Judge: Andrew E. Cooper, Case: 21CHCV00802, Date: 2023-05-23 Tentative Ruling

Case Number: 21CHCV00802    Hearing Date: May 23, 2023    Dept: F51

MOTION FOR SUMMARY JUDGMENT

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Motion Filed: 12/15/22

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MOVING PARTY: Defendant Crum & Forster Specialty Insurance Company (“Defendant”)

RESPONDING PARTY: Plaintiffs Green Solar Enterprises, LLC; Green Solar Technologies, Inc.; Green Solar Tech California, Inc.; and Shay Yavor, an individual (collectively, “Plaintiffs”) 

NOTICE: OK¿ 

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RELIEF REQUESTED: An order granting summary judgment in favor of Defendant and against Plaintiffs.

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TENTATIVE RULING: The motion is granted.

REQUEST FOR JUDICIAL NOTICE: Plaintiffs’ request for judicial notice is denied.

EVIDENTIARY OBJECTIONS:

Plaintiffs’ evidentiary objections are overruled.

Defendant’s evidentiary objections to the Declaration of Nicki Zvick Nos. 1, 3, 4, and 10 are sustained.

Defendant’s evidentiary objections to the Declaration of Shay Yavor Nos. 1, 3, 4, and 9 are sustained.

BACKGROUND¿ 

This is an insurance dispute in which Plaintiffs insured, allege that Defendant, their insurance coverage provider, wrongfully denied their insurance claim and refused to defend Plaintiffs, “asserting that the Policy did not cover the case at issue due to a prior litigation between the same parties under a prior contract.” (Compl. ¶ 1.)

In their complaint, Plaintiffs allege that Defendant issued to them an insurance policy providing coverage for the period of 5/15/20 to 5/15/21, “with an extended reporting period of an ‘additional period’ of one (1) year.” (Id. at ¶ 15.) On 8/18/20, an action was filed against Plaintiffs in Los Angeles County Superior Court, MILAN REI VIII, LLC v. GREEN SOLAR TECHNOLOGIES, INC. et al., Case No. 20BBCV00507 (the “Milan Action”) for which Plaintiffs requested coverage by Defendant. (Id. at ¶¶ 16–17.)

Milan Action

In the Milan Action, plaintiff Milan alleged against Plaintiffs the following causes of action: (1) Breach of Lease; (2) Trespass; and (3) Interference with Contractual Relations.

The facts underlying the Milan Action are undisputed by the parties. In that case, plaintiff Milan REI VIII, LLC (“Milan”) alleged that Green Solar entered into a lease to rent certain office space (the “Premises”) from Milan beginning on 7/19/12. (Ex. 2 to Decl. of Joshua Shayne, ¶ 14.) On 7/2/15, Milan filed an action (the “2015 Action”) against the instant Plaintiffs, alleging that they breached their lease agreement by failing to pay rent as agreed upon by the parties. (Id. at ¶ 21.) Thereafter, the parties entered into a settlement agreement, thereby resolving the 2015 Action. (Id. at ¶ 22.)

In 2019. at the end of the lease term, Milan elected against extending Plaintiffs’ lease, and sent them notice thereof. (Id. at ¶¶ 27–30.) Accordingly, Plaintiffs’ lease term expired on 8/15/19 with no options to extend the term. (Id. at ¶ 33.) However, Plaintiffs failed to vacate the Premises at the expiration of the lease term, causing Milan to file an action (the “2019 Action”) against Plaintiffs for unlawful detainer. (Id. at ¶ 34.) Milan prevailed against Plaintiffs in the 2019 Action, and was awarded monetary damages and possession of the Premises as of 11/23/19. (Id. at ¶ 35.)

Despite the judgment in the 2019 Action, Plaintiffs continued to wrongfully occupy the Premises until 12/19/19, when they were evicted by Deputies of the Los Angeles County Sheriff’s Department. (Id. at ¶ 46.) In 2020, Milan filed the Milan Action against Plaintiffs for, inter alia, holdover rent damages, abatement of rent owed to new tenant, and construction fees stemming from Plaintiffs’ wrongful occupation following the judgment rendered in the 2019 Action. (Id. at ¶¶ 43, 47.)

Instant Action

On 6/10/21, Plaintiffs notified Defendant of the Milan Action, and on 7/6/21, Defendant allegedly sent Plaintiff a letter declining coverage, basing its decision on the existence of “a prior complaint from July 2, 2015, which has been settled and dismissed for over three years.” (Compl. at ¶¶ 16, 20–21.)

