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Kinsale Insurance Co. v. Sky High Sports Concord LLC

United States District Court, E.D. California

May 24, 2017

KINSALE INSURANCE COMPANY, an Arkansas corporation, Plaintiff,
SKY HIGH SPORTS CONCORD LLC, a California and Nevada Limited Liability Company, SKY HIGH SPORTS NASHVILLE LLC, a Nevada and Tennessee Limited Liability Company, SKY HIGH SPORTS ONTARIO LLC, a California and Nevada Limited Liability Company, SKY HIGH SPORTS OPPORTUNITIES LLC, a California and Nevada Limited Liability Company, SKY HIGH SPORTS SACRAMENTO LLC, a California and Nevada Limited Liability Company, SKY HIGH SPORTS SANTA CLARA LLC, a California and Nevada Limited Liability Company, Defendants.



         In bringing this lawsuit, Kinsale Insurance Company (“Plaintiff”) seeks redress from Sky High Sports Opportunities LLC (“Opportunities”) and three Sky High Sports franchisees: Sky High Sports Santa Clara LLC, Sky High Sports Sacramento LLC, and Sky High Sports Concord LLC (“Ownership Companies”), (collectively “Defendants”).[1]FAC, ECF No. 35, at 1:24-2:5. Presently before the Court is Plaintiff's Motion for Summary Judgment (“Plaintiff's Motion”), which is premised on the contention that Plaintiff is entitled to recover unpaid insurance premiums and unreimbursed deductibles from Defendants. Pl.'s Mot., ECF No. 37; Pl.'s P & A Mot., ECF No. 37-1, at 3:14-18. Defendants filed an Opposition to Plaintiff's Motion, to which Plaintiff submitted a Reply. Defs.' Opp., ECF No. 51; Pl.'s Reply, ECF No. 53.

         For the reasons set forth below, the Court GRANTS in part and DENIES in part Plaintiff's Motion, ECF No. 37.[2]


         Defendants franchise and/or operate amusement centers with trampolines, foam pits, and snack bars at various locations across the United States. FAC ¶ 13. Plaintiff is an Arkansas corporation that provides, inter alia, commercial general liability insurance. Id. at ¶ 1.

         Most of the facts surrounding the present action are undisputed by the parties. Defs.' Opp. at 3:5-8; SUMF, ECF No. 53-2.[3] Plaintiff issued five total commercial general liability insurance policies (“Insurance Contracts”) to various Sky High entities between November 2, 2011 and September 21, 2013. Pl.'s P & A Mot. at 4:15-5:12; SUMF ¶ 13. Only two of these Insurance Contracts are at issue here: (1) the September 21, 2011 to September 21, 2012 Insurance Contract issued to Ownership Companies and Opportunities; and (2) the September 21, 2012 to September 21, 2013 Insurance Contract issued to Ownership Companies. FAC ¶ 14. Pursuant to the Insurance Contracts, Plaintiff was entitled to advance amounts within the applicable $25, 000 deductible threshold to satisfy insurance claims, and then seek reimbursement for these deductible payments from Defendants. Id. at ¶¶ 20, 22; SUMF ¶¶ 1, 24. Additionally, at the time the policies were issued, Defendants paid an insurance premium deposit, with the agreement that the final premium owed would be adjusted based on Defendants' gross sales figures. Pl.'s P & A Mot. at 7:19-27, 10:22-11:1; SUMF ¶ 54.

         To determine the final premium, Plaintiff was entitled to perform an audit of Defendants' finances at the end of each policy term. FAC ¶ 15; SUMF ¶¶ 17, 54. A dispute arose when Defendants refused to provide Plaintiff original financial ledgers after the coverage periods of the Insurance Contracts ended. FAC ¶ 16. This prevented Plaintiff from calculating Defendants' gross sales for the purpose of determining the insurance premiums owed. Id. Plaintiff filed a Complaint against Defendants on September 9, 2014, claiming that Defendants' actions were in breach of the audit provisions of the Insurance Contracts. FAC ¶ 17; Compl., ECF No. 1. Plaintiff subsequently filed a motion for summary judgment on the basis of that breach, (ECF No. 11), which the Court granted in part, by ordering an audit of Defendants' finances as stipulated in the Insurance Contracts. FAC ¶ 17; 2015 Order, ECF No. 21. Plaintiff's auditor commenced that audit in September of 2015, and concluded the following: (1) Ownership Companies owe $777, 372.00 in final premiums and $96, 211.76 in unreimbursed deductibles; and (2) Opportunities owes $350, 376.00 in final premiums and $69, 822.76 in unreimbursed deductibles. FAC ¶ 18; Pl.'s Am. Mot., ECF No. 39, at 2:4-20.

         By way of this lawsuit Plaintiff seeks to recover those final premiums and unreimbursed deductibles as identified by the audit. FAC ¶ 19-20. Plaintiff filed the present Motion on June 21, 2016, asking that this Court find as a matter of law that Defendants are liable in accordance with the audit's findings. Pl.'s P & A Mot. at 20:18- 21. Defendants filed an Opposition, conceding that Plaintiff is owed reimbursement for the deductible payments, but challenging the amount owed for insurance premiums. Defs.' Opp. at 2:2-7, 3:18-6:11.


         The Federal Rules of Civil Procedure provide for summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). One of the principal purposes of Rule 56 is to dispose of factually unsupported claims or defenses. Celotex, 477 U.S. at 325.

         Rule 56 also allows a court to grant summary judgment on part of a claim or defense, known as partial summary judgment. See Fed.R.Civ.P. 56(a) (“A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought.”); see also Allstate Ins. Co. v. Madan, 889 F.Supp. 374, 378-79 (C.D. Cal. 1995). The standard that applies to a motion for partial summary judgment is the same as that which applies to a motion for summary judgment. See Fed.R.Civ.P. 56(a); State of Cal. ex rel. Cal. Dep't of Toxic Substances Control v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998) (applying summary judgment standard to motion for summary adjudication).

         In a summary judgment motion, the moving party always bears the initial responsibility of informing the court of the basis for the motion and identifying the portions in the record “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968).

         In attempting to establish the existence or non-existence of a genuine factual dispute, the party must support its assertion by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits[, ] or declarations . . . or other materials; or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52 (1986); Owens v. Local No. 169, Assoc. of W. Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1987). The opposing party must also demonstrate that the dispute about a material fact “is ‘genuine, ' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. In other words, the judge needs to answer the preliminary question before the evidence is left to the jury of “not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.” Anderson, 477 U.S. at 251 (quoting Improvement Co. v. Munson, 81 U.S. 442, 448 (1871)) (emphasis in original). As the Supreme Court explained, “[w]hen the moving party has carried its burden under Rule [56(a)], its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. Therefore, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.'” Id. 87.

         In resolving a summary judgment motion, the evidence of the opposing party is to be believed, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. Anderson, 477 U.S. at 255. Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Ric ...

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