Coverage - Central Analysis Bureau

Allstate Prop. & Cas. Ins. Co. v. Fowler

United States District Court for the Northern District of Georgia, Atlanta Division

August 23, 2022, Decided; August 23, 2022, Filed

CIVIL ACTION FILE NO. 1:21-CV-4534-TWT

Reporter

2022 U.S. Dist. LEXIS 151366 *; 2022 WL 3636599

ALLSTATE PROPERTY & CASUALTY INSURANCE COMPANY, Petitioner, v. JAMES FOWLER and ROBERT PARISH, Respondents.

Core Terms

motor vehicle, coverage, loading, trailer, dead storage, injuries, exclusionary provision, material fact, summary judgment, bodily injury, provisions, driving, argues, Reply, truck, insured premises, insured, engine, homeowner’s insurance, homeowner’s policy, second factor, proximity, but-for, genuine, storage, Notice, agrees, Guest, terms

Counsel: [*1] For Allstate Property & Casualty Insurance Company, Petitioner: Frederick Mills Valz, III, LEAD ATTORNEY, Copeland, Stair, Kingma & Lovell, LLP, Atlanta, GA; Jena Grace Emory, Copeland, Stair, Valz & Lovell, LLP, Atlanta, GA.

For Robert Parish, Respondent: John F. Connolly, Flint, Connolly & Walker, LLP, Canton, GA; Xavier T. Romero, Flint, Connolly & Walker, Canton, GA.

Judges: THOMAS W. THRASH, JR., United States District Judge.

Opinion by: THOMAS W. THRASH, JR.

Opinion

OPINION AND ORDER

This is a declaratory judgment action. It is before the Court on the Petitioner Allstate’s Motion for Summary Judgment [Doc. 24]. For the reasons set forth below, the Petitioner Allstate’s Motion for Summary Judgment [Doc. 24] is GRANTED.

I. Background¹

A. The Corvette Sale and Respondent Fowler’s Injuries

This case arises from injuries that Respondent James Fowler sustained while loading a blue 1975 Corvette that he bought from Respondent Robert Parish onto his trailer. (Pet’r’s Statement of Material Facts in Supp. of Pet’r’s Mot. for Summ. J. ¶ 1-3; Compl., Exs. 1-2.)² Prior to the sale, Parish kept the Corvette stored in his garage for 15-16 years and never drove it beyond his driveway. (Pet’r’s Statement of Material Facts in Supp. [*2] of Pet’r’s Mot. for Summ. J. ¶¶ 4-5.) He only intermittently started the car, backed it out of the garage, and allowed the engine to run to prevent the car’s battery from dying. (Id. ¶ 4.)

On September 22, 2018, Fowler arrived at Parish’s residence to purchase and load the Corvette onto Fowler’s tractor trailer. (Id. ¶¶ 2-3.) Parish reminded Fowler on the day of the sale that the Corvette had faulty brakes. (Id. at ¶ 6.) Before loading the Corvette, Parish and Fowler agreed that Parish would drive the car onto the trailer. (Id. ¶ 7.) Parish slowly drove the Corvette up the trailer ramp, while Fowler stood on the opposite end of the trailer. (Id. at ¶¶ 9-10.) By the time the car’s back tires cleared the start of the ramp, Parish noticed that Fowler had fallen off the back of the trailer. (Id. at ¶ 11.) Parish stopped the car and proceeded to check on Fowler and assist with his injuries. (Id. at ¶ 12.) Parish testified that he took Fowler to urgent care and the emergency room after his fall and that he and Fowler finalized the sale of the Corvette the next day. (Resp’t Parish’s Statement of Add’l Material Facts ¶¶ 2-3.) Parish also testified that Fowler stated [*3] that he would not pay for his medical treatment and that Fowler “didn’t say anything about filing a claim [but Parish] assumed he might file a claim.” (Id. ¶¶ 6-7.)

B. Respondent Parish’s Homeowners Policy

An Allstate Deluxe Plus Homeowners Insurance Policy (“Policy”) covered Parish’s residence where the incident occurred. (Pet’r’s Statement of Material Facts in Supp. of Pet’r’s Mot. for Summ. J. ¶ 1; Compl., Ex. 1). The Policy contains various provisions applicable to the current case. First, the Family Liability Protection section under Coverage X of the Policy contains the following language:

Losses We Do Not Cover Under Coverage X:

5. We do not cover bodily injury or property damage arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motor vehicle or trailer. However, this exclusion does not apply to:

a) a motor vehicle in dead storage or used exclusively on an insured premises . . . .

(Compl., Ex. 1, at 39-40.) The Court refers to this provision of the Policy as the “Motor Vehicle Exclusion.” When specifically addressing “use” of a motor vehicle under this provision, the Court refers to the provision as the “Motor Vehicle [*4] Use Exclusion.” When specifically addressing “loading” of a motor vehicle under this provision, the Court refers to the provision as the “Motor Vehicle Loading Exclusion.”

Second, the Guest Medical Protection section under Coverage Y of the Policy contains the following language:

Losses We Do Not Cover Under Coverage Y:

5. We do not cover bodily injury arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motor vehicle or trailer. However, this exclusion does not apply to:

a) a motor vehicle in dead storage or used exclusively on an insured premises . . . .

(Id. at 42.) The Court refers to the Motor Vehicle Exclusion, Motor Vehicle Use Exclusion, and Motor Vehicle Loading Exclusion in Coverages X and Y interchangeably, though Coverage X covers the policyholder’s family members and Coverage Y covers the policyholder’s guests on the insured premises.

C. The Underlying Lawsuit and the Present Case

On March 26, 2020, Fowler sued Parish in Cobb County State Court for damages to recover for the cost of his injuries from loading the Corvette onto the trailer. (Pet’r’s Statement of Material Facts in Supp. of Pet’r’s Mot. for Summ. J. [*5] ¶ 16; Compl., Ex. 2.) Parish was not served with process for the lawsuit until May 21, 2020. (Resp’t Parish’s Statement of Add’l Material Facts ¶ 13.) Parish notified Allstate of the lawsuit the following day. (Pet’r’s Statement of Material Facts in Supp. of Pet’r’s Mot. for Summ. J. ¶ 18.) On November 3, 2021, Allstate filed this action seeking declarations from this Court that the Policy’s Motor Vehicle Exclusion (Counts I and III), Negligent Supervision Exclusion (Count II), and Prompt Notice of Loss Requirement (Count IV) provisions preclude coverage of Fowler’s injuries in the Underlying Lawsuit. (Compl., at 5, 8, 9, 11). Allstate now moves for summary judgment on its claims in Counts I, III, and IV.