On 10/12/21, Plaintiffs filed their complaint against Defendant, alleging the following causes of action: (1) Breach of the Duty of Good Faith and Fair Dealing; (2) Bad Faith—Failure to Properly Investigate Claim; and (3) Breach of the Contractual Duty to Pay a Covered Insurance Claim. On 11/19/21, Defendant filed its Answer.

On 12/15/22, Defendant filed the instant motion for summary judgment, arguing that Plaintiffs’ claims were not subject to coverage under the Policy. On 5/3/23, Plaintiffs filed their opposition. On 5/12/23, Defendant filed its reply.

ANALYSIS

Legal Standard 

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 65, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381–382.) 

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519–1520.)  

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.)

Policy Language

Defendant proffers a copy of the subject insurance Policy, which provides that “the Insurer shall pay, on behalf of an Insured Organization, Loss on account of a Claim first made against the Insured Organization during the Policy Period, or the Extended Reporting Period if applicable.” (Ex. 7 to Shayne Decl., p. 73 [emphasis added].)[1]

A qualifying claim includes “a civil proceeding commenced by the service of a complaint or similar proceeding … against an Insured Person for a Wrongful Act.” (Id. at p. 74.) “All Related Claims shall be deemed a single Claim made in the Policy Period in which the earliest of such Related Claims was first made or first deemed to have been made in accordance with Section VI. Reporting (the ‘Earliest Related Claim’).” (Id. at p. 64.) “Related Claims means all Claims for Wrongful Acts based upon, arising from, or in consequence of the same or related facts, circumstances, situations, transactions or events or the same or related series of facts, circumstances, situations, transactions or events.” (Id. at p. 63 [emphasis added].)

Scope of Coverage

Defendant argues that Plaintiffs’ entire action fails because the plain language of the Policy establishes that Plaintiffs were not entitled to Defendant’s defense/indemnity from the Milan Action, as the “Related Claims” as defined by the Policy were made prior to the coverage period of 5/15/20 to 5/15/21. “There was no potential for a covered Claim in this matter because the Underlying Claim submitted for coverage related back to the 2019 Claim and therefore is deemed a Claim first made prior to the Policy Period.” (MSJ 3:3–5.)

 Defendant asserts that the Milan Action “and the 2019 Claim are ‘Related Claims’ under the Policy because they are based upon, arise from and/or are in consequence of the same or related facts, circumstances, situations, transactions or events or the same or related series of facts, circumstances, situations, transactions or events.” (Id. at 3:7–10.) Specifically, the Milan Action “and the 2019 Claim are Related Claims because the 2019 Claim was filed seeking damages and possession of the Premises, and the [Milan Action] now alleges that because Green Solar failed to timely vacate the Premises in compliance with the judgment from the 2019 Claim, Milan sustained additional damages.” (Id. at 12:28–13:3.)

Defendant concludes that, pursuant to the Policy, the Milan Action “is deemed a Claim first made at the time the earliest of such Related Claims was made, which was on or about September 16, 2019 at the latest, when the 2019 Claim was served on Green Solar, and before the Policy Period.” (Id. at 12:23–26.) In support of its arguments, Defendant proffers the complaints filed in the Milan Action, the 2019 Action, and the 2015 Action.

Furthermore, Defendant proffers a Notice of Related Cases that Plaintiffs filed in the Milan Action, which attempted to deem the case as related to the 2019 Action. While the Court did not deem the cases related, “the fact that Green Solar’s own counsel informed the Court that the 2019 Claim and the [Milan Action] ‘are based on the same or similar claims’ and arise from ‘the same or substantially identical transactions, incidents, or events,’ is further evidence that the [Milan Action] and the 2019 Claim arise from the same circumstances and therefore are Related Claims.” (Id. at 14:4–8, citing Ex. 11 to Shayne Decl.)

Based on the foregoing, the Court finds that Defendant has satisfied its initial burden on summary judgment to present facts to show that it did not owe Plaintiffs a duty to defend/indemnify them in the Milan Action. The burden thus shifts to Plaintiffs to proffer substantial responsive evidence to show that there exists a triable issue of material fact. (Sangster, 68 Cal.App.4th at 163.)

