Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-01548/USCOURTS-casd-3_13-cv-01548-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

BITA TRADING, INC.,

Plaintiff,

CASE NO. 13cv1548 JM(WVG)

ORDER GRANTING DEFENDANTS’

MOTION FOR SUMMARY

JUDGMENT; DENYING

PLAINTIFF’S MOTION FOR

SUMMARY JUDGMENT

vs.

NATIONWIDE MUTUAL

INSURANCE COMPANY; ALLIED

INSURANCE,

Defendants.

Plaintiff Bita Trading, Inc. (“Bita”) moves for partial summary judgment on its

insurance coverage claim. Defendant Nationwide Mutual Insurance Company

(“Nationwide”), also erroneously sued as Allied Insurance, seeks a declaration that

there is no property coverage under the contract of insurance at issue. All motions are

opposed. For the reasons set forth below, the court grants Nationwide’s motion for

summary judgment and denies Bita’s partial motion for summary judgment. The Clerk

of Court is instructed to enter judgment in favor of Defendants, and against Plaintiff,

on all claims and to close the file

BACKGROUND

On May 24, 2013, Bita commenced this action in the California Superior Court,

County of San Diego, by filing a form complaint alleging a single cause of action for

breach of an insurance contract. On July 2, 2013, Nationwide removed the action to

- 1 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 1 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

this court based upon diversity jurisdiction. (Ct. Dkt. 1).

The following evidentiary facts are not disputed. 

The Ground Lease

Bita owns real property located on Mira Mesa Boulevard in San Diego,

California. Effective August 1, 2005, Bita entered into a Ground Lease with Sorrento

Mesa Hand Car Wash & Spa, Inc. (“Sorrento”) for the construction and operation of

a car wash and related facilities. The Ground Lease obligated Sorrento to maintain

builder’s risk, property, liability, and business interruption insurance after the

completion of the improvements. The lease also provided that Sorrento would

designate Bita as an additional insured under the policies.

Bita and Sorrento became involved in a dispute over the property. On May 25,

2012, the Superior Court of San Diego County terminated the lease, awarded monetary

relief to Bita, and restored possession to Bita. Bita asserts that Sorrento caused

1

damage to the property in the amount of $750,000. (Sheena Decl. ¶7). Bita also

represents that only the car wash portion of the business opened on June 1, 2013, and

that the remaining portions of the operations, consisting of a convenience store, office

and oil change facility, have not been fully repaired and have not been fully placed in

service. Bita also seeks to recover business interruption losses under the Sorrento

insurance contract. 

The Sorrento Policy

Nationwide issued policy No. ACP BPA 7824416814 to Sorrento for the period

from March 22, 2012 through March 22, 2013. The policy consists of a Declarations

sections followed by two major sections: a 39-page Premier Businessowners Property

Coverage Form (The “Property Form”), setting forth the first party property coverage

and a 22-page Premier Businessowners Liability Coverage Form (the “Liability

Form”), setting forth the third party individual liability coverage. (Nationwide Exh.

 On June 29, 2012, the Sheriff restored possession to Bita. 1

- 2 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 2 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1).

2

The original Property Declarations page listed Sorrento as the only insured. 

(NW 00005, 00009). The Property Form also provided that certain payments would

be made to mortgagees of the property. These entities are also listed as additional

insureds. (NW 000010). The Property Form also provided coverage for the loss of

business income.

The Liability Form provides liability insurance coverage for those sums the

“insured becomes legally obligated to pay as damages because of ‘bodily damages’ or

‘property damages’ to which this insurance applies. . . .” (NW 000058). The Liability

Form also extends insurance coverage for several categories of “Automatic Additional

Insured.” One entity is “Managers or Lessors of Leased Premises” which provides, in

pertinent part:

e. Managers or Lessors of Leased Premises

Any person or organization from whom you lease premises is an

additional insured, but only with respect to their liability arising out of

your use of that part of the premises leased to you, subject to the

following additional exclusion:

This insurance, including any duty we have to defend “suits,” does not

apply to structural alterations, new construction or demolition operations

performed by or for such person or organization.

