Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_08-cv-02268/USCOURTS-cand-3_08-cv-02268-3/pdf.json

Nature of Suit Code: 340
Nature of Suit: Marine Personal Injury
Cause of Action: 28:1333 Admiralty

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THE CONTINENTAL INSURANCE COMPANY,

Plaintiff,

 v.

JOHN JOSEPH COTA; REGAL STONE,

LIMITED, FLEET MANAGEMENT LTD.; and

the M/V COSCO BUSAN, LR/IMO Ship

No. 9231743, her engines, apparel,

electronics, tackle, boats,

appurtenances, etc., in rem,

Defendants.

 

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Case No. 08-2052 SC

Related cases:

 07-5800 SC

 07-6045 SC

 07-5926 SC

 08-2268 SC

ORDER GRANTING

DEFENDANT"S MOTION TO

STAY CIVIL ACTION

PENDING RESOLUTION OF

CRIMINAL PROCEEDING

I. INTRODUCTION

This matter comes before the Court on the Motion to Stay

Civil Action Pending Resolution of Criminal Proceeding or,

Alternatively, to Compel Arbitration ("Motion"), filed by the

defendant John Joseph Cota ("Cota"). Docket No. 33. The

Continental Insurance Company ("Plaintiff" or "Continental")

submitted a Response, as did the defendants Regal Stone Limited

("Regal Stone") and Fleet Management, Ltd. ("Fleet"). Docket Nos.

42, 43. Cota submitted a Reply. Docket No. 50. For the reasons

discussed below, Cota's Motion is GRANTED and the case is hereby

STAYED pending resolution of the criminal matter, United States v.

John J. Cota, Case No. CR 08-0160, now pending before the

Case 3:08-cv-02268-SC Document 24 Filed 09/19/08 Page 1 of 7
United States District Court

For the Northern District of California

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1 The San Francisco Bar Pilots is an association of

approximately 60 pilots authorized to pilot large vessels into and

out of the San Francisco Bay and its tributaries. Mot. at 3.

2

Honorable Judge Illston.

II. BACKGROUND

On November 7, 2007, the cargo ship COSCO BUSAN hit the Bay

Bridge while attempting to sail out of the San Francisco Bay. As

a result of this allision, the COSCO BUSAN discharged more than

50,000 gallons of heavy bunker fuel into the bay. Various

lawsuits have since been filed in state and federal court. The

four federal civil actions have been related and are before this

Court. See Chelsea v. Regal Stone, Ltd. et al., Case No. 07-5800;

Shogren Living Trust et al. v. Regal Stone, Ltd. et al., Case No.

07-5926; Continental Ins. Co. v. Cota et al., Case No. 08-2052;

California v. Regal Stone Ltd. et al., Case No. 08-2268. In

addition, the United States filed a criminal action against both

Cota and Fleet. See Cota, Case No. CR 08-0160. 

Cota is a member of the San Francisco Bar Pilots ("Bar

Pilots") and was allegedly at the helm of the COSCO BUSAN when it

allided with the bridge.1 First Am. Compl. ("FAC"), Docket No.

14, ¶ 21. Regal Stone owns the COSCO BUSAN and Fleet is the

ship's operator. Continental had issued an insurance policy to

the Bar Pilots, including Cota, that was in effect at the time of

the allision. FAC ¶¶ 11, 12. Because of this policy, Cota

tendered his defense in the criminal matter to Continental. Mot.

at 1. Although Continental initially refused to defend or

Case 3:08-cv-02268-SC Document 24 Filed 09/19/08 Page 2 of 7
United States District Court

For the Northern District of California

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2

 California Harbors and Navigation Code § 1198(c) states, in

part:

Every vessel, owner, operator, or demise

or bareboat charterer hiring a pilot with

a state license for the Bays of San

Francisco, San Pablo, and Suisun shall

either defend, indemnify, and hold

harmless pilots pursuant to paragraph (1),

or alternatively, notify pilots of an

intent to pay for trip insurance pursuant

to paragraph (2). If a vessel or its

owner, operator, or demise or bareboat

charterer does not provide written notice

pursuant to paragraph (2) of an intent to

exercise the trip insurance option, then

the vessel and its owner, operator, and

demise or bareboat charterer will be

deemed to have elected the obligation to

defend, indemnify, and hold harmless

pilots pursuant to paragraph (1).

3

indemnify him, it eventually agreed to do so in the criminal

proceedings, subject to a reservation of rights. Id. at 2. In

the civil matters, Cota initially tendered his defense to both

Continental and, pursuant to California Harbors and Navigation

Code § 1198(c), to Regal Stone and Fleet.2 FAC ¶¶ 26, 27. Regal

Stone and Fleet initially declined to defend Cota, while

Continental accepted the obligation under a reservation of rights. 

Id. ¶ 28. Several months later, Regal Stone and Fleet reversed

course and assumed Cota's defense in the civil actions, also under

a reservation of rights. Id. ¶ 30.

Continental subsequently filed the present action seeking

indemnity as to the civil defense costs against Regal Stone and

Fleet for the months during which Continental paid these costs. 

Id. ¶ 31. According to Continental, these costs totaled

$315,321.31. Id. In addition, Continental seeks declaratory

relief as to its obligations regarding the defense of Cota in the

Case 3:08-cv-02268-SC Document 24 Filed 09/19/08 Page 3 of 7
United States District Court

For the Northern District of California

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3

 California Harbors and Navigation Code § 1198(a) states:

Except as provided in subdivision (c), the

rates and charges for pilotage services

shall not include the cost of primary

marine insurance insuring a pilot, an

organization of pilots, or their officers

or employees, from liability arising from

negligence or errors in judgment in

connection with the provision of pilotage

service by pilots, organizations of

pilots, or their officers or employees.

