ORDER DENYING MOTION FOR ENTRY OF JUDGMENT UNDER RULE 54(b)
SAMUEL CONTI, District Judge.
On December 19, 2012, the Court granted in part and denied in part Plaintiff Axis Reinsurance Company's ("Plaintiff") motion for partial summary judgment. ECF No. 68 ("Dec. 19 Order"). Based on that Order, Defendants Telekenex, Inc. ("Telekenex"), IXC Holdings, Inc. ("IXCH"), Anthony Zabit, Karen Salazar, Brandon Chaney, and Deanna Chaney (collectively, the "Telekenex Defendants") now move for entry of judgment pursuant to Federal Rule of Civil Procedure 54(b). ECF No. 94 ("Mot."). The Motion is fully briefed, ECF Nos. 99 ("Opp'n"), 102 ("Reply"), and suitable for determination without oral argument, Civ. L.R. 7-1(b). For the reasons set forth below, the Motion is DENIED.
In 2008, one of Telekenex's Washington-based competitors, Straitshot Communications, Inc. ("Straitshot"), sued Telekenex and a number of the other Telekenex Defendants in a case captioned Straitshot Communications, Inc. v. Telekenex, Inc., et al., No. C10-268 TSZ (W.D. Wash.) (the "Straitshot action"). Dec. 19 Order at 4. Straitshot alleged that a number of the Telekenex Defendants stole its trade secrets and confidential customer information and covered up this theft by destroying evidence. Id . The jury returned a $6.49 million verdict in favor of Straitshot, finding for Straitshot - in whole or in part - on its claims for breach of contract, breach of the duty of loyalty, interference with contractual relations, and violation of Washington's Consumer Protection Act. Id. at 5. The Court later entered spoliation sanctions against Telekenex in connection with its destruction of evidence. Id. at 6.
The instant action arises out of a dispute over whether the damages awarded and defense costs incurred in connection with the Straitshot action are covered by an insurance policy Plaintiff issued to Telekenex (the "Policy"). Plaintiff's amended complaint asserts eight counts, including six counts for declaratory relief. ECF No. 15 ("Am. Compl."). Specifically, Plaintiff asks the Court to declare the following: (I) the Policy's "unlawful advantage exclusion" bars coverage; (II) California Insurance Code section 533 bars coverage; (III) the spoliation sanctions are not covered because they do not constitute a "Loss" under the terms of the Policy; (IV) the finding that Defendants Mark Prudell and Joshua Summers, who formerly worked for Straitshot, breached their duty of loyalty to Straitshot does not trigger coverage for them or their spouses; (V) IXCH is not an insured under the Policy; and (VI) the proper allocation of amounts covered and uncovered by the Policy. Id . §§ 40-73. Plaintiff's remaining two counts seek reimbursement from the Telekenex Defendants under theories of equitable indemnity and restitution for amounts Plaintiff paid in connection with its coverage of the Straitshot action.
On December 19, 2012, the Court granted in part and denied in part Plaintiff's motion for summary judgment on Counts I, II, and V. As to Count I, the Court found that the Policy's "unlawful advantage exclusion barred" coverage for the $6.49 million judgment but not the spoliation sanctions, and rejected the Telekenex Defendants' argument that Plaintiff is estopped from asserting the exclusion because it purportedly failed to inform the Telekenex Defendants of their right to independent counsel. Id. at 14-18. With respect to Count II, the Court found that California law - as opposed to Washington law - governed the dispute and that California Insurance Code section 533 barred coverage for the $6.49 million judgment but not the spoliation sanctions. Id. at 18-24. The Court also ruled in favor of Plaintiff on Count V, finding that IXCH is not covered under the Policy because IXCH is not named as an insured and did not automatically acquire a right to coverage when it agreed to purchase Telekenex's assets. Id. at 25.
The Telekenex Defendants have answered Axis's Amended Complaint and asserted five counterclaims. ECF No. 69 ("Telekenex Answer"). The first counterclaim seeks a judicial declaration that Axis is estopped from denying coverage, that Axis may not allocate between covered and uncovered claims, and that Axis must fully reimburse the Telekenex Defendants for the costs and damages associated with the Straitshot action. Id . § 56. The second and third counterclaims are for breach of contract and negligence. Id . §§ 57-63. The fourth counterclaim asserts that Plaintiff engaged in bad faith and breached its statutory and regulatory duties under Washington law by, among other things, wrongfully asserting that California law applies and failing to inform the Telekenex Defendants of their right to independent counsel. Id . §§ 64-72. The fifth counterclaim, pled in the alternative, asserts that Plaintiff engaged in bad faith under California law. Id . §§ 73-76.
The Telekenex Defendants now move under Rule 54(b) for a determination that the Court's December 19 Order constitutes a final judgment with respect to coverage under the Policy for the $6.49 million Straitshot judgment.
III. LEGAL STANDARD
Rule 54(b) allows a district court to direct entry of final judgment for the purpose of appeal as to one or more, but fewer than all, claims if the court expressly determines that there is no just reason for delay. Fed.R.Civ.P. 54(b). The application of Rule 54(b) is governed by a two-step process. Curtiss-Wright Corp. v. Gen. Elec. Co. , 446 U.S. 1, 7-8 (1980). First, the court must determine whether it is dealing with a final judgment. Id. at 7. "It must be a judgment' in the sense that it is a decision upon a cognizable claim for relief, and it must be final' in the sense that it is an ultimate disposition of an individual claim entered in the course of a multiple claims action.'" Id . (quoting Sears, Roebuck & Co. v. Mackey , 351 U.S. 427, 436 (1956)). Second, the Court must determine whether there is any just reason for delay, "tak[ing] into account judicial administrative interests as well as the equities involved." Id. at 8. This step is necessary to preserve the long-standing policy against piecemeal appeals. Id . Accordingly, the Court may properly "consider such factors as whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals." Id . The existence of counterclaims does not render Rule 54(b) certification inappropriate. Id. at 9. "[Counterclaims'] significance for Rule 54(b) purposes turns on their interrelationship with the claims on which certification is sought." Id.
The Court finds that its December 19 Order does not fall within the ambit of Rule 54(b). As an initial matter, it is not clear that the December 19 Order constitutes a final judgment. That order disposed of three of Plaintiff's seven counts, and the Court is not convinced that the remaining four counts constitute separate claims for the purposes of Rule 54(b). "The word claim' in Rule 54(b) refers to a set of facts giving rise to legal rights in the claimant, not to legal theories of recovery based upon those facts." CMAX, Inc. v. Drewry Photocolor Corp. , 295 F.2d 695, 697 (9th Cir. 1961). Thus, Rule 54(b) certification is inappropriate where "[t]he claims' stated in the complaint are really but one claim, stated in two ways, for the purpose of presenting two legal theories of recovery." Id.
Here, in ruling on Plaintiff's Counts I and II, the Court determined that the Policy's unlawful advantage exclusion and California Insurance Code section 533 bar coverage for the $6.49 million judgment rendered in the Straitshot action. But the Court has yet to rule on Counts VI, VII, or VIII, and thus, has yet to determine the allocation between amounts covered and uncovered by the Policy (including defense costs) or whether Plaintiff is entitled to reimbursement from the Telekenex Defendants. It may be that the Court's ruling on Plaintiff's Counts I and II has a dispositive ...