Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-00886/USCOURTS-cand-5_04-cv-00886-5/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF SEPTEMBER 17, 2007 ORDER —C-04-00886 RMW

MAG

E-FILED on 12/5/07

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

ROYAL INDEMNITY GROUP, THE

GREYSTONE GROUP, INC.,

Plaintiffs,

v.

THE TRAVELERS INDEMNITY COMPANY

OF RHODE ISLAND, STEDMAN

CONSTRUCTION COMPANY, DOES 1-100,

Defendants.

No. C-04-00886 RMW

ORDER GRANTING PLAINTIFFS' MOTION

FOR RECONSIDERATION OF ORDER

DATED SEPTEMBER 17, 2007

[Re Docket No. 117, 124]

Plaintiffs The Greystone Group, Inc. ("Greystone") and Royal Indemnity Group ("Royal")

have sued defendant Travelers' Indemnity Company of Connecticut ("Travelers"), inter alia, for

breach of contract and equitable contribution regarding the defense of an underlying action against

Greystone, alleging that Greystone is an additional insured under a Travelers insurance policy issued

to its subcontractor Stedman Construction Company ("Stedman"). 

By its order dated September 17, 2007, the court granted in part and denied in part a motion

for reconsideration filed by Travelers. That order, finding that plaintiffs had failed to present

evidence that Greystone was an insured under the relevant Travelers insurance policies issued to

Stedman, granted Travelers' motion for summary adjudication as to (1) plaintiff Greystone's claim

for breach of contract under the Travelers insurance policy and (2) plaintiffs' equitable contribution

Case 5:04-cv-00886-RMW Document 138 Filed 12/05/07 Page 1 of 6
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ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF SEPTEMBER 17, 2007 ORDER —C-04-00886 RMW

MAG 2

claim based on Greystone's status as an insured under that policy. The order was based on plaintiffs'

failure to authenticate three purported certificates of insurance issued on the Stedman policy naming

Greystone as an additional insured, the only evidence plaintiffs offered that Greystone was an

insured. In fact, Traveler's admitted in its original opposition to Travelers' motion that "[a]t present,

Plaintiffs cannot prove that Mr. Harper [who purportedly issued the certificates] acted as Travelers'

actual or designated agent." Rather, Royal maintained and still maintains, incorrectly, that Travelers

has not properly raised the issue of Greystone's status as an additional insured.

Plaintiffs Greystone and Royal now contend that they have evidence that Fort Bend

Insurance Company ("Fort Bend"), the insurance agency that issued the Travelers policy to

Stedman, was not only an ostensible but an actual agent of Travelers such that Greystone was made

an insured under a Travelers policy issued to Stedman. They assert that they should not have been

required to authenticate the certificates of insurance that were the subject of Travelers' motion for

reconsideration in order to avoid summary judgment of their breach of contract and equitable

contribution claims. Plaintiffs now move for reconsideration of this court's September 17, 2007

order on Travelers' prior motion for reconsideration on two grounds. First, plaintiffs argue that there

is a "material difference in fact or law from that which appeared to the court before entry of the

order." Second, plaintiffs argue that there is "an absence of a predicate finding necessary to the

order." 

 To the extent there appeared to be a "material difference in fact" prior to the order, that

appearance is primarily the result of plaintiffs' failure to adduce any evidence in opposition to

Travelers' motion that Fort Bend was an ostensible or actual agent of Travelers. Plaintiffs did not

oppose Travelers' motion for reconsideration by addressing the failure to authenticate the certificates

on the merits. Instead, plaintiffs chose to argue solely that Travelers had failed to demonstrate that

there was no issue of material fact that Greystone was an insured under a Travelers policy, asking

the court to conclude that, as a result, plaintiffs were not required adduce evidence that would serve

to authenticate the certificates. As the court previously determined, Travelers had put the

authenticity of the certificates of insurance at issue (and has contested plaintiffs' claim that

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1 Plaintiffs apparently believe, at least based upon counsel's oral argument, that the

certificates of insurance magically become authenticated business records merely by their

appearance in Stedman's files.

ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF SEPTEMBER 17, 2007 ORDER —C-04-00886 RMW

MAG 3

Greystone was made party to the Travelers insurance policy) both in the original cross-motions and

in its motion for reconsideration of the court's order thereon. 

