Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-02086/USCOURTS-caed-2_14-cv-02086-2/pdf.json

Parties Involved:
Kinsale Insurance Company
Plaintiff
Sky High Sports Concord LLC
Defendant
Sky High Sports LLC
Defendant
Sky High Sports Nashville LLC
Defendant
Sky High Sports Ontario LLC
Defendant
Sky High Sports Opportunities LLC
Defendant
Sky High Sports Orange County LLC
Defendant
Sky High Sports Sacramento LLC
Defendant
Sky High Sports Santa Clara LLC
Defendant
Sky High Sports Seattle LLC
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

KINSALE INSURANCE COMPANY, an 

Arkansas corporation,

Plaintiff,

v.

SKY HIGH SPORTS LLC, a California 

and Nevada Limited Liability 

Company, SKY HIGH SPORTS CONCORD 

LLC, a California and Nevada 

Limited Liability Company, SKY 

HIGH SPORTS NASHVILLE LLC, a 

Nevada and Tennessee Limited 

Liability Company, SKY HIGH 

SPORTS ONTARIO LLC, a California 

and Nevada Limited Liability 

Company, SKY HIGH SPORTS 

OPPORTUNITIES LLC, a California 

and Nevada Limited Liability 

Company, SKY HIGH SPORTS ORANGE 

COUNTY LLC, a California and 

Nevada Limited liability Company, 

SKY HIGH SPORTS SACRAMENTO LLC, a 

California and Nevada Limited 

Liability Company, SKY HIGH 

SPORTS SANTA CLARA LLC, a 

California and Nevada Limited 

Liability Company, SKY HIGH 

SPORTS SEATTLE LLC, a Nevada and 

Washington Limited Liability 

Company, and DOES 1-20 inclusive,

Defendants.

No. 2:14-cv-02086-GEB-DAD

ORDER GRANTING PLAINTIFF’S 

SUMMARY ADJUDICATION MOTION

Plaintiff moves for summary judgment, or in the 

alternative, summary adjudication, under Federal Rule of Civil 

Procedure (“Rule”) 56 on the liability issues in its Complaint. 

Case 2:14-cv-02086-MCE-DB Document 21 Filed 08/26/15 Page 1 of 8
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Plaintiff’s Complaint comprises declaratory relief and breach of 

contract claims against each Defendant. Plaintiff argues in its 

motion:

[Defendants] breached the audit provisions of 

the commercial general liability [insurance] 

policies issued by [Plaintiff] . . . . [since 

Defendants] ha[ve] failed to provide 

[Plaintiff’s] auditors the necessary access 

to original financial records needed to 

calculate [the] final premium [owed to 

Plaintiff] as stipulated in each of the 

policies issued to [Defendants].

By this motion, [Plaintiff] seeks . . . 

summary adjudication on its claims for 

[d]eclaratory [r]elief [a]nd [b]reach of 

[c]ontract and for a judicial declaration 

. . . that the defendants have breached the 

policies by failing to provide original books 

and records for inspection pursuant to the 

premium audit provisions of the . . . 

[p]olicies; and, that defendants comply with 

the . . . [p]olicies and provide original 

books and records for inspection pursuant to 

premium audit provisions of said policies.

(Mem. P. & A. Supp. Mot. Summ. J. (“Mot.”) 2:7-19, ECF No. 11-1.)

Defendants oppose the motion with mere argument and 

unsupported conclusory assertions.

I. LEGAL STANDARD

A party is entitled to summary judgment if 

‘the movant shows that there is no genuine 

dispute as to any material fact and the 

movant is entitled to judgment as a matter of 

law.’ . . . The moving party has the burden 

of establishing the absence of a genuine 

dispute of material fact. 

City of Pomona v. SQM North Am. Corp., 750 F.3d 1036, 1049 (9th 

Cir. 2014) (quoting Fed. R. Civ. P. 56(a)) (citing Celotex Corp. 

v. Catrett, 477 U.S. 317, 323 (1986)). “A fact is ‘material’ when 

. . . it could affect the outcome of the case.” Thrifty Oil Co. 

v. Bank of Am. Nat’l Trust & Sav. Ass’n, 322 F.3d 1039, 1046 (9th 

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Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 

242, 248 (1986)). “A[] [dispute] of material fact is ‘genuine’ 

when ‘the evidence is such that a reasonable jury could return a 

verdict for the nonmoving party.’” Anderson, 477 U.S. at 248. 