II. Legal Standard

Summary judgment is appropriate only when the pleadings, depositions, and affidavits submitted by the parties show that no genuine issue of material fact exists, and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c). The court should view the evidence and draw any inferences in the light most favorable to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). The party seeking summary judgment must first identify grounds that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The burden [*6] then shifts to the nonmovant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

Georgia law treats insurance disputes as a matter of contract, and thus, a contract’s plain and unambiguous terms bind the parties to an insurance policy. Old Republic Union Ins. Co. v. Floyd Beasley & Sons, Inc., 250 Ga. App. 673, 675, 551 S.E.2d 388 (2001) (citation omitted). In resolving a dispute between parties over an insurance contract, a reviewing court must determine whether the contested policy language is ambiguous. Id. “A policy which is susceptible to two reasonable meanings is not ambiguous if the trial court can resolve the conflicting interpretations by applying the rules of contract construction.” Id. Under O.C.G.A. § 13-2-2(5), Georgia courts must construe ambiguous language in an insurance contract strictly against the insurer and in favor of the insured. O.C.G.A. § 13-2-2(5); State Farm Fire & Cas. Co. v. Walnut Ave. Partners, LLC, 296 Ga. App. 648, 650, 675 S.E.2d 534 (2009) (citation omitted). Finally, an insurer must clearly and distinctly define any exclusions in a policy granting coverage to an insured. Walnut Ave., 296 Ga. App. at 650.

III. Discussion

Allstate moves for summary judgment as to its claims for declaratory relief in Counts I, III, and IV and asks that the Court find that it has no duty to provide coverage, indemnity, or a defense to Parish under the Policy’s Family Liability [*7] Protection section of Coverage X and no duty to provide coverage to Fowler under the Policy’s Guest Medical Protection section of Coverage Y, based on the Motor Vehicle Use Exclusion provisions in both sections of the Policy. (Pet’r’s Mot. for Summ. J., at 1-2.) Allstate also argues that the plain terms of the Policy’s Motor Vehicle Loading Exclusion provisions bar coverage in the case. (Pet’r’s Reply Br. in Supp. of Pet’r’s Mot. for Summ. J., at 2.) Finally, Allstate requests that the Court find that Parish failed to promptly notify it of the subject incident and that Allstate, therefore, has no duty to provide a defense to Parish or coverage to Fowler for his injuries because such notice operated as a condition precedent to coverage. (Pet’r’s Mot. for Summ. J., at 2.) Parish opposes Allstate’s Motion for Summary Judgment on the grounds that genuine issues of fact remain regarding the definition of “dead storage” and the cause of Fowler’s fall from the trailer. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 24.)

Allstate’s Motion for Summary Judgment and Parish’s Response in Opposition present four primary issues: (1) whether the Policy’s Motor Vehicle Use Exclusion provisions [*8] bar coverage in the case; (2) whether the Policy’s Motor Vehicle Loading Exclusion provisions bar coverage in the case; (3) whether the Policy’s Dead Storage Exception provisions apply; and (4) whether Parish promptly notified Allstate of the injury to Fowler. (Pet’r’s Mot. for Summ. J., at 9, 14, 17; Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 7, 13, 21.) The Court addresses the four primary issues in turn.

A. Motor Vehicle Use Exclusion

The Policy’s two Motor Vehicle Use Exclusion provisions under the Family Liability Protection section of Coverage X and the Guest Medical Protection section of Coverage Y contain nearly identical language. (See Compl., Ex. 1, at 39-40, 42.) Both provisions preclude coverage for “bodily injury . . . arising out of the . . . use . . . of any motor vehicle or trailer.” (Id.) Allstate argues that the Policy bars coverage because Fowler’s injuries arose out of the use of a motor vehicle—the Corvette. (Pet’r’s Mot. for Summ. J., at 9-13.) Parish responds that the issue is irrelevant because the dead storage exception applies in the case. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 21-22.)

Allstate cites Hays v. Georgia Farm Bureau Mutual Insurance Co., 314 Ga. App. 110, 112, 722 S.E.2d 923 (2012) (holding that the motor vehicle [*9] exclusion provision of a homeowner’s insurance policy barred coverage to a plaintiff who was injured on the defendant’s property while attempting to hoist a portable toilet onto a deer stand using a pulley system connected to the defendant’s truck) in support of its claim that Fowler’s injuries arose out of the use of a motor vehicle and that the Policy therefore precludes coverage of his injuries. (Pet’r’s Mot. for Summ. J., at 9). In Hays, the Georgia Court of Appeals set forth three factors for determining whether an injury arose out of the use of a motor vehicle: “(i) the physical proximity of the injury site to the vehicle, (ii) the nature of the conduct which caused the situation of jeopardy, and (iii) whether the vehicle was being ‘utilized’ in the plain and ordinary sense of the word.” Hays, 314 Ga. App. at 112 (quotation marks and citation omitted).

1. Hays Factor 1: Physical Proximity

Regarding the first factor, Allstate argues that the proximity factor is met because Fowler was standing “upon the trailer” at the time of his injury while Parish drove the Corvette up the ramp. (Pet’r’s Mot. for Summ. J., at 10.) The Court finds that the first factor weighs in favor of exclusion. The court in Hays considered [*10] that the defendant’s truck “was at or near the location of the accident” in finding that the plaintiff’s injuries arose out of the use of the truck. Hays, 314 Ga. App. at 113. Here, Allstate and Parish do not dispute that the Corvette was at or near the location where Fowler was injured. (See Pet’r’s Statement of Material Facts in Supp. of Pet’r’s Mot. for Summ. J. ¶ 11.) Thus, the physical proximity of Fowler’s injury site to the Corvette on the trailer favors a finding of exclusion under the Policy’s Motor Vehicle Use Exclusion provision.

2. Hays Factor 2: Nature of Conduct

Regarding the second factor, Allstate claims that loading the Corvette onto the trailer is at least an aggravating cause of Fowler’s injuries because the injuries occurred during and as a result of the process of loading the Corvette onto the trailer. (Pet’r’s Mot. for Summ. J., at 11.) Parish counters that the second factor is not met because both Respondents knew that the Corvette was without working brakes when it was loaded onto the trailer and because Parish and Fowler dispute the cause of Fowler’s injuries. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 22-23.)³

The second factor often turns on whether the nature of the conduct [*11] that caused the injury is related to the “actual operation” of the motor vehicle. See, e.g., Roberts v. Burke Cnty. Sch. Dist., 267 Ga. 665, 668, 482 S.E.2d 283 (1997). In Roberts, the defendant-school district negligently selected and implemented an unsafe bus route with stops “along a heavily traveled road with no crosswalks and a 55 mph speed limit.” Id. at 665-66. After the bus dropped off a five-year-old boy at the unsafe stop, the boy was struck and killed by a van while crossing the street to his house approximately four-tenths of a mile from the stop. Id. The Georgia Supreme Court found that the nature of the conduct that caused the injury—the school district’s negligent bus route selection—was removed enough from the actual operation of the school bus such that the second factor favored a finding of preclusion of coverage for the boy’s wrongful death under the applicable insurance policy. Id. at 668.

