Britz Fertilizers, Inc. v. Nationwide Agribusiness Ins. Co.

BRITZ FERTILIZERS, INC., Plaintiff, v. NATIONWIDE AGRIBUSINESS INSURANCE COMPANY, Defendant.

1:10-cv-02051-AWI-MJS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

Dated: October 3, 2013

ORDER RE: MOTIONS FOR

SUMMARY JUDGMENT

(Docs. 79, 82)

I. INTRODUCTION

Plaintiff Britz Fertilizers, Inc. ("Plaintiff" or "Britz") and defendant Nationwide Agribusiness Insurance Company ("Defendant" or "Nationwide") have filed competing motions for summary judgment or partial summary judgment (i.e., summary adjudication) in the alternative pursuant to Federal Rule of Civil Procedure 56. For reasons discussed below, Nationwide's motion shall be granted in part and denied in part; Britz's motion shall be denied in its entirety.

II. FACTS AND PROCEDURAL BACKGROUND

The Court refers the parties to previous orders for a complete chronology of the proceedings. On November 4, 2010, Britz filed its original complaint against Nationwide asserting one cause of action for declaratory relief. Britz followed up with a first amended complaint on October 28, 2011, asserting causes of action for reformation, declaratory relief, breach of contract and bad faith. On July 27, 2012, Britz filed its second amended complaint against Nationwide and alleged as follows:

"Britz and Nationwide negotiated for and mutually agreed that, Farmland Mutual Insurance, through its subsidiary company, Nationwide, would provide Britz commercial general liability ('CGL') coverage, to include Agronomists Errors and Omissions coverage ('Ag E&O' or simply 'E&O'), with limits of $1 million per occurrence and [$]1 million annual aggregate, and also to include Products/[Completed] Operation[s] coverage ('Products'), with limits of $1 million per occurrence and $2 million annual aggregate. Those coverages were to be part of a package insurance policy to also include property coverage and commercial auto coverage. Nationwide also agreed to provide Britz a $10 million umbrella coverage to 'follow form' the CGL coverages."

Britz further alleged:

"On August 31, 2011, Nationwide offered the foregoing package policy to Britz, in a 25-page written offer of insurance by it entitled, 'Farmland Mutual Insurance and Nationwide Agribusiness Insurance Commercialgard Quote' (the 'Quote'). [¶] On the same day, August 31, 2011, following receipt by Britz of the Quote, Britz signed and returned to Nationwide an acknowledgment accepting the Quote. Thereafter, Britz paid the full year's premium."

Britz further alleged:

"On or about September 26, 2001, the umbrella coverage was modified, to increase the coverage to $15 million, and Britz paid an additional premium for the increased coverage. [¶] The coverage period for the package insurance policy was from September 10, 2001 to September 10, 2002. [¶] Thus, Nationwide issued to Britz a package policy of insurance described as Commercial General Liability Insurance Policy No. CMG118004A (the 'CGL policy') and as Commercial Umbrella Liability Policy No. CVL118004A (the 'Umbrella Policy'), both effective from September 10, 2001 to September 10, 2002."

Britz further alleged:

"At all material times herein, Britz'[s] practice was not to charge growers a fee for crop consulting services and for recommendations by Britz'[s] salesmen, who were known as 'PCAs' (Pest Control Advisors) for use of agricultural chemicals. Those services wereincidental to the sales by Britz of agricultural chemicals. The premise was that if the use of an agricultural chemical by a grower was recommended by a Britz PCA, the grower would purchase the chemical from Britz. [¶] At all material times herein, the fact that Britz'[s] practice was not to charge a fee for crop consulting services and recommendations was known to Nationwide."

Britz further alleged:

"On or about August 9, 2002, Britz provided to the Nationwide liability claims unit notice of a claim against Britz by Ahmad Skouti, a Fresno County grape grower, and one of his lessors, Walter Johnsen . . . . Skouti asserted crop damage arising out of the use of chemicals which Britz sold to Skouti through a Britz salesman, who allegedly provided advice as to the use of the chemicals sold. Nationwide began investigation of the claim. By September 1, 2002, Nationwide assigned the claim to an adjuster and denied Skouti's demand."

Britz further alleged:

"On December 18, 2002, Skouti and Johnsen filed suit against Britz (the 'Skouti Action') in the California Superior Court, County of Fresno, Case No. 02CECG04540. Within a week thereafter, Britz tendered defense and indemnity to Nationwide, and the Skouti Action was tendered within a week to Nationwide for a defense. The Skouti Action stated causes of action for breach of contract, negligence, products liability, breach of warranty, and declaratory relief, all arising from the sale of chemicals by Britz to Skouti through its salesman who also incidental to the sale allegedly gave advice to Skouti as to how to use the chemicals."

