Preview
JOHN E. PEER - State Bar No. 95978
KATYA. NELSON - State Bar No. 173759
WOOLLS & PEER
FILKg
SAhl MATEO COUVTy
A Professional Corporation
One Wilshire Boulevard, 22" Floor ZO>3
3 Los Angeles, California 90017
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Telephone: (213) 629-1600
Facsimile: (213) 629-1660
Attorneys for Defendants
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CLERIC
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FARMERS INSURANCE EXCHANGE and
TRUCK INSI.JRANCE EXCHANGE
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN MATEO, CENTRAL BRANCH
tf io MICHAEL
CHANG, an individual, . Case No.: CIV 489065
Plaintiff, EX PARTE APPLICATION FOR
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V. ORDER SHORTENING TIME FOR
NOTICE OF HEARING OF MOTION
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FAKERS INSURANCE COMPANY, INC., TO CONTINUE TRIAL
FARMERS GROUP, INC., FARMERS
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INSURANCE EXCHANGE AND TRUCK
Hearing Date: June 26, 2013
0 y>k INSURANCE EXCHANGE, reciprocal inter-
Time: 2:00 pm
insurance exchanges; Does 1 to 99, Inclusive,
lr-', Dept.: PJ
0 Defendants.
Trial Date: August 26, 2013
Discovery Cut-off: July 26, 2013
17 Motion Cut-off: August 12, 2013
Complaint Filed: October 28, 2009
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Defendants Farmers Insurance Exchange and Truck Insurance Exchange ("Farmers" ) apply
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ex parte pursuant to Rule of Court 3.1300(b) for an order allowing Farmers to file and serve on
shortened notice a Motion to Continue Trial in this matter.
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This is the second time Farmers has requested an order shortening time for the hearing of a
motion to continue the trial. In February 2013, this Court agreed to shorten time for a hearing, and
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EX PARTE APPLICATION FOR ORDER SHORTENING
TIME FOR HEARING OF MOTION TO CONTINUE TRIAL
346445.1
then granted the Motion to Continue. The continuance was requested on the ground that, among
2 other things, until the underlying liability action has been tried, some of the issues in this case cannot
be fully adjudicated. Subsequently, the trial of the underlying liability action was continued to the
4 same date as the trial in this case, necessitating another continuance.
Good cause exists for on order shortening time for the hearing of the Motion to Continue the
6 Trial because the trial date is only two months away and the parties desire to resolve the merits of
defendants'equest to continue trial as soon as possible. IfFarmers'otion were formally noticed
8 on June 26, 2013 (the day of hearing on this ex parte application), it could not be heard until July 19,
9 2013, which would be less than six weeks before trial. The sooner the motion is decided, the sooner
10 this Court and the parties may adjust their schedules, inform all witnesses and experts of the new
trial date and proceed with trial preparation in an orderly fashion. Accordingly, an expedited
12 disposition of Farmers'otion to Continue Trial will serve the interests of both parties.
Additionally, shortened notice and an accelerated briefing schedule for the motion will not prejudice
plaintiff.
Notice of this Ex Parte application was given by counsel for Farmers to counsel for plaintiff:
Gregg S. Garrison, Esq.
Garrison Law Corporation
161 Cortez Avenue
Half Moon Bay, CA 94019
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Herman I. Kalfen, Esq.
19 Kalfen Law Corporation
1 Embarcadero Center, Suite 500
20 San Francisco, CA 94111
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Notice was provided to plaintifFs counsel on June 21, 2013, at about 2 pm by phone and
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again on June 24, 2013, by email, at about 10:35 am. (Declaration of Katy Nelson, f[tt 5, 6 and Ex.
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A.)
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This ex parte request is made pursuant to California Rules of Court 3.1201, et seq., and is
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based upon the notice previously provided, this application, the accompanying memorandum of
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points and authorities, the declaration of Katy Nelson and the papers and records on file with the
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EX PARTE APPLICATION FOR ORDER SHORTENING
TIME FOR HEARING OF MOTION TO CONTINUE TRIAL
346445.1
court and such oral and documentary evidence as may be submitted at the hearing on the application.
For the convenience of the Court, a proposed ex parte order shortening time is submitted herewith.
DATED: June 2013 WOOLLS & PEER
A Professional Corporation
JOHN E. PEER/
KATYA. NELSON
Attorneys for Defendants
FARIVIERS INSURANCE EXCHANGE and
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EX PARTE APPLICATION FOR ORDER SHORTENING
TIME FOR HEARING OF MOTION TO CONTINUE TRIAL
346445. I
MEMORANDUMOF POINTS AND AUTHORITIES
2 I. RELIEF REQUESTED
Defendants Farmers Insurance Exchange and Truck Insurance Exchange ("Farmers" ) seek an
4 order shortening time for notice of a motion to continue the trial date. The Motion to Continue is
attached to this application as Exhibit B. There is good cause for the order shortening time because
6 the trial is currently set for August 26, 2013, only two months away, and a prompt ruling on the
7 motion will allow the parties to prepare for trial in a more reasonable and economical fashion, and
8 will also allow the court to better manage its trial calendar. The motion to continue the trial is
9 clearly necessary because the matter is not ripe for adjudication and cannot be fully adjudicated until
10 the underlying action, Kartal v. Chang, Case No. CIV 458146, is tried. The Kartal action is
11 currently set for trial on August 26, 2013.
12 II. STATEMENT OF FACTS
h. 13 This action concerns insurance coverage for an underlying action entitled Kartal v. Chang,
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San Mateo County Superior Court Case No. CIV 458146 (and related cross-actions) (hereafter
g „oft
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oI E
"Kartal action"). By this coverage action, plaintiff Chang seeks to force defendants Farmers and
$ %
>s16 Truck ("Farmers" ) to indemnify him for any liability he may ultimately be found to owe in the
17 underlying Kartal action. On February 1, 2013, this Court granted Farmers'rior Motion to
18 Continue Trial in this case &om April 8, 2013 to August 26, 2013. That motion was based upon the
19 fact that Kartal action should be concluded before this matter proceeds because Mr. Chang has not
20 yet been held liable in the Kartal action and, therefore, any ruling on Farmers'uty to indemnify Mr.
21 Change for any such liability will be purely speculative.
22 After this Court granted that continuance, however, the Kartal action trial was continued to
the very same date, August 26, 2013. (Request for Judicial Notice in support of Motion to Continue
24 the Trial, Ex. A, B and C [Ex. B hereto].)
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The continuance of the Kartal action was requested by the Special Master in that matter, William Nagle,
27 with the parties'oncurrence. Before that continuance was requested, plaintiff stated in his Opposition to
defendants'revious Motion to Continue the Trial that plaintiff Chang wants the trials of the two matters to
28 proceed "in close time proximity." Opposition to Motion for Continuance of Trial dated 1/25/13, at 4:10-11.
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EX PARTE APPLICATION FOR ORDER SHORTENING
TIME FOR HEARING OF MOTION TO CONTINUE TRIAL
346445. I
Accordingly, Farmers is seeking a second continuance for the same reason the first
continuance was requested. A Motion to Continue the Trial will be necessary because plaintifFs
counsel have advised that they will oppose any request for trial continuance. (Declaration of Katy
4 Nelson in support of Ex Parte Application, tt 4.) Counsel for plaintiffalso advised they will oppose
this Ex Parte Application. (Nelson Decl., tt 4.)
