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Lakeland Village Homeowners Association v. Great American Insurance Group

July 21, 2010

LAKELAND VILLAGE HOMEOWNERS ASSOCIATION, PLAINTIFF,
v.
GREAT AMERICAN INSURANCE GROUP, TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, AND DOES 1 THROUGH 50, DEFENDANTS.



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

ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND GRANTING DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

Plaintiff moves for partial summary judgment against its insurer, Defendant Great American Insurance Group ("Defendant"), on its seventh claim for declaratory relief. Specifically, Plaintiff seeks a declaration that Defendant has a duty to defend it in a pending state court cross-complaint and related administrative proceeding, and an order directing Defendant to reimburse Plaintiff for its attorneys' fees and costs incurred to date in both matters. Defendant filed a cross motion for summary judgment, arguing it does not owe Plaintiff a defense, and therefore, is entitled to partial summary judgment on Plaintiff's declaratory relief claim.

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 ----, 2010 WL 2431482, at *2 (9th Cir. 2010).

II. UNDISPUTED FACTS

A. The Underlying State Court Litigation and Tender of Defense

In the underlying state court litigation involved with Plaintiff's tender of defense, Kellie Warnick and her mother, Ann Michael, filed a complaint against Premier Resorts International, Inc. dba Lakeland Village Beach and Mountain Resort ("PRI"), and Francis Hollow ("Hollow") that concerns a wedding reception Ms. Warnick hosted at Lakeland Village. (Def.'s Response to Pl.'s Separate Statement of Undisputed Facts ("SUF") #1-2.)

Hollow, who owns a town home in Lakeland Village, called the police and complained about noise at the reception. (Def.'s Reply Separate Statement of Undisputed Facts ("RSUF") #3.) The police responded and took action that resulted in the termination of the wedding reception. (RSUF #4.)

Hollow answered the state court action and filed a cross-complaint against Plaintiff and PRI for injunctive relief, declaratory relief and indemnity. (SUF #3.) Hollow alleges in his injunctive relief claim:

[Plaintiff] has entered into a written or oral agreement with PRI by which [Plaintiff] has authorized and allowed PRI to rent the common areas for the exclusive use of third parties who are not unit or lot owners or the families or guests of unit or lot owners or tenants or contract purchasers residing in a unit or lot (collectively the "Non-Owners") for weddings, wedding receptions and similar events in violation of the Governing Documents, which constitutes a breach of [Plaintiff's] fiduciary duty to its members, a breach of the covenant of quiet enjoyment, and a nuisance.

The cross-defendants have authorized and allowed amplified music to be played within the common areas during Non-Owner weddings, wedding receptions and similar events which constitutes a breach of the covenant of quiet enjoyment and a nuisance, in violation of the Governing Documents. ....

The wrongful conduct of the cross-defendants, unless and until enjoined and restrained by order of this Court, will cause great and irreparable injury to Cross-Complainant in that Cross-Complainant's quiet enjoyment of the Property will continue to be violated. (Pl.'s Evidence in Supp. of Mot. for Summ. J., Ex. 3, ¶¶ 10-11, 14.)

Hollow alleges in his declaratory relief claim: An actual controversy has arisen between Cross-Complainant and the cross-defendants in that Cross-Complainant maintains that the Governing Documents do not authorize the cross-defendants' wrongful conduct described above, while the cross-defendants maintain that they have acted within the scope of authority under the Governing Documents in authorizing and allowing the rental of common areas for the exclusive use of Non-Owner third parties for weddings, wedding receptions and similar events.

Cross-Complainant desires a judicial determination and declaration of Cross-Complainant's and the cross-defendants respective rights and duties under the Governing Documents. Specifically, Cross-Complainant requests a determination of whether Cross-Complainant is entitled to enforce the Governing Documents against the cross-defendants and prevent and enjoin the rental of common areas for the exclusive use of Non-Owner third parties....

(Id., ¶¶18-19.)

Plaintiff tendered its defense of Hollow's Cross-Complaint to Defendant on January 3, 2007, which Defendant denied on January 5, 2007. (SUF #22-23.)

Hollow filed a First-Amended Cross-Complaint on January 29, 2007, which added a nuisance claim. (SUF # 11.) Hollow alleges in the nuisance claim that non-property owners used Lakeland Village's common areas for weddings, wedding receptions and similar events, wherein loud amplified music was played that interfered with Hollow's quiet use and enjoyment of his property. (Pl.'s Evidence in Supp. of Mot. for Summ. J., Ex. 4, ¶¶ 26-27.) Hollow subsequently filed a Second-Amended Cross-Complaint ("Cross-Complaint") on December 12, 2008, which deleted his indemnity claim. (SUF #14.)

Defendant reiterated its denial of Plaintiff's tender of defense after receiving a copy of both Hollow's First-Amended Cross-Complaint and Second-Amended Cross-Complaint. (SUF #26, 28-29.)

B. Hollow's Administrative Proceeding Involved With Plaintiff's Tender of Defense

On January 12, 2009, Hollow submitted a letter and application to the Tahoe Regional Planning Agency requesting an administrative determination "as to whether the commercial wedding events operation at Lakeland ...


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