AIX Specialty Insurance Company v. Ferratex, Inc. et al

Filing 40

ORDER by Judge Saundra Brown Armstrong: denying 34 Administrative Motion to Stay Discovery without prejudice to the filing of a motion for a protective order to limit the scope of discovery. This matter is referred to the Chief Magistrate Judge for the assignment of a Magistrate Judge for purposes of resolving any discovery disputes. (ig, COURT STAFF) (Filed on 8/3/2016).

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UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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OAKLAND DIVISION
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AIX SPECIALTY INSURANCE

Case No: C 16-01023 SBA

11 COMPANY, a Delaware corporation,

Plaintiff,

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ORDER DENYING PLAINTIFF’S
MOTION TO STAY DISCOVERY

vs.

14 FERRATEX, INC., a Virginia corporation;

SPINIELLO COMPANIES, a California
15 corporation; and JASON GILMER,
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Defendants.

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Plaintiff AIX Specialty Insurance Company (“Plaintiff”) brings the instant

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declaratory relief and equitable reimbursement action against Defendants FerraTex, Inc.

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(“FerraTex”), Spiniello Companies (“Spiniello”) and Jason Gilmer (“Gilmer”). Plaintiff

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seeks a determination that it has no duty to defend or indemnify FerraTex and Spiniello

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against Gilmer in an underlying personal injury action. See Am. Compl., Dkt. 41. The

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parties are presently before the Court on Plaintiff’s motion to stay discovery. Dkt. 34.

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FerraTex and Spiniello (collectively, “Defendants”) oppose the motion. Dkt. 38. Having

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read and considered the papers filed in connection with this matter and being fully

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informed, the Court hereby DENIES the motion, for the reasons stated below. The Court,

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in its discretion, finds this matter suitable for resolution without oral argument. See Fed. R.

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Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).

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I.

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BACKGROUND
Plaintiff issued FerraTex a commercial general liability insurance policy, which was

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in effect from April 15, 2013 to April 15, 2014 (the “Policy”). Am. Compl. ¶ 8. On or

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about November 20, 2015, Gilmer filed a personal injury action against FerraTex and

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Spiniello, styled as Gilmer v. Spiniello Companies, et al., Case No. C15-02112 (the

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“Underlying Action”), in Contra Costa County Superior Court. Id. ¶¶ 7, 9. Gilmer alleges

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that he suffered a severe injury on November 22, 2013, while walking on a mobile “wet-

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out” conveyer that Ferratex leased from Spiniello. Id. ¶ 9.

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Plaintiff agreed to defend FerraTex in the Underlying Action subject to a reservation

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of rights to deny defense and indemnity coverage. Am. Compl. ¶ 10. In addition, Spinello

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tendered its defense of the Underlying Action to Plaintiff as a purported additional insured

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under the Policy and an indemnitee of FerraTex. Id. ¶ 12. Plaintiff denied Spinello’s

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tender. See McCaslin Decl., ¶ 7 & Ex. D, Dkt. 36.

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II.

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LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 26(b)(1), “[p]arties may obtain

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discovery regarding any nonprivileged matter that is relevant to any party’s claim or

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defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b). This principle is

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subject to limitation. “The court may, for good cause, issue an order to protect a party or

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person from annoyance, embarrassment, oppression, or undue burden or expense,”

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including forbidding discovery or limiting the scope of discovery to certain matters. Fed.

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R. Civ. P. 26(c)(1). “The burden is upon the party seeking the order to ‘show good cause’

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by demonstrating harm or prejudice that will result from the discovery.” Rivera v. NIBCO,

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Inc., 364 F.3d 1057, 1063 (9th Cir. 2004). The motion must also “include a certification

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that the movant has in good faith conferred or attempted to confer with other affected

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parties in an effort to resolve the dispute without court action.” Fed. R. Civ. P. 26(c)(1).

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III.

DISCUSSION

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Plaintiff asserts that it intends to file a motion for partial summary judgment to

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determine its duty to defend. Plaintiff requests a stay of discovery “until the Court rules on
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the duty to defend,” at which time the Court can “reassess the scope of discovery.” Mot.

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at 6. According to Plaintiff, a stay is warranted because “the duty to defend is a question of

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law” to be decided “based on the facts alleged in Gilmer’s complaint, the terms of [the

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Policy] and any extrinsic evidence known to [Plaintiff] at the time of tender.” Id. at 4.

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Plaintiff argues that it will suffer prejudice absent a stay because it will continue paying the

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costs of defending the Underlying Action. Id. at 5.

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As a threshold matter, the instant motion is procedurally defective because Plaintiff

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failed to certify that the parties met and conferred before its filing. In addition to the

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certification requirement of Rule 26(c)(1) of the Federal Rules of Civil Procedure, this

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Court’s Standing Orders require that parties meet and confer prior to filing any motion or

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request. Standing Order No. 4 states:
Meet and Confer Requirement. All parties shall meet and
confer before filing any motion or other non-stipulated request.
Any motion or request shall include a certification, which may
be submitted separately or included in the body of the
document, that the parties have complied with the meet and
confer requirement. The Court may disregard and/or strike any
papers submitted that do not comply with this rule.

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The meet-and-confer requirement is essential to ensure that there is, in fact, a dispute

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requiring judicial intervention. It also conserves the limited time and resources of the Court

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and parties by obviating the filing of unnecessary motions. Based on this procedural defect

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alone, the Court may properly deny Plaintiff’s motion. See Tri-Valley CARES v. U.S.

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Dept. of Energy, 671 F.3d 1113, 1131 (9th Cir. 2012) (“Denial of a motion as the result of a

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failure to comply with local rules is well within a district court’s discretion.”).

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Moreover, the Court finds the substance of Plaintiff’s motion unpersuasive.

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Although Plaintiff seeks a stay of discovery, it is apparent that the parties’ current dispute

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actually concerns the scope of discovery.1 A complete stay of discovery may be

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Specifically, although Plaintiff seeks a stay of discovery, it acknowledges that
Defendants are entitled to some discovery, including extrinsic evidence known to Plaintiff
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acknowledge that interpretation of an insurance policy is a legal question, but oppose an
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appropriate in limited circumstances, e.g., when meaningful attempts at mediation are

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underway. In this case, however, Plaintiff urges a swift judicial determination of its duty to

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defend. The Court finds that the parties should therefore complete all discovery necessary

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to the resolution of that issue straightaway, and declines Plaintiff’s invitation to “reassess”

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the scope of discovery at a later date. See Texas Partners v. Conrock Co., 685 F.2d 1116,

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1119 (9th Cir. 1982) (proceeding on a motion for summary judgment without providing a

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reasonable opportunity for discovery is disfavored).

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IV.

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1.

Plaintiff’s Motion to Stay Discovery is DENIED without prejudice to the

filing of a motion for a protective order to limit the scope of discovery.
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This matter is referred to the Chief Magistrate Judge for the assignment of a

Magistrate Judge for purposes of resolving any discovery disputes.

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3.

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IT IS SO ORDERED.

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Dated: August 3, 2016

UNIT
ED

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S DISTRICT
TE
C
TA
______________________________
SAUNDRA BROWN ARMSTRONG
Senior United States District Judge
DERED
SO OR
IT IS

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This Order terminates Docket No. 34.

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For the reasons stated above, IT IS HEREBY ORDERED THAT:

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CONCLUSION

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