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Bita Trading, Inc. v. Nationwide Mutual Insurance Co.

United States District Court, Ninth Circuit

January 6, 2014

BITA TRADING, INC., Plaintiff,


JEFFREY T. MILLER, District Judge.

Plaintiff Bita Trading, Inc. ("Bita") moves for partial summary judgment on its insurance coverage claim. Defendant Nationwide Mutual Insurance Company ("Nationwide"), also erroneously sued as Allied Insurance, seeks a declaration that there is no property coverage under the contract of insurance at issue. All motions are opposed. For the reasons set forth below, the court grants Nationwide's motion for summary judgment and denies Bita's partial motion for summary judgment. The Clerk of Court is instructed to enter judgment in favor of Defendants, and against Plaintiff, on all claims and to close the file


On May 24, 2013, Bita commenced this action in the California Superior Court, County of San Diego, by filing a form complaint alleging a single cause of action for breach of an insurance contract. On July 2, 2013, Nationwide removed the action to this court based upon diversity jurisdiction. (Ct. Dkt. 1).

The following evidentiary facts are not disputed.

The Ground Lease

Bita owns real property located on Mira Mesa Boulevard in San Diego, California. Effective August 1, 2005, Bita entered into a Ground Lease with Sorrento Mesa Hand Car Wash & Spa, Inc. ("Sorrento") for the construction and operation of a car wash and related facilities. The Ground Lease obligated Sorrento to maintain builder's risk, property, liability, and business interruption insurance after the completion of the improvements. The lease also provided that Sorrento would designate Bita as an additional insured under the policies.

Bita and Sorrento became involved in a dispute over the property. On May 25, 2012, the Superior Court of San Diego County terminated the lease, awarded monetary relief to Bita, and restored possession to Bita.[1] Bita asserts that Sorrento caused damage to the property in the amount of $750, 000. (Sheena Decl. ΒΆ 7). Bita also represents that only the car wash portion of the business opened on June 1, 2013, and that the remaining portions of the operations, consisting of a convenience store, office and oil change facility, have not been fully repaired and have not been fully placed in service. Bita also seeks to recover business interruption losses under the Sorrento insurance contract.

The Sorrento Policy

Nationwide issued policy No. ACP BPA XXXXXXXXXX to Sorrento for the period from March 22, 2012 through March 22, 2013. The policy consists of a Declarations sections followed by two major sections: a 39-page Premier Businessowners Property Coverage Form (The "Property Form"), setting forth the first party property coverage and a 22-page Premier Businessowners Liability Coverage Form (the "Liability Form"), setting forth the third party individual liability coverage. (Nationwide Exh. 1).[2]

The original Property Declarations page listed Sorrento as the only insured. (NW 00005, 00009). The Property Form also provided that certain payments would be made to mortgagees of the property. These entities are also listed as additional insureds. (NW 000010). The Property Form also provided coverage for the loss of business income.

The Liability Form provides liability insurance coverage for those sums the "insured becomes legally obligated to pay as damages because of bodily damages' or property damages' to which this insurance applies...." (NW 000058). The Liability Form also extends insurance coverage for several categories of "Automatic Additional Insured." One entity is "Managers or Lessors of Leased Premises" which provides, in pertinent part:

e. Managers or Lessors of Leased Premises
Any person or organization from whom you lease premises is an additional insured, but only with respect to their liability arising out of your use of that part of the premises leased to you, subject to the following additional exclusion:
This insurance, including any duty we have to defend "suits, " does not apply to structural alterations, new construction or demolition operations performed by or for such person or organization.
HOWEVER, their status as additional insured under this policy ends when you cease to be a tenant of such premises.

(NW000072). For purposes of liability coverage, Bita, as the lessor of the property, was automatically an additional ...

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