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Mills v. Ramona Tire

May 22, 2009


The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge


This matter comes before the Court on Defendant Ramona Tire, Inc.'s Motion for Summary Judgment [Doc. No. 66]. Plaintiff Howard Mills,*fn1 Superintendent of Insurance of the State of New York, as Rehabilitator of Frontier Insurance Company In Rehabilitation, opposes the motion [Doc. No. 73]. Defendant Ramona Tire, Inc. filed a reply [Doc. No. 74]. For the following reasons, the Court GRANTS Defendant Ramona Tire, Inc.'s motion in its entirety.


The follow material facts are not in dispute.*fn2 The Nominal Plaintiff in this case is the Superintendent of Insurance of the State of New York ("Plaintiff"), acting in his capacity as rehabilitator of Frontier Insurance Company ("Frontier"). Frontier is an insolvent insurance company organized and existing under the laws of the State of New York. Defendant Ramona Tire, Inc. ("Ramona") is a California corporation with its principal place of business in Hemet, California. Ramona is in the business of providing tires and automotive services. Former defendant Automotive Services Insurance Limited ("ASIL") is a captive insurance agency located in the bailiwick of Guernsey. Donald Digby, who is not a named party in this matter, is the President/Owner of Ramona and a shareholder/member of ASIL.

Frontier entered into a reinsurance agreement with ASIL effective May 1, 1999. By this contract, ASIL agreed to reinsure Frontier for insurance proceeds paid out by Frontier on policies (written for Frontier) for a now-defunct entity called "The Tire Factory Groupe LLC" ("TFG"). TFG was a group of independent tire dealers who pooled their purchases to obtain better prices. It is comprised of several companies in and around Southern California. Donald Digby was one of the original organizers of TFG, and Ramona was a member of TFG. At least two members of TFG, including Digby, set up ASIL, the offshore captive insurance company. ASIL in turn contracted with Frontier to reinsure members of TFG for workers compensation. Ramona purchased a new workers compensation insurance policy from Frontier in April 2000, almost a year after Frontier and ASIL entered into their reinsurance agreement. Ramona's general manager, Chris Wyborny, who is in charge of selecting workers compensation insurance coverage for Ramona, made the decision to purchase the Frontier policy on behalf of Ramona. Proceeds from the workers compensation policy paid by Frontier were for the benefit of the injured employees. Ramona did not keep or profit from any monies paid on its workers compensation claims.

The reinsurance agreement obligated ASIL to pay Frontier 100% of Frontier's losses and loss expenses on Frontier's workers compensation and employers liability policies. Frontier knew ASIL's capitalization amount before reinsurance began. ASIL only made two payments to Frontier, the last of which was made in December 2000. On July 18, 2006, ASIL wrote to Frontier stating that it was underfunded by its shareholders and was incapable of paying claims as promised. By way of this litigation, Frontier obtained a default judgment against ASIL for the full amount of Frontier's claims.

Plaintiff alleges that Ramona defrauded Frontier via ASIL by purposefully under capitalizing and under funding the captive reinsurance company so as to make it unable to comply with its contractual obligations to Frontier, thereby saving Ramona the money it should have been paying out in workers compensation expenses. Based on further allegations arising out of the above stated events, Plaintiff brings six causes of action against Ramona: (1) fraud - deceit; (2) false promise -intent not to perform; (3) negligent misrepresentation; (4) unjust enrichment; (5) money had and received; and (6) conspiracy. The Court previously held that claims one, two, three, and six sound in fraud. (See December 5, 2007 Order, Doc. No. 39, p.4-5.)

Ramona moves for summary judgment in its favor as to all of Plaintiff's claims. Ramona asserts that Plaintiff's fraud-based claims are barred by California's applicable statute of limitations. Ramona also asserts that there is no genuine issue of material fact as to any of Plaintiff's claims. Ramona relies heavily on the fact that Plaintiff propounded very little discovery and has no evidence to prove its claims against Ramona, entitling Ramona to judgment as a matter of law. Plaintiff argues that genuine issues of material fact render summary judgment inappropriate as to Ramona's statute of limitations defense, as well as creating genuine disputes with respect to Plaintiff's substantive claims. As such, Plaintiff asserts that Ramona's motion should be denied as to all causes of action.


1. Legal Standard

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. " Fed. R. Civ. P. 56(c). A fact issue is "material" only if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U. S. 242, 248 (1986). A fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.

A principal purpose of the summary judgment procedure is to isolate and dispose of factually unsupported claims. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The party moving for summary judgment has the burden to show initially the absence of a genuine issue concerning any material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159 (1970). This can be done by either producing evidence negating an essential element of the plaintiff's claim, or by showing that plaintiff does not have enough evidence of an essential element to carry its ultimate burden at trial. See Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1103 (9th Cir. 2000). Once the moving party has met its initial burden, the burden shifts to the nonmoving party to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). To discharge this burden, the nonmoving party cannot rely on its pleadings, but instead must have evidence showing that there is a genuine issue for trial. See id. at 324.

Special rules of construction apply to evaluating summary judgment motions: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. ...

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