St. Paul Mercury Insurance Company v. Tessera, Inc.

Filing 56

Order by Hon. Ronald M. Whyte granting 52 Motion for Entry of Judgment under Rule 54(b)(rmwlc1, COURT STAFF) (Filed on 9/26/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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SAN JOSE DIVISION
ST. PAUL MERCURY INSURANCE
COMPANY, a Connecticut corporation,

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Case No. C-12-01827 RMW
ORDER GRANTING DEFENDANT
AND COUNTERCLAIMANT
TESSERA, INC.’S MOTION
FOR JUDGMENT ON RULING
PURSUANT TO FEDERAL RULE
OF CIVIL PROCEDURE 54(b)

Plaintiff,

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v.

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TESSERA, INC., a Delaware corporation,

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Defendant.

[Re: Docket No. 52]

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Defendant Tessera, Inc. (“Tessera”), moves for an entry of final judgment pursuant to

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Federal Rule of Civil Procedure 54(b) on this court’s November 30, 2012 order granting St. Paul

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Mercury Insurance Company’s partial motion for summary judgment and denying Tessera’s partial

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motion for summary judgment. See Dkt. No. 48 (“Order”). In the Order, the court held that St. Paul

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has no duty to defend Tessera in the underlying action, Powertech Technology, Inc. v. Tessera, Inc.,

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Case No. 11-06121. Because the court’s ruling on the duty to defend issue, if correct, effectively

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determines the outcome of Tessera’s remaining causes of action, Tessera wishes to immediately

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appeal the court’s ruling and stay all remaining claims in this action pending the outcome of the

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appeal. St. Paul filed an official statement of non-opposition to Tesera’s motion. Dkt. No. 54.

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Because the court finds no just reason to delay Tessera’s appeal, the court GRANTS Tessera’s
ORDER
Case No. C-12-01827 RMW
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motion for final judgment on the November 30, 2012 Order. The court deems this motion proper

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for a decision without a hearing. See Civ. L.R. 7-1(b).

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I. BACKGROUND
Between May 2007 and August 2009, St. Paul issued three insurance policies to Tessera in

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which it agreed to indemnify Tessera and defend it against certain claims. Compl. ¶¶ 5-8, Dkt. No.

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1. The policies do not cover any “injury or damage . . . that result[s] from any actual or alleged

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infringement or violation of . . . Patent [law] . . . [or] Other intellectual property rights or laws.”

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Stip. Re Undisputed Facts (“Stip.”) Ex. A, P000000090. Tessera holds patents to an encapsulation

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process for packaging semiconductor chips and licensed those patents to Power Technology

United States District Court
For the Northern District of California

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Company (“PTI”), a chip packager. On December 6, 2011, PTI brought breach of contract, breach

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of implied covenant of good faith, and fraud claims against Tessera in the underlying action,

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alleging that Tessera violated PTI’s license agreement by naming one of PTI’s customers in a

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United States International Trade Commission Section 337 Investigation (“ITC proceeding”). Stip.

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Exs. F, I. The underlying action between Tessera and PTI is ongoing. On February 12, 2012,

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Tessera notified St. Paul of the underlying action and requested that St. Paul conduct a coverage

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review. Stip. Ex. J. St. Paul agreed to participate in Tessera’s defense in the underlying action, but

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reserved the right to contest its duty to defend and seek reimbursement. Id. Tessera alleges that St.

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Paul neither participated in Tessera’s defense nor reimbursed Tessera for its defense. Answer &

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Counterclaims ¶¶ 36, 59, Dkt. No. 11.

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On April 12, 2012, St. Paul filed the present action against Tessera seeking a declaratory

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judgment that it has no duty to defend Tessera in the underlying action and for reimbursement of the

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fees it has already paid. On May 21, 2012, Tessera answered and brought counterclaims for breach

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of contract, bad faith and declaratory judgment that St. Paul has a duty to defend and indemnify

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Tessera in the underlying action.

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On October 26, 2013, both parties filed cross-motions for partial summary judgment on the

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issue of whether St. Paul has a duty to defend Tessera in the underlying action. The court held that

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nothing in PTI’s complaint in the underlying action, nor any facts known to St. Paul at the time the

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duty to defend would have arisen, could possibly give rise to any covered claim under the policy
ORDER
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agreement between St. Paul and Tessera. 1 Consequently, the court granted St. Paul’s partial motion

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to dismiss and denied Tessera’s partial motion to dismiss.