Here, the Court agrees with Allstate that under either recitation of the facts—whether Parish negligently injured Fowler or whether Fowler fell off the trailer on his own accord—the nature of the conduct causing the situation of jeopardy (Fowler’s precarious perch on the end of the trailer) is plainly related to the operation of the motor vehicle (loading the Corvette onto the trailer). [*12] (Pet’r’s Mot. for Summ. J., at 11.) The loading of the Corvette is analogous to the nature of the conduct at issue in Hays, where the plaintiff sustained injuries in attempting to use the defendant’s truck to load the toilet onto the deer stand. And the nature of the conduct is distinguishable from the more attenuated factual circumstance at issue in Roberts, where the school district’s negligent bus route selection was removed from the actual operation of the bus. Accordingly, the second factor favors exclusion.

3. Hays Factor 3: Plain and Ordinary Use

Finally, regarding the third factor, Allstate argues that Parish and Fowler used the trailer and the Corvette in the plain and ordinary sense because they were using the trailer as a transportation device and because Parish was driving the car. (Pet’r’s Mot. for Summ. J., at 11.) Respondent Parish disagrees, claiming that loading the “dilapidated roadster” onto the trailer for its subsequent transportation is not plain or ordinary use of the Corvette and that the existence of the Dead Storage Exception recognizes the distinction. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 23.)

In Hays, the court found that the defendant used the truck in [*13] the ordinary sense because he stated that he often towed and pulled heavy objects with his truck, as he had done in hoisting the toilet onto the deer stand via the pulley system. Hays, 314 Ga. App. at 113. In contrast, the Georgia Court of Appeals found that an abandoned trailer on the side of a road, which allegedly caused a car accident because it obscured the drivers’ view of oncoming traffic, could not constitute ordinary use of the trailer, Old Republic, 250 Ga. App. at 674-76 (“In this case, the trailer was not loaded or attached to any vehicle that could haul it, and it lay broken on the roadside. Accordingly, though it was still a trailer, it was not being utilized as such when the accident occurred.”), nor could a three-year-old’s use of a car as a playpen, where the child inadvertently released the car’s emergency brake and caused the car to roll down the driveway and crash into a telephone pole, Assurance Co. of Am. v. Bell, 108 Ga. App. 766, 767-68, 772, 134 S.E.2d 540 (1963) (“The fact that the child unwittingly released the emergency brake while playing around the automobile is not such operation or use of the car as a motor vehicle as is contemplated by the exclusionary provision.”).

The Court finds that the third factor also weighs in favor of exclusion. Though Fowler was not injured during a car accident in [*14] the traditional sense, the facts giving rise to the present case are more analogous to Hays than to Old Republic or Bell because Parish was driving the Corvette up the trailer ramp at the time of Fowler’s injury, like the defendant in Hays who was driving the truck to lift the toilet onto the deer stand, and unlike both the stationary trailer in Old Republic that allegedly caused a car accident and the child’s use of the car as a playpen in Bell. Therefore, all three factors favor a finding that Fowler’s injuries arose out of the use of the Corvette.

4. But-for Causation

In addition to the three-factor test, when the phrase “arising out of” appears in an exclusionary provision of a contested policy, Georgia courts evaluate whether the facts giving rise to the case have the requisite causation, applying the same “but-for” test used to determine cause-in-fact for tort liability. Hays, 314 Ga. App. at 114 (citation omitted). Under the but-for test, courts find that “[c]laims arise out of the excluded conduct when[,] ‘but for’ that conduct, there could be no claim against the insured.” Id. (quotation marks, bracket, and citation omitted).

Allstate argues that Fowler would not have been injured but for the Respondents’ loading of the Corvette onto the trailer. [*15] (Pet’r’s Mot. for Summ. J., at 12.) Respondent Parish counters that a motor vehicle can be related to the incident without being the cause and that whether Fowler sustained injuries because of the Corvette’s loading or his own carelessness remains unresolved. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 24.) The Court agrees with Allstate’s application of the but-for causation test. The dispute over the cause of Fowler’s fall from the trailer does not change the fact that, but for the loading of the Corvette onto the trailer (the excluded conduct), Fowler would not have sustained the injuries that he did. Parish’s argument is one related to proximate cause, which is not at issue here.

In summary, the Court finds that both the three-factor test for determining whether an injury arose out of the use of a motor vehicle and the but-for causation test require a finding that the Motor Vehicle Use Exclusion provisions in Coverages X and Y bar coverage related to Fowler’s injuries.

B. Motor Vehicle Loading Exclusion

In addition to the exclusion for injuries arising out of motor vehicle use, the plain language of the Policy excluding coverage for bodily injury arising out of the loading [*16] of any motor vehicle or trailer also operates to bar coverage in this case. See Old Republic, 250 Ga. App. at 675. Allstate argues for the first time in its reply brief that the Policy’s plain terms bar Fowler’s injuries from coverage because the Corvette was being loaded at the time of his injuries. (Pet’r’s Reply Br. in Supp. of Pet’r’s Mot. for Summ. J., at 2 (citing Jacobs v. Am. Interstate Ins. Co., 249 Ga. App. 795, 549 S.E.2d 767 (2001)).) The Court agrees. The Policy bars coverage for “bodily injury . . . arising out of the . . . loading . . . of any motor vehicle or trailer.” (Compl., Ex. 1, at 22-23, 25.)

Here, Fowler’s injuries arose from the loading of the Corvette onto the trailer. The Court finds no ambiguity in this plain language, and accordingly, the Policy’s Motor Vehicle Loading Exclusion provisions bar coverage in this case as well. See Turner v. Moore, 752 So. 2d 908, 909-10 (La. Ct. App. 1999) (“‘Loading’ is loading, and the homeowner’s policy here provides no coverage for injuries arising out of same.”), appeal dismissed on reh’g, id. at 911.

