D.R. Horton Los Angeles Holding Co., Inc. v. American Safety Indemnity Company et al

Filing 68

ORDER: The Motion for Reconsideration filed by Defendant American Safety Indemnity Company (Doc. 60 ) is denied. Signed by Judge William Q. Hayes on 4/13/2012. (mdc)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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D.R. HORTON LOS ANGELES
HOLDING CO., INC.,

CASE NO. 10CV443 WQH (WMc)
ORDER

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Plaintiff,
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vs.
AMERICAN SAFETY INDEMNITY
COMPANY,

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Defendant.
HAYES, Judge:
The matter before the Court is the Motion for Reconsideration filed by Defendant

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American Safety Indemnity Company. (ECF No. 60).

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I.

Procedural Background

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This action arises out of an insurance dispute regarding coverage under four insurance

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policies (the “Policies”) issued by Defendant American Safety Indemnity Company (“ASIC”)

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to Ebensteiner Co. (“Ebensteiner”).1 The policies at issue in this litigation are: XGI 01-1261-

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003 (“03 policy”) effective from August 1, 2001 through August 1, 2002; XGI 02-1261-004

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(“04 policy”) effective from August 1, 2002 through August 1, 2003, XGI 03-1261-005 (“05

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policy”) effective from August 1, 2003 through August 1, 2004; and ESL 0010410406 (“06

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policy”) effective from August 1, 2004 through August 1, 2005.

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On January 15, 2010, Plaintiff D.R. Horton Los Angeles Holding Co., Inc. (“D.R.

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Ebensteiner Co. is not a party to this action.
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Horton”) filed a Complaint against ASIC which was removed to this Court. (ECF No. 1). The

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Complaint alleges that D.R. Horton was engaged in a real estate development project named

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Canyon Gate and that D.R. Horton entered into a subcontractor agreement with Ebensteiner

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for grading work on the project. Id. at 10. The Complaint alleges that Ebensteiner purchased

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general liability insurance policies from ASIC and named D.R. Horton as an additional insured

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and third-party beneficiary of ASIC’s obligations to Ebensteiner. Id. at 10-11.

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The Complaint alleges that D.R. Horton received several notices to builder and that

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several complaints and cross-complaints were filed against D.R. Horton in the following cases:

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Chang O. Kim, et al. v. City of Santa Clarita, et al., Los Angeles Superior Court Case No.

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BC407614 (the “Kim case”), Canyon Gate Maint. Ass’n v. City of Santa Clarita, et al., Los

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Angeles Superior Court Case No. BC415663 (the “Canyon Gate case”), and Warrick, et al. v.

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City of Santa Clarita, et al., Los Angeles Superior Court Case No. PC046442 (the “Warrick

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case”) (collectively “the underlying actions”). The Complaint alleges that D.R. Horton made

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claims for benefits under the policies regarding the underlying actions and that ASIC declined

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coverage and refused to defend D.R. Horton.

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On April 12, 2010, ASIC filed an Answer. (ECF No. 4). On October 22, 2010, ASIC

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filed a Counterclaim against D.R. Horton asserting a claim for declaratory relief. ASIC asserts

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that there is no potential coverage for Ebensteiner and that there is no potential coverage for

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D.R. Horton as an additional insured. (ECF No. 17).

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On April 6, 2011, D.R. Horton filed a Motion for Partial Summary Judgment. (ECF No.

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25). On May 2, 2011, ASIC filed an Opposition. (ECF No. 41). On May 9, 2011, D.R.

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Horton filed a Reply. (ECF No. 42). On May 20, 2011, D.R. Horton filed a Request for

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Judicial Notice in Support of its Motion for Partial Summary Judgment. (ECF No. 44).

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On April 15, 2011, ASIC filed a Motion for Summary Judgment, or Alternatively

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Partial Summary Judgment. (ECF No. 33). On May 2, 2011, D.R. Horton filed an Opposition

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(ECF Nos. 39-40). On May 9, 2011, ASIC filed a Reply. (ECF No. 43).

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On May 20, 2011, D.R. Horton filed a Request for Judicial Notice. (ECF No. 44). On
May 23, 2011, ASIC filed an Opposition. (ECF No. 45).
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On May 27, 2011, the Court heard oral argument on the motions. (ECF No. 46).

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On August 31, 2011, ASIC filed a Supplemental Brief. (ECF No. 54). On September

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14, 2011, D.R. Horton filed an Opposition to the Supplemental Brief. (ECF No. 55).

