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Westport Insurance Corp. v. California Casualty Management Co.

United States District Court, N.D. California

July 8, 2016

WESTPORT INSURANCE CORPORATION, Plaintiff,
v.
CALIFORNIA CASUALTY MANAGEMENT CO., Defendant.

          ORDER DENYING MOTION FOR JUDGMENT ON THE PLEADINGS RE: DKT. NO. 40

          WILLIAM H. ORRICK UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         Plaintiff Westport Insurance Corporation ("Westport") and defendant California Casualty Management Co. ("California Casualty") both provided insurance for three school administrators in the Moraga School District in California. When the administrators were sued for negligent supervision, Westport funded the settlement of the claims. Westport now seeks contribution from California Casualty and moves for judgment on the pleadings. For the reasons discussed below, the motion is DENIED.

         BACKGROUND

         I. FACTUAL BACKGROUND

         The following facts are taken from Westport's complaint and the exhibits attached to it, except where otherwise indicated. The parties' dispute arises out of claims brought by three students (Does 1, 2, and 3) at Joaquin Moraga Intermediate School in the Moraga School District ("School District") who alleged that they were sexually molested by their teacher in the mid-1990s. Compl. ¶ 2 (Dkt. No. 1). When the students came forward in 1996, the teacher killed himself. Id. In 2013, the students sued three school administrators (collectively, "Administrators") and the School District for negligent supervision of the teacher. Id. ¶¶ 10-22. Does 1 and 2 filed one lawsuit against the Administrators and the School District in January 2013. Id. ¶ 10. Doe 3 filed another lawsuit against the Administrators and the School District in the same month. Id. ¶ 19. The students alleged that the teacher had molested them in the following school years:

1993-1994 School Year

1994-1995 School Year

1995-1996 School Year

1996-1997 School Yea

Doe 1

X

X

X

Doe 2

X

X

Doe 3

X

Id. ¶¶ 12-14, 16-17, 21; see also Mot. at 6 (Dkt. No. 14).

         Westport provided insurance for both the School District and the Administrators. Compl. ¶¶ 23-30.[1] Specifically, Westport issued two policies of primary general liability insurance ("Westport Primary Policies") to the School District. One of the Westport Primary Policies was effective from October 1, 1991 through October 1, 1994, and the other was effective from October 1, 1994 through October 1, 1997. Id. ¶¶ 24-25. According to Westport, the first pages of both of the Westport Primary Policies "indicate a limit of liability of ‘$1, 000, 000 each occurrence.'" Mot. at 3 (quoting Compl. Exs. C, D). Westport also issued four policies of excess liability insurance ("Westport Excess Policies") to the School District. One of the excess policies was effective from October 1, 1991 to October 1, 1994; the other three were effective for consecutive one-year periods starting October 1, 1994. Compl. ¶ 27.[2]

         In contrast with Westport, California Casualty provided insurance only for the Administrators, not for the School District. Specifically, California Casualty issued successive annual liability policies ("California Casualty Polices") to the Association of California School Administrators and the Association of California Community College Administrators. Id. ¶ 31. The California Casualty Policies were in effect from at least July 1, 1994 to at least July 1, 1997. Id. ¶ 32. Exhibit F to Westport's complaint is a copy of the policy in effect from July 1, 1994 through July 1, 1995. See Compl. Ex. F; Ans. ¶ 34 (Dkt. No. 4). Westport alleges that each of the California Casualty Policies contains "substantially similar" language. Compl. ¶ 34. In its answer, California Casualty admits that Exhibit F is a copy of the policy in effect from July 1, 1994 through July 1, 1995 but does not admit that each of the California Casualty Policies uses substantially similar language. See Ans. ¶ 34. The policy attached to the complaint defines the term "Insured, " in relevant part, as "[a] member of the Associate of California School Administrators who is employed by a school board, board of trustees or other similar governing body of an educational unit." Compl. Ex. F § II.E. The policy also includes the following provisions:

COVERAGES AND LIMITS OF LIABILITY
Coverage A. Administrator Excess Liability $150, 000.00 per occurrence, Over $1, 000, 000.00 of Underlying Primary Layer/$2, 000, 000.00 aggregate per annual policy period
[ . . . ]
III. COVERAGES
In this section the Company indicates the coverages provided, subject to the exclusions, limits of liability and other terms of this policy.
A. ADMINISTRATORS' EXCESS LIABILITY. The Company agrees to pay all damages in excess of the required underlying primary collectible insurance or self-insurance which the insured shall become legally obligated to pay as a result of any claim arising out of an occurrence in the course of the insured educational employment activities, and caused by any acts or omissions of the insured, or any other person for whose acts the insured is legally liable, not to exceed the limits of liability stated in the Declarations for this coverage.
[ . . . ]
IV. LIMITS OF LIABILITY
The combined limits of liability for each coverage stated in the Declarations are the limits of the Company's liability to each Insured for all damages arising out of one occurrence, except as provided in Coverage A, additional coverages, but in no event shall the Company's liability be more than $250, 000 for all damages and costs of defense arising out of one occurrence. The fact that there may be multiple claims against the Insured as a result of the occurrence shall not operate to increase the limit of the Company's liability under this policy. ...

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