Preview
FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016
NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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COLONY INSURANCE COMPANY and
MYM CONSTRUCTION, INC., Index No.: 652031/2016
Plaintiffs,
PLAINTIFFS'
-against- REPLY
AFFIRMATION IN
TUDOR INSURANCE COMPANY and SUPPORT OF SUMMARY
GREENSIDE JUDGMENT MOTION
CORP.,
Defendants.
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S. DWIGHT STEPHENS, an attorney duly admitted to practice law before the courts of
the state of New York, affirms the truth of the following statements:
("Colony"
1. Plaintiffs Colony Insurance Company ("Colony") and MYM Construction, Inc.
"Plaintiffs"
("MYM") (collectively "Plaintiffs") submit this affirmation in response to the opposition to their
("Tudor"
summary judgment motion filed by Defendant Tudor Insurance Company ("Tudor").
TUDOR'S DISCLAIMER IS INVALID BECAUSE IT WAS
UNTIMELY UNDER INSURANCE LAW SECTION 3420(d).
Plaintiffs'
2. As discussed in moving papers, New York Insurance Law §3420(d)(2)
imposes a strict timeliness requirement on the issuance of a written notice of disclaimer for liability
policies issued or delivered in New York, like the Tudor Policy here, when an insurer seeks to
deny coverage for death or bodily injury based on an exclusion. Failure to raise a ground for
possible"
disclaiming "as soon as is reasonably precludes an insurer from later asserting itas a
defense.
3. Tudor does not dispute that it was required to timely disclaim coverage based on
the employee exclusion because the general provisions of the Tudor Policy afford coverage to
MYM since itwas specifically added as an additional insured by name to the Tudor Policy by
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Endorsement number 3 (Exhibit N). (Unless otherwise noted, exhibit references are to the exhibits
Plaintiffs'
annexed to summary judgment motion.) See, e.g., Kemper Independence Ins. Co. v.
Brennan, 155 A.D.3d 953, 954, 64 N.Y.S.3d 125, 127 (2d Dep't 2017).
4. Tudor also does not dispute that ithas the burden of justifying any delay. See, e.g.,
First Financial Insurance Co. v. Jetco Contracting Corp., 1 N.Y.3d 64, 66, 769 N.Y.S.2d 459
(2003). Nor does Tudor dispute that the reasonableness of a delay will be measured from the point
when the insurer becomes aware of sufficient facts to support the disclaimer. See Consolidated
(13t
Edison Co. v. Hartford Ins. Co., 203 A.D.2d 83, 84, 610 N.Y.S.2d 219, 221 Dep't 1994), or
possible"
that "[a]s soon as reasonably has generally been construed to mean 30 days or less. See,
e.g., Kramer v. Government Employees Ins. Co., 269 A.D.2d 567, 703 N.Y.S.2d 514 (2d Dep't
2000).
5. A logical corollary of this rule is that an insurer cannot justify its delay in
"investigation"
disclaiming by contriving an alleged extended that is not calculated to, and in fact
does not, add anything new to the information upon which the insurer bases its disclaimer. See
(13t
also City of New York v. Welsbach Electric Corp., 49 A.D.3d 322, 852 N.Y.S.2d 134 Dep't
2008) (insurer must conduct investigation "promptly, diligently and in good faith").
6. Once the delay exceeds 30 days, which is the case here, the insurer must explain
why itneeded that amount of time to issue a disclaimer.
Viewing every fact in Tudor's favor,
the 36 days it took Tudor to issue itsdisclaimer
is untimely as a matter of law under New York's
very strict timely disclaimer requirements.
Plaintiffs'
7. As discussed in opposition to Tudor's summary judgment motion, for
purposes of the present summary judgment motion practice, Plaintiffs assume that Tudor received
firstnotice of the claim on 11/24/14.
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Plaintiffs'
8. initial tender letter alerted Tudor to the applicability of the employee
exclusion in the Tudor Policy. Tudor confirmed the applicability of the exclusion with a phone
call to its insured, which was returned by the insured the next day. Tudor was aware of sufficient
facts to support the disclaimer following an investigation taking a couple of days.
9. However, Tudor did not issue its disclaimer for 36 days after it acknowledges
Plaintiffs'
receiving tender. The question is whether Tudor's explanation for the 36 days passes
muster given the strict timely-disclaimer requirements.
10. Tudor has no explanation for no activity from 11/24/14 to 12/2/14. Tudor's
explanation for the next seven days of no activity from 12/2/14 to 12/9/14 is that itallegedly "made
him."
several calls to Mr. Kelleher but could not reach (Hazard Aff. at 113). However, the first
note documenting a call where the adjuster left a message resulted in a note the next day
confirming a call back by Greenside (a call that confirmed the claimant's employment status).
11. Tudor's explanation for not issuing the disclaimer on 12/10/14 is that itwas waiting
for its investigator's report. However, the investigator's report had nothing to add to what the
adjuster already knew about the claimant's employment by Greenside based on his own
investigation. The investigator's report primarily addressed the nature of the job, the
circumstances of the accident, and witnesses to the accident, etc., all of which are relevant to
potential liability issues but not to the applicability of the employee exclusion (See Exhibit V).
The law is clear that Tudor's delay in notifying Plaintiffs of the disclaimer is not justified by
Tudor's investigation into other issues unrelated to the employment issue relevant to Tudor's
coverage denial. See, e.g., Liberty Mutual Fire Insurance Co. v. Navigators Insurance Co., 158
(1st
A.D.3d 431, 67 N.Y.S.3d 816 Dep't 2018).
Plaintiffs'
12. For the firsttime, in opposition to motion, Tudor asserts that the danger
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"advised"
of issuing an immediate disclaimer on the basis of what Colony had been as to
Gormley's employment status is highlighted by the conflicting information ultimately provided by
the Greenside contact person provided to Tudor, Phillip Kelleher. (Tudor Opp. Memo of Law at
pp. 6-7). Mr. Kelleher told Tudor's adjuster and its investigator that he was the president and co-
owner of Greenside and that Gormley was employed by Greenside. (Exhibit U at CFO 434;
Exhibit V at CFO 378). In this action, however, Mr. Kelleher denied being the owner of Greenside
and his testimony indicated that he assumed Gormley worked for Greenside. (Tudor Exhibit V at
pp. 18, 20).
13. First of all, Plaintiffs are giving Tudor the benefit of the doubt that itwas justified
in confirming for itself Gormley's employment status. It did that with one documented call that
was returned the very next day. Moreover, this inconsistent testimony by Mr. Kelleher in this
insurance coverage action four years later does not change the fact that Mr. Kelleher told Tudor's
adjuster and its investigator the same thing in the context of Tudor's investigation of the claim and
Tudor relied on that assertion (namely, that Mr. Kelleher owned Greenside and Greenside
employed Gormley) to deny coverage based on the employee exclusion.
practice"
14. Tudor also asserts that it was Tudor's "standard to refer every claim to
outside coverage counsel where the claim involves an incident that is in suit (Hazard Aff. at $15).
To carry its burden, however, Tudor was required to explain the necessity of a coverage opinion
in this case-that is,any reason that the applicability of the employee exclusion presented a novel
legal issue given either the language of the Tudor exclusion and/or the particular facts of this case.
It has not provided such an explanation, either in its affirmative motion or in opposition to
Plaintiffs'
motion, and any belated explanation that itmight come up with in reply should be
disregarded for the contrivance that itis. (See Exhibit T at 20 lines 2-11).
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15. Again, giving Tudor the benefit of the doubt, Tudor sent the investigator's report,
indicating Greenside employed the claimant, to counsel on 12/17/14, and counsel responded with
a report complete with three virtually identical draft disclaimers two days later on 12/19/14 (Tudor
Exhibit Q). And counsel had done Tudor's work by drafting the disclaimers for it.
16. Tudor asserts that itreceived the disclaimers on Monday, 12/22/14 (Hazard Aff. at
¶l 6). Giving Tudor the benefit of the doubt again, itstill did not issue the disclaimers on 12/22/18.
Instead, Tudor sent Plaintiffs a letter on 12/23/18 stating that itwould be denying coverage without
explaining why (Exhibit E).
17. Despite having a coverage opinion from counsel and draft disclaimers, Tudor
waited another eight days before mailing the disclaimers. Tudor's explanation is that the
Christmas holiday fellduring that week (Hazard Aff. at ¶l 8). This does not explain why the letter
was not sent out on 12/22 or 12/23. This eight days is another inadequately explained gap.
18. At a minimum, there are 23 unexplained days (15 in the beginning and 8 at the end).
Plaintiffs submit that there are an additional 6 inadequately explained days attributable to Tudor
waiting for an investigator's report that was unnecessary for the employment issue.
19. Plaintiffs also submit that Tudor has not adequately explained its reliance on the
opinion from counsel to justify its delayed disclaimer (6 days). The coverage opinion apparently
waited for the DMA investigation, which was solely duplicative on the employment issue.
20. New York's disclaimer requirements are very strict for denials of coverage under
liability policies issued in New York. A general liability policy has been held to cover an auto
liability accident despite a clear auto exclusion where an insurer did not timely disclaim. See
Highrise Hoisting & Scaffolding, Inc. v. Liberty Ins. Underwriters, Inc., 116 A.D.3d 647, 984
(1st
N.Y.S.2d 366 Dep't 2014).
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21. In sum, the fact that Tudor has 23 unexplained days and six inadequately explained
days and that itdid not disclaim for 20 days after being told by the insured of Gormley's employee
status means that the disclaimer was untimely. Accordingly, even if this Court were to assume
that it took Tudor 36 (and not 51) days to disclaim, the Tudor disclaimer is invalid under New
York's strict timeliness rules where over 30 days requires an explanation.
TUDOR'S REAL-PARTY-IN-INTEREST
ARGUMENT IS MERITLESS.
Plaintiffs'
22. For the first time, in opposition to motion, Tudor argues that Colony is
the real party in interest and may not seek reimbursement of defense or settlement costs itpaid.
23. Our office had this exact same situation, with the shoe on the other foot, in Time
(4th
Cap Development Corp. v. Colony Insurance Company, 148 A.D.3d 1749, 51 N.Y.S.3d 757
Rutgers'
Dep't 2017). The case is virtually identical for purposes of belated real-party-in-interest
claim in this case, including a settlement of the underlying action during the coverage action. The
one difference is that,unlike here where Colony is a plaintiff, the other insurer in Time Cap, which
was Cincinnati Insurance Company, tried to hide its interest by filing the declaratory judgment
action solely in the name of its insured, Time Cap. Colony made the real-party-in-interest
argument at the outset, impleading Cincinnati into the action. The real-party-in-interest argument
made no difference in the outcome.
24. Time Cap filed a declaratory judgment action against the insurer of its contractor,
Colony. Time Cap, which was insured by Cincinnati, was the general contractor, and the injured
laborer was employed by Colony's insured Parish Ironworks. Colony issued a disclaimer based
on an employee exclusion that was untimely under section 3420(d)(2). See id.
25. Colony impleaded Cincinnati into the insurance coverage action arguing that itwas
the real party in interest and its disclaimer was valid vis-à-vis Cincinnati. If that were so, then
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Colony argued that the coverage under the two policies (Cincinnati's and Colony's) would apply
on a co-insurance basis because Time Cap and Cincinnati theoretically both were parties in
interest. The Appellate Division rejected that argument, concluding that even if Colony's
disclaimer was valid as to Cincinnati's claim, that was not a reason to alter the priority of coverage
set forth in the plain language of the insurance contracts. 148 A.D.3d at 1751.
