Motion-Secondary: ROBERT ROSS et al VS. C.C. MOORE & CO. ENGINEERS

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ELECTRONICALLY

Mark A. Love (SBN CA 162028)

mlove@selmanlaw.com FILED
Richan a Lee (SBN CA 187694) s county ot sun francisco
rlee@selmanlaw.com

Kyle Clawson (SBN CA 303682) 10/06/2016
kclawson@selmanlaw.com BY:BOWMAN LIU
SELMAN BREITMAN LLP Deputy Clerk

33 New Montgomery, Sixth Floor
San Francisco, CA 94105-4537
Telephone: 415.979.0400
Facsimile: 415.979.2099

Attorneys for Intervenor FIREMAN'S FUND INSURANCE
COMPANY, the insurer of Defendant ASSOCIATED
INSULATION OF CALIFORNIA, INC.

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO
ROBERT ROSS and JEAN ROSS, Case No. CGC-10-275731
Plaintiff, INTERVENOR FIREMAN'S FUND
INSURANCE COMPANY, THE
v. INSURER OF DEFENDANT

ASSOICATED INSULATION OF

C.C. MOORE & CO. ENGINEERS, et al., CALIFORNIA, INC.'S MEMORANDUM
OF POINTS AND AUTHORITIES IN
Defendant. SUPPORT OF EX PARTE
APPLICATION FOR AN ORDER
GRANTING LEAVE TO FILE A
COMPLAINT IN INTERVENTION

Date: October 11, 2016
Time: 11:00 a.m.

Judge: Hon. Garrett L. Wong
Dept.: 503

L INTRODUCTION
ASSOCIATED INSULATION OF CALIFORNIA, INC. ("ASSOCIATED
INSULATION") has been served as a defendant in the instant asbestos-related lawsuit.
ASSOCIATED INSULATION is currently a suspended corporation by the California
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MEMO OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION RE: COMPLAINT IN
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Secretary of State. The California Franchise Tax Board does not even have any record of
ASSOCIATED INSULATION. As a suspended corporation, ASSOCIATED
INSULATION lacks the capacity to defend itself in this lawsuit pursuant to Revenue &
Taxation Code, section 23301.

FIREMAN'S FUND INSURANCE COMPANY ("INTERVENOR") pursuant to
the terms of its insurance policy(ies) and solely in its capacity as insurer of
ASSOCIATED INSULATION, now seeks an ex parte order from this Court granting it
leave to file a complaint in intervention in this case in order to specifically name
FIREMAN'S FUND INSURANCE COMPANY as Intervenor, the insurer of Defendant
ASSOCIATED INSULATION. The purpose of INTERVENOR'S intervention is to
contest ASSOCIATED INSULATION 's alleged liability and the amount of damages, if
any, alleged by Plaintiffs. INTERVENOR also requests that the Court deem that the
complaint in intervention constitutes the answer to Plaintiffs' complaint against
ASSOCIATED INSULATION. In addition, INTERVENOR requests that the Court
grant INTERVENOR leave to appear and defend ASSOCIATED INSULATION in this
action in the name of Intervenor FIREMAN's FUND INSURANCE COMPANY, the
insurer of Defendant ASSOCIATED INSULATION OF CALIFORNIA, INC.

Il. STATEMENT OF FACTS

This lawsuit involves disputes arising out of injuries allegedly sustained as a result
of alleged exposure to asbestos. ASSOCIATED INSULATION, currently a suspended
California corporation, was a contractor doing business in the state of California. Among
other allegations, Plaintiffs allege negligence on the part of several defendants, including
ASSOCIATED INSULATION.

ASSOCIATED INSULATION 's ability to exercise its corporate powers, rights,
and privileges in California have been suspended pursuant to Revenue and Taxation code
section 23301. (See Declaration of Kyle Clawson filed herewith.) California
corporations, such as ASSOCIATED INSULATION, whose rights to exercise their

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corporate powers, rights, and privileges in California have been suspended, cannot defend
themselves in lawsuits. Revenue and Taxation Code section 23301 provides, in pertinent
part, that "the corporate powers, rights, and privileges of a domestic taxpayer may be
suspended, and the exercise of the corporate powers, rights, and privileges of a foreign
taxpayer in this state may be forfeited" if certain taxes are not paid, Once the corporate
powers, rights, and privileges are suspended or forfeited for failure to pay taxes, a
corporation cannot sue or defend a lawsuit in its name while its taxes remain unpaid.
(United Medical Management Limited v. Gatto, (1996) 49 Cal.App.4th 1732, 1737.) ("A
foreign corporation whose rights have been forfeited for failure to pay state taxes may not
prosecute or defend an action" pursuant to section 23301 (citation omitted; see also
Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc., (2006) 133
Cal.App.4th 212, at 215-16 [citing Gar-Lo, Inc. v. Prudential Savings & Loan
Association (1974) 41 Cal.App.3d 242, 244].)