On June 21, 2013, at approximately 2 p.m., counsel for Farmers informed both of plaintifFs
7 attorneys, Gregg Garrison and Herman Kalfen, by phone that Farmers intended to seek an order
8 shortening time for a hearing of a motion to continue the trial by ex parte application on Thursday,
9 June 27, 2013. Counsel for plaintiff stated that June 27 was not convenient for him, so Farmers'0
counsel agreed to appear ex parte on June 26, 2013, instead. (Nelson Decl., f[ 2.)
Subsequently, counsel for Farmers provided both of plaintiff's attorneys, Mr. Garrison and
12 Herman Kalfen, written notice that Farmers would appear Ex Parte on June 26, 2013 at 1:30 p.m. in
13 the Law and Motion department of this court, providing full ex parte notice in compliance with the
14 California Rules of Court. (Nelson Decl., tt 3 and Exhibit A thereto.) PlaintifFs attorneys advised
15 that would not stipulate to an order shortening time, necessitating this Ex Parte Application.
16 (Nelson Decl., tt 4.)
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18 III. GOOD CAUSE EXISTS FOR GRANTING AN ORDER SHORTENING TIME
19 Section 1005(b) of the Code of Civil Procedure requires that a party usually be given at least
20 sixteen court days'otice of a hearing on a motion. However, subdivision (b) of that section also
21 allows that "[t]he court, or a judge thereof, may prescribe a shorter time." Additionally, Rule
22 3.1300(b) of the California Rules of Court provides:
23 The court, on its own motion or on application for an order shortening time supported
24 by a declaration showing good cause, may prescribe shorter times for the filing and
25 service of papers than the time specified in Code of Civil Procedure Section 1005.
26 Here, good cause exists for an order shortening time because the trial date is only two months
27 away. The sooner an order continuing trial is issued, the sooner this Court and the parties may adjust
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EX PARTE APPLICATION FOR ORDER SHORTENING
TIME FOR HEARING OF MOTION TO CONTINUE TRIAL
346445. I
their schedules, inform all witnesses and experts of the new trial date and proceed with trial
2 preparation and in an orderly and more economical fashion.
An expedited disposition of Farmers'otion will serve the interests of both parties.
4 Although plaintiffopposes any continuance of the trial, it will benefit plaintiffby allowing him and
his counsel to better plan for trial. Moreover, plaintiffs are opposed to any delays and a shortened
6 hearing scheduling for the motion to continue trial will avoid any unnecessary delays.
Defendants are not aware of any actual prejudice that would result to plaintiff by shortened
8 notice and an accelerated briefing schedule for the motion.
9 IV. CONCLUSION
10 Allowing Farmers'otion to be heard on shortened notice will serve the economy and
11 convenience of the parties and the Court. Accordingly, there is good cause for this Court to issue an
12 ex parte order shortening time for notice of hearing on a motion for a trial continuance and
13 accelerated briefing schedule.
14 DATED: June3t 2013 WOOLLS & PEER
A Professional Corporation
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17 JOHN E. PEEQ
KATYA. NELSON
18 Attorneys for Defendants
FARMERS INSI.JRANCE EXCHANGE and
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EX PARTE APPLICATION FOR ORDER SHORTENING
TIME FOR HEARING OF MOTION TO CONTINUE TRIAL
346445.1
DECLARATIONOF KATYA. NELSON
IN SUPPORT OF EX PARTE APPLICATION
I, Katy A. Nelson, declare:
1. I am an attorney and a member of the Bar of the State of California. I am
an associate with Woolls & Peer, counsel of record for defendants Farmers Insurance Exchange and
Truck Insurance Exchange ("Farmers" ). I am one of the attorneys responsible for handling this
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litigation on behalf of Farmers. I have personal knowledge of the facts stated in this declaration and,
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ifcalled as a witness, could and would testify competently to those facts.
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2. On June 21, 2013, at approximately 2 p.m., I participated along with attorney John
Peer in a conference call with plaintifFs attorneys, Gregg Garrison and Herman Kalfen, by phone.
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Mr. Garrison and Mr. Kalfen were informed during that conference that Farmers intended to seek an
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order shortening time for a hearing of a motion to continue the trial by ex parte application on
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Thursday, June 27, 2013. Counsel for plaintiff stated that June 27 was not convenient, so Mr. Peer
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and I agreed to appear ex parte on June 26, 2013, instead.
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3. On Monday, June 24, 2013 at about 10:35 a.m., I gave Mr. Garrison and Mr. Kalfen
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written notice by email that Farmers would appear ex parte on June 26, 2013 at 2:00 p.m. in
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Department PJ of this court to ask for an order shortening time for a hearing of a motion to continue
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the trial. (See Exhibit A.)
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4. During our phone conference on June 21, 2013, Mr. Garrison and Mr. Kalfen advised
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that they would not stipulate to an order shortening time, and that they intend to oppose the motion
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to continue the trial.
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5. A copy of the Motion to Continue the Trial is attached as Exhibit B.
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I declare under penalty of perjury under the laws of the State of California that the foregoing
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is true and correct.
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Executed on June cP, 2013, at Los Angeles, California.
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WJ Q. dli
~ IVjTYA. NEMON
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DECLARATION
346445.1
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Katy Nelson
From: Katy Nelson
Sent: Monday, June 24, 2013 10:34 AM
To: 'Herman Law', Gregg Garrison; Carol Erdie
Subject: Chang v. Farmers Insurance - 12463 NOTICE OF EX PARTE APPLICATION
Dear Counsel:
As we discussed during our phone conversation on Friday, June 21, 2013, please be advised that we will appear ex parte
to ask the court for an order shortening time for the hearing of a motion to continue the trial on Wednesday, June 26,
2013 at 2:00 p.m. in Dept. PJ (Judge Foiles).
The discrepancy regarding our substitution was corrected this morning by the court clerk, who had misread the form.
Please let us know if you have any questions or concerns. We will email you the paperwork before the hearing.
Regards,
Katy A. Nelson
wooLLs III PEER
A Professional Corporation
One Wilshire Boulevard, 22nd Floor
Los Angeles, California 90017
Telephone: (213) 629-8768
Facsimile: (213) 629-1660
knelsonwoollsoeer.corn
From: Herman Law [mailto:kalfenlawoffice@eafthlink.net)
Sent: Friday, June 21, 2013 12:54 PM
To: Carrie Dupic Huynh; John E. Peer
Cc: Gregg Garrison; Carol Erdie; Lee J. Danforth; Eva Oliveira; Katy Nelson
Subject: KALFEN CONFIRMATION OF 2PM TC Ik ISSUES WITH SUBciiTUTION FORM Re: Conversation with Lee
Danforth on May 15, 2013, I have a response for Mr. Danforth; and Depositions of Roxanne Chang and Michael Chang
Hello Folks:
Thank you for the emails. I am confirming my participation at 2pm. I also note that the Substitution of
Attorney is flawed as it lacks the name and date regarding the signatory for Farmers Insurance. I suggest you
please remedy same.