26. Cincinnati's policy there (like Colony's policy here) provided that the coverage
afforded for itsnamed insured was excess over "[a]ny other primary insurance available to you
covering liability arising out of . .. operations . ..for which you have been added as an additional
endorsement."
insured by attachment of an (See Exhibit W hereto at C-15 (Colony "Other
Insurance"
Condition, Section IV.4.b.(1)(b))). In Time Cap, the Appellate Division concluded that
even if Colony's disclaimer was valid as to Cincinnati's claim, the Colony policy still covered
Time Cap as an additional insured since the disclaimer was invalid as to it, giving Colony the sole
obligation to defend and indemnify Time Cap. See 148 A.D.3d at 1752.
27. The same is true here. Even if Tudor's disclaimer is valid as to Colony, the Tudor
policy still covers MYM as an additional insured since the disclaimer is invalid as to it,giving
Tudor the sole obligation to defend and indemnify MYM.
28. Thereafter, the underlying action in Time Cap settled, after the summary judgment
motions but stillduring the declaratory judgment action, for an amount within Time Cap's policy
limit with Cincinnati. Based on thisnew fact, Colony moved for renewal arguing that thispayment
confirmed that Cincinnati was, in fact, the sole real party in interest. See 148 A.D.3d at 1751. The
Appellate Division concluded that this constituted a different legal theory and rejected the
argument that this new fact warranted changing the prior determination. See id.
29. So, too, here the fact that the underlying Gormley action settled during this
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declaratory judgment action does not change the fact that the Tudor policy still covers MYM as
an additional insured since the disclaimer is invalid as to it,giving Tudor the sole obligation to
defend and indemnify MYM.
30. There also is an important policy reason that Tudor's argument should be rejected.
According to Tudor, when the tendering insurer settles the underlying action, itbecomes the real
party in interest in a coverage action against the contractor's insurer, and this, in turn, transforms
a disclaimer that is invalid as to the additional insured's claim into a valid disclaimer during the
coverage action. If this were the rule (and itis not), itwould be a serious impediment to resolving
the many construction cases involving additional insured tenders as the various parties upstream
attempt to shift the loss downstream to the contractor(s) actually in control of the work. Carriers
for owners and general contractors would have a disincentive to settle claims where they are
challenging the validity of another insurer's disclaimer while an underlying action is stillongoing
because doing so would transform an invalid disclaimer into a valid one.
31. Plaintiffs submit that this Court should also be guided by the New York Court of
Appeals Sierra decision where the Court held that an insurer is obligated to validly disclaim
directly to an additional insured even where itsinsurer is the one that tendered the claim and itdid
the tendering because itis the one with a primary interest in shifting the loss to another insurer.
See Sierra v. 4401 Sunset Park, LLC, 24 N.Y.3d 514, 2 N.Y.S.3d 8 (2014). In doing so, the Court
effectively overruled Excelsior, which is relied on by Tudor, stating that to the extent Excelsior
can be "read to stand for the general proposition that notice to an additional insured's liability
carrier serves as notice to the additional insured under section 3420(d)(2), [it] should not be
followed."
24 N.Y.3d at 519.
32. In Excelsior, the First Department had concluded that the "failure to serve a formal
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notice on the nominal party in interest (the insured) does not render ineffective the denial of
coverage where, under the circumstances, the party who received the notice (its insurer) was
party'
expected to forward it to the nominal party and had undertaken to protect the nominal party's
rights."
Excelsior Ins. Co. v. Antretter Contracting Corp., 262 A.D.2d 124, 128, 693 N.Y.S.2d
(1st
100, 104 Dep't 1999) (cits. omitted). The point is that the Court of Appeals reversal of
Excelsior in Sierra makes clear that Tudor's insurance coverage obligation under section 3420(d)
party."
runs to MYM even if MYM is deemed to be "the nominal
33. Moreover, while itis true that there is First Department case law stating that the
protections of Insurance Law §3420(d) were not intended to apply to another insurer (see Bovis
((1st
Lend Lease LMB, Inc. v. Royal Surplus Lines Ins. Co., 27 A.D.3d 84, 91, 806 N.Y.S.2d 53
Dep't 2005)), the First Department has permitted an insurer to recover against another insurer even
when the insurer is the plaintiff-party seeking coverage and even when the disclaimer is valid
against the plaintiff insurer.
34. In Greater New York Mutual Ins. Co. v. Chubb Indem. Ins. Co., 105 A.D.3d 523,
(1st
963 N.Y.S.2d 218 Dep't 2013), the First Department broadly ruled that where an insured might
as"
need the estopped insurer's coverage "as well its own coverage because its eventual liability
might exceed the limits of itsown coverage, the insured has a real stake in the outcome such that
the estoppel applies and the estopped insurer must afford coverage.
35. Along these lines, parties like Plaintiffs, in fact, are real parties in interest and have
a real stake in the outcome because their commercial liability policies are experience rated, which
means that an adverse loss experience makes their premiums higher-and— this, in turn, makes them
parties'
real parties in interest in coverage actions seeking to shift losses to other insurers. They
parties'
also have a real interest in shifting the loss to other insurers to the extent that every
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indemnity payment made under the policy erodes the aggregate policy limit, making itmore likely
that the insured will be personally impacted by claims arising under the policy. That is particularly
so where, as here, the full per occurrence policy limit is paid on a loss.
36. For all of these reasons, Tudor's real-party-in-interest argument is meritless.
WHEREFORE, Plaintiffs respectfully request that this Court issue an order: (i) denying
Plaintiffs'
Tudor's summary judgment motion; (ii) granting summary judgment motion against
Defendants, pursuant to CPLR Rule 3212, and (a) declaring that the Tudor Policy affords
additional insured coverage to MYM for the claims asserted in the Gormley action and that Tudor
had a duty to defend and indemnify MYM in the underlying Gormley action; or (b) alternatively,
granting Plaintiffs judgment against Greenside based on breach of contract and finding that
Greenside is required to defend and indemnify MYM for the claims against it in the Gormley
action, and (iii) scheduling a hearing to hear and determine the amount for which Defendants
should reimburse Plaintiffs for the defense costs and indemnity amount incurred in the Gormley
action, with statutory interest; and (iv) granting such other and further legal and/or equitable relief
as the Court deems appropriate under the circumstances.
Dated: New York, New York
April 26, 2018
S. DWIG T STEPHENS
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S-CV-0052426
S-CV-0052426 McIntyre, Patrick et al vs. Fire Insurance Exchange
** NOTE: telephonic appearances are strongly encouraged
NOTE: Plaintiff has not paid advance jury fees pursuant to CCP § 631.
Trial Date & Length: 12/08/25 8 day Jury Trial
(Please contact Master Calendar (916) 408-6061 on the business day
prior to the scheduled trial date to find courtroom availability.)
Civil Trial Conference: 11/21/25
(heard at 8:30 am in Dept. 3)
Mandatory Settlement Conference: 11/14/25
(heard at 8:30am; report to Jury Services)
NO APPEARANCE REQUIRED UNLESS REQUESTED BY PARTY BY 3PM ON
THE THURSDAY PRIOR TO HEARING DATE. REQUESTS FOR
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Ruling
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23SMCV03537
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N TENTATIVE RULING
Plaintiff Goldrich Kest, LLCs Motion to Compel Further Responses from Certain Underwriters at Lloyds of London, Ategrity Specialty Insurance Company and Axis Surplus Lines Insurance Company to Requests for Production (Set One) and Special Interrogatories (Set One) is GRANTED in part. Defendants Certain Underwriters at Lloyds, London, Syndicate 4444; Ategrity Specialty Insurance Company; and Axis Surplus Insurance Company shall provide supplemental responses to Plaintiff Goldrich Kest, LLCs Special Interrogatories (Set One) Nos. 3, 16, 17, 18, 27, 28, 29, 30, 31, 32, 33, 34, 35, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 57, and 59 within thirty (30) days of entry of this order. Defendants Certain Underwriters at Lloyds, London, Syndicate 4444; Ategrity Specialty Insurance Company; and Axis Surplus Insurance Company shall provide supplemental responses to Plaintiff Goldrich Kest, LLCs Requests for Production (Set One) Nos. 1, 2, 6, 9, 10, 11, 12, 13, 15, and 16, insofar as Defendants have possession of, access to, or control of responsive documents, within thirty (30) days of entry of this order.
Plaintiff Goldrich Kest, LLC to give notice.
REASONING
If a party that has propounded interrogatories or requests for production of documents believes that the responses received are evasive or incomplete, or that an objection to the interrogatories or requests for production of documents is without merit or too general, the propounding party may bring a motion to compel further responses to the interrogatories. (Code Civ. Proc., §§ 2030.300, subd. (a), 2031.310, subd. (a); see also Best Products, Inc. v. Superior Court (2004) 119 Cal.App.4th 1181, 1189-1190 [motion to compel proper to challenge boilerplate responses].)
Unless notice of this motion is given within 45 days of the service of the verified response, or any supplemental verified response, or on or before any specific later date to which the propounding party and the responding party have agreed in writing, the propounding party waives any right to compel a further response to the interrogatories or requests for production of documents. (Code Civ. Proc., §§ 2030.300, subd. (c), 2031.310, subd. (c).) This timeliness requirement is mandatory, and in some sense may even be considered a matter of jurisdiction, and the Court therefore [has] no power to make an order compelling further answers where the propounding party failed to serve this motion within the statutory time. (Profl Career Colls., Magna Inst., Inc. v. Superior Court (1989) 207 Cal.App.3d 490, 493; see also Vidal Sassoon, Inc. v. Superior Court (1983) 147 Cal.App.3d 681 [same].)
A motion to compel further responses must be accompanied by a meet and confer declaration under Code of Civil Procedure section 2016.040. (See Code Civ. Proc., §§ 2030.300, subd. (b)(1), 2031.310, subd. (b)(2).) A meet and confer declaration must state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion. (Code Civ. Proc., § 2016.040.) California Rules of Court, rule 3.1345(a) requires that any motion to compel further responses to discovery contain a separate statement with the text of each request, the response, and a statement of factual and legal reasons for compelling further.
Plaintiff Goldrich Kest, LLC (Plaintiff) moves for further responses to its Requests for Production (Set One) Nos. 1, 2, 6, 9, 10, 11, 12, 13, 15, and 16 and Special Interrogatories (Set One) Nos. 3, 16, 17, 18, 27, 28, 29, 30, 31, 32, 33, 34, 35, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 57, and 59 propounded on Defendants Certain Underwriters at Lloyds, London, Syndicate 4444; Ategrity Specialty Insurance Company; and Axis Surplus Insurance Company (Defendants); for an order requiring Defendants to search for, collect, and produce all documents and electronically-stored information responsive to Requests for Production Nos. 1, 2, 6, 9, 10, 11, 12, 13, 15, and 16; and for an order requiring Defendants to provide privilege logs identifying all responsive documents that have been withheld or redacted. Insofar as Plaintiff asks for further responses to its Special Interrogatories (Set One) Nos. 66, 67, 68, 69, 70, 71, 80, 81, 82, 83, 84, and 85, the Court will not order any such responses because those requests were not identified in the notice of motion. The Court also will not consider a request for sanctions that is not stated in the notice of motion. (See Code Civ. Proc., § 2023.040.) The Court has reviewed the requests at issue, as well as Defendants responses to the same, and hereby rules as follows:
Defendants shall provide supplemental responses to Special Interrogatories (Set One) Nos. 3, 16, 17, 18, 27, 28, 29, 30, 31, 32, 33, 34, 35, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 57, and 59. Each of the interrogatories seeks discoverable information, specifically, information relevant to Defendants basic business operations, Defendants identification of certain employees involved with the claim at issue, and Defendants process as to the claim at issue. As to Requests for Production (Set One) Nos. 1, 2, 6, 9, 10, 11, 12, 13, 15, and 16, Defendants must provide all documents responsive to these requests, as they, too, seek discoverable information. The Court cannot order Defendants to produce documents which do not exist. However, as to documents possessed by Defendants claims administrator, sub-consultants, and counsel, the Court will not order production of documents possessed by a third party which is not in Defendants possession and for which Defendants do not have access and control. The Court has not considered any supplemental responses here.