Plaintiffs argue in opposition that “the above-mentioned lawsuits were filed by different Milan entities, that they did not arise from alleged breaches of contract in the same year, they did not include tort claims and they did not include the same Defendants.” (Pls.’ Opp. 6:4–6.) Plaintiffs further observe that the Milan Action and the 2019 Action were not deemed related by the Court. (Id. at 6:9–10.) Therefore, Plaintiffs maintain that there exists a “glaring issue of fact ... which has not been disposed of by Defendant's Motion,” namely “whether a similar claim has been made against all insured Plaintiffs by Milan in the Milan 2015 Lawsuit, the Milan 2019 Lawsuit or any claims made outside the framework of the prior litigation among the various parties.” (Id. at 9:18–21.)

To support their arguments, Plaintiffs proffer the sworn declarations of the following individuals: (1) Nicki Zvick, the Manager and sole Director of Plaintiff Green Solar Enterprises, LLC; (2) Shay Yavor, a named Plaintiff and an officer and shareholder of Green Solar Technologies, Inc. and Green Solar California, Inc.; and (3) Jeffrey Slott, general legal counsel to Green Solar Technologies, Inc. and Plaintiffs’ counsel of record in the instant action.

Defendant argues in reply that “even if the Underlying Claim and the 2019 Claim were brought by different entities, which is not the case, because they both clearly arise from Green Solar Technologies, Inc.’s failure to vacate the subject premises and resultant harm to Milan, they are Related Claims under the Policy.” (Def.’s Reply 6:18–21.) The Court agrees, finding that the plain language of the Policy is unambiguous, and broad enough in scope as to classify the 2019 Action as a “Related Claim” to the Milan Action. As Defendant observes, “the Policy does not state anywhere that Claims have to be made against the same Insured(s) in order to be Related Claims,” nor does it require multiple Claims to include the same causes of action in order to be Related Claims. Instead, the Policy provides that Claims for Wrongful Acts that are based upon, arising from, or are in consequence of the same or related facts or circumstances are Related Claims.” (Id. at 7:3–5, 7:17–20.)

Based on the foregoing, the Court finds that Plaintiffs have failed to meet their responsive burden to proffer evidence showing that a triable issue of material fact exists regarding the contention that the 2019 Action and the Milan Action are “Related Claims” within the definition set forth under the plain language of the Policy. The Court therefore finds that the underlying claim was first made outside of the Policy Period for which coverage was available to Plaintiffs.

Admissibility

Code of Civil Procedure section 437c, subdivision (b)(1) requires a motion for summary judgment to be “supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” The California Rules of Court requires the motion to be accompanied by “evidence in support of [moving party's] motion for summary judgment or summary adjudication or both; and … [a] Request for judicial notice in support of [moving party's] motion for summary judgment or summary adjudication or both (if appropriate).” (Cal. Rules of Ct., rule 3.1350(c)(4)–(5).)

Plaintiffs object to the evidence proffered by Defendant, arguing that “Mr. Shayne is not a competent ‘affiant’ to authenticate the documents attached to his declaration,” and therefore the instant motion should be denied in its entirety. (Pls.’ Opp. 9:9–10.) Plaintiffs further argue that Defendant is required to file with the instant motion a request for judicial notice, which it has failed to do. (Id. at 9:12–13.)

In opposition, Defendant argues that “as counsel for Defendant in connection with the coverage dispute, Mr. Shayne is a competent affiant to attest to the authenticity of the communications for purposes of summary judgment.” (Def.’s Reply 12:4–6.)

The Court declines to accept Plaintiffs’ objections to the evidence proffered by Defendant, and finds that the plain language of the relevant statutes and rules do not affirmatively require a request for judicial notice to be filed with a motion for summary judgment. Code of Civil Procedure section 437c, subdivision (b)(1) suggests that the motion be supported by “matters of which judicial notice shall or may be taken.” [emphasis added]. The California rules of Court explicitly calls for a request for judicial notice only “if appropriate.” (Cal. Rules of Ct., rule 3.1350(c)(5).) Furthermore, as Defendant notes, Plaintiffs’ argument lacks merit as “there is no substantive dispute as to the contents of Defendant’s Exhibits or whether they are true and accurate copies.” (Def.’s Reply 12:16–17.)

Accordingly, the Court finds overrules Plaintiffs’ evidentiary objections.

CONCLUSION¿ 

As Plaintiffs have failed to show a triable issue of material fact as to whether they are entitled to Defendant defending/indemnifying them in the Milan Action, the Court finds that Defendant is entitled to summary judgment. The Court takes note of the parties’ arguments regarding the 2015 Action and various independent grounds for denial of coverage, but need not reach them based on the above finding.

The motion is granted.