HOWEVER, their status as additional insured under this policy ends

when you cease to be a tenant of such premises.

(NW000072). For purposes of liability coverage, Bita, as the lessor of the property,

was automatically an additional insured under this provision.

Effective for the policy period at issue, Nationwide providedBita, and its owner,

Hosssien Javanfar, with an acknowledgment, on Form PBA102, of their “status as an

Bita objects to the insurance contract submitted by Nationwide as Exhibit 1. 2

Bita contends that the exhibit is not authentic for purposes of FRE 901. The court

overrules this objection. The declaration of Lisa Sotelo states thatshe is an authorized

representative of Nationwide, she reviewed the policy, states that the records are kept

in the normal course of business, and that the exhibit is a true and correct copy. 

Nothing more is required to authenticate the exhibit. The court also accepts Bita’s

Exhibit C, page 17, a change of declaration endorsement, as an authenticated part of

the insurance contract because this document is also authenticated by Ms. Sotelo.

- 3 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 3 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

additional insured under, . . . , the policy issued” to Sorrento. The acknowledgment

noted that the Liability Form provided:

Any of the following persons or organizations are automatically insureds

when you [i.e. the Named Insured stated below] and such person or

organization have agreed in a written contract or agreement that such

person or organization be added as an additional insured on your policy

providing general liability coverage.

Managers or Lessors of Leased Premises

Any person or organization from whom you lease premises is an

additional insured, but only with respect to their liability arising out of

that part of the premises leased to you, subject to the following additional

exclusion:

This insurance, including any duty we have to defend “suits,” does not

apply to structural alterations, new construction or demolition operations

performed by or for such person or organization. 

HOWEVER, their status as additional insured under this policy ends

when you cease to be a tenant of such premises.

(NW000111).

Two other documents are pertinent to Bita’s claim that it was an additional

insured under the Sorrento policy. The first document is a Certificate of Insurance. 

The second, the Change of Declarations Endorsement page, in a subheading entitled

“Additional Insured,” noted that Hossien Javanfar and Bita were added as additional

insureds for no extra premium. (Bita Exh. C at p.17). This section of the Change of

Declarations Endorsement page also specifically incorporated FormPBA102, the form

that specified that the additional insureds were covered for purposes of the Liability

Form only. On the same page of the Change of Declarations Endorsement, and

separated by a line of asterisks, the form stated “Mortgagee or Loss Payee.” This

section identified the mortgagee, Pacific Western Bank, the same mortgagee identified

in the Property Form.

Bita moves for partial summary judgment by arguing that it is an additional

insured under the Property Form. Bita also argues that it is covered under the Property 3

Form for business interruption losses but that summary judgment is inappropriate on

There is no dispute that Bita is an additional insured under the Liability Form.

3

- 4 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 4 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

this claim because the total amount of business income loss is on-going and therefore

an unknown amount. Nationwide opposes Bita’s motion and argues that it is entitled

to summary judgment because Bita is not an additional insured for purposes of the

Property Form.

DISCUSSION

Legal Standards

Motion for Summary Judgment Standards

A motion for summary judgment shall be granted where “there is no genuine

issue asto any material fact and . . . the moving party is entitled to judgment as a matter

of law.” FED. R. CIV. P. 56(c); Prison Legal News v. Lehman, 397 F.3d 692, 698 (9th

Cir. 2005). The moving party bears the initial burden of informing the court of the

basis for its motion and identifying those portions of the file which it believes

demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). There is “no express or implied requirement in Rule 56 that

the moving party support its motion with affidavits or other similar materials negating

the opponent’s claim.” Id. (emphasis in original). The opposing party cannot rest on

the mere allegations or denials of a pleading, but must “go beyond the pleadings and

by [the party’s] own affidavits, or by the ‘depositions, answers to interrogatories, and

admissions on file’ designate ‘specific facts showing that there is a genuine issue for

trial.’” Id. at 324 (citation omitted). The opposing party also may not rely solely on

conclusory allegations unsupported by factual data. Taylor v. List, 880 F.2d 1040,

1045 (9th Cir. 1989). 