Plaintiffs assert that Greystone's vice president of construction, Mark Lear, can authenticate

the certificates of insurance and that they can be authenticated by other means, including through the

business records exception to the hearsay rule.1

 It appears that Lear was mentioned in the deposition

of Walter Eeds, president of Greystone taken on October 26, 2005, well before Travelers' motion for

reconsideration was even filed on October 12, 2006. Nevertheless there was not a single mention of

Lear or any other authenticating witness in the plaintiffs' briefing in opposition to Travelers' motion

for reconsideration. However, it would also appear that in its own motion for reconsideration of the

court's determination regarding the authenticity of the certificates, Travelers neglected to point out

testimony of its own employees that is relevant to whether Fort Bend had sufficient authority to

make Greystone an additional insured under Stedman's insurance policy, arguing instead that the

determination hinged solely on whether the certificates could be authenticated. Travelers' Motion

for Reconsideration at 8, Docket No. 108 ("[Greystone's] status as an additional insured is in turn

based solely on the certificates of insurance. But absent any competent evidence authenticating the

certificates or confirming their accuracy, the certificates must be disregarded. No certificates, no

additional insured – and no breach of contract."). Had the court been aware of the testimony of

Travelers' underwriters William Floyd and Claude Reed, it might have viewed the significance of

the certificates of insurance differently with regard to the question of whether there was any

evidence from which one could infer that Greystone was an additional insured under Stedman's

policy. Floyd testified that Fort Bend did bind business on behalf of Travelers. Decl. Michael

Mathews Re: Request for Leave to File Motion for Reconsideration dated 9/27/2007, Ex. D, Dep. of

William C. Floyd at 27:11-12. Reed explained that the agency agreement between Travelers and

Fort Bend would have set forth whether Fort Bend had binding authority and that such an agency

agreement would have been found in Travelers' files on the agent. Decl. Anne O'Niell Supp.

Travelers' Opp. dated 11/2/07, Ex. E, Dep. of Claude Reed at 18:2-19:1, 19:21-20:1 ("Q: Where

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2 Mark Lear, former vice-president of construction for Greystone, and whose

testimony was first presented in plaintiffs' reply to Travelers' opposition to the current motion for

reconsideration, states that no subcontractor was allowed to work on the project without an

appropriate certificate of insurance. It is not fair to first present evidence in reply to an opposition to

a motion for reconsideration.

ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF SEPTEMBER 17, 2007 ORDER —C-04-00886 RMW

MAG 4

would I find record of [an agent's binding authority]? A: That would probably be in an agent's file. 

His 10850."). His testimony also sets forth some circumstances under which agents might be

granted authority to bind Travelers. See id. 22:23-23:1, 23:24-25:16.2

Despite plaintiffs' failure to properly oppose Travelers' original motion, the court withdraws

its September 17, 2007 order in light of the newly offered, although previously known, evidence.

That evidence may potentially be marshaled to raise a question of fact as to the authenticity of the

certificates. Although the court believes that plaintiffs should have properly marshaled their

evidence in their original opposition or made an appropriate request for additional time under Fed.

R. Civ. P. 56(f), the court wants to avoid the possibility of an injustice that could occur if relevant

evidence of actual or ostensible agency is not considered. The court reinstates plaintiffs' claims for

breach of contract and equitable contribution to the extent that those claims are based upon

Greystone's alleged status as a Travelers insured under the Stedman policy. It is clear that Travelers

continues to assert that plaintiffs will be unable to prove that Fort Bend was an ostensible or actual

agent of Travelers for purposes of extending coverage to Greystone under the Stedman policy and

that coverage was not extended to Greystone whether through the certificates of insurance or

otherwise. The court will permit Travelers to bring a new motion for summary judgment based

upon the question of whether plaintiffs can prove that Greystone was an additional insured under the

Stedman policy. Briefing on that motion for summary judgment shall assume that the court has not

ruled on the authenticity of (or lack thereof) of the certificates of insurance and shall set forth anew

the parties' contentions regarding Greystone's status as additional insureds under the Stedman policy. 

Both parties indicated a desire to take the deposition of James Harper. Therefore, any motion for

summary judgment should not be filed until after that deposition has been taken or a determination

has been made that the deposition cannot be taken.

Travelers argues in its opposition to the instant motion for reconsideration that a recently

issued Texas Supreme Court decision, Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., ___ S.W.2d

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ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF SEPTEMBER 17, 2007 ORDER —C-04-00886 RMW

MAG 5

___, 2007 WL 2965401 (Tex. 2007), demonstrates that Royal would not have an equitable

contribution claim against Travelers as a matter of law. Plaintiffs argue that this case may not be

relied upon. They first point out that the case has not yet been published and may be subject to

revision pursuant to Texas court rules. Next, they contend that California rather than Texas law

governs with regard to equitable contribution, notwithstanding the court's previous decision to apply

Texas law to govern the interpretation of the insurance contract. Because this issue, as

acknowledged by Travelers, is outside the scope of plaintiffs' motion for reconsideration, the court

declines to consider it at this time, but it will permit Travelers to raise this argument in its motion for

summary judgment that Greystone was not an additional insured under the Stedman policy. 

Travelers should address the choice of law issue raised in plaintiffs' reply.

DATED: 12/5/07

RONALD M. WHYTE

United States District Judge

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ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF SEPTEMBER 17, 2007 ORDER —C-04-00886 RMW

MAG 6

Notice of this document has been electronically sent to:

Counsel for Plaintiff(s):

Michael Mathews mathewsesq@earthlink.net 

Counsel for Defendant(s):

Robert John Romero rromero@hinshawlaw.com 

Anne D. O'Niell aoniell@hinshawlaw.com 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 12/5/07 /s/ MAG

Chambers of Judge Whyte

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