C. Dead Storage Exception

The third issue presented by Allstate’s Motion for Summary Judgment is whether the Dead Storage Exception provisions of Coverages X and Y provide an exception to the applicable policy exclusions. The Exception reads as follows: “However, [the Motor Vehicle] exclusion does [*17] not apply to . . . a motor vehicle in dead storage or used exclusively on an insured premises.” (Compl., Ex. 1, at 39-40, 42.) Allstate argues that, even if the Corvette was in dead storage for a period of time before the incident, the Corvette was no longer in storage when the incident occurred because Parish and Fowler were loading the Corvette onto the trailer. (Pet’r’s Mot. for Summ. J., at 16.) In response, Parish contends that Coverages X and Y unambiguously provide coverage for injuries arising out of the maintenance and loading of a motor vehicle in dead storage. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 7.) In reply, Allstate states that Parish misreads the Policy and that the Dead Storage Exception does not specifically except the loading of a motor vehicle in dead storage. (Pet’r’s Reply Br. in Supp. of Its Mot. for Summ. J., at 3-4.)

The arguments here present an issue of contract interpretation. The Court agrees with Allstate and finds that Parish misreads the Policy’s Dead Storage Exception. The relevant provision reads as follows:

We do not cover bodily injury or property damage arising out of the ownership, maintenance, use, occupancy, renting, loaning, [*18] entrusting, loading or unloading of any motor vehicle or trailer. However, this exclusion does not apply to:

a) a motor vehicle in dead storage or used exclusively on an insured premises . . . .

(Compl., Ex. 1, at 39-40.) Parish reads these two sentences as “provid[ing] coverage for bodily injury arising out of the maintenance or loading of a motor vehicle in dead storage or used exclusively on an insured premises.” (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 7-8.) The Court reads the terms “maintenance” and “loading,” however, as mutually exclusive from the term “dead storage” as provided in the excerpted provision. See David v. Tanksley, 218 F.3d 928, 931 (8th Cir. 2000) (finding the terms “maintenance” and “dead storage” to be mutually exclusive as provided in a motor vehicle exclusion provision of a homeowner’s insurance policy and therefore finding that the policy barred coverage in the case). Notably, the Policy’s Dead Storage Exception does not read “this exclusion does not apply to [bodily injury arising out of the maintenance or loading of] a motor vehicle in dead storage.” (alteration and emphasis added).

The case law cited by Allstate supports the Court’s reading of the plain language of the Policy’s provisions at [*19] issue here. In Tanksley, the defendants arranged to sell a 1965 Chevy Impala to the plaintiff’s then-fiancé. Tanksley, 218 F.3d at 929. The Impala had been parked in storage for five years prior to the sale, and the defendants “did little to maintain the car during this time, twice charging its battery and once starting its engine but otherwise performing no maintenance on the vehicle.” Id. On the day of the incident, the defendants drove the Impala from its storage area to the driveway in front of their house in preparation for the sale. Id. When the plaintiff’s fiancé asked to hear the Impala’s engine run, the defendants had trouble starting the car. Id. Then, in an attempt to start the car, one of the defendants poured gasoline into the Impala’s carburetor, but the engine backfired, causing the defendant to jerk back and inadvertently throw gasoline onto the plaintiff. Id. That gasoline ignited, and the plaintiff sustained severe burns. Id. When the plaintiff sued the defendants for damages arising from her injuries, the defendants sought indemnification under their homeowner’s insurer policy. Id. at 929-30.

The relevant provisions of the homeowner’s insurance policy at issue in Tanksley “exclude[d] from coverage any ‘bodily injury [*20] or property damage arising out of the ownership, maintenance, use, loading or unloading of motor vehicles'” but provided that the exclusion did not apply to “a vehicle … not subject to motor vehicle registration which is … in dead storage on an insured location.” Id. at 930 (emphasis added). The court ultimately found that the Impala was not in dead storage within the meaning of the homeowner’s policy because pouring gasoline into the Impala’s carburetor in an attempt to start the engine constituted “maintenance” and because a car undergoing maintenance could not be simultaneously in dead storage. Id. at 931 (citing Holliman v. MFA Mut. Ins. Co., 289 Ark. 276, 711 S.W.2d 159, 161 (Ark. 1986)).

The Court finds that the Policy at issue here is “substantively indistinguishable” from the one at issue in Tanksley, despite the language in the policy exclusion regarding motor vehicle registration in that case. Id. Parish attempts to distinguish Tanksley by noting that he stored the Corvette in his garage for up to sixteen years, without driving it for eight years, and that the Corvette was not undergoing maintenance at the time of Fowler’s injuries. (Resp’t Parish’s Resp. to Pet’r’s Mot. for Summ. J., at 8.) The Court agrees with Allstate that the reasoning from Tanksley involving maintenance of a vehicle [*21] extends to the present case involving Parish driving the Corvette onto the trailer. (Pet’r’s Reply Br. in Supp. of Pet’r’s Mot. for Summ. J., at 3.) The focus of the inquiry is “on how the vehicle was being used at the time of the accident at issue,” and not any past or intended future use. Tanksley, 218 F.3d at 931. As concluded above, driving the Corvette onto the trailer constitutes both use and loading, as provided within the Policy’s Motor Vehicle Use Exclusion and Motor Vehicle Loading Exclusion provisions in Coverages X and Y.

The additional case law cited by Allstate on this issue also favors a finding that the dead storage exception is inapplicable here. For example, the Eighth Circuit found that a dead storage exception to a homeowner’s insurance policy did not apply to an incident where a child was thrown from a tractor and killed while on the insured’s property. Am. Fam. Mut. Ins. Co. v. Van Gerpen, 151 F.3d 886, 887-88 (8th Cir. 1998). The court noted that “dead storage is clearly a type of storage,” that “the state of being in storage is inconsistent with the state of being in use,” and that “[t]he ‘dead’ in ‘dead storage’ suggests, at the least, that the engine would not be running.” Id. at 888. The Court finds that this reasoning logically and reasonably extends to the loading [*22] of the Corvette onto the trailer at issue here because both the tractor in Van Gerpen and the Corvette here were in use when the injuries occurred.

Parish’s attempt to distinguish Nationwide Mutual Insurance Co. v. McMahon is also unavailing. That the defendants in McMahon intended to drive the car to another location before they injured the plaintiff while attempting to start the car is immaterial because the car was still undergoing maintenance and therefore could not be in dead storage. Nationwide Mut. Ins. Co. v. McMahon, 365 F. Supp. 2d 671, 677 (E.D.N.C. 2005); see also Tanksley, 218 F.3d at 931 (noting that intended future use is not the focus of the inquiry). In addition, the court in Hollis v. St. Paul Fire & Marine Insurance Co. did not explicitly address the issue of dead storage, though the court’s holding regarding exclusion for the maintenance of a motor vehicle under the homeowner’s policy is consistent with the body of case law addressed above. Hollis v. St. Paul Fire & Marine Ins. Co., 203 Ga. App. 252, 253, 416 S.E.2d 827 (1992). Finally, the court in Allstate Insurance Co. v. Breshears found that the dead storage exception was inapplicable because “the pickup was not in dead storage at the time of the accident, as it was being towed,” further supporting the broad construction of “use” under motor vehicle exclusion policies. Allstate Ins. Co. v. Breshears, 154 F. App’x 671, 673 (9th Cir. 2005).

