not even come close to

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In its moving papers, Travelers argues that the so-called

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electronic invoices were subject to the Sealing Order and thus

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should have been lodged with the Court.

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Mot. at 4-5.

This

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argument borders on the frivolous.

Travelers never filed the

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electronic invoices in connection with the Administrative Motion --

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it only filed the paper invoices.

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unclear why Centex should have interpreted the Sealing Order to

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pertain to documents that were not before the Court.

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wanted Centex to file the electronic invoices in connection with

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its motion for summary judgment, Travelers should have attached the

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electronic invoices to the Falcone Declaration or the

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Administrative Motion.

Accordingly, it is entirely

If Travelers

In short, Centex's conduct was consistent

United States District Court

For the Northern District of California

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with the Sealing Order: Centex filed a version of the paper

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invoices in the public record with the work descriptions redacted.
Travelers asserts two new arguments on reply.2

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First,

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Travelers argues that the electronic invoices and paper invoices

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are one and the same.

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argument is contrary to the facts set forth in Travelers' moving

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papers.

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Centex in discovery did not contain any indication on them of a

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line item discount like the electronic versions described by

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[Centex's general counsel].").

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to the evidence before the Court.

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attached to the Falcone Declaration and which Centex lodged with

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the Court, look nothing like the electronic invoices.

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Falcone Decl. Exs. A-H with Perea Decl. Ex. E.

Reply at 3.

As an initial matter, this

See Mot. at 5 ("The [N&D] paper invoices produced by

Further, the argument is contrary
The paper invoices, which are

Second, Travelers argues on reply that the paper invoices

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lodged with the Court contain secret redactions.

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Compare

Reply at 3-4.

The Court is generally not inclined to address new arguments
raised on reply. The Court makes an exception here since
Travelers' new arguments do nothing to alter the Court's
conclusion, and because Centex was allowed to respond to these
arguments on surreply.

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Specifically, Travelers contends that the original paper invoices

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contained a column meant to include the total cost for each billing

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entry and that the entire column was deleted -- without any

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redaction notation -- but for the total charges at the bottom of

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each invoice.

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reflects the line item discounts offered to Centex.

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serious charge, and Travelers has not offered evidence to back it

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up.

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include subtotals for each billing entry.

Id.

The "secretly deleted column" supposedly
This is a

For example, Centex has not produced any N&D invoices which
Further, Joseph

United States District Court

For the Northern District of California

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Ferrentino ("Ferrentino"), a partner at N&D, has filed a

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declaration stating it is not N&D's custom and practice to include

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such a column in its invoices.

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¶ 6.

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had been doctored, it is unclear why it submitted them without

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comment in support of its motion for summary judgment.

ECF No. 190-2 ("Ferrentino Decl.")

In any event, if Travelers believed that the paper invoices

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IV.

CONCLUSION
In sum, Travelers has produced no evidence that even remotely

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suggests that Centex failed to comply with the Court's Sealing

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Order.

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contempt is DENIED.

Accordingly, Travelers' motion to hold Centex in civil

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IT IS SO ORDERED.

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Dated: June 24, 2013
UNITED STATES DISTRICT JUDGE

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