Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_13-cv-08297/USCOURTS-azd-3_13-cv-08297-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:2201 Declaratory Judgment (Insurance)

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

St. Paul Guardian Insurance Company, et al.,

Plaintiffs, 

v. 

Town of Colorado City, et al., 

Defendants.

No. CV-13-08297-PCT-JAT

ORDER 

 Pending before the Court are two motions filed by St. Paul Guardian Insurance 

Company and The Travelers Indemnity Company (collectively, the “Plaintiffs”): a 

Motion to Stay Further Proceedings, (Doc. 61), and a motion pursuant to Fed. R. Civ. P. 

54(b) to enter final judgment on the Court’s rulings in the July 13, 2015 Order. The Court 

now rules on the motions. 

I. Clarification of the Court’s July 13, 2015 Order 

 As an initial matter, the Court hereby clarifies its July 13, 2015, Order that granted 

in part, and denied in part, Plaintiffs’ Motion for Summary Judgment. (Doc. 59). In the 

Order, the Court concluded—on the issue of whether Plaintiffs have a duty to defend 

Defendant Town of Colorado City (the “Town”) in the underlying litigation—that 

although Plaintiffs established as a matter of law that coverage for the Town did not exist 

under a number of insurance policies, “coverage potentially exist[ed] under [certain] 

2009-11 Policies for at least one claim in the Underlying Lawsuit,” (Doc. 59 at 17). 

Therefore “Plaintiffs have a duty to defend the entire Underlying Lawsuit until its 

completion.” (Id. (citing Lennar Corp. v. Auto-Owners Ins. Co., 151 P.3d 538, 544 (Ariz. 

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Ct. App. 2007)). 

 Having reviewed the parties’ filings, it is apparent that both parties understood the 

Court’s July 13, 2015, Order to have granted summary judgment in favor of the Town on 

the issue of whether Plaintiffs have a duty to defend the Town throughout the entirety of 

the underlying litigation. To clarify, the Court did not grant summary judgment in favor 

of the Town. The Court concluded that based on Plaintiffs’ Fed R. Civ. P. 56 motion, 

Plaintiffs failed to establish as a matter of law that no insurance policy provided coverage 

for the Town triggering the duty to defend, and therefore “the Court must deny summary 

judgment on this issue.” (Doc. 59 at 8). 

 Specifically, with respect to Plaintiffs’ duty to defend the Town against the First 

Cause of Action in the underlying litigation, the Court concluded that Plaintiffs failed to 

carry their burden under Rule 56 to establish that the Umbrella Excess Liability 

Protection (UEL) policy and the Excess Errors and Omissions Liability Protection 

(EE&O) policy provided no coverage for the Town. The Court found that it could not 

determine whether Plaintiffs had a duty to defend under the UEL policy “on the present 

record,” and “express[ed] no opinion as to whether there is potential . . . coverage for the 

First Cause of Action.” (Doc. 59 at 8). In regards to the potential coverage that may exist 

under the EE&O policy, the Court could “not declare that there is no coverage when it is 

uncertain whether such coverage . . . exists.” (Id. at 9). 

 With respect to Plaintiffs’ duty to defend the Town against the Second Cause of 

Action in the underlying litigation, the Court concluded that Plaintiffs were not entitled to 

judgment as a matter of law because coverage may exist under the EE&O, UEL, and Law 

Enforcement Liability (LEL) insurance policies. (Doc. 59 at 12, 16-17). Specifically, 

after analyzing Plaintiffs’ LEL policy argument, the Court found that “the Town has 

presented actual evidence that its law enforcement officers have discriminated in matters 

relating to housing and property,” and thus “the Second Cause of Action potentially 

implicates the LEL coverage,” which precluded Plaintiffs from being “entitled to 

judgment as a matter of law that there is no coverage under the LEL” policy. (Id. at 

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12,13). The Court further found that Plaintiffs “failed to show their entitlement to 

judgment . . . as a matter of law” on the EE&O policy because they failed to show that 

coverage for the Second Cause of Action did not exist under the “Employee Benefit Plans 

Administration Liability Claims-Made” coverage which is the underlying insurance for 

the EE&O policy. (Id. at 16). Finally, the Court found that the UEL policy “follow[ed] 

the LEL in providing coverage for law enforcement activities or operations,” and thus 

Plaintiffs were not entitled to judgment as a matter of law on the UEL policy because 

“the Second Cause of Action potentially implicate[d] . . . the UEL.” (Id. at 17). 

 Based on these findings, the Court concluded that Plaintiffs failed to establish—as 

a matter of law—that all applicable insurance policies did not provide coverage for the 

Town against both causes of action in the underlying litigation. (Doc. 59 at 17). In other 

words, coverage “potentially exist[ed] under the 2009-11 Policies for at least one claim.” 