Though Allstate bears the burden of persuasion, [*23] Parish points to no controlling case law of his own that would contradict Allstate’s abundance of authority finding the dead storage exception to various homeowner’s policies inapplicable under analogous facts. The lack of contrary authority points to the conclusion that “a vehicle being loaded is not in dead storage and would never meet the dead storage exception to the motor vehicle use exclusion.” (Pet’r’s Reply Br. in Supp. of Pet’r’s Mot. for Summ. J., at 3.) Accordingly, the Court finds that the Dead Storage Exception does not apply here and that the Motor Vehicle Use Exclusion and Motor Vehicle Loading Exclusion provisions in Coverages X and Y bar coverage of the Respondents.

D. Prompt Notification and Remaining Causes of Action

Having found that the Policy’s Motor Vehicle Use Exclusion and Motor Vehicle Loading Exclusion provisions bar coverage and that the Dead Storage Exception is inapplicable, the Court declines to address whether Parish provided sufficient notice under the Policy. The Court finds that it need not resolve Allstate’s request for declarations that the Policy’s Prompt Notice of Loss Requirement (Count IV) and Negligent Supervision Exclusion (Count II) provisions [*24] bar coverage of Fowler’s injuries. The Court’s conclusions as to Counts I and III on the Motor Vehicle Exclusion are alone sufficient grounds to enter judgment in favor of the Petitioner Allstate.

IV. Conclusion

In brief, the Court finds no genuine issue of material fact exists, and therefore, the Petitioner Allstate is entitled to a declaration that it has no coverage obligations under the Policy’s Family Liability Protection section of Coverage X or Guest Medical Protection section of Coverage Y. For the foregoing reasons, the Petitioner’s Motion for Summary Judgment [Doc. 24] is GRANTED. The Clerk is DIRECTED to enter judgment in favor of the Petitioner Allstate on Counts I and III of the Complaint [Doc. 1], and to close the case.

SO ORDERED, this 23rd day of August, 2022.

/s/ Thomas W. Thrash, Jr.

THOMAS W. THRASH, JR.

United States District Judge

End of Document

¹The operative facts on the Motion for Summary Judgment are taken from the parties’ Statements of Material Facts and the responses thereto. The Court will deem the parties’ factual assertions, where supported by evidentiary citations, admitted unless the respondent makes a proper objection under Local Rule 56.1(B).

²Parish objects to Allstate’s second Statement of Material Fact “as a statement supported by a citation to a pleading rather than to evidence” in violation of Local Rule 56.1(B)(1). (Pet’r’s Statement of Material Facts in Supp. of Pet’r’s Mot. for Summ. J. ¶ 2). The Court finds no error because Allstate cites to an Exhibit of the Complaint, not the Complaint itself. And though the Exhibit is itself the complaint to the state court lawsuit underlying this declaratory action, James Fowler v. Robert Parish, Civil Action No. 20-A-1163 (Cobb Cnty. State Ct. Mar. 26, 2020) (“Underlying Lawsuit”), the Court finds Allstate’s reference to the Underlying Lawsuit’s complaint valid because Allstate offers the complaint to show that the allegations in the complaint exist. Further, Parish seeks coverage, indemnification, and/or a legal defense from Allstate for the allegations in the Underlying Lawsuit’s complaint. Thus, its reference in this case is appropriate.

³Parish’s arguments regarding the first factor appear to relate to the second factor; thus, the Court considers them here.

Williamsburg Nat’l Ins. Co. v. New York Marine & Gen. Ins. Co.

United States District Court for the Central District of California

August 12, 2022, Decided; August 12, 2022, Filed

CV 21-04377-RSWL-JDEx

Reporter

2022 U.S. Dist. LEXIS 144658 *; 2022 WL 3348935

WILLIAMSBURG NATIONAL INSURANCE COMPANY, Plaintiff, v. NEW YORK MARINE AND GENERAL INSURANCE COMPANY, Defendant.

Core Terms

notice, insured, indemnity, endorsement, subrogation, equitable, alleges, declaratory relief, carrier, claim for contribution, reconsideration motion, amended complaint, default judgment, judicial notice, leave to amend, requests, tractor

Counsel: [*1] For Williamsburg National Insurance Company, Plaintiff: Ira D Goldberg, Woolls Peer Dolinger and Scher APC, Los Angeles, CA; John E Peer, Woolls Peer Dollinger and Scher, Los Angeles, CA.

For New York Marine and General Insurance Company, Defendant: Christian D Jinkerson, Nicholas H Rasmussen, LEAD ATTORNEYS, James P Wagoner, McCormick Barstow Sheppard Wayte and Carruth LLP, Fresno, CA; Maria E. Valencia Camberos, LEAD ATTORNEY, McCormick Barstow, Fresno, CA.

Judges: HONORABLE RONALD S.W. LEW, Senior United States District Judge.

Opinion by: RONALD S.W. LEW

Opinion

ORDER re: Defendant’s Motion to Dismiss Plaintiff’s First Amended Complaint [41]

Plaintiff Williamsburg National Insurance Company (“Plaintiff”) brings this Action against Defendant New York Marine and General Insurance Company (“Defendant”). In its First Amended Complaint, Plaintiff alleges eleven causes of action involving contribution, indemnity, and other various tort claims. Currently before the Court is Defendant’s Motion to Dismiss Plaintiff’s First Amended Complaint [41] (the “Motion”). Having reviewed all papers submitted pertaining to this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS in part and DENIES in part Defendant’s [*2] Motion.

I. BACKGROUND

A. Factual Background

Plaintiff, a Michigan-based insurance corporation, issued a motor carrier liability policy to DLR Express, Inc. (“DLR”) that provides a $1,000,000 combined single limit for covered accidents. First Am. Compl. (“FAC”) ¶¶ 3, 5, ECF No. 37. Attached to the policy is the MCS-90 endorsement, which is a standardized form that requires an insurer to pay up to its policy limit to members of the public for liability arising from its insured’s operations even where the policy itself provides no coverage. Id. ¶ 5.

