PENN-STAR INSURANCE COMPANY, Plaintiff,
v.
ZENITH INSURANCE COMPANY, et al., Defendants.
No. 1:18-cv-01319-DAD-EPG
United States District Court, E.D. California
October 29, 2021
ORDER DENYING PLAINTIFF PENN-STAR INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANT ZENITH INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT
(Doc. Nos. 63, 69)
This matter is before the court on the cross-motions for summary judgment filed by plaintiff Penn-Star Insurance Company (“Penn-Star”) and defendant Zenith Insurance Company (“Zenith”). (Doc. Nos. 63, 69.) Pursuant to General Order No. 617 addressing the public health emergency posed by the COVID-19 pandemic, both motions were taken under submission on the papers. (Doc. No. 73.) For the reasons explained below, the court will deny Penn-Star's motion and grant Zenith's motion.
BACKGROUND
The material facts of this case are undisputed and to the extent relevant to resolution of the pending motions, are set forth below.
A. The Parties[1]
Penn-Star is an insurance company that issued a commercial general liability insurance policy (the “Penn-Star policy”) to Golden Labor (“Golden”). (Doc. No. 50 at 3.) Golden is a labor-services firm that provides farms with laborers. (Id.) D.M. Camp & Sons (“Camp”) is a farm based in Kern County. (Id.) Valentin Colotl (“Colotl”) is a farm contractor. (Id.) Camp hired Colotl through Golden. (Id.) Zenith is an insurance company that issued an “agribusiness insurance package policy” to Camp (the “Zenith policy”). (Id.)
B. The Underlying State Court Action
On June 27, 2018, the plaintiffs in the state court action filed a complaint in the Kern County Superior Court, naming Golden, Camp, and Colotl as the defendants (the “underlying action” or “state court action”). (Doc. No. 50 at 3.) That underlying action stems from a collision between an automobile and a tractor pulling a tillage disc in an unincorporated area of Kern County. (Id.) The automobile in the collision was owned by one plaintiff in the state court action and was driven by another. (Id.) The driver of the automobile was killed in the collision and the three surviving passengers suffered injuries. (Id.)
The state court complaint alleged that, at the time of the collision, Colotl was operating the tractor that collided with the automobile and that the tractor was owned and entrusted to him by Camp and Golden. (Id.) Based thereon, the underlying complaint alleged that Colotl, Camp, and Golden were negligent and careless in their ownership, operation, maintenance, and/or control of the tractor, and that their negligence and carelessness caused the tractor to collide with the automobile, thereby causing the decedent's death and the other injuries about which the plaintiffs complain. (Id.) The underlying complaint further alleged that the negligence of these defendants' is not limited to the ownership, operation, maintenance, and/or control of the tractor but also included the negligent hiring, retaining, training, and/or supervision of persons responsible for the collision. (Id.)
Golden and Colotl tendered the underlying action to Penn-Star for defense and indemnification under the Penn-Star policy. (Id.) Penn-Star accepted the tender subject to a reservation of its rights, advising Golden and Colotl that it agreed to provide them with defense in the underlying action subject to the terms, conditions, limitations, and exclusions of the Penn-Star policy. (Id. at 3-4.) Camp tendered its defense to Zenith, which accepted Camp's defense. (Doc. No. 79 at 11.)
The entire underlying lawsuit was dismissed with prejudice on July 16, 2020, pursuant to the terms of a written settlement agreement. (Id. at 12.) As consideration for the settlement, Penn-Star and Zenith agreed to pay a combination of upfront cash and future periodic payments with a total present cash value of $2 million, with $1 million funded by each. (Id.)
