Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-04082/USCOURTS-cand-3_04-cv-04082-1/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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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ATMEL CORPORATION,

Plaintiff,

 v.

ST. PAUL FIRE & MARINE,

Defendant.

 /

No. C 04-04082 SI

ORDER GRANTING DEFENDANT’S EX

PARTE APPLICATION UNDER FRCP

56(f) FOR AN ORDER CONTINUING

ATMEL’S PARTIAL SUMMARY

JUDGMENT MOTION

Defendant St. Paul requests that the Court grant a continuance of plaintiff Atmel’s motion for partial

summary judgment. Having considered the papers submitted by counsel, the Court hereby GRANTS plaintiff’s

application for continuance under Rule 56(f) for the reasons set forth below. 

BACKGROUND

Atmel, a computer chip manufacturer,seeks to recover fromSt. Paul defense fees and costs it incurred

in connection with a third-part suit filed by one of Atmel’s customers for damages allegedly arising from

defective chips. Atmel tendered defense of the action to both St. Paul and Royal, each of which had a separate

insurance policy covering Atmel. After allegedly discovering previously undisclosed but requested information

about events precipitating the third-party suit, St. Paul rescinded Atmel’s insurance. Royaldid provide Atmel

with a defense under California Civil Code § 2860.

On June 3, 2005, Atmelfiled a motion for partialsummary judgment seeking to establish, among other

things, that St. Paul breached its duty to defend Atmel in the third-party suit. St. Paul claims that it cannot

adequately prepare its opposition to the partialsummary judgment motionwithout certain requested discovery,

which is also the subject ofvarious pending motions to compel that are setfor argument on July 1, 2005. Since

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its opposition is due shortly after July 1, St. Paul essentially seeks more time to prepare its opposition in light

of the outcome of the pending motions to compel. St. Paul now brings this ex parte application under Federal

Rule ofCivil Procedure 56(f) to continue Atmel’s summary judgment motion, or, in the alternative, to shorten

the time for hearing on application for continuance.

LEGAL STANDARD

Pursuant to FederalRule ofCivil Procedure 56(f), upon a showing by the party opposing a motion for

summary judgment that it “cannot for reasons stated present by affidavit facts essential to justify the party’s

opposition,” the court may deny or continue the motion forsummary judgment in order to permit that party an

opportunity to obtain necessary discovery. “Ordinarily, summary judgment should not be granted when there

are relevant facts remaining to be discovered, but the party seeking a continuance bears the burden to show

what specific facts it hopes to discover that will raise an issue of material fact.” Cont’l Mar. v. Pac. Coast

Metal Trades, 817 F.2d 1391, 1395 (9th Cir. 1987). 

A Rule 56(f) motion should be granted where the party opposing summary judgment makes a timely

application thatspecifically identifiesrelevantinformationto be discovered, and there is some basis for believing

that such information actually exists. Visa Int’l Serv. Ass’n v. Bankcard Holders, 784 F.2d 1472, 1475 (9th

Cir. 1986). Granting of such a motion is particularly appropriate where the identified information is the subject

of outstanding discovery requests. Id. 

DISCUSSION

St. Paul argues thatAtmel’s motion for partialsummary judgment should not be decided until St. Paul

is given“the opportunity to avail itself ofthe proper discovery tools to obtain the evidence needed to effectively

oppose Atmel’s motion.” Mot. at 8. St. Paul contends that “if Royal met its [defense] obligations to Atmel

under Civil Code § 2860, Atmel suffered no legal damage as a result of St. Paul not participating in Atmel’s

defense.” Id. St. Paul states that it expects the responsive documents to show (1) the terms of the defense

agreed to by Royal, (2) Atmel’ssubmissionofdefense invoicesto Royalfor payment, (3) Royal’s payment of

the defense invoices in accordance with its obligations under § 2860, and (4) communications between Royal

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1Under California law, the essential elements for a breach of contract claim are: (1) the existence of a

contract, (2) plaintiff’s performance or excuse fornonperformance,(3)defendant’s breach, and (4)the resulting

damages to plaintiff. Reichert v. General Ins. Co., 68 Cal. 2d 822, 830 (1968).

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and Atmel regarding disputed amounts. 

Atmel claims that it received only a “partial” defense from Royal and that it is entitled to recover from

St. Paul the remainder of defense fees and expenses it incurred. Atmel contends that, notwithstanding its

allegations of recision, St. Paul owed a duty to defend and, since it did not participate in Atmel’s defense, it

breached that duty.

As noted in St. Paul’s brief, under California law, damage to plaintiffis an essentialelement of a breach

of contract claim.1 Therefore, Atmel bears the burden of showing that it suffered damage as a result of St.

Paul’s non-participation in Atmel’s defense, whether by using the withheld documents sought by St. Paul or

by some other evidence. The withheld documents may possibly establish this essential element ofa breach of

duty cause of action, or may, as St. Paul suspects will be the case, provide a basis for defending against

plaintiff’s partial summary judgment motion. 

Atmel is correct in noting that, under Rule 56(c), liability may be adjudicated apart from damages;

however, it fails to recognize the distinctionbetween damages as an essential element of a cause of action and

the monetary amount of damages suffered as a result of a breach. Whereas the latter may be adjudicated

separately after a breach is established, see Fed.R.Civ.P. 56(d), the former is part of the breach allegation

itself. See Reichert, 68 Cal. 2d at 830. Therefore, it is immaterial that Atmel does not seek an adjudication

of the amount of damages at this time. 

Atmel argues that “[t]he duty to defend arises when the complaint against the insured raises any

potentialfor covered damages under the policy,” and that this duty “is judged bythe complaint and facts known

to the carrier at the time the complaint is tendered to it.” Opp’n at 3 (citing Horace Mann Ins. Co. V. Barbara

B., 4 Cal. 4th 1076, 1081 (1993); Gray v. ZurichIns. Co., 65 Cal. 2d 263, 265 (1966)). The authority cited

by Atmel is distinguishable from the case at hand. In Horace, the insured submitted an amended complaint

alleging acts that arguably fell within the scope of the insurance policy that excluded acts alleged in the original

complaint. Horace, 4 Cal. 4th at 1080. The court found thatsummary judgment was improper where, at the

time of the summary adjudication proceedings, there were unresolved factual disputes about the potential for

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liability under the policy vis a vis the amended complaint. Id. at 1083. In Gray, the court found a duty to

defend because the ambiguous language of the insurance policy would reasonably have led the insured to

expect defense of the third party suit. Gray, 65 Cal. 2d at 275. There, the insured was unsuccessful in

defending the third party suit and suffered a judgment of $6,000 actual damages. Id. at 267.

Here, Atmel has not met its burden of showing actual damages necessary to sustain a breach of

contract cause of action. Moreover, there appears to be some dispute over whether St. Paul’s rescission was

justified under the terms of the policy, which is to say that the court’s decision in Horace may actually support

the proposition that a continuance on the partial summary judgment motion is proper given this unresolved

factual dispute. 

Accordingly, the Court finds that St. Paul has met the requirements of Rule 56(f) in seeking a

continuance of Atmel’s partial summary judgment motion. 

 

CONCLUSION

For the foregoing reasons and for good cause shown, the Court hereby GRANTS St. Paul’s Rule

56(f) motion to continue Atmel’s motion for partial summary judgment until August 19, 2005 at 9:00

a.m. [Docket #98]

IT IS SO ORDERED.

Dated: June 23, 2005 S/Susan Illston 

SUSAN ILLSTON

United States District Judge

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