ORDER RE: MOTION FOR RECONSIDEATION
Plaintiff Maryland Casualty Company ("Plaintiff") issued a commercial general liability policy ("Policy") to Olga and Hector Gonzalez, doing business as G & Co ("Employers").*fn1 The Policy had an auto exclusion provision which reads "This insurance does not apply to....'Bodily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any aircraft, 'auto' or watercraft owned or operated by or rented or loaned to any insured." Doc. 22, Policy, at 20 of 49. The Employers have a separate auto insurance policy provided by a third party. The Employers were in the business of selling vacuum cleaners directly to consumers by sending sales teams door-to-door. One of the Employers' sales representatives was Gabriel Pascual ("Pascual"), hired in October 2008. On April 27, 2009, Pascual was driving fellow sales representatives Kyle Hoetsier, Daniel Reyna, and Emmerson Valdivieso ("Passengers") in an Employers-owned van, returning to headquarters from a vacuum cleaner sales demonstration. The van was involved in a collision with another automobile. It is alleged that at the time of the accident, Pascual was under the influence of alcohol and driving on a suspended license. It is further alleged that Pascual had a history of driving under the influence.
In Fresno County Superior Court, the Passengers filed suit against the Employers and Pascual, based on claims of negligence, negligent hiring, negligent entrustment, and negligent maintenance. The Employers' auto insurance company is currently providing a defense in that state court case. In this case, Plaintiff filed suit against Employers, Pascual, and Passengers seeking a declaration that it does not have the duty to either indemnify or defend Employers and Pascual based on the auto exclusion provision of the Policy. Doc. 7. Plaintiff moved for summary judgment. Doc. 45. The Passengers opposed the motion. Doc. 50. The hearing on the motion was held on June 6, 2011. On August 19, 2011, Judge Oliver Wanger issued an Order denying summary judgment as to the Employers, Pascual, and the Passengers, while granting the motion as to G & Company, Inc. Doc. 66. Judge Wanger retired from the bench and the case was reassigned. Doc. 70. Plaintiff now moves for reconsideration based on new legal precedent. Doc. 75. The Passengers oppose the motion. Doc. 81. The matter was taken under submission without oral argument.
"Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law. There may also be other, highly unusual, circumstances warranting reconsideration." School Dist. No. 1J Multnomah County v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993), citations omitted.
Plaintiff has pointed to two recent opinions (which were issued after oral argument in the underlying summary judgment motion), arguing that they shed new light on the relevant law in this case. In the earlier Order, this court examined the case law concerning concurrent cause doctrine, focusing in particular on four California Appeals Court decisions that dealt with negligent hiring.
The California Supreme Court established the concurrent cause doctrine in State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal. 3d 94 (Cal. 1973). In that case, the insurer issued a homeowner's policy included a comprehensive personal liability provision which excluded "bodily injury...arising out of the...use of...any motor vehicle." State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal. 3d 94, 98 (Cal. 1973). The insured modified the trigger of a gun to increase its sensitivity. The insured carried the gun with him while he was driving his car. The car hit a bump and the gun went off, hitting a passenger. The California Supreme Court found the 'use' of Partridge's car was not the sole cause of Vanida's injuries but was only one of two joint causes of the accident. Thus, even if we assume that the connection of the car with the accident is the type of non-ambiguous causal relationship which would normally bring the exclusionary clause into play, the crucial question presented is whether a liability insurance policy provides coverage for an accident caused jointly by an insured risk (the negligent filing of the trigger mechanism) and by an excluded risk (the negligent driving). Defendants correctly contend that when two such risks constitute concurrent proximate causes of an accident, the insurer is liable so long as one of the causes is covered by the policy.
In issuing the homeowner's policy to Partridge, State Farm agreed to protect the insured against liability accruing from non-auto-related risks. The insurer does not deny that Partridge's negligence in filing the trigger mechanism of his gun was a risk covered by the homeowner's policy; thus, if the gun had accidentally fired while the insured was walking down the street or running through the woods, the insurer admits that any resultant damage would clearly be covered by the policy. The insurer contends, nonetheless, that coverage is foreclosed here because the present accident arose out of the use of an automobile.
In the instant case, however, although the accident occurred in a vehicle, the insured's negligent modification of the gun suffices, in itself, to render him fully liable for the resulting injuries. Under these facts the damages to Vanida are, under the language of the homeowner's coverage clause, 'sums which the Insured...[became] legally obligated to pay' because of the negligent filing of the trigger mechanism; inasmuch as the liability of the insured arises from his non-auto-related conduct, and exists independently of any 'use' of his car, we believe the homeowner's policy covers that liability.
A hypothetical may serve to explain further our conclusion in this regard. If, after negligently modifying the gun, Partridge had lent it to a friend who had then driven his own insured car negligently, resulting in the firing of the gun and injuring of a passenger, both Partridge and his friend under traditional joint tortfeasor principles would be liable for the injury. In such circumstances, Partridge's personal liability would surely be covered by his homeowner's policy, and his friend's liability would be covered by automobile insurance. When viewed from this perspective, it can be seen that State Farm is presently attempting to escape liability under the homeowner's policy simply because, in the instant case, both negligent acts happened to have been committed by a single tortfeasor. In our view, this coincidence cannot defeat the insurer's obligation to indemnify the insured for liability arising from non-automobile risks.
State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal. 3d 94, 102-103 (Cal. 1973).
The Second District Court of Appeal dealt with concurrent cause doctrine in the context of negligent hiring in Underwriters Ins. Co. v. Purdie, 145 Cal. App. 3d 57 (Cal. App. 2d Dist. 1983). The insurer issued a multiperil liability policy with an exclusion for "any use maintenance or possession of a fire arm by insured or its agent or employee." Underwriters Ins. Co. v. Purdie, 145 Cal. App. 3d 57, 61 (Cal. App. 2d Dist. 1983). The insured knowingly hired a store clerk with some kind of violent history. While acting in the scope of his employment, that employee got into an argument and shot a supplier. The Second District Court of Appeal concluded: the dispositive issue is whether the events giving rise to the insured's liability are exclusively related to the use and operation of the excluded risk.
Appellants correctly contend the liability insurance policy provides coverage for their claimed injuries caused jointly by an insured risk (the insured's negligent hiring of a known violent person) and by an excluded risk (use of a ...