Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_12-cv-01261/USCOURTS-caed-1_12-cv-01261-23/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

EASTERN DISTRICT OF CALIFORNIA

THOMAS T. HAWKER, et al.,

Plaintiffs,

v.

BANCINSURANCE, INC., et al.,

Defendants.

Case No. 1:12-cv-01261-SAB

ORDER GRANTING MOTION FOR 

CERTIFICATION OF JUDGMENT AS 

FINAL AND APPEALABLE

ECF NO. 155

On April 1, 2015, Defendant John D. Doak, as receiver for Red Rock Insurance 

Company, formerly known as BancInsure, Inc. (“Defendant”) filed a motion for certification of 

judgment as final and appealable. (ECF No. 155.) Plaintiff Federal Deposit Insurance 

Corporation (“Plaintiff”) filed a non-opposition on April 9, 2015. (ECF No. 156.)

The Court finds it appropriate for the motion to be submitted upon the record and briefs 

on file and therefore vacates the hearing on the motion scheduled for April 22, 2015. For the 

reasons set forth below, the Court grants the motion.

I.

BACKGROUND

This action was filed on August 1, 2012. (ECF No. 1.) Plaintiffs Thomas T. Hawker 

John J. Incandela, Dave Kraechan, Edwin Jay Lee, and Edward Rocha (“the County Bank 

Officers”) filed suit against Defendant BancInsure, Inc. (“BancInsure”) for the alleged wrongful 

Case 1:12-cv-01261-SAB Document 157 Filed 04/17/15 Page 1 of 5
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denial of insurance coverage. The County Bank Officers are all former officers of County Bank, 

a California state-chartered bank. The County Bank Officers were named as defendants in a civil 

action filed by Plaintiff Federal Deposit Insurance Corporation (“FDIC”), who alleged that the 

County Bank Officers were negligent and breached their fiduciary duties to County Bank. The 

County Bank Officers contend that the insurance policy covers civil actions brought by the FDIC 

whereas BancInsure contends that the insurance policy does not cover civil actions brought by 

the FDIC due to an Insured versus Insured Exclusion in the policy.

On April 7, 2014, the Court granted Defendant BancInsure Inc.’s motion for summary 

judgment. (ECF No. 125.) At a status conference on May 27, 2014, the parties informed their 

Court of their intent to appeal the Court’s order. After a second status conference on June 6, 

2014, the Court set a briefing schedule on the issue of whether the order could be appealed. The 

parties filed a joint motion on June 20, 2014. (ECF No. 134.) The Court granted the motion on 

July 15, 2014. (ECF No. 135.)

On August 5, 2014, Defendant filed a Notice of Show Cause Order informing the Court 

that a state Court in Oklahoma issued an injunction against all persons from prosecuting actions 

against Defendant as a result of pending liquidation proceedings. (ECF No. 136.) In light of the 

injunction, the Court vacated the order granting certification and stayed this action pending the 

resolution of the liquidation proceedings. (ECF No. 140.) On January 27, 2015, the stay was 

lifted and the Court set a briefing schedule for a subsequent motion to certify. (ECF No. 147, 

150.)

II.

DISCUSSION

Federal Rule of Civil Procedure 54(b) states:

(b) Judgment on Multiple Claims or Involving Multiple 

Parties. When an action presents more than one claim for relief—

whether as a claim, counterclaim, crossclaim, or third-party 

claim—or when multiple parties are involved, the court may direct 

entry of a final judgment as to one or more, but fewer than all, 

claims or parties only if the court expressly determines that there is 

no just reason for delay. Otherwise, any order or other decision, 

however designated, that adjudicates fewer than all the claims or 

the rights and liabilities of fewer than all the parties does not end 

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the action as to any of the claims or parties and may be revised at 

any time before the entry of a judgment adjudicating all the claims 

and all the parties’ rights and liabilities.

“A district court must first determine that it has rendered a ‘final judgment,’ that is, a judgment 

that is an ultimate disposition of an individual claim entered in the course of a multiple claims 

action.” Wood v. GCC Bend, LLC, 422 F.3d 873, 878 (internal quotations and citations 

omitted). “Then it must determine whether there is any just reason for delay.” Id. “‘It is left to 

the sound judicial discretion of the district court to determine the “appropriate time” when each 

final decision in a multiple claims action is ready for appeal. This discretion is to be exercised 

“in the interest of sound judicial administration.”’” Id. (quoting Curtiss-Wright Corp. v. General 

Electric Co., 446 U.S. 1, 8 (1980)). “Whether a final decision on a claim is ready for appeal is a 

different inquiry from the equities involved, for consideration of judicial administrative interests 

‘is necessary to assure that application of the Rule effectively “preserves the history federal 

policy against piecemeal appeals.”’” Id. (quoting Curtiss-Wright Corp., 446 U.S. at 8).

