The opinion of the court was delivered by: BREWSTER
This matter came on regularly for hearing on plaintiff's motion for summary judgment, or in the alternative for summary adjudication of issues. After careful consideration of the moving and opposing papers, the Court hereby DENIES plaintiff's motion for summary judgment, and GRANTS plaintiff's motion for summary adjudication.
This is an action brought by First National Insurance Co. ("First National") against the Federal Deposit Insurance Corporation ("FDIC") for breach of the covenant of good faith and fair dealing, restitution and breach of contract arising out of a dispute as to which of two insurers were liable for a fire loss to property.
First National, plaintiff in this action, issued an insurance policy to Imperial Savings ("Imperial"), American Savings & Loan Association, and ICA Mortgage Corporation. This was an umbrella policy covering all real property on which Imperial was a mortgagee. General Accident Insurance Co. ("General") issued a builders risk commercial fire policy covering the El Cajon Garden Apartments on which Imperial was listed as the mortgagee. The General and First National policy limits were $ 8 million and $ 1 million, respectively. In June of 1990, the federal government determined that Imperial was in unsound condition and appointed the Resolution Trust Corp ("RTC") as receiver for Imperial. The FDIC, as the successor to the RTC, is the defendant in this action.
General made repeated requests to Imperial and RTC to have pertinent Imperial employees submit to statements under oath regarding Imperial's receipt of the notice of cancellation, among other issues, but RTC initially refused these requests. On November 15, 1991, RTC agreed to produce Imperial employees for examination under oath; however, once RTC learned of the suit General filed against it, RTC withdrew its agreement to produce these witnesses. It was RTC's position that once litigation was commenced, it would not submit employees to examinations under oath absent a formal notice and scheduling of a deposition.
B. The First Suit -- Civil Case No. 91-1533
General filed a declaratory relief suit against RTC on October 25, 1991, Civ. No. 91-1533, alleging that RTC forfeited its right to payment under the General policy due to its refusal to cooperate with General's investigation. RTC counterclaimed for bad faith and. breach of contract, alleging that the fire loss at the El Cajon Garden Apartments was a covered occurrence under the General policy.
On August 17, 1992, RTC and First National entered into a settlement in which First National agreed to advance the policy limit of $ 1,000,000 for the fire loss, but reserved subrogation rights should RTC receive any money from General.
General moved for summary judgment on RTC's bad faith claim, and also on its own claim for declaratory relief. On January 5, 1993, the court granted summary judgment for General on RTC's bad faith claim, and denied General's motion for summary judgment on the coverage claim on the ground that the General policy requiring examinations under oath was not applicable to the RTC.
On June 1, 1993, First National filed a complaint in intervention, seeking to recover a portion of the $ 1 million it paid to RTC from General pursuant to its subrogation rights.
The suit eventually went to trial on the merits of whether the fire was an occurrence covered by General's policy and whether First National was entitled to recover some of the money it had paid to RTC. The trial court found that the fire loss was a covered occurrence under the General policy and that First National was entitled to recover a portion of the amount it had paid to RTC. The Court apportioned the fire loss between First National and General pro rata.
General appealed the trial court's denial of summary judgment on the issue of whether RTC's refusal to cooperate forfeited its rights to the insurance policy proceeds. RTC appealed the court's grant of summary judgment on its bad faith claim, and First National appealed the trial court's apportionment of the loss between First National and General. On May 30, 1995, the Ninth Circuit reversed the trial court's denial of General's summary judgment motion on its complaint for declaratory relief, holding that RTC had been required to submit Imperial's employees to examination under oath at General's request, and that RTC's failure to comply was prejudicial to General's resolution of the fire loss claim. As a result, the Ninth Circuit held that RTC had forfeited its rights under the General policy. The Ninth Circuit vacated the judgment entered after trial on the complaint, counterclaim and complaint in intervention, and remanded the matter to the district court. The district court entered judgment in favor of General on the complaint and counterclaim, but the court never entered judgment on the complaint in intervention, so it remains pending. On January 7, 1997, Case No. 91-1533 was transferred to this Court, and the Court consolidated it with the instant case (Civ. Case No. 96-1356).
C. The Second Suit -- Civil Case No. 96-1356
First National has filed suit against the FDIC as receiver for Imperial Savings, contending that RTC's refusal to comply with General's demands to examine Imperial employees under oath constitutes a material breach of the settlement agreement between First National and RTC because it jeopardized First National's subrogation rights. First National also claims that RTC's failure to cooperate with General caused its subrogation rights to be extinguished in violation of the covenant of good faith and fair dealing. Complaint PP 33-36. First National seeks compensatory damages, prejudgment interest and an award of attorney's fees.
In early May of 1997, the Court granted FDIC's motion to dismiss the FDIC in its "corporate" capacity. Both the FDIC in its receiver capacity and First National moved for summary judgment. The Court denied both motions for summary judgment, granted summary adjudication for First National as to certain issues, and stated that two issues remain in this case: (1) was the General policy valid and collectible at the time of the fire loss, and if so (2) what is the extent of the First National policy obligation to indemnify for the fire loss by virtue of the other insurance clauses of both policies. Plaintiff now moves for summary judgment on these two issues.
FDIC objects to this motion, arguing that First National is seeking rulings on individual issues without seeking summary judgment as to an entire cause of action. Rule 56(d), however, provides that if a motion for summary judgment will not dispose of the whole case, the Court "shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted." Fed. R. Civ. P. 56(d). Even if First National will not prevail on one of ...