Atain Specialty Insurance Company v. North Bay Waterproofing, Inc.

Filing 29

ORDER RESETTING CMC TO 12/14/12 at 9:00 a.m. Case Management Statement due by 12/7/2012. Case Management Conference set for 12/14/2012 09:00 AM in Courtroom 5, 17th Floor, San Francisco.. Signed by Judge Edward M. Chen on 11/8/12. (bpf, COURT STAFF) (Filed on 11/8/2012)

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GailAnn Y. Stargardter (Bar No. 250749)
[e-mail]
Andrew J. King (Bar No. 253962)
[e-mail]
ARCHER NORRIS
2033 North Main Street, Suite 800
Walnut Creek, CA 94596-3759
Telephone: [phone]
Facsimile: 925.930.6620

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Attorneys for Plaintiff
ATAIN SPECIALTY INSURANCE
COMPANY f/k/a USF INSURANCE
COMPANY

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN FRANCISCO DIVISION
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ATAIN SPECIALTY INSURANCE
COMPANY f/k/a USF INSURANCE
COMPANY,

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Plaintiff,

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v.

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NORTH BAY WATERPROOFING, INC.,
a California corporation; OPUS WEST
CONSTRUCTION CORPORATION, a
Minnesota corporation

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Case No. CV 12-03339 EMC
PLAINTIFF ATAIN SPECIALTY
INSURANCE COMPANY’S CASE
MANAGEMENT STATEMENT & RULE
26 DISCOVERY PLAN ; ORDER RESETTING
CMC
[FED.R.CIV.P. 26(f); L.R. 16-9]
Date: November 14, 2012
Time: 9:30 a.m.
Dept.: Courtroom 5, 17th Floor
Judge: Hon. Edward M. Chen

Defendants.

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Pursuant to Federal Rule of Civil Procedure 26(f), Civil Local Rule 16-9, and the Standing

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Order for All Judges of the Northern District of California dated July 1, 2011, plaintiff Atain

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Specialty Insurance Company f/k/a USF Insurance Company (“Atain”) hereby submits this Case

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Management Statement & Rule 26 Discovery Plan.

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Atain submits this report on its own behalf, and not as a joint report, due to: (a) the entry

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of default against defendant North Bay Waterproofing, Inc. (“North Bay”) which has failed to

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appear in this action; and (b) the fact that recently-added defendant Opus West Construction

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Corporation (“Opus West”) has not yet responded to the First Amended Complaint or otherwise
PLAINTIFF’S CASE MANAGEMENT
STATEMENT & RULE 26 DISCOVERY
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CASE NO. CV 12-03339 EMC

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appeared in this action. (See Declaration of Andrew J. King, filed concurrently herewith.) At the

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request of Opus West’s counsel, Atain agreed to provide an extension of time until November 19,

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2012 for Opus West to respond to the First Amended Complaint. (Ibid.)

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1. Jurisdiction & Service
The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 and 28 U.S.C. §

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2201, and venue is proper in this district pursuant to 28 U.S.C. §§ 1391(b)(1) and (c), and 28

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U.S.C. § 1391(b)(2). All parties have been served.
Defendant North Bay failed to appear or otherwise respond to the Complaint within the

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requisite time under the applicable federal rules. To date, North Bay has still not appeared or

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responded to the Complaint. At Atain’s request, the Clerk entered a default against North Bay on

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August 21, 2012. (Docket 12.)
At the time Atain filed its initial Complaint in this action, Opus West had filed a Chapter

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11 petition for bankruptcy in the United States Bankruptcy Court for the Northern District of

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Texas. Atain’s original Complaint set forth Atain’s intent to seek leave to file an amended

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complaint to name Opus West as a defendant, once Atain had obtained relief from the bankruptcy

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stay. On September 5, 2012, the Bankruptcy Court issued an Order lifting the automatic stay and

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any applicable discharge injunctions to permit Atain to file and serve an amended complaint upon

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Opus West in this action, and to prosecute its claims to final judgment.
On October 4, 2012, this Court issued an Order granting Atain’s motion for leave to file a

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first amended complaint, naming Opus West as a defendant. (Docket 20.) On October 5, 2012,

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Plaintiff filed its First Amended Complaint in this action. (Docket 21.) Opus West was served on

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October 11, 2012. (Docket 22.) On November 5, 2012, counsel for Atain received a telephone

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call from counsel representing Opus West in the underlying construction defect action. Counsel

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for Opus West advised that she had just received a copy of the First Amended Complaint and

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requested an extension of time to respond. As a professional courtesy, counsel for Atain agreed

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to provide a two-week extension until November 19, 2012.

