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Great West Casualty Co. v. General Fire & Casualty Co.

June 24, 2009

GREAT WEST CASUALTY COMPANY, PLAINTIFF,
v.
GENERAL FIRE & CASUALTY COMPANY, DEFENDANT.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

SCHEDULING CONFERENCE ORDER

Rule 68 Offer, Acceptance, Performance, and Perfection of Appeal Rights Cut-Off: 7/27/09

I. Date of Scheduling Conference. June 24, 2009.

III. Summary of Pleadings.

1. This is an insurance coverage dispute arising out of an underlying wrongful death/personal injury action involving the mutual insured of Plaintiff Great West Casualty Company ("Great West") and Defendant General Fire & Casualty Company ("GFC"). At the time of the accident the insured, Juan Jose Mendez Cobian ("Mendez"), was operating his tractor, which was insured by Great West, and was towing a trailer owned by GFC's insured, OHK Transport, LLC. ("OHK"). Mendez was operating pursuant to a Sub Haul Agreement which designated Mendez as an independent contractor to OHK and required Mendez to indemnify OHK for all losses arising from operations under the agreement.

2. The underlying suit settled for $2 million. Great West paid $1 million for Mendez; GFC paid $1 million for OHK and a related entity, Western Milling. Great West spent approximately $80,000 in the defense of Mendez; GFC spent approximately $140,000 in the defense of OHK and Western Milling.

3. Great West brought the instant action against GFC seeking indemnification for monies it paid in the defense and settlement of the underlying action on behalf of Mendez.

4. The parties dispute the amount of the available limits afforded to Mendez under the GFC policy. GFC contends said limits are $50,000 pursuant to the policy's Undeclared Drivers sub-limit, while Great West contends the GFC policy provides $15 million in coverage to Mendez.

5. In ruling on cross-motions for summary judgment, the Court held that GFC's Undeclared Driver sub-limit was enforceable, but that there was a triable issue of material fact as to whether Insurance Code § 11580.9(b) (establishing the order of attachment of certain automobile liability policies) was applicable to the loss. The effect of the Court's rulings is that GFC's maximum liability to Great West is $50,000. However, if it were to be determined that Insurance Code § 11580.9(b) is triggered, Great West would take nothing by way of its Complaint as its policy would be deemed primary for the loss.

Procedural Posture

6. Cross Motions for Summary Judgment were brought before the Court as to the enforceability of the GFC policy's coverage sub-limit. GFC filed a concurrent motion for summary judgment in which it argued that California Insurance Code § 11580.9(b) applied to the loss, making the Great West policy primary for the loss.

7. The Court made the following rulings as to these motions:

a. GFC's Motion for Summary Judgment re: enforceability of Undeclared Driver sub-limit: GRANTED.

b. Great West's Motion for Summary Judgment re: enforceability of Undeclared Driver sub-limit: DENIED.

c. GFC's Motion for Summary Judgment re: application of Insurance Code ยง 11580.9(b): DENIED (triable issue of material fact as ...


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