The court must examine the evidence in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). Any doubt

asto the existence of any issue of materialfact requires denial of the motion. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). On a motion for summary judgment,

when “‘the moving party bears the burden of proof at trial, it must come forward with

evidence which would entitle it to a directed verdict if the evidence were

- 5 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 5 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

uncontroverted at trial.’” Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992)

(emphasis in original) (quoting International Shortstop, Inc. v. Rally's, Inc., 939 F.2d

1257, 1264-65 (5th Cir. 1991), cert. denied, 502 U.S. 1059 (1992)).

General Insurance Law Principles

Ordinary rules of contract interpretation apply to insurance contracts. “The

fundamental goal of contractual interpretation is to give effect to the mutual intention

of the parties. If the contractual language is clear and explicit, it governs.” Bank of

West v. Superior Court (Industrial Indemnity Co.), 2 Cal. 4th 1254 (1992). Where

exclusions are clear, plain, and conspicuous, they will be enforced. Malcolm v.

Farmers New World Life Ins. Co., 4 Cal.App.4th 296, 3045 (1992). 

The Property Form

Bita argues that it was an additional insured under the Sorrento policy because

(1) the Ground Lease with Sorrento required Sorrento to insure Bita against losses

caused by property damage and business interruption; (2) the Certificate of Insurance

evidences its status as an additional insured under the Property Form; and (3) the

Change of Declarations Endorsement evidences coverage under the Property Form. 

Each is discussed in turn.

The Ground Lease

Bita argues that the Ground Lease required Sorrento to maintain builder’s risk

insurance as well as property, liability, and businessinterruption insurance. (Bita Exh.

A). While this fact is undisputed, it has no bearing on whether Bita is an additional

insured for purposes of the Property Form. Whether Bita is an additional insured

depends on the insurance contract, and not the Ground Lease. 

In sum, the ground lease is not relevant to Bita’s breach of the Property Form

and its claim against Nationwide. 

The Certificate of Insurance

Sorrento’s insurance broker, Kennedy Insurance Agency, Inc., provided Bita

with a Certificate of Insurance. The Certificate of Insurance states, in the Description

- 6 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 6 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of Operations/ Locations/ Vehicles section:

Certificate holder (identified as Hossien Javanfar - Bita Trading Co.) is

named as additional insured (land owner) with respect to building,

business personal property and general liability in accordance with loan

#18755681 with Pacific Western Bank.

(Bita Exh. D). The first provision on the Certificate of Insurance states:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION

ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE

HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR

NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE

AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF

INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE

ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR

PRODUCER, AND THE CERTIFICATE HOLDER.

Id. Furthermore, the Certificate provides “If the certificate holder (Bita) is an

ADDITIONAL INSURED, the policy(ies) must be endorsed.” Id.

Moreover, California law providesthat certificates ofinsurance may not alter the

terms of an insurance contract. Insurance Code section 384(a) provides, in pertinent

part:

A certificate of insurance or verification of insurance provided as

evidence of insurance in lieu of an actual copy of the insurance policy

shall contain the following statements or words to the effect of:

This certificate or verification of insurance is not an insurance policy and does

not amend, extend or alter the coverage afforded by the policies listed herein.

Notwithstanding any requirement, term, or condition of any contract or other

document with respect to which this certificate or verification of insurance may

be issued or may pertain, the insurance afforded by the policies described herein

is subject to all the terms, exclusions and conditions of the policies.

In light ofthe plain language of the Certificate of Insurance and Cal. Ins. Code §384(a),

the Certificate of Insurance confers no rights to Bita that are not contained in the

Sorrento policy issued by Nationwide. See Pardee Construction Co. v. Insurance Co.

of the West, 77 Cal.App.4th 1340, 1347 n.2 (2000) (a certificate of insurance is not a

contract between the insurer and the certificate holder). As Bita is not identified as an

additional insured for purposes of the Property Form, as more fully discussed below,

the Certificate of Insurance does not support Bita’s arugment that it is an additional

insured under the Sorrento policy.

