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Lennar Mare Island, LLC v. Steadfast Insurance Co.

United States District Court, E.D. California

April 7, 2015



KENDALL J. NEWMAN, Magistrate Judge.

Presently pending before the court are four motions to compel, two filed by plaintiff/counter-defendant Lennar Mare Island, LLC ("LMI"), and the other two filed by defendant/counterclaimant Steadfast Insurance Company ("Steadfast"). (ECF Nos. 234, 235, 247, 248.) Through one of its motions, LMI seeks to compel Steadfast to produce certain underwriting files LMI claims Steadfast previously stated it would produce, but which LMI cannot locate in its review of the documents Steadfast has produced thus far. (ECF No. 234.) LMI's other motion seeks to compel Steadfast to provide testimony regarding certain topics set out in LMI's Rule 30(b)(6) amended notice of deposition. (ECF No. 235.) Through its first motion, Steadfast seeks to compel LMI "to provide further testimony regarding its knowledge of the scope and extent of the environmental conditions at Mare Island prior to inception of the policies at issue in this litigation." (ECF No. 247.) Through its second motion, Steadfast seeks to compel LMI to provide testimony concerning whether the United States Navy ("Navy") paid for LMI's legal expenses incurred in its pursuit of benefits under the insurance policy at issue and, if so, whether LMI either has been reimbursed by the Navy for such expenses, or has an agreement with the Navy that the Navy will reimburse LMI for such expenses at a later time.

The parties did not timely file a joint statement with respect to any of the four motions. Instead, the parties filed declarations by their respective counsel addressing the parties' motions. (ECF Nos. 255, 256.)

A hearing on the motions was conducted on April 2, 2015. (ECF No. 102.) Attorney Ryan Werner appeared on behalf of LMI. Attorneys Brandon Rainey and Ethan Miller appeared on behalf of Steadfast. Attorney Amanda Hairston appeared telephonically on behalf of counterclaimant/counterdefendant CH2M Hill Constructors, Inc ("CCI"). After considering the parties' filings, supporting documentation, and the oral argument at the hearing, the court denies both of LMI's motions to compel without prejudice, denies Steadfast's motion to compel filed at ECF No. 247 without prejudice, and partially grants Steadfast's motion to compel filed at ECF No. 248 insofar as LMI will be directed to produce to Steadfast any written agreements it has entered into with the Navy that establish that the Navy is assisting LMI in its payment of attorneys' fees in this litigation and that the Navy is entitled to reimbursement for some or all of the attorneys' fees for which it is paying.


The background facts are taken from the parties' declarations unless otherwise indicated.[1] The Navy operated a base at Mare Island in the City of Vallejo, California from 1852 to 1996. (ECF No. 63 at 2 (a prior Joint Statement).) The Navy's operations at this base resulted in contamination of certain sites located on Mare Island, requiring the Navy to investigate and remediate. (Id.) The Navy closed its base on Mare Island in 1996. (Id.) In 2002, the Navy conveyed title to the land of its former naval base to the City of Vallejo ("City"), and the City then conveyed title to a portion of the base known as the Eastern Early Transfer Parcel ("EETP") to LMI. (Id.)

In 2001, the Navy and the City entered into an Environmental Services Cooperative Agreement ("ESCA") in anticipation of these transfers. (Id.) Under the terms of the ESCA, the Navy agreed to pay the City $77.67 million, and the City agreed to perform, environmental remediation of certain "Known Conditions" at the EETP. (Id.) The ESCA defined Known Conditions by reference to tables and figures identifying specific sites and contaminants and defined any condition that was a not a Known Condition as an "Unknown Condition." (Id.) The City had no responsibility under the ESCA for certain items referred to as "Navy Retained Conditions." (Id.)

Also in anticipation of the land transfers, the City and LMI entered into the Mare Island Remediation Agreement ("MIRA"). (Id. at 2-3.) In the MIRA, LMI agreed to undertake the City's remediation obligations under the ESCA. (Id. at 3.)

LMI hired CCI to perform remediation construction at Mare Island by entering into the Guaranteed Fixed Price Contract ("GFPC"). (Id.) The GFPC required CCI to perform "certain environmental services related to the remediation of contamination in the EETP." (Id.) Among these services was the "cleanup of specified Known Conditions" for a fixed price of $70.45 million. (Id.) The GFPC also stated that CCI would be required to cleanup Unknown Conditions under certain circumstances, "for additional compensation, when requested to do so by LMI." (Id.)

In addition, LMI and CCI each signed onto separate insurance policies with Steadfast. The insurance policy between Steadfast and CCI is the "RSL Policy, " which provided coverage to CCI in the event that the cost of cleanup of "Known" Pollution Conditions exceeded a specified threshold of $57.5 million. (Id. at 3-4.) The insurance policy between Steadfast and LMI is the "ELI Policy, " which "provides coverage to LMI for the cost of remediating pollution conditions that are not Known Pollution Conditions... as well as coverage for a list of special conditions described in an endorsement." (Id. at 3.)

The action brought by LMI against Steadfast involves seven sites in the EETP. (Id. at 5.) LMI generally alleges that Steadfast committed: (1) intentional interference with contract (i.e., LMI's contract with CCI); (2) breach of contract (between LMI and Steadfast); (3) tortious breach of the implied covenant of good faith and fair dealing; and (4) that LMI is entitled to declaratory relief. (ECF No. 1, Ex. A at 1-6.)

Of particular relevance to the discovery disputes before the court is LMI's claim against Steadfast for tortious breach of the implied covenant of good faith and fair dealing because LMI seeks to recover it attorneys' fees incurred in pursuit of obtaining its benefits under the ELI policy as an item of damages for this claim (ECF No. 22 at ΒΆ 31), and Steadfast seeks to compel testimony regarding the Navy's involvement in paying for those fees.


As an initial matter, the court reiterates that for all future discovery disputes in this action, counsel for the parties are required to meet and confer in person prior to filing a motion to compel. Furthermore, the moving party is required to file a declaration by its counsel along with the parties' joint statement that details the parties' in-person meet and confer efforts, what was accomplished through those efforts, and any other information regarding the meet and confer conference that counsel believes should be brought to the court's attention. Failure to file such a declaration will result in a summary denial of the motion. The parties are cautioned that the court will not hesitate to issue appropriate sanctions ...

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