Plaintiffs asserted multiple claims in this action. The First Amended Complaint asserted 

four claims: first, for declaratory relief regarding Defendant’s obligation to provide insurance 

coverage, second, for breach of contract stemming from Defendant’s failure to provide insurance 

coverage, third, for insurance carrier bad faith, and fourth, for reformation of the insurance 

contract.

The breach of contract claim has been finally decided. The order granting Defendant’s 

motion for summary judgment constitutes a final decision in favor of Defendant on the breach of 

contract claim. The remaining claims are undecided, as Plaintiffs alternatively claimed that the 

insurance contract should be reformed pursuant to California Civil Code § 3399 to cover claims 

brought by the FDIC based upon BancInsure’s alleged representations regarding the breadth of 

coverage of the insurance policy.

Finally, the Court finds that there is no just reason for delay. The parties both 

characterize the breach of contract theory as the “driving force” of the case. The reformation 

claim was plead as an alternative ground for relief. Permitting the parties to appeal the breach of 

contract issue immediately would likely be in the interest of judicial economy, as it may 

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materially advance the ultimate termination of litigation by alleviating the need to litigate the 

reformation claim. In contrast, if the parties were forced to litigate the reformation claim in its 

entirety before appealing the dismissal of the breach of contract claim, judicial resources may be 

wasted because reversal on appeal would bring the parties back before this Court to litigate the 

breach of contract claim.

Additionally, the case meets all of the elements for certification of appeal under 28 

U.S.C. § 1292(b). Under Section 1292(b):

When a district judge, in making in a civil action an order not 

otherwise appealable under this section, shall be of the opinion that 

such order involves a controlling question of law as to which there 

is substantial ground for difference of opinion and that an 

immediate appeal from the order may materially advance the 

ultimate termination of the litigation, he shall so state in writing in 

such order.

Thus, the appealed issue must be one where there is a “controlling question of law,” a 

“substantial ground for difference of opinion” and the appeal must “materially advance the 

ultimate termination of the litigation.”

In this case, there is a “controlling question of law”--whether the insured versus insured 

clause’s reference to “receivers” should be interpreted to apply to the FDIC. There is also a 

“substantial ground for difference of opinion.” In their briefs supporting their own motion for 

summary judgment and opposing Defendant’s motion for summary judgment, the FDIC cited a 

number of cases where courts have held that insured versus insured exclusions do not apply to 

the FDIC. See American Cas. Co. of Reading, Pennsylvania v. Sentry Federal Sav. Bank, 867 F. 

Supp. 50 (D. Mass. 1994); American Cas. Co. v. FDIC, 791 F. Supp. 276 (W.D. Okla. 1992); 

FDIC v. American Cas. Co. of Reading, Pennsylvania, 814 F. Supp. 1021 (D. Wyo. 1991); St. 

Paul Fire and Marine Ins. Co. v. Federal Deposit Ins. Corp., 765 F. Supp. 538 (D. Minn. 1991). 

This Court and at least one other court has held otherwise. See Mt. Hawley Ins. Co. v. Federal 

Sav. & Loan Ins. Corp., 695 F. Supp. 469, 482 (C.D. Cal. 1987). 

The parties have also identified a case from the Central District of California that reached 

a different conclusion compared to this Court’s conclusion, FDIC as Receiver of Security Pacific 

v. BancInsure, Inc., Case No. CV 12-09882 DMG. The parties inform the Court that the Central 

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District action has been appealed to the Ninth Circuit. Finally, as discussed above, the appeal 

would “materially advance the ultimate termination of the litigation.”

Based upon the foregoing, the Court grants the motion to certify the order on the motions 

for summary judgment as final and appealable.

III.

CONCLUSION AND ORDER

Based upon the foregoing, it is HEREBY ORDERED that:

1. The April 22, 2015 hearing on the joint motion for certification of judgment as 

final and appealable is VACATED and the parties shall not appear at that time; 

and

2. The motion for certification of judgment as final and appealable is GRANTED; 

and

3. The Court certifies its April 7, 2014 order on the cross motions for summary 

judgment as final and appealable under Federal Rule of Civil Procedure 54(b) and 

28 U.S.C. § 1292.

IT IS SO ORDERED.

Dated: April 17, 2015 

UNITED STATES MAGISTRATE JUDGE

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