Defendant, a New York-based insurance corporation, issued a motor carrier liability policy (“Defendant Policy”) to Intermodal Contractor’s Association of North America. Id. ¶¶ 4, 6. Arthur Trimble, Jr. (“Trimble”) was later added as a certificate holder under this policy. Id. ¶ 6. Defendant Policy similarly provides a $1,000,000 combined single limit and includes the MCS-90 endorsement. Id. ¶¶ 6, 31.

DLR leased a tractor with an attached trailer to Trimble pursuant to an Equipment Lease Agreement and a sub-haul agreement (collectively, the “Agreement”). Id. ¶ 8. Under the Agreement, Trimble agreed to indemnify and release DLR against all liability [*3] arising out of Trimble’s use of the tractor. Id. ¶ 9. Pursuant to the Agreement, Trimble also added DLR to Defendant Policy as an additional insured with respect to the tractor. Id. ¶ 11. The Policy obligates Defendant to pay all sums Trimble is liable for related to any accident involving the tractor. Id. ¶ 29.

On March 5, 2015, Trimble was driving the tractor pulling a loaded trailer when he rear-ended a truck being driven by Ronald Foster, Jr. Id. ¶ 7. Foster, along with the truck’s passenger and the truck’s owner (collectively, the “Foster plaintiffs”), filed a complaint against Trimble in Los Angeles Superior Court on March 3, 2017, alleging injuries and damages related to the accident. Id. ¶ 12. DLR was later added to the action as a defendant. Id. ¶ 15. Defendant provided a defense for Trimble in the Foster litigation, and all claims against Trimble were settled for $155,000. Id. ¶ 13. Plaintiff alleges that Defendant “was aware, via its retained defense counsel for Trimble, that its additional insured DLR was named as a defendant in the Foster litigation.” Id. ¶ 16. However, neither Plaintiff nor Defendant provided a defense for DLR in the Foster litigation initially, and consequently [*4] DLR never appeared in the case. Id. ¶¶ 17, 18.

A default judgment of $6,085,702 was entered against DLR. Id. ¶ 18. DLR moved to set aside the default judgment, and subsequently filed an appeal when that motion was denied. Id. DLR then tendered its defense to Plaintiff, and Plaintiff agreed to defend DLR in the Foster litigation under a reservation of rights.¹ Id. ¶ 19. A month later, DLR tendered its defense and request for indemnity to Defendant as an additional insured under Defendant Policy. Id. ¶ 21.

The Foster plaintiffs then agreed to settle all claims against DLR for $1,000,000. Id. ¶ 22. Both DLR and Plaintiff demanded that Defendant contribute its remaining policy limit to settle the claim, but Defendant refused. Id. ¶¶ 23-25. Ultimately, Plaintiff paid the entire settlement amount on behalf of DLR. Id. ¶¶ 22, 26. Plaintiff alleges that Defendant had the primary duty to defend and indemnify DLR in the Foster litigation because DLR is an additional insured under Defendant Policy. Id. ¶ 34.

B. Procedural Background

Plaintiff filed its initial Complaint [1] on May 26, 2021, alleging claims for declaratory relief, equitable contribution, and equitable subrogation. Defendant filed [*5] a Motion to Dismiss (“Initial Motion”) [12] on July 16, 2021, and this Court subsequently entered an Order [18] granting in part and denying in part Defendant’s Motion. Specifically, the Court dismissed Plaintiff’s subrogation claims with leave to amend but denied Defendant’s Motion as to the declaratory relief and contribution claims. See Order re: Mot. to Dismiss (“Order”) 18:2-8, ECF No. 18.

Plaintiff then filed its First Amended Complaint (“FAC”) [37] on March 30, 2022. The FAC includes the previous claims for contribution and declaratory relief, as well as additional claims for equitable and implied indemnity, negligence, and common law and statutory tort of another. Defendant filed the instant Motion to Dismiss (“Second Motion”) [41] on April 28, 2022. On June 21, 2022, Plaintiff filed its Opposition [42]. Defendant replied [43] on June 28, 2022.

II. DISCUSSION

A. Legal Standard

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. A complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quotation omitted). Dismissal is warranted [*6] for a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988) (citation omitted).

In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir. 1991). The question is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence to support its claims. Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 184, 125 S. Ct. 1497, 161 L. Ed. 2d 361 (2005) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974)). While a complaint need not contain detailed factual allegations, a plaintiff must provide more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).

B. Analysis

1. Preliminary Matters

a. Local Rule 7-3

Defendant argues that Plaintiff failed to comply with Local Rule 7-3 because Plaintiff never informed Defendant of its objection to Defendant’s reassertion of certain arguments. Reply 25:18-22, ECF No. 43. However, Local Rule 7-3 sets forth the meet and confer obligations of the moving party only. C.D. Cal. L.R. 7-3 (requiring that “counsel contemplating the filing of any motion shall [*7] first contact opposing counsel” to discuss the motion’s substance) (emphasis added). Therefore, Plaintiff did not violate Local Rule 7-3 in failing to raise its objection during the meet and confer session. The Court accordingly considers the arguments raised in Plaintiff’s Opposition.

b. Defendant’s Requests for Judicial Notice

Pursuant to Federal Rule of Evidence 201, “[a] court may judicially notice a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Thus, while a court may take judicial notice of matters of public record, a court may not take judicial notice of the substance of such records if subject to reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 689-90 (9th Cir. 2001) (stating that a court may take judicial notice of the fact that certain court records were filed but not of the truth of any facts stated therein).

Defendant requests the Court judicially notice the following records from the Foster litigation: (1) the proof of service of the amended complaint substituting DLR for a Doe defendant; (2) the order granting default judgment against DLR; (3) DLR’s motion to set aside default and default judgment; (4) the order denying DLR’s motion to set aside [*8] default and default judgment; and (5) the Superior Court’s entry of a $6,085,702 judgment against DLR. See generally Def.’s Req. for Judicial Notice, ECF No. 41-1. Defendant also requests that the Court judicially notice: (6) an excerpt from the Federal Motor Carrier Administration’s (“FMCA”) Regulatory Guidance; and (7) the “About Us” information from the FMCA’s website. Id.

The Court GRANTS Defendant’s first through fifth requests because they pertain to court documents, the existence of which is not subject to reasonable dispute. See Selane Prods. v. Cont’l Cas. Co., No. 2:20-cv-07834-MCS-AFM, 2020 U.S. Dist. LEXIS 233753, 2020 WL 7253378, at *3 (C.D. Cal. Nov. 24, 2020). However, the Court DENIES Defendant’s sixth and seventh requests. While these documents may qualify as judicially noticeable materials, they are not relevant to the resolution of this Motion and therefore need not be considered by this Court. See Santa Monica Food Not Bombs v. City of Santa Monica, 450 F.3d 1022, 1025 n.2 (9th Cir. 2006).

