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Maryland Casualty Company v. Olga Gonzalez

August 19, 2011


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



Maryland Casualty Company ("Plaintiff") proceeds with an action for declaratory relief pursuant to 28 U.S.C. § 2201 et seq. On April 25, 2011, Plaintiff filed a motion for summary judgment. (Doc. 45). Defendants Kyle Koetsier, Daniel Reyna, and Emmerson Valdivieso filed opposition to Plaintiff's motion on May 23, 2011. (Doc. 50).


Hector Gonzalez is an owner of G & Company, a business which sells Kirby Vacuum cleaners directly to consumers by sending sales teams door-to-door. Plaintiff issued a commercial general liability insurance policy to "Olga and Hector Gonzalez DBA: G & Co." effective April 19, 2009 ("Policy"). Section I.(2)(g) of the Policy's Commercial General Liability Coverage Form provides:

This insurance does not apply to... "Bodily Injury" or "property damage" arising out of the ownership, maintenance, use, or entrustment to others of any..."auto"...owned or operated by or rented or loaned to any insured. (Manapol Decl., Ex. W, Doc. 53 at 48.).

On April 27, 2009, Defendants were passengers in a van owned by G & Company that was involved in a collision with another vehicle. At the time of the accident, Gabriel Pascual ("Pascual"), an independent contractor hired by G & Company as a "Crew Leader," was driving the van. Defendants were ejected from the van and sustained serious injuries.

On or about April 16, 2010, Defendants filed a lawsuit in the Fresno County Superior Court naming, among others, Pascual, Hector Gonzalez and "G & Company Enterprises" as defendants ("Reyna Action"). The complaint filed in the Reyna Action ("Reyna Complaint") provides: "this action arises out of a collision by a motor vehicle against a passenger van." (Plaintiff's RJN, Ex. A, Doc. 18). The Reyna Complaint alleges that, at the time of the accident, Pascual and Defendants were "acting within the course and scope of their employment as Dealers for Defendants G & Company [and] [Hector] Gonzales." (Id. at 6). The Reyna Complaint alleges that Pascual consumed alcohol prior to operating the van on April 27, 2009, and that Pascual was driving on a suspended license.

The Reyna Complaint asserts negligence against Pascual, G & Company, and Hector Gonzalez. The theory of recovery as to G & Company and Hector Gonzalez is that Pascual was negligently hired and retained. Specifically, the Reyna Complaint asserts that G & Company knew or should have known that Pascual had been convicted of driving under the influence, had a history of drinking alcohol while driving Company-owned vehicles, and had no valid driver's license.

The fourth cause of action asserted in the Reyna Complaint is negligent maintenance of a motor vehicle. The Reyna Complaint alleges that Hector Gonzales and G & Company maintained the van in a dangerous condition because it lacked properly functioning tires and seatbelts. The fifth cause of action is for negligent entrustment of a motor vehicle.

G & Company has tendered defense of the Reyna Action to its automobile insurance provider; that insurer is defending the pending State court action.


Summary judgment/adjudication is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The movant "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks omitted).

Where the movant will have the burden of proof on an issue at trial, it must "affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party." Soremekun v.Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). With respect to an issue as to which the non moving party will have the burden of proof, the movant "can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case." Soremekun, 509 F.3d at 984.

When a motion for summary judgment is properly made and supported, the non movant cannot defeat the motion by resting upon the allegations or denials of its own pleading, rather the "non moving party must set forth, by affidavit or as otherwise provided in Rule 56, 'specific facts showing that there is a genuine issue for trial.'" Soremekun, 509 F.3d at 984 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)). "A non movant's bald assertions or a mere scintilla of evidence in his favor are both insufficient to withstand summary judgment." FTC v. Stefanchik, 559 F.3d 924, 929 (9th Cir. 2009). "[A] non movant must show a genuine issue of material fact by presenting affirmative evidence from which a jury could find in his favor." Id. (emphasis in original). "[S]ummary judgment will not lie if [a] dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. In determining whether a genuine dispute exists, a district court does not make credibility determinations; rather, the "evidence of the non movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255.


A. Plaintiff's Duty to Defend

An insurer has a duty to defend an insured if it becomes aware of, or if the third party lawsuit pleads, facts giving rise to the potential for coverage under the insuring agreement; this duty is separate from and broader than the insurer's duty to indemnify. E.g., Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 19 (Cal. 1995). Although broad, the duty to defend is not unlimited; "it is measured by the nature and kinds of risks covered by the policy." Id.

Doubt as to whether the facts establish the existence of an insurer's duty to defend must be resolved in the insured's favor. E.g., Montrose Chemical Corp. v. Superior Court, 6 Cal.4th 287, 300 (Cal. 1993). In order to prevail on the issue of the duty to defend, the insurer must satisfy a heavier burden than the insured:

When the issue is whether an insurance company has a duty to defend its insured in an action by a third party, the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. In other words, the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot."

Shanahan v. State Farm General Ins. Co., 193 Cal. App. 4th 780, 785 (Cal. Ct. App. 2011) (citing Montrose). Basic coverage provisions are construed broadly in favor of affording protection to the insured, while clauses setting forth specific exclusions from coverage are interpreted narrowly against the insurer. E.g., Minkler v. Safeco Ins. Co. of America, 49 Cal. 4th 315, 322 (Cal. 2010).

Well-settled rules of contract interpretation govern interpretation of an insurance agreement. E.g., E.M.M.I. Inc. v. Zurich American Ins. Co., 32 Cal. 4th 465, 470 (Cal. 2004). As with any contract, the mutual intention of the parties at the time the insurance policy is entered into controls interpretation of the policy's provisions. Id. (citing Cal. Civ. Code ยง 1636). Unless the parties attributed special meaning to the terms of an insurance policy, the "clear ...

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