Century Indem. Co. v. Marine Grp., LLC

848 F.Supp.2d 1229

CENTURY INDEMNITY COMPANY, a Pennsylvania Corporation, Plaintiff,

v.The MARINE GROUP, LLC, a California limited liability company, as affiliated with Northwest Marine, Inc.; Northwest Marine, Inc., an inactive Oregon corporation, as affiliated with Northwest Marine Iron Works; Northwest Marine Iron Works, an inactive Oregon corporation, Defendants.

The Marine Group, LLC, a California limited liability company, as affiliated with Northwest Marine, Inc.; Northwest Marine, Inc., an inactive Oregon corporation, as affiliated with Northwest Marine Iron Works; Northwest Marine Iron Works, an inactive Oregon corporation; and BAE San Diego Ship Repair, Inc., a California corporation, Third–Party Plaintiffs,

v.Agricultural Insurance Company, an Ohio corporation; American Centennial Insurance Company, a Delaware corporation; Chicago Insurance Company, an Illinois corporation; Continental Insurance Company, a Pennsylvania corporation; Employers Mutual Casualty Company, an Iowa corporation; Federal Insurance Company, an Indiana corporation; Granite State Insurance Company, a Pennsylvania corporation; Hartford Insurance Company, a Connecticut corporation; Insurance Company of the State of Pennsylvania, a New Jersey corporation; Insurance Company of North America, a Pennsylvania corporation; Certain Underwriters at Lloyd's, London, and Certain London Market Insurance Companies, each a foreign corporation; National Union Fire Insurance Company of Pittsburgh, a Pennsylvania corporation; New England Reinsurance Company, a Connecticut corporation; Old Republic Insurance Company, an Illinois corporation; Pacific Mutual Marine Office Inc., a New York corporation; Reliance Insurance Company, a Pennsylvania corporation; Royal Indemnity Company, a Delaware corporation; St. Paul Fire & Marine Insurance Company, a Minnesota corporation; Twin City Fire Insurance Company, an Indiana corporation; Water Quality Insurance Syndicate, a syndicate of foreign corporations; West Coast Marine Managers, Inc., a New York corporation; and John Doe Insurance Companies, Third–Party Defendants.

Civ. No. 08–1375–AC.

United States District Court, D. Oregon.

Jan. 27, 2012.

R. Lind Stapley, Misty A. Edmundson, Soha & Lang, P.S., Seattle, WA, William G. Earle, Jonathan Henderson, Davis Rothwell Earle & Xochihua, PC, Portland, OR, for Plaintiff.

Christopher A. Rycewicz, Hong N. Huynh, Miller Nash LLP, Portland, OR, for Defendants.

Hong N. Huynh, Christopher A. Rycewicz, Miller Nash LLP, Michael R. Seidl, Seidl Law Office, PC, Portland, OR, Ira Revich, Charlston, Revich & Wollitz LLP, Los Angeles, CA, for Third–Party Plaintiffs.

Francis Douglas Tuffley, Jodi A. McDougall, Molly K.S. Eckman, Cozen O'Connor, Troy A. Biddle, Bett Patterson & Mines, PS, Peter J. Mintzer, Chamberlin Keaster & Brockman, LLP, R. Lind Stapley, Misty A. Edmundson, Soha & Lang, P.S., Carl E. Forsberg, Charles E. Albertson, John P. Hayes, Forsberg & Umlauf, P.S., Seattle, WA, Margaret M. Van Valkenburg, Bullivant Houser Bailey, PC, Thomas W. Brown, Cosgrave Vergeer Kester, LLP, Christopher T. Carson, Kilmer Voorhees & Laurick, PC, Jonathan Henderson, William G. Earle, Davis Rothwell Earle & Xochihua, PC, Portland, OR, Kenneth H. Sumner, Sinnott Puebla Campagne & Curet, APLC, San Francisco, CA, Alan M. Posner, Wayne S. Karbal, Karbal Cohen Economou Silk & Dunne, LLC, Chicago, IL, for Third–Party Defendants.

OPINION AND ORDER

ACOSTA, United States Magistrate Judge.