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On January 5, 2012, this Court issued an Order granting D.R. Horton’s Motion for

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Partial Summary Judgment (ECF No. 25) as to D.R. Horton’s claims that ASIC had a duty to

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defend D.R. Horton under the 04 and 05 policies in the Chang O. Kim, et al. v. City of Santa

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Clarita, et al., Los Angeles Superior Court Case No. BC407614; Canyon Gate Maint. Ass’n

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v. City of Santa Clarita, et al., Los Angeles Superior Court Case No. BC415663; and Warrick,

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et al. v. City of Santa Clarita, et al., Los Angeles Superior Court Case No. PC046442 cases

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and related notices to builder. The Court denied D.R. Horton’s Motion for Partial Summary

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Judgment in all other respects. The Court also granted ASIC’s Motion for Summary Judgment

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(ECF No. 33) as to D.R. Horton’s third claim for declaratory relief and denied the motion in

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all other respects. (ECF No. 58).

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On January 19, 2012, ASIC filed a Motion for Reconsideration. (ECF Nos. 60-61, 64).

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On February 7, 2012, D.R. Horton filed an Opposition. (ECF No. 65). On February 14, 2012,

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ASIC filed a Reply. (ECF No. 66).

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II.

Contentions of the Parties

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ASIC seeks reconsideration of the Court’s finding that ASIC has a duty to defend D.R.

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Horton under the 04 and 05 policies pursuant to Federal Rule of Civil Procedure 59(e) or

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60(b). ASIC does not contend that there has been an intervening change in the law or that

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there is new evidence. ASIC contends that reconsideration is necessary to correct clear error

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or to prevent manifest injustice. ASIC contends that the Court’s decision “is based on an

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inappropriate leap of reasoning that is inconsistent with the applicable burden of proof” on the

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grounds that D.R. Horton did not prove that it is an additional insured under the 04 and 05

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policies. (ECF No. 60-2 at 3).

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liability until after it sold the real property which occurred after the policies expired. ASIC

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contends that it showed that Ebensteiner had graded all of the land within the Canyon Gate

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project. ASIC contends that the Court incorrectly applied the j(5) and (6) exclusions and that

ASIC contends that D.R. Horton did not face any legal

ASIC did not owe a duty to defend based on damage to the project while Ebensteiner’s work
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10cv443 WQH (WMc)

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was ongoing. ASIC contends that the WRAP policies apply and prevent coverage in this case

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on the grounds that “[t]he work at issue in this case is not Ebensteiner’s grading work ... [;

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r]ather, in this additional insured coverage case, D.R. Horton seeks coverage for liability for

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damage purportedly to the work of others including itself.” Id. at 11.

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D.R. Horton contends that “ASIC’s motion for reconsideration does nothing but rehash

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the same arguments that it has made multiple times ....” (ECF No. 65 at 5). D.R. Horton

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contends that the Court properly resolved the legal dispute regarding the interpretation of the

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“on file” requirement for an additional insured in favor of coverage. Id. D.R. Horton contends

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that the Court properly concluded that the 04 and 05 policies provide coverage for property

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damage that occurred during the policy period. D.R. Horton contends that ASIC has not

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eliminated the potential form coverage by “assum[ing] ... that any property damage must have

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been to Ebensteiner’s ‘work’ or ‘product’ because Ebensteiner must have graded the entirety

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of the Canyon Gate project.” Id. at 11. D.R. Horton contends that the Court properly found

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that the j(5) and (6) exclusions did not eliminate the duty to defend because the underlying

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complaints allege damage to property that Ebensteiner did not work on. D.R. Horton contends

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that the Court correctly found that Ebensteiner’s work was not insured under the WRAP

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policies.

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III.

Discussion

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“A motion for reconsideration of summary judgment is appropriately brought under

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Rule 59(e).” Backland v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 1985) (citing Fed. R. Civ.

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P. 59(e)). A motion for reconsideration pursuant to Federal Rule of Civil Procedure 59(e) is

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properly denied if the moving party fails to present new arguments. See Fuller v. M.G.

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Jewelry, 950 F.2d 1437, 1442 (9th Cir. 1991) (denying a motion for reconsideration under

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Fed. R. Civ. P. 59(e), regarding altering a judgment, because the plaintiff “presented no

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arguments which the court had not already considered and rejected.”); Taylor v. Knapp, 871

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F.2d 803, 805 (9th Cir. 1989) (finding that “[b]ecause [plaintiff] presented no arguments in his

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motion for relief from judgment [pursuant to Fed. R. Civ. P. 59] that had not already been

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raised in opposition to summary judgment, the trial court properly denied his motion.”;
Backland, 778 F.2d at 1388 (“The motion [pursuant to Fed. R. Civ. P. 59] was properly denied
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here because ... it presented no arguments that had not already been raised in opposition to

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summary judgment.”).