Accordingly, Plaintiff Goldrich Kest, LLCs Motion to Compel Further Responses from Certain Underwriters at Lloyds of London, Ategrity Specialty Insurance Company and Axis Surplus Lines Insurance Company to Requests for Production (Set One) and Special Interrogatories (Set One) is GRANTED in part. Defendants Certain Underwriters at Lloyds, London, Syndicate 4444; Ategrity Specialty Insurance Company; and Axis Surplus Insurance Company shall provide supplemental responses to Plaintiff Goldrich Kest, LLCs Special Interrogatories (Set One) Nos. 3, 16, 17, 18, 27, 28, 29, 30, 31, 32, 33, 34, 35, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 57, and 59 within thirty (30) days of entry of this order. Defendants Certain Underwriters at Lloyds, London, Syndicate 4444; Ategrity Specialty Insurance Company; and Axis Surplus Insurance Company shall provide supplemental responses to Plaintiff Goldrich Kest, LLCs Requests for Production (Set One) Nos. 1, 2, 6, 9, 10, 11, 12, 13, 15, and 16, insofar as Defendants have possession of, access to, or control of responsive documents, within thirty (30) days of entry of this order.
Ruling
CBD FRANCHISING, INC., A CALIFORNIA CORPORATION VS CENTRAL JERSEY DOORS & CLOSETS, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY, ET AL.
Jul 12, 2024 |
22STCV13457
Case Number:
22STCV13457
Hearing Date:
July 12, 2024
Dept:
17
Superior Court of California
County of Los Angeles
DEPARTMENT 17
TENTATIVE RULING
CBD FRANCHISING, INC.
vs.
CENTRAL JERSEY DOORS & CLOSETS, LLC
Case No.: 22STCV13457
Hearing Date:
July 12, 2024
CBD Franchisings motion for reconsideration is DENIED.
On 4/21/2022, Plaintiff CBD Franchising, Inc. (Plaintiff or CBD) filed suit against Central Jersey Doors & Closets, LLC, Mary Conway, William Conway, One Day Doors and Closets, Inc., and One Day Enterprises, alleging: (1) breach of written contract; (2)
breach of the implied duty of good faith and fair dealing; (3) tortious interference with contractual relations; and (4) unlawful business practices.
On 5/21/2024, the Court granted One Day Defendants motion for summary judgment.
Now, CBD Franchising moves for reconsideration of that ruling.
Discussion
CBD Franchising argues that the Court should reconsider its MSJ ruling because it was denied the opportunity to respond to the non-compete provision arguments and because there was a good will transfer here within the meaning of Business and Professions Code section 16601.
After review, the Court denies the motion for several reasons:
First, the Court disagrees that One Day Defendants only raised goodwill arguments in reply, or that CBD Franchising was denied an opportunity to fully respond to these arguments. One Day Defendants opening brief in support of their motion for summary judgment argued that the 2013 Franchise Agreement expressly and repeatedly states that it does not transfer any goodwill. Moreover, CBD was provided a full opportunity to respond in oral argument, and the Court fully considered those arguments in its ruling.
Importantly, as noted by One Day Defendants, CBDF argued for the first time at the May 9, 2024, hearing on the One Day Defendants motion for summary judgment that the 2013 Franchise Agreement (1) transfers a license to use its goodwill and (2) is part of a series of integrated agreements that includes both the 2016 Asset Purchase Agreement and the 2016 Transfer Agreement. (Opp., 4:10-12.) As such, CBD Franchising itself advanced arguments for the first time at oral argument which it request be considered now.
Taken together, the Court fails to find that CBD Franchisings motion is based upon new or different facts, circumstances, or law, as a motion for reconsideration must be. (Code Civ. Proc., § 1008, subd. (a).)
Second, even setting aside the fact that reconsideration is not appropriate given the lack of new or different facts or law, the Court reaches the same conclusion as to the merits for several reasons:
First, Section 16601 provides that a person who
sells the goodwill of a business
. . . may agree with the buyer to refrain from carrying on a similar business within a specified geographic area. (Bus & Prof. Code, § 16601, italics added.) Here, there was no evidence submitted to show that the Conways, as sellers,
sold
the goodwill of a business to CBDF as buyer. Rather, CBDF argues that it licensed its goodwill to the Conways via the 2013 Franchise Agreement; that the Conways assigned goodwill to DenMatt Industries via the 2016 Asset Purchase Agreement; and that the Conways, with CBDFs consent, assigned their license to use CBDFs goodwill to DenMatt Industries via the 2016 Transfer Agreement.
As such, there is no evidence that the Conways ever sold their goodwill, or that they did so with CBDF agreeing as a buyer to refrain from carrying on a similar business within a specified geographic area. Indeed, the 2013 Franchise Agreement expressly states that it does not transfer the ownership of any goodwill, whether associated with CBDFs proprietary marks or otherwise, such that a franchisee could never sell any goodwill following the termination or expiration of the agreement:
Following the termination or expiration of this agreement, no monetary amount will be attributable to any goodwill associated with your use of the Proprietary Marks or operation of the franchised Business or Closets By Design Location, include any local goodwill.
(MSJ C.E. Ex. 9, p. 130 2013 Franchise Agreement at p. 42, § 15.01.)
The Northern District of Californias decision in
Scott v. Snelling
and Snelling, Inc
. (N.D. Cal. 1990) 732 F.Supp. 1034 supports this interpretation. In
Scott
, the plaintiff-franchisor argued that section 16601 applied because a franchise agreement is akin to a sale of goodwill in a business. (
Id
. at p. 1041.) The Northern District disagreed, and instead found that a franchisor simply does not sell its goodwill to the franchisee but instead, consistent with the terms of a license, only agrees that the franchisee may benefit from the goodwill for a specified period of time. (
Id
.) Given that distinction, the court rejected the plaintiff-franchisors argument that section 16601 applied, noting that the position that a franchisor sells its goodwill by entering into a franchise agreement while retaining its ownership of the goodwill is patently untenable. (
Id
. at p. 1041, fn. 9.) As applied here, CBDF, as a franchiser, never sold any goodwill to the Conways, and thus the Conways never owned any goodwill to sell.
Third, the Court maintains that the 2013 Franchise Agreement, 2016 Asset Purchase Agreement, and 2016 Transfer Agreement are not integrated agreements that should be read together. Civil Code section 1642 provides that [s]everal contracts relating to the same matters, between the same parties, and made as part of substantially one transaction, are to be taken together. (Civil Code, § 1642.) But, here, the three referenced agreements do not relate to the same matters, are not between the same parties, and were not made as part of substantially one transaction. As noted by One Day Defendants:
-
The three agreements were signed at different times over a more than three-and-a-half-year period: the Conways signed the 2013 Franchise Agreement in December 2012; signed the 2016 Asset Purchase Agreement over three years later in March 2016; and signed the 2016 Transfer Agreement five more months later in August 2016.
-
The three agreements relate to three distinct transactions: the Conways sought a franchise relationship via the 2013 Franchise Agreement; sold and assigned assets to DenMatt Industries via the 2016 Asset Purchase Agreement; and transferred their post-termination rights, duties, and obligations under the 2013 Franchise Agreement to DenMatt Industries via the 2016 Transfer Agreement.
-
The three agreements were not signed by the same parties: neither CBDF nor DenMatt Industries signed the 2013 Franchise Agreement, and CBDF did not sign the 2016 Asset Purchase Agreement.
-
And the three agreements do not each reference the other: the 2013 Franchise agreement does not reference the 2016 Asset Purchase Agreement or the 2016 Transfer Agreement; the 2016 Asset Purchase Agreement does not reference the 2016 Transfer Agreement; and the 2016 Transfer Agreementwhich CBDF calls the most important document in the transaction and references as the agreement that binds all three agreements together (Recons. Mot. 7, 17)does not even reference the 2016 Asset Purchase Agreement.
(Opp., 7:6-16.)
Moreover, even assuming the three referenced agreements were integrated agreements that should be read together, that does not mean that they were merged into one contract. (
Mountain Air Enters., LLC v. Sundowner Towers, LLC
(2017) 3 Cal.5th 744, 759, noting that while it is the rule that several contracts relating to the same matters are to be construed together (citing Civ. Code, sec. 1642), it does not follow that for all purposes they constitute one contract.) And even if the contracts to be read as one, there is still nothing which would show a sale of the goodwill of a business to CBDF, as required to fall within the scope of the section 16601.
Based on the foregoing, CBDFs motion for reconsideration is denied.
It is so ordered.
Dated:
July
, 2024
Hon. Jon R. Takasugi
Judge of the Superior Court
Parties who intend to submit on this tentative must send an email to the court at
smcdept17@lacourt.org
by 4 p.m. the day prior as directed by the instructions provided on the court website at
www.lacourt.org
. If a party submits on the tentative, the partys email must include the case number and must identify the party submitting on the tentative.
If all parties to a motion submit, the court will adopt this tentative as the final order.
If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar
.
For more information, please contact the court clerk at (213) 633-0517.
Ruling
CHINYERE VALERIE IBE VS BAMBOO INSURANCE SERVICES, INC., A CORPORATION, ET AL.
Jul 10, 2024 |
24CHCV00588
Case Number:
24CHCV00588
Hearing Date:
July 10, 2024
Dept:
F43 Dept. F43
Date: 7-10-24
Case #24CHCV00588
,
Chinyere Valerie Ibe vs. Bamboo Insurance Services, Inc., et al.
Trial Date: N/A
DEMURRER TO FIRST AMENDED COMPLAINT WITH MOTION TO STRIKE
MOVING PARTY: Defendant 818 Restoration and Construction, LLC
RESPONDING PARTY: Plaintiff Chinyere Valerie Ibe
RELIEF REQUESTED
Demurrer to the Complaint
·
4
th
Cause of Action for Intentional Misrepresentation
·
5
th
Cause of Action for Violation of California Business & Professional Code
·
6
th
Cause of Action for Unjust Enrichment
·
7
th
Cause of Action for Defamation
Motion to Strike
·
Page 24, Paragraph 111 entitled Prayer for Relief, Lines 23-25 [claim for punitive damages]
RULING
: Defendants demurrer is sustained. Defendants motion to strike is granted.
SUMMARY OF ACTION
Plaintiff Chinyere Valerie Ibe (Plaintiff) filed her First Amended Complaint (FAC), in pro per, on March 25, 2024. Plaintiffs complaint alleges seven causes of action for (1) Breach of the Duty of Good Faith and Fair Dealing; (2) Bad Faith Denial of Insurance Claim; (3) Breach of the Contractual Duty to Pay a Covered Insurance Claim; (4) Intentional Misrepresentation; (5) Violations of Cal. Bus. & Prof. Code
§§
17200, et. seq.; (6) Unjust Enrichment; and (7) Defamation.
The First through Third Causes of Action are only against Defendant Bamboo Insurance Services, Inc. The Fourth through Seventh Causes of Action are against all Defendants. Defendant 818 Restoration and Construction, LLC (818 Restoration) is the demurring Defendant in this instance. 818 Restoration demurs to the Fourth through Seventh Causes of Action.
