Pulte Home Corp. v. Am. Safety Indem. Co.

264 F.Supp.3d 1073

PULTE HOME CORPORATION, Plaintiff,

v.AMERICAN SAFETY INDEMNITY COMPANY, Defendant.

Case No.: 16–cv–02567–H–AGS

United States District Court, S.D. California.

Signed September 13, 2017

Sharon Ann Huerta, Koeller Nebeker Carlson and Haluck LLP, San Diego, CA, for Plaintiff.

Robert Wayne Keaster, Chamberlin & Keaster LLP, Encino, CA, for Defendant.

ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

MARILYN L. HUFF, District Judge

On August 8, 2017, Plaintiff Pulte Home Corporation ("Pulte") filed a motion for partial summary judgment. (Doc. No. 20.) On September 1, 2017, Defendant American Safety Indemnity Company ("ASIC") filed an opposition to Plaintiff's motion. (Doc. No. 21.) On September 11, 2017, Pulte filed a reply. (Doc. No. 22.) That same day, the Court took the matter under submission. (Doc. No. 23.) For the reasons below, the Court denies Pulte's motion.

Background

The present diversity action is an insurance coverage dispute wherein Pulte asserts that it qualifies as an "additional insured" under several insurance policies issued by ASIC. (Doc. No. 1, Compl. ¶ 8.) In this summary judgment motion, Pulte seeks a declaration that one of ASIC's insurance policies—issued to non-party Concrete Concepts, Inc. ("CCI")—obligated ASIC to defend Pulte in Salazar, et al. v. Pulte Home Corp., et al., Case No. 37–2013–00079447–CU–CD–CTL ("Salazar"), a settled action formerly pending in the Superior Court of San Diego County.

I. Relevant Facts

Pulte is a residential real estate developer. (Doc. No. 1 at ¶ 9.) Between 2003 and 2005, it served as the general contractor for a real estate development project called "The Reserve at the Woods" in Chula Vista, California.¹ (Ibid. ) As part of this project, Pulte subcontracted with CCI to lay concrete foundations for the project's residences. (Doc. No. 20–14, CCI Scope of Work, PageID 1679–83.)

Pulte's agreement with CCI required CCI to maintain general commercial liability insurance ("GCL"), and to obtain an endorsement listing Pulte as an additional beneficiary under CCI's policy. (Doc. No. 20–13, Contractor Base Agreement, PageID 1671–72.) During the pendency of the project, CCI purchased two GCL policies from ASIC covering the period from October 20, 2003 through October 20, 2015. (Doc. No. 21–1, ASIC's Statement of Material Facts, PageID 1999.) Each of these policies contained an endorsement extending coverage to "[t]hose parties required to be named as an Additional Insured in a written contract with the Named Insured entered into prior to the loss or occurrence." (Doc. No. 20–15, ASIC Endorsement, PageID 1686.) The policies also contained a series of standard business risk exclusions limiting the scope of coverage for property damage caused by CCI's concrete work. (Doc. No. 20–26, ASIC Policy, PageID 1895.)

In late 2013, several persons who purchased homes in "The Reserve at the Woods" contacted Plaintiff seeking damages for alleged construction defects at the project. (Doc. No. 21 at PageID 2000–02.) On November 25, 2013, Pulte tendered the dispute to ASIC, invoking the additional insured endorsements in CCI's GCL policies, and arguing that ASIC had a duty to defend Pulte in the forthcoming lawsuit. (Ibid. ) The aggrieved homeowners filed a complaint for damages against Pulte in the San Diego County Superior Court on December 10, 2013. (Doc. No. 20–10, Salazar Compl., PageID 1626–1642.) ASIC denied coverage in a letter dated January 9, 2014, (Doc. No. 21 at PageID 2002), and declined Pulte's request for reconsideration in a letter dated January 22, 2015. (Id. at PageID 2007.) Pulte eventually settled the Salazar lawsuit. (Doc. No. 20–1, MSJ, PageID 1425.)

II. Procedural History

On October 14, 2016, Pulte filed the instant lawsuit, seeking, among other things, a declaration that ASIC owed Pulte a duty to defend Pulte in the Salazar lawsuit under CCI's GCL policies. (Doc. No. 1 at ¶¶ 25–29.) ASIC answered the suit on December 16, 2017, (Doc. No. 2, Answer), and the parties proceeded to discovery.

