Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03875/USCOURTS-cand-3_04-cv-03875-5/pdf.json

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

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

TRAVELERS CASUALTY & SURETY

COMPANY, formerly known as THE AETNA

CASUALTY AND SURETY COMPANY,

Plaintiff,

 v.

INSURANCE COMPANY OF THE STATE

OF PENNSYLVANIA, NATIONAL UNION

FIRE INSURANCE COMPANY OF

PITTSBURGH, PA, and DOES 1 through 10,

Defendants. /

No. C 04-03875 WHA

ORDER GRANTING IN PART

AND DENYING IN PART

DEFENDANTS’ MOTION FOR

SUMMARY JUDGMENT

INTRODUCTION

In this dispute between insurance carriers, defendants Insurance Company of the State of

Pennsylvania (“ISOP”) and National Union Fire Insurance Company of Pittsburgh, PA move

for summary judgment as to plaintiff Travelers Casualty & Surety Company’s third claim for

relief for equitable contribution. For the reasons stated herein, defendants’ motion is GRANTED

IN PART.

STATEMENT

This dispute revolves around a previous settlement in a construction lawsuit in San

Francisco Superior Court, entitled Board of Trustees of the California State University v. Perini

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United States District Court

For the Northern District of California

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Building Company, et. al., Case No. 304093. That state-court action centered around Perini’s

liability for damage from leaks after construction work by Perini. The parties to the abovecaptioned action are insurers that together contributed $16.25 million to that settlement, with

Travelers paying $12 million and National Union paying $4.25 million.

The following insurance policies are implicated by this dispute. Travelers issued Perini

six commercial-general-liability policies each with two million dollar limits per occurrence

(Compl. at ¶ 7, Br. 13). Travelers also issued Perini a commercial-excess-liability policy for

Perini with a limit of ten million dollars per occurrence (id. at ¶ 8). ISOP issued four

commercial-general-liability policies to Perini each with limits of two million dollars (id. at

¶¶ 9–12). Finally, National Union issued Perini two commercial-umbrella policies with

aggregate limits of $50 million and one commercial-umbrella policy with an aggregate limit of

$25 million (id. at ¶¶ 13–15). 

In short, plaintiff contends that it paid a disproportionate share. On September 15, 2004,

plaintiff filed its complaint. Plaintiff’s third claim for relief alleges a claim for equitable

contribution related to payment of the settlement, seeking indemnity from ISOP and National

Union under their respective policies. Defendants now move for summary judgment on this

claim.

ANALYSIS

1. LEGAL STANDARD FOR SUMMARY JUDGMENT.

Pursuant to FRCP 56(c), summary judgment shall be rendered if “there is no genuine

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

On a motion by a party without the burden of proof at trial:

The moving party may produce evidence negating an essential

element of the nonmoving party’s case, or, after suitable

discovery, the moving party may show that the nonmoving party

does not have enough evidence of an essential element of its

claim or defense to carry its ultimate burden of persuasion at trial.

Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1106 (9th Cir.

2000).

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2. EQUITABLE CONTRIBUTION.

Plaintiff’s claim for equitable contribution is governed by California law. In the context

of insurance law:

Equitable contribution permits reimbursement to the insurer that

paid on the loss for the excess it paid over its proportionate share

of the obligation, on the theory that the debt it paid was equally

and concurrently owed by the other insurers and should be shared

by them pro rata in proportion to their respective coverage of the

risk. 

Am. Cont’l Ins. Co. v. Am. Cas. Co., 86 Cal. App. 4th 929, 937 (2001)(internal citation

omitted). “Every California case of which we are aware has enforced an insurer’s contribution

claim only where the other insurer was also obligated to pay on the claim.” Ibid.

“Under well-settled insurance principles, there are two levels of insurance coverage,

primary and excess.” Reliance Nat’l Indem. Co. v. Gen. Star Indem. Co., 72 Cal. App. 4th

1063, 1076 (1999)(citation omitted). No right to contribution exists between insurers at the

different risk levels. Id. at 1077–78. 

This rule barring cross-risk-level contribution eliminates certain portions of plaintiff’s

third claim as a matter of law. National Union only provided excess insurance to Perini. 

Travelers cannot seek equitable contribution for the two million dollar payment pursuant to its

primary coverage from National Union’s excess policies. Likewise, this rule bars contribution

for payments made under Travelers’ excess policies from ISOP’s primary policies. The only

theoretically sustainable claims are for contribution for Travelers’ primary payments from

ISOP’s primary policies and for Travelers’ excess payments from National Union’s excess

policies. 