Thanks again,
Herm
Herman i. Kaifen, JD, REA, NAEP
Kaifen Law Corporation
1 Embarcadero Center, Suite 500
San Francisco, CA 94111
EXHIBIT B
JOHN E. PEER - State Bar No. 95978
KATYA. NELSON - State Bar No. 173759
WOOLLS & PEER
A Professional Corporation
One Wilshire Boulevard, 22" Floor
Los Angeles, California 90017
Telephone: (213) 629-1600
Facsimile: (213) 629-1660
Attorneys for Defendants
6 FARMERS INSURANCE EXCHANGE and
TRUCK INSURANCE EXCHANGE
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN MATEO
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11 MICHAELCHANG, an individual, Case No.: CIV 489065
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Plaintiff, NOTICE OF MOTION AND MOTION
13 FOR TRIAL CONTINUANCE
14 Complaint Filed: October 28, 2009
FARMERS INSURANCE COMPANY, INC.,
15 FARMERS GROUP, INC., FARMERS Hearing Date: July 24, 2013
INSURANCE EXCHANGE AND TRUCK Time: 9:00 a.m.
16 INSURANCE EXCHANGE, reciprocal inter- Dept.: P JLM
insurance exchanges; Does 1 to 99, Inclusive,
17 Trial Date: August 26, 2013
Discovery Cut-off: July 26, 2013
18 Defendants. Motion Cut-off: August 12, 2013
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21 TO PLAINTIFF MICHAELCHANG AND HIS ATTORNEYS OF RECORD:
22 Notice is hereby given that on July24, 2013 at 9:00 a.m., or as soon thereafter as the matter
23 may be heard by in the Presiding Judge's courtroom of the above-entitled court located at 400
24 County Center, Redwood City, California, defendants Farmers Insurance Exchange ("Farmers" ) and
25 Truck Insurance Exchange ("Truck") will, and hereby do, move for an order vacating the August 26,
26 2013 trial date and continuing trial for at least three months to allow completion of trial of the
27 underlying action for which plaintiffhere seeks indemnification.
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NOTICE OF MOTION AND MOTION FOR TRIALCONTINUANCE
345799.1
On February 1, 2013, this court continued the previous trial date of this action from April 8,
2013 to August 26, 2013. One of the grounds for the motion was the fact that the underlying action,
3 Kartal v. Chang, Case No. CIV 458146, which at that time was set for trial for March 13, 2013,
4 needed to be concluded first.
Good cause exists for granting a trial continuance because it will serve the interests of
6 judicial economy, fairness and justice, for the following reasons:
1. Trial of the Kartal v. Chang action did not, in fact, take place commencing on March
8 13, 2013, but was instead continued by order of the Court and is presently scheduled to commence in
9 Department PJ of this Court on exactly the same date as this trial is currently scheduled (August 26,
10 2013).
2. Defendants ask for a continuance of this action only long enough to allow the August
12 26, 2013 trial of the underlying liability action to be concluded.
13 3. A continuance is the only solution that will permit the underlying Kartal v. Chang
14 action to be concluded so that Farmers obligation to indemnify Chang for any awards against Chang
15 in that action, ifany, will be ripe for adjudication.
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25 KATYA. h ELSON
Attorneys for Defendants
26 FARMERS INSURANCE EXCHANGE and
TRUCK INSI.JRANCE EXCHANGE
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NOTICE OF MOTION AND MOTION FOR TRIALCONTINUANCE
345799. I
PROOF OF SERVICE
Michael Chang v. Farmers Insurance Exchange, et al
Case No. CV 489065
I, Kristy Ortega, declare:
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I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a
party to the within action. My business address is Woolls & Peer, A Professional Corporation, One
Wilshire Boulevard, 22" Floor, Los Angeles, California 90017. On June 25, 2013, I served the
document(s) described as NOTICE OF MOTION AND MOTION FOR TRIAL
CONTINUANCE on the interested parties in this action as follows:
0> By placing 0 the original 0> a true copy thereof enclosed in a sealed envelope addressed as
follows:
Gregg S. Garrison, Esq. Attorney for Plaintiff Michael Chang
Garrison Law Corporation
161 Cortez Avenue Telephone: (805) 857-9300
Half Moon Bay, CA 94019 Email:gsgarrisongarrisonlawcorp.corn
Herman I. Kalfen, Esq. Co-Counsel for Plaintiff Michael Chang
10 Kalfen Law Corporation
1 Embarcadero Center, Suite 500 Telephone: (415) 315-1710
San Francisco, CA 94111 Email: kalfenlawoffice(Rearthlink.net
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8 BY MAIL: I am "readily familiar" with this firm's practice for the collection and the
processing of correspondence for mailing with the United States Postal Service. In the
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ordinary course of business, the correspondence would be deposited with the United States
Postal Service at One Wilshire Boulevard, 22" Floor, Los Angeles, California 90017 with
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postage thereon fully prepaid the same day on which the correspondence was placed for
collection and mailing at the firm. Following ordinary business practices, I placed for
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collection and mailing with the United States Postal Service such envelope at One Wilshire
Boulevard, 22" Floor, Los Angeles, California 90017.
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0 OVERNIGHT DELIVERY: I deposited such envelope in a facility regularly maintained by
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0 FEDERAL EXPRESS 0 UPS 0 Overnight Delivery [specify name of service: ]
with delivery fees fully provided for or delivered the envelope to a courier or driver of 0
18 FEDERAL EXPRESS 0 UPS 0 OVERNIGHT DELIVERY [specify name of service: ]
authorized to receive documents at One Wilshire Boulevard, 22 Floor, Los Angeles,
19 California 90017 with delivery fees fully provided for.
20 0 BY FACSIMILE: I sent via facsimile a copy of said document(s) to the following
addressee(s) at the following number(s) in accordance with the written confirmation of
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counsel in this action.
22 BY E-MAIL: I sent via electronic mail a copy of said document(s) to the persons at the
e-mail addresses listed on the service list in accordance with the written confirmation of
23 counsel in this action.
24 I declare under penalty of perjury under the laws of the State of California that
0> [State]
the above is true and correct.
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26 Executed on June 25, 2013, at Los Angeles, California.
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28 Kris ty Ortega
346793.1
JOHN E. PEER - State Bar No. 95978
KATYA. NELSON - State Bar No. 173759
WOOLLS & PEER
A Professional Corporation
One Wilshire Boulevard, 22" Floor
Los Angeles, California 90017
Telephone: (213) 629-1600
Facsimile: (213) 629-1660
Attorneys for Defendants
FARMERS INSURANCE EXCHANGE and
TRUCK INSURANCE EXCHANGE
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF San Mateo, Central Branch
MICHAELCHANG, an individual, Case No.: CIV 489065
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MEMORANDUMOF POINTS AND
Plaintiff, AUTHORITIES IN SUPPORT OF
DEFENDANTS'OTION FOR TRIAL
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CONTINUANCE
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FARMERS INSURANCE COMPANY, INC., Complaint Filed: October 28, 2009
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FARMERS GROUP, INC., FARMERS
INSURANCE EXCHANGE AND TRUCK Hearing Date: July 24, 2013
INSURANCE EXCHANGE, reciprocal inter- Time: 9:00 a.m.
15 PJLM
insurance exchanges; Does 1 to 99, Inclusive, Dept.:
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Trial Date: August 26, 2013
Defendants. Discovery Cut-off: July 26, 2013
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Motion Cut-o ff: July 12, 2013
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1 9 I. INTRODUCTION
20 This action concerns insurance coverage for an underlying action entitled Kartal v. Chang,
San Mateo County Superior Court Case No. CIV 458146 (and related cross-actions) (hereafter
22 „"Kartal
action"). The trial of the Kartal action was recently continued from March 13, 2013 to
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August 26, 2013, and is now scheduled for the same day as trial of this action currently is scheduled
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to commence.
