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Scottsdale Indemnity Company v. Lexington Insurance Company

December 18, 2012


The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge


This insurance coverage suit arises out of a third-party automobile accident that occurred while an employee of the insured was providing security services for a funeral procession. The parties dispute whether the incident falls within the insured's automotive liability policy or general commercial liability policy. Plaintiff Scottsdale Indemnity Company's ("Scottsdale") Motion for Summary Judgment (Doc. No. 20) and Defendant Lexington Insurance Company's ("Lexington") Motion for Summary Judgment (Doc. No. 24) came before the Court for hearing on November 26, 2012. After reviewing and considering all papers filed in support of, and in opposition to, the Motions, as well as the arguments advanced by counsel at the hearing, the Court GRANTS Plaintiff's Motion IN PART, and GRANTS Defendant's Cross-Motion IN PART, as specified below.


A. Procedural History

Scottsdale filed a Complaint against Lexington on January 4, 2012, asserting four claims: (1) equitable subrogation (duty to defend); (2) equitable subrogation (duty to indemnify); (3) equitable indemnity; and (4) declaratory relief. (Compl. (Doc. No. 1).)

Scottsdale filed a Motion for Summary Judgment ("Motion") on October 26, 2012 (Doc. No. 20). In support of its Motion, Scottsdale submitted the following documents:

* Statement of Uncontroverted Facts ("Plaintiff's SUF") (Doc. No. 21)

* Declaration of Kenneth Harris (Doc. No. 22)

* Declaration of Alan B. Yuter (Doc. No. 23)

Lexington filed an Opposition to Scottsdale's Motion on November 5, 2012 (Doc. No. 32), and Scottsdale filed a Reply on November 9, 2012 (Doc. No. 35).

Lexington also filed a Motion for Summary Judgment ("Cross-Motion") on October 26, 2012. In support of its Cross-Motion, Lexington submitted the following documents:

* Statement of Uncontroverted Facts ("Defendant's SUF") (Ex. 2 to Cross Motion)

* Declaration of Kevin Gill (Ex. 3 to Cross-Motion)

* Declaration of Michael Claiborne (Ex. 4 to Cross-Motion)

Scottsdale filed an Opposition to the Cross-Motion on November 5, 2012 (Doc. No. 33); and Lexington filed a Reply on November 9, 2012 (Doc. No. 34).

In addition, the parties filed a set of Stipulated Facts and attached exhibits applicable to both motions (Doc. No. 27).

B. Underlying Action

The coverage dispute between the two insurance companies here arises out of a fatal traffic accident that occurred in Temecula, California on December 28, 2009. Plaintiff Scottsdale is the commercial automobile liability insurance coverage carrier for National Public Safety ("NPS"); Defendant Lexington is NPS's professional and general liability insurance carrier. The heirs of Ronald Phillips sued NPS in the California Superior Court for the County of Riverside, Case No. RIC 1001521 ("the Phillips suit"). The Phillips plaintiffs alleged that NPS security guard Juan Lopez acted negligently when he secured an intersection to allow a funeral procession to travel through it without interruption, causing a collision between Phillips and the vehicle in front of him, driven by another third party.

NPS tendered the Phillips suit to Lexington. Lexington denied coverage based on the automobile exclusion contained in the policy. NPS then tendered to Scottsdale, its commercial automobile liability carrier, who agreed to defend NPS and eventually settled the Phillips action for $1 million. Scottsdale now brings this action against Lexington, arguing that Lexington owed sole coverage for the loss claimed in the Phillips action, and that Scottsdale thus is entitled to indemnification for the amount of settlement and the cost of defense.


A court shall grant a motion for summary judgment when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party must show that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson, 477 U.S. at 250.