Since ASSOCIATED INSULATION cannot defend itself in this lawsuit,
ASSOCIATED INSULATION and INTERVENOR will be irreparably harmed unless
INTERVENOR is granted immediate leave to file a complaint in intervention on behalf
of ASSOCIATED INSULATION.

Tl. LEGAL ARGUMENT

A. Intervention Is Proper When The Insured Is A Suspended Corporation

INTERVENOR seeks this ex parte order granting leave to intervene in this case
pursuant to the terms of its insurance policy(ies) and applicable California law, including,
without limitation, California Code of Civil Procedure, section 387; California Revenue
& Taxation Code, sections 19717, 19719; Bame v. City of Del Mar (2001) 86
Cal.App.4th 1346; Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 385; and
Kaufman & Broad, supra. Revenue & Taxation Code, section 1971, subdivision (b)
allows an insurance company to provide a defense for a suspended corporation in certain

actions and, in connection with this defense, to prosecute subrogation, contribution, or

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MEMO OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION RE: COMPLAINT IN
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indemnity rights in the name of the suspended corporation. The statute, however, is
silent as to the proper mechanism the insurance company may use to exercise this right
(Kaufman, supra.). The Kaufman court held that if a corporation is suspended and not
revived, the absence of any mechanism in section 19719 for the insurance company to
assert the suspended corporation's claims supports the conclusion that the insurance
company must intervene in the lawsuit to protect the rights of its insured. (/d. at 221.)

Code of Civil Procedure, section 387, sets forth the rules for intervention by a
third party in existing litigation. Section 387 reads, in pertinent part: "[u]pon timely
application, any person, who has an interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, may intervene in the action or
proceeding." (Code of Civ. Proc. § 387, subd. (a).) Pursuant to section 387, subdivision
(a), the trial court has discretion to permit a non-party to intervene where the following
factors are met: (1) the proper procedures have been followed; (2) the non-party has a
direct and immediate interest in the action; (3) the intervention will not enlarge the issues
in the litigation; and (4) the reasons for the intervention outweigh any opposition by the
parties presently in the action. (Reliance Ins., supra at 386 [citing Truck Ins. Exchange v.
Superior Court (1997) 60 Cal.App.4th 342, 346].)

In addition, section 387, subdivision (b) provides as follows:

"{I]f the person seeking intervention claims an interest relating to the
property or transaction which is the subject of the action and that person is
so situated that the disposition of the action may as a practical matter
impair or impede the person's ability to protect that interest, unless that
person's interest is adequately represented by existing parties, the court
shall, upon application, permit that person to intervene."

Here, the statutory requirements for both permissive and mandatory intervention
are met. As an insurer of ASSOCIATED INSULATION, INTERVENOR has an
identical interest relating to the transactions that are the subject of this action as
ASSOCIATED INSULATION would have, as they would potentially be liable for any
settlement or judgment rendered against ASSOCIATED INSULATION. In addition,

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INTERVENOR is so situated that the disposal of this action without such an intervention
will, as a practical matter, impair or impede INTERVENOR's abilities to protect that
interest. Also, the intervention by INTERVENOR will not enlarge the issues of the
litigation, as INTERVENOR would essentially be intervening into the case in the place of |
ASSOCIATED INSULATION. Lastly, INTERVENOR's interests are not adequately
represented by the existing parties. When these factors are satisfied, intervention is
mandatory by virtue of the specific provisions of section 387, subdivision (b): "the court
shall, upon application, permit that person to intervene." (Jd. [emphasis added].)
INTERVENOR seeks to intervene in this action pursuant to Code of Civil
Procedure, section 387, on the grounds that it has a direct and immediate interest in the
matter as ASSOCIATED INSULATION's insurer. Naming INTERVENOR as
Intervenor will cause no delay in this litigation and will not broaden the issues in the

case.

B. INTERVENOR Has A Direct Interest In This Lawsuit As They May
Be Subject To A Direct Action By Plaintiff To Satisfy Any Judgments

INTERVENOR is a liability insurer of ASSOCIATED INSULATION. In
Reliance Insurance, supra, the court held, "[w]here the insurer may be subject to a direct
action under Insurance Code section 11580 by a judgment creditor who has or will obtain
a default judgment in a third party action against the insured, intervention is appropriate."
(id. at 386-87.) Reliance Insurance Company was the insurer of a suspended corporation
who lacked the capacity to defend itself against claims for negligence against the insured.
Pursuant to Code of Civil Procedure, section 387, the court held that Reliance Insurance
Company should be permitted to intervene, otherwise the insurance company would not
have any other opportunity or avenue to litigate fault or damage issues against its insured.
(id. at 385.) In such a situation, the court noted that Reliance Insurance Company could
be bound by a default judgment, which would create an unjustified windfall to the

plaintiff. (/d. at 388.) Reliance Insurance Company would essentially be punished for

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something it did not do, since "[i]nsurers have no control over the solvency or corporate
viability of their insured." (/d.)