Bita argues that American Casualty Co. of Reading, PA v. Krieger, 181 F.3d

- 7 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 7 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1113 (9th Cir. 1999), supports its position that the Certificate of Insurance evidences

its status as an additional insured for all purposes under the policy. Krieger is

distinguishable in at least two ways. First, the Certificate of Insurance at issue in

Kreiger apparently did not contain two specific advisements contained in the

Certificate at issue here: “THIS CERTIFICATE OF INSURANCE DOES NOT

CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S),

AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE

HOLDER” and “If the certificate holder (Bita) is an ADDITIONAL INSURED, the

policy(ies) must be endorsed.” As set forth below, the endorsement transmitted with

the Certificate was accompanied by form PBA102, specifically limiting Bita’s status

as an additional insured for purposes of liability coverage only. Second, the relevant

issue with respect to the certificate ofinsurance in Kreiger dealt with agency principles,

an argument not raised by Bita herein.

In sum, the Certificate of Insurance does not support Bita’s breach of contract

claims against Nationwide.

The Policy

Here, the Property Form recognizes Sorrento as the insured, and no other party. 

The only insured party, as identified in the policy, is Sorrento. (NW000005). 

Similarly, the schedule of named insureds only identifies Sorrento. (NW000006). 

Additional insureds include mortgageesthat are listed as additional insureds under the

policy. (NW000010). Sorrento is not listed as a mortgagee. The only other issue is

whether there is another contractual basis or ambiguity to find that Bita is an additional

insured for purposes of the Property Form.

4

Bita claims that the Change of Declarations Endorsement supportsits claim that

it is an insured for purposes of the Property Form. (Bita Exh. C p.17). The Change of

Declarations Endorsement is divided into two sections. The first section, with a

The parties do not dispute that Bita is an additional insured for purposes of the

4

Liability Form. The Liability declarations page identifies Managers or Lessors, like

Bita, as automatic additional insureds. (NW000011, 0000111).

- 8 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 8 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

subheading entitled “Additional Insured,” identifies Hossien Javanfar - Bita and

specifically adds Form PBA102. Form PBA102 accompanied the Change of

Declarations Endorsement and clearly and unambiguously states that Bita is an

additional insured for purposes of the Liability Form.

5

The second portion of the Change of Declarations Endorsement, separated by a

line of asterisks with a subheading entitled “Mortgagee or Payee,” identifies the

mortgagee as Pacific Western Bank, Inc. Id. This is the same lender identified on the

Property declarations. Seen in context of the insurance contract and the documents

comprising the Change of Declarations Endorsement and the Acknowledgment of

Insured Status Form (PBA102), the policy and its provisions are not ambiguous

because Bita’s proposed construction is simply not a reasonable one. See Bay Cities

Paving and Grading, Inc. v. Lawyers Mutual Ins. Co., 5 Cal.4th 854, 867 (1993) (“A

policy provision will be considered ambiguous only when it is capable of two or more

constructions, both of which are reasonable.”). The only reasonable interpretation is

that Bita is an additional insured for purposes of the Liability Form, but not the

Form PBA102 provides that Bita is an additional insured for purposes of the

5

Liability Form: 

Any of the following persons or organizations are automatically insureds

when you [i.e. the Named Insured stated below] and such person or

organization have agreed in a written contract or agreement that such

person or organization be added as an additional insured on your policy

providing general liability coverage.

Managers or Lessors of Leased Premises

Any person or organization from whom you lease premises is an

additional insured, but only with respect to their liability arising out of

that part of the premises leased to you, subject to the following additional

exclusion:

This insurance, including any duty we have to defend “suits,” does not

apply to structural alterations, new construction or demolition operations

performed by or for such person or organization. 

HOWEVER, their status as additional insured under this policy ends

when you cease to be a tenant of such premises.

(NW000111).

- 9 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 9 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Property Form. 