Generally, the burden is on the moving party to demonstrate that it is entitled to summary judgment. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998) (citing Anderson, 477 U.S. at 256-57); Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033 (9th Cir. 1983). The moving party bears the initial burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

Where the moving party has the burden at trial, "that party must support its motion with credible evidence . . . that would entitle it to a directed verdict if not controverted at trial." Celotex, 477 U.S. at 331. The burden then shifts to the non-moving party "and requires that party . . . to produce evidentiary materials that demonstrate the existence of a 'genuine issue' for trial." Id.; Anderson, 477 U.S. at 256; Fed. R. Civ. P. 56(a).

Where the non-moving party has the burden at trial, however, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. Celotex, 477 U.S. at 325. Instead, the moving party's burden is met by pointing out that there is an absence of evidence supporting the non-moving party's case. Id. The burden then shifts to the non-moving party to show that there is a genuine dispute of material fact that must be resolved at trial. Fed. R. Civ. P. 56(a); Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 256. The non-moving party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 252. See also William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial § 14:144.

A genuine issue of material fact will exist "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248. In ruling on a motion for summary judgment, a court construes the evidence in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378, 380 (2007); Barlow v. Ground, 943 F.2d 1132, 1135 (9th Cir. 1991); T.W. Elec. Serv. Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987).


The following facts are either undisputed by the parties, or the Court deems them undisputed for the reasons noted.

NPS is a private security company; its employees sometimes work as escorts for funeral processions, directing traffic as a traffic police officer would do. (Pl.'s SUF ¶¶ 1--3.) On December 29, Juan Lopez was working for NPS as a security officer, and was assigned to lead a funeral procession from a mortuary in Temecula, California to a cemetery. (Pl.'s SUF ¶¶ 4, 5, 13.) Other NPS security officers were also assigned to the funeral procession, and all of them, like Lopez, were riding black-and-white BMW retired police motorcycles equipped with air horns and flashing amber lights. (Pl.'s SUF ¶¶ 9--11.) Lopez led the procession westbound on Sanborn Avenue to the intersection of Jefferson. He stopped at the limit line of the intersection with his motorcycle's lights on and chirped the motorcycle's air horn several times. (Pl.'s SUF ¶¶ 1--14.) Traffic on Jefferson stopped; Lopez intended to secure the intersection to allow the funeral procession to turn southbound on Jefferson.

As Lopez began slowly riding his motorcycle towards the middle of the intersection, the traffic signal facing him on Sanborn was red. (Pl.'s SUF ¶¶ 18--19.) He reached the middle of the intersection, dismounted, and began directing traffic on foot. (Pl.'s SUF ¶ 21.) Between five and ten seconds later, he witnessed a collision near the intersection. (Pl.'s SUF ¶ 22.) Lopez saw Ronald Phillips riding his motorcycle northbound on Jefferson; the light in the intersection facing the northbound Jefferson traffic was green, but all traffic on Jefferson had stopped. (Pl.'s SUF ¶ 24.) Phillips braked but could not stop his motorcycle in time to avoid a collision and skidded out of control. (Pl.'s SUF ¶ 25.) Phillips was ejected from his motorcycle, hit the Mitsubishi vehicle stopped in front of him on Jefferson, and sustained fatal injuries. (Pl.'s SUF ¶ 26.)

No vehicles owned by NPS were involved in the collision. (Pl.'s SUF ¶ 27.) Lopez was not cited for any traffic violation, nor was NPS. (Pl.'s SUF ¶ 29.)

Phillips's heirs filed suit in the California Superior Court for the County of Riverside against Lopez, NPS, and others, on July 30, 2010. (Pl.'s SUF ¶ 31.) Their complaint alleged claims for negligence (wrongful death) and negligence per se. (Pl.'s SUF ¶¶ 32--33.)

As of December 29, 2009, NPS was insured under a General and Professional Liability Policy, Policy No. 33053919, issued by Lexington ("the Lexington policy"). (Pl.'s SUF ΒΆ 34.) The Lexington policy had an "each occurrence" limit of $1 million. (Pl.'s SUF ...

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