Plaintiffs FAC alleges that the water heater in the garage of her home burst. This caused the garage to flood, damaging the drywall and items that were stored in the garage. Plaintiffs FAC alleges that on Marh 24, 2023, Defendant Bamboo Insurance sent out a leak detector from 818 Restoration to take pictures of the damaged drywall in the garage. (FAC,
¶ 21.) She also alleges that water was still trickling out of the water heater when the leak detector from 818 Restoration came out. (FAC, ¶ 25.) She also alleges that 818 Restoration was working with Bamboo to create a story that Plaintiff falsely reported that the water heater flooded the garage. (FAC, ¶ 34.) Plaintiff also alleges that Bamboo, using its contractors, including 818 Restoration, found ways to deny her claim. (FAC, ¶ 61.) The last allegations in Plaintiffs FAC related to 818 Restoration is that it made one or more defamatory statements about Plaintiff to a person other than Plaintiff. (FAC, ¶¶ 100, 103.) There are no other specific allegations related to 818 Restoration.
818 Restoration filed its demurrer on May 28, 2024. Plaintiff filed an opposition on June 26, 2024, with proof of service by mail. On July 1, 2024, 818 Restoration filed a notice of non-opposition to its demurrer, as it apparently had no knowledge of the opposition that was filed by Plaintiff with the Court and had not yet received the opposition in the mail.
Plaintiffs opposition only argues that she was not validly served with the demurrer because she had not consented to service of the demurrer via email, which is how she claimed she received the demurrer. However, the proof of service filed with Defendants demurrer indicates that Plaintiff was served via U.S. Mail, so it is unknown why she did not receive the demurrer in the mail. Plaintiff also argues that Defendant did not meet and confer, but Defendants demurrer indicates that it attempted to meet and confer with Plaintiff, but Plaintiff did not respond to attempts to meet and confer with her. Plaintiffs opposition contains no arguments regarding the merits of the demurrer and motion to strike.
The Court will address the merits of the demurrer and the motion to strike.
ANALYSIS
A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also
Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading by raising questions of law. (
Postley v. Harvey
(1984) 153 Cal.App.3d 280, 286.) In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties. (CCP § 452.) The court treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law& (
Berkley v. Dowds
(2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (
Picton v. Anderson Union High School Dist.
(1996) 50 Cal.App.4th 726, 733.)
Fourth Cause of Action for Intentional Misrepresentation
Defendant 818 Restoration demurs to Plaintiffs cause of action for intentional misrepresentation on the basis that it fails to plead any specific allegations against 818 Restoration.
The elements of intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. (
Aton Center, Inc. v. United Healthcare Ins. Co.
(2023) 93 Cal.App.5th 1214, 1245.) Notably, in California, fraud must be pled specifically; general and conclusory allegations do not suffice. (
Lazar v. Superior Court
(1996) 12 Cal.4th 631, 645.) This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. (
Id
.)
There are no specific allegations against 818 Restoration under this cause of action. Instead, Plaintiff just alleges that Defendants made misrepresentations regarding what would be covered by Plaintiffs insurance policy. (FAC, ¶ 78.) 818 Restoration was not Plaintiffs insurance provider. It was simply an inspector hired by Plaintiffs provider, Bamboo Insurance. There are no allegations under this cause of action for any misrepresentations made specifically by 818 Restoration.
Defendants demurrer to Plaintiffs Fourth Cause of Action is sustained with leave to amend.
Fifth Cause of Action for Violation of Cal. Bus. & Prof. Code §§ 17200 et. seq.
818 Restoration demurs to this cause of action on the basis that there are insufficient facts against 818 Restoration to support this cause of action.
Cal. Business & Professions Code § 17200 et seq. includes the California Unfair Competition Law and provides consumers with remedies when businesses engage in unfair or fraudulent practices.
Plaintiffs FAC does not contain any allegations indicating that 818 Restoration violated the Business and Professions Code. The only specific allegation against 818 Restoration under this cause of action is that Bamboo used it to find ways to deny Plaintiffs claims. This is not sufficient to indicate that 818 Restoration itself engaged any acts that would constitute a violation of the Business and Professions Code.
Defendants demurrer to Plaintiffs Fifth Cause of Action is sustained with leave to amend.
Sixth Cause of Action for Unjust Enrichment
818 Restoration demurs to this cause of action on the basis that it does not allege sufficient facts to constitute a cause of action against 818 Restoration.
The theory of unjust enrichment requires one who acquires a benefit at the expense of another to either return the thing or its equivalent to the aggrieved party so as not to be unjustly enriched. (
Lyles v. Sangadeo-Patel
(2014) 255 Cal.App. 4th 759.)
Though Defendant does not raise this argument, the Court will note that there is no cause of action for unjust enrichment in California. (
Melchior v. New Line Productions, Inc.
(2003) 106 Cal.App.4th 779, 785, 793 (unjust enrichment is not a valid cause of action under California law).)
Unjust enrichment is not a valid cause of action. Furthermore, Plaintiffs FAC contains no allegations indicating how 818 Restoration was unjustly enriched.
Because unjust enrichment is not a valid cause of action, Defendants demurrer to Plaintiffs Sixth Cause of Action is sustained without leave to amend.
Seventh Cause of Action for Defamation
818 Restoration demurs to this cause of action on the basis that it does not allege facts sufficient to constitute a cause of action for defamation.
Defamation is an intentional tort that requires proof that the defendant intended to publish the defamatory statement. (
Stellar v. State Farm General Ins. Co.
(2007) 157 Cal.App 4th 1498.) California law requires that any words constituting an alleged defamation must be specifically identified, if not pleaded verbatim, in the complaint. (
ZL Technologies, Inc. v Does 1 17
(2017) 13 Cal.App. 5th 603.)
The only allegations that Plaintiff has against 818 Restoration under this cause of action is that it noted that a potential slab leak had occurred in the garage as the water did not reflect a failed water heater in the April 14, 2023, denial of benefits letter to Plaintiff, and that 818 Restoration made one or more of the states to a person other than Ms. Ibe. (FAC, ¶¶ 100, 103.) There is nothing in Plaintiffs FAC to indicate how 818 Restoration defamed Plaintiff, as the letter would have been issued by Plaintiffs insurance provider, nor does Plaintiff specifically identify the alleged defamation.
Defendants demurrer to Plaintiffs Seventh Cause of Action is sustained with leave to amend.
Motion to Strike
Defendant had moved to strike Plaintiffs request for punitive damages.
This Court may strike from the complaint any irrelevant, false, or improper matter. Under CCP § 435, [a]ny party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. Under CCP § 436(a), [t]he court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper . . . [s]trike out any irrelevant, false, or improper matter inserted in any pleading.
Punitive damages are governed by Civ. Code § 3294: In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. (Civ. Code § 3294(a).)
To state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in Civ. Code § 3294. (
Coll. Hosp., Inc. v. Superior Court
(1994) 8 Cal.4th 704, 721.) Malice is defined in the statute as conduct intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (
Id
. at 725.) Oppression is despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that persons rights. (Civ. Code § 3294(c)(2).) Fraud is defined as an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. (Civ. Code § 3294(c)(3).)¿
¿
Plaintiff has requested punitive damages as part of her prayer for relief, but nowhere in her FAC does she allege that 818 Restoration acted with malice, fraud, or oppression. Because she has not alleged that it acted with malice, fraud, or oppression, she cannot maintain a claim for punitive damages against 818 Restoration.
Defendants motion to strike Plaintiffs request for punitive damages is granted for 818 Restoration only. It could still apply to other Defendants.
CONCLUSION
Defendants demurrer to Plaintiffs Fourth, Fifth, and Seventh Causes of Action is sustained with leave to amend. Defendants demurrer to Plaintiffs Sixth Cause of Action is sustained without leave to amend.
Defendants motion to strike is granted.
Moving party to give notice to all parties.
Ruling
LGP EQUIPMENT RENTALS, INC. VS LAGD PROPERTIES LLC, ET AL.
Jul 10, 2024 |
21STCV33926
Case Number:
21STCV33926
Hearing Date:
July 10, 2024
Dept:
45
Superior Court of California
County of Los Angeles
LGP EQUIPMENT RENTALS, INC., a
California Corporation,
Plaintiff,
vs.
LAGD PROPERTIES LLC, a California limited liability company; 1st DESIGN AND DEVELOPMENT, a California Corporation; RAMON ROMERO, an individual dba SOUTHERN CALI CONSTRUCITON; L.A. GREEN DESIGNS, an unknown form of entity; and DOES 1 through 100, inclusive,
Defendants.
Case No.:
21STCV33926
DEPARTMENT 45
[TENTATIVE] RULING
Action Filed:
09/14/21
1
ST
Amended Complaint Filed: 07/17/23
Trial Date:
None set.
Hearing date:
07/10/2024
Moving Party:
Plaintiff LGP Equipment Rentals, Inc.
Responding Party:
Defendant 1ST Choice Design and Development
Motion to Compel Initial Responses to Request for Production of Documents, Set One and Request for Sanctions in the Amount of $3,000.00
The Court considered the moving, opposition, and reply papers.
The motion is GRANTED.
Recommendation
:
Grant,
Defendant is ordered to serve responses to
Requests for Production, Set One without objections within 20 days of this order. Defendant and Defense Counsel are also ordered to pay monetary sanctions jointly and severally in the amount of $750.00 to Plaintiff through its counsel of record.
Reason
:
Plaintiff served Requests for Production, Set One, on December 18, 2023. To date, the Defendant has not served any responses. However, Defendant argues that after a diligent search, it was unable to locate the documents it initially believed it had. Defendants counsel states [w]hen I was corresponding with Plaintiffs counsel, I was unaware that the documents did not exist and based on discussions with my Client we both believed the documents did exist but eventually Defendant was unable to locate them after a diligent search. (Diefenbach Decl. ¶ 8; See also Innabi Decl. ¶ 5, Ex. C.) Moreover, Tony Holder, the principal and owner of Defendant 1
st
Choice Design & Development states Defendant is ultimately unable to produce the documents because the project file was taken from a former employee who worked as the project manager for both projects, Mr. Alberto Dominguez. (Holder Decl. ¶ 2.) Mr. Holder further states [t]he records that 1st Choice did have that were not lost at the project site were lost when 1st Choice changed office locations in approximately June of 2021 . . .
1st Choice does not have any responsive documents in its custody and control that it can make available for production. I initially believed the project documents existed but was unable to locate them after a diligent search and realized that Mr. Dominguez was in charge of the documents and then other documents were lost during a move. (
Id
. at ¶¶ 4-6.)
Nevertheless, the Court notes Defendant fails to provide any evidence for its speculations of the former employee taking the records.
Therefore, the Court should grant the motion under CCP section 2031.300 and impose the reasonable amount of $750.00 (1.5 hours at $500 per hour) in monetary sanctions on the Defendant and Defense Counsel, jointly and severally.
Other Notes
:
There is a discrepancy as to the sanction amount requested. In the moving papers, Plaintiff seeks $3,000.00 in sanctions. However, in the reply papers, Plaintiff seeks $2,000.00 in sanctions.
It is so ordered.
Dated: July 10, 2024
_______________________
MEL RED RECANA
Judge of the Superior Court
Ruling
LIEL LEVI VS KEYES HYUNDAI OF VAN NUYS, AN ENTITY, ET AL.
Jul 10, 2024 |
23VECV02505
Case Number:
23VECV02505
Hearing Date:
July 10, 2024
Dept:
T
Levi v Keyes 23VECV02505
Tentative rulings
Defendants motion to strike First Amended Complaint-GRANT
. The opposition was not considered because plaintiffs counsel was to provide a declaration from Saniel Sanft attaching a copy of the overnight mail receipt, and proof of delivery or status of delivery (he stated in his 5/10/2024 proof of service that it was served by overnight delivery.). He failed to do so, and defense denies receiving the opposition.