Bita appears to argue that the court should begin and end its analysis of the

Change of Declarations Endorsement upon encountering the words “Additional

Insured.” This narrow view runs counter to rules of contract interpretation. “While

insurance contracts have special features, they are still contracts to which the ordinary

rules of contractual interpretation apply.” Bank of the West v. Superior Court, 2

Cal.4th 1254, 1264 (1992). “The rules governing policy interpretation require us to

look first to the language of the contract ... to ascertain its plain meaning or the

meaning a layperson would ordinarily attach to it.” Waller v. Truck Ins. Exchange,

Inc.,11 Cal.4th 1, 18 (1995). “[L]anguage in a contract must be construed in the

context of that instrument as a whole, and in the circumstances of that case, and cannot

be found to be ambiguous in the abstract.” Bank of the West, 2 Cal.4th at 1265. Here,

in the Change of Declarations Endorsement under the heading “Additional Insured,”

the document states “Added” and identifies Bita, Hossien Javanfar, and PBA102. 

Viewing this language in context of the Change of Declarations Endorsement section

in which it appears, and the insurance contract as a whole, the only reasonable

interpretation is that Bita is an additional insured for purposes of the Liability Form,

but not the Property Form. The court concludes that the Change of Declarations

Endorsement is not reasonably susceptible to Bita’s proferred interpretation and

therefore not legally ambiguous. This is particularly true in light of the parties’ relative 

sophistication. See AIU Ins. Co. v. Superior Court, 51 Cal.3d 807, 823 (1990) (in

insurance policy disputesinvolving sophisticated parties, noting that the court need not

construe the policy as may be understood by a layperson). 

At the time of oral argument, Bita argued that Lee v. Fidelity National Title Ins.

Co., 188 Cal.App.4th 853 (2010) supports its view that the insurance documents are

sufficiently ambiguous such that it is insured for all property and liability losses. In

Lee, the plaintiffs purchased property in 1990 that was identified by two tax assessor

parcel numbers. Fidelity issued a preliminary report that “referred repeatedly to both

- 10 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 10 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

assessor parcels, and included a legal description of the property to be insured.” Id. at

751. Further, the preliminary report identified both parcel numbers as the property

address and unpaid taxes on both properties. The plaintiffs paid property taxes on both

properties. While the parcel number references were not incorporated into the policy,

“the policy attached a map; depicting the two parcels.” In 2006 plaintiffs learned from

the county assessor that the legal description in the title insurance was correct but that

the plaintiffs only owned one of the two parcels contrary to the preliminary report. The

county assessor also represented that it had erroneously assessed the taxes for both

parcels on plaintiffs. When plaintiffs made a claims against Fidelity, it denied

coverage on the ground that the legal description in the title insurance policy was

correct. The appellate court noted that the metes and bounds legal description,

although correct, was one that “required professional training to decipher.” Id. Noting

that an insured “can rely on a preliminary [title] report to reflect the scope of the

coverage being offered,” id. at 596, and noting the repeated references to both parcel

numbers asthe property description in the preliminary report, the court found plaintiffs

had an “objectively reasonable expectation” of coverage. Id. at 597. The court then

determined that “the legal description here is ambiguous only because of the

circumstances under which the policy was issued, which involve a preliminary report

that could be reasonably construed as an offer to insure property located outside the

land described.” Id. at 598. The appellate court then reversed the trial court’s grant of

summary judgment in favor of the insurer.

Here, unlike Lee, Bita cannot identify circumstances warranting a determination

that the insurance documents are reasonably ambiguous. The ordinary sense of the

policy and the Change of Endorsement Declaration, including the incorporation of

PBA102 into the Declaration, reveal that Bita is an additional insured for purposes of

liability coverage, but not property coverage. Bita’s proposed construction, in light of

the clear and explicit meaning of the insurance policy provisions, is not a reasonable

one.

- 11 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 11 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In sum, the court concludes that the Property Form does not provide coverage

for the property losses (and business interruption losses) suffered by Bita because it is

not an additional insured under the Property Form. Accordingly, the court grants

summary judgment in favor of Defendant Nationwide and against Plaintiff Bita on the 

claim alleged in the complaint. The Clerk of Court is instructed to enter judgment and

to close the file.

IT IS SO ORDERED.

DATED: January 6, 2014

 Hon. Jeffrey T. Miller

 United States District Judge

cc: All parties

- 12 - 13cv1548

Case 3:13-cv-01548-JM-WVG Document 25 Filed 01/06/14 Page 12 of 12