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26 By this coverage action, plaintiff Chang seeks to force defendants Farmers and Truck
27 ("Farmers" ) to both defend and indemnify him for any liability he owes in the underlying Kartal
28 action. On February 1, 2013, this Court granted Farmers'rior Motion to Continue Trial in this case
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MEMORANDUMOF POINTS 8T AUTHORITIES IN SUPPORT OF MOTION FOR TRIAL CONTINUANCE
346063.1
&om April 8, 2013 to August 26, 2013, on the ground that the Kartal action should be concluded
before this matter proceeds. After this Court granted that continuance, however, the Kartal action
3 trial was continued to the very same date, August 26, 2013. (Request for Judicial Notice, Ex. A, B
4 and
C.)'he
two most important issues in this case are whether Farmers owes a duty to defend Chang
in the underlying Kartal action and whether Farmers owes a duty to indemnify him for any liability
he is ultimately assessed in the Kartal action under their general liability policies. In opposition to
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defendants'rior motion to continue the trial of this coverage action, Chang argued that he needed
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10 the trial of this matter to go forward because Farmers was not defending him in the underlying action
11 and his need for that defense was immediate. After the trial of this action was continued, however,
Farmers agreed on April 24, 2013 to defend Chang in the underlying Kartal action and Farmers has
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.5~ y reimbursed Chang's unpaid defense costs. (Declaration of John Peer, tt 7.) Farmers is continuing to
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defend Chang's interests in that action. (Peer Decl., tt 8.)
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1]3, The other primary issue in this litigation is whether Farmers owes any obligations to
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17 indemnify Chang for liabilities the trier of fact in the underlying Kartal action finds Chang must pay
18 to Kartal or others. Until the Kartal trial, now set for August 26, 2013, is completed or that case is
settled, however, it remains completely uncertain whether Chang actually will owe any sums to third
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parties in that action, or ifso, how much he will owe, or on what legal theories or claims his liability
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will be found. Thus, until the Kartal action has been resolved by settlement or trial, the amount and
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basis for Chang's legal obligations to pay damages in that action, if any, remain completely
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uncertain. There is simply no basis —short of pure speculation - on which a trier of fact in this action
can at present determine whether Farmers and Truck must indemnify Chang for presently unknown
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27 The continuance of the Eartal action was requested by the Special Master in that matter, William Nagle,
with the parties'oncurrence. Before that continuance was requested, plaintiff stated in his Opposition to
28 defendants'revious Motion to Continue the Trial that plaintiff Chang wants the trials of the two matters to
proceed "in close time proximity." Opposition to Motion for Continuance of Trial dated 1/25/13, at 4:10-11.
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MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIAL CONTINUANCE
346063. I
damages that may or may not be assessed against him in the underlying action and that may arise
&om a number of different legal theories, some of which might be covered and some of which may
3 not. Indeed, trial of the coverage action before the underlying action is concluded presents the very
4 real possibility of dramatically divergent and conflicting results.
Moreover, to establish the absence of coverage for many of Kartal's claims against Chang,
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Farmers and Truck will be required to introduce evidence that could adversely impact Chang's
defense in the underlying Kartal action. Thus, for example to establish the fact that the Farmers'
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pollution exclusion applies to the claims against Chang, it would be in Farmers'nterests in this
10 action to demonstrate the full extent of the contamination of the property, but such evidence would
11 be adverse to Chang's defense of the underlying action and could also be adverse to Farmers in the
event the claims against Chang in the underlying action actually are covered by the Farmers'3
policies. Such a procedural posture would not benefit either Chang or Farmers, since it would only
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serve to increase both of their exposures &om the underlying action. These are precisely the reasons
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California courts routinely stay trial of coverage actions pending resolution of the underlying action
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1 7 against the insured. See, e.g., Haskell, Inc. v. Superior Court (1 995) 33 Cal.App.4 963:
18 There are three concerns which the courts have about the trial of coverage issues
which necessarily turn upon the facts to be litigated in the underlying action. First, the
19 insurer, who is supposed to be on the side of the insured and with whom there is a
special relationship, effectively attacks its insured and thus gives comfort to the
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claimant in the underlying suit; second, such a circumstance requires the insured to
21 fight a two-&ont war,...and third, there is a real risk that, if the declaratory relief
action proceeds to judgment before the underlying action is resolved, the insured could
22 be collaterally stopped to contest issue in the latter by the results in the former.
(Id., at 979).
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For all of these reasons, good cause exists to continue the trial of this action for at least three
months to allow trial of the underlying action to go forward. Accordingly, pursuant to California
26 Rules of Court 3.1332 and 3.1335, Farmers asks this Court to enter an order vacating the August 26,
27 2013 trial date and continuing trial for three months to allow the August 26, 2013 trial of the
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underlying Kartal action to go forward.
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MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIALCONTINUANCE
346063.1
H. BRIEF STATEMENT OF RELEVANT FACTS
A. THE UNDERLYINGLOSS AND THE KARTALACTION
Plaintiff Michael Chang has owned adjoining commercial properties at 233 and 235 Baldwin
Avenue in San Mateo, California since 1977. For many years the property was utilized for dry
cleaning operations. Dry cleaning operators installed four underground storage tanks, ranging in
size &om 650-gallon to 1,200-gallon capacities. Three of these tanks apparently were used to store a
dry cleaning chemical known as Stoddard solvent. Previous owners of the premises abandoned the
four tanks in the ground, seemingly without emptying or sealing the tanks. Unfortunately, those
10 operations apparently have led to significant amounts of Stoddard solvent and perchloroethlene
(PCE) contamination.
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In the late 1980s, Mr. Chang began leasing a part of the premises for use as a restaurant. In
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S~ y 1992, the restaurant tenant constructed a patio deck that extended over the yard behind the restaurant
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and later enclosed the deck for use as a banquet hall. Ultimately, Chang leased the restaurant
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0 $ premises to Bilal Kartal, the plaintiffin the underlying Kartal v. Chang action.
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17 Sometime around 2002, a peculiar odor permeated the restaurant and banquet hall and
18 allegedly persisted for years, worsening over time, and allegedly damaging Mr. Kartal's business.
19 Efforts to determine the source of the odor led to the discovery of the first of the four abandoned
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tanks in 2006. Three more abandoned tanks were discovered in 2007. Two of the three tanks found
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in 2007 were nearly empty, one containing an amount of residual Stoddard solvent, a flammable,
22
hazardous substance, and sludge, and the other an amount of fuel oil and sludge. The tank
23
discovered in 2006 and one of the three tanks discovered in 2007 were filled with a mixture of water
24
25 and Stoddard solvent. Further investigation and remediation efforts ensued, ultimately involving
26 significant amounts of other toxic substances, including PCE, and involving several other parties.
27
28
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MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIALCONTINUANCE
346063. I
B. THE INSURANCE POLICIES AT ISSUE IN THIS ACTION
Farmers has insured Mr. Chang's commercial properties at 233 and 235 Baldwin Avenue for
3 consecutive annual periods &om December 28, 1991 to the present. The policy (No. 60150-85-11)
4 includes coverage for businessowners'iability to others and for property loss.