By court order of 2/7/2024, the first amended complaint was to be served and filed no later than 20 days. Because notice was given by the court by mail, an additional 5 days were added, which would make the due date 3/4/2024. It was not served until 3/13/2024 and not filed until 3/14/2024 after the answer had been filed. Therefore, the First Amended Complaint was late, and it is disregarded. The ruling on the demurrer as to the original complaint stands: Defendants Hyundai Motor America and Van Nuys-H, Inc. dba Keyes Hyundai of Van Nuyss Demurrer to the Complaint is OVERRULED as to the eighth cause of action; SUSTAINED WITH 20 DAYS LEAVE TO AMEND as to the second cause of action; and SUSTAINED WITHOUT LEAVE TO AMEND as to the fourth, fifth, seventh, tenth, twelfth, and thirteenth causes of action. The Answer to the Complaint filed on 3/13/2024 stands.
Plaintiffs Demurrer to Answer: SUSTAINED WITH 20 DAYS LEAVE TO AMEND THE ANSWER.
Plaintiff may demur to an answer, particularly as to affirmative defenses. (Timberidge Enterps., Inc. v. City of Santa Rosa (1978) 86 Cal.App.3d 873, 879; see Hejmadi v. Amfac, Inc. (1988) 202 Cal.App.3d 525, 535 [proper vehicle to test the sufficiency of an answer].) The affirmative defenses must do more than set forth bare legal conclusion. Affirmative defenses must specify supporting facts. (FPI Devel., Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384.) Allegations stating a legal conclusion (rather than pleading facts) are inadequate. (Berger v. California Ins. Guar. Assn. (2005) 128 Cal.App.4th 989, 1006; Jones v. Grewe (1987) 189 Cal.App.3d 950, 954.)
Here, the court finds that the demurrer is justified because there are no factual allegations supporting the bare legal conclusions. The demurrer is sustained with 20 days leave to amend.
The Second Affirmative Defense at page 19, lines 3-6, is uncertain in that it cannot be ascertained what was the improper conduct of Plaintiff, and what applicable statutes required notice: Sustained as to lack of facts which is alleged to have been improper conduct.
The Sixth Affirmative Defense is uncertain in that on page 19, line 26, it cannot be ascertained who are the persons or entities other than Defendants, nor can it be ascertained how, when, or in what manner such persons or entitles were reckless, careless and/or negligent: Sustained. No facts identified.
The Twelfth Affirmative Defense fails to allege facts sufficient to state a defense; Sustained. No facts alleged.
The Twelfth Affirmative Defense is uncertain in that on page 21, line 18, it cannot be ascertained what the statutory requirements were: Sustained. No facts alleged.
The Fourteenth Affirmative Defense fails to allege facts sufficient to state a cause of action; Sustained. No facts alleged.
The Fourteenth Affirmative Defense is uncertain in that on page 21, lines 26-28, it cannot be ascertained how, when, or in what manner there was either a release or a settlement; Sustained. No facts alleged.
The Twentieth Affirmative Defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
The Twenty-First Affirmative Defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
The Twenty-Second Affirmative Defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
The Twenty-Fifth Affirmative defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
The Thirty Second Affirmative Defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
The Thirty Third Affirmative Defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
The Thirty Fourth Affirmative Defense is uncertain in that on page 25 lines 24- 25, it cannot be ascertained in what action or proceeding was there a prior class action settlement, nor can it be ascertained how, when or in what manner, Plaintiff was given notice so as to prevent his being opted out: Sustained. No facts alleged.
14.
The Thirty Sixth Affirmative Defense fails to allege facts sufficient to state a defense: Sustained. No facts alleged.
Ruling
BOGHOS TOVMASSIAN, ET AL. VS HIPPOS INSURANCE SERVICE, ET AL.
Jul 12, 2024 |
23STCV10128
Case Number:
23STCV10128
Hearing Date:
July 12, 2024
Dept:
32
BOGHOS TOVMASSIAN, et al.,
Plaintiffs,
v.
HIPPO INSURANCE SERVICES, et al.,
Defendants.
Case No.:
23STCV10128
Hearing Date:
July 12, 2024
[
TENTATIVE] order RE:
defendants motion for summary judgment
BACKGROUND
On May 5, 2023, Plaintiffs Boghos Tovmassian and Marguerite Tovmassian filed this action against Defendants Hippo Insurance Services (Hippo), Spinnaker Insurance Company (Spinnaker), and Patrick Hix, alleging (1) breach of insurance contract, (2) breach of the covenant of good faith and fair dealing, and (3) elder abuse.
According to the complaint, Plaintiffs own a home located in Tujunga, California (the Property). (Compl. ¶ 1.) The Property was insured by a homeowners insurance policy issued by Hippo, which is owned and underwritten by Spinnaker. (
Ibid.
) In December 2021, the Property suffered wind and water intrusion, leading Plaintiffs to make a claim. (
Ibid.
) Plaintiffs allege that Defendants failed to conduct a full and fair investigation, which resulted in an insufficient payout. (
Id.
, ¶ 3.)
On April 25, 2024, Hippo and Spinnaker filed the instant motion for summary judgment. Plaintiffs have not filed an opposition.
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, 67, 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, 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, 166.) 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.)
DISCUSSION
I. Hippos Liability
a. Plaintiffs Had No Contract with Hippo
To establish breach of contract, a plaintiff must show: (1) the contract existed, (2) the plaintiffs performance of the contract or excuse for nonperformance, (3) the defendants breach, and (4) the resulting damage to the plaintiff. (
Richman v. Hartley
(2014) 224 Cal.App.4th 1182, 1186.) A plaintiff cannot assert a claim for breach of contract against one who is not a party to the contract. (
Tri-Continent Internat. Corp. v. Paris Savings & Loan Assn.
(1993) 12 Cal.App.4th 1354, 1359.)
It is undisputed that the policy was issued by Spinnaker, with Hippo as the program administrator. (Def.s Undisputed Facts (UF) 1; Carden Decl., Ex. A.) The policy was signed by Spinnakers CEO. (
Ibid.
) Therefore, Hippo has satisfied its initial burden by showing that it was not a party to the policy with Plaintiffs. This is sufficient to shift the burden to Plaintiffs, who do not oppose the motion or present any contrary evidence. Accordingly, Hippo is not liable for breach of contract as a matter of law.
b. Hippo Cannot be Liable for the Implied Covenant
The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other partys right to receive the benefits of the agreement actually made. (
Guz v. Bechtel National, Inc.
(2000) 24 Cal.4th 317, 349-50.) In the absence of a contractual relationship, no implied covenant claims may be stated. (
Gulf Ins. Co. v. TIG Ins. Co.
(2001) 86 Cal.App.4th 422, 430.)
As discussed above, Hippo has established that it had no contractual relationship with Plaintiffs. Accordingly, Plaintiffs cannot maintain an implied covenant claim against Hippo.
c. Hippo Cannot be Liable for Elder Abuse
Financial abuse of an elder or dependent adult occurs when a person or entity does any of the following: takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (Welf. & Inst. Code, § 15610.30.)
Hippo could not have wrongfully retained Plaintiffs property (
i.e.
, the insurance proceeds) if it was not a party to the policy and did not have any obligation to pay Plaintiffs. Therefore, the elder abuse claim fails as a matter of law.
II. Spinnakers Liability
a. The Claims are Time-Barred
Under California law parties may agree to a provision shortening the statute of limitations, qualified, however, by the requirement that the period fixed is not in itself unreasonable or is not so unreasonable as to show imposition or undue advantage. (
William L. Lyon & Associates, Inc. v. Superior Court
(2012) 204 Cal.App.4th 1294, 1307, quoting
Capehart v. Heady
(1962) 206 Cal.App.2d 386, 388.) [A] covenant shortening the period of limitations is a valid provision of an insurance contract and cannot be ignored with impunity as long as the limitation is not so unreasonable as to show imposition or undue advantage. (
Prudential-LMI Com. Ins. v. Superior Court
(1990) 51 Cal.3d 674, 683.) One year was not an unfair period of limitation. (
Ibid.
; see also Ins. Code, § 2071(a) [imposing one-year limitations period for fire insurance claims].)
The statute of limitations for actions on insurance claims is equitably tolled from the time the insured notifies the insurer of the claim until coverage is denied. (
Marselis v. Allstate Ins. Co.
(2004) 121 Cal.App.4th 122, 124.) The reason for the tolling rule is to avoid penalizing the insured for the time consumed by the insurer investigating the claim. (
Id.
at p. 125.) The running of the limitations period resumes upon the insurers denial of a claim, and no further tolling occurs, even if the insurer reconsiders its denial. (
Singh v. Allstate Ins. Co.
(1998) 63 Cal.App.4th 135, 142.)
Here, the insurance policy provides that [n]o action can be brought against us unless . . . the action is started within one year after the date of loss. (Carden Decl., Ex. A.) The loss occurred on December 30, 2021. (Compl. ¶ 1.) Plaintiffs reported the loss to Spinnaker on January 8, 2022. (Carden Decl. ¶ 4, Ex. B.) Spinnaker issued notice of its coverage position on January 27, 2022, granting coverage on certain items and denying the rest. (
Id.
, ¶ 5, Ex. C.) Plaintiffs did not file this action until May 5, 2023, well past the one-year limitations period, even accounting for the tolling period between January 8, 2022 and January 27, 2022. Spinnakers reopening of the claim on May 17, 2022 based on Plaintiffs request for reconsideration (Carden Decl. ¶13) did not further toll the limitations period.
Therefore, Spinnaker has met its initial burden by establishing that the claims are time-barred.
[1]
This is sufficient to shift the burden to Plaintiffs, who do not oppose the motion or present any contrary evidence. Accordingly, Spinnaker is not liable as a matter of law.
b. Spinnaker Did Not Breach the Policy
There can be no breach of the insurance policy . . . [where] the undisputed evidence established that [the insurer] paid all amounts due under the policy. (
Janney v. CSAA Ins. Exchange
(2021) 70 Cal.App.5th 374, 390.)
Here, the policy covered direct physical loss to property. (Carden Decl., Ex. A.) Spinnaker covered damage to the first-floor flooring, the only part of the Property directly damaged by the water intrusion. (Carden Decl. ¶ 14, Ex. F.) Spinnaker declined to cover the undamaged stairs and second-floor flooring. (
Ibid.
) Spinnaker issued payment for the covered portions. (
Id.
, ¶¶ 5-6, Ex. C, D.)
Spinnaker has met its initial burden by showing that it satisfied its obligations under the policy. This is sufficient to shift the burden to Plaintiffs, who do not oppose the motion or present any contrary evidence. Accordingly, Spinnaker is not liable for breach of contract as a matter of law for this independent reason.
c. Spinnaker Could Not Have Breached the Implied Covenant
[A] bad faith claim cannot be maintained unless policy benefits are due. (
Love v. Fire Ins. Exchange
(1990) 221 Cal.App.3d 1136, 1153.) Spinnaker could not have acted in bad faith if it correctly denied policy coverage. Furthermore, as discussed above, the claim is time-barred. Therefore, the implied covenant claim fails as a matter of law.
d. Spinnaker Could Not Have Committed Elder Abuse
Likewise, Spinnaker could not have wrongfully retained insurance benefits if it correctly denied them, and the claim is time-barred in any case. Therefore, the elder abuse claim fails as a matter of law.
CONCLUSION
The motion for summary judgment filed by Hippo and Spinnaker is GRANTED.
