Companion Property and Casualty Group v. Consolidated Agent Partners et al

Filing 210

ORDER Plaintiff's motion for partial summary judgment 170 is denied. Faust's motion for summary judgment 165 is granted as to plaintiff's claims of breach of fiduciary duty, constructive fraud and detriment al reliance and is denied in all other respects.Sky High's motion for summary judgment 168 is granted as to plaintiff's claim of detrimental reliance and denied in all other respects. Signed by Judge Howard D. McKibben on 6/24/14. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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COMPANION PROPERTY AND CASUALTY
GROUP,

)
)
)
Plaintiff,
)
)
vs.
)
)
CONSOLIDATED AGENCY PARTNERS, dba )
MENICUCCI INSURANCE ASSOCIATES, )
KAREN FAUST, RISK PLACEMENT
)
SERVICES, INC. dba RISK PLACEMENT )
SERVICES, INSURANCE BROKERS, JOAN )
VASCONES, GLORIA LAM, SKY HIGH
)
SPORTS, LLC, SKY HIGH SPORTS
)
ORANGE COUNTY OPERATIONS, LLC,
)
and ROLLAND WEDDELL, et al.
)
)
Defendants.
)
_________________________________ )

3:12-cv-00595-HDM-VPC
ORDER

Plaintiff Companion Property and Casualty Group’s

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(“plaintiff”) first amended complaint (#46) filed on March 23,

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2013, asserts fourteen causes of action against ten defendants

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based on their alleged involvement in procuring a workers’

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compensation policy from plaintiff for Sky High Sports, an entity
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operating indoor trampoline centers.

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and answered plaintiff’s complaint.

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counterclaims against plaintiff.

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All defendants have appeared
Sky High has asserted three

Plaintiff has settled its claims against defendants Pinnacle

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Underwriters, Highpoint Risk Services, and according to a

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stipulation filed by the parties (#155) Risk Placement Services,

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Joan Vascones, and Gloria Lam (collectively “RPS”).1

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also reached a settlement with defendants Consolidated Agency

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Partners, dba Menicucci Insurance Associates and Karen Faust

Plaintiff has

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(collectively “CAP”), which is contingent on the court’s

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determination that the settlement was reached in good faith.

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motion for good faith settlement determination remains pending.

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Presently before the court are several motions for summary

CAP’s

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judgment.

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judgment on all of plaintiff’s claims (#165).

Plaintiff has

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responded (#175), and CAP has replied (#181).

Defendants Sky High

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Sports, LLC, Sky High Sports Orange County Operations, LLC, and

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Rolland Weddell (collectively “Sky High”) have filed a motion for

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summary judgment on all of plaintiff’s claims as well as on their

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counterclaims and one of their affirmative defenses (#168).

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Plaintiff has responded (#174), and Sky High has replied (#180).

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Finally, plaintiff has filed a motion for partial summary judgment

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on its claim of negligent misrepresentation (#170).

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have opposed (#177, #178) and plaintiff has replied (#182).2

The CAP defendants have filed a motion for summary

Defendants

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The court has granted motions for good faith settlement filed by
Highpoint and Pinnacle. As of yet, RPS has not filed any such motion.
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The parties have also filed several motions in limine. As the motions
for summary judgment can be decided without reference to the objected
evidence, those motions are not herein considered.

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Facts
Sky High Sports operates recreational indoor trampoline

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centers.

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Opp’n Pl. Mot. Summ. J. Ex. C (Weddell Dep. 6-16); Sky High Mot.

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Summ. J. Ex. S at 2)).

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compensation coverage was issued under the “amusement” class code.3

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(See Pl. Mot. Summ. J. Ex. 1 (Raymond Dep. 11-12); CAP

Before 2010, Sky High’s workers’

(Pl. Mot. Summ. J. Ex. 2 (Lewis Dep. 19-20, 40-41, 43)).

Sky High

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owner and managing member Rolland Weddell (“Weddell”) met with

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insurance broker Karen Faust (“Faust”) of Menicucci Insurance

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Associates (“Menicucci”) to discuss Sky High’s insurance needs,

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including workers’ compensation.4

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Dep. 134-36); CAP Mot. Summ. J. Ex. M (Weddell Dep. 16); id. Ex. D

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(Faust Dep. 31-32)).

