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Rydstrom v. Federal Insurance Co.

United States District Court, C.D. California

July 7, 2017

JERIE S. RYDSTROM; DONALD RYDSTROM, Plaintiffs,
v.
FEDERAL INSURANCE COMPANY; and DOES 1 through 50, inclusive, Defendants.

          ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [27] AND DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT [26]

          OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This insurance coverage dispute turns on the interpretation of two policy terms, “participants” and “management.” Before the Court are Defendant Federal Insurance Company's motion for summary judgment and Plaintiffs Jerie and Donald Rydstrom's motion for partial summary judgment. (ECF Nos. 26-27.) For the following reasons, the Court GRANTS Defendant's motion and DENIES Plaintiffs' motion.

         II. FACTUAL BACKGROUND

         Plaintiffs are the parents and beneficiaries/potential beneficiaries of insurance policies covering/potentially covering their deceased son Darren Rydstrom. (See Consol. Compl. ¶¶ 5, 14-18, 33-45, ECF No. 22.) Defendant is the insurer that underwrote those policies. (Resnick Decl., Exs. A, B, ECF No. 27.)

         Darren was a director of photography and camera operator by trade, primarily in the reality television genre. (Johnson Decl., Ex. C, ECF No. 27.) On February 2, 2013, Darren formally agreed to be the director of photography for Bongo, LLC's[1]reality show “Lone Operator, ” which featured “Former Special Forces operators engag[ing] in a series of challenges on [a] . . . course to determine that they are capable of operating in a non-permissive urban environment with no outside support.” (Resnick Decl., Ex. C at 104.) This agreement was memorialized in two related contracts: a loan out contract[2] and a Crew Deal Memo. (Johnson Decl., Exs. D, E.) For his services, Darren was paid $50 an hour, which worked out to $700 a day. (Id., Ex. E at 226.)

         Bongo had three insurance policies that functioned to protect it against adverse events arising from the production of “Lone Operator”: a Special Risk Policy (“the AD&D policy”), a Guild Travel Accident Policy (“the Travel policy”), and a workers' compensation policy. (Resnick Decl., Exs. A, B; Johnson Decl., Ex. A.) The AD&D policy provided $1 million of accidental death coverage to “all participants in the production entitled ‘Lone Operator.'” (Resnick Decl., Ex. B at 62-63.) The Travel policy provided accident coverage to three classes of persons: (1) employees associated with a guild; (2) employees not associated with a guild; and (3) all management employees. (Id., Ex. A at 21.) The beneficiaries of Class 2 non-guild employees would receive $250, 000 in the event of the non-guild employee's death and the beneficiaries of Class 3 management employees would receive $500, 000 in the event of the management employee's death. (Id. at 22.)

         On February 10, 2013, Darren was flying in a helicopter with Michael Donatelli, an “on camera personality” in “Lone Operator, ” when it crashed into a hillside killing its occupants. (Johnson Decl., Ex. F at 246; Consol. Compl. ¶ 11.) After the crash, Defendant deemed Darren a Class 2 non-guild employee under the Travel policy and paid Plaintiffs $250, 000. (See Resnick Dep. 35:13-35:20, ECF No. 27; see also Pls. Opp'n 7 n.2, ECF No. 31.)

         On February 5, 2016, Plaintiff Jerie Rydstrom filed a complaint in the California Superior Court for the County of Los Angeles alleging that she was owed $1 million dollars as a beneficiary under the AD&D policy because Darren was a “participant[] in the production of Lone Operator.” (See Compl., ECF No. 1-1 (case ending in 2543).) On February 9, 2016, Plaintiff Donald Rydstrom also filed a complaint in the California Superior Court for the County of Los Angeles alleging the same. (See Compl., ECF No. 1 (case ending in 2614).) Defendant removed these cases on April 15 and April 13, 2016, respectively.

         On July 5, 2016, the Court consolidated Donald Rydstrom's case with Jerie Rydstrom's case.[3] (ECF No. 13.) Approximately four months later, Plaintiffs filed a consolidated complaint. (ECF No. 22.) In the consolidated complaint, Plaintiffs seek not only to recover $1 million as beneficiaries under the AD&D policy but also an additional $250, 000 under the Travel policy, claiming that Darren should have been deemed a management employee rather than a non-guild employee. (See Consol. Compl. ¶¶ 33-45.) The consolidated complaint contains eight causes of action: (1) breach of contract related to the AD&D policy; (2) tortious breach of the implied covenant of good faith and fair dealing related to the AD&D policy; (3) declaratory relief related to the AD&D policy; (4) a common count related to the AD&D policy; (5) breach of contract related to the Travel policy; (6) tortious breach of the implied covenant of good faith and fair dealing related to the Travel policy; (7) declaratory relief related to the Travel policy; and (8) a common count related to the Travel policy. (Id. ¶¶ 14-60.)