The same result may occur in this case as INTERVENOR could potentially be
bound by a default judgment or other judgment entered against ASSOCIATED
INSULATION. Based on the foregoing, INTERVENOR requests that this court grant
this ex parte application for leave to file a complaint in intervention in this case so that
INTERVENOR may properly protect their interests as well as ASSOCIATED
INSULATION's interests in this lawsuit.

Cc. INTE OR'S Intervention Will Not Enlarge The Issues In This
awsuit

INTERVENOR seeks to intervene in this case to protect its own interests and
those of ASSOCIATED INSULATION. Therefore, INTERVENOR will raise only those
defenses that would have been available to ASSOCIATED INSULATION, had it not
been a suspended corporation that is unable to defend itself. Intervention will not
broaden the issues already pending before the court. Although INTERVENOR has
reserved its rights with respect to coverage issues, and they do not waive those issues by
intervening, the existence of coverage issues will not be litigated in the present lawsuits.
Rather, the coverage issues are reserved for another time. Also, other insurers may have
issued other policies under which ASSOCIATED INSULATION is also an insured.
INTERVENOR has reserved all rights against those other insurers, if any, but again, the
existence of these issues will not expand the scope of the present litigation because they
will not be litigated here. Lastly, INTERVENOR's reservation of subrogation rights will
not expand past the present litigation because those rights will not be litigated within the
existing lawsuit.

D. INTERVENOR'S Reasons For Intervention Outweigh Any Opposition

INTERVENOR does not expect any opposition to this application for leave to file

a complaint in intervention. As stated above, the claims against ASSOCIATED
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MEMO OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION RE: COMPLAINT IN
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INSULATION cannot be defended by ASSOCIATED INSULATION because
ASSOCIATED INSULATION is a suspended corporation. INTERVENOR seeks to
intervene in this case in order to defend ASSOCIATED INSULATION and/or to prevent
an entry of default against its suspended and incapacitated insured, ASSOCIATED
INSULATION, for which INTERVENOR may be potentially liable pursuant to the terms

of its insurance policy(ies).

E. INTERVENOR Will Be Severely Prejudiced If This Ex Parte
Application Is Not Granted

Since the claims against ASSOCIATED INSULATION cannot be defended by
ASSOCIATED INSULATION because ASSOCIATED INSULATION is a suspended
corporation, INTERVENOR will be severely prejudiced if Plaintiffs enter a default
judgment against ASSOCIATED INSULATION. By granting this ex parte application
for an order granting leave to file a complaint in intervention, the court will allow
INTERVENOR to intervene in this lawsuit in order to prevent the entry of default, or set
aside any default, against its suspended and incapacitated insured, ASSOCIATED
INSULATION, for which INTERVENOR may be potentially liable pursuant to the terms
of its insurance policy(ies).

Iv. CONCLUSION

Based on the foregoing, INTERVENOR requests that this court grant this ex parte
application for an order granting leave to file a complaint in intervention in this lawsuit,
so that INTERVENOR can protect the rights of its suspended insured, ASSOCIATED
INSULATION.

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MEMO OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION RE: COMPLAINT IN
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DATED: October 6 , 2016

SELMAN BREITMAN LLP

By:
MARK A. LOVE
RICHARD M. LEE
KYLE CLAWSON
Attorneys for Intervenor FIREMAN'S
FUND INSURANCE COMPANY, the
insurer of Defendant ASSOCIATED
INSULATION OF CALIFORNIA, INC.

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MEMO OF POINTS:AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION RE: COMPLAINT IN

INTERVENTIONSelman Breitman LLP

ATTORNEYS AT LAW

351148.

PROOF OF SERVICE BY ELECTRONIC TRANSMISSION

Robert Ross and Jean Ross v. C. C. Moore & Co. Engineers, et al.
San Francisco Superior Court Case No. CGC-10-275731

Defendant: Intervenor Fireman's Fund Insurance Company, the insurer of Defendant
Associated Insulation of California, Inc.

I am employed in the County of San Francisco, State of California. I am over the age
of 18 years and am not a party to the within action; my business address is 33 New
Montgomery, Sixth Floor, San Francisco, CA, 94105,

On October 6, 2016, I electronically served the document(s) via File & ServeXpress
described as: INTERVENOR FIREMAN'S FUND INSURANCE COMPANY, THE
INSURER OF DEFENDANT ASSOICATED INSULATION OF CALIFORNIA, INC.'S
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE
APPLICATION FOR AN ORDER GRANTING LEAVE TO FILE A COMPLAINT IN
INTERVENTION on the recipients designated on the Transaction Receipt located on the File
& ServeXpress website.

I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.

Executed on October 6, 2016, at San Francisco, California.

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PROOF OF SERVICE BY ELECTRONIC TRANSMISSION
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