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Travelers Prop. Cas. Co. of America v. LK Transp., Inc.

United States District Court, E.D. California

March 13, 2014

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff,
v.
LK TRANSPORTATION, INC., a California Corporation; MARIO PRADO, an individual; JOHN SHOWER, an individual; JOHN RITCHIE, an individual; SANDRA RITCHIE, an individual, and Does 1 through 10, inclusive, Defendants

Page 800

For Travelers Property Casualty Company of America, a Connecticut corporation, Plaintiff: Theona Zhordania, McKenna Long & Aldridge, LLP, Los Angeles, CA; John Tinley Brooks, McKenna Long & Aldridge LLP, San Diego, CA.

For LK Transportation, Inc., Defendant: John Richard Haluck, LEAD ATTORNEY, Koeller, Nebeker, Carlson & Haluck, LLP, Roseville, CA.

For John Shower, John Ritchie, Sandra Ritchie, Defendants: John Dugan Douglas Barr, LEAD ATTORNEY, Barr & Mudford, Redding, CA; Paul J. O'Rourke, Jr., LEAD ATTORNEY, Law Offices Of Paul J. O'Rourke, Jr., Fresno, CA.

Page 801

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' CROSS-MOTION FOR SUMMARY JUDGMENT

JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE.

This matter is before the Court on Plaintiff Travelers Property Casualty Company of America's (" Plaintiff" ) Motion for Summary Judgment (Doc. #17) and Defendants LK Transportation, Mario Prado, John Shower, John Ritchie, and Sandra Ritchie's (collectively " Defendants" ) Cross-Motion for Summary Judgment (Doc. #23). Defendants oppose Plaintiff's motion (Doc. #24) and Plaintiff opposes Defendants' motion (Doc. #25).[1]

I. PROCEDURAL AND UNDISPUTED FACTUAL BACKGROUND

On April 19, 2010, Larry Kampmeinert, the owner of Defendant LK Transportation (" LK" ), received a phone call from Descor Inc. (" Descor" ) arranging for LK to go to the Yuba City area, pick up a construction trailer owned by Descor (" the Trailer" ), and move it back to Sacramento for a fee. JSF at 5. A tractor was required to move the Trailer on the highway. JSF at 7. Mr. Kampmeinert contacted Mario Prado (" Prado" ), who was an employee of LK. JSF at 8. Mr. Kampmeinert made arrangements for Prado to drive a tractor owned by LK (" the Tractor" ) from the LK yard in Sacramento to Yuba City to pick up the Trailer. JSF at 8. While

Page 802

Prado was driving the Tractor to Yuba City to pick up the Trailer and transport it to Sacramento, he was involved in a two-vehicle accident. JSF at 10. The driver of the other vehicle, Martha Shower, died at the scene of the accident. JSF at 12. Her passengers, John Shower and John Ritchie, claim to have been injured during the accident. JSF at 13. When the accident occurred, Prado had not yet arrived at Descor's work site and had not yet begun to haul the Trailer. JSF at 13. Prado and the Tractor were on the road only because Prado was on his way from Sacramento to pick up and transport the Trailer. JSF at 15.

At the time of the accident, the Tractor and Prado were insured under a policy (" the Northland Policy" ) issued by Northland Insurance Company, an affiliate of Plaintiff. JSF at 16. The Northland Policy provided liability coverage in the amount of $1 million for LK for any accident involving the Tractor and for Prado while driving the Tractor. JSF at 18, Ex. A. At the time of the accident, Descor was the named insured in a policy issued by Plaintiff Travelers (the " Travelers Policy" ), which provided liability coverage of $1 million per accident. JSF at 24, Ex. C. The Trailer was a " covered auto" under the Travelers Policy, but neither LK nor Prado were named insureds under the Travelers Policy, nor was the Tractor listed as an insured vehicle. JSF at 27-28.

On November 4, 2010, Defendants John Shower, John Ritchie, and Sandra Ritchie sued Prado and LK in Sacramento County Superior Court. JSF at 20. LK tendered the lawsuit to Northland, which paid its $1 million policy limits to John Shower and John Ritchie in partial settlement of their claims. JSF at 23. The settlement did not include a release of LK and Prado, or a dismissal of the action. JSF at 23. However, the settlement did include a " covenant not to execute," which limits any further recovery by Shower and Ritchie to the amount they are entitled to recover from any other liability policy that provides coverage for the accident. JSF at 23. On June 6, 2013, LK and Prado tendered the lawsuit to Travelers and requested that Travelers defend and indemnify them under the Travelers Policy. JSF at 30.

On July 19, 2013, Plaintiff Travelers filed the Complaint (Doc. #1) in this Court. The Complaint includes the following causes of action for declaratory judgment: (1) no coverage exists for the accident under the Travelers Policy; and (2) no duplicate coverage is available under the Travelers Policy, as $1 million has already been paid out under the Northland Policy. The Court has jurisdiction over this action under 28 U.S.C. § 1332(a)(1), as there is complete diversity between the parties and the amount in controversy exceeds $75,000.

II. OPINION

A. Legal Standard


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