C. THE CLAIMS SUBMITTED UNDER MR. CHANG'S POLICIES WITH DEFENDANTS
1. Denial of Mr. Chang's Pronertv Claim
In September 2006, following the discovery of the first leaking tank, Mr. Chang made a first
9 party
claim to defendants for property damage and business losses. Farmers denied coverage for
10 Chang's property loss claim on October 3, 2006, because there was no "covered cause of loss" based
11 on the exclusions for property damage arising &om pollution, water and negligent work.
12
2. Denial of Mr. Chang's Liabilitv Claims
13
W
8~y On October 6, 2006, Kartal sued Chang in San Mateo County Superior Court Case No. CIV
14
w y'>i 458146, alleging nuisance and constructive eviction relating to his restaurant losses allegedly as a
x Ego
o Ili 15
16
result of the Stoddard solvent odors. Chang cross-complained against Kartal, claiming that the
17
tenant's negligence in building the structures and maintaining the area caused the odors that
18 allegedly disrupted Kartal's business. The litigation has expanded as additional contamination has
been discovered and numerous additional parties were brought in, including past and current owners
20
and operators of the dry cleaning business. (See Request For Judicial Notice, Ex. A and B [Minute
21
Orders from the Kartal action].)
22
Mr. Chang tendered the Kartal action to Farmers for defense and indemnity under his
23
policies. On January 16, 2007, Farmers denied coverage based on the absolute exclusion for third
party claims arising &om the release of pollutants.
26 On October 26, 2009, Chang filed the instant action against Farmers for breach of contract
and insurance bad faith concerning the denials of these two claims. By this action Chang sought to
28
force Farmers to defend his interests in the Kartal action brought against him, and also seeks to force
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MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIALCONTINUANCE
346063.1
Farmers to indemnify him for any money or equitable judgment that may be awarded against him in
the Kartal action. (See Complaint, at g 56-61 [First Cause Of Action regarding duty to defend] and
3 gtt 62-68 [Second Cause of Action regarding duty to pay]). As noted above, Farmers has now agreed
4 to provide a defense for Chang in the Kartal action under a reservation of rights to seek recoupment,
5
and is continuing to defend Chang's interests in that action. (See Peer Decl, ltd[ 7-8.) The remaining
issue is whether any claims that Kartal actually may prove against Chang at trial are ripe for
adjudication before those underlying claims actually are adjudicated. Adjudication of Chang's first
8
9
party claims at this point similarly could adversely impact the outcome of the Kartal action for both
10 Chang and Farmers.
12
D. THE FACTUALISSUES IN THE UNDERLYINGACTION ARE DIRECTLY RELATED TO
13
IA .I THE ISSUES TO BE ADJUDICATED IN THE INSTANT ACTION
~ l~gj 14
The ultimate facts regarding how the environmental losses occurred will be determined in the
Ie- underlying Kartal action when the trier of fact finds which party or parties actually are liable for the
17 pollution and resulting losses at the property. (Peer Decl., at $ 9.) In the instant action, the trier of
18 fact will be asked to apply the language of Mr. Chang's insurance policies to the facts that are
determined in the Kartal action. (Id., at 10.) Thus, by definition, trial and final adjudication of the
20
underlying Kartal action will allow a resolution of the ultimate facts that must be proven in this case,
21
and which will be directly relevant to proving or disproving plaintifF s coverage and bad faith claims
22
at trial. (Id.)
23
24
Conversely, allowing trial of the coverage action to go forward before the underlying action
25 is concluded could result in conflicting results on those very issues. In short, it makes no sense, and
26 presents the very real prospect for a waste of judicial resources, to have a trial on whether Farmers
27 owes coverage for a judgment or judgments against its insured that may never be entered and any
28
such judgment in this action might need to be set aside because the underlying action on which that
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MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIAL CONTINUANCE
346063. I
indemnification obligation would be based reached a contrary conclusion. Ifthe underlying action is
allowed to proceed first on August 26, this Court and the parties can avoid a potentially needless
3 "trial within a trial", and the parties (and the Court) will be able to rely on the facts of loss as they
4 actually were adjudicated in the underlying action in determining Farmers'overage obligations.
5
Speculation about what might happen in the Kartal action will be avoided regarding plaintifFs
Preview
JOHN E. PEER - State Bar No. 95978 KATYA. NELSON - State Bar No. 173759 WOOLLS & PEER FILKg SAhl MATEO COUVTy A Professional Corporation One Wilshire Boulevard, 22" Floor ZO>3 3 Los Angeles, California 90017 Cler S t Telephone: (213) 629-1600 Facsimile: (213) 629-1660 Attorneys for Defendants ~+TV CLERIC M~ FARMERS INSURANCE EXCHANGE and TRUCK INSI.JRANCE EXCHANGE OE.NlE0 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN MATEO, CENTRAL BRANCH tf io MICHAEL CHANG, an individual, . Case No.: CIV 489065 Plaintiff, EX PARTE APPLICATION FOR 12 V. ORDER SHORTENING TIME FOR NOTICE OF HEARING OF MOTION 13 FAKERS INSURANCE COMPANY, INC., TO CONTINUE TRIAL FARMERS GROUP, INC., FARMERS -- ai 14 INSURANCE EXCHANGE AND TRUCK Hearing Date: June 26, 2013 0 y>k INSURANCE EXCHANGE, reciprocal inter- Time: 2:00 pm insurance exchanges; Does 1 to 99, Inclusive, lr-', Dept.: PJ 0 Defendants. Trial Date: August 26, 2013 Discovery Cut-off: July 26, 2013 17 Motion Cut-off: August 12, 2013 Complaint Filed: October 28, 2009 q )~2o 21 22 23 Defendants Farmers Insurance Exchange and Truck Insurance Exchange ("Farmers" ) apply 24 ex parte pursuant to Rule of Court 3.1300(b) for an order allowing Farmers to file and serve on shortened notice a Motion to Continue Trial in this matter. 26 This is the second time Farmers has requested an order shortening time for the hearing of a motion to continue the trial. In February 2013, this Court agreed to shorten time for a hearing, and 28 PRINTED ON RECYCLED PAPER 1 EX PARTE APPLICATION FOR ORDER SHORTENING TIME FOR HEARING OF MOTION TO CONTINUE TRIAL 346445.1 then granted the Motion to Continue. The continuance was requested on the ground that, among 2 other things, until the underlying liability action has been tried, some of the issues in this case cannot be fully adjudicated. Subsequently, the trial of the underlying liability action was continued to the 4 same date as the trial in this case, necessitating another continuance. Good cause exists for on order shortening time for the hearing of the Motion to Continue the 6 Trial because the trial date is only two months away and the parties desire to resolve the merits of defendants'equest to continue trial as soon as possible. IfFarmers'otion were formally noticed 8 on June 26, 2013 (the day of hearing on this ex parte application), it could not be heard until July 19, 9 