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Employers Insurance Company of Wausau, et al v. Oakdale Heights Management Corporation

June 12, 2012



I. Background

Plaintiffs Employers Insurance Company of Wausau, Wausau Business Insurance Company, and Wausau Underwriters Insurance Company (collectively "Wausau") filed a complaint against Oakdale Heights Management Corporation ("Oakdale") and Northstar Senior Living, Inc. ("Northstar"), alleging causes of action for breach of contract, accounting and declaratory relief, stemming from defendants' alleged failure to pay premiums for workers' compensation and employer liability policies Wausau issued to Oakdale. ECF No. 1.

On August 23, 2012, defendant Northstar answered the complaint and filed a cross-complaint against Wausau and Oakdale for breach of contract, indemnification, comparative indemnification and equitable relief. ECF No. 9-1. Wausau filed its answer to the cross-complaint on September 15, 2010. ECF No. 11.

On April 28, 2011, Wausau filed a request for a clerk's entry of default as to Oakdale and on May 2, 20111, the clerk entered default as to Oakdale. ECF Nos. 18 and 19.

Wausau has now filed a motion for summary judgment against Northstar, asserting that in Schwartz v. Oakdale Heights Management Corp., No. PC044618 (Los Angeles County Superior Court), the Los Angeles County Superior Court determined that Northstar is Oakdale's successor-in-interest and thus liable for Oakdale's debts and that it is entitled to use this ruling, which is now final, as offensive collateral estoppel against Northstar. It also argues that the amount due is not in dispute following Oakdale's default and so it is entitled to judgment in that amount against Northstar.

Northstar has opposed the motion, arguing that Wausau has not met its burden of showing that collateral estoppel applies and that there is insufficient evidence to show that it should be liable for Oakdale's debts.*fn1 In its reply, Wausau disputes Northstar's characterization of the law and the record.

The motion was heard on December 14, 2011. Ilya Kosten appeared for plaintiff; Jonz Norine appeared for defendant Northstar. The matter was thereafter submitted. For the reasons discussed below, plaintiff's motion is granted.

II. Summary Judgment Standard

A court will grant summary judgment "if . . . there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). The "threshold inquiry" is whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).*fn2

The moving party bears the initial burden of showing the district court "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The burden then shifts to the nonmoving party, which "must establish that there is a genuine issue of material fact . . . ." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585 (1986). In carrying their burdens, both parties must "cit[e] to particular parts of materials in the record . . .; or show [] that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." FED. R. CIV. P. 56(c)(1); see also Matsushita, 475 U.S. at 586 ("[the nonmoving party] must do more than simply show that there is some metaphysical doubt as to the material facts"). Moreover, "the requirement is that there be no genuine issue of material fact . . . . Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 247-48 (emphasis in original).

In deciding a motion for summary judgment, the court draws all inferences and views all evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88; Whitman v. Mineta, 541 F.3d 929, 931 (9th Cir. 2008). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

III. Evidentiary Objections*fn3

Wausau objects to portions of the Declaration of Attorney Scott Putnam (Putnam Decl.), submitted in opposition to the motion for summary judgment. Putnam describes his role in drafting the asset purchase agreement, which resulted in the sale of Oakdale's assets to Northstar. ECF No. 32, Putnam Decl. ¶¶ 5-13. Putnam avers that "as the result of the [Schwartz] lawsuit, Northstar tendered its defense and indemnity of the matter to [Oakdale] whose insurance company accepted the tender, assumed its representation, and agreed to pay any judgment levied against Northstar" and that as counsel for Northstar, he assisted in this process. He continues that "[f]ollwing the tender, Northstar was not involved in the defense of the Schwartz case. It did not control the defense or litigation in any way." Putnam Decl. ¶ 15. Wausau argues that Putnam's description of the insurance company's promise is hearsay and cannot be considered as the letter is not attached to the declaration.

As it appears that Putnam is relying on a communication between Northstar and the insurer, his description of the insurer's commitment is hearsay. ECF No. 33-3 at 2; see Schosche Industries Inc. v. Visor Gear Inc., 121 F.3d 675, 681 (9th Cir. 1997) ("[h]earsay evidence in Rule 56 affidavits is entitled to no weight"). In addition, Putnam has not attached a copy of the insurer's written undertaking as required by the rules. See School Dist. No.1J, Multnomah Co. Oregon v. ACandS, Inc., 5 F.3d 1255, 1262 (9th Cir. 1993) (relying on former Rule 56(e) which required an affidavit to attach documents referred to); 2010 Advisory Committee Notes Rule ...

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