[1]
This applies to all three causes of action, not just breach of contract, because the policy states that no action may be brought outside one year. The policy does not restrict the limitations period to claims on the policy itself. Furthermore, where the essence of [a] claim[] is an attempt to recover [d]amages for failure to provide benefits under subject contract of insurance, the claim is fundamentally a claim on the policy and is thus time barred under the limitations period stated in the policy. (
Magnolia Square Homeowners Ass'n v. Safeco Ins. Co.
(1990) 221 Cal.App.3d 1049, 1063, quoting
Lawrence v. Western Mutual Ins. Co.
(1988) 204 Cal.App.3d 565, 575.)
Ruling
LOS ANGELES UNIFIED SCHOOL DISTRICT, A SCHOOL DISTRICT, VS SCOTTSDALE INDEMNITY COMPANY, ET AL.
Jul 11, 2024 |
21STCV28642
Case Number:
21STCV28642
Hearing Date:
July 11, 2024
Dept:
53
Superior Court of California
County of Los Angeles Central District
Department 53
los angeles unified school district
;
Plaintiff
,
vs.
scottsdale indemnity company a/k/a nationwide e&s / specialty
, et al.;
Defendants
.
Case No.:
21STCV28642
Hearing Date:
July 11, 2024
Time:
10:00 a.m.
[tentative] Order
RE:
plaintiffs motion for court determination of defendant scottsdale indemnity companys claim of privilege
MOVING PARTY:
Plaintiff Los Angeles Unified School District
RESPONDING PARTY:
Defendant Scottsdale Indemnity Company
Motion for Court Determination of Defendant Scottsdale Indemnity Companys Claim of Privilege
The court considered the moving, opposition, and reply papers filed in connection with this motion.
DISCUSSION
Plaintiff Los Angeles Unified School District (Plaintiff) moves the court for an order determining, pursuant to Code of Civil Procedure section 2031.285, that the attorney-client privilege or the attorney work production protection do not apply, or that defendant Scottsdale Indemnity Company (Defendant) has waived any claim of such privilege or protection, as to (1) all or part of Defendants production of documents identified as Bates Nos. SCD0000732 SCD0001049, and (2) the portions of the March 25, 2024 deposition of Ana Campos concerning Exhibit 17 to that deposition.
If electronically stored information produced in discovery is subject to a claim of privilege or of protection as attorney work product, the party making the claim may notify any party that received the information of the claim and the basis for the claim.
(Code Civ. Proc., § 2031.285, subd. (a).)
After being notified of a claim of privilege or of protection under subdivision (a), a party that received the information shall immediately sequester the information and either return the specified information and any copies that may exist or present the information to the court conditionally under seal for a determination of the claim.
(Code Civ. Proc., § 2031.285, subd. (b).)
As a threshold matter, the court notes that the parties have not set forth, in their briefs, the exact documents in the approximate 400-page production that Defendant contends are privileged.
(Andrade Decl., Ex. A [March 26, 2024 letter requesting the destruction of documents bates-numbered SCD0000732-SCD0001049]; Gerson Decl., ¶¶ 4-8.)
However, Defendants revised privilege log, dated April 19, 2024, has identified the following page numberswhich consist of emails, draft letters, counsels notes, and a form setting forth premium information of a third partyas privileged: (1) numbers 906-910 (attorney-client privilege); (2) numbers 912-917 (attorney-client privilege); (3) numbers 918-920 (work product protection); (4) numbers 924-928 (attorney-client privilege); (5) number 943 (work product protection); (6) numbers 956-958 (attorney-client privilege and work product protection); (7) numbers 959-962 (work product protection); (8) numbers 962-966 (attorney-client privilege); (9) numbers 1046-1049 (attorney-client privilege); and (10) counsels notes set forth on pages 733, 827, 831, 836, 839, 842, 845, 852, 854, 856, 858, 860, 861, 871, 972, 973, 975, 977, 1005, 1009, 1011, 1013, 1016, 1018, 1020, 1022, 1025, 1027, 1030, 1034, 1037, 1040, 1042, 1044, and 1045 (work product protection).
(Andrade Decl., Ex. F, Privilege Log, p. 1; Gerson Decl., ¶ 15 [On April 19, 2024, [Defendant] reproduced the file with appropriate redactions of the privileged documents contained within the file, and produced alongside it a new privilege log, noting the redactions].)
Thus, the court has evaluated Plaintiffs motion and Defendants claims of privilege as to the documents identified in Defendants April 19, 2024 privilege log.
First, the court finds that Defendant has
met its burden to show that the documents containing email correspondence are protected by the attorney-client privilege.
(
Costco Wholesale Corp. v. Superior Court
(2009) 47 Cal.4th 725, 733 [The party claiming the privilege has the burden of establishing the preliminary facts necessary to support its exercise, i.e., a communication made in the course of an attorney-client relationship].)
Defendant has submitted evidence establishing that it retained (1) the law firm Selman Breitman, LLP (the Selman Firm) as its outside coverage counsel, and (2) the law firm Manning & Kass, Ellrod, Ramirez, Trester LLP (the Manning Firm) to defend defendant After School All Stars (ASAS) in the underlying action and in this action.
(Gerson Decl., Ex. A, McRoberts Decl., ¶ 7; Hochhausler Decl., ¶¶ 1-2, 4.)
Defendant has also submitted evidence explaining that K&K Insurance Group, Inc. (K&K) acted as its claims administrator, and performed various claims administrations functions, including retaining defense counsel for ASAS.
(Gerson Decl., Ex. A, McRoberts Decl., ¶ 8.)
As to the communications between Defendant (including through its claims administrator, K&K) and the Manning Firm regarding the defense of ASAS, the court finds that Defendant has made a prima facie showing that the communications were made in the course of a tripartite attorney-client relationship and therefore are protected by the attorney-client privilege because (1) [w]hen an insurer retains counsel to defend its insured, a tripartite attorney-client relationship arises among the insurer, insured, and counsel[,] and (2) Defendant has submitted evidence establishing that it, as the insurer for ASAS, retained the Manning Firm to represent ASAS, its insured.
(
Bank of America, N.A. v. Superior Court
(2013) 212 Cal.App.4th 1076, 1083; Hochhausler Decl., ¶ 4; Andrade Decl., Ex. F, Privilege Log, p. 1, ¶ 9 [email correspondence between Manning Firm and K&K].)
Thus, the confidential communications between either the insurer [(here, Defendant)] or the insured [(here, ASAS)] and counsel [(here, the Manning Firm)] are protected by the attorney-client privilege, and both the insurer and insured are holders of the privilege.
(
Bank of America, N.A.
,
supra
, 212 Cal.App.4th at p. 1083.)
As to the communications between Defendant (including through its claims administrator, K&K) and the Selman Firm, the court finds that Defendant has made a prima facie claim of privilege by showing that (1) Defendant retained the Selman Firm to act as its coverage counsel, such that (2) the communications described in the privilege logwhich describe the subject emails as confidential communications with coverage counselwere made in the course of an attorney-client relationship.
(Gerson Decl., Ex. A, McRoberts Decl., ¶ 7;
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at p. 733 [party has initial burden of establishing preliminary facts of a communication made in the course of an attorney-client relationship]; Andrade Decl., Ex. F, Privilege Log, p. 1, ¶¶ 1 [email correspondence between Selman Firm and K&K], 2 [email correspondence forwarding communications from Selman Firm between K&K and Defendant], 4 [email correspondence between K&K, Selman Firm, and Defendant], 6 [email correspondence between K&K, Selman Firm, and Defendant], 8 [email correspondence between Selman Firm, K&K, and Defendant].)
Thus, the court finds that Defendant has met its burden to make a prima facie claim of privilege as to the communications between it, its claims adjuster K&K, the Manning Firm, and the Selman Firm.
(
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at p. 733.)
Second, the court finds that Plaintiff has not met its burden to show that the communications are not privileged.
(
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at p. 733 [Once that party establishes facts necessary to support a prima facie claim of privilege, the communication is presumed to have been made in confidence and the opponent of the claim of privilege has the burden of proof to establish the communication was not confidential or that the privilege does not for other reasons apply].)
Plaintiff contends that the privilege arising from an attorney-client relationship (whether arising from a tripartite relationship or generally) does not apply here because such privilege does not protect an insurers internal communications concerning coverage issues relevant to the insureds litigation and Defendant retained coverage counsel to perform [Defendants] investigation of the claim (i.e., claims handling)[.]
(Reply, p. 3:1-3, 3:8-9.)
The court disagrees.
The court acknowledges that a court should determine the dominant purpose of the relationship between an insurance company and its in-house attorneys to determine whether the relationship is one of attorney-client or one of claims adjuster-insurance corporation.
(
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at pp. 739-740.)
If the court determines that the dominant purpose of such a relationship is not that of attorney and client, communications between the insurer and its counsel that is acting as a claims adjuster would not be protected by the attorney-client privilege.
(
Id.
at p. 740.)
As set forth above, Defendant met its initial burden to show the existence of an attorney-client relationship by submitting evidence establishing that it retained the Selman Firm as its coverage counsel, such that it is presumed that the communications were made in confidence.
(Gerson Decl., Ex. A, McRoberts Decl., ¶ 7;
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at p. 733.)
Plaintiff contends that Defendants relationship with the Selman Firm is more analogous to claims adjuster-insurance company than attorney-client.
In support of this contention, Plaintiff relies on the following two assertions made by Defendant in its motion for summary judgment or, alternatively, summary adjudication: (1) Defendant retained coverage counsel who promptly sought information necessary for [Defendants] coverage investigation[,] and (2) Defendant promptly retained coverage counsel and promptly agreed to defend [Plaintiff] under a reservation of rights.
(Andrade Reply Decl., Ex. H, p. 24:4-5, 24:8-11.)
The court finds that these two statements do not show that the dominant purpose of the relationship between Defendant and the Selman Firm was that of claims adjuster-insurance corporation.
These statements do not establish that the Selman Firm was acting solely as a claims adjuster, or even acting mostly as a claims adjuster, on behalf of Defendant.
As set forth above, the inquiry concerns the
dominant
purpose of the relationship between Defendant and the Selman Firm.
(
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at p. 739 [emphasis added].)
Thus, the court finds that Plaintiff has not shown that the attorney-client privilege does not apply on the ground that the dominant purpose of Defendant and the Selman Firms relationship was that of claims adjuster-insurance corporation.
Moreover, the court finds relevant that, in its opposition papers, Defendant represented that its communications involving,
inter alia
, the Selman Firm concerned case strategy and case updates, further supporting Defendants assertion of the existence of an attorney-client relationship between it and the Selman Firm.
(Opp., p. 12:11-13.)
Third, the court finds that Plaintiff has not met its burden to show that Defendant waived its right to assert the attorney-client privilege and work product protection.
(
Costco Wholesale Corp.
,
supra
, 47 Cal.4th at p. 733.)
The right of any person to claim attorney-client privilege is waived with respect to a communication protected by the privilege if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to the disclosure made by anyone.
Consent to disclosure is manifested by any statement or other conduct of the holder of the privilege indicating consent to the disclosure, including failure to claim the privilege in any proceeding in which the holder has legal standing and the opportunity to claim the privilege.
(Evid. Code, § 912, subd. (a).)
[T]he disclosure contemplated in Evidence Code section 912 involves some measure of choice and deliberation on the part of the privilege holder.
(
McDermott Will & Emery LLP v. Superior Court
(2017) 10 Cal.App.5th 1038, 1101;
State Compensation Ins. Fund v. WPS, Inc.
(1999) 70 Cal.App.4th 644, 652 [Based on the language of Evidence Code section 912, we hold that waiver does not include accidental, inadvertent disclosure of privileged information by the attorney].)
When determining whether an inadvertent disclosure waived the attorney-client privilege, a trial court must examine both the subjective intent of the privilege holder and any manifestation of the holders intent to disclose the information.