2013, which would be less than six weeks before trial. The sooner the motion is decided, the sooner 10 this Court and the parties may adjust their schedules, inform all witnesses and experts of the new trial date and proceed with trial preparation in an orderly fashion. Accordingly, an expedited 12 disposition of Farmers'otion to Continue Trial will serve the interests of both parties. Additionally, shortened notice and an accelerated briefing schedule for the motion will not prejudice plaintiff. Notice of this Ex Parte application was given by counsel for Farmers to counsel for plaintiff: Gregg S. Garrison, Esq. Garrison Law Corporation 161 Cortez Avenue Half Moon Bay, CA 94019 18 Herman I. Kalfen, Esq. 19 Kalfen Law Corporation 1 Embarcadero Center, Suite 500 20 San Francisco, CA 94111 21 Notice was provided to plaintifFs counsel on June 21, 2013, at about 2 pm by phone and 22 again on June 24, 2013, by email, at about 10:35 am. (Declaration of Katy Nelson, f[tt 5, 6 and Ex. 23 A.) 24 25 This ex parte request is made pursuant to California Rules of Court 3.1201, et seq., and is 26 based upon the notice previously provided, this application, the accompanying memorandum of 27 points and authorities, the declaration of Katy Nelson and the papers and records on file with the 28 PRINTED ON RECYC LED PAPER 2 EX PARTE APPLICATION FOR ORDER SHORTENING TIME FOR HEARING OF MOTION TO CONTINUE TRIAL 346445.1 court and such oral and documentary evidence as may be submitted at the hearing on the application. For the convenience of the Court, a proposed ex parte order shortening time is submitted herewith. DATED: June 2013 WOOLLS & PEER A Professional Corporation JOHN E. PEER/ KATYA. NELSON Attorneys for Defendants FARIVIERS INSURANCE EXCHANGE and 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PRINTED ON REC YC LED PAPER 3 EX PARTE APPLICATION FOR ORDER SHORTENING TIME FOR HEARING OF MOTION TO CONTINUE TRIAL 346445. I MEMORANDUMOF POINTS AND AUTHORITIES 2 I. RELIEF REQUESTED Defendants Farmers Insurance Exchange and Truck Insurance Exchange ("Farmers" ) seek an 4 order shortening time for notice of a motion to continue the trial date. The Motion to Continue is attached to this application as Exhibit B. There is good cause for the order shortening time because 6 the trial is currently set for August 26, 2013, only two months away, and a prompt ruling on the 7 motion will allow the parties to prepare for trial in a more reasonable and economical fashion, and 8 will also allow the court to better manage its trial calendar. The motion to continue the trial is 9 clearly necessary because the matter is not ripe for adjudication and cannot be fully adjudicated until 10 the underlying action, Kartal v. Chang, Case No. CIV 458146, is tried. The Kartal action is 11 currently set for trial on August 26, 2013. 12 II. STATEMENT OF FACTS h. 13 This action concerns insurance coverage for an underlying action entitled Kartal v. Chang, g o m San Mateo County Superior Court Case No. CIV 458146 (and related cross-actions) (hereafter g „oft X Pgo oI E "Kartal action"). By this coverage action, plaintiff Chang seeks to force defendants Farmers and $ % >s16 Truck ("Farmers" ) to indemnify him for any liability he may ultimately be found to owe in the 17 underlying Kartal action. On February 1, 2013, this Court granted Farmers'rior Motion to 18 Continue Trial in this case &om April 8, 2013 to August 26, 2013. That motion was based upon the 19 fact that Kartal action should be concluded before this matter proceeds because Mr. Chang has not 20 yet been held liable in the Kartal action and, therefore, any ruling on Farmers'uty to indemnify Mr. 21 Change for any such liability will be purely speculative. 22 After this Court granted that continuance, however, the Kartal action trial was continued to the very same date, August 26, 2013. (Request for Judicial Notice in support of Motion to Continue 24 the Trial, Ex. A, B and C [Ex. B hereto].) 25 26 I The continuance of the Kartal action was requested by the Special Master in that matter, William Nagle, 27 with the parties'oncurrence. Before that continuance was requested, plaintiff stated in his Opposition to defendants'revious Motion to Continue the Trial that plaintiff Chang wants the trials of the two matters to 28 proceed "in close time proximity." Opposition to Motion for Continuance of Trial dated 1/25/13, at 4:10-11. PRINTED ON RECYCLED PAPER 4 EX PARTE APPLICATION FOR ORDER SHORTENING TIME FOR HEARING OF MOTION TO CONTINUE TRIAL 346445. I Accordingly, Farmers is seeking a second continuance for the same reason the first continuance was requested. A Motion to Continue the Trial will be necessary because plaintifFs counsel have advised that they will oppose any request for trial continuance. (Declaration of Katy 4 Nelson in support of Ex Parte Application, tt 4.) Counsel for plaintiffalso advised they will oppose this Ex Parte Application. (Nelson Decl., tt 4.) On June 21, 2013, at approximately 2 p.m., counsel for Farmers informed both of plaintifFs 7 attorneys, Gregg Garrison and Herman Kalfen, by phone that Farmers intended to seek an order 8 shortening time for a hearing of a motion to continue the trial by ex parte application on Thursday, 9 June 27, 2013. Counsel for plaintiff stated that June 27 was not convenient for him, so Farmers'0 counsel agreed to appear ex parte on June 26, 2013, instead. (Nelson Decl., f[ 2.) Subsequently, counsel for Farmers provided both of plaintiff's attorneys, Mr. Garrison and 12 Herman Kalfen, written notice that Farmers would appear Ex Parte on June 26, 2013 at 1:30 p.m. in 13 the Law and Motion department of this court, providing full ex parte notice in compliance with the 14 California Rules of Court. (Nelson Decl., tt 3 and Exhibit A thereto.) PlaintifFs attorneys advised 15 that would not stipulate to an order shortening time, necessitating this Ex Parte Application. 16 (Nelson Decl., tt 4.) 17 18 III. GOOD CAUSE EXISTS FOR GRANTING AN ORDER SHORTENING TIME 19 Section 1005(b) of the Code of Civil Procedure requires that a party usually be given at least 20 sixteen court days'otice of a hearing on a motion. However, subdivision (b) of that section also 21 allows that "[t]he court, or a judge thereof, may prescribe a shorter time." Additionally, Rule 22 3.1300(b) of the California Rules of Court provides: 23 The court, on its own motion or on application for an order shortening time supported 24 by a declaration showing good cause, may prescribe shorter times for the filing and 25 service of papers than the time specified in Code of Civil Procedure Section 1005. 26 Here, good cause exists for an order shortening time because the trial date is only two months 27 away. The sooner an order continuing trial is issued, the sooner this Court and the parties may adjust 28 PRINTED ON RECYCLED PAPER 5 EX PARTE APPLICATION FOR ORDER SHORTENING TIME FOR HEARING OF MOTION TO CONTINUE TRIAL 346445. I their schedules, inform all witnesses and experts of the new trial date and proceed with trial 2 preparation and in an orderly and more economical fashion. An expedited disposition of Farmers'otion will serve the interests of both parties. 