United States District Court, N.D. California
PROGRESSIVE CASUALTY INS. CO., Plaintiff,
ST. PAUL FIRE AND MARINE INS. CO., Defendant.
ORDER REGARDING MOTIONS FOR SUMMARY JUDGMENT
JEFFREY S. WHITE, District Judge.
Now before the Court are the cross-motions for summary judgment filed by plaintiff Progressive Casualty Insurance Company ("Progressive") and defendant St. Paul Fire and Marine Insurance Company ("St. Paul"). Having considered the parties' pleadings and the relevant legal authority, the Court hereby denies Progressive's motion for summary judgment and grants St. Paul's cross-motion.
The facts at issue are not in dispute. This action concerns a coverage dispute between Progressive and St. Paul regarding their respective rights and obligations to their mutual insured under their respective insurance policies for an underlying lawsuit against the insured. Progressive covered the cost of the defense and settlement of the underlying lawsuit and now seeks some contribution from St. Paul.
Progressive issued its "Directors & Officers/Company Liability Insurance Policy for Financial Institutions" to Sonoma Valley Bancorp, policy number XXXXXXX-XX, for an original policy period of July 1, 2008 to July 1, 2011 ("Progressive Policy"). (Joint Stip. of Facts, No. 4.) The coverage period of the Progressive Policy was subsequently amended to July 1, 2008 to July 1, 2010. ( Id., No. 5.) St. Paul issued its "Broad Form PLUS Directors and Officers Liability Insurance Policy" to Sonoma Valley Bancorp, policy number EC09400585, for the period July 1, 2009 to July 1, 2010 ("St. Paul Policy"). ( Id., No. 7.) Shareholders brought purported class actions against Sonoma Valley Bancorp and certain of its former directors and officers. ( Id., Nos. 9-11.) The defendant officers and directors qualified as insured persons under both the Progressive Policy and the St. Paul Policy. ( Id., No. 13.) For purposes of this action, both parties agree that the shareholder lawsuit against these insured persons constitutes a "Claim" for "Wrongful Acts" as defined under both the Progressive Policy and the St. Paul Policy. ( Id., No. 15.)
The St. Paul Policy describes the director and officer liability coverage as follows:
The Company will pay on behalf of any Insured Person Loss resulting from Claims first made during the Policy Period for Wrongful Acts by an Insured Person in his or her capacity as such, except to the extent that such loss is paid by any other insurance or as indemnification from any source.
( Id., Ex. 2.) The Policy also contains the following "other insurance" clause: "The Insured Person(s) and St. Paul agree that all coverage under this Policy is excess over, and will not contribute with... all other insurance, whenever purchased, whether such insurance is stated to be primary, excess, contributing, contingent or otherwise...." ( Id. ) The St. Paul Policy defines "Loss" as "any amount, including Defense Expenses, that an Insured Person is obligated to pay as a result of a Claim...." ( Id. ) St. Paul contends that this Policy provided only excess and umbrella insurance to the directors and officers and, thus, is not liable for the cost of the defense and settlement. St. Paul describes the Policy as a "Side A policy" that "functions like a Difference in Conditions ("DIC") policy, meaning that the policy drops down' to provide coverage for individual directors and officers for a loss that is not covered by the underlying primary policy, or, if there is underlying coverage, the Side A policy provides coverage on an excess basis." (Declaration of William E. Husbands, ¶ 10.)
The Progressive Policy describes the Insured Persons Liability Coverage as the following: "[t]he Insurer will pay on behalf of the Insured Persons, Loss resulting from Claims first made during the Policy Period or the Discovery Period against the Insured Persons for which the Insured Persons are legally obligated to pay for Wrongful Acts...." ( Id., Ex. 1.) The Policy defines "Loss" as "Defense Costs and any amount which the Insured Persons or the Company (if applicable) are legally obligated to pay resulting from a Claim...." ( Id. ) The Progressive Policy also contains the following "other insurance" clause: "This Policy shall not be subject to the terms of any other insurance. All Loss, including Defense Costs, payable under this policy, shall be excess to... any other existing insurance regardless of whether collectable, including but not limited to, any insurance under which there is a duty to defend, unless such other insurance is written only as specific excess insurance over the Limits of Liability provided by this Policy...." ( Id. )
A. Legal Standards Applicable to Motions for Summary Judgment.
A principal purpose of the summary judgment procedure is to identify and dispose of factually unsupported claims. Celotex Corp. v. Cattrett, 477 U.S. 317, 323-24 (1986). Summary judgment is proper when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is 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(c). "In considering a motion for summary judgment, the court may not weigh the evidence or make credibility determinations, and is required to draw all inferences in a light most favorable to the non-moving party." Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997).
The party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. An issue of fact is "genuine" only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A fact is "material" if it may affect the outcome of the case. Id. at 248. If the party moving for summary judgment does not have the ultimate burden of persuasion at trial, that party must produce evidence which either negates an essential element of the non-moving party's claims or that party must show that the non-moving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Once the moving party meets its initial burden, the non-moving party must go beyond the pleadings and, by its own evidence, "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
In order to make this showing, the non-moving party must "identify with reasonable particularity the evidence that precludes summary judgment." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). In addition, the party seeking to establish a genuine issue of material fact must take care adequately to point a court to the evidence precluding summary judgment because a court is "not required to comb the record to find some reason to deny a motion for summary judgment.'" Carmen v. San Francisco Unified School Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quoting Forsberg v. Pacific Northwest Bell Telephone Co., 840 F.2d 1409, 1418 (9th Cir. 1988)). ...