Admiral Ins. Co. v. Kabul, Inc.

1

Admiral Insurance Company, Plaintiff v. Kabul, Inc., et al., Defendants

No. 2:22-cv-00177-CDS-NJK

United States District Court, D. Nevada

August 14, 2024

ORDER RESOLVING PENDING MOTIONS FOR SUMMARY JUDGMENT

[ECF NOS. 79, 126, 128]

CRISTINA D. SILVA, UNITED STATES DISTRICT JUDGE

Plaintiff Admiral Insurance Company brings this declaratory action against Kabul Inc., . d/b/a Fastrip PWC Rentals and Kabul Inc, d/b/a Fastrip Food Store (collectively “Kabul”), and . the Lynch Defendants: Darryl Alexander, Tommy Lynch^[1] and April Black. See Compl., ECF No. 1.

This insurance dispute is enshrouded in tragedy. It involves the tragic deaths of Tammy Lynch and David Raper. Tammy lost her life in a fatal jet ski accident. The jet ski was owned by defendant Kabul Inc., who rented the jet ski to defendant Darryl Alexander. The Lynch Action^[2]was filed as a result. Compl., ECF No. 1 at ¶¶ 1, 22. David Raper tragically lost his life to Covid-19. David's role in this action is significant: the third-party-complaint spins on whether Kabul delivered a list of purchased jet skis to Gregg Eidsness Farm Bureau Financial Services (GEFB) through David. The timing of the purported delivery of the list during the Covid-19 pandemic in 2020, and close in time to David's death, who was the only GEFB employee at the time due to Covid-19,^[3] raises questions about if and when delivery occurred, which is the center of Kabul's action against GEFB.

This order addresses the pending motions for summary judgment. ECF Nos. 79 (GEFB); 126 (Kabul and Alexander); 128 (Admiral). On July 17, 2024, I held a hearing on Kabul, Alexander, and Admiral's motions. See generally July 17, 2024 Hr'g Tr.^[4] After careful consideration, I deny GEFB's motion for summary judgment, deny Kabul and Alexander's motion for summary judgment, and grant Admiral's motion for summary judgment.

I. Background

A. The Lynch Action

Kabul Inc. owns Fastrip Food Store, a convenience store, gas station, and jet ski rental business, located in Bullhead City, Arizona. Noori Dep., Def.'s Ex. 1, ECF No. 79-1 at 5. On August 21, 2020, a jet ski owned by Kabul and rented to Alexander was involved in a fatal accident, resulting in the Lynch Action, where Kabul is a named defendant. Compl., ECF No. 1 at ¶¶ 1, 22. After being sued, Kabul submitted a claim to Admiral for coverage under their May 22, 2020-May 22, 2021 insurance policy (hereinafter, “2020 Policy”). Baratti Decl., ECF No. 128-1 at ¶ 6.

B. The 2020 Policy

The Admiral insurance policy at issue in this action, provided Kabul insurance from May 22, 2020 to May 22, 2021. 2020 Policy, Pl.'s Ex. 1, ECF No. 128-3 at 5. The 2020 Policy contains exclusion g., which precludes coverage for watercrafts. Id. at 12. However, the 2020 Policy contains endorsements that expand coverage to watercrafts. The specified operations endorsement that covers “jet ski rental” provides that the insurance “applies only to ‘bodily injury', ‘property damage', ‘personal and advertising injury' and medical expenses caused by the operations shown in the Schedule.” Id. at 50. The boats endorsement contains a similar provision, providing that exclusion g. “does not apply to any watercraft owned or used by or rented to the insured shown in the Schedule.” Id. at 32 (emphasis added). Said differently, the jet ski rental must be listed on a schedule of jet skis on file with Admiral pursuant to the boats endorsement in order for exclusion g. not to apply.

C. The schedules on file with Admiral

Admiral senior claims superintendent Stacie Baratti was assigned to investigate the Kabul claim. See generally Baratti Decl., ECF No. 128-1. She found that the jet ski involved in the Lynch Action is registered under the identification number YAMA3877C020. Dec. 1, 2021 Email, Pl.'s Ex. 5, ECF No. 128-7 at 10 (showing jet ski purchases on June 25, 2020); see also Baratti Decl., ECF No. 128-1 at ¶¶ 8-9. The 2020 Policy underwriter informed Baratti that Kabul had no schedule on file for the 2020 Policy. Baratti Decl., ECF No. 128-1 at ¶ 10; see also Baratti Dep. Vol. II, Pl.'s Ex. 3, ECF No. 127-4 at 4. However, there was a schedule of 40 jet skis on file for the 2019-2020 policy, but the jet ski involved in the Lynch Action was not on that schedule. Baratti Decl., ECF No. 128-1 at ¶ 10; see generally 2019-2020 schedule, Pl.'s Ex. 3, ECF No. 128-5.