4 Although plaintiffopposes any continuance of the trial, it will benefit plaintiffby allowing him and his counsel to better plan for trial. Moreover, plaintiffs are opposed to any delays and a shortened 6 hearing scheduling for the motion to continue trial will avoid any unnecessary delays. Defendants are not aware of any actual prejudice that would result to plaintiff by shortened 8 notice and an accelerated briefing schedule for the motion. 9 IV. CONCLUSION 10 Allowing Farmers'otion to be heard on shortened notice will serve the economy and 11 convenience of the parties and the Court. Accordingly, there is good cause for this Court to issue an 12 ex parte order shortening time for notice of hearing on a motion for a trial continuance and 13 accelerated briefing schedule. 14 DATED: June3t 2013 WOOLLS & PEER A Professional Corporation 15 16 17 JOHN E. PEEQ KATYA. NELSON 18 Attorneys for Defendants FARMERS INSI.JRANCE EXCHANGE and 19 20 21 22 23 24 25 26 27 28 PRINTED ON RECYCLED PAPER 6 EX PARTE APPLICATION FOR ORDER SHORTENING TIME FOR HEARING OF MOTION TO CONTINUE TRIAL 346445.1 DECLARATIONOF KATYA. NELSON IN SUPPORT OF EX PARTE APPLICATION I, Katy A. Nelson, declare: 1. I am an attorney and a member of the Bar of the State of California. I am an associate with Woolls & Peer, counsel of record for defendants Farmers Insurance Exchange and Truck Insurance Exchange ("Farmers" ). I am one of the attorneys responsible for handling this 6 litigation on behalf of Farmers. I have personal knowledge of the facts stated in this declaration and, 7 ifcalled as a witness, could and would testify competently to those facts. 8 2. On June 21, 2013, at approximately 2 p.m., I participated along with attorney John Peer in a conference call with plaintifFs attorneys, Gregg Garrison and Herman Kalfen, by phone. 10 Mr. Garrison and Mr. Kalfen were informed during that conference that Farmers intended to seek an 11 order shortening time for a hearing of a motion to continue the trial by ex parte application on 12 Thursday, June 27, 2013. Counsel for plaintiff stated that June 27 was not convenient, so Mr. Peer 13 and I agreed to appear ex parte on June 26, 2013, instead. age 14 3. On Monday, June 24, 2013 at about 10:35 a.m., I gave Mr. Garrison and Mr. Kalfen 15 written notice by email that Farmers would appear ex parte on June 26, 2013 at 2:00 p.m. in 16 Department PJ of this court to ask for an order shortening time for a hearing of a motion to continue 17 the trial. (See Exhibit A.) 18 4. During our phone conference on June 21, 2013, Mr. Garrison and Mr. Kalfen advised 19 that they would not stipulate to an order shortening time, and that they intend to oppose the motion 20 to continue the trial. 21 5. A copy of the Motion to Continue the Trial is attached as Exhibit B. 22 I declare under penalty of perjury under the laws of the State of California that the foregoing 23 is true and correct. 24 Executed on June cP, 2013, at Los Angeles, California. 25 26 WJ Q. dli ~ IVjTYA. NEMON 27 28 PRINTED ON RECYCLED PAPER DECLARATION 346445.1 I' ]I I 1 Katy Nelson From: Katy Nelson Sent: Monday, June 24, 2013 10:34 AM To: 'Herman Law', Gregg Garrison; Carol Erdie Subject: Chang v. Farmers Insurance - 12463 NOTICE OF EX PARTE APPLICATION Dear Counsel: As we discussed during our phone conversation on Friday, June 21, 2013, please be advised that we will appear ex parte to ask the court for an order shortening time for the hearing of a motion to continue the trial on Wednesday, June 26, 2013 at 2:00 p.m. in Dept. PJ (Judge Foiles). The discrepancy regarding our substitution was corrected this morning by the court clerk, who had misread the form. Please let us know if you have any questions or concerns. We will email you the paperwork before the hearing. Regards, Katy A. Nelson wooLLs III PEER A Professional Corporation One Wilshire Boulevard, 22nd Floor Los Angeles, California 90017 Telephone: (213) 629-8768 Facsimile: (213) 629-1660 knelsonwoollsoeer.corn From: Herman Law [mailto:kalfenlawoffice@eafthlink.net) Sent: Friday, June 21, 2013 12:54 PM To: Carrie Dupic Huynh; John E. Peer Cc: Gregg Garrison; Carol Erdie; Lee J. Danforth; Eva Oliveira; Katy Nelson Subject: KALFEN CONFIRMATION OF 2PM TC Ik ISSUES WITH SUBciiTUTION FORM Re: Conversation with Lee Danforth on May 15, 2013, I have a response for Mr. Danforth; and Depositions of Roxanne Chang and Michael Chang Hello Folks: Thank you for the emails. I am confirming my participation at 2pm. I also note that the Substitution of Attorney is flawed as it lacks the name and date regarding the signatory for Farmers Insurance. I suggest you please remedy same. Thanks again, Herm Herman i. Kaifen, JD, REA, NAEP Kaifen Law Corporation 1 Embarcadero Center, Suite 500 San Francisco, CA 94111 EXHIBIT B JOHN E. PEER - State Bar No. 95978 KATYA. NELSON - State Bar No. 173759 WOOLLS & PEER A Professional Corporation One Wilshire Boulevard, 22" Floor Los Angeles, California 90017 Telephone: (213) 629-1600 Facsimile: (213) 629-1660 Attorneys for Defendants 6 FARMERS INSURANCE EXCHANGE and TRUCK INSURANCE EXCHANGE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN MATEO 10 11 MICHAELCHANG, an individual, Case No.: CIV 489065 12 Plaintiff, NOTICE OF MOTION AND MOTION 13 FOR TRIAL CONTINUANCE 14 Complaint Filed: October 28, 2009 FARMERS INSURANCE COMPANY, INC., 15 FARMERS GROUP, INC., FARMERS Hearing Date: July 24, 2013 INSURANCE EXCHANGE AND TRUCK Time: 9:00 a.m. 16 INSURANCE EXCHANGE, reciprocal inter- Dept.: P JLM insurance exchanges; Does 1 to 99, Inclusive, 17 Trial Date: August 26, 2013 Discovery Cut-off: July 26, 2013 18 Defendants. Motion Cut-off: August 12, 2013 19 20 21 TO PLAINTIFF MICHAELCHANG AND HIS ATTORNEYS OF RECORD: 22 Notice is hereby given that on July24, 2013 at 9:00 a.m., or as soon thereafter as the matter 23 may be heard by in the Presiding Judge's courtroom of the above-entitled court located at 400 24 County Center, Redwood City, California, defendants Farmers Insurance Exchange ("Farmers" ) and 25 Truck Insurance Exchange ("Truck") will, and hereby do, move for an order vacating the August 26, 26 2013 trial date and continuing trial for at least three months to allow completion of trial of the 27 underlying action for which plaintiffhere seeks indemnification. 28 PRINTED ON RECYCLED PAPER 1 NOTICE OF MOTION AND MOTION FOR TRIALCONTINUANCE 345799.1 On February 1, 2013, this court continued the previous trial date of this action from April 8, 2013 to August 26, 2013. One of the grounds for the motion was the fact that the underlying action, 3 Kartal v. Chang, Case No. CIV 458146, which at that time was set for trial for March 13, 2013, 4 needed to be concluded first. Good cause exists for granting a trial continuance because it will serve the interests of 6 judicial economy, fairness and justice, for the following reasons: 1. Trial of the Kartal v. Chang action did not, in fact, take place commencing on March 8 13, 2013, but was instead continued by order of the Court and is presently scheduled to commence in 9 Department PJ of this Court on exactly the same date as this trial is currently scheduled (August 26, 10 2013). 