Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Navigators Specialty Insurance Co. v. Howard Drywall

March 17, 2010

NAVIGATORS SPECIALTY INSURANCE COMPANY, PLAINTIFF,
v.
HOWARD DRYWALL, INC.; J P HEINTZ & COMPANY INC.; AND JUAN MANUEL LOPEZ, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

On February 5, 2010, plaintiff Navigators Specialty Insurance Company ("Navigators") filed a motion for summary judgment under Federal Rule of Civil Procedure 56(c) on its claim against defendants Howard Drywall, Inc. ("Howard Drywall") and J P Heintz & Company, Inc. ("J P Heintz"). The motion concerns whether, under a commercial general liability insurance policy Navigators issued to Howard Drywall, Navigators is obligated to indemnify or defend either Howard Drywall or J P Heintz in a pending state court proceeding. Both Howard Drywall and J P Heintz argue that Navigators' summary judgment motion should be denied or continued to allow for additional discovery under Federal Rule of Civil Procedure 56(f), and alternatively, oppose the motion. Navigators' motion was heard on March 8, 2010. For the reasons stated below, J P Heintz and Howard Drywall's Rule 56(f) motion is DENIED and Navigators' motion for summary judgment is GRANTED.

I. LEGAL STANDARD

A party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S., 317, 323 (1986). If this burden is satisfied, "the non-moving party must set forth, by affidavit or as otherwise provided in [Federal] Rule [of Civil Procedure] 56, specific facts showing that there is a genuine issue for trial." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (quotations and citation omitted) (emphasis omitted). When deciding a summary judgment motion, all reasonable inferences that can be drawn from the evidence "must be drawn in favor of the non-moving party." Bryan v. McPherson, --- F.3d ----, 2009 WL 5064477, at *2 (9th Cir. 2009).

Navigators requests that judicial notice be taken of two documents: 1) Lopez's complaint against J P Heintz in the Lopez v. J P Heintz litigation ("Lopez"), Case No. 34-2008-00029816, pending in the Sacramento County Superior Court; and 2) J P Heintz's cross-complaint filed against Howard Drywall in Lopez. J P Heintz also requests that judicial notice be taken of an order continuing the trial date in the Lopez case.*fn1

Under Federal Rule of Evidence 201, a district court may take judicial notice of a fact that is "not subject to reasonable dispute" because "it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). "[P]roceedings in other courts, both within and [outside of] the federal judicial system, if [they] have a direct relation to matters at issue" may be judicially noticed. United States ex rel. Robinson Rancheria Citizens Council v. Boreno, Inc., 971 F.2d 244, 248 (9th Cir. 1992) (taking judicial notice of California Superior Court decision). Since Lopez is directly related to this action, judicial notice may be taken of the three filings in that case. Therefore, both Navigators and J P Heintz's requests for judicial notice of filings in Lopez are granted.

II. STATEMENT OF UNDISPUTED FACTS

On November 28, 2006, Builders & Tradesmen Insurance Services ("BTIS"), Navigators' underwriter, received an application for insurance prepared and submitted by Wasserman & Associates ("Wasserman") on behalf of its client, Howard Drywall. (Mozell Decl. ¶ 4.) Navigators then issued commercial general liability insurance to Howard Drywall under policy number 04-00006013 (the "Policy"), which was effective from December 1, 2006 to December 1, 2007. (Pl.'s Response to Defs.' SUF ¶ 7; O'Hara Decl. Ex. A.)*fn2 Richard Drywall, the President and Chief Executive Officer of Howard Drywall, did not receive a copy of the Policy from Wasserman until May 14, 2007. (Howard Decl. ¶ 6.)

On December 29, 2006, Juan Manuel Lopez, an employee of Howard Drywall's, went to a church to perform work for Howard Drywall. (Pl.'s Response to Defs.' Separate Statement of Undisputed Facts ("SUF") ¶¶ 1-2.) Shortly after his arrival at the church, Lopez fell down an elevator shaft. (Id. ¶ 3.)

Prior to Lopez's accident, in June 2000, Howard Drywall, as a subcontractor, had entered into a contract with general contractor J P Heintz, under which Howard Drywall was "obligated to defend and fully indemnify [J P Heintz]... against all claims, lawsuits, and damages brought by any person against [J P Heintz]... arising out of [Howard Drywall's] work at the subject job site." (J P Heintz Additional Statement of Facts ¶ 3) (emphasis in original.)*fn3 The contract between Howard Drywall and J P Heintz also required Howard Drywall to obtain a comprehensive general liability insurance policy covering bodily injury claims and naming J P Heintz as an additional insured. (Id. ¶ 5.) This subcontract agreement was unmodified and in effect at the time of Lopez's accident at the church in December 2006. (Id. ¶ 4.)

Lopez filed a complaint in the Sacramento County Superior Court on December 19, 2008, alleging a negligence claim against J P Heintz based upon the December 2006 accident. (Pl.'s Response to Defs.' SUF ¶ 5.) J P Heintz then filed a cross-complaint against Howard Drywall on February 27, 2009, alleging a contractual indemnity claim. (Id. ¶ 6.) In that claim, J P Heintz alleges "Cross-Defendant Howard Drywall, Inc. is contractually obligated to defend and indemnify [J P Heintz]... pursuant to a written contract entered into before [Lopez's] accident...." (Navigators' Request for Judicial Notice ("RJN") Ex. B.)