Introduction

This motion concerns excess insurance policies issued by Federal Insurance Company (“Federal”), Chicago Insurance Company (“Chicago”), and Arrowood Indemnity Company (“Arrowood”) (collectively “Excess Insurers”) to Northwest Marine Iron Works (“NWMIW”) covering, generally, property damage in an amount greater than that covered by NWMIW's primary insurance policies. This dispute arises in the context of an action for declaratory judgment filed by Century Indemnity Company (“Century”) against The Marine Group, LLP (“TMG”), Northwest Marine, Inc. (“NWM”), and NWMIW. Century sought declaratory relief establishing its rights and duties with respect to an insurance policy issued to NWMIW. BAE Systems San Diego Ship Repair (“BAE”) joined with the original plaintiffs (collectively “TPPs”) in asserting third-party claims against numerous insurance companies alleging a claim for breach of contract and seeking declaratory judgment regarding the insurers' duties to defend and indemnify.

Excess Insurers currently move for summary judgment on TPPs' claim for breach of contract and request for declaratory judgment on the ground that neither is ripe for adjudication. These issues are not ripe, Excess Insurers contend, because TPPs have not and cannot allege exhaustion of the underlying insurance policies. TPPs respond that the court has the discretion to consider the claim for declaratory judgment and that fairness and judicial economy counsel that the court should exercise that discretion.

The court concludes that TPPs' breach of contract claim is not ripe and should be dismissed without prejudice. The court also concludes that TPPs' request for declaratory judgment against Excess Insurers is ripe for adjudication and the court thus exercises its discretion to consider this request.

Legal Standard¹

Summary judgment is appropriate “if the movant shows 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) (2011). Summary judgment is not proper if material factual issues exist for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995).

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324, 106 S.Ct. 2548. A nonmoving party cannot defeat summary judgment by relying on the allegations in the complaint, or with unsupported conjecture or conclusory statements. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir.2003). Thus, summary judgment should be entered against “a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

The court must view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir.1982). All reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir.1976). However, deference to the nonmoving party has limits. The nonmoving party must set forth “specific facts showing a genuine issue for trial.” Fed.R.Civ.P. 56(e) (2008) (emphasis added). The “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Therefore, where “the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation marks omitted).

Factual Background

The facts essential to determination of this motion are not disputed. TPPs are potentially responsible parties to an Environmental Protection Agency (“EPA”) action under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) for environmental damage at the Portland Harbor Superfund Site (“the Site”). The EPA has estimated the amount of damages related to this action as exceeding $1 billion. This figure does not include “costs of investigation and Natural Resource Damages (“NRDs”).” (TPP Opposition 3.) According to TPPs, these costs have the potential to equal remediation costs and, thus, the total liability could be as great as $2 billion or more. Id. The EPA has identified at least 141 PRPs who may bear liability for the underlying action. (Eckman Declaration (“Decl.”) Exhibit (“Ex.”) C.) According to a document issued by the Oregon Department of Environmental Quality (“DEQ”) in March 2010, the EPA is committed to issue its decision in 2012. (Rycewicz Decl., Ex. 3 at 21.)

TPPs allegedly hold excess insurance policies issued by Excess Insurers. Each of the policies in question provides coverage where the underlying policy or policies exhaust $20.5 million in coverage.

Discussion

In Hoffman Construction Co. of Alaska v. Fred S. James & Co., of Oregon, 313 Or. 464, 836 P.2d 703 (1992), the Oregon Supreme Court gave a concise description of the different tiers of insurance that an insured might possess:

Liability insurance policies frequently are arranged in tiers, with each level of policy designed to “kick in” when the coverage provided by the lower level of insurance is exhausted. The general nomenclature surrounding this phenomenon labels an insured's basic insurance as the “primary” insurance, the insured's next level of insurance (that covers risks involving amounts in excess of the primary insurance) as “excess” insurance, and the insured's final level of insurance (that covers risks only after and to the extent that lower levels do not) as “umbrella” insurance.

Id. at 466 n. 1, 836 P.2d 703. Here, Excess Insurer's policies are considered “excess” policies, the level above “primary,” and they provide coverage for damages in an amount greater than $20.5 million. Liability typically attaches under excess policies “only after a predetermined amount of primary coverage has been exhausted.” Industrial Finishes & Systems, Inc. v. American Universal Insurance Co., ...