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Tessera brings the present motion requesting final judgment pursuant to Rule 54(b) on the
court’s partial summary judgment ruling.

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II. ANALYSIS
Federal Rule of Civil Procedure 54(b) provides:

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When an action presents more than one claim for relief—whether as a
claim, counterclaim, crossclaim, or third-party claim—or when multiple
parties are involved, the court may direct entry of a final judgment as to
one or more, but fewer than all, claims or parties only if the court
expressly determines that there is no just reason for delay. Otherwise, any
order or other decision, however designated, that adjudicates fewer than
all the claims or the rights and liabilities of fewer than all the parties does
not end the action as to any of the claims or parties and may be revised at
any time before the entry of a judgment adjudicating all the claims and all
the parties' rights and liabilities.

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United States District Court
For the Northern District of California

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Judgment under this rule is proper when there are multiple claims, at least one of the claims has

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been adjudicated finally, and the court finds no just reason for delay. See Continental Airlines, Inc.

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v. Goodyear Tire & Rubber Co., 819 F.2d 1519, 1524 (9th Cir. 1987). To determine whether there

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is no just reason for delay, the court will consider factors, including “whether the claims under

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review were separable from the others remaining to be adjudicated and whether the nature of the

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claims already determined was such that no appellate court would have to decide the same issues

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more than once even if there were subsequent appeals.” W.L. Gore & Assocs., Inc. v. Int'l Med.

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Prosthetics Research Assocs., Inc., 975 F.2d 858, 862 (Fed. Cir. 1992) (quoting Curtiss–Wright

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Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980)). The court will also consider whether the interest

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of judicial economy would be better served by granting judgment and permitting an immediate

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appeal on the issue of St. Paul’s duty of defend rather than proceeding with the remaining

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The court recognized that the insured need only demonstrate conceivable claims that would fall
within the policy coverage to trigger the duty to defend, see Montrose Chem. Corp. v. Super. Ct., 6
Cal. 4th 287, 295 (1993), but held that none of PTI’s allegations in the underlying action, nor any
extrinsic facts known to the insurer at the time the duty to defend would have arisen, could possibly
support any covered claims for defamation, disparagement, malicious prosecution, or abuse of
process. The court did not reach the issue of whether the intellectual property exclusion in the
policy agreement excuses St. Paul from its duty to defend.
ORDER
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counterclaims such that all disputes could be addressed in a single appeal. Aristocrat Techs. V. Int’l

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Game Tech., No. C–06–03717 RMW, 2010 WL 2486174 (N.D. Cal. June 15, 2010).

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Tessera contends that entry of final judgment with respect to the court’s partial summary

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judgment Order is appropriate under Rule 54(b) because immediate appellate review of the duty to

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defend ruling will facilitate the efficient resolution of the remaining claims and issues in the case or

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lead to settlement. The indemnification, bad faith and reimbursement claims, Tessera argues, all

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turn on whether St. Paul owes coverage obligations to Tessera based on their policy agreement. St.

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Paul does not oppose Tessera’s motion for entry of a final judgment on the court’s duty to defend

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ruling.

United States District Court
For the Northern District of California

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The court agrees that the Ninth Circuit’s ruling on this issue on appeal will likely dictate the

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outcome of all of the parties’ remaining claims, and at a minimum will resolve the threshold

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coverage issue which the Ninth Circuit would not have to revisit. Because the duty to defend issue

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is separable from the remaining claims, has been finally adjudicated by the court, and its ultimate

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resolution will likely dictate the outcome of the ensuing litigation, the court finds no just reason to

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delay final judgment on this ruling. Moreover, St. Paul does not oppose entry of judgment under

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Rule 54(b). Accordingly, the court GRANTS Tessera’s motion and enters final judgment with

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respect to the November 30, 2012 ruling that St. Paul has no duty to defend Tessera in the

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underlying action.

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III. ORDER
For the foregoing reasons, the court GRANTS Tessera’s motion for final judgment pursuant

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to Rule 54(b) and stays the remaining claims pending the outcome of the appeal, assuming the Ninth

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Circuit accepts the appeal.

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Dated: September 26, 2013

_________________________________
RONALD M. WHYTE
United States District Judge

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ORDER
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