         On May 15, 2017, Defendant moved for summary judgment and Plaintiffs moved for partial summary judgment on causes of action one, three, five, and seven. (ECF Nos. 26-27.) Both motions are now fully briefed and ready for decision. (ECF Nos. 30-33.)[4]

         III. LEGAL STANDARD

         A court “shall grant summary judgment if 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). Courts must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007). A disputed fact is “material” where resolution of that fact might affect the outcome of the suit under the governing law. Anderson Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). The dispute is “genuine” where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         When the moving party has carried its burden under Rule 56(c), the opposing party must show more than some metaphysical doubt as to the material facts; the nonmoving party must come forward with “specific facts showing that there is a genuine issue for trial.Matsushita Elec. Indus. Co. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (emphasis in original) (citing Fed. Rule Ci Proc. 56(e)). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Matsushita Elec. Indus. Co., 475 U.S. at 587 (quoting First Nat. Bank of Ariz. Cities Ser Co., 391 U.S. 253, 288 (1968)).

         I DISCUSSION

         The parties disagree over whether “participants” and “management” are subject to more than one interpretation, and if the terms are subject to more than one interpretation, which interpretation controls.[5] As the previous sentence implies, California employs a multi-phase contract interpretation methodology in situations such as this. See Wolf Walt Disney Pictures & Television, 162 Cal.App.4th 1107, 1126 (2008).

         In the first phase, the defendant submits extrinsic evidence to the court that points to a reasonable alternative interpretation of the relevant terms, distinct from the interpretation proposed by the plaintiff. See id. Once this evidence has been “provisionally receive[d], ” the court conducts an examination of the evidence to determine whether the proposed alternative interpretation is reasonable. Wolf, 162 Cal.App.4th at 1126; Dore Arnold Worldwide, Inc., 39 Cal.4th 384, 393 (2006) (“When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is ‘reasonably susceptible' to the interpretation urged by the party.” (quoting Southern Cal. Edison Co. Superior Court, 37 Cal.App.4th 839, 847 (1995)).

         If the court finds the defendant's proposed alternative interpretation reasonable, then it progresses to the second phase. In the second phase, the court admits the defendant's previously submitted evidence and examines it, along with any extrinsic evidence supplied by the plaintiff, to determine which of the proposed interpretations reflects the parties' intent at the time of contracting. Skilstaf, Inc. CVS Caremark Corp., 669 F.3d 1005, 1015 (9th Cir. 2012) (“‘If the court decides, after consideration of this evidence, that the language of a contract, in the light of all the circumstances, is fairly susceptible of either one of the two interpretations contended for, extrinsic evidence relevant to prove either of such meanings is admissible.'” (quoting Miller Glenn Miller Prods., Inc., 454 F.3d 975, 989 (9th Cir. 2006)); see also Id. (“Under California law, [t]he fundamental goal of contract interpretation is to give effect to the mutual intent of the parties as it existed at the time of contracting.” (emphasis added)); Supervalu, Inc. Wexford Underwriting Managers, Inc., 175 Cal.App.4th 64, 73 (2009) (explaining that if the relevant “language is ‘reasonably susceptible' to the interpretation urged” in the first step, the “extrinsic evidence” used in the first step “is then admitted to aid the second step-interpreting the contract.” (quoting Gen. Motors Corp. v. Superior Court, 12 Cal.App.4th 435, 441 (1993)). When there is no conflict of “extrinsic evidence, ” the court may decide as a matter of law which of the proposed interpretations reflects the parties' intent at the time of contracting.[6] Wolf, 162 Cal.App.4th at 1126.

         A. Participants

         The essence of Plaintiffs' argument is that “all participants in the production of Lone Operator” should be interpreted in the most literal sense to mean every person involved in the production of “Lone Operator” from the lowliest production assistant to the producer himself. (See Pls. Mot. 10, ECF No. 26-1 (“Federal's ‘Special Risk' policy unambiguously provides a $1 million death benefit for ‘All participants in the production entitled Lone Operator'-not a few and not the anointed participants, but all of them. The analysis should stop there . . .” (emphasis in original)). Defendant argues that the breadth of this interpretation far exceeds the parties' intent at the time of contracting. Defendant argues that the contracting parties intended[7] for “participants” to be interpreted as persons in front of the camera. (Def. Mot. 14, 17- 18, ECF No. 27-1.)

         1. Whether Defendant's Alternative Interpretation is Reasonable

         After reviewing the record, the Court finds that Defendant's alternative interpretation is reasonable.

         a. Both Contracting Parties Explicitly Agree With ...


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