2. Defendants ask for a continuance of this action only long enough to allow the August 12 26, 2013 trial of the underlying liability action to be concluded. 13 3. A continuance is the only solution that will permit the underlying Kartal v. Chang 14 action to be concluded so that Farmers obligation to indemnify Chang for any awards against Chang 15 in that action, ifany, will be ripe for adjudication. o~ o I 25 KATYA. h ELSON Attorneys for Defendants 26 FARMERS INSURANCE EXCHANGE and TRUCK INSI.JRANCE EXCHANGE 27 28 PRINTED ON RECYCLED PAPER 2 NOTICE OF MOTION AND MOTION FOR TRIALCONTINUANCE 345799. I PROOF OF SERVICE Michael Chang v. Farmers Insurance Exchange, et al Case No. CV 489065 I, Kristy Ortega, declare: 3 I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is Woolls & Peer, A Professional Corporation, One Wilshire Boulevard, 22" Floor, Los Angeles, California 90017. On June 25, 2013, I served the document(s) described as NOTICE OF MOTION AND MOTION FOR TRIAL CONTINUANCE on the interested parties in this action as follows: 0> By placing 0 the original 0> a true copy thereof enclosed in a sealed envelope addressed as follows: Gregg S. Garrison, Esq. Attorney for Plaintiff Michael Chang Garrison Law Corporation 161 Cortez Avenue Telephone: (805) 857-9300 Half Moon Bay, CA 94019 Email:gsgarrisongarrisonlawcorp.corn Herman I. Kalfen, Esq. Co-Counsel for Plaintiff Michael Chang 10 Kalfen Law Corporation 1 Embarcadero Center, Suite 500 Telephone: (415) 315-1710 San Francisco, CA 94111 Email: kalfenlawoffice(Rearthlink.net 12 8 BY MAIL: I am "readily familiar" with this firm's practice for the collection and the processing of correspondence for mailing with the United States Postal Service. In the 13 ordinary course of business, the correspondence would be deposited with the United States Postal Service at One Wilshire Boulevard, 22" Floor, Los Angeles, California 90017 with 14 postage thereon fully prepaid the same day on which the correspondence was placed for collection and mailing at the firm. Following ordinary business practices, I placed for 15 collection and mailing with the United States Postal Service such envelope at One Wilshire Boulevard, 22" Floor, Los Angeles, California 90017. 16 0 OVERNIGHT DELIVERY: I deposited such envelope in a facility regularly maintained by 17 0 FEDERAL EXPRESS 0 UPS 0 Overnight Delivery [specify name of service: ] with delivery fees fully provided for or delivered the envelope to a courier or driver of 0 18 FEDERAL EXPRESS 0 UPS 0 OVERNIGHT DELIVERY [specify name of service: ] authorized to receive documents at One Wilshire Boulevard, 22 Floor, Los Angeles, 19 California 90017 with delivery fees fully provided for. 20 0 BY FACSIMILE: I sent via facsimile a copy of said document(s) to the following addressee(s) at the following number(s) in accordance with the written confirmation of 21 counsel in this action. 22 BY E-MAIL: I sent via electronic mail a copy of said document(s) to the persons at the e-mail addresses listed on the service list in accordance with the written confirmation of 23 counsel in this action. 24 I declare under penalty of perjury under the laws of the State of California that 0> [State] the above is true and correct. 25 26 Executed on June 25, 2013, at Los Angeles, California. 27 28 Kris ty Ortega 346793.1 JOHN E. PEER - State Bar No. 95978 KATYA. NELSON - State Bar No. 173759 WOOLLS & PEER A Professional Corporation One Wilshire Boulevard, 22" Floor Los Angeles, California 90017 Telephone: (213) 629-1600 Facsimile: (213) 629-1660 Attorneys for Defendants FARMERS INSURANCE EXCHANGE and TRUCK INSURANCE EXCHANGE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF San Mateo, Central Branch MICHAELCHANG, an individual, Case No.: CIV 489065 10 MEMORANDUMOF POINTS AND Plaintiff, AUTHORITIES IN SUPPORT OF DEFENDANTS'OTION FOR TRIAL 12 CONTINUANCE 13 FARMERS INSURANCE COMPANY, INC., Complaint Filed: October 28, 2009 14 FARMERS GROUP, INC., FARMERS INSURANCE EXCHANGE AND TRUCK Hearing Date: July 24, 2013 INSURANCE EXCHANGE, reciprocal inter- Time: 9:00 a.m. 15 PJLM insurance exchanges; Does 1 to 99, Inclusive, Dept.: 16 Trial Date: August 26, 2013 Defendants. Discovery Cut-off: July 26, 2013 17 Motion Cut-o ff: July 12, 2013 18 1 9 I. INTRODUCTION 20 This action concerns insurance coverage for an underlying action entitled Kartal v. Chang, San Mateo County Superior Court Case No. CIV 458146 (and related cross-actions) (hereafter 22 „"Kartal action"). The trial of the Kartal action was recently continued from March 13, 2013 to 23 August 26, 2013, and is now scheduled for the same day as trial of this action currently is scheduled 24 to commence. 25 26 By this coverage action, plaintiff Chang seeks to force defendants Farmers and Truck 27 ("Farmers" ) to both defend and indemnify him for any liability he owes in the underlying Kartal 28 action. On February 1, 2013, this Court granted Farmers'rior Motion to Continue Trial in this case PRINTED ON RECYCLED PAPER 1 MEMORANDUMOF POINTS 8T AUTHORITIES IN SUPPORT OF MOTION FOR TRIAL CONTINUANCE 346063.1 &om April 8, 2013 to August 26, 2013, on the ground that the Kartal action should be concluded before this matter proceeds. After this Court granted that continuance, however, the Kartal action 3 trial was continued to the very same date, August 26, 2013. (Request for Judicial Notice, Ex. A, B 4 and C.)'he two most important issues in this case are whether Farmers owes a duty to defend Chang in the underlying Kartal action and whether Farmers owes a duty to indemnify him for any liability he is ultimately assessed in the Kartal action under their general liability policies. In opposition to 8 defendants'rior motion to continue the trial of this coverage action, Chang argued that he needed 9 10 the trial of this matter to go forward because Farmers was not defending him in the underlying action 11 and his need for that defense was immediate. After the trial of this action was continued, however, Farmers agreed on April 24, 2013 to defend Chang in the underlying Kartal action and Farmers has 13 .5~ y reimbursed Chang's unpaid defense costs. (Declaration of John Peer, tt 7.) Farmers is continuing to 14 defend Chang's interests in that action. (Peer Decl., tt 8.) 15 1]3, The other primary issue in this litigation is whether Farmers owes any obligations to 16 17 indemnify Chang for liabilities the trier of fact in the underlying Kartal action finds Chang must pay 18 to Kartal or others. Until the Kartal trial, now set for August 26, 2013, is completed or that case is settled, however, it remains completely uncertain whether Chang actually will owe any sums to third 20 parties in that action, or ifso, how much he will owe, or on what legal theories or claims his liability 21 will be found. Thus, until the Kartal action has been resolved by settlement or trial, the amount and 22 basis for Chang's legal obligations to pay damages in that action, if any, remain completely 23 uncertain. There is simply no basis —short of pure speculation - on which a trier of fact in this action can at present determine whether Farmers and Truck must indemnify Chang for presently unknown 26 I 27 The continuance of the