Rockhill Insurance Companies v. CSAA Insurance Exchange et al
Filing
118
ORDER granting Rockhill's ECF No. 88 Motion for Summary Judgment on Rockhill's Amended Complaint; denying CSAA's ECF No. 90 Motion for Summary Judgment on its counterclaims; denying as moot Rockhill's ECF No. 99 Motion to Strike; directing Clerk to enter judgment in favor of the plaintiff, Rockhill, on its Amended Complaint and against the defendants, CSAA and Premier, on their Counterclaims. Signed by Judge Howard D. McKibben on 8/9/2019. (Copies have been distributed pursuant to the NEF - KR)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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ROCKHILL INSURANCE COMPANIES,
Plaintiff,
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ORDER
vs.
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3:17-cv-00496-HDM-WGC
CSAA INSURANCE EXCHANGE, et al.,
Defendants.
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Pending
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before
the
court
are
cross-motions
for
summary
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judgment.
On June 6, 2019, plaintiff Rockhill Insurance Companies
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(“Rockhill”) filed a motion for summary judgment (ECF No. 88).
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Defendant CSAA Insurance Exchange (“CSAA”) filed a response (ECF
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No. 105), which was joined by defendant Premier Restoration and
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Remodel, Inc. (“Premier”) (ECF No. 109), and Rockhill replied (ECF
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No. 114).
On June 7, 2019, CSAA filed a motion for summary judgment
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(ECF No. 90), which was joined by Premier (ECF No. 108).
Rockhill
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responded (ECF No. 104), and CSAA replied (ECF No. 113).
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parties’ motions are thus ripe for judgment.
The
Also pending before the court is Rockhill’s motion to strike
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(ECF No. 99).
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(ECF No. 112).
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//
CSAA responded (ECF No. 111), and Rockhill replied
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I.
BACKGROUND
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CSAA (defendant/counter claimant) is a homeowners’ insurer.
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Premier
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contractor, which CSAA hired to perform water restoration and mold
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remediation services at the home of one of its insureds.
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(plaintiff/counter defendant) is Premier’s professional liability
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insurer for damages arising from the mold abatement activities.
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(defendant/counter
claimant)
is
a
mold
remediation
Rockhill
In January 2013, CSAA’s insureds, suffered water damage in
their home due to a broken water pipe.
CSAA had the insureds
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contact Premier to do the necessary remediation work.
Premier
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performed mold mitigation and water damage repair, but overused an
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anti-fungal agent causing the residence to emit an offensive odor
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unacceptable to the homeowners.
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to the satisfaction of the homeowners although it was arguably
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below detectable levels.
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constructed a new home at a cost of $3 million.
The odor could not be eliminated
Therefore, CSAA demolished the home and
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CSAA paid the costs of the repairs, and on June 23, 2015,
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filed a complaint for subrogation against Premier in the Superior
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Court of California.
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Premier against the subrogation lawsuit.
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offered to settle for the $700,000, representing the limits of the
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policy reduced by defense costs, under the “Contractor’s Pollution
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Liability Coverage” Provision of the policy.
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offer.
Rockhill agreed to defend and indemnify
After discovery Rockhill
CSAA refused the
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The subrogation lawsuit went to trial in November 2016, and
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on May 22, 2017, the Superior Court filed its Statement of Decision
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After Court Trial and Objections, in favor of CSAA and against
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Premier in the amount of $2,005,118.32, plus additional pre2
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judgment interest of $529.45 per day from December 1, 2016 until
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the date of entry of judgment, plus CSAA’s attorney fees and court
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costs.
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On February 1, 2018, the state court entered judgment in favor
of CSAA in the amount of $2,230,465.53.
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In the action before this court, Rockhill seeks declaratory
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relief against CSAA and Premier as follows: First, in Count I, a
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declaratory judgment that coverage is barred under the Commercial
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General Liability Coverage Form due to the pollution exclusion.
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Second, in Count II, a declaratory judgment that coverage is barred
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under the Commercial General Liability Coverage Form due to the
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mold, fungus, and organic pathogen exclusion.
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III, a declaratory judgment that, in the alternative, the Rockhill
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policy prohibits stacking of limits.
Finally, in Count
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II.
CHOICE OF LAW
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As a threshold matter, the court finds that Nevada law applies
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to this case.
Nevada law does not recognize the doctrine of
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concurrent causation.
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App’x 264, 265 (9th Cir. 2009).
See Allstate Indem. Co. v. Russell, 345 F.
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III. CONTRACTOR’S POLLUTION LIABILITY COVERAGE
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It
is
undisputed
by
the
parties
that
the
“Contractor’s
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Pollution Liability Form” applies in this case.
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Pollution
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Premier’s legal liability for “property damage” caused by an
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“occurrence” that results from a “pollution condition” that arises
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out of “[Premier’s] work.”
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Coverage Form” also contains a “Mold Coverage Endorsement,” which
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amends the policy to provide coverage for “‘property damage’ that
Liability
Form”
states
that
The “Contractor’s
Rockhill
will
pay
for
The “Contractor’s Pollution Liability
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results from a ‘mold pollution condition’ that arises out of
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‘[Premier’s] work’.”
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the remaining limits under the “Contractor’s Pollution Liability
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Coverage Form.”
On November 30, 2018, Rockhill paid to CSAA
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IV.
COMMERCIAL GENERAL LIABILITY COVERAGE
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The central contested coverage issue in this case is the
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“Commercial General Liability Coverage Part.”
The “Commercial
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General Liability Coverage Part” specifically excludes coverage
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for damage arising out of pollution or damage that would not have
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occurred but for the threatened growth of mold.