(Id.). Thus, under Arizona law, “the insurer has a duty to defend the entire suit, because it 

is impossible to determine the basis upon which the plaintiff will recover . . . .” Nat’l 

Fire. Ins. Co. v. Lewis, 898 F. Supp. 2d 1132, 1154 (D. Ariz. 2012) (citation omitted). 

But the Court did not enter judgment as a matter of law in favor of the Town on the duty 

to defend issue. Plaintiffs failed to carry their burden under Rule 56, and therefore the 

parties must proceed to trial on the issue of whether coverage exists under the UEL, 

EE&O, or LEL insurance policies, which would establish as a matter of law or fact 

whether the duty to defend continues beyond the conclusion of this declaratory judgment 

action. In the interim, Plaintiffs have a duty to defend the Town in the underlying lawsuit 

unless and until this Court ultimately enters judgment in their favor. In accordance with 

this ruling, on August 6, 2015, the Court set a Final Pretrial Conference for December 2, 

2015.1

 Having clarified the July 13, 2015, Order, the Court now addresses the instant 

motions. 

 

1

 Accordingly, Doc. 59 at 17, lines 13 – 15 is amended consistent with this 

clarification. 

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II. Plaintiffs’ Motion to Stay 

 Plaintiffs propose that further proceedings in the matter be stayed pending 

resolution of the underlying litigation, No. CV12-08123-PCT-HRH, which is set for trial 

on January 19, 2016. (Doc. 61 at 3). In light of the Court’s clarification of the July 13, 

2015, Order, discussed supra, the Court declines to rule on Plaintiffs’ motion at this time. 

The Court hereby orders the parties to file supplemental briefs addressing the following 

issues: (1) whether each party is ready to proceed to trial immediately on the issue of 

coverage under the EE&O, UEL, or LEL policies;2

 and (2) the appropriateness of an 

order from this Court staying further proceedings in the matter with respect to either the 

duty to defend issue or the duty to indemnify issue. The parties’ supplemental briefs are 

to be filed with the Court by Tuesday, October 13, 2015 at 9:00 a.m. 

III. Rule 54(b) Certification 

 The Court now turns to Plaintiffs’ motion for entry of final judgment 

pursuant to Fed. R. Civ. P. 54 (b). As a threshold matter, a “final judgment” must have 

been entered, Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 7 (1980), one 

that is an “ultimate disposition of an individual claim” for certification to be appropriate. 

Id. (citation omitted). As discussed supra, the July 13, 2015, Order did not grant 

summary judgment in favor of the Town on the issue of whether Plaintiffs have a duty to 

defend the Town throughout the underlying litigation. Thus, no final judgment has been 

issued by this Court. See Az. State Carpenters Pension Trust Fund v. Miller, 938 F.2d 

1039, 1039-40 (9th Cir. 1991). Accordingly, the Court will deny Plaintiffs’ motion to 

enter final judgment without prejudice. 

 

2

 If either party deems itself ready to proceed to trial on the duty to defend issue and advocates moving forward immediately, that party may also wish to include in its supplemental brief its arguments on whether the Court should bifurcate the duty to defend issue and the duty to indemnify issue for separate trials. 

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IV. Defendant’s Request for Attorneys’ Fees 

 In its response to Plaintiffs’ motions, the Town argues that in light of this Court’s 

July 13, 2015, Order, it is the prevailing party, and requests that the Court award 

reasonable attorney’s fees pursuant to Ariz. Rev. Stat. Ann. § 12-3401 (A) (2012) 

(establishing that “[i]n any contested action arising out of a contract, express or implied, 

the court may award the successful party reasonable attorney fees”). Given that no final 

judgment has been entered and the litigation is ongoing, there is no prevailing party, and 

any award of attorney’s fees is premature. The Court therefore denies the Town’s request 

for attorney’s fees without prejudice. Future requests may be filed in accordance with 

both Fed. R. Civ. P. 54(d)(2) and LRCiv. 54.2. 

V. Conclusion 

 For the aforementioned reasons, 

IT IS ORDERED that the parties shall file supplemental briefs with the Court, by 

October 13, 2015, at 9:00 a.m., addressing proceeding to trial on the issue of coverage. 

The parties shall also address the appropriateness of an Order staying further proceedings 

in the matter, addressing both the issue of Plaintiffs’ duty to defend the Town in the 

underlying litigation and Plaintiffs’ duty to indemnify the Town. 

IT IS FURTHER ORDERED that Plaintiffs’ motion to enter final judgment 

pursuant to Fed. R. Civ. P. 54(b) (Doc. 62) is DENIED, without prejudice. 

 IT IS FURTHER ORDERED that the Town’s request for attorney’s fees (Doc. 

63 at 7) is DENIED, without prejudice. 

 Dated this 5th day of October, 2015. 

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