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Geurden v. Quantum Transportation LP

United States District Court, D. Arizona

September 19, 2017

Yves Geurden, et al., Plaintiffs,
v.
Quantum Transportation LP, et al., Defendants.

          ORDER

          James A. Teilborg Senior United States District Judge

         I. Stipulated Judgment

         On June 26, 2017, Plaintiffs and Defendant Vahik Alaverdyan and Quantum Transportation L.P. (“Quantum”) agreed to enter into a stipulated judgment against these two Defendants. (Doc. 42). The proposed stipulated judgment does not mention defendants Jane Doe Alaverdyan (Vahik Alaverdyan's wife) or Dole Fresh Fruit Company (“Dole”). However the stipulation itself says pursuant to an agreement of the “parties, ” and the judgment does not contain language pursuant to Federal Rule of Civil Procedure 54(b), so presumably this judgment would resolve the whole case, with no judgment being entered against either Mrs. Alaverdyan or Dole.

         In their stipulation, the parties acknowledged that they were entering into a “Damron Agreement.” (Doc. 42). The Court inquired whether it had any duty to investigation the reasonableness of the amount of the stipulated judgment (in this case $25, 000, 000.00) before entering the judgment. (Doc. 43).

         II. Damron v. Morris Agreements

         Plaintiffs, Defendant Quantum, and Defendant Vahik Alaverdyan (“the settling parties”) responded to the Court's inquiry and argued that when the parties enter into a Damron Agreement, the Court does not conduct a reasonableness inquiry. (Doc. 48 at 4-6). Conversely, the settling parties concede that when the parties enter into a Morris Agreement, the Court does have a duty to conduct a reasonableness inquiry. (Doc. 48 at 4-6). The settling parties further noted that a Damron Agreement is used when the insurance company has refused to defend, and a Morris Agreement is used when the insurance company is defending under a reservation of rights. (Doc. 48 at 4-6).

         Dole responded to the Court's inquiry by stating that it is not a party to the Damron Agreement. (Doc. 49). Further Dole argued that neither defense of this action, nor a request for indemnification, have been tendered to Dole. (Doc. 49). Finally, citing nothing, Dole stated that a reasonableness hearing on the Damron agreement would be required in this case, but then went on to explain why a reasonableness hearing is required between an indemnitor and indemnitee. (Doc. 49 at 2).

         Also in response to the Court's inquiry, two insurance companies moved to intervene: Greenwich Insurance Company and XL Specialty Insurance Company (hereinafter “intervenors”). (Docs. 46 and 47). The intervenors made several arguments in opposition to the Court entering the stipulated judgment.

         A. Coverage

         The first argument made by intervenors is that they had no duty to defend. (Doc. 47 at 3). The Court finds that issue is the subject of another case (CV 17-2270) and not relevant to whether the stipulated judgment may be entered in this case.[1] Specifically, the Court rejects the intervenor's argument that this Court must find a duty to defend on the part of a non-party insurance company before the Court ever enters a judgment pursuant to a Damron Agreement.[2]

         B. Tender

         Next, intervenors argue that defense of this action was never tendered to them. (Doc. 47-2 at 6). In response, the settling parties provided a copy of a June 15, 2016 letter from counsel for Quantum and Mr. Alaverdyan tendering the defense of this case to intervenors. (Doc. 55-2 at 2-3). Intervenors reply to this evidence by claiming that that XL never received the letter. (Doc. 56 at 9).

         The settling parties also provided a copy of a November 14, 2016 letter counsel for Hallmark sent to XL formally tendering defense of this case to Greenwich. (Doc. 55-3 at 2-3). While intervenors admit to receiving this letter, they argue it should not “count” as a tender because it was not sent by counsel for Quantum or Mr. Alaverdyan. (Doc. 56 at 9-10). However, in responding to the November 14, 2016 letter, intervenors' claims specialist said, “XL Catlin, on behalf of Greenwich Insurance Company, acknowledges receipt of the attached letter … wherein you tender defense and indemnity on behalf of Quantum Transportation… for the case styled Yves Geurden, et al., v. Quantum Transportation, et al.” (Doc. 55-4 at 2).

         The Court finds that Quantum's insurance company, Hallmark, could and did tender defense of this case on Quantum's behalf; and, moreover, intervenors accepted such letter as formal tender of defense and indemnity. Accordingly, the Court finds that defense of this case was tendered to intervenors. Further, the Court finds that either by the June 15, 2016 letter, or by the November 14, 2016 letter, Mr. Alaverdyan tendered defense and indemnity to intervenors. Specifically, on March 9, 2017, intervenors wrote Mr. Alaverdyan a seven page single spaced letter denying coverage. (Doc. 54-1). While that letter disputes formal tender, clearly intervenors were on notice of the claim and the current lawsuit and knew that Mr. Alaverdyan sought coverage under intervenors' policy. Thus, intervenors argument that they did not received the June 15, 2016 letter, which ...


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