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criminal action; reimbursement of the criminal defense costs paid

for Cota; declaratory relief against all defendants; and indemnity

as to the criminal defense costs against Regal Stone and Fleet. 

Id. ¶¶ 23-62. Regal Stone and Fleet filed a Counterclaim against

Continental, a Cross-Claim against Cota, and a Third-Party

Complaint against the Bar Pilots (collectively, "Counter

Complaint"). Docket No. 27. In the Counter Complaint, Regal

Stone and Fleet seek declaratory relief that the California

Harbors and Navigation Code § 1198(c) is preempted by federal law

or, in the alternative, that § 1198(c) does not require Regal

Stone and Fleet to indemnify Cota in the criminal action. Counter

Compl. ¶¶ 25-34. Regal Stone and Fleet also allege violations of

§ 1198(a) by Cota and the Bar Pilots and seek by way of

declaratory relief a finding that Regal Stone and Fleet are not

obligated to indemnify Continental because of these alleged

violations.3

 Id. ¶¶ 35-42. 

III. LEGAL STANDARD

Courts may, within their discretion, stay civil proceedings

"when the interests of justice seem to require such action." 

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United States District Court

For the Northern District of California

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Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th

Cir. 1995) (internal quotation marks and alterations omitted). 

"The decision whether to stay civil proceedings in the face of a

parallel criminal proceeding should be made in light of the

particular circumstances and competing interests involved in the

case." Id. (internal quotation marks omitted). The first

consideration is "the extent to which the defendant's fifth

amendment rights are implicated." Id. (internal quotation marks

omitted). In addition, courts should generally consider the

following factors:

(1) the interest of the plaintiffs in

proceeding expeditiously . . . and the

potential prejudice to plaintiffs of a

delay; (2) the burden which any

particular aspect of the proceeding may

impose on defendants; (3) the convenience

of the court in the management of its

cases, and the efficient use of judicial

resources; (4) the interests of persons

not parties to the civil litigation; and

(5) the interest of the public in the

pending civil and criminal litigation.

Id. at 324-25.

IV. DISCUSSION

As an initial matter, the Court notes that subsequent to the

filing of the instant Motion by Cota, Continental conceded that it

was required to submit its dispute with Cota to arbitration, as

mandated by the underlying insurance policy. See Continental's

Opp'n at 5. In light of this fact, Continental voluntarily

dismissed Cota from its lawsuit. See Docket No. 44. In addition,

Continental has indicated that, in the interest of judicial

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United States District Court

For the Northern District of California

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economy, it does not oppose a stay of the action. Continental's

Opp'n at 6. Regal Stone and Fleet, however, continue to oppose

the stay and argue that it is overbroad and prejudicial to their

interests.

In applying the Keating factors to the circumstances of the

present case, the Court finds that a stay is warranted. It is

undisputed that all of the civil actions and the criminal action

spring from the same nucleus of facts--the allision of the COSCO

BUSAN with the Bay Bridge and the resulting oil spill. 

Contrary to the argument presented by Regal Stone and Fleet,

resolution of their Counter Complaint against Cota will likely

involve resolution of issues that are pivotal the criminal action. 

For example, in their Counter Complaint, Regal Stone and Fleet

seek "a determination by this Court that section 1198(c) does not

obligate [Regal Stone and Fleet] to defend, indemnify or hold

harmless Cota . . . ." Counter Compl. ¶ 33. Section 1198(c)

releases insurers from the obligation to defend in "cases of

willful misconduct by a pilot." Cal. Harb. & Nav. Code §

1198(c)(1)(C). Thus, as their Cross Complaint makes clear, Regal

Stone and Fleet seek, in part, a determination that Cota engaged

in willful misconduct. It is difficult to imagine how

adjudication of this issue would not implicate many of the factual

issues underlying the criminal action. Accordingly, discovery

propounded on Cota in the underlying civil action will likely

implicate his fifth amendment rights. Although Regal Stone and

Fleet assert that they "do no presently believe discovery of Cota

is necessary to their anticipated motion for summary judgment,"

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United States District Court

For the Northern District of California

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Regal Stone & Fleet Opp'n at 6, such a belief does not justify the

risk of prejudice Cota would face were he forced to proceed with

discovery at this time.

Finally, a stay of this case would not unduly prejudice Regal

Stone and Fleet. The only prejudice they have identified is a

delay in the determination of their responsibility to Cota's

defense. While delay is a relevant factor under Keating, the

possible prejudice Regal Stone and Fleet might suffer as a result

of this delay is not substantial and does not weigh heavily

against a stay. Furthermore, Fleet is a co-defendant with Cota in

the criminal action and, as Fleet concedes in its Opposition, is

now seeking to postpone the criminal trial from its current date

of November 17, 2008, to March 2009. Regal Stone & Fleet Opp'n at

7 n.5. Thus, some of the delay for which Regal Stone and Fleet

assert they will be prejudiced is in fact delay they are actively

pursuing in the criminal action. 

The remaining Keating factors, to the extent they apply, also

favor a stay.

V. CONCLUSION

For the reasons discussed above, Cota's Motion to Stay Civil

Action Pending Resolution of Criminal Proceeding is GRANTED.

IT IS SO ORDERED.

Dated: September 18, 2008

 

UNITED STATES DISTRICT JUDGE

Case 3:08-cv-02268-SC Document 24 Filed 09/19/08 Page 7 of 7