San Diego Cnty. Sch. Risk Mgmt. Joint Powers Auth. v. Liberty Ins. Corp.

339 F.Supp.3d 1019

SAN DIEGO COUNTY SCHOOLS RISK MANAGEMENT JOINT POWERS AUTHORITY, Plaintiff,

v.LIBERTY INSURANCE CORPORATION, an Illinois corporation, authorized to do business in California; Wesco Insurance Company, a Delaware corporation authorized to do business in California, and Does 1-10, inclusive, Defendants.

Case No.: 17-cv-252-GPC-KSC

United States District Court, S.D. California.

Signed April 16, 2018

Albert E. Haverkamp, Lucas & Haverkamp Law Firm, San Diego, CA, for Plaintiff.

Michael Alan Topp, Bruce Daniel Celebrezze, Jason J. Chorley, Clyde & Co. U.S. LLP, San Francisco, CA, Jeffrey A. Charlston, Stephen P. Soskin, Charlston Revich and Wollitz LLP, Los Angeles, CA, for Defendants.

ORDER:

(1) DENYING WESCO'S MOTION FOR SUMMARY JUDGMENT AND

(2) GRANTING IN PART AND DENYING IN PART LIBERTY'S MOTION FOR SUMMARY JUDGMENT

[Dkt. Nos. 33 and 34]

Hon. Gonzalo P. Curiel, United States District Judge

Presently before the Court are the following cross motions for summary judgment:(1) Defendant Liberty Insurance Corporation's ("Liberty")¹ Motion for Summary Judgment as to Plaintiff San Diego County Schools Risk Management Joint Powers Authority's ("JPA") first amended complaint and as to the cross-claims asserted by defendant Wesco Insurance Company ("Wesco") (Dkt. No. 33) and (2) Wesco's Motion for Summary Judgment, or alternatively partial Summary Judgment (Dkt. No. 34). Defendants concurrently filed a Joint Statement of Undisputed Material Facts ("JSUMF") with these motions. Dkt. Nos. 33-3; Dkt. 34-2. Wesco and the JPA filed oppositions to Liberty's Motion on November 17, 2017. Dkt. Nos. 36-37. Liberty filed an opposition to Wesco's Motion on November 17, 2017. Dkt. No. 38. Liberty and Wesco filed replies on December 8, 2017. Dkt. Nos. 42, 44. On January 2, 2018, the Court granted Liberty's Ex Parte Motion to file a Sur-Reply, which Liberty filed on January 8, 2018. Dkt. Nos. 46, 49. A hearing as to these motions was held on January 12, 2017. Dkt. No. 51.

Upon consideration of the moving papers, the parties' oral arguments, and the applicable law, and for the following reasons, the Court provides this decision (1) DENYING Wesco's Motion for Summary Judgment and (2) GRANTING IN PART and DENYING IN PART Liberty's Motion for Summary Judgment.

I. Legal Standard

Federal Rule of Civil Procedure 56 empowers the Court to enter summary judgment on factually unsupported claims or defenses, and thereby "secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett , 477 U.S. 317, 325, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is material when it affects 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).

The moving party bears the initial burden of demonstrating the absence of any genuine issues of material fact. Celotex , 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element of his or her claim on which that party will bear the burden of proof at trial. Id. at 322–23, 106 S.Ct. 2548. If the moving party fails to bear the initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. Adickes v. S.H. Kress & Co. , 398 U.S. 144, 159–60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

Once the moving party has satisfied this burden, the nonmoving party cannot rest on the mere allegations or denials of his pleading, but must "go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file’ designate ‘specific facts showing that there is a genuine issue for trial.’ " Celotex , 477 U.S. at 324, 106 S.Ct. 2548. If the non-moving party fails to make a sufficient showing of an element of its case, the moving party is entitled to judgment as a matter of law. Id. at 325, 106 S.Ct. 2548. "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. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting First National Bank of Arizona v. Cities Service Co. , 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) ). In making this determination, the court must "view[ ] the evidence in the light most favorable to the nonmoving party." Fontana v. Haskin , 262 F.3d 871, 876 (9th Cir. 2001). The Court does not engage in credibility determinations, weighing of evidence, or drawing of legitimate inferences from the facts; these functions are for the trier of fact. Anderson , 477 U.S. at 255, 106 S.Ct. 2505.

"[W]hen parties submit cross-motions for summary judgment, each motion must be considered on its merits."

