Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_13-cv-01365/USCOURTS-caed-1_13-cv-01365-6/pdf.json

Parties Involved:
Evanston Insurance Company
Plaintiff
North American Capacity Insurance Company
Defendant

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

EVANSTON INSURANCE COMPANY,

Plaintiff,

v.

NORTH AMERICAN CAPACITY 

INSURANCE COMPANY,

Defendant.

__________________________________/

1:13-cv-01365-AWI-SAB

ORDER GRANTING NORTH 

AMERICAN CAPACITY 

INSURANCE COMPANY’S 

MOTION FOR SUMMARY 

JUDGMENT

ORDER DENYING EVANSTON 

INSURANCE COMPANY’S 

MOTION FOR SUMMARY 

JUDGMENT

(Docs. 34, 42.)

On October 30, 2014, Defendant North American Capacity Insurance Company (“NAC”)

and Evanston Insurance Company filed competing motions for summary judgment. This Court 

ordered supplemental briefing to determine whether a self-insured retention (“SIR”) was met as 

to any of the claims in any of the four underlying actions, any of which would trigger a duty to 

defend the entirety of that underlying action. On July 6, 2015, Plaintiff Evanston Insurance 

Company (“Evanston”) submitted supplemental briefing – in large part ignoring the specific 

issue that the Court ordered additional briefing on and instead seeking to relitigate issues already 

decided.1 NAC filed its supplemental briefing on July 13, 2015. This matter is ready for 

adjudication. 

As a preliminary matter, Evanston disagrees with the Court’s characterization of 

“qualifying claims expenses.” See Doc. 53 at 7, n.5. Evanston contends that by using an ellipses 

 

1 This Court will not address all of the arguments presented in Evanston’s supplemental briefing as many have 

already been decided or are otherwise unhelpful to resolution of this matter.

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in quoting from the “claims expenses” section of SIR Endorsement, the Court inaccurately 

interpreted that provision. Id. Although the Court agrees that the grammatical structure of the 

section in question is flawed, Evanston’s proposed reading fares no better. It would, in fact, lead 

to an absurd result.

The section in question provides, in whole:

For purposes of this endorsement, the term “claims expense” shall include all 

fees, costs, charges and expenses generated by an attorney designated to represent 

the insured, and all other costs, charges and expenses incurred in the 

investigation, adjustment, settlement, arbitration, defense or appeal of any claim 

to which this insurance otherwise applies. 

Doc. 38-3 at 3. The Court’s prior order truncated that section to read:

Qualifying claims expenses “include all fees, costs, charges and expenses ... to 

which this insurance otherwise applies.”

Doc. 52 at 7. Evanston contends that the “to which this insurance otherwise applies” language 

applies only to the items beginning with “all other costs.” If that were the case, this section could 

logically be broken into two separate sentences; namely: claims expense shall include (a) all 

fees, costs, charges and expenses generated by an attorney designated to represent the insured, 

and (b) all other costs, charges and expenses incurred in the investigation, adjustment, 

settlement, arbitration, defense or appeal of any claim to which this insurance applies. Such a 

construction would mean that any fee generated an attorney designated to represent the insured –

regardless of whether it were covered by the policy or even related insured – would reduce the 

SIR. Such a reading is unreasonable. The reasonable reading is that the “to which this insurance 

otherwise applies” language shoots through to each of the matters for which claims expenses can 

be generated. The section should be read: claims expense shall include all fees generated by an 

attorney designated to represent the insured to which this insurance otherwise applies, all costs 

generated by an attorney designated to represent the insured to which this insurance otherwise 

applies, et cetera. Any other reading would expand “claims expenses” to include any fees 

generated by counsel for Berry & Berry in working on a non-Berry & Berry related case. The 

Court again rejects that construction.

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Evanston’s further briefing is based on the argument that a total of $10,000 in claims 

expenses attributable to one suit – as opposed to one claim – triggers a duty to defend that suit.

See Doc 53 at 6 (“The fees and costs generated by the insured’s defense counsel that qualify as 

‘claims expense’ are not limited in any fashion.”) This Court adequately explained its rejection 

of that theory above and in its previous order. See Doc. 52 at 8. No part of Evanston’s 

supplemental briefing is responsive to the Court’s specific inquiry – whether the SIR was met 

with qualifying expenses as to any one home covered by the NAC policies in any of the 

underlying actions. As a result, Evanston has not proven that: (1) the total amount of claims 

expenses

2

any of the underlying actions averaged more than $10,000 per house involved that

action,3or that $10,000 in qualifying claims expenses was directly attributable to any one of the 

claims covered by the NAC policies; Evanston has not proven that NAC had a duty to defend 

any of the actions. See Doc. 52 at 9-10. NAC is entitled to summary judgment. 

Based on the foregoing and the reasoning of this Court’s prior order (Doc. 52), IT IS 

HEREBY ORDERED that:

1. NAC’s motion for summary judgment (Doc. 42) is GRANTED. 

2. Evanston’s motion for summary judgment (Doc. 34) is DENIED.

3. The Clerk of the Court is respectfully directed to enter judgment in favor of NAC and 

close this case.

This Order terminates the action.

IT IS SO ORDERED.

Dated: August 6, 2015 

 SENIOR DISTRICT JUDGE

 

2 As explained in the prior order, qualifying claims expenses can only be generated in relation to a claim that is 

otherwise covered by the NAC agreement. This Court’s reference to total amount of claims expenses should be 

understood to mean all “fees, costs, charges and expenses generated by an attorney designated to represent the 

insured, and all other costs, charges and expenses incurred in the investigation, adjustment, settlement, arbitration, 

defense or appeal of any claim” in each of the underlying actions. 

3 Again, as explained in the prior order, a duty to defend attaches to an entire action, not a single claim. However, as 

with all mixed actions, a duty to defend would attach to any one underlying action, as a whole, if the SIR was met as 

to any one claim involved in that action. 

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