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discussed the nature of Sky High’s business.

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said Sky High employees do not teach people how to do back flips or

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tricks on the trampolines and do not perform such in the scope of

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their duties.5

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77); Pl. Mot. Summ. J. Ex. 5 (Wedell Dep. 78)).

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whether employees jump up and down on the trampolines.

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Summ. J. Ex. M (Weddell Dep. 77)).

(Id. at 24; id. Ex. 5 (Weddell

During their conversation, Faust and Weddell
Faust claims Weddell

(CAP Mot. Summ. J. Ex. D (Faust Dep. at 41-42, 76Faust did not ask
(CAP Mot.

However, Weddell says he told

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The agent handling Sky High’s workers’ compensation policy before 2010
had submitted Sky High’s applications under the amusement class code after
consultation with the Workers’ Compensation Insurance Rating Bureau of
California (“WCIRB”). (Pl. Mot. Summ. J. Ex. 2 (Lewis Dep. 16, 28-29)).
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Menicucci had already by that time placed personal and commercial
policies for Weddell, as well as some policies for Sky High. (Pl. Mot.
Summ. J. Ex. 4 (Faust Dep. 21-22); CAP Mot. Summ. J. Ex. M (Weddell Dep. 34,
117)).
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Weddell does not recall Faust asking whether employees do flips, but
he would have told her “definitely not.” (CAP Mot. Summ. J. Ex. M (Weddell
Dep. 48).

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Faust that employees “travel on the trampolines and . . . in order

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to travel they jump on the trampolines”; he also told her that

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employees would “perch” on pads separating the trampolines until

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they have to move.

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78)).

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employees.

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site, she did not recall seeing any AIRobics training depicted on

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the site.

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213-14)).

(Pl. Mot. Summ. J. Ex. 5 (Weddell Dep. 48, 76-

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Faust did not visit any Sky High centers or interview any
(Id. at 32-33, 37, 40)).

While she did visit the web

(CAP Mot. Summ. J. Ex. D (Faust Dep. 37-40, 72, 124,

Faust believed that Sky High’s classification should be sports

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and fitness instead of amusement.

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id. Ex. 4 (Faust Dep. 37)).

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was significantly less than the premium with an amusement class

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code.

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that the premium for amusement was 2.5 times more expensive than

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that of sports and fitness).

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High’s workers’ compensation coverage.

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(See Pl. Mot. Summ. J. Ex. 6;

The premium with a fitness class code

(Pl. Mot. Summ. J. Ex. 5 (Weddell Dep. 135-36) (testifying

Weddell asked Faust to place Sky
(Id.)

Faust prepared an “Acord 125,” an application for workers’

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compensation insurance.

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In the “Nature of Business/Description of Operations” box, she

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wrote: “Sports and fitness facility using trampolines.

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are used at the front desk for check, monitoring wrist bands for

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time, food area, maintenance.

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on the trampolines.”6

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Information,” Faust included the fitness class code.

(CAP Mot. Summ. J. Ex. D (Faust Dep. 99).

Employees

They do not teach nor are they out

(Pl. Mot. Summ. J. Ex. 3A).

Under “Rating
(Id.)

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In stating that employees “do not teach nor are they out on the
trampolines,” Faust says she intended to convey that “employees are not on
the trampoline teaching people how to do jumps or tricks.” (CAP Mot. Summ.
J. Ex. D (Faust Dep. 84-86)).

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Finally, she represented that Sky High did not have “any policy or

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coverage declined, canceled, or non-renewed during the prior 3

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years,” and that no work was performed “underground or above 15

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feet.”

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(Id.)

Faust emailed Sky High’s application to insurers and wholesale

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brokers, including defendant RPS.

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Faust noted that the policy had been written under the “amusement”

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code but that she felt it had been misclassed and should be

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“classed in Physical Fitness.”

(See id. Ex. 6).

(Id.)

