United States District Court, E.D. California
MEMORANDUM AND ORDER
MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE
coverage litigation, Plaintiff Arch Specialty Insurance
Company (“Plaintiff”) seeks contribution from
Defendant Liberty Surplus Insurance Company
(“Defendant”) for its alleged failure to
participate in the underlying construction defect settlement.
ECF No. 1-1. Presently before the Court are the
parties’ Motions for Summary Judgment (ECF Nos. 77-78)
and Defendant’s Motion to Strike (ECF No. 89), all of
which are fully briefed. For the reasons stated below, these
Motions are all DENIED.
2012, North Natomas Apartments I, L.P., and North Natomas
Apartments II, L.P. (collectively “North Natomas
Apartments”), sued USA Properties Fund, Inc.
(“USA Properties”), a general contractor, for
damages resulting from the construction of an apartment
complex (“underlying action”). Compl., ECF No.
1-1. Defense and indemnity were tendered to USA’s
direct carriers Plaintiff, Defendant, and Evanston Insurance
Company (“Evanston”). Id. Following
mediation and settlement negotiations, Plaintiff paid $3,
250, 000 to settle the underlying action on behalf of USA
Properties. Id. Evanston and Liberty refused to
contribute to this settlement. Id.
February 16, 2017, Plaintiff initiated the present action in
the Superior Court of California, County of Sacramento,
seeking reimbursement from Defendant and Evanston. ECF No.
1-1. Defendant timely removed the case to this Court, and
Plaintiff thereafter dismissed with prejudice all claims and
causes of action against Evanston. ECF Nos. 1, 42.
September 2018, Defendant filed a motion to compel,
requesting that the Court order Plaintiff “to provide
substantive responses to [Defendant’s] first set of
interrogatories and requests for admissions, as well as
produce all relevant, non-privileged documents in response to
[Defendant’s] requests for production of
documents.” ECF No. 47. This motion was denied by the
Magistrate Judge without prejudice on procedural grounds,
after which Defendant renewed its motion, requesting the
Court to compel Plaintiff “to produce all relevant,
non-privileged documents in response to [Defendant’s]
request for production of documents.” ECF Nos. 60, 65.
This motion was then denied by the Magistrate Judge as
untimely. ECF No. 71. The current motions followed and are
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.
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
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,
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. at 587.
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. Richards v. Nielsen
Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D. Cal.
1985), aff’d, 810 F.2d 898 (9th Cir. 1987).
issue in this case is hotly contested, and the parties have
identified numerous factual disputes with respect to (1)
whether the Known Loss Exclusion in Defendant’s
policies to USA Properties bars coverage; (2) whether USA
Properties qualifies as an additional insured under the
general liability policies issued by USA Properties’
subcontractors’ insurance carriers, thus rendering
Defendant’s policies excess; and (3) whether Defendant
acted in bad faith by refusing to settle or contribute to the
settlement. See Pl.’s Mot. Summ. J., ECF No.
78; Def.’s Mot. Summ. J., ECF No. 77. Indeed, the
parties disagree about fundamental issues such as when the
property damage in the underlying action actually commenced
and what caused that damage.
specifically, Defendant argues that the property damage began
in 2002, three years prior to the first policy period.
See Def.’s Mem. Supp. Summ. J., ECF No. 79, at
10. Plaintiff, however, argues that the property damage was
not discovered until 2012. See Pl.’s Mem.
Supp. Summ. J., ECF No. 78-1, at 6. Similarly, Defendant
argues defective construction was the sole cause, whereas
Plaintiff contends that the installation and repair of
scuppers in 2008 caused additional damage. See
Def.’s Mem. Supp. Summ. J., ECF No. 79, at 14;
Pl.’s Mem. Supp. Summ. J., ECF No. 78-1, at 6. A