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National Fire Insurance Co. of Hartford v. James River Insurance

United States District Court, D. Arizona

May 6, 2016

National Fire Insurance Company of Hartford, et al., Plaintiffs,
v.
James River Insurance, et al., Defendants.

ORDER

James A. Teilborg Senior United States District Judge

Pending before the Court is Plaintiffs National Fire Insurance Company of Hartford (“National Fire”) and Sigma Contracting, Inc. (“Sigma”)s’ motion for reconsideration, (Doc. 54), of this Court’s February 16, 2016, Order granting in part and denying in part Plaintiffs’ motion for summary judgment.[1] (Doc. 51). Having considered the parties’ filings, the Court now rules on the motion.

I.

On February 16, 2016, the Court issued an Order that granted in part, and denied in part, Plaintiffs’ motion for summary judgment. (Doc. 51). The Court’s Order found that Defendant James River Insurance Company (“James River”) (1) had a duty to defend Sigma and breached that duty, that (2) James River had no duty to indemnify Sigma for property damage caused by Quik Flush Plumbing (“Quik Flush”)’s work because none of the damage leading to the underlying lawsuit[2] occurred when the insurance policy was in effect, and (3) that further factual development was necessary to determine how much National Fire should be awarded in equitable contribution from James River for the defense it provided for Sigma in the underlying litigation. (Id. at 29).

On March 1, 2016, Plaintiffs filed the pending motion for reconsideration pursuant to Local Rule of Civil Procedure 7.2(g)(1), and assert three grounds for relief: (1) Plaintiffs ask the Court to consider a copy of the settlement that ended the underlying litigation; (2) Plaintiffs assert that the Court clearly erred when it did not find that James River’s duty to defend extended to the defense of all plaintiffs in the underlying lawsuit; and (3) Plaintiffs assert that the Court clearly erred when it granted National Fire relief under the doctrine of equitable contribution, National Fire’s own alternative argument, that the Court should not have reached. (Doc. 54 at 6).

II.

LRCiv. 7.2(g)(2) allows a party to file a motion for reconsideration within fourteen days of the filing of the Order that is the subject of the motion. “[A]bsent a showing of manifest error or a showing of new facts or legal authority that could not have been brought to its attention earlier with reasonable diligence, ” the Court “will ordinarily deny a motion for reconsideration.”[3] LRCiv. 7.2(g)(1); see also Kona Enters. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (quoting 389 Orange Street Partners, 179 F.3d 656, 665 (9th Cir. 1999)) (noting that “a motion for reconsideration should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law”). Reconsideration entails “an ‘extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources.’” Id. (citation omitted). A motion for reconsideration, therefore, “may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation, ” Guillen v. Thompson, 2010 U.S. Dist. LEXIS 39591, at *10 (D. Ariz. March 26, 2010) (citation omitted), and it may not “repeat any argument previously made in support of or in opposition to a motion.” Id. (citing Motorola, 215 F.R.D. at 586).

III.

As noted supra, Plaintiffs have set forth three grounds for reconsideration of the Court’s February 16, 2016, Order. The Court will first address the issue of whether James River had the duty to defend the entirety of the underlying suit and the issue of equitable contribution together. The Court will then address the proffered settlement agreement.

A. James River’s Duty to Defend Sigma as an Additional Insured

Plaintiffs argue that the Court erred when it found that James River had a duty to defend Sigma from the claims asserted by the plaintiff EJ’s in the underlying lawsuit, but not from the claims of the other plaintiffs in the suit. (Doc. 54 at 6). The Court acknowledges that clarification is appropriate.

It is undisputed that James River provided one year of coverage for Sigma as an additional insured for plumbing work carried out by Quik Flush. (Doc. 39 at 2). This policy covered Quik Flush and Sigma from February 11, 2007, to February 11, 2008. The record further establishes that National Fire insured Sigma with a commercial general liability (“CGL”) policy from December 31, 2007, to December 31, 2009. (Doc. 43 at 1). National Fire’s CGL provided that the “insurance is primary except when, ” among other exceptions, there is “[a]ny other primary insurance available to [Sigma] covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement.” (Doc. 43-1 at 20-21). As noted supra, James River’s policy issued to Quik Flush named Sigma as an additional insured.

Under Arizona law, the “occurrence” that triggered coverage was “the point at which damage materialized, ” for the four tenants in the underlying lawsuit. Natl Fire Ins. Co. v. James River Ins., 2016 U.S. Dist. LEXIS 19076, at *18-20 (D. Ariz. Feb. 16, 2016). The record clearly established that the “occurrence” with respect to three plaintiffs in the Knuth lawsuit occurred outside of the policy coverage afforded by James River.[4]One tenant, EJ’s, experienced an “occurrence” during the policy coverage. This seemingly sets at odds two principles of Arizona law.

On the one hand, the Arizona Court of Appeals has held that “if any claim alleged in the complaint is within the policy’s coverage, the insurer has a duty to defend the entire suit, because it is impossible to determine the basis upon which the plaintiff will recover (if any) until the action is completed.” Western Cas. & Sur. Co. v. International Spas of Arizona, Inc., 634 P.2d 3, 6 (Ariz.Ct.App. 1981). In Western Casualty, the court was concerned with substantive causes of action, not claims filed by separate plaintiffs that fall outside of the policy’s coverage. See Id. (finding that the complaint “stated in the second and third counts sufficient facts to possibly bring the complaint within the coverage provided”). More recently, however, the Arizona Court of Appeals has found that where multiple insurers covered an insured for a period of three years, and multiple plaintiffs allege “various occurrences” during the time period, then all three insurers had a duty to defend the insured from “the entire suit.” Regal Homes, Inc. v. CNA Ins., 171 P.3d 610, 620 (Ariz.Ct.App. 2007) (citations omitted). In Nucor Corp. v. Employers Ins. Co., 296 P.3d 74, 86 (Ariz.Ct.App. 2012), the Court of Appeals, following Regal Homes, held that where several plaintiffs “alleged various occurrences spanning many years, ” and the insured had retained several insurance providers, “[e]ach of [the insured’s] insurers therefore would have been required ...


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