In her emails,

She stated that employees

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are not on trampolines unless someone needs help, that they do not

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provide any training or officiating, and that although Sky High

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offers Airobics and dodge ball, employees stand on the “catwalk”

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and call out moves and do not participate nor go out on the

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trampolines.7

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“information on the business.”

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(Id.)

She pointed to Sky High’s web site for
(Id.)

Several insurers declined to quote. (Pl. Mot. Summ. J. Ex. 4

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(Faust Dep. at 205-06)).

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had trampolines and the losses showed “some claims where employees

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jumped off the trampolines and injured themselves.”

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7).

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One stated it would pass because Sky High

(Id.; id. Ex

RPS forwarded the application to defendant Pinnacle, which

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forwarded the application to Dallas National. (CAP Mot. Summ. J.

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Ex. P; id. Ex. A (Leatzow Dep. 52); id. Ex. N (Lam Dep. 21)).

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Dallas National, acting as plaintiff’s general agent, underwrote

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Weddell does not recall telling Faust that employees would lead
AIRobics classes by calling out moves from the separator pads. (Id. Ex. M
(Weddell Dep. 77)). However, he did tell her employees “don’t participate.”
(Id.) Faust appears to admit she assumed employees called out AIRobics moves
from “catwalks” based on her conversation with Weddell. (CAP Mot. Summ. J.
Ex. D (Faust Dep. 80-81)).

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the policy, bound coverage and issued Sky High a workers’

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compensation policy with effective dates of September 21, 2010, to

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September 21, 2011.

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Sky High Mot. Summ. J. Ex. C.; id. Ex. H).

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(CAP Mot. Summ. J. Ex. B (Hirsch Dep. 43-47);

Jerry Sam of Dallas National reviewed the application and made

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the final decision to bind coverage.

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Dep. 17-18, 27)).

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underwriting.”

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to the estimated premium to determine if the numbers fit “in the

(CAP Mot. Summ. J. Ex. C (Sam

Sam described his review as “almost like box

(Id. at 52-53)).

He compared the estimated losses

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box”; as the “loss run ratio” (estimated losses to estimated

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premium) was under 40 percent, Sam issued the policy without

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further investigation.8

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66)).

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claims – were available to Sam, he did not review them.

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at 50, 159, 166); id. Ex. F).

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contained some claims possibly involving trampolines.

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Faust’s email did not make it into Dallas National’s file and

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therefore was not considered by Sam.

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190)).

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occasionally be on the trampolines in the course of maintenance,

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cleaning, or assisting customers, and that they would engage in

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“low exposure jumping,” he testified that had the application

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stated employees were on the trampolines, he would have

(Id. at 31-32, 52-53, 83, 161-62, 164-

Although Sky High’s “loss runs” – a history of prior loss
(See id.

The loss runs available to Sam
(Id. Ex. F).

(Id. Ex. C (Sam Dep. at 174,

While Sam assumed that employees would at least

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The estimated premium is based in part on the class code. Plaintiff
argues that the code is dictated by “state government” – and thus that
Faust’s selection of the “fitness” rating was a material misrepresentation.
Defendants argue that insurers are not bound by the ratings of the WCIRB and
are responsible for selecting the appropriate code.
Thus, they argue,
Faust’s selection of the “fitness” code was merely a suggestion as to what
she believed the appropriate code should be.

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investigated further, and had he known employees were jumping on

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trampolines, he would not have issued the policy.

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108-09, 121-30).

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(Id. at 93-94,

On July 6, 2011, Faust prepared and submitted a renewal

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application.

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application was in all material respects identical to the original

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application.9

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information.

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id. Ex. C (Sam Dep. 64, 66, 82-83, 209-12, 215)).

(See Pl. Mot. Summ. J. Ex. 3D).

(See id.)

The renewal

Faust also submitted updated loss run

(See CAP Mot. Summ. J. Ex. T; id. Ex. U; id. Ex K;
The updated loss

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runs contained some injuries possibly related to the trampolines.

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(Sky High Mot. Summ. J. Ex. K).

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file at the time of renewal was a document suggesting Sky High had

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been classified under “amusement” in the past.