A party asserting that a fact cannot be or is 

genuinely disputed must support the assertion 

by . . . citing to particular parts of 

materials in the record . . . or . . . 

showing that the materials cited do not 

establish the absence or presence of a 

genuine dispute, or that an adverse party 

cannot produce admissible evidence to support 

the fact.

Fed. R. Civ. P. 56(c)(1)(A)-(B). 

Local Rule 260(b) prescribes:

Any party opposing a motion for summary 

judgment . . . [must] reproduce the itemized 

facts in the [moving party’s] Statement of 

Undisputed Facts and admit those facts that 

are undisputed and deny those that are 

disputed, including with each denial a 

citation to the particular portions of any 

pleading, affidavit, deposition, 

interrogatory answer, admission, or other 

document relied upon in support of that 

denial.

If the nonmovant does not “specifically . . . 

[controvert duly supported] facts identified in the [movant’s] 

statement of undisputed facts,” the nonmovant “is deemed to have 

admitted the validity of the facts contained in the [movant’s] 

statement.” Beard v. Banks, 548 U.S. 521, 527 (2006).

Because a district court has no independent duty “to 

scour the record in search of a genuine issue of triable fact,” 

and may “rely on the nonmoving party to identify with reasonable 

particularity the evidence that precludes summary judgment,” 

. . . the district court . . . [is] under no obligation to 

undertake a cumbersome review of the record on the [nonmoving 

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party’s] behalf. Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 

1017 (9th Cir. 2010) (quoting Keenan v. Allan, 91 F.3d 1275, 1279 

(9th Cir. 1996)).

II. UNCONTROVERTED FACTS

The following uncontroverted facts concern the motion. 

Plaintiff insured Defendants “through September 2013 pursuant to 

five insurance policies.” (Defs.’ Response to Pl.’s Undisputed 

Material Facts (“SUF”) No. 1, ECF No. 12-1.) “Under the terms of 

each insurance policy, [Plaintiff is] contractually entitled to 

perform an audit of [each Defendant’s] books and records to 

assess the correct final premium for the insurance coverage 

provided.” (Id. No. 2.) “[Plaintiff] retained a professional 

insurance audit firm[] . . . to perform the audits mandated by 

the [insurance] policies.” (Id. No. 3.) “[T]he [insurance] 

policies provide a right to ‘examine [each Defendant’s] books and 

records.’” (Id. No. 4.) “Direct access to such original records 

is essential under the premium calculation provisions of said 

policies . . . .” (Id. No. 5.) “The ‘Basis of Premium’ 

Endorsement No. ADF4002 0110 (the ‘Basis of Premium Endorsement’) 

provides a formula for calculating ‘Gross Sales’ as defined in 

that endorsement and specified in the ‘Classification and 

Premium’ Section of the declaration pages of each policy.” (Id.

No. 6.) The “[f]inal premium due under each policy is derived by 

multiplying a rate into said Gross Sales figure.” (Id. No. 7.) 

Plaintiff’s “auditor requested direct access to the general 

ledgers and other source records of [each Defendant] for the 

annual audit needed to calculate [the] final premium and also 

verify that individual revenue entries were accurate.” (Id. No. 

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10.) “The general financial statements provided by [Defendants] 

were mere summaries with gross figures which did not delineate 

the line-by-line entries from which said totals were derived.” 

(Id. No. 11.) “As such, they were wholly inadequate to calculate 

the ‘Gross Sales’ of the respective policies, and to verify the 

accuracy of the amount and characterization of individual revenue 

entries of general ledgers and similar source accounting 

records.” (Id. No. 12.)

III. DISCUSSION

Plaintiff argues Defendants “did not provide access to 

ordinary general ledgers or source records . . . . Instead, 

[Defendants] repeatedly provided [Plaintiff with] secondary 

records primarily consisting of Profit and Loss Statements, with 

revenue summaries presumably based on general ledgers and other 

source records that were never provided to [Plaintiff’s

auditor].” (Mot. 4:18-22.) Plaintiff’s auditor avers:

[he requested] direct access to the general 

ledgers of [Defendants] for the annual audit 

period as well as access to the source 

records needed to verify that individual 

revenue entries were accurate . . . . 

However, the complete documentation 

requested, and necessary to complete the 

audits, were never provided. Instead . . . . 

