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Pacatte Construction Company, Inc v. Amco Insurance Company

May 16, 2013


The opinion of the court was delivered by: Jon S. Tigar United States District Judge



Plaintiff Pacatte Construction Company, Inc. ("Plaintiff") has brought a Complaint ("Complaint") against Defendants AMCO Insurance Company ("AMCO") and Great American Assurance Company ("Great American") (collectively, "Defendants") for breach of contract and 17 breach of the covenant of good faith and fair dealing, and seeking declaratory relief. Complaint, 18 Exh. A. to ECF No. 1. Defendants have moved for summary judgment. ECF No. 37. After 19 considering the moving papers, the arguments of the parties at the hearing held on March 6, 2013, 20 and good cause appearing, the Court hereby GRANTS the motion for summary judgment in its 21 entirety.


A. Factual Background

1. The Construction

In July 2000, Plaintiff purchased a General Commercial Liability policy from AMCO ("AMCO GCL Policy"). Complaint at ¶ 4; Exh. 1 to Declaration of Beverly Dettman ("Dettman 27 Decl."), ECF No. 39-2. About two years later, Plaintiff entered into a contract with Marigold LLC 28 ("Marigold") to construct a building in Sebastapol, California (the "Basso Building"). Exh. 1 to Declaration of Mark Bonino ("Bonino Decl."), ECF No. 42. According to the contract, Plaintiff 2 would build according to the plans or as directed by the owner, and the owner took responsibility 3 to determine that work was performed as required under the contract. Id.

During the final month of construction, Plaintiff's CEO James Pacatte met with the owner 5 and city officials to discuss his concerns that the grade of the entrances to the building did not 6 comply with the ADA. Declaration of James L. Pacatte ("Pacatte Decl."), at ¶¶ 6 & 7, ECF No. 7 48-2. Nonetheless, construction was completed at the owner's direction in 2003. Id. at ¶ 7; Exhs. 8 2 & 3 to Bonino Decl. 9

Plaintiff states in its opposition that Marigold remodeled the building in 2007, and that Plaintiff was not involved in that work. Memorandum of Points and Authorities in Opposition to 11 Defendants' Motion for Summary Judgment ("Opp."), ECF No. 48, at 3:5-13. 12 In July 2008, Plaintiff purchased a Commercial Umbrella ("Umbrella") policy from AMCO, and also obtained coverage from Great American pursuant to a different GCL policy 14 ("Great American GCL Policy"). Complaint at ¶¶ 4-5; Exhs. 1-3 to the Declaration of Jean M. 15 Osborne ("Osborne Decl."), ECF No. 41. 16

2. The Underlying Actions

On June 30, 2009, Hollynn Delil filed a complaint (the "Delil Complaint") against

Marigold in this district. Delil v. Marigold, LLC, Case No. 3:09-cv-02934- JSW ("the Delil 19 Action"); Exh. 1 to Request for Judicial Notice ("RJN") in this case, ECF No. 38-1.*fn1 Ms. Delil 20 brought two causes of action: (1) "Damages and Injunctive Relief for Denial of Full and Equal 21

Access to a Public Accommodation" pursuant to California statutory provisions; and (2) 22 "Violation of the Americans With Disabilities Act." Exh. 1 to RJN, at ¶¶ 1 & 21. According to 23 the Delil Complaint, the Basso Building was not equally accessible to persons with wheelchairs 24 and therefore failed to comply with state and federal disabled access laws. Id. at ¶ 2. Ms. Delil 25 settled her claims against Marigold in 2010, and the case was dismissed. Delil Action, ECF Nos. 2 24 & 25. Marigold agreed to close the second floor of the Basso Building, as well as the 3 restrooms, drinking fountain, and elevator. Exh. 2 to RJN in this case, ECF No. 38-2, at ¶10. 4

Marigold also agreed to make various physical modifications to the first floor and pay $107,000 to 5 Ms. Delil "for her alleged emotional distress, costs and attorneys' fees." Id. Marigold's attorney 6 would later state in a letter to Plaintiff's attorney that "settlement of the [Delil] case was $107,000 7 plus the cost of repair with approximately $30,000 attributed to the emotional distress allegedly 8 sustained by Delil, and the remaining $78,000 for costs and attorney fees." Exh. F to Umrein 9 Decl. 10

Marigold, in turn, sued Plaintiff on December 16, 2010, in Sonoma County Superior Court, 11 in a case titled Marigold, LLC v. Pacatte Construction Co., Inc., Case No. SVC-248805 (the 12 "Marigold Action") for indemnity and contribution, to recover sums it paid to settle the Delil action. Id. The complaint included four causes of action: (1) Comparative Indemnity; (2) 14 Contribution; (3) Implied Contractual Indemnity; and (4) Declaratory Relief. Id. at ¶¶ 13, 17, 19, 15 & 21. Marigold alleged that Plaintiff's construction of the Basso Building violated state and 16 federal disabled access laws, and therefore Plaintiff was liable for some or all of the settlement 17 Marigold had paid to resolve the Delil action, as well as the cost of repairs required under the 18 terms of the settlement. Id. at ¶¶14-23. 19

Plaintiff tendered defense of the Marigold action to AMCO on February 7, 2011. Exh. 3 to Dettman Decl., at AMCO 160-61. A week later, AMCO denied coverage. Exh. 4 to Dettman 21 Decl. Plaintiff tendered a claim to Great American on February 9, and Great American denied that 22 claim on March 23. Exhs. 4 & 8 to Osborne Decl. Plaintiff sought reconsideration of both 23 determinations in March 2011, and again in October 2012, and on both occasions both insurers 24 declined to revise their determinations. Exhs. 7-9 to Dettman Decl; Exhs. 10-13 to Osborne Decl. 25

Plaintiff agreed to settle the Marigold Action for $35,000, after paying a total of $152,144.22 in attorney's fees to defend against it. Pacatte Decl. at ¶ 8.

3. The Terms of the Insurance Policies

The two GCL policies have essentially identical language. Under the pertinent portions of the GCL policies, Defendants undertook to "pay those sums that the [i]nsured becomes legally 2 obligated to pay as damages because of 'bodily injury' or 'property damage' to which this 3 insurance applies."*fn2 Exh. 1 to Dettman Decl, at AMCO 571; Exh. 1 to Osborne Decl., at GA-CF-4 575. The policies state that the insurers "will have no duty to defend the [i]nsured against any 5 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not 6 apply. Id. The policies only apply when bodily injury or property damage "is caused by an 7 'occurrence' during the policy period. Id. "Bodily injury" is defined in both GCL policies as 8 "bodily injury, sickness or disease sustained by a person, including death resulting from any of 9 these at any time." Exh. 1 to Dettman Decl., at AMCO 582 ; Exh. 1 to Osborne Decl., at GA-CF-10 ...

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