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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Plaintiff Prosight-- Syndicate 1110 At Lloyd’s (the “Plaintiff”) filed suit against 

American Builders and Developers LLC (“ABD”) seeking a declaratory judgment that it 

is not liable to indemnify ABD for any damages awarded pursuant to Maria Virginia 

Huizache and Florenciano Axinicuilteco’s (the “Claimants”) lawsuit. The Claimants 

filed their Second Motion for Summary Judgment (the “Claimants’ MSJ”) (Doc. 197), 

and the Plaintiff filed a separate Motion for Summary Judgment (the “Plaintiff’s MSJ”)

(Doc. 199). Both motions were fully briefed on October 15, 2019, and oral argument was 

requested. (Docs. 206, 209, 213, 214) Because it would not assist in resolution of the 

instant issues, the Court finds the pending motions are suitable for decision without oral 

argument. See LRCiv. 7.2(f); Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 

(9th Cir. 1998). The Court’s ruling is as follows.

Prosight–Syndicate 1110 At Lloyd’s,

 

Plaintiff, 

vs. 

American Builders and Developers 

LLC,

Defendant. 

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No. CV-17-04662-PHX-SPL

ORDER
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I. Background 

The Plaintiff issued an owner controlled insurance policy (the “Policy”), often 

referred to as a wrap policy, to ABD. (Doc. 197 at 3) Wrap policies allow for a general 

contractor to purchase an insurance policy for a construction project and enroll multiple 

subcontractors for insurance coverage under the policy. (Doc. 188 at 11) ABD’s wrap 

policy was originally effective from March 31, 2013 to March 31, 2016, and the Policy 

covered two separate construction sites, the Trio Condominium property located in 

Scottsdale, Arizona, and the Clearwater Hills property located in Paradise Valley, 

Arizona. (Doc. 197 at 3) ABD hired Paladin Risk Management Limited, LLC 

(“Paladin”) to be the administrator of the Policy. (Doc. 188 at 11) ABD enrolled 

subcontractor Diamond House Painting, LLC (“DHP”) in the Policy in November 2014. 

(Doc. 197 at 5) 

In January 2016, one of DHP’s employees was killed in an incident at the Trio 

Condominium property. (Doc. 197 at 2) The Claimants, as the decedent’s parents,

brought a wrongful death action against ABD, among others, in Arizona state court. 

(Doc. 197 at 2) ABD settled the Claimants’ lawsuit against it by turning over its rights 

against the Plaintiff and Paladin to the Claimants. (Doc. 197 at 8) ABD also agreed for a 

stipulated judgment to be entered against it for $3.5 million. (Doc. 197 at 8) 

The Plaintiff initiated this lawsuit for declaratory judgment seeking a 

determination that it is not liable to indemnify ABD for any damages awarded pursuant to 

the Claimants’ lawsuit. (Doc. 1) The Claimants filed counterclaims against the Plaintiff 

and Paladin, arguing that they were each liable for the $3.5 million stipulated judgment. 

(Doc. 188) However, in July 2019, the Claimants and Paladin entered into a settlement 

agreement (the “Settlement Agreement”) in which the Claimants agreed to dismiss their

claims against Paladin in exchange for a settlement payment of approximately $37,500. 

(Doc. 203 at 51–57) On August 30, 2019, the Plaintiff and the Claimants filed crossmotions for summary judgment on all claims and counterclaims before the Court. (Doc.

197; Doc. 199) 
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II. Legal Standard 

A court shall grant summary judgment if the pleadings and supporting documents, 

viewed in the light most favorable to the non-moving party, “show that there is no 

genuine dispute as to any material fact and the movant is entitled to judgment as a matter 

of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 

(1986). Material facts are those facts “that might affect the outcome of the suit under the 

governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine 

dispute of material fact arises if “the evidence is such that a reasonable jury could return a 

verdict for the nonmoving party.” Id. 

The party moving for summary judgment bears the initial burden of informing the 

court of the basis for its motion and identifying those portions of the record, together with 

affidavits, which it believes demonstrate the absence of a genuine issue of material fact. 

Celotex, 477 U.S. at 323. If the movant is able to do such, the burden then shifts to the 

non-movant who, “must do more than simply show that there is some metaphysical doubt 

as to the material facts,” and instead must “come forward with ‘specific facts showing 

that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 

475 U.S. 574, 586–87 (1986).

III. Analysis

In the Claimants’ MSJ, the Claimants request for the Court to make certain 

findings of law, including (i) that the Plaintiff’s insurance policy provided coverage to 

ABD for the Claimants’ lawsuit, (ii) that the Plaintiff breached its duty to indemnify 

ABD, and (iii) that the Plaintiff is obligated to pay the $3.5 million judgment against 

ABD. (Doc. 197 at 2) In the Plaintiff’s MSJ, the Plaintiff argues that (i) the Claimants 

are judicially estopped from pursuing claims against the Plaintiff, (ii) by the plain terms 

of the Policy, DHP was not enrolled under the Policy, and (iii) the Plaintiff has no duty to 

indemnify ABD for the result of the Claimants’ lawsuit. (Doc. 199-1 at 5–8) 

The Plaintiff argues that the Claimants cannot recover against the Plaintiff as a 

matter of law because the Claimants successfully recovered on their claims for relief
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against Paladin. (Doc. 206 at 4; Doc. 199-1 at 9–10) The Plaintiff identifies the

Settlement Agreement between Paladin and the Claimants, in which Paladin sought to 

settle the Claimants’ negligence and breach of contract claims against it. (Doc. 203 at 51) 

The Plaintiff argues that the Claimants are judicially estopped from pursuing their claims 

against the Plaintiff because they obtained a favorable settlement against Paladin on a 

mutually exclusive theory of liability. (Doc. 199-1 at 14) In response, the Claimants argue 

that they have not asserted inconsistent positions against Paladin and the Plaintiff. (Doc. 