On May 26, 2017, Pulte filed a partial summary judgment motion asking the Court to declare that the Georgia choice of law provisions in ASIC's insurance policies were invalid and unenforceable, and to apply California law to this dispute instead. (Doc. No. 11.) The Court denied this motion on June 28, 2017, and determined that Georgia law should govern the construction of ASIC's policies. (Doc. No. 19.)

Pulte then filed the instant partial summary judgment motion on August 8, 2017. (Doc. No. 20.) The motion argues that under Georgia law, ASIC was obligated to defend Pulte in the Salazar action. (Ibid. ) The parties have completed their briefing for this motion, and the matter is ripe for decision.²

Discussion

I. Legal Standards for Summary Judgment

Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the moving party demonstrates that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1031 (9th Cir. 2010). "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Fortune Dynamic, 618 F.3d at 1031 (internal quotation marks and citations omitted); accord Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case that the nonmoving party bears the burden of proving at trial. Id. at 322–23, 106 S.Ct. 2548 ; Jones v. Williams, 791 F.3d 1023, 1030 (9th Cir. 2015). Once the moving party establishes the absence of a genuine issue of material fact, the burden shifts to the nonmoving party to "set forth, by affidavit or as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine issue for trial.’ " T.W. Elec. Serv., 809 F.2d at 630 (quoting former Fed. R. Civ. P. 56(e) ); accord Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007). To carry this burden, the non-moving party "may not rest upon mere allegation or denials of his pleadings." Anderson, 477 U.S. at 256, 106 S.Ct. 2505 ; see also Behrens v. Pelletier, 516 U.S. 299, 309, 116 S.Ct. 834, 133 L.Ed.2d 773 (1996) ("On summary judgment, ... the plaintiff can no longer rest on the pleadings."). Rather, the nonmoving party "must present affirmative evidence ... from which a jury might return a verdict in his favor." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. "[C]ontract interpretation issues" are "pure legal questions well-suited to summary judgment." Flintkote Co. v. Aviva PLC, 177 F.Supp.3d 1165, 1172 (N.D. Cal. 2016) (citing Shannon–Vail Five Inc. v. Bunch, 270 F.3d 1207, 1210 (9th Cir. 2001), and TH & T Int'l Corp. v. Elgin Indus., Inc., 216 F.3d 1084 (9th Cir. 2000) ).

When ruling on a summary judgment motion, the court must view the facts and draw all reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The court should not weigh the evidence or make credibility determinations. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505. "The evidence of the non-movant is to be believed." Id. Further, the Court may consider other materials in the record not cited to by the parties, but it is not required to do so. See Fed. R. Civ. P. 56(c)(3) ; Simmons v. Navajo Cnty., 609 F.3d 1011, 1017 (9th Cir. 2010).

II. Analysis

Pulte moves for summary judgment as to its first cause of action, and seeks a declaration that ASIC's policies with CCI obligated ASIC to defend Pulte in the Salazar lawsuit. ASIC counters by arguing that: (i) Pulte has failed to meet its burden to show that it is an "additional insured" under CCI's GCL policies; (ii) the policies provide coverage only for "ongoing operations," and since "The Reserve at the Woods" was completed in 2005 and is no longer "ongoing," any coverage duties have expired; (iii) the Salazar lawsuit was not an "occurrence" triggering coverage under the policies; and (iv) the policies' business risk exclusions unambiguously bar coverage for the claims alleged in the Salazar lawsuit. As explained below, the Court agrees that the policies' business risk exclusions bar coverage, and accordingly declines to address the parties' remaining issues. The Court thus assumes, without deciding, that Pulte is an "additional insured" under CCI's policies.

A. Law Governing the Duty to Defend.

The Court previously determined that Georgia law governs the construction of CCI's GCL policies. (Doc. No. 19.) The Ninth Circuit has recently explained that:

"The task of a federal court in a diversity action is to approximate state law as closely as possible in order to make sure that the vindication of the state right is without discrimination because of the federal forum." Gee v. Tenneco, Inc., 615 F.2d 857, 861 (9th Cir. 1980) ; accord U.S. Fidelity and Guaranty Co. v. Lee Investments LLC, 641 F.3d 1126, 1133 (9th Cir. 2011) ("Perhaps a better way of putting it is to say that one of the goals in deciding state law questions is to do no harm to state

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