[Citations.]
Other relevant considerations include the precautions the holder took to maintain the privilege and the promptness with which the holder sought return of the inadvertently disclosed document.
(
McDermott Will & Emery LLP
,
supra
, 10 Cal.App.5th at pp. 1101-1102 [internal citations omitted].)
Plaintiff contends that both Defendant and ASAS waived their rights to assert the attorney-client privilege and work product protection because (1) Defendant did not attempt to claw back the documents until two years after the production thereof; (2) Defendant raised a privileged-based objection at the end of deposition, after allowing Plaintiffs counsel to question Ana Campos about one of those documents; and (3) ASAS did not assert the privilege at the deposition of Ana Campos.
The court disagrees.
Defendant has submitted evidence establishing that (1) its counsel inadvertently overlooked the subject communications and documents and did not intend to include those documents in Defendants production, and (2) it did not discover the production of the privileged documents until the March 25, 2024 deposition of Ana Campos.
(Gerson Decl., ¶¶ 8-13; Roberts Decl., ¶¶ 2-4.)
Moreover, counsel states that they did not have occasion to review the documents after Defendants 2022 production.
(Gerson Decl., ¶ 12; Roberts Decl., ¶ 6.)
The court finds that Defendant did not have the subjective intent to disclose privileged materials to Plaintiff in its production, nor did Defendant manifest an intent to disclose or to consent to disclose such information by asserting the privilege two years after its production, in light of the evidence establishing that Defendant first learned of the disclosure at that time and (1) asserted the privilege at the end of the deposition and on the record, and (2) promptly requested, the day after the deposition, that Plaintiff destroy the documents.
(
McDermott Will & Emery LLP
,
supra
, 10 Cal.App.5th at p. 1101; Evid. Code, § 912, subd. (a); Andrade Decl., Ex. A [March 26, 2024 letter from Defendant requesting destruction of documents].)
The court acknowledges, as Plaintiff has pointed out, that Defendants counsel did not object to the use of one privileged document (labeled as Exhibit 17) until the conclusion of Ana Camposs deposition.
(Limber Decl., ¶ 5 [stating that, [a]t the conclusion of the Campos deposition[,] counsel asserted privilege].)
However, the court finds that this conduct does not evidence a subjective intent to disclose privileged information.
The attorney representing Defendant in this deposition has stated, in her declaration, that while she believed the exhibit appeared on its face to contain privileged material, she wanted to fully review and analyze the document and identify all individuals referenced, before making any statements on the record.
(Limber Decl., ¶ 3.)
After reviewing the exhibit during a break, counsel asserted the attorney-client privilege on the record.
(Limber Decl., ¶¶ 4-5.)
The court finds that Defendants counsels conduct, in ensuring the applicability of the claim of privilege before asserting it on the record and doing so at the conclusion of the deposition, does not show a subjective intent to disclose the information, or to consent to its disclosure.
(
McDermott Will & Emery LLP
,
supra
, 10 Cal.App.5th at p. 1101; Evid. Code, § 912, subd. (a).)
The court further finds that ASAS did not waive its right to claim the attorney-client privilege and work product protection by electing not to assert the privileges at the deposition of Ana Campos.
Counsel for ASAS has stated, in his declaration, that (1) he did not intend to waive any privilege claims on behalf of ASAS, and (2) he did not make an objection on the deposition record because Defendant had already asserted the privilege, such that counsel did not see the need to make a redundant objection.
(Hochhausler Decl., ¶¶ 8, 6.)
The court finds that this evidence shows that ASAS did not have the subjective intent to disclose or to consent to the disclosure of privileged information.
(
McDermott Will & Emery LLP
,
supra
, 10 Cal.App.5th at p. 1101; Evid. Code, § 912, subd. (a).)
Thus, for the reasons set forth above, the court finds that Plaintiff did not meet its burden to show that Defendant and/or ASAS waived their rights to assert the attorney-client privilege.
Finally, the court notes that three entries on Defendants privilege log identify three categories of documents that it contends are subject to the work product protection.
(Andrade Decl., Ex. F, Privilege Log, p. 1, ¶¶ 3, 5, 10.)
The parties do not expressly address these entries or dispute that they are subject to the work product protection provided by Code of Civil Procedure section 2018.010 et seq.; instead, Plaintiff appears only to argue that Defendant and ASAS waived this protection.
(Mot., p. 10:22-25.)
However, the court has determined, for the reasons set forth above, that Defendant did not waive its right to claim that the documents in the subject production are privileged.
The court finds that Defendant did not waive its right to claim the work product protection for the same reasons set forth above.
ORDER
The court denies plaintiff Los Angeles Unified School Districts motion for determination of claim of privilege.
The court orders defendant Scottsdale Indemnity Company to give notice of this ruling.
IT IS SO ORDERED.
DATED:
July 11, 2024
_____________________________
Robert B. Broadbelt III
Judge of the Superior Court
Document
State Farm Mutual Automobile Insurance Company v. Jonathan Etwaroo, Sudeisha Ortiz, Alex Oquendo, Ronald Borden, Alexandre Grigorian, D.O., I Am Supplies Inc, Injury Care Chiropractic, P.C., Jtk Chiropractic Care, P.C., M & A Pharmacy And Med Supplies, Corp., Medical Imaging Of Bronx, P.C., Metro Scripts, Llc, Next Generation Diagnostic Imaging P.C., Nextstep Healing Inc, Pacem Psychological Services, P.C., Pda Ny Chiropractic, P.C., Right Choice Supply Inc, Rightway Pharmacy, Inc., Sedation Vacation Perioperative Medicine Pllc, Sharsham Corp. d/b/a Willis Pharmacy, Tj Physical Therapy P.C.
Jul 11, 2024 |
Torts - Other (Insurance) |
Torts - Other (Insurance) |
156307/2024
Preview
FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------------------------------X COLONY INSURANCE COMPANY and MYM CONSTRUCTION, INC., Index No.: 652031/2016 Plaintiffs, PLAINTIFFS' -against- REPLY AFFIRMATION IN TUDOR INSURANCE COMPANY and SUPPORT OF SUMMARY GREENSIDE JUDGMENT MOTION CORP., Defendants. --------------------------------------------------------------------X S. DWIGHT STEPHENS, an attorney duly admitted to practice law before the courts of the state of New York, affirms the truth of the following statements: ("Colony" 1. Plaintiffs Colony Insurance Company ("Colony") and MYM Construction, Inc. "Plaintiffs" ("MYM") (collectively "Plaintiffs") submit this affirmation in response to the opposition to their ("Tudor" summary judgment motion filed by Defendant Tudor Insurance Company ("Tudor"). TUDOR'S DISCLAIMER IS INVALID BECAUSE IT WAS UNTIMELY UNDER INSURANCE LAW SECTION 3420(d). Plaintiffs' 2. As discussed in moving papers, New York Insurance Law §3420(d)(2) imposes a strict timeliness requirement on the issuance of a written notice of disclaimer for liability policies issued or delivered in New York, like the Tudor Policy here, when an insurer seeks to deny coverage for death or bodily injury based on an exclusion. Failure to raise a ground for possible" disclaiming "as soon as is reasonably precludes an insurer from later asserting itas a defense. 3. Tudor does not dispute that it was required to timely disclaim coverage based on the employee exclusion because the general provisions of the Tudor Policy afford coverage to MYM since itwas specifically added as an additional insured by name to the Tudor Policy by 1 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 Endorsement number 3 (Exhibit N). (Unless otherwise noted, exhibit references are to the exhibits Plaintiffs' annexed to summary judgment motion.) See, e.g., Kemper Independence Ins. Co. v. Brennan, 155 A.D.3d 953, 954, 64 N.Y.S.3d 125, 127 (2d Dep't 2017). 4. Tudor also does not dispute that ithas the burden of justifying any delay. See, e.g., First Financial Insurance Co. v. Jetco Contracting Corp., 1 N.Y.3d 64, 66, 769 N.Y.S.2d 459 (2003). Nor does Tudor dispute that the reasonableness of a delay will be measured from the point when the insurer becomes aware of sufficient facts to support the disclaimer. See Consolidated (13t Edison Co. v. Hartford Ins. Co., 203 A.D.2d 83, 84, 610 N.Y.S.2d 219, 221 Dep't 1994), or possible" that "[a]s soon as reasonably has generally been construed to mean 30 days or less. See, e.g., Kramer v. Government Employees Ins. Co., 269 A.D.2d 567, 703 N.Y.S.2d 514 (2d Dep't 2000). 5. A logical corollary of this rule is that an insurer cannot justify its delay in "investigation" disclaiming by contriving an alleged extended that is not calculated to, and in fact does not, add anything new to the information upon which the insurer bases its disclaimer. See (13t also City of New York v. Welsbach Electric Corp., 49 A.D.3d 322, 852 N.Y.S.2d 134 Dep't 2008) (insurer must conduct investigation "promptly, diligently and in good faith"). 6. Once the delay exceeds 30 days, which is the case here, the insurer must explain why itneeded that amount of time to issue a disclaimer. Viewing every fact in Tudor's favor, the 36 days it took Tudor to issue itsdisclaimer is untimely as a matter of law under New York's very strict timely disclaimer requirements. Plaintiffs' 7. As discussed in opposition to Tudor's summary judgment motion, for purposes of the present summary judgment motion practice, Plaintiffs assume that Tudor received firstnotice of the claim on 11/24/14. 2 2 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 Plaintiffs' 8. initial tender letter alerted Tudor to the applicability of the employee exclusion in the Tudor Policy. Tudor confirmed the applicability of the exclusion with a phone call to its insured, which was returned by the insured the next day. Tudor was aware of sufficient facts to support the disclaimer following an investigation taking a couple of days. 9. However, Tudor did not issue its disclaimer for 36 days after it acknowledges Plaintiffs' receiving tender. The question is whether Tudor's explanation for the 36 days passes muster given the strict timely-disclaimer requirements. 10. Tudor has no explanation for no activity from 11/24/14 to 12/2/14. Tudor's explanation for the next seven days of no activity from 12/2/14 to 12/9/14 is that itallegedly "made him." several calls to Mr. Kelleher but could not reach (Hazard Aff. at 113). However, the first note documenting a call where the adjuster left a message resulted in a note the next day confirming a call back by Greenside (a call that confirmed the claimant's employment status). 11. Tudor's explanation for not issuing the disclaimer on 12/10/14 is that itwas waiting for its investigator's report. However, the investigator's report had nothing to add to what the adjuster already knew about the claimant's employment by Greenside based on his own investigation. The investigator's report primarily addressed the nature of the job, the circumstances of the accident, and witnesses to the accident, etc., all of which are relevant to potential liability issues but not to the applicability of the employee exclusion (See Exhibit V). The law is clear that Tudor's delay in notifying Plaintiffs of the disclaimer is not justified by Tudor's investigation into other issues unrelated to the employment issue relevant to Tudor's coverage denial. See, e.g., Liberty Mutual Fire Insurance Co. v. Navigators Insurance Co., 158 (1st A.D.3d 431, 67 N.Y.S.3d 816 Dep't 2018). Plaintiffs' 12. For the firsttime, in opposition to motion, Tudor asserts that the danger 3 3 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 "advised" of issuing an immediate disclaimer on the basis of what Colony had been as to Gormley's employment status is highlighted by the conflicting information ultimately provided by the Greenside contact person provided to Tudor, Phillip Kelleher. (Tudor Opp. Memo of Law at pp. 6-7). Mr. Kelleher told Tudor's adjuster and its investigator that he was the president and co- owner of Greenside and that Gormley was employed by Greenside. (Exhibit U at CFO 434; Exhibit V at CFO 378). In this action, however, Mr. Kelleher denied being the owner of Greenside and his testimony indicated that he assumed Gormley worked for Greenside. (Tudor Exhibit V at pp. 18, 20). 