2. The Motion

Defendant argues that all of Plaintiff’s claims should be dismissed because Defendant had no duty to indemnify and defend DLR. See Mot. to Dismiss FAC (“Second Mot.”) 3:7-14, ECF No. 37. For the following reasons, the Court DENIES Defendant’s Motion as to Plaintiff’s claims for contribution, indemnity, and declaratory relief. The Court [*9] GRANTS Defendant’s Motion as to Plaintiff’s claims for negligence and both common law and statutory tort of another.

a. Contribution and Indemnity

i. Notice

Defendant’s Motion repeats a central argument that the Court previously rejected — namely, that Defendant cannot be liable for contribution because Defendant lacked sufficient notice of DLR’s potential claims. See generally Second Mot. In its prior Order, the Court rejected Defendant’s argument that Plaintiff failed to state a claim for contribution due to lack of notice. Order 13:19-15:16. The Court found that Plaintiff adequately alleged that Defendant had sufficient inquiry notice of the potential for a contribution claim. Id. Nevertheless, Defendant’s current Motion restates the same notice argument, contending that Defendant did not have constructive notice and thus that Plaintiff cannot state “any claim” against Defendant. See Second Mot. 3:15-4:11.

Although Defendant does not expressly ask the Court to reconsider the conclusions it reached in the prior Order, Defendant’s Motion functions as a motion for reconsideration and should be analyzed as such. See Laub v. Horbaczewski, No. CV 17-6210-JAK (KSX), 2020 U.S. Dist. LEXIS 247102, 2020 WL 7978227 at *4 (C.D. Cal. Nov. 17, 2020) (analyzing a motion to compel and for sanctions as a motion for reconsideration [*10] where it “essentially request[ed] that the [c]ourt revisit its [prior] ruling”).²

Local Rule 7-18 allows reconsideration “of the decision on any motion,” which includes interlocutory orders such as an order denying a motion to dismiss or granting a motion to dismiss without prejudice. C.D. Cal. L.R. 7-18; see also United States v. Curiel, No. 2:05-cr-00889-RSWL, 2015 U.S. Dist. LEXIS 3346, 2015 WL 143897, at *1 (C.D. Cal. Jan. 12, 2015).

A motion for reconsideration pursuant to Local Rule 7-18 may be made only on the following grounds:

(a) a material difference in fact or law from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or

(b) the emergence of new material facts or a change of law occurring after the time of such decision, or

C.D. Cal. L.R. 7-18; see In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., 966 F. Supp. 2d 1031, 1036 (C.D. Cal. 2013). Additionally, a motion for reconsideration must not “repeat any oral or written argument made in support of or in opposition to the original motion.” C.D. Cal. L.R. 7-18.

Defendant has not demonstrated that the Court’s prior decision was erroneous, nor that any of the limited circumstances for reconsideration apply here. Defendant appears to confuse [*11] two distinct notice requirements. As the Court explained in its prior Order, the notice required for a contribution claim is distinct from the notice that an insured must give its insurer to trigger the insurer’s duty to indemnify and defend. This is because a coinsurer’s right to contribution is not governed by the terms of either insurance policy. Therefore, “an insured’s lack of tender or compliance with a policy provision is not fatal to a coinsurer’s right of equitable contribution; rather, adequate notice of the potential for contribution and the opportunity for investigation and participation in the defense in the underlying litigation will suffice.” OneBeacon Am. Ins. Co. v. Fireman’s Fund Ins. Co., 175 Cal. App. 4th 183, 95 Cal. Rptr. 3d 808, 822 (Cal. Ct. App. 2009). The Court carefully considered Plaintiff’s allegations regarding Defendant’s notice of DLR’s involvement in the Foster litigation, and it determined that Plaintiff had pled notice sufficient to state a claim for contribution against Defendant. The Court declines to revisit that conclusion here.³

As such, Defendant may not repeat its prior arguments about its lack of notice simply because it is dissatisfied with the Court’s prior conclusions. See Rhodes v. Pfeiffer, No. CV 14-7687, 2017 U.S. Dist. LEXIS 223588, 2017 WL 10519635, at *1 (C.D. Cal. June 30, 2017) (noting that litigants may not use motions for reconsideration to get a “proverbial [*12] second bite at the apple”) (internal quotation marks and citation omitted); Laub v. Horbaczewski, No. CV 17-6210-JAK (KSX), 2020 U.S. Dist. LEXIS 247102, 2020 WL 7978227 at *4 (C.D. Cal. Nov. 17, 2020) (denying reconsideration where movant failed to show court error or material difference in fact or law).

ii. MCS-90 Endorsement

Because the Court finds that Plaintiff’s contribution and indemnity claims survive Defendant’s Motion based on adequate notice, the Court need not address whether the MCS-90 endorsement attached to Defendant Policy provides an alternative basis for these claims. Nevertheless, the Court briefly notes its previous finding that the public protection purpose of the MCS-90 endorsement has been fulfilled in this case “[b]ecause Trimble, the injured member of the public, has already been compensated for his injuries.” Order 11:8-12. Thus, as with Plaintiff’s prior claims for subrogation, the MCS-90 is irrelevant to Plaintiff’s claims for contribution and indemnity.⁴

This is not to say that declining to apply the MCS-90 endorsement here in any way precludes Plaintiff’s claims for contribution and indemnity. As the Court has explained, claims for equitable contribution and indemnity do not arise out of a contract between two insurers and thus are not controlled by the language of either [*13] policy. See Fireman’s Fund Ins. Co. v. Md. Cas. Co., 65 Cal. App. 4th 1279, 77 Cal. Rptr. 2d 296, 313 (Cal. Ct. App. 1998); Travelers, 285 Cal. Rptr. 3d at 308. Plaintiff has pled facts sufficient to plausibly allege that Defendant had notice of DLR’s addition to the Foster litigation. Plaintiff can therefore state claims for contribution and indemnity regardless of the protections afforded by the MCS-90 endorsement.

