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Harrison v. Bankers Standard Insurance Co.

United States District Court, S.D. California

June 9, 2015

Jack D. Harrison et al., Plaintiffs,
Bankers Standard Insurance Company et al., Defendants.


JILL L. BURKHARDT, Magistrate Judge.

On May 11, 2015, this Court issued a Minute Order granting Defendant BBVA Compass Insurance Agency, Inc.'s ("BBVA" or "BCIA") Motion to Compel Production of Settlement Agreement, with a written order to follow. (ECF No. 146.) Accordingly, the Court issues the following written order GRANTING BCIA's Motion to Compel Production of Settlement Agreement. (ECF No. 130.)


Plaintiffs Jack and Naoma Harrison are insureds under three insurance policies issued by Defendant Bankers Standard Insurance Company ("Bankers" or "BSIC"): (1) an auto policy; (2) a dwelling and umbrella policy; and (3) a valuables policy. (ECF No. 64 at ¶ 13.) Each of the three insurance policies had a policy period of July 20, 2011, through July 20, 2012. (Id. ) The policies guaranteed coverage up to $2, 600, 000, and covered the Harrisons' personal property for limits of $2, 419, 000. (Id. at ¶ 15.) On July 28, 2011, Plaintiffs rented a truck to move their personal belongings from their home in Colorado to their new home in California. (Id. at ¶ 20.) Plaintiffs were also towing their personal vehicle on a trailer behind the truck. (Id. ) During the journey, Plaintiffs stopped overnight in New Mexico where their truck with all their belongings and their vehicle were stolen. (Id. at ¶ 21-22.) Plaintiffs submitted a claim to BSIC under their policies. (Id. at ¶ 23.) Defendants paid a portion of Plaintiffs' claim, but not the full amount. (Id. at ¶ 29.) As a result, Plaintiffs filed the present case.

The original Complaint alleged claims for declaratory judgment, breach of contract, violation of California Business and Professions Code § 17200 ("UCL"), bad faith, fraud and negligent misrepresentation against Defendants BSIC, Ace Property and Casualty Insurance Company, American Family Mutual Insurance Company and BCIA. In response to the Complaint, Defendant American Family filed a motion to dismiss for lack of personal jurisdiction, which the Court granted. (ECF No. 40.) Defendant Ace also filed a motion to dismiss, which the Court granted. (ECF No. 39.) Defendant BSIC filed a motion to dismiss, which the Court granted in part and denied in part. (Id. ) Plaintiffs thereafter filed the First Amended Complaint in which they allege claims for declaratory judgment, breach of contract, violation of the UCL and bad faith against Defendants BSIC and BCIA only. (ECF No. 41.) The operative Complaint - Plaintiffs' Second Amended Complaint - adds claims for negligence and failure to advise on or secure coverage against BCIA. (ECF No. 64.)

On January 23, 2015, Plaintiffs and Defendant BSIC filed a Notice of Settlement. (ECF No. 116.) On January 27, 2015, all claims between Plaintiffs and Defendant BSIC were dismissed with prejudice. (ECF No. 118). On April 15, 2015, Defendant BCIA, the sole remaining defendant, filed the instant Motion to Compel. (ECF No. 130.) On April 27, 2015, Plaintiffs filed a Motion to Dismiss Partial Claims against Defendant BCIA. (ECF No. 139.) Plaintiffs sought to dismiss: (1) all agency allegations as between Defendant BSIC and Defendant BCIA: (2) the third claim for violation of California's Unfair Business Practices Act; and (3) the fifth claim for breach of implied covenant of good faith and fair dealing. (Id. ) On May 19, 2015, after the instant Motion to Compel was granted, the District Judge granted Plaintiffs' Motion to Dismiss Partial Claims. (ECF No. 149.) To date, there are two remaining claims against Defendant BCIA: (1) claim four for negligence; and (2) claim six for failure to advise on or secure coverage.[1] (ECF No. 64.)


The instant Motion to Compel seeks a court order compelling Plaintiffs to produce the Settlement Agreement reached by Plaintiffs and Defendant BSIC. (ECF No. 130.) BCIA argues that it is "entitled to request the production of the Settlement Agreement as the settlement amount will off-set any further damages awarded to Plaintiffs." (Id. at 4.) BCIA argues that Plaintiffs have "alleged that BCIA's and Banker's [BSIC] purported acts combined to make one indivisible injury" - the purported failure to provide adequate insurance coverage. (Id. at 4-6.) "Plaintiffs argue that BCIA is liable for any personal property damages in excess of the Bankers' [BSIC] policy limits meaning BCIA is purportedly liable for any damages not covered by Bankers [BSIC]...." (Id. at 6, citing Exhibit F.) Accordingly, "BCIA is a joint tortfeasor... [and thus] entitled to offset the settlement amount against Plaintiffs' future damages claims." (Id. )

Plaintiffs oppose the Motion to Compel and argue that the Settlement Agreement need not be produced because it is not relevant to BCIA's defense. (ECF No. 134 at 5.)

This Court ruled BSIC properly applied the 10% sublimit, and held the Plaintiffs' policy limit under the BSIC policy was $266, 000.00. [Docket No. 39]. The Court went on to state that the American Family policy limit was $269, 100. [Docket No. 39]. Plaintiffs' alleged losses as a result of the theft were $722, 456.49. [Compl., ¶ 34]. Based on these numbers, Plaintiff's (sic) damages claim against BCIA is $187, 356.49 because the Harrisons were told by BCIA they were fully covered when in fact they were [not]. Thus, the settlement agreement would not shed any additional light as to BCIA's liability to Plaintiffs because the settlement agreement between BSIC and Plaintiffs relates to BSIC contractual liability under the policy limits, which has nothing to do with BCIA's negligence liability.

(Id. at 6.) Thus, Plaintiffs argue that the Settlement Agreement is not relevant to the remaining Defendant and claims in this case and should not be produced. (Id. )

Additionally, Plaintiffs argue that BSIC and BCIA are not joint tortfeasors, that the harm is divisible, and that BCIA is not entitled to an offset under California Code of Civil Procedure § 877. Plaintiffs contend that BSIC was sued for breach of contract, whereas BCIA is being sued primarily for negligence. Accordingly, BSIC and BCIA are not "joint tortfeasors for the same wrong and same loss. The wrongs and damages BSIC and BCIA committed are different, distinct and divisible." (Id. at 7.)

Finally, Plaintiffs submit that the Settlement Agreement is confidential and should not be compelled in light of California's "strong public policy favoring settlements that extends to confidential settlement agreements." (Id. at 9.)

In its Reply, BCIA argues that "it is irrelevant whether BCIA is a joint tortfeasor [or not, ] as overlapping liability for the same injury entitles BCIA to offset the amount of its liability to prevent double recovery for the same injury."[2] (ECF No. 136 at 2.) BCIA contends that the "actual settlement amount Plaintiffs received from Bankers determines BCIA's set-off claims as opposed to the $266, 000 policy limit." (Id. at 8.) Finally, BCIA ...

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