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PLAINTIFF’S CASE MANAGEMENT
STATEMENT & RULE 26 DISCOVERY
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CASE NO. CV 12-03339 EMC

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2. Facts
Atain issued three policies of insurance to defendant North Bay covering the policy

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periods from January 2, 2005 through January 2, 2008 (the “Policies”). The Policies provide

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commercial general liability coverage pursuant to all of the terms, conditions, limitations,

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exclusions, and endorsements contained therein. Opus West has claimed status as an Additional

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Insured under each of the Policies.

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Developer STRS Ohio CA Real Estate Inv. 1, LLC (“STRS”) filed a construction defect

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action against general contractor Opus West and subcontractor North Bay, among others, in the

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Superior Court of California, County of Sonoma, in an action styled STRS Ohio CA Real Estate

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Inv. 1, LLC v. Alcal/Arcade Contracting, Inc., et al., Case No. SCV-246738 (the “Underlying

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Action”). The Underlying Action arises out of the construction of a residential apartment

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complex located in Santa Rosa, California, commonly known as The Boulders at Fountaingrove

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(the “Project”). The operative complaint in the Underlying Action asserted claims against North

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Bay and Opus West for breach of contract, breach of guaranty, breach of implied warranty,

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negligence, and violation of California Business and Professions Code § 17200, et seq.

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The operative complaint alleges that the Project “consists of ten 3-story apartment

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buildings containing 124 residential dwelling units as well as a leasing office, pool and

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community center.” STRS alleges that Opus West was the general contractor for the Project, and

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that North Bay provided the waterproofing system. STRS avers that, “in and around 2008,”

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STRS discovered water intrusion and other defects at the Project.

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Indian Harbor Insurance Company (“Indian Harbor”), acting on behalf of its insured

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North Bay, tendered the defense of North Bay in the Underlying Action to Atain. Atain

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disclaimed coverage for the claims asserted against North Bay in the Underlying Action, based

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primarily on the “Total Residential Construction” exclusion, set forth in Endorsement RBJ 048 12

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(03/98) (TOTAL RESIDENTIAL EXCLUSION—FORM B), which was included in each of the

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Policies, and which excludes coverage for the defense or indemnification of claims for “‘property

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damage’, . . . ‘arising from’ any work or operations performed … in connection with any

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condominium, townhome, single family dwelling and any other residential or tract housing
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CASE NO. CV 12-03339 EMC

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project.”
Indian Harbor, this time acting on behalf of Opus West, then tendered defense of Opus

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West in the Underlying Action to Atain, based upon Opus West’s claimed status as an additional

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insured under the Policies. Atain disclaimed coverage for the claims asserted against Opus West

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in the Underlying Action, based upon several applicable policy provisions, including the “Total

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Residential Construction” exclusion. Non-parties Indian Harbor and North American Capacity

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Insurance Company, (“NAC”) both purporting to act on behalf of Opus West, have disputed the

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application of the Total Residential Construction exclusion and have demanded that Atain defend

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and indemnify Opus West in the Underlying Action.

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In order to fall within the scope of the Coverage A insuring agreement contained in each

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of the Policies, any “property damage” must first manifest during the policy period. The claims

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asserted against North Bay and Opus West in the Underlying Action do not fall within the

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insuring agreements of the 2005-2006 Policy or the 2006-2007 Policy because the operative

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complaint alleges that the “property damage” first manifested “in or about 2008,” which is after

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the expiration dates of the 2005-2006 Policy and the 2006-2007 Policy. Therefore, Atain

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contends that is has no duty to defend or indemnify North Bay or Opus West against the claims

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asserted in the Underlying Action under the 2005-2006 Policy or the 2006-2007 Policy. Atain

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believes that the claims will also likely fall outside of the scope of the Coverage A insuring

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agreement for the 2007-2008 Policy because that policy expired on January 2, 2008.
Moreover, the Policies’ “Total Residential Construction” exclusion applies to eliminate

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any potential for coverage under any of the Policies for the claims asserted against North Bay and

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Opus West in the Underlying Action, because the operative complaint alleges, and the extrinsic

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evidence confirms, that the property at issue is a 124-unit residential apartment project.

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Accordingly, Atain contends that it owes no duty to defend North Bay or Opus West in the

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Underlying Action under any of the Policies. Atain has also expressly reserved its rights to assert

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that other policy terms, conditions, limitations, and exclusions apply to eliminate coverage.

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PLAINTIFF’S CASE MANAGEMENT
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3. Legal Issues
Plaintiff Atain seeks a declaratory judgment that it does not owe a duty to defend or

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indemnify North Bay or Opus West against the claims asserted in the Underlying Action,

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pursuant to the terms of the Policies and applicable law.

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4. Motions
Plaintiff anticipates filing a motion for summary judgment at the earliest opportunity.
5. Amendment of Pleadings

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Plaintiff filed its First Amended Complaint on October 5, 2012, which added Opus West

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as a defendant. Plaintiff does not currently anticipate further amendments to the complaint, but

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reserves the right to seek leave to do so. Plaintiff proposes a deadline of March 31, 2013 for

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amendments to the pleadings.

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6. Evidence Preservation
Plaintiff has taken all appropriate steps to ensure the preservation of relevant evidence,
consistent with its obligations under the applicable federal and local rules.
7. Disclosures
Due to the failure of any defendant to appear in this action, Plaintiff has been unable to

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conduct a Rule 26(f) conference as contemplated under the federal and local rules, and the parties

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have not yet exchanged their Rule 26 initial disclosures. Plaintiff intends to schedule the Rule

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26(f) conference as soon as possible after defendant Opus West files its responsive pleading, and

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at that time set a date certain for exchange of the disclosures.

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8. Discovery
No discovery has occurred to date. Plaintiff Atain anticipates promptly moving for

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summary judgment based primarily upon the complaint in the Underlying Action and the

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Policies. Atain may serve targeted requests for production of documents, interrogatories, and

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requests for admission. Plaintiff reserves the right to take the depositions of defendants.

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Plaintiff may also seek documents and deposition testimony from third parties pursuant to

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subpoena. If necessary, plaintiff may seek the entry of a stipulated protective order to facilitate

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the production of certain confidential or proprietary information.
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9. Class Actions
Not applicable.

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10. Related Actions
The Underlying Action – STRS Ohio CA Real Estate Inv. 1, LLC v. Alcal/Arcade

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Contracting, Inc., et al., Case No. SCV-246738 – pending in the Superior Court of California,

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County of Sonoma.

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11. Relief
Atain seeks a declaration that it does not owe, and has never owed, a duty to defend or

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indemnify North Bay or Opus West in the Underlying Action.
12. Settlement and ADR
The parties have not discussed settlement or ADR. On October 26, 2012, Plaintiff filed its

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ADR Certification. Atain has not, however, had an opportunity to discuss or select an ADR

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process or teleconference due to the defendants’ failure to appear in this action. Atain does not

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believe that settlement or ADR is appropriate for this matter in that Atain requires a judicial

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declaration that it does not owe a duty to defend or indemnify defendants in the Underlying

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Action.

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13. Consent to Magistrate Judge For All Purposes
On July 19, 2012, Plaintiff declined to consent to a magistrate judge.

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14. Other References
Plaintiff does not believe that the case is suitable for reference to binding arbitration or

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that any other reference is appropriate at this time.
15. Narrowing of Issues
Plaintiff does not believe that the issues can be narrowed at this time, but reserves the

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right to seek the bifurcation of issues, claims or defenses at trial.
16. Expedited Trial Procedure
Plaintiff does not believe that this case is suitable for an expedited trial procedure.

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PLAINTIFF’S CASE MANAGEMENT
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CASE NO. CV 12-03339 EMC

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17. Scheduling
Plaintiff tentatively proposes the following dates for expert disclosures, discovery cutoff,

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last date to hear dispositive motions, pretrial conference and trial:

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Expert disclosures, pursuant to Rule 26(a)(2)(A) and (B) – June 2013

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Rebuttal expert disclosures, and disclosures pursuant to Rule 26(a)(2)(C) – July 2013.

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Discovery cutoff – September 2013

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Last day to file dispositive motions – October 2013

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Last date for hearing on dispositive motions - November 2013

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Pretrial conference – February 2014

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Trial – March 2014

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18. Trial

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Plaintiff believes this matter is suitable for a bench trial, and has not demanded a jury trial.
Plaintiff estimates the length of trial as 1-3 days.
19. Disclosure of Non-party Interested Entities or Persons
Plaintiff filed its required certification and disclosure statement on June 28, 2012. Plaintiff

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restates that AJK Holdings, LLC, is the parent company of plaintiff ATAIN SPECIALTY

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INSURANCE COMPANY.

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20. Other
Plaintiff submits that, in the interests of judicial economy and efficiency, a continuance of

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the case management conference presently scheduled for November 14, 2012 may be warranted,

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given that defendant Opus West has not yet appeared in this action and Plaintiff has afforded

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Opus West an extension until November 19, 2012 to respond to the First Amended Complaint.

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No other issues at this time.

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Dated: November 7, 2012
IT IS HEREBY ORDERED THAT
the CMC is reset for 12/14/12 at
9:00 a.m. An updated joint CMC
statement shall be filed by 12/7/12.
S DISTRICT
___________________________C
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ATA015/1472749-1
Edward M. Chen
DE D
U.S. District Judge IT IS SO ORIFIERE
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PLAINTIFF’S CASE MANAGEMENT
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ARCHER NORRIS

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D IS T IC T O
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/s/ Andrew J. King
GailAnn Y. Stargardter
Andrew J. King
Attorneys for Plaintiff
ATAIN SPECIALTY INSURANCE COMPANY
f/k/a USF INSURANCE COMPANY
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CASE NO. CV 12-03339 EMC