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Ex. C (Sam Dep. 182-85); id. Ex. F; Sky High Mot. Summ. J. Ex. E).

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Plaintiff renewed the policy and bound coverage from September 21,

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2011, to September 21, 2012. (Sky High Mot. Summ. J. Ex. N).

Available in Dallas National’s

(CAP Mot. Summ. J.

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On October 3, 2011, Sky High employee Jake Likich became

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paralyzed when, while trying to perform a trick on the trampoline,

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he landed on his head, upper back and neck area instead of on his

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back.

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Likich had been on duty at the time and was jumping with other Sky

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High employees who were off the clock, including Sydney Reeve.

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(CAP Mot. Summ. J. Ex. E (Reeve Dep. 28)).

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been practicing AIRobics moves, Reeve testified that the trick he

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had attempted was not part of being an AIRobics instructor.

(Pl. Mot. Summ. J. Ex. 13; CAP Opp’n Ex. I (Reeve Dep. 27)).

Although Likich had

(CAP

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Sky High asserts that no one from Sky High ever signed the renewal
application. Sky High also argues that it was not a “renewal” application
but an entirely new application.

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Mot. Summ. J. Ex. E (Reeve Dep. 26-28, 39-40)).

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claim under the workers’ compensation policy issued by plaintiff.

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Plaintiff has now settled Likich’s workers’ compensation proceeding

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and has agreed to pay him a total $8 million.

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Likich made a

(See Doc. #206).

Plaintiff asserts the applications submitted by Faust

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materially misrepresented the nature of Sky High’s business,

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including the extent to which employees were on the trampolines.

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Following the incident, plaintiff canceled Sky High’s workers’

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compensation coverage mid-term.

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J. Ex. 9).

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(Pl. Opp’n to Sky High Mot. Summ.

Standard

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This lawsuit followed.

“The court shall grant summary judgment if the movant shows

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that there is no genuine issue as to any material fact and the

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movant is entitled to judgment as a matter of law.”

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P. 56(a).

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issue of material fact lies with the moving party, and for this

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purpose, the material lodged by the moving party must be viewed in

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the light most favorable to the nonmoving party.

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Kress & Co., 398 U.S. 144, 157 (1970); Martinez v. City of Los

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Angeles, 141 F.3d 1373, 1378 (9th Cir. 1998).

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fact is one that affects the outcome of the litigation and requires

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a trial to resolve the differing versions of the truth.

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Sheet Metal Workers Int’l Ass’n, 804 F.2d 1472, 1483 (9th Cir.

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1986); S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir.

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1982).

Fed. R. Civ.

The burden of demonstrating the absence of a genuine

Adickes v. S.H.

A material issue of

Lynn v.

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Once the moving party presents evidence that would call for

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judgment as a matter of law at trial if left uncontroverted, the

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respondent must show by specific facts the existence of a genuine
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issue for trial.

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250 (1986).

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sufficient evidence favoring the nonmoving party for a jury to

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return a verdict for that party.

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colorable, or is not significantly probative, summary judgment may

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be granted.”

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of evidence will not do, for a jury is permitted to draw only those

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inferences of which the evidence is reasonably susceptible; it may

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not resort to speculation.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

“[T]here is no issue for trial unless there is

If the evidence is merely

Id. at 249-50 (citations omitted).

“A mere scintilla

British Airways Bd. v. Boeing Co., 585

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F.2d 946, 952 (9th Cir. 1978); see also Daubert v. Merrell Dow

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Pharmaceuticals, Inc., 509 U.S. 579, 596 (1993) (“[I]n the event

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the trial court concludes that the scintilla of evidence presented

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supporting a position is insufficient to allow a reasonable juror

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to conclude that the position more likely than not is true, the

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court remains free . . . to grant summary judgment.”).

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“[i]f the factual context makes the non-moving party’s claim of a

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disputed fact implausible, then that party must come forward with

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more persuasive evidence than otherwise would be necessary to show

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there is a genuine issue for trial.”

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Stanewich, 142 F.3d 1145, 1149 (9th Cir. 1998) (citing Cal.

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Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818

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F.2d 1466, 1468 (9th Cir. 1987)).