In sum, the FAC alleges notice sufficient to state claims for contribution and indemnity. The Court therefore DENIES Defendant’s Motion as to Plaintiff’s first through eighth claims for contribution, indemnity, and declaratory relief.

b. Negligence and Tort of Another

Plaintiff’s FAC fails to state claims for negligence and common law and statutory tort of another. To state a claim for either negligence or tort of another, Plaintiff must establish that Defendant owed it a duty of due care. Artiglio v. Corning, Inc., 18 Cal. 4th 604, 614, 76 Cal. Rptr. 2d 479, 957 P.2d 1313 (1998); Zahnleuter v. Lenhart, No. 2:20-CV-02492-KJM-KJN, 2021 U.S. Dist. LEXIS 83529, 2021 WL 1721812, at *4 (E.D. Cal. Apr. 30, 2021) (internal citations omitted). In a dispute between insurers like the one here, a primary insurer owes an excess insurer a duty of good faith identical to that owed to the insured. Diamond Heights Homeowners’ Ass’n v. Nat’l Am. Ins. Co., 227 Cal. App. 3d 563, 579, 277 Cal. Rptr. 906 (1991). As such, the excess carrier may recover in tort against the primary insurer only through equitable subrogation, by subrogating to the rights of the insured.⁵ Id.; see also Signal Cos., Inc. v. Harbor Ins. Co., 27 Cal. 3d. 359, 365, 165 Cal. Rptr. 799, 612 P.2d 889 (1980) (“[T]he primary carrier, in settling [*14] an action, owes a duty of good faith to the excess carrier based on the theory of equitable subrogation.”).

As the Court has previously held, Plaintiff cannot state a claim for subrogation because Plaintiff has not alleged facts establishing that DLR itself has an existing, assignable cause of action against Defendant. Indeed, any duty Defendant owed to DLR was extinguished because DLR failed to timely tender its defense to Defendant. See Order 10:5-14. Because Defendant owed no duty to DLR, Defendant likewise owed no duty to Plaintiff. Plaintiff’s claims for negligence and tort of another therefore fail.

The MCS-90 endorsement is no help to Plaintiff’s claims for negligence and tort of another. As explained above, the MCS-90 does not apply in this dispute between insurers. While the MCS-90 endorsement creates a suretyship relationship, the insurer becomes a surety to protect the public only. See Harco Nat. Ins. Co. v. Bobac Trucking Inc., 107 F.3d 733, 736 (9th Cir. 1997). Because the injured members of the public — the Foster plaintiffs — have been compensated in this case, the MCS-90 endorsement does not give rise to a duty on the part of Defendant, and therefore it does not create any rights which Plaintiff may be subrogated to.

Because Defendant owed no duty [*15] to Plaintiff based either on subrogation or on its suretyship obligations under the MCS-90 endorsement, Plaintiff cannot state claims for negligence or for common law or statutory tort of another. As such, the Court GRANTS Defendant’s Motion as to Plaintiff’s ninth through eleventh claims for negligence and tort of another.

c. Leave to Amend

“The Court should give leave [to amend] freely when justice so requires.” Fed. R. Civ. P. 15(a)(2). While the Ninth Circuit has “stressed Rule 15‘s policy of favoring amendments,” leave need not be granted where amendment would be “an exercise in futility.” Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989).

Here, allowing Plaintiff to amend the FAC would be futile because Plaintiff has not indicated the existence of any additional facts that would establish the duty required for negligence or tort of another. The Court previously afforded Plaintiff an opportunity to amend its subrogation claims to allege that Defendant owed a duty to DLR, and Plaintiff declined to do so. Plaintiff has not indicated that it could allege any additional facts to establish such a duty. The Court therefore finds that amendment of these claims would be futile and dismisses Plaintiff’s negligence and tort of another claims without leave to amend. See [*16] Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 339 (9th Cir. 1996) (holding that district court did not abuse discretion in denying leave to amend where amendment would be futile).

III. CONCLUSION

Based on the foregoing, the Court GRANTS in part and DENIES in part Defendant’s Motion. The Court DENIES the Motion as to Plaintiff’s first through eighth claims for contribution, indemnity, and declaratory relief. The Court GRANTS the Motion as to Plaintiff’s ninth through eleventh claims for negligence and tort of another without leave to amend.

IT IS SO ORDERED.

DATED: August 12, 2022

/s/ Ronald S.W. Lew

HONORABLE RONALD S.W. LEW

Senior U.S. District Judge

End of Document

¹The MCS-90 endorsement included in the policy that Plaintiff issued to DLR required Plaintiff to cover DLR’s claim despite DLR’s failure to provide Plaintiff with timely notice of the Foster litigation. Pl.’s Opp’n to Mot. to Dismiss (“Opp’n”) 16:27-17:3, ECF No. 15.

²Defendant contends that it may repeat its constructive notice argument because the filing of an amended complaint allows the Court to alter its prior judgment. Reply 22:19-24:4. However, Defendant provides no authority for the proposition that the filing of an amended complaint authorizes a court to revisit previously rejected arguments attacking claims that remain identical in the amended complaint. Cf. Askins v. U.S. Dep’t of Homeland Sec., 899 F.3d 1035, 1043 (9th Cir. 2018) (discussing the standard for evaluating an amended complaint itself rather than the standard for reconsideration of previously rejected arguments in a motion to dismiss). Even if the standard for reconsideration were somehow lower in this procedural context, the Court declines to alter its previous rulings for the reasons stated below.

³Defendant provides no authority holding that the notice standard for indemnity is different from that for contribution, and the Court could find none. A claim for indemnity lies where “one party pays a debt for which another is primarily liable and which in equity and good conscience should have been paid by the latter party.” Travelers Indem. Co. of Conn. v. Navigators Specialty Ins. Co., 70 Cal. App. 5th 341, 285 Cal. Rptr. 3d 289, 308 (Cal. Ct. App. 2021). Like contribution, equitable and implied indemnity are “premised on a joint legal obligation to another” and are not governed by the language of the insurers’ respective policies. Prince v. Pac. Gas & Elec. Co., 45 Cal. 4th 1151, 90 Cal. Rptr. 3d 732, 202 P.3d 1115, 1120 (2009). Thus, Plaintiff’s indemnity claims similarly survive Defendant’s arguments concerning lack of notice.

⁴This holding is consistent with the majority view that the MCS-90 endorsement applies only “when necessary to protect injured members of the public” and does not control the allocation of loss among insurers. Canal Ins. Co. v. Distrib. Servs., Inc., 320 F.3d 488, 492-93 (9th Cir. 2003) (collecting cases); see also John Deere Ins. Co. v. Nueva, 229 F.3d 853, 858 (9th Cir. 2000).

⁵Plaintiff argues that duty is established because California Civil Code section 1714 imposes liability on any person for “an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person.” However, this general provision cannot be relied upon to establish the legal duty of a defendant in a particular case. Lundy v. California Realty, 170 Cal. App. 3d 813, 216 Cal. Rptr. 575, 577-78 (Cal. Ct. App. 1985). Rather, the duty owed by Defendant in this particular insurance context has been defined through the case law cited above.