On November 9, 2009, Navigators filed a complaint in this federal court, seeking "a judicial declaration that it owes no duty to defend or indemnify either defendant [J P Heintz]... or defendant [Howard Drywall]... under the insurance policy Navigators issued to [Howard Drywall], regarding a bodily lawsuit brought in Sacramento County Superior Court by Howard Drywall's injured employee, [Lopez]..., because the Navigators policy excludes coverage for any claim arising out of bodily injury to any insured's employee." (Compl. 1:18-24.)

III. J P Heintz and Howard Drywall's Rule 56(f) Motion

J P Heintz argues Navigators' summary judgment motion should be denied under Federal Rule of Civil Procedure 56(f) ("Rule 56(f)") to allow it time to conduct discovery concerning whether Navigators waived, or is estopped, from denying coverage under the Policy. Howard Drywall joins in J P Heintz's Rule 56(f) motion. At oral argument, J P Heintz's counsel clarified that defendants only seek discovery into what Navigators or its underwriter knew or should have known about Howard Drywall's insurance needs in light of the fact that Navigators had previously insured Howard Drywall. J P Heintz's counsel argued that an exhibit attached to Navigators' reply brief revealed that Navigators had insured Howard Drywall from 2002 to 2003. Specifically, J P Heintz seeks to discover the underwriting file as well as depose BTIS's declarant, Penny Mozell. J P Heintz's counsel further argued that this discovery is relevant to whether J P Heintz and Howard Drywall are entitled to reform the Policy to provide coverage to J P Heintz.

Navigators counters that defendants have not satisfied Rule 56(f)'s requirements since defendants cannot create coverage through either the doctrines of waiver or estoppel. At oral argument, Navigators' counsel further opined that discovery into what Navigators' or its underwriter knew about Howard Drywall's insurance needs is irrelevant since the Policy reflects the parties' bargained-for contract.

Rule 56(f) states: "If a party opposing [a summary judgment] motion shows by affidavit that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) deny the motion; (2) order a continuance to enable affidavits to be obtained, depositions to be taken, or other discovery to be undertaken; or (3) issue any other just order." Fed. R. Civ. P. 56(f). "To prevail under Rule [56(f)], [a party] opposing a motion for summary judgment must make (a) a timely application (b) which specifically identifies (c) relevant information, (d) where there is some basis for believing that the information sought actually exists.

The burden is on the party seeking additional discovery to proffer sufficient facts to show that the evidence sought exists, and that it would prevent summary judgment." Blough v. Holland Realty, Inc., 574 F.3d 1084, 1091 n.5 (9th Cir. 2009). "The rule is well established that the doctrines of implied waiver and of estoppel based upon the conduct or action of the insurer, are not available to bring within the coverage of a policy risks not covered by its terms, or risk expressly excluded therefrom, and the application of the doctrines in this respect is therefore to be distinguished from the waiver of, or estoppel to assert, grounds of forfeiture." Supervalu, Inc. v. Wexford Underwriting Managers, Inc., 175 Cal. App. 4th 64, 77 (2009). It is undisputed that if the endorsement at issue in this litigation is valid, the terms of the Policy do not provide coverage to either J P Heintz or Howard Drywall for Lopez's bodily injury claim. Therefore, neither the doctrines of waiver or estoppel may operate to extend coverage to Howard Drywall or J P Heintz. Accordingly, discovery on these issues would not preclude an award of summary judgment in Navigators' favor.

Further, defendants have not demonstrated that the discovery they seek would establish a right to reformation of the Policy and preclude awarding summary judgment in Navigators' favor. Under California law, reformation "may be had when there has been a negligent misrepresentation, mutual mistake, or a mistake, suspected or known by the party opposing reformation, made by the party seeking reformation." Rail Servs. of Am. v. State Compensation Ins. Fund, 110 Cal. App. 4th 323, 333 (2003) (citations omitted); see also Cal. Civ. Code § 3399 (providing for reformation of a contract). "The purpose of reformation is to correct a written instrument in order to effectuate a common intention of both parties which was incorrectly reduced to writing." Alderson v. Ins. Co. of N. Am., 223 Cal. App. 3d 397, 411 (1990).

Defendants have not explained how the discovery they seek on the coverage Navigators' provided Howard Drywall four years prior to the issuance of the Policy, establishes that when the Policy was formed, there was a "common intention" shared by both Navigators and Howard Drywall to extend certain coverage under the Policy to J P Heintz. That Navigators may have previously provided certain coverage to Howard Drywall does not demonstrate that a "mistake" was made when the Policy was formed. Therefore, defendants have not shown that the discovery they see would preclude awarding summary judgment in Navigators favor. Accordingly, defendants' motion for a continuance or denial under Rule 56(f) is DENIED.

IV. DISCUSSION

Navigators argues it is entitled to summary judgment on its claim for declaratory relief since a valid endorsement in the Policy "excludes coverage for any claim of bodily injury brought by any employee of any insured" and Lopez was an employee of Howard Drywall, an insured. (Mot. for Summ. J. 7:27-28.) Howard Drywall and J P Heintz each filed oppositions, raising nearly identical arguments. Both argue that "amendment" to the employer's liability exclusion of the Policy is inconsistent with the reasonable expectations of Howard Drywall and J P Heintz; and, there is a material question ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.