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unsupported by factual data cannot defeat a motion for summary

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judgment.

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Moreover,

Blue Ridge Ins. Co. v.

Conclusory allegations that are

Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).

If the nonmoving party fails to present an adequate opposition

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to a summary judgment motion, the court need not search the entire

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record for evidence that demonstrates the existence of a genuine

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issue of fact.

See Carmen v. San Francisco Unified Sch. Dist., 237
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F.3d 1026, 1029-31 (9th Cir. 2001) (holding that “the district

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court may determine whether there is a genuine issue of fact, on

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summary judgment, based on the papers submitted on the motion and

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such other papers as may be on file and specifically referred to

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and facts therein set forth in the motion papers”).

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court need not “scour the record in search of a genuine issue of

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triable fact,” but rather must “rely on the nonmoving party to

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identify with reasonable particularity the evidence that precludes

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summary judgment.”

The district

Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.

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1996) (quoting Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th

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Cir.1995)).

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an opportunity to assist the court in understanding the facts.

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if the nonmoving party fails to discharge that burden–for example

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by remaining silent–its opportunity is waived and its case

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wagered.”

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(6th Cir. 1992).

“[The nonmoving party’s] burden to respond is really
But

Guarino v. Brookfield Twp. Trustees, 980 F.2d 399, 405

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Finally, if the parties file cross-motions for summary

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judgment, the court must consider each party’s motion separately

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and determine whether that party is entitled to a judgment under

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Rule 56.

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the evidence offered in support of each cross-motion.

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Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132,

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1136-37 (9th Cir. 2001).

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Analysis

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In making these determinations, the court must evaluate
Fair Housing

As an initial matter, plaintiff and CAP agree that Nevada law

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applies to this case.

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CAP Mot. 15).

(See CAP Mot. Summ. J. 16-18;

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Pl. Opp’n to

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I. Breach of Fiduciary Duty

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Plaintiff’s claim of breach of fiduciary duty is asserted

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against CAP.
“A breach of fiduciary duty claim seeks damages for injuries

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that result from the tortious conduct of one who owes a duty to

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another by virtue of the fiduciary relationship.”

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Mushkin, 199 P.3d 838, 843 (Nev. 2009).

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exists between two persons when one of them is under a duty to act

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for or to give advice for the benefit of another upon matters

Stalk v.

A “fiduciary relation

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within the scope of the relation.”

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fiduciary duty claim, the plaintiff must establish: “(1) the

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existence of a fiduciary duty; (2) breach of that duty; and (3) the

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breach proximately caused the damages.”

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Partners, LLC, 595 F. Supp. 2d 1152, 1162 (D. Nev. 2009).

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Id.

To prevail on a breach of

Klein v. Freedom Strategic

The complaint alleges CAP owed a fiduciary duty “by virtue of

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[its] role as insurance agent[] and broker[]” and that it owed

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plaintiff “a duty to adequately, competently, and faithfully place

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insurance coverage with and through” plaintiff.

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did not owe any such duty to plaintiff.

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CAP argues that it

The record reflects that in all material respects, CAP acted

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on Sky High’s behalf as Sky High’s agent.

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Ins. Co., 329 S.C. 522, 530, 496 S.E.2d 417, 422 (Ct. App. 1997)

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(“Generally, an insurance broker is the agent of the insured, not

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the insurer.”).

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in any way on plaintiff’s behalf, or that plaintiff had any

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relationship with CAP, contractual or otherwise.

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Summ. J. Ex. B (Hirsch Dep. 26)).

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that CAP, acting as the agent for the insured, was under a duty to

See Hiott v. Guar. Nat.

Plaintiff has presented no evidence that CAP acted

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(See CAP Mot.

There is therefore no evidence

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act for or to give advice for the benefit of plaintiff, the

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insurer.

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2d 354, 381 (S.D.N.Y. 2009) (finding as a matter of law that broker

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could not be found to owe insurer a fiduciary duty because “[a]s a

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broker, he is properly understood as the agent of the insured . . .

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and not the insurer”).