[Defendants] provided records with . . . 

secondary summaries of revenues. These 

secondary records were not the genuine and 

complete internal day-to-day, weekly and 

monthly accounting books and records of the 

[Defendants] but summaries purportedly 

derived from and prepared based on 

[Defendants’] . . . internal records . . . . 

These secondary records included profit and 

loss statements and tax returns. I was never 

provided general ledgers setting forth 

complete revenue figures nor any other source 

records on revenues.

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(Decl. Gaylord Wood Supp. Mot. Summ. J. ¶¶ 4, 6-7, ECF No. 11-4.) 

Defendants rejoin: Plaintiff “seeks the original books 

and records of separate and independent companies[] that 

[Plaintiff] does not insure.” (Opp’n 2:9-10.) Defendants’

“Managing Member” avers in his declaration submitted in support 

of Defendants’ position:

Defendants[] are owners of trampoline 

equipment, trampoline structures, and 

recreational devices . . . . In exchange for 

a fixed monthly fee, the [Defendants] provide 

trampoline equipment[,] . . . structures 

. . . and recreational devices to separate 

and independent companies to provide 

trampoline related, recreational services to 

the public. These separate and independent 

companies[] are responsible for their own 

operations[] and maintaining their own 

business and financial records for those 

operations. 

(Decl. of Rolland Weddell Supp. Opp’n to Mot. Summ. J. ¶¶ 4-7, 

ECF No. 12.) 

Plaintiff replies:

[Defendants’] . . . opposition tries to 

confuse the straightforward issue presented, 

and rewrite the commercial general liability 

insurance contracts [Plaintiff] provided 

th[ese] ‘trampoline center[]’

business[es]. Now, for the first time,

[Defendants] contend[] that [they] merely 

leased trampolines . . . . [Defendants’] 

contention [that they lease trampoline 

equipment] . . . is defied by . . . the 

extensive underwriting history [for the 

insurance policies] and common sense. [Each 

Defendant] asked for and received commercial 

general liability coverage for its trampoline 

business.

. . . .

[Defendants] cannot now attempt to recast 

[their] business as a mere leasing agent to 

avoid providing the documents needed to 

complete the audit.

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(Pl.’s Reply Supp. Mot. Summ. J. (“Reply”) 2:2-6, 8:10-11 ECF No. 

13) (emphasis in original). 

Plaintiff’s evidence establishes that each Defendant 

operates a trampoline center or centers, and this evidence

includes averments from its Senior Vice President, who avers that 

Defendants described themselves in applications for insurance 

coverage as “trampoline centers,” “trampoline fitness centers,” a 

“trampoline and fitness center,” and a “[t]rampoline [f]amily 

entertainment center.” (Decl. of Stuart Samuel Supp. Mot. Summ. 

J. ¶¶ 3-7 Exs. A-E, ECF No. 11-5.)

Plaintiff has established that each Defendant breached 

the audit provision of the commercial general liability insurance 

policy issued by Plaintiff by its failure to provide Plaintiff’s 

auditors the necessary access to original financial records 

needed to calculate the final premium owed to Plaintiff. 

However, Plaintiff has not shown it is entitled to declaratory 

relief since Plaintiff prevails on its summary adjudication of

its breach of contract claim. 

Declaratory relief is appropriate ‘(1) when 

the judgment will serve a useful purpose in 

clarifying and settling the legal relations 

in issue, and (2) when it will terminate and 

afford relief from the uncertainty, 

insecurity, and controversy giving rise to 

the proceeding.’ The circumstances of the 

present case [have not been shown to satisfy] 

these criteria.

Guerra v. Sutton, 783 F.2d 1371, 1376 (9th Cir. 1984) (citing 

Bilbrey by Bilbrey v. Brown, 738 F.2d 1462, 1470 (9th Cir. 

1984)). “Adjudication of [Plaintiff’s] breach of contract claim 

[in Plaintiff’s favor] . . . render[s] the request for 

declaratory judgment moot or redundant . . . .” Amerisure Mut. 

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Ins. Co. v. Maschmeyer Landscapers, Inc., No. 4:06-cv-1308, 2007 

WL 2811080 at *2 (E.D. Mo. Sept. 24, 2007). 

For the stated reasons, Plaintiff prevails on the 

liability portion of its breach of contract claim.

Dated: August 25, 2015

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