Furthermore, “[i]t is settled under California law that an excess or secondary policy does

not cover a loss, nor does any duty to defend the insured arise, until all of the primary insurance

has been exhausted.” Cmty. Redev. Agency v. Aetna Cas. & Sur. Co., 50 Cal. App. 4th 329, 339

(1996)(citation omitted). Before the National Union excess policies would even be implicated,

therefore, all six of Travelers’ primary policies would have to be exhausted. Each of those

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policies had limits of two million dollars with respect to Perini. Beyond that, all four of the

ISOP primary policies would have to be exhausted. Given that only $12 million is at stake,

there is no possibility that the primary policies would be exhausted such that National Union

would be required to contribute on the basis of its excess policies. At oral argument, plaintiff’s

counsel admitted that she had no authority countering this conclusion. Instead, plaintiff’s

counsel asserted, without citation, that the Court could ignore the rule of exhaustion by applying

“the rule of equity.” Absent any proof that equity requires such a departure from the rule of

exhaustion here, however, this order finds that National Union is not responsible to plaintiff for

contribution. 

In an attempt to salvage its complaint, plaintiff argues that this Court should read into

the complaint a claim for subrogation, relying on the liberal doctrine of notice pleading under

FRCP 8. It is not true, however, that by alleging equitable contribution a defendant is

automatically on notice of a claim for subrogation—a claim for “[e]quitable contribution is

entirely different” from a claim for subrogation. Fireman’s Fund Ins. Co. v. Md. Cas. Co., 65

Cal. App. 4th 1279, 1292 (1998). In any event, “[a]n opposition is not the proper forum to raise

new claims.” Smith v. Coleman, No. C 01-20576, 2001 WL 1220736, *2 n. 1 (N.D. Cal. Sep.

27, 2001). 

* * * 

The only remaining portion of plaintiff’s claim is for contribution on the two million

dollars paid under Travelers’ primary policies against ISOP’s primary policies. As to this

claim, defendants argue that Travelers failed to bring forth sufficient evidence during discovery

to indicate a possibility of success at trial. This order disagrees.

The primary flaw with defendants’ argument is a mistake about defendants’ own

interrogatory questions. Defendants argue at length that plaintiff’s interrogatory responses

demonstrate a lack of evidence to prove at trial that an obligation by Travelers to indemnify

Perini ever arose with respect to the leak damage. In the definition section for defendants’

interrogatories, defendants defined “THE PERINI ACTION” as a separate action between

Perini and Travelers (Fredette Decl. Exh. A). All of the allegedly deficient responses were to

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questions aimed at that action. The underlying action at hand here, Board of Trustees of the

California State University v. Perini Building Company, et. al., was named “THE TRUSTEES

ACTION” by defendants for purposes of the interrogatories (ibid.). Defendants simply did not

frame any interrogatories to plaintiff to discover information about Travelers’ obligations

stemming from the “THE TRUSTEES ACTION.” 

On reply and at oral argument, defendants’ counsel tried to wish away this argument

about the interrogatories by contending both that THE PERINI ACTION was equally relevant

to the above-captioned matter and that, in any event, plaintiff provided generally elusive and

technical discovery responses which indicate an absence of proof. As to the first point, THE

PERINI ACTION is not equally relevant to the issue of whether the leak damages for which

Perini was liable onset Travlers’ obligation of indemnification for the THE TRUSTEES

ACTION. As plaintiff’s counsel explained at oral argument, THE PERINI ACTION ultimately

boiled down to a dispute between Perini and Travelers over legal fees, not over indemnification

rights. ISOP’s second contention about elusive interrogatory answers should have been raised,

if at all, in the context of a discovery motion, not on a motion for summary judgment.

Defendants’ remaining argument is an attack on Travelers’ initial disclosures of

witnesses and documents. Defendants contend that the disclosures indicate an inability of

plaintiff to prove at trial that an obligation to insure arose. Travelers, however, did indicate an

extensive list of individuals plausibly able to testify to the obligation issue, including Perini

personnel, Travellers’ personnel and counsel from the underlying action. Likewise, Travelers

pointed to numerous sets of documents available to prosecute this action, including the

documents from the underlying action. These disclosures were not so inadequate as to warrant

summary judgment. A material issue of fact exists whether Travelers bore an obligation to

indemnify Perini for the leak damage and, if so, whether ISOP’s primary policies should

provide contribution toward the two million dollar payment made from Travelers’ primary

policies. 

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CONCLUSION

For the foregoing reasons, defendants’ motion for summary judgment on plaintiff’s third

claim for relief is GRANTED IN PART. Plaintiff’s third claim is still viable as to ISOP’s primary

policies for possible contribution toward payment made by Travelers under Travelers’ primary

policies. This order declines to rule on defendants’ request for judicial notice as the documents

defendants seek to notice were not relevant to the disposition. Likewise, this order does not rely

on any of the evidence objected to by defendants, thus no ruling is necessary. Trial is set for

March 6, 2006 and will proceed as scheduled.

IT IS SO ORDERED.

Dated: January 19, 2006 WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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