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duty owed by a broker toward an insured, it therefore follows that

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a broker does not owe any duty toward an insurer with which the

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broker has no relationship and on whose behalf the broker has not

See Kramer v. Lockwood Pension Servs., Inc., 653 F. Supp.

Further, as Nevada has not recognized a

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acted.

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30, 32 (9th Cir. 2008) (unpublished disposition).

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See CBC Fin., Inc. v. Apex Ins. Managers, LLC, 291 F. App’x

Plaintiff’s opposition completely fails to establish the

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existence of a fiduciary relationship between plaintiff and CAP.

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It does not even directly argue such a relationship exists.

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fact, not one of the cases cited in the section of plaintiff’s

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opposition devoted to this claim involves a claim of breach of

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fiduciary duty or a special relationship, and the one case that

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mentions fiduciary duty does so to make clear that no such duty is

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owed by a broker to an insurer where the broker is not the

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insurer’s agent.

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Cal. App. 4th 116, 124, 21 Cal. Rptr. 3d 115, 121 (2004) (internal

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punctuation omitted) (“Since a broker that is not the insurer’s

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agent owes no fiduciary duty to the insurer, the broker is not

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liable for an alleged failure to reveal known facts.”).10

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In

See Century Sur. Co. v. Crosby Ins., Inc., 124

Accordingly, CAP is therefore entitled to summary judgment on

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Although not argued by the plaintiff in its opposition, those cases
involving “dual agency” cited in earlier briefs are inapposite, as there is
no evidence that CAP acted on plaintiff’s behalf in any way.

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the fiduciary duty claim.

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II. Constructive Fraud

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Plaintiff asserts a claim of constructive fraud against CAP.

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“Constructive fraud is the breach of some legal or equitable duty

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which, irrespective of moral guilt, the law declares fraudulent

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because of its tendency to deceive others or to violate

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confidence.”

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Constructive fraud requires a confidential or fiduciary

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relationship, which “exists when one reposes a special confidence

Long v. Towne, 639 P.2d 528, 529-30 (Nev. 1982).

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in another so that the latter, in equity and good conscience, is

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bound to act in good faith and with due regard to the interests of

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the one reposing the confidence.”

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Id.

As with the breach of fiduciary duty claim, CAP argues that no

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special or confidential relationship exists between it and

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plaintiff.

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plaintiff has failed to show material issues of fact exist that

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support a constructive fraud claim.

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summary judgment will be granted as to plaintiff’s constructive

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fraud claim.

Thus, as with the breach of fiduciary duty claim,

Accordingly, CAP’s motion for

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III. Detrimental Reliance

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Plaintiff concedes that summary judgment should be granted as

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to this claim.

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IV. Concert of Action

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CAP moves for summary judgment on a claim of “concert of

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action.”

However, such a claim is not included in plaintiff’s

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first amended complaint, and the amended complaint superseded

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plaintiff’s original complaint.

Valadez-Lopez v. Chertoff, 656

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F.3d 851, 857 (9th Cir. 2011).

Accordingly, CAP’s arguments in
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this regard are moot.

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V. Weddell in his Individual Capacity

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Sky High’s motion to dismiss Weddell in his individual

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capacity is denied without prejudice.

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VI. All Other Claims and Defenses

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As to all remaining claims, counterclaims, and affirmative

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defenses, the court finds that there are either triable issues of

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material fact or that the moving party has failed to show it is

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entitled to judgment as a matter of law.

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therefore be denied as to those claims.

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Conclusion

Summary judgment will

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In accordance with the foregoing, IT IS ORDERED:

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1. Plaintiff’s motion for partial summary judgment (#170) is

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DENIED;

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2. Faust’s motion for summary judgment (#165) is GRANTED as to

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plaintiff’s claims of breach of fiduciary duty, constructive fraud,

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and detrimental reliance and is DENIED in all other respects; and

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3. Sky High’s motion for summary judgment (#168) is GRANTED as

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to plaintiff’s claim of detrimental reliance and DENIED in all

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other respects.

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IT IS SO ORDERED.

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DATED: This 24th day of June, 2014.

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____________________________
UNITED STATES DISTRICT JUDGE

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