C. The Farm Labor Contractors Services Agreement
At the time of the accident at issue, Camp had hired Colotl through Golden pursuant to the terms of a written Farm Labor Contractors Services Agreement. (Doc. No. 79 at 3.) With respect to the parties' obligations to procure insurance, the Farm Labor Contractors Services Agreement provided in pertinent part:
B. Insurance: [Golden] will provide and maintain in force at his own expense the following insurance
(2) General comprehensive liability and property damage liability insurance with a combined single liability limit of no less than One Million Dollars ($1, 000, 000) and a general aggregate of no less than Two Million Dollars ($2, 000, 000) with Camp named as an additional insured. (Penn Star Insurance Co. Policy Number CPV0014424, with an expiration date of 2/19/2018.
(3) [Golden] will deliver to Camp before the signing of this contract, certificates of insurance stating that the above insurance is in effect . . .. Underwriters will have no right to recovery or subrogation against Camp, its divisions, affiliates, or subsidiary companies, it being the intention of the parties that the insurance so affected shall protect both parties and be primarily liable for any and all losses covered by the above described insurance. It is further understood that the insurance provided by [Golden] under this Agreement shall be primary insurance for all assureds, and such other insurance carried by Camp and its affiliated and subsidiary companies shall not be called upon by [Golden's] insurers for contributing, deficiency, concurrent or double insurance or otherwise . . ..
D. The Penn-Star Insurance Policy
Penn-Star issued its policy, insurance policy number CPV0014424, to Golden for the period of February 19, 2017 to February 19, 2018. (Doc. No. 79 at 4.) The liability insurance insuring agreement in the Penn-Star policy generally agrees to pay for damages that an insured becomes legally obligated to pay because of bodily injury caused by an occurrence that takes place during the policy period. (Id. at 5.) In addition, the Penn-Star policy agrees to defend an insured against any suit seeking such damages, subject to the policy's exclusions and other limitations. (Id.) The Penn-Star policy contains the following relevant language:
A. Section II - Who is An Insured is amended to include as an additional insured any person or organization when you and such person or organization have agreed in writing in a contract, agreement, or permit, that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for “bodily injury”, “property damage”, or “personal and advertising injury” caused, in whole or in part, by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured or in connection with your premises rented to you.
However, the insurance afforded to such additional insured:
1. Only applies to the extent permitted by law;
2. Will not be broader than that which you are required by the contract or agreement to provide for such additional insured; and
3. Only applies to “occurrences” or coverages not otherwise excluded under this policy.
(Id. at 6-7.)
The Penn-Star policy also contains the following “Other Insurance” clause:
a. Primary Insurance
This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below.
b. Excess Insurance
(1) This insurance is excess over:
(a) Any of the other insurance, whether primary, excess, contingent or on any other basis:
(i) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for “your work”;
(ii) That is Fire insurance for your premises rented to you or temporarily occupied by you with permission of the owner;
(iii) That is insurance purchased by you to cover your liability as a tenant for “property damage” to premises rented to you or temporarily occupied by you with permission of the owner; or
(iv) If the loss arises out of the maintenance or use of aircraft, “autos” or watercraft to the extent not subject to Exclusion g. of Section I - Coverage A - Bodily Injury And Property Damage Liability.
(b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and complete operations, for which you have been added as an additional insured.
E. The Zenith Policy
Zenith issued a package of insurance policies to Camp, bearing policy number CFP 00013032-03, effective March 1, 2017 to March 1, 2018. (Id. at 8.) Those policies purport to offer three forms of liability coverage: general liability, farm liability, and umbrella liability. (Doc. No. 63 at 9.) All three policies generally afford coverage to an insured for “bodily injury” and “property damage.” (Doc. No. 68 at 3-10.) Additionally, all three policies contain an “Other Insurance” clause.
The “Other Insurance” clauses in the Zenith policy provide in pertinent part:
6. Other Insurance
a. If there is any other liability insurance under any other policy;
(1) Issued by any other insurer, or self insurance or similar protection, that applies to a loss covered by Coverages H or I of this Coverage Form, then Coverages H and I shall be excess over that other insurance.
(2) Issued by us that applies to a loss covered by this Coverage Form, then only the highest applicable Limit of Insurance shall apply to
...such a