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In this case, ASIC as failed to present any arguments in the motion for reconsideration

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which were not previously raised in the briefing on the motions for summary judgment. See

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(ECF Nos. 33 at 6:20-8:9, 14:4-17:18; 41 at 2:2-4, 18:25-21:7, 21-26; 43 at 4:4-5, 5:14-6:17;

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54 at 3:17-27). The Court considered and rejected ASIC’s arguments. See (ECF No. 58). The

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Motion for Reconsideration pursuant to Fed. R. Civ. P. 59(e) is DENIED.

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“Rule 60(b) allows a party to seek relief from a final judgment ... under a limited set of

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circumstances.” Gonzalez v. Crosby, 545 U.S. 524, 528 (2005) (citing Fed. R. Civ. P. 60(b)).

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“On motion and just terms, the court may relieve a party ... from a final judgment, order, or

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proceeding for ... [any] reason that justifies relief.” Fed. R. Civ. P. 60(b)(6).

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Reconsideration is an “extraordinary remedy, to be used sparingly in the interests of

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finality and conservation of judicial resources.” Kona Enters., Inc. v. Estate of Bishop, 229

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F.3d 877, 890 (9th Cir. 2000); see also United Natn’l Ins. Co. v. Spectrum Worldwide, Inc.,

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555 F.3d 772, 780 (9th Cir. 2009). “[A] motion for reconsideration should not be granted,

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absent highly unusual circumstances, unless the district court is presented with newly

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discovered evidence, committed clear error, or if there is an intervening change in the

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controlling law.” Marlyn Natraceuticals , Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873,

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880 (9th Cir. 2009) (citing 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.

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1999)).

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With regard to whether D.R. Horton is an additional insured under the policies, the

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Court stated: “The terms of the policies do not define ‘on file’ within the meaning of form 98

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15, which weighs in favor of coverage. See Golden Eagle Ins. Co. v. Insurance Co. of the West,

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99 Cal. App. 4th 837, 845 (2002) .... The Court finds that there is at least a factual dispute

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regarding whether the Canyon Gate project was ‘on file’ with ASIC pursuant to the inclusion

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of the ‘ASIC - ES 98 13 08 99 Endorsement - Waiver of Subrogation’ form in the 03 policy.

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See Montrose Chemical Corp. v. Superior Court, 6 Cal.4th 287, 295 n.3 (1993) (finding that

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there was a duty to defend although the parties factually disputed whether the plaintiff was a
named insured under the policy).” (ECF No. 58 at 15-16). With regard to whether D.R.
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Horton faced legal liability, the Court found that the policy provides coverage for “‘property

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damage’ [that] occur[ed] during the policy period.” Id. at 21 (citing the policies). With regard

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to whether ASIC showed that Ebensteiner graded all of the land within the Canyon Gate

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project and whether the Court properly applied the j(5) and (6) exclusions, the Court stated:

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“The Kim, Canyon Gate, and Warrick plaintiffs allege damage beyond the repair and

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replacement of the grading work. The Kim, Canyon Gate, and Warrick plaintiffs allege damage

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to their land and property caused by the grading work at the Canyon Gate project. A claim for

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repair of damage to land or property other than the grading work itself is not excluded by j(5)

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and j(6).... ASIC has failed to show that at the time it declined to provide a defense, ASIC

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relied upon information that showed that Ebensteiner had graded all of the land within the

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Canyon Gate project.” Id. at 23-24. The Court concluded that “ASIC has failed to show that

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there was no ‘potential’ that Ebensteiner’s grading work caused damage to land or property

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which would not be excluded by j(5) and j(6).” Id. at 24. With regard to whether the WRAP

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policies apply and prevent coverage in this case, the Court found that: “The 04, 05, and 06

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policies contain a ‘Wrap-up Exclusion’ which provides: ‘This insurance does not apply to any

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work insured under a consolidated (Wrap up) Insurance Program ....’ The ‘Wrap-up’ policies

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insure D.R. Horton, not Ebensteiner. The work at issue in this case is Ebensteiner’s grading

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work.” Id. at 30 (citations omitted). Defendant ASIC has failed to establish any grounds for

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reconsideration. The Motion for Reconsideration pursuant to Fed. R. Civ. P. 60(b) is

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DENIED.

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IV.

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Conclusion
IT IS HEREBY ORDERED that the Motion for Reconsideration filed by Defendant

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American Safety Indemnity Company (ECF No. 60) is DENIED.

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DATED: April 13, 2012

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WILLIAM Q. HAYES
United States District Judge

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