Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_03-cv-04406/USCOURTS-cand-3_03-cv-04406-3/pdf.json

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

---

United States District Court

For the Northern District of California

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

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

FIREMAN’S FUND INSURANCE

COMPANY,

Plaintiff,

v.

GENERAL REINSURANCE CORP.,

Defendant.

____________________________________/

No. C-03-4406 JCS

ORDER DENYING MOTION TO

AMEND THE JUDGMENT, FINDINGS

OF FACT AND CONCLUSIONS OF

LAW; OR IN THE ALTERNATIVE,

MOTION FOR A NEW TRIAL [Docket

No. 118]

I. INTRODUCTION

Following a bench trial, Defendant General Reinsurance Corp. (“Gen Re”) brings a Motion

to Amend the Judgment, Findings of Fact and Conclusions of Law; or in the Alternative, Motion for

a New Trial (“Motion”). Pursuant to Civil Local Rule 7-1(b), the Court determines that the Motion

is suitable for determination without oral argument. For the reasons stated below, the Motion is

DENIED.

II. BACKGROUND

In this action, the parties dispute whether declaratory judgment expenses (“DJ expenses”) are

covered under certain reinsurance certificates (“the Certificates”) issued to Fireman’s Fund

Insurance Company (“Fireman’s Fund”) by Gen Re. Following a bench trial, the Court held that DJ

expenses are covered, concluding that the language used in the Certificates is ambiguous but that

there was a custom and practice in the reinsurance industry during the relevant period of paying such

expenses and Gen Re had, at a minimum, constructive notice of that practice. The Court rejected

Gen Re’s assertion that Plaintiffs’ claims as to at least some of the DJ expenses were barred on the

basis of the statute of limitations. 

Case 3:03-cv-04406-JCS Document 124 Filed 01/17/06 Page 1 of 4
United States District Court

For the Northern District of California

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

2

In the Motion, Gen Re seeks an order altering the judgment or granting a new trial, arguing

that the Court erred in finding that: 1) the DJ expenses were covered; 2) there was a custom and

practice in the reinsurance industry of paying such expenses; 3) Gen Re had constructive and actual

knowledge of any such custom or practice; and 4) the statute of limitations did not bar Plaintiff’s

claims as to certain billings.

II. ANALYSIS

Pursuant to Rules 52(b) and Rule 59 (a)(2) of the Federal Rules of Civil Procedure,

following a bench trial the court may amend its findings or a judgment, or grant a new trial, on the

following grounds: 1) manifest error of law; 2) manifest error of fact; or 3) newly discovered

evidence. Brown v. Wright, 588 F.2d 708, 710 (9th Cir. 1978) (Rule 59); see also Fontenot v. Mesa

Petroleum Co., 791 F.2d 1207, 1219 (5th Cir. 1986) (Rule 52(b)). Gen Re relies on the first two

grounds. First, it argues that a number of the Court’s factual findings are against the clear weight of

the evidence. Second, Gen Re implicitly takes the position that the Court committed manifest legal

error when it concluded that under Caner v. Owners Realty Co., 33 Cal. App. 479 (Cal. Ct. App.

1917), all of the amounts sought by Fireman’s Fund were due within a reasonable time. Rather, Gen

Re asserts that with respect to billings in which the invoices were marked “balance due” or “balance

due upon receipt,” the statute of limitations began to run when those invoices were received and

therefore, many of the amounts sought are barred by the statute of limitations.

With respect to the Court’s findings of fact, Gen Re has not pointed to any evidence in the

record that persuades the Court that its findings were erroneous. Rather, Gen Re has repeated the

arguments made in its briefs and at oral argument, which the Court has already rejected. For the

reasons stated in the Court’s Findings of Fact and Conclusions of Law, the Court concludes that the

evidence is sufficient to support the findings challenged by Gen Re. 

The Court also rejects Gen Re’s assertion that it committed legal error when it found, based

on Caner, that none of the amounts sought was barred under the statute of limitations. Under

California law, the limitation period begins to run at the point when the cause of action is complete

and the party has a right to sue. McGuire v. Hibernia Sav. & Loan Soc’y, 23 Cal. 2d 719, 733

(1944). In Caner, the court held that where the contract does not specify a time period for

Case 3:03-cv-04406-JCS Document 124 Filed 01/17/06 Page 2 of 4
United States District Court

For the Northern District of California

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

 The Court notes that Gen Re does not challenge in its Motion the Court’s determination that

under the circumstances, a “reasonable period” for accrual of a cause of action was no less than four

years. 

3

performance, performance must occur within a “reasonable time.” 33 Cal. App. at 481. The Court

concludes that that rule applies here. Indeed, Gen Re does not dispute that the Certificates do not

specify a date of performance with respect to payments. Further, when asked about its statute of

limitations position at trial, Gen Re did not dispute that the invoices themselves are not contracts. 

Rather, Gen Re essentially conceded that the invoices marked “balance due” or “balance due on

receipt” were due in a reasonable time. In particular, the following exchange occurred:

COURT: Would you address the statute of limitations argument because I am troubled

by that. . . . It’s transparent to me that the invoices are not the contract. The

contract is the contract. And the contract doesn’t have a payment time. And

if somebody never says, we’re not going to pay you, when does the claim

accrue?

GEN RE: I think the invoice itself in most instances said due upon receipt.

COURT: But that doesn’t trigger an obligation, does it? That’s not the contract. The

invoice is not the contract, correct?

GEN RE: I think the invoice – I think you don’t have to pay until you get billed. And

then after you get billed you have to pay. It says there in the language, due

upon receipt or within a reasonable time thereafter. . . .

. . .

COURT: My question is this. . ..You get an invoice, okay. You get it at a particular

time. Obviously there couldn’t have been a breach before you got that

invoice because you hadn’t gotten even notice that the payment was due. And

then you never say we’re not going to pay that portion of the invoice. You

don’t say that. What you say is our position on coverage is well-known in the

industry and we don’t think these kinds of expenses are included, and lets go,

lets have a negotiation about it. You never say, no, we are not going to pay

that. Does that mean you are not in breach of the contract?

GEN RE: I think that the answer is that it’s some sort of reasonable period of time. . . .

Trial Transcript at 67-68 (emphasis added). Therefore the Court rejects Gen Re’s assertion that the

Court committed legal error in rejecting Gen Re’s statute of limitations argument.1

Case 3:03-cv-04406-JCS Document 124 Filed 01/17/06 Page 3 of 4
United States District Court

For the Northern District of California

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

4

IV. CONCLUSION

The Motion is DENIED.

IT IS SO ORDERED.

Date: January 17, 2006

 

JOSEPH C. SPERO

United States Magistrate Judge

Case 3:03-cv-04406-JCS Document 124 Filed 01/17/06 Page 4 of 4