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North East Insurance Co. v. Masonmar, Inc.

United States District Court, E.D. California

March 25, 2014

NORTH EAST INSURANCE COMPANY, a Maine corporation, Plaintiff.
MASONMAR, INC., a California corporation, DANIEL MILA, FLORENCIO VELASCO, and NICO BUSTOS, Defendants.


ANTHONY W. ISHII, District Judge.

This is an insurance policy limits dispute between Plaintiff North East Insurance Co. ("North East") against Defendants Daniel Mila, Florencio Velasco, and Nico Bustos (collectively "Claimants").[1] North East seeks a declaration that the applicable policy limit in a dispute between Claimants and North East's insured is $100, 000.00, while Claimants seek a declaration that the policy limit is $1.1 million dollars. Both sides have filed motions for summary judgment on the applicable policy limits. For the reasons that follow, the Court will grant North East's motion, deny Claimants' motion, and declare that the applicable policy limits is $100, 000.00.


Masonmar, Inc. ("Masonmar") does business as "The Battered Beaver, " a tavern in Oakdale, California. JUMF 1. On February 25, 2012, while visiting The Battered Beaver, Claimants became involved in an altercation with two other customers, Benjamin Crouch and Nicholas Vanlieshout. JUMF 2. Claimants allege that they suffered injuries when Crouch and Vanlieshout attacked, stabbed, and struck them repeatedly. JUMF 3. Crouch, Vanlieshout, and Claimants were all adults in February 2012. JUMF's 15, 16.

North East issued a policy of liability insurance, Policy No. CPPAS00264-11, ("the Policy") to Masonmar, effective from October 14, 2011 through October 14, 2012. JUMF 4. The Policy afforded, in addition to certain property insurance, Commercial General Liability ("CGL") insurance with per-occurrence limits of liability of $1 million, under Form CG 00 0110 01. JUMF 5. The CGL contained a Liquor Liability Exclusion, which excluded coverage for damages for which the "insured may be held liable by reason of: (1) Causing or contributing to the intoxication of any person; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages." See Doc. No. 1-1; JUMF 6. The Liquor Liability Exclusion only applied if the insured was in the business of "manufacturing, distributing, selling, serving, or furnishing alcoholic beverages." See Doc. No. 1-1; JUMF 6.

The Policy's CGL provision was modified by an Assault and Battery Limitation ("ABL") endorsement, Form CG9 21 20 10 07. JUMF 7. The ABL reduced the Policy's per-occurrence limits of liability under the CGL to $100, 000 for damages and supplementary payments alleged or claimed for, among other this, "bodily injury" resulting from assault and battery or physical altercations that occur in, on, near or away from the insured's premises. See JUMF 8.

The Policy also afforded Liquor Liability Coverage ("LLC") insurance with per occurrence limits of liability of $1 million, under Form CG 00 33 10 01. JUMF 9. The LLC insuring agreement form provided that North East "will pay those sums that the insured becomes legally obligated to pay as damages because of injury' to which this section applies if liability for such injury' is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage." See JUMF 10. The LLC form defined "injury" as "all damages including damages because of bodily injury' and property damage, ' and including damages for care, loss of service or loss of support." JUMF 11.

On April 24, 2013, claimants filed a personal injury lawsuit in Stanislaus County to recover for their stabbing injuries: Mila, Bustos, and Velasco v. Masonmar, Inc., et al., Case No. 684136. JUMF 12. The Claimants allege in that case that Masonmar was negligent for failing "to provide adequate security measures" and for failing to protect plaintiffs from Crouch and Vanlieshout. JUMF 13. The Claimants also allege Masonmar was negligent because it "continued to serve and/or allowed consumption and/or possession of alcoholic beverages" by Crouch and Vanlieshout when it should not have done so. JUMF 14. Claimants demanded that North East pay its policy limits to settle their claims against Masonmar, but a controversy arose as to the amount of the applicable policy limits. JUMF 17.


Cross motions for summary judgment are evaluated separately under the same standards that apply to single summary judgment motions. See Pintos v. Pacific Creditors Ass'n, 565 1106, 1111 (9th Cir. 2009); ACLU v. City of Las Vegas , 466 F.3d 784, 790 (9th Cir. 2006). Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Adickes v. S.H. Kress & Co. , 398 U.S. 144, 157 (1970); Fortyune v. American Multi-Cinema, Inc. , 364 F.3d 1075, 1080 (9th Cir. 2004). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying the portions of the declarations (if any), pleadings, and discovery that demonstrate an absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986); Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir. 2007). A fact is "material" if it might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248-49 (1986); United States v. Kapp , 564 F.3d 1103, 1114 (9th Cir. 2009). A dispute is "genuine" as to a material fact if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Anderson , 477 U.S. at 248; Freecycle Sunnyvale v. Freecycle Network , 626 F.3d 509, 514 (9th Cir. 2010).

Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the movant. Soremekun , 509 F.3d at 984. Where the non-moving party will have the burden of proof on an issue at trial, the movant may prevail by presenting evidence that negates an essential element of the non-moving party's claim or by merely pointing out that there is an absence of evidence to support an essential element of the non-moving party's claim. See James River Ins. Co. v. Herbert Schenk, P.C. , 523 F.3d 915, 923 (9th Cir. 2008); Soremekun , 509 F.3d at 984. If a moving party fails to carry its burden of production, then "the non-moving party has no obligation to produce anything, even if the non-moving party would have the ultimate burden of persuasion." Nissan Fire & Marine Ins. Co. v. Fritz Cos. , 210 F.3d 1099, 1105-06 (9th Cir. 2000). If the moving party meets its initial burden, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586 (1986); Nissan Fire , 210 F.3d at 1103. The opposing party cannot "rest upon the mere allegations or denials of [its] pleading' but must instead produce evidence that sets forth specific facts showing that there is a genuine issue for trial.'" Estate of Tucker v. Interscope Records , 515 F.3d 1019, 1030 (9th Cir. 2008).

The opposing party's evidence is to be believed, and all justifiable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. See Anderson , 477 U.S. at 255; Matsushita , 475 U.S. at 587; Narayan v. EGL, Inc. , 616 F.3d 895, 899 (9th Cir. 2010). While a "justifiable inference" need not be the most likely or the most persuasive inference, a "justifiable inference" must be rational or reasonable. See Narayan , 616 F.3d at 899. Inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Sanders v. City of Fresno , 551 F.Supp.2d 1149, 1163 (E.D. Cal. 2008); UMG Recordings, Inc. v. Sinnott , 300 F.Supp.2d 993, 997 (E.D. Cal. 2004). "A genuine issue of material fact does not spring into being simply because a litigant claims that one exists or promises to produce admissible evidence at trial." Del Carmen Guadalupe v. Agosto , 299 F.3d 15, 23 (1st Cir. 2002); see Bryant v. Adventist Health System/West , 289 F.3d 1162, 1167 (9th Cir. 2002). Further, a "motion for summary judgment may not be defeated... by evidence that is merely colorable' or is not significantly probative.'" Anderson , 477 U.S. at 249-50; Hardage v. CBS Broad. Inc. , 427 F.3d 1177, 1183 (9th Cir. 2006). If the nonmoving party fails to produce evidence sufficient to create a genuine issue of material fact, the moving party is entitled to summary judgment. Nissan Fire , 210 F.3d at 1103.


Plaintiff's Arguments

North East argues that it is entitled to a declaration that the $100, 000 ABL sets the applicable policy limits for Claimants' case. Claimants have alleged two theories of recovery against Masonmar, one based on inadequate security and ...

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