The “Commercial
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General Liability Coverage Part” includes a Mold, Fungus and
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Organic Pathogen Exclusion, which states:
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This insurance does not apply to:
(1) “Bodily injury” or “property damage” which would
not have occurred in whole or part but for the
actual,
alleged
or
threatened
discharge,
dispersal, seepage, migration, release or escape
of any “organic pathogen” at any time.
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(ECF No. 14-1 at 15.) “Organic pathogen” means any organic irritant
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or contaminant, including but not limited to mold, fungus, bacteria
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or virus, including but not limited to their byproduct such as
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mycotoxin, mildew, or biogenic aerosol. (Id.)
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As the court previously found in connection with Rockhill’s
motion for judgment on the pleadings:
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It is the opinion of the court that it is undisputed in this
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action that the underlying lawsuit arose solely from the effects
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of chemical used to treat the threat of mold growth, which is
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specifically
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Coverage Part,” and specifically covered under the “Contractor’s
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Pollution Liability Coverage Form.”
excluded
under
the
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“Commercial
General
Liability
The court now reaffirms its
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finding and conclusion that there is no material issue in dispute
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that the damage to the home would not have occurred in whole or in
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part, but for the actual or threatened growth of mold.
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Other courts have construed similar mold exclusion language
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to preclude coverage because the over-spraying would not have
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occurred but for the threatened growth of mold.
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Risk Retention Grp., Inc. v. Selective Way Ins. Co., No. A-1975-
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10T1, 2011 WL 4808211 (N.J. Super. Ct. App. Div. Oct. 12, 2011);
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see also M&H Enterprises, Inc. v. Westchester Surplus Lines Ins.
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Co., 2010 WL 5387626 (D. Nev. Dec. 20, 2010); Schmitt v. NIC Ins.
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Co., 2007 WL 3232445 (N.D. Cal. Nov. 1, 2007).
See Restoration
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Therefore, the court concludes that Rockhill has no liability
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under the “Commercial General Liability Coverage Part” and only
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the “Contractor’s Pollution Liability Coverage Form” applies and
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that Rockhill is entitled to summary judgment on Count II of its
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Amended Complaint.
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Having so concluded, the court finds that Count I and Count
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III of Rockhill’s Amended Complaint are rendered moot and the court
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declines to consider those counts.
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V.
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In their counterclaims, CSAA and Premier assert violations of
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BAD FAITH CLAIM
the covenant of good faith and unfair claims practices.
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The undisputed facts in this case establish that the Rockhill
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did not act in bad faith in its handling of CSAA’s claim. There
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was no dispute between the parties as to coverage under the
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“Contractor’s
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“Commercial General Liability Coverage Part,” the court concludes
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as set forth above that there was a good faith dispute over whether
Pollution
Liability
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Coverage
Form.”
As
to
the
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that coverage part applied.
A reasonable, or good faith, dispute
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does not constitute a bad faith claim.
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Farm Mut. Ins. Co., 96 F. Supp. 3d 1105, 1109 (D. Nev. 2015).
See Brewington v. State
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Additionally, the court concludes that Rockhill reasonably
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relied on counsel to evaluate liability and damages in the case
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and advise on settlement offers.
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Co. v. Super. Ct., 228 Cal.App.3d 721 (1991) (an insurer cannot be
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found liable for bad faith when it reasonably relies on the advice
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of counsel).
See State Farm Mut. Auto. Ins.
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Because the Mold Exclusion applies to preclude coverage under
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the Commercial General Liability Coverage Form, CSAA never made a
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demand within the applicable limits.
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limits, there can be no bad faith.
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Co., 223 F. Supp. 3d 1081, 1091 (E.D. Cal. 2016), aff’d 751 F.
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App’x 980 (9th Cir. 2018).
If there is no demand within
See Dorroh v. Deerbrook Ins.
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Accordingly, the court concludes as a matter of law that the
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Rockhill did not act in bad faith in settling its claim with CSAA.
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The court further finds and concludes that the remaining
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claims or defenses raised by the CSAA and Premier are without
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merit.
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VI.
CONCLUSION
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Having considered all the evidence set forth on the record,
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and finding that there are no triable issues as to any material
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fact and the parties by virtue of their cross motions for summary
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judgment have acknowledged that this action should be decided on
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summary judgment, the court finds and concludes as follows.
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court grants judgment in favor of Rockhill finding and concluding
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that the “Contractor’s Pollution Liability Coverage Form” of the
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The
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policy applies to CSAA’s claim, which the parties do not dispute,
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and the remaining limits of which have already been paid by
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Rockhill to CSAA. The court also finds and concludes that the but
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for
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“Commercial General Liability Coverage Part.”
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has paid the applicable limits under its policy, and did not breach
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any contract it had with CSAA or any covenant of good faith and
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fair dealing, a judgment shall be entered in favor of Rockhill on
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its
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Mold
Exclusion
Amended
applies
Complaint
and
to
preclude
against
CSAA
coverage
and
under
the
Because Rockhill
Premier
on
their
Counterclaims.
Accordingly,
Rockhill’s
motion
for
summary
judgment
on
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Rockhill’s ’s Amended Complaint (ECF No. 88) is GRANTED, and CSAA’s
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motion for summary judgment on its counterclaims (ECF No. 90) is
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DENIED. Rockhill’s motion to strike (ECF No. 99) is DENIED as moot.
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The Clerk of the Court shall enter judgment in favor of the
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plaintiff, Rockhill, on Rockhill’s Amended Complaint and against
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the defendants, CSAA and Premier, on their Counterclaims.
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IT IS SO ORDERED.
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DATED: This 9th day of August, 2019.
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UNITED STATES DISTRICT JUDGE
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