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Probuilders Specialty Ins. Co. v. Double M. Constr.

United States District Court, D. Nevada

July 10, 2015

PROBUILDERS SPECIALTY INSURANCE COMPANY, et al., Plaintiff(s),
v.
DOUBLE M. CONSTRUCTION dba CLASSIC HOMES, Defendant(s)

Page 1174

For Probuilders Specialty Insurance Company, Plaintiff, Counter Defendant: John H. Podesta, LEAD ATTORNEY, Wilson Elser Moskowitz Edelman & Dicker LLP, San Francisco, CA.

For Double M Construction, doing business as Classic Homes, Defendant: Conor P. Flynn, Kevin R Stolworthy, LEAD ATTORNEYS, Armstrong Teasdale, Las Vegas, NV.

For Double M Construction, Counter Claimant: Conor P. Flynn, Kevin R Stolworthy, LEAD ATTORNEYS, Armstrong Teasdale, Las Vegas, NV.

Page 1175

ORDER

James C. Mahan, UNITED STATES DISTRICT JUDGE.

Presently before the court is plaintiff Probuilders Insurance Company's (" Probuilders" ) motion for summary judgment. (Doc. # 36). Defendant Double M Construction dba Classic Homes (" Double M" ), filed a response, (doc. # 64), and Probuilders filed a reply, (doc. # 67).

Page 1176

I. Background

i. Facts and procedural history

This case involves an insurance coverage dispute. Probuilders is a registered risk retention group in Nevada. Double M, a general contractor, developed Richland Estates, a housing development in Pahrump, Nevada. (Doc. # 67, p. 2). On August 10, 2012, fourteen Richland Estate homeowners filed suit in Nye County District Court (the " Erbe action" ). ( Id. ). The homeowners asserted numerous causes of action against Double M, including constructional defects under N.R.S. Chapter 40. (Doc. # 24, Exhibit B). One of the underlying theories is that the affected homes are being damaged due to earth movement, specifically differential settlement. ( Id., p. 2).

Double M has several general liability insurance policies from Probuilders (the " Probuilders policies" ). Each policy includes property damage exclusions for earth movement. (Doc. # 24, at 5-6). Probuilders has undertaken Double M's legal defense in the Erbe action while issuing a full and complete reservation of rights. ( Id. at 9). Probuilders alleges that it has paid $73,705.35 in legal expenses towards Double M's defense. (Doc. # 36, p. 4).

On July 1, 2014, NBIS Construction and Transport Insurance Services (" NBIS" ), Probuilders' claims agent, wrote to Double M and requested $28,424.90 in deductible payments pertaining to the Erbe action, as required by the 05/06 policy deductibles. (Docs. # 36, p. 6; 37, Exhibit 1). On July 2, 2014, NBIS requested $27,770.61 for the 06/07 policy deductibles. ( Id., Exhibit 13). To date, Double M admits that it has not paid any deductible payments.

On November 21, 2013, Probuilders filed this suit, seeking declaratory relief regarding the parties' rights and duties under the policies. (Doc. # 1). On March 10, 2015, Probuilders filed the instant motion seeking summary judgment on two issues. First, Probuilders alleges that it owes no duty to defend Double M in the Erbe action because the claims are not covered by the policies or, alternatively, because the policies are void. (Doc. # 36, p. 2). Second, Probuilders asserts that Double M must reimburse the amount advanced for legal defense in the Erbe action. ( Id. ).

ii. Policy limits

Each Probuilders policy includes a provision, titled " Section I - Coverage," under which Probuilders accepts " the right and duty to defend . . . against any suit seeking those damages." (Doc. # 24, Exhibits C-G). The Probuilders policies also attach limitations to the duty to defend. " Section I - Coverage" reads in relevant part:

Our duty to defend you is further limited as provided below or in the Section of the policy entitled " EXCEPTIONS: COVERAGES A AND B" . . . . We will have no duty to defend any insured against any suit seeking damages for . . . property damage to which this insurance does not apply.
. . .
In those cases in which we have no obligation or duty to defend . . . we shall have the right to defend or to intervene in defense of any suit which may involve liability covered by this policy.

In addition, the Probuilders policies provide certain exclusions, identified under " EXCLUSIONS: COVERAGES A AND B." The provision states:

This insurance does not apply to:
. . .
S. EARTH MOVEMENT EXCLUSION
Property damage arising from . . . earth movement, whether the earth movement is combined with any other cause . . . . [¶ ] This exclusion applies regardless of the cause or causes of the earth movement

Page 1177

and includes defects or negligence . . . precipitated [by] [and] caused . . . in any sequence with earth movement . . . . [¶ ] Where a suit is based in whole or in part upon . . . property damage, liability[1] for which is excluded by this Exclusion, we shall have the right, but not the obligation, to defend you . . . . When we do not elect to defend you in such suit, we shall reimburse you for reasonable attorneys' fees and litigation expenses.

II. Legal standard

The Federal Rules of Civil Procedure allow summary judgment when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that " there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(a). A principal purpose of summary judgment is " to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

For purposes of summary judgment, disputed factual issues should be construed in favor of the non-moving party. Lujan v. Nat'l Wildlife Fed., 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). However, for a denial of summary judgment, the non-moving party must " set forth specific facts showing that there is a genuine issue for trial." Id.

In determining summary judgment, a court applies a burden-shifting analysis. " When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).

In contrast, when the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the non-moving party's case; or (2) by demonstrating that the non-moving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court ...


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