Navigators Specialty Insurance Company v. St Paul Surplus Lines Insurance et al

Filing 109

ORDER requiring supplemental briefing re 69 MOTION for Summary Judgment filed by St Paul Surplus Lines Insurance Company. Plaintiff Navigators should file a supplemental brief of no more than three (3) pages within seven (7) days of th is Order on the specific issues identified herein. Defendant St. Paul may file a supplemental brief in reply of no more than three (3) pages within seven (7) days of the filing of Plaintiff's supplemental brief. Signed by Judge Samuel Conti on 6/26/2015. (sclc1, COURT STAFF) (Filed on 6/26/2015)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court

For the Northern District of California

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NAVIGATORS SPECIALTY INSURANCE
COMPANY,

)
)
)
Plaintiff,
)
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v.
)
)
ST. PAUL SURPLUS LINES INSURANCE )
COMPANY; LIBERTY SURPLUS
)
INSURANCE CORPORATION; et al., )
)
Defendants.
)
)
)

Case No. 13-cv-03499-SC
ORDER REQUIRING SUPPLEMENTAL
BRIEFING ON ST. PAUL'S MOTION
FOR SUMMARY JUDGMENT

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Now before the Court is Defendant St. Paul Surplus Lines

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Insurance Company's ("St. Paul") motion for summary judgment.1

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No. 69 ("Mot.").

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broker California Financial Insurance Services ("California

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Financial") had the authority to issue an Additional Insured

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Endorsement on St. Paul's behalf.

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Insurance Company ("Navigators") claims that California Financial

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had the authority to issue the Additional Insured Endorsement

The Motion turns, in part, on whether insurance

Plaintiff Navigators Specialty

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ECF

The original motion for summary judgment was filed jointly by
Defendants St. Paul and Travelers Property Casualty Company of
America ("Travelers"). By virtue of Navigators' dismissal of
Travelers (ECF No. 89), the Court no longer has to rule on that
portion of the motion pertaining to Travelers.

("Crouse"), delegated its power to issue such endorsements to

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California Financial.

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whether Crouse had the authority to delegate its agency powers.

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addition, Navigators did not have the opportunity to respond to St.

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Paul's brief which raised, for the first time, a section of St.

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Paul's letter of authority to Crouse expressly prohibiting any

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United States District Court

because St. Paul's underwriter and agent, Crouse and Associates

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For the Northern District of California

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delegation of agency powers.

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additional briefing is necessary.

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Navigators fails to address, however,

ECF No. 105-1, Ex. A.

In

As a result,

This is an insurance dispute arising from two underlying

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construction defect lawsuits (known as the "3820 Cypress Action"

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and the "PRBO Action").

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Petaluma, California contains construction defects, and both

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lawsuits have been consolidated in state court (collectively "the

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Underlying Actions").

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general contractor for the building, was insured by Navigators.

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St. Paul insured Sunrise Windows ("Sunrise"), a subcontractor

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responsible for windows.

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Paul issued to Sunrise (the "Sunrise Policies").

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Both lawsuits allege that a building in

McDevitt & McDevitt ("McDevitt"), the

This case relates to two policies St.

Navigators alleges that it is entitled to declaratory relief,

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equitable contribution, and equitable subrogation arising out of

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St. Paul's alleged breach of its duty to defend and indemnify

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Navigators' named insured, McDevitt, against the Underlying

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Actions.

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additional insured on the Additional Insured Endorsement to the

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Sunrise Policies.

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insurance broker, issued the Additional Insured Endorsement.

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Central to this case is whether, under the law of agency in

Navigators claims that McDevitt is listed as an

Importantly, California Financial, Sunrise's

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California, California Financial had the authority to issue the

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Additional Insured Endorsement on St. Paul's behalf.

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ordered additional discovery and supplemental briefing on this

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issue (ECF Nos. 86, 95, 100), and the parties recently filed

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supplemental briefs (ECF Nos. 102 ("Navigators Suppl. Br."); 105

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("St. Paul Suppl. Br.")).

The Court

The parties' supplemental briefs focus on whether California

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United States District Court

For the Northern District of California

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Financial was authorized by St. Paul's agent, Crouse, to issue the

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additional insured endorsement -- in other words, whether

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California Financial operated as an authorized sub-agent of St.

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Paul.

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a conversation between representatives of Crouse and California

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Financial during which Crouse allegedly authorized California

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Financial to issue additional insured endorsements on St. Paul's

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behalf.

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Crouse had the authority to delegate its agency powers to

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California Financial in the first place.

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Navigators' supplemental brief focuses almost exclusively on

Navigators completely fails to address, however, whether

Section 2349 of the California Civil Code governs an agent's
ability to delegate its powers to a sub-agent:

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An agent, unless specially forbidden by his principal to
do so, can delegate his powers to another person in any
of the following cases, and in no others:

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1. When the act to be done is purely mechanical;

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2. When it is such as the agent cannot himself, and the
sub-agent can lawfully perform;

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3. When it is the usage of the place to delegate such
powers; or,
4. When such delegation is specially authorized by the
principal.

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Cal. Civ. Code § 2349 (emphasis added).

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Navigators has not

from Crouse to California Financial falls within one of these

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categories.

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respond to St. Paul's brief citing a section of St. Paul's letter

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of authority to Crouse specifically forbidding Crouse from

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delegating its agency powers.

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the prior express written approval of [St. Paul], [Crouse] shall

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United States District Court

presented any evidence that the alleged delegation of authority

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For the Northern District of California

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not: . . . Delegate or assign any of the rights or powers conferred

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under this Letter of Authority to any other individual or

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Further, Navigators has not had the opportunity to

ECF No. 105-1, Ex. A at 2 ("Without

entity.").

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For the forgoing reasons, the Court hereby ORDERS Navigators

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to show cause why summary judgment should not be granted in favor

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of St. Paul pursuant to section 2349 of the California Civil Code.

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Navigators should file a supplemental brief on this issue of no

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more than three (3) pages within seven (7) days of this Order.

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Paul may file a supplemental brief of no more than three (3) pages

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in reply within seven (7) days of the filing of Navigators'

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supplemental brief.

St.

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IT IS SO ORDERED.

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Dated: June 26, 2015

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UNITED STATES DISTRICT JUDGE

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