Britz further alleged:

"Nationwide accepted the tender for defense under the CGL Policy, which contains stated limits for Products Coverage of $1 million per occurrence and $2 million Aggregate. However, at all times herein, Nationwide only acknowledged coverage under an Ag E&O endorsement, form CMG7220500, attached to the CGL Policy, notwithstanding that although the endorsement provided coverage only for consulting services for which a fee was charged, Skouti and Johnsen never allege [sic] that Britz charged a fee for such services. [¶] At all times herein, Nationwide concealed coverage, in addition to or alternatively to the Ag E&O coverage under the Products/Completed Operations provisions of the basic CMG general liability portion of the Britz Policy, form CMGB3030500, and corresponding Products/Completed Operations coverage under the Umbrella Policy no[.] CUL118004A, notwithstanding that the Skouti Action explicitly alleged products liability claims."

Britz further alleged:

"The Skouti Action was tried before a jury in 2005. On April 14,2005, judgment was entered against Britz in the amount of $7,596,247.00 plus costs of $29,745.25, for a total judgment of $7,625,993.23. [¶] Britz appealed the judgment to the California Court of Appeal, 5^th Appellate District. An Undertaking on Appeal was filed by Britz on or about June 23, 2005. The Undertaking consisted of $9,938,989.00 cash furnished by Britz and a $1.5 million surety bond furnished by Nationwide Mutual Insurance Company, an affiliate of Nationwide. [¶] The judgment was affirmed by the California Court of Appeal on July 6, 2007. A Petition for Review was denied by the California Supreme Court."

Britz further alleged:

"The judgment was satisfied in November, 2007, by payment of $9,562,132.41 to Skouti and Johnsen. $1,183,088.55, which included $183,088.55 post-judgment interest on $1,000,000.00, was paid by Nationwide. The balance, $8,379,043.85, was paid by Britz. Its attorney fees in the trial court were paid initially by Nationwide and subsequently by Bayer Corporation, the manufacturer of one of the products which Britz had sold to Skouti. Britz attorney fees on appeal were paid in part by Nationwide. Britz used its own counsel post-verdict to some extent. Britz paid their fees. Nationwide subsequently failed to do so. The amount which Nationwide failed to reimburse Britz for is approximately $50,000."

Britz further alleged:

"The $1 million and the post-judgment interest on that amount was paid by Nationwide pursuant to its $1 million limit set forth in its Ag E&O endorsement, form CMG7220500, attached to the General Liability section of the CGL policy. Nationwide did not pay anything pursuant to its Products/Completed Operations provisions of its CGL policy. Nationwide did not pay anything under its umbrella policy in that regard . . . . [¶] Britz has requested Nationwide indemnify Britz for the $8,379,043.95 paid by Britz. Nationwide has refused . . . ."

Britz further alleged:

"Effective as of October 29, 2008, Nationwide and Britz executed a Tolling Agreement tolling after that date the running of any Statute of Limitations with respect to all claims, demands, actions and causes of action which either party had or might have against the other arising out of or related to the Skouti Action. The Tolling Agreement expired November 7, 2010. [¶] Nationwide is equitably estopped to assert the running of the Statute of Limitations for any period or periods prior to October 29, 2008, because of the concealment and misrepresentation. Britz reasonably did so. Britz was not aware of Nationwide's concealment and misrepresentation until Britz reviewed documents produced by Nationwide within the last few months."

Incorporating the foregoing allegations by reference, Britz further asserted the following sevencauses of action: (1) reformation of "the Umbrella Policy, ab initio, to specifically include Ag E&O coverage;" (2) declaratory relief seeking "a judicial declaration that Nationwide is obligated to indemnify Britz under the Umbrella Policy for the $8,379,043.85 paid by Britz in the Skouti Action, that Nationwide is obligated to indemnify Britz under the CGL policy and the Umbrella Policy for all post-judgment interest paid by Britz in the Skouti Action, and that Nationwide is obligated to reimburse Britz under the CGL and the Umbrella Policy and under Nationwide's written agreement with Britz to do so, for all of Britz'[s] post-judgment attorney fees and costs in the Skouti Action;" (3) declaratory relief "determin[ing] that the professional services exclusions in the CGL Policy and the Umbrella policy are only for services furnished for a fee;" (4) declaratory relief seeking "a judicial determination that Nationwide was obligated to defend and indemnify Britz in the Skouti Action under the Products coverage of the CGL policy and under the Umbrella Policy;" (5) breach of contract; (6) bad faith (i.e., breach of the covenant of good faith and fair dealing); and (7) fraud.

On March 25, 2013, Britz and...