13. First of all, Plaintiffs are giving Tudor the benefit of the doubt that itwas justified in confirming for itself Gormley's employment status. It did that with one documented call that was returned the very next day. Moreover, this inconsistent testimony by Mr. Kelleher in this insurance coverage action four years later does not change the fact that Mr. Kelleher told Tudor's adjuster and its investigator the same thing in the context of Tudor's investigation of the claim and Tudor relied on that assertion (namely, that Mr. Kelleher owned Greenside and Greenside employed Gormley) to deny coverage based on the employee exclusion. practice" 14. Tudor also asserts that it was Tudor's "standard to refer every claim to outside coverage counsel where the claim involves an incident that is in suit (Hazard Aff. at $15). To carry its burden, however, Tudor was required to explain the necessity of a coverage opinion in this case-that is,any reason that the applicability of the employee exclusion presented a novel legal issue given either the language of the Tudor exclusion and/or the particular facts of this case. It has not provided such an explanation, either in its affirmative motion or in opposition to Plaintiffs' motion, and any belated explanation that itmight come up with in reply should be disregarded for the contrivance that itis. (See Exhibit T at 20 lines 2-11). 4 4 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 15. Again, giving Tudor the benefit of the doubt, Tudor sent the investigator's report, indicating Greenside employed the claimant, to counsel on 12/17/14, and counsel responded with a report complete with three virtually identical draft disclaimers two days later on 12/19/14 (Tudor Exhibit Q). And counsel had done Tudor's work by drafting the disclaimers for it. 16. Tudor asserts that itreceived the disclaimers on Monday, 12/22/14 (Hazard Aff. at ¶l 6). Giving Tudor the benefit of the doubt again, itstill did not issue the disclaimers on 12/22/18. Instead, Tudor sent Plaintiffs a letter on 12/23/18 stating that itwould be denying coverage without explaining why (Exhibit E). 17. Despite having a coverage opinion from counsel and draft disclaimers, Tudor waited another eight days before mailing the disclaimers. Tudor's explanation is that the Christmas holiday fellduring that week (Hazard Aff. at ¶l 8). This does not explain why the letter was not sent out on 12/22 or 12/23. This eight days is another inadequately explained gap. 18. At a minimum, there are 23 unexplained days (15 in the beginning and 8 at the end). Plaintiffs submit that there are an additional 6 inadequately explained days attributable to Tudor waiting for an investigator's report that was unnecessary for the employment issue. 19. Plaintiffs also submit that Tudor has not adequately explained its reliance on the opinion from counsel to justify its delayed disclaimer (6 days). The coverage opinion apparently waited for the DMA investigation, which was solely duplicative on the employment issue. 20. New York's disclaimer requirements are very strict for denials of coverage under liability policies issued in New York. A general liability policy has been held to cover an auto liability accident despite a clear auto exclusion where an insurer did not timely disclaim. See Highrise Hoisting & Scaffolding, Inc. v. Liberty Ins. Underwriters, Inc., 116 A.D.3d 647, 984 (1st N.Y.S.2d 366 Dep't 2014). 5 5 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 21. In sum, the fact that Tudor has 23 unexplained days and six inadequately explained days and that itdid not disclaim for 20 days after being told by the insured of Gormley's employee status means that the disclaimer was untimely. Accordingly, even if this Court were to assume that it took Tudor 36 (and not 51) days to disclaim, the Tudor disclaimer is invalid under New York's strict timeliness rules where over 30 days requires an explanation. TUDOR'S REAL-PARTY-IN-INTEREST ARGUMENT IS MERITLESS. Plaintiffs' 22. For the first time, in opposition to motion, Tudor argues that Colony is the real party in interest and may not seek reimbursement of defense or settlement costs itpaid. 23. Our office had this exact same situation, with the shoe on the other foot, in Time (4th Cap Development Corp. v. Colony Insurance Company, 148 A.D.3d 1749, 51 N.Y.S.3d 757 Rutgers' Dep't 2017). The case is virtually identical for purposes of belated real-party-in-interest claim in this case, including a settlement of the underlying action during the coverage action. The one difference is that,unlike here where Colony is a plaintiff, the other insurer in Time Cap, which was Cincinnati Insurance Company, tried to hide its interest by filing the declaratory judgment action solely in the name of its insured, Time Cap. Colony made the real-party-in-interest argument at the outset, impleading Cincinnati into the action. The real-party-in-interest argument made no difference in the outcome. 24. Time Cap filed a declaratory judgment action against the insurer of its contractor, Colony. Time Cap, which was insured by Cincinnati, was the general contractor, and the injured laborer was employed by Colony's insured Parish Ironworks. Colony issued a disclaimer based on an employee exclusion that was untimely under section 3420(d)(2). See id. 25. Colony impleaded Cincinnati into the insurance coverage action arguing that itwas the real party in interest and its disclaimer was valid vis-à-vis Cincinnati. If that were so, then 6 6 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 Colony argued that the coverage under the two policies (Cincinnati's and Colony's) would apply on a co-insurance basis because Time Cap and Cincinnati theoretically both were parties in interest. The Appellate Division rejected that argument, concluding that even if Colony's disclaimer was valid as to Cincinnati's claim, that was not a reason to alter the priority of coverage set forth in the plain language of the insurance contracts. 148 A.D.3d at 1751. 26. Cincinnati's policy there (like Colony's policy here) provided that the coverage afforded for itsnamed insured was excess over "[a]ny other primary insurance available to you covering liability arising out of . .. operations . ..for which you have been added as an additional endorsement." insured by attachment of an (See Exhibit W hereto at C-15 (Colony "Other Insurance" Condition, Section IV.4.b.(1)(b))). In Time Cap, the Appellate Division concluded that even if Colony's disclaimer was valid as to Cincinnati's claim, the Colony policy still covered Time Cap as an additional insured since the disclaimer was invalid as to it, giving Colony the sole obligation to defend and indemnify Time Cap. See 148 A.D.3d at 1752. 27. The same is true here. Even if Tudor's disclaimer is valid as to Colony, the Tudor policy still covers MYM as an additional insured since the disclaimer is invalid as to it,giving Tudor the sole obligation to defend and indemnify MYM. 28. Thereafter, the underlying action in Time Cap settled, after the summary judgment motions but stillduring the declaratory judgment action, for an amount within Time Cap's policy limit with Cincinnati. Based on thisnew fact, Colony moved for renewal arguing that thispayment confirmed that Cincinnati was, in fact, the sole real party in interest. See 148 A.D.3d at 1751. The Appellate Division concluded that this constituted a different legal theory and rejected the argument that this new fact warranted changing the prior determination. See id. 29. So, too, here the fact that the underlying Gormley action settled during this 7 7 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 declaratory judgment action does not change the fact that the Tudor policy still covers MYM as an additional insured since the disclaimer is invalid as to it,giving Tudor the sole obligation to defend and indemnify MYM. 30. There also is an important policy reason that Tudor's argument should be rejected. According to Tudor, when the tendering insurer settles the underlying action, itbecomes the real party in interest in a coverage action against the contractor's insurer, and this, in turn, transforms a disclaimer that is invalid as to the additional insured's claim into a valid disclaimer during the coverage action. If this were the rule (and itis not), itwould be a serious impediment to resolving the many construction cases involving additional insured tenders as the various parties upstream attempt to shift the loss downstream to the contractor(s) actually in control of the work. Carriers for owners and general contractors would have a disincentive to settle claims where they are challenging the validity of another insurer's disclaimer while an underlying action is stillongoing because doing so would transform an invalid disclaimer into a valid one. 31. Plaintiffs submit that this Court should also be guided by the New York Court of Appeals Sierra decision where the Court held that an insurer is obligated to validly disclaim directly to an additional insured even where itsinsurer is the one that tendered the claim and itdid the tendering because itis the one with a primary interest in shifting the loss to another insurer. See Sierra v. 4401 Sunset Park, LLC, 24 N.Y.3d 514, 2 N.Y.S.3d 8 (2014). In doing so, the Court effectively overruled Excelsior, which is relied on by Tudor, stating that to the extent Excelsior can be "read to stand for the general proposition that notice to an additional insured's liability carrier serves as notice to the additional insured under section 3420(d)(2), [it] should not be followed." 24 N.Y.3d at 519. 32. In Excelsior, the First Department had concluded that the "failure to serve a formal 8 8 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 notice on the nominal party in interest (the insured) does not render ineffective the denial of coverage where, under the circumstances, the party who received the notice (its insurer) was party' expected to forward it to the nominal party and had undertaken to protect the nominal party's rights." Excelsior Ins. Co. v. Antretter Contracting Corp., 262 A.D.2d 124, 128, 693 N.Y.S.2d (1st 100, 104 Dep't 1999) (cits. omitted). The point is that the Court of Appeals reversal of Excelsior in Sierra makes clear that Tudor's insurance coverage obligation under section 3420(d) party." runs to MYM even if MYM is deemed to be "the nominal 33. Moreover, while itis true that there is First Department case law stating that the protections of Insurance Law §3420(d) were not intended to apply to another insurer (see Bovis ((1st Lend Lease LMB, Inc. v. Royal Surplus Lines Ins. Co., 27 A.D.3d 84, 91, 806 N.Y.S.2d 53 Dep't 2005)), the First Department has permitted an insurer to recover against another insurer even when the insurer is the plaintiff-party seeking coverage and even when the disclaimer is valid against the plaintiff insurer. 34. In Greater New York Mutual Ins. Co. v. Chubb Indem. Ins. Co., 105 A.D.3d 523, (1st 963 N.Y.S.2d 218 Dep't 2013), the First Department broadly ruled that where an insured might as" need the estopped insurer's coverage "as well its own coverage because its eventual liability might exceed the limits of itsown coverage, the insured has a real stake in the outcome such that the estoppel applies and the estopped insurer must afford coverage. 35. Along these lines, parties like Plaintiffs, in fact, are real parties in interest and have a real stake in the outcome because their commercial liability policies are experience rated, which means that an adverse loss experience makes their premiums higher-and— this, in turn, makes them parties' real parties in interest in coverage actions seeking to shift losses to other insurers. They parties' also have a real interest in shifting the loss to other insurers to the extent that every 9 9 of 10 FILED: NEW YORK COUNTY CLERK 05/03/2018 03:03 PM INDEX NO. 652031/2016 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 05/03/2018 indemnity payment made under the policy erodes the aggregate policy limit, making itmore likely that the insured will be personally impacted by claims arising under the policy. That is particularly so where, as here, the full per occurrence policy limit is paid on a loss. 36. For all of these reasons, Tudor's real-party-in-interest argument is meritless. WHEREFORE, Plaintiffs respectfully request that this Court issue an order: (i) denying Plaintiffs' Tudor's summary judgment motion; (ii) granting summary judgment motion against Defendants, pursuant to CPLR Rule 3212, and (a) declaring that the Tudor Policy affords additional insured coverage to MYM for the claims asserted in the Gormley action and that Tudor had a duty to defend and indemnify MYM in the underlying Gormley action; or (b) alternatively, granting Plaintiffs judgment against Greenside based on breach of contract and finding that Greenside is required to defend and indemnify MYM for the claims against it in the Gormley action, and (iii) scheduling a hearing to hear and determine the amount for which Defendants should reimburse Plaintiffs for the defense costs and indemnity amount incurred in the Gormley action, with statutory interest; and (iv) granting such other and further legal and/or equitable relief as the Court deems appropriate under the circumstances. Dated: New York, New York April 26, 2018 S. DWIG T STEPHENS 10 10 of 10