United States District Court, N.D. California
ORDER RE MOTION FOR SUMMARY JUDGMENT, ADMINISTRATIVE
MOTION TO FILE UNDER SEAL, AND VACATING HEARING
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
insurance action, this order finds that the primary carrier
breached its duty of good faith and fair dealing by refusing
to settle within policy limits or so a reasonable jury could
find based on this record.
National Union Fire Insurance Company of Pittsburgh,
Pennsylvania, was the primary insurer for Anderson Hay &
Grain, an exporter of hay and straw products. Plaintiff
Houston Casualty Company had the excess. National Union's
primary policy had a general aggregate limit of $10 million,
an each-occurrence limit of one million dollars, and an
each-location aggregate sub-limit of two million dollars,
effective May 2014 to May 2015. In July 2014, Bartolo Flores
collapsed while delivering alfalfa to the premises of
Anderson Hay. He filed suit in Los Angeles Superior Court.
National Union appointed Acker & Whipple as defense
counsel (Compl. ¶¶ 4, 8-11, 14, 19).
August 2016, Acker & Whipple evaluated the potential
verdict of the case to be $250, 000 to $300, 000 with a
settlement range of $30, 000 to $40, 000 (Opp. Exh. D). In
early December 2016, Acker & Whipple informed National
Union that the case could potentially be settled for $50,
000. Ray Adams, a representative for National Union,
authorized the offer, which Flores rejected. In late December
2016, Acker & Whipple provided National Union with a
pre-trial report that estimated the potential verdict of the
case to be between $325, 000 to $400, 000 before certain
deductions, with judgment against Anderson Hay between $165,
000 to $200, 000 (Br. Exh. 15-17). All of these amounts fell
below the one million dollar policy limit.
March 2017, however, Acker & Whipple informed Houston
Casualty of the potential for exposure in excess of the
primary limits. It still estimated the potential verdict of
the case to be at most between $325, 000 to $400, 000 (Opp.
Exh. D). At that time, Acker & Whipple recommended making
an offer of settlement to Flores of up to $100, 000. The
parties attended mediation on March 27. By the end of the
mediation, Flores made an offer of three million dollars.
Acker & Whipple told National Union, however, that
“even if liability were clear, [it] would not be worth
more than $1 million.” The mediator stated the
“full value of the plaintiff's case is 6 figures
and not 7 figures. $500K might be full value, ” and
made a proposal of $950, 0000. Acker & Whipple advised
that that amount was “too high” (Br. Exh. 18, 21,
22, 25, 28).
28, Acker & Whipple took the deposition of Jennie
McNulty, Flores's economic expert. Based thereon, an
Acker & Whipple email dated July 31 stated it estimated
the verdict range “will be as high as $3.2 million . .
. At this time, we believe an offer to meet the
mediator's proposal of $950, 000 would be
appropriate.” The parties disagree as to whether this
belief was ever communicated to National Union, but as a
previous order has already found, a reasonable jury could
find that it either was communicated or that the information
contained therein was communicated verbally (Dkt. No. 86).
August 2, Acker & Whipple sent an email to National Union
stating the probable verdict range would be between $325, 000
and $400, 000 (Br. Exh. 27). On August 3, a phone call took
place between attorney Stephen Acker of Acker & Whipple
and Ray Adams of National Union. Ray Adams, at his
deposition, did not recollect the substance of the call (so
the July 31 email may particular evidentiary force as to what
was said) (Opp. Exh. D). That same day, National Union made
an offer of $200, 000 to Flores. On or before August 8,
Flores made a counteroffer of $900, 000. National Union
maintained its offer of $200, 000. On August 16, Flores
reduced his demand to $675, 000. National Union maintained
its offer of $200, 000 (Br. Exh. 28, 39).
2018, a few weeks before trial, Acker & Whipple sent
National Union a pre-trial report that estimated the verdict
range to be between $200, 000 and $300, 000 with a 25% chance
of a defense verdict (id. at Exh. 36). Flores
reduced his offer to $600, 000 at this point, which National
Union rejected (Opp. Exh. O).
began on August 13. On August 15, Flores made an offer of
$300, 000. National Union rejected the offer and maintained
that it would not go above $225, 000. On August 22, the jury
returned a verdict against Anderson Hay for $3.5 million (Br.
Exh. 39, 41, 46).
in the shoes of Anderson Hay, Houston Casualty asserts
National Union unreasonably refused to settle the underlying
action within its policy limits and accordingly alleges the
following claims for relief: (1) equitable subrogation, (2)
unjust enrichment, and (3) declaratory relief (Compl.
¶¶ 24-49). Defendants now move for summary judgment
as to all claims. This order follows full briefing. Pursuant
to our local civil rule 7-1(b), this order finds
plaintiff's motion suitable for submission without oral
argument and hereby vacates the December 26
Motion for ...