Fair Hous. Council of Riverside Cnty, Inc. v. Riverside Two , 249 F.3d 1132, 1136 (9th Cir. 2001) (internal citations and quotation marks omitted). Moreover, "when simultaneous cross-motions for summary judgment on the same claim are before the court, the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them." Id. at 1134.

II. Background

a. The Joint Powers Authority ("JPA")

Plaintiff San Diego County Schools Risk Management Joint Powers Authority ("JPA") is an organization formed pursuant to California Government Code § 6500, et seq. whose members consist of various public educational agencies located in San Diego County. JSUMF ¶ 1. The JPA provides and administers a self-insurance program for workers' compensation claims involving its members. The JPA and its members are self-insured pursuant to California Labor Code § 3700(c). Id. ¶ 2.

The JPA purchased a policy titled "Excess Insurance Policy for Self-Insurer of Workers' Compensation and Employers' Liability from Liberty, policy number EW7-64N-436336-012, in effect from July 1, 2012 through July 1, 2013 (Exhibit A, the "Liberty Policy"). Id. ¶ 3. The JPA subsequently purchased an Excess Workers' Compensation and Employers Liability Insurance Policy from Wesco, policy number WPP110079300, in effect from July 1, 2013 to July 1, 2014. (Exhibit B, the "Wesco Policy"). Id. ¶ 4.

b. The Velazquez Claim

In 2012, Francisco Velazquez was employed as a custodian at the San Ysidro School District ("SYSD"). Id. ¶ 6. Mr. Velazquez's job duties included repeated heavy lifting of bags of trash to be placed into a dumpster. Id. After Mr. Velasquez returned to work at SYSD on March 13, 2013 following an extended leave of absence for personal reasons, Mr. Velazquez suffered a cumulative trauma industrial injury where he complained of neck pain, left shoulder pain, left elbow pain, left wrist pain, and radiating left leg pain. Id. ¶ 6. On May 29, 2013, Mr. Velasquez saw his personal physician Dr. Johnson, who placed him on modified duty. Id. ¶ 7. After June 19, 2013, continued to work full time under work restrictions/modified work duty. Id. Mr. Velasquez's pain continued until he became permanently disabled due to his industrial cumulative trauma injury. The parties stipulate that the last day Mr. Velasquez was exposed to the work conditions which caused and/or aggravated his cumulative trauma injury was September 13, 2013. Id. ¶ 8. Mr. Velazquez applied for workers' compensation benefits as a result of his cumulative trauma injury, which the JPA reported to Liberty and Wesco. The JPA has incurred expenses on behalf of SYSD in an amount exceeding $100,000 for workers' compensation benefits paid on Mr. Velasquez's claims. Id. ¶ 9.

c. The Smith Claim

Alicia Smith commenced employment at the Escondido Union High School District prior to 1995. Id. ¶ 10. In 2008, she first experienced an industrial cumulative trauma injury from the repetitive motion requirements of her job (typing, lifting of heavy items in the warehouse, and prolonged sitting). She experienced muscle tightness in her right shoulder and arm that gradually increased over time. Ms. Smith worked in a full-duty capacity between 2008 and July 30, 2013, and wore a brace on her right wrist from 2009 to July 30, 2013 due to her typing duties. The parties have stipulated that the last day she was exposed to work conditions that caused or aggravated her was July 30, 2013. Id. ¶ 11. Ms. Smith applied for workers' compensation benefits as a result of her cumulative trauma industrial injury, which the JPA reported to Liberty and Wesco. Id. ¶ 12. The JPA has incurred expenses exceeding $100,000 for workers' compensation benefits paid on Ms. Smith's claim. Id.

d. The Liberty Policy

The Liberty Policy was in effect from July 1, 2012 through July 1, 2013 and requires Liberty to indemnify (reimburse) the JPA for any workers' compensation claims in excess of the JPA's $100,000 self-insured retention. JUSF ¶ 3. The Liberty Policy provides in pertinent part:

PART ONE—WORKERS COMPENSATION INSURANCE ...

C. This excess insurance applies to losses you have paid as a qualified self-insurer under the Workers Compensation Law for bodily injury by accident or bodily injury by disease including resulting death, provided:

1. The bodily injury by accident occurs during the policy period or

2. The bodily injury by disease is caused by, or aggravated by the conditions of employment by you. The employee's last day of exposure to those conditions causing or aggravating such bodily injury by disease must occur during the policy period.

Ex. A at 37. Section N of the Liberty Policy—titled Policy Conforms to Law—states "If terms of this policy are in conflict with any law applicable to this...