Baratti then emailed GEFB to discuss the schedule. Baratti Decl., ECF No. 128-1 at ¶ 11. GEFB informed Baratti that Kabul “always” provided it with copies of new jet ski registrations every year, as well as a list of jet skis to be removed. Dec. 1, 2021 Email, Pl.'s Ex. 5, ECF No. 128-7 at 2. GEFB further informed Buratti that Kabul provided GEFB with jet ski registrations for the jet skis it purchased on May 8, 2020, June 11, 2020, and June 25, 2020. Id. There is no dispute that jet skis purchased on May 8 and June 11 were received by Admiral. Id. GEFB informed Buratti that Kabul “sw[ore] that [it] provided [GEFB] employee [David Raper] with the invoice and registrations” for the jet skis purchased on June 25-but there is no proof of delivery. Id.; see also Baratti Decl., ECF No. 128-1 at ¶ 12. David unfortunately passed away prior to litigation and GEFB could “no longer access [David's] computer emails or records as to how the transaction was handled.” Dec. 1, 2021 Email, Pl.'s Ex. 5, ECF No. 128-7 at 2; see also Baratti Decl., ECF No. 128-1 at ¶ 12.

GEFB provided Buratti with the list of jet skis purchased on May 8, June 11, and June 25, 2020. Baratti Decl., ECF No. 128-1 at ¶ 12; see also Dec. 1, 2021 Email, Pl.'s Ex. 5, ECF No. 128-7 at 4-12. Baratti reviewed the lists and confirmed that the list of jet skis purchased on June 25, 2020 (hereinafter, the “June 25 jet ski list”) had not been provided to Admiral prior to the date of Tammy's accident. Baratti Decl., ECF No. 128-1 at ¶ 12; see also Dec. 1, 2021 Email, Pl.'s Ex. 5, ECF No. 128-7 at 4-12. Baratti also reviewed the list of jet skis that were provided for the policy period of May 22, 2021 to May 22, 2022. Baratti Decl., ECF No. 128-1 at ¶ 13. That list contained jet skis purchased in 2020 and 2021 but did not include the June 25 jet ski list. Id.; see also Renewal policy schedule, Pl.'s Ex. 6, ECF No. 128-8. Admiral considered all of the lists on file to determine if coverage was available to Kabul. Baratti Decl., ECF No. 128-1 at ¶¶ 10-13.

D. The instant action

Admiral, Kabul's insurance provider, provided Kabul and GEFB with a Reservation of Rights Letter signed by Admiral senior claims superintendent Stacie Baratti. See Reservation of Rights Letter, Def.'s Ex. 2, ECF No. 79-2. In that letter, Admiral agreed to defend Kabul and Alexander in the Lynch Action, but stated that the jet ski involved in the Lynch Action “was not on any schedule on file with Admiral at the time of the Lynch accident or anytime during the effective dates of the Policy.” Id. at 11. Admiral also asked Kabul to provide any information that it had to show that that jet ski was on the schedule with Admiral on or before the date of the accident, as it “would be new information” that “could lead to a different coverage decision.” Id. at 3. The letter further stated that “Admiral reserve[d] the right to seek a judicial determination of what coverage, if any, is afforded for [Kabul] under the Policy for the claims made and damages alleged in the Lynch [Action], including Admiral's obligation to provide a defense.” Id. at 12. Admiral then filed the instant declaratory judgment, seeking a determination on whether it has a duty to defend and indemnify Kabul and Alexander. Id.

Kabul answered the complaint and brought a third-party action against GEFB. ECF No. 14. The third-party-complaint contains one claim for relief: negligence. ECF No. 14 at ¶¶ 9-17.

Kabul alleges that GEFB is negligent for failing to provide Admiral with the June 25 jet ski list, which included the jet ski involved in the Lynch Action. Id. Kabul also alleges that GEFB's negligence resulted in Kabul having to defend himself in the instant declaratory action brought by Admiral, thereby causing Kabul to face “the threat of imminent loss of insurance coverage for the defense and coverage as to any damages associated with the Lynch [Action].” Id. at ¶ 11.

E. The motions for summary judgment

GEFB filed a motion for summary judgment, arguing that Kabul is unable to meet his burden to prove that GEFB was negligent, as there is no proof that Kabul gave GEFB the June 25 jet ski list to Admiral so the jet skis on that list, including the jet ski involved in the Lynch Action, were not added to Kabul's schedule for coverage. See generally ECF No. 79; 98. Kabul argues that summary judgment is not appropriate since “the burden does not even shift to Kabul because [GEFB] cannot present evidence that entitles it to judgment as a matter of law.” ECF No. 90 at 5. Specifically, Kabul argues that there is a genuine dispute of material fact as to principal and director of Kabul, Inc, Nijibullah Noori's,^[5] recollection of the June 25 jet ski list delivery. Id.

Kabul and Alexander filed a motion for summary judgment, arguing that Admiral “fraudulently brought this declaratory relief action to avoid its duty to defend and indemnify” them in the Lynch Action. ECF No. 126 at 2. Kabul and Alexander argue that “[s]ummary judgment should be granted in [their] favor [] because the face of the policy grants coverage; and, even if [Admiral] alleges ambiguities in an attempt to restrict coverage, those must be construed in favor of the insured and coverage.” Id. at 3.

Admiral also filed a motion for summary judgment, arguing that there is no dispute of material fact that it has no duty to defend or indemnify Kabul or Alexander in the Lynch Action because...