United States District Court, E.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY
MENDEZ, UNITED STATES DISTRICT JUDGE
insurance coverage dispute was sparked by a state court
lawsuit over a residential fire. It heated up with a
cross-complaint filed against Defendants in the state court
action for which Defendants tendered their defense to Bankers
Insurance Company (“Bankers”). Bankers further
fanned the flames by filing this present action for
declaratory relief and it now seeks summary judgment
concerning its duties to defend and indemnify the Defendants
in the underlying action. For the reasons described below the
Court grants Bankers' Motion for Summary Judgment.
Conditioning & Heating (“A-1”) is a sole
proprietorship owned by Daniel Edward Michael Webb
(“Webb”) that installs and services heating and
air conditioning equipment. Defendants' Responses to
Plaintiff's Separate Statement of Undisputed Facts
(“SUF”), ECF No.42, at ¶¶ 10, 27. A-1,
Webb, and Daniel Fisher (“Fisher”) applied to
Bankers for general liability coverage in 2002 and held a
Bankers policy from August 2003 to August 2005. SUF
¶¶ 4, 5, 6; Exh. 8. Webb and Fisher also partnered
to create Homestead Installations (“Homestead”),
a fireplace and stove installation business that incorporated
in April 2002 and for which Webb and Fisher were the sole
shareholders. Defendants' Opposition at 2; SUF at
¶¶ 8, 11. Although Homestead attempted to secure
insurance from Bankers in 2004, Homestead has never been
listed as a named insured on a Bankers policy. SUF at
¶¶ 7, 21; Filipoone Decl. at ¶ 6.
2004, Fisher-working for Homestead-installed a wood burning
stove and flue system at 9753 Ben Hall Drive in Galt,
California. SUF at ¶¶ 12, 15, 25. Custom Fireside
Shop, Inc. (“Custom”) contracted Homestead to
perform the work and required Homestead to procure a one
million dollar general liability insurance policy naming
Custom as an additional insured. SUF at ¶¶ 12, 13.
Homestead attempted to apply for this insurance with the
Scott Alberts Insurance Agency (“Alberts”)
through the Alberts' employee Linda Shook
(“Shook”). Alberts and Shook then provided
Defendants with an ACORD form Certificate of Liability
Insurance, which names A-1 and Homestead as insureds, Custom
as the certificate holder, and Alberts as the producer. SUF
at ¶¶ 16, 17; Exh. 7. Around March 28, 2012, the
residence in which Fisher installed the above-described stove
was destroyed in a fire. SUF at ¶ 18.
year and a half after the fire, Safeco Insurance Company
(“Safeco”) filed a state lawsuit against several
parties, including Custom, due to the fire and the money
Safeco paid the insured for damage to the residence. SUF at
¶ 19; Exh. 4. Custom filed a cross-complaint naming
Homestead, A-1, Webb, and Fisher, among others. SUF at ¶
19; Exh. 5. Custom, Homestead, A-1, Webb, and Fisher each
tendered their defense to Bankers and requested that Bankers
defend and indemnify them in the Safeco lawsuit. SUF at
¶ 20. Bankers filed the present suit in January 2016
seeking a judicial declaration-pursuant to 28 U.S.C. §
2201-that it does not owe a duty to defend or indemnify A-1,
Fisher, Webb, Homestead, or Custom in the Safeco suit.
Complaint for Declaratory Relief, ECF No. 1. Bankers also
named Safeco as a defendant in order for the judgment to bind
Safeco. Compl. at ¶ 7. A default was entered against
A-1, Homestead, Safeco and Webb on May 25, 2016. ECF No. 11.
The default was set aside on June 29, 2016 as to Webb and
A-1. ECF No. 14. By stipulation and Court order, Custom was
not required to file any responsive pleading and dismissed
from this action. ECF Nos. 5 & 6. A-1, Webb, Fisher, and
Homestead filed their Answer and
“cross-complaint” against Alberts and Shook
(“Cross-Defendants”) alleging that
Cross-Defendants failed to secure the requested Bankers
insurance coverage and asserting related claims. See
Cross-Complaint, ECF No. 15.
filed its Motion for Summary Judgment on January 13, 2017.
ECF No. 28. Cross-Defendants requested a continuance of the
hearing on the motion, which the Court denied. ECF Nos. 29
& 33. A-1, Webb, Fisher, and Homestead (hereinafter
“Defendants”) filed an opposition, as did
Cross-Defendants. ECF Nos. 40 & 34. Although Plaintiff
contests Cross-Defendants' standing to oppose its motion,
Plaintiff replied to each opposition. ECF Nos. 43 & 44.
suit seeking declaratory judgment pursuant to 28 U.S.C.
§ 2201, a district court must first inquire whether
there is an actual case or controversy within its
jurisdiction. Principal Life Ins. Co. v. Robinson,
394 F.3d 665, 669 (9th Cir. 2005). This standard is identical
to Article III's constitutional case or controversy
requirement and thus determines the court's jurisdiction
to award relief. Am. States Ins. Co. v.
Kearns, 15 F.3d 142, 143 (9th Cir. 1994).
Ninth Circuit has held that in a declaratory judgment action
brought to determine an insurer's duty to defend and
indemnify in a pending state court liability suit, the case
or controversy requirement is met. Kearns, 15 F.3d
at 144 (1994). In this case, the underlying state lawsuit was
pending when Bankers' instigated the action and there is
no indication in the record that the state case has resolved.
The Defendants tendered their defense to Bankers and
Bankers-as the present litigation demonstrates-contests its
obligations to Defendants. Under Ninth Circuit precedent and
the present facts, the case or controversy requirement is
Court must also exercise its discretion to determine whether
entertaining the action is proper. Gov't Emp. Ins.
Co. v. Dizol, 133 F.3d 1220, 1223 (9th Cir. 1998).
Prudential guidance for retention is found in Brillhart
v. Excess Ins. Co. of Am. and includes considerations of
the needless determination of state law issues, forum
shopping, and avoidance of duplicative litigation.
Id. at 1223-25 (Citing Brillhart, 316 U.S.
491 (1942)). The Ninth Circuit has indicated that other
considerations may be appropriate, such as “whether the
declaratory action will settle all aspects of the
controversy; whether the declaratory action will serve a
useful purpose in clarifying the legal relations at issue;
whether the declaratory action is being sought merely for the
purposes of procedural fencing or to obtain a ‘res
judicata' advantage;  whether the use of a declaratory
action will result in entanglement between the federal and
state court systems[;] . . . convenience of the parties[;]
and the availability and relative convenience of other
remedies.” Id. at 1225 n. 5 (quoting
Kearns, 15 F.3d at 145 (J. Garth, concurring)).
Court finds that retention is proper in this case. Defendants
have not objected to this Court deciding the action. Although
the case turns on state law, it is not an anticipatory
lawsuit and there is no indication that Bankers is forum
shopping. Bankers is not a party to the underlying litigation
and, to the Court's knowledge, there are no parallel
state proceedings involving the same issues between the
parties. Cf. Chamberlain v. Allstate Ins. Co., 931
F.2d 1361, 1366-67 (9th Cir. 1991) (“[W]hen a party
requests declaratory relief in federal court and a suit is
pending in state court presenting the same state law issues,
there exists a presumption that the entire suit should be
heard in state court.”). Thus, the Court does not find
that declaratory relief is sought for the purposes of
procedural fencing, nor that a decision will entangle the