Chartis Specialty Insurance Company et al v. United States of America
Filing
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ORDER by Judge Edward M. Chen Granting 105 Chartis' Motion for Reconsideration. (emcsec, COURT STAFF) (Filed on 1/26/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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CHARTIS SPECIALTY INSURANCE
COMPANY, et al.,
No. C-13-1527 EMC
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Plaintiffs,
v.
ORDER GRANTING CHARTIS’
MOTION FOR RECONSIDERATION
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For the Northern District of California
United States District Court
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UNITED STATES OF AMERICA,
(Docket No. 105)
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Defendant.
___________________________________/
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Pending before the Court is Plaintiff Chartis Specialty Insurance Company’s (“Chartis”)
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motion for reconsideration. This motion is focused on a narrow issue: Does Chartis’ subrogation
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claim under § 112 of the Comprehensive Environmental Response, Compensation, and Liability Act
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(“CERCLA”), 42 U.S.C. § 9612 – first asserted in the amended complaint – relate back to the filing
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of the original complaint.1 For the following reasons, the Court finds that it does and therefore
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GRANTS Chartis’ motion for reconsideration.
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Federal Rule of Civil Procedure 15(c) provides, in relevant part, that an “amendment to a
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pleading relates back to the date of the original pleading when . . . the amendment asserts a claim or
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defense that arose out of the conduct, transaction, or occurrence set out – or attempted to be set out –
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in the original pleading.” Fed. R. Civ. P. 15(c). The relation back doctrine is to be “liberally
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applied” as its purpose “‘is to provide maximum opportunity for each claim to be decided on its
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merits rather than on procedural technicalities.’” ASARCO, LLC v. Union Pacific R. Co., 765 F.3d
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A detailed discussion of the facts underlying this action can be found at Chartis Speciality
Ins. Co. v. United States, No. C13-1527, 2013 WL 3803334 (N.D. Cal. July 19, 2013).
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999, 1005 (9th Cir. 2014) (quoting 6 Charles Alan Wright et al., Federal Practice & Procedure
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§ 1471 (3d ed. 1998). “Gone are the code pleading days when a party was ‘irrevocably bound to the
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legal or factual theory of the party’s first pleading.’” Id. (quoting 6 Wright et al., supra, § 1471).
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Accordingly, relation back is “proper if the original pleading put the defendant on notice of the
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‘particular transaction or set of facts’ that the plaintiff believes to have caused the complained of
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injury.” Percy v. San Francisco Gen. Hosp., 841 F.2d 975, 979 (9th Cir. 1988); see also Farma v.
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Comm’r of Correctional Servs., 253 F.3d 804 (2d Cir. 2000) (“[T]he pertinent inquiry . . . is whether
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the original complaint gave the defendant fair notice of the newly alleged claims.’” (quoting Wilson
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v. Fairchild Republic Co., 143 F.3d 733, 738 (2d Cir. 1998)).
Resolution of Chartis’ motion for reconsideration hinges on the impact of Custom Insurance
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For the Northern District of California
United States District Court
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Co. v. Space Systems/Loral, Inc., 710 F.3d 946 (9th Cir. 2013). In that case the Ninth Circuit held
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that an insurer cannot bring a direct claim under CERCLA § 107(a). The Court stated that a section
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107(a) claim “plainly applies to a person who, through his or her own actions, becomes statutorily
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liable for, or is subject to, the costs related to the cleanup” of a contaminated site. Id. at 961-62. It
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then held that the insurer in that case “only alleges that by virtue of reimbursing [the property
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owner] under its Policy, it became subrogated to [the property owner’s] right to pursue a section
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107(a) claim. But a subrogee – simply by stepping into the shoes of the insured via a reimbursement
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– cannot be liable for response costs under CERCLA, and thus cannot itself incur response costs.”
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Id. at 962. Accordingly, the Ninth Circuit concluded that an insurer “lacks standing to sue under
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section 107(a) because it has not itself become statutorily liable for response costs” and “section
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107(a) does not support an application of subrogation under that provision.” Id. at 965. Chubb also
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spoke to the necessary requirements in asserting a subrogration claim under § 112(c). The Ninth
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Circuit, “after reviewing the statutory language, remedial scheme, and purpose of CERCLA, along
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with relevant case law,” held that “an insured must first make a claim to either the Superfund or a
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potentially liable party before an insurer can bring a subrogration action under section 112(c).”
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Chubb, 710 F.3d at 971. A “claim” is defined under CERCLA as a “demand in writing for a sum
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certain.” 42 U.S.C. § 9601(4).
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Chubb had a major impact on the proceedings in this action. In the original complaint, filed
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in December 2012 (three months before the Chubb decision issued), Chartis and Whittaker both
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asserted a § 107 claim against the United States. See Complaint ¶¶ 63-88. A mere one week after
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the Chubb decision came out, the parties stipulated to the filing of an amended complaint that sought
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to “clarify” Chartis’ § 107 claim and add, for the first time, a subrogation claim under § 112. Docket
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No. 27, at 2. Further, Whittaker made a formal written demand on the United States on March 28,
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2013 (two weeks after the Chubb decision). Ultimately, this Court (in addressing the United States’
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motion to dismiss the amended complaint), found that Chubb required dismissal of Chartis’ section
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107 claim. See Chartis, 2013 WL 3803334, at *10-11.
The United States contends that because Whittaker did not make a written demand on the
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For the Northern District of California
United States District Court
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United States until after the original complaint was filed, Chartis’ subrogration claims under
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§ 112(c) did not exist at the time of the original complaint. Accordingly, it contends relation back is
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improper. While not without logical force, the Court finds the argument unpersuasive.
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Here, it is undisputed that the amended complaint and the original complaint both arise out
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of the same factual dispute – the alleged responsibility of the United States for environmental
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contamination at the affected site. Further, Chartis has been a plaintiff in this action from the
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beginning – having first asserted a claim under § 107 of CERCLA in the original complaint. See
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Complaint ¶¶ 63-88. In fact, the original complaint expressly alleges that Chartis was the “subrogee
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of Whittaker.” Id. ¶ 5. Accordingly, there can be no reasonable dispute that the United States was
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on notice not only of the underlying dispute, but Chartis’ involvement as the property owner’s
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subrogee. Hence, the core requirements of and policy consideration underlying Rule 15(c) relations
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back are satisfied. The subsequent decision in Chubbs does not change this fact. Moreover, it is
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noteworthy that Chartis has been diligently seeking to pursue its claims, promptly responding to the
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guidance provided by the Chubb decision. See ASARCO, 765 F.3d at 1005 (relation back doctrine is
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to be liberally applied and is designed to “provide maximum opportunity for each claim to be
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decided on its merits rather than on procedural technicalities” (citation omitted)). Until its insured
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made a claim for a sum certain, there was nothing more that Chartis could do. While it is true that
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technically, Chartis had no right to sue under § 112 at the time of the complaint, to deny relations
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back when all the basic requisites of relations back are met would exalt the form over substance and
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revert to old code pleading which Rule 15(c) was designed to eschew.
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Accordingly, the Court GRANTS Chartis’ motion for reconsideration. This Court’s July 19,
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2013 order on the United States’ motion to dismiss is hereby modified to provide that Chartis may
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proceed on its § 112(c) subrogration claims for payments made by Chartis within three years of the
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December 12, 2012 filing of the original complaint. Any payments made by Chartis more than three
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years prior to December 12, 2012 remain time barred.
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This order disposes of Docket Number 105.
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IT IS SO ORDERED.
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For the Northern District of California
United States District Court
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Dated: January 26, 2015
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_________________________
EDWARD M. CHEN
United States District Judge
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