209 at 10) The Claimants argue that they have simply asserted alternative theories of 

liability against Paladin and the Plaintiff, which is permissible pursuant to Federal Rule of 

Civil Procedure 8(d). (Doc. 209 at 10) 

Plaintiffs are allowed to plead alternative and even inconsistent claims, but parties 

are not allowed to disavow claims and then argue from them. Fed. R. Civ. P. 8(d); 

Martinez v. Maricopa Cty. Cmty. Coll. Dist., 2018 WL 2119338, at *4 (D. Ariz. May 8, 

2018); Revive You Media LLC v. Esquire Bank, 2018 WL 2164379, at *5 (D. Ariz. May 

10, 2018). Judicial estoppel precludes a party from gaining an advantage by taking one 

position and then seeking a second advantage by taking an incompatible position. Gagne 

v. Zodiac Mar. Agencies, Ltd., 274 F. Supp. 2d 1144, 1148 (S.D. Cal. 2003) (citing 

Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir.1996)). Judicial 

estoppel is used “because of ‘general consideration[s] of the orderly administration of 

justice and regard for the dignity of judicial proceedings,’ and to ‘protect against a litigant 

playing fast and loose with the courts.’” Id. (citing Hamilton v. State Farm Fire & Cas. 

Co., 270 F.3d 778, 782 (9th Cir. 2001)). Further, double recovery is disfavored, and it

should be particularly avoided where punitive and compensatory damages are assessed. 

Kissell Co. v. Gressley, 591 F.2d 47, 51 (9th Cir. 1979); Hosp. Mktg. Concepts, LLC v. Six 

Continents Hotels, Inc., 2016 WL 9045621, at *6 (C.D. Cal. Jan. 28, 2016) (stating double 

recovery is precluded when alternative theories seeking the same relief are pleaded and 

tried together).

The Supreme Court of the United States has established certain factors that district 
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courts may take into consideration when deciding whether judicial estoppel is appropriate 

in a given case: (1) a party’s later position is “clearly inconsistent” with its earlier 

position; (2) the first tribunal accepted and relied upon the prior inconsistent position; and 

(3) the party maintaining the inconsistent position stands to gain an unfair advantage over 

the opposing party. Id. (citing New Hampshire v. Maine, 532 U.S. 742, 750–51 (2001)).

These factors, however, are not exhaustive. Id. The inconsistent positions need not come 

from the same litigation, and a favorable settlement constitutes judicial reliance. Id. (citing 

Hamilton, 270 F.3d at 783; Rissetto, 94 F.3d at 605). The purpose of judicial estoppel is 

to protect the courts’ integrity, not necessarily the parties’ interests; the doctrine is 

equitable, and its application discretionary. Id. (citing Russell v. Rolfs, 893 F.2d 1033, 

1037 (9th Cir. 1990)); Rissetto, 94 F.3d at 601. 

The Court finds that the Claimants are judicially estopped from pursuing their

claims against the Plaintiff. The Claimants asserted claims against Paladin for negligence 

and breach of contract on the basis that Paladin negligently failed to enroll DHP under the 

Policy. (Doc. 188 at 18) The Claimants settled their claims against Paladin for 

approximately $37,500 pursuant to the Settlement Agreement. (Doc. 203 at 52) The 

Claimants also moved to dismiss Paladin from this action with prejudice as a result of the 

Settlement Agreement. (Doc. 87) Now, the Claimants continue to seek summary 

judgment against the Plaintiff under the theory that DHP was enrolled under the Policy. 

(Doc. 197 at 5) 

In addressing the first factor, the Court finds that the Claimants’ current position 

against the Plaintiff is clearly inconsistent with their position against Paladin, for which it 

obtained a favorable settlement. The Claimants have recovered on the theory that Paladin 

was liable for failing to register DHP under the Policy; therefore, the Claimants cannot 

now seek to recover from the Plaintiff under the theory that DHP was registered under the 

Policy. Samson v. NAMA Holdings, LLC, 637 F.3d 915, 935 (9th Cir. 2011) (stating 

judicial estoppel “generally prevents a party from prevailing in one phase of a case on an 

argument and then relying on a contradictory argument to prevail in another phase.”) The 
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United States Court of Appeals for the Ninth Circuit has found that obtaining a favorable 

settlement constitutes judicial reliance, which satisfies the second factor of the Court’s

reliance on the prior inconsistent position. Rissetto, 94 F.3d at 605. Finally, the Court 

finds that allowing the Claimants to proceed against the Plaintiff to obtain an additional 

recovery on a mutually exclusive theory of liability would be unfair to the Plaintiff and 

result in the Claimants obtaining a double recovery for the issues presented in their

counterclaims. Therefore, the Court finds that the Plaintiff’s MSJ must be granted, and 

summary judgment must be issued in favor of the Plaintiff on all claims. 

Accordingly,

IT IS ORDERED:

1. That Plaintiff’s Motion for Summary Judgement (Doc. 199) is granted, and 

judgment shall be entered in favor of the Plaintiff on all claims and counterclaims;

2. That Claimants’ Second Motion for Summary Judgment (Doc. 197) is 

denied;

3. That Claimants’ Rule 37 Motion to Exclude Declaration and Trial 

Testimony of Jake Morin (Doc. 211) is denied as moot; and

4. That the Clerk of Court shall terminate this case and enter judgment 

accordingly.

Dated this 14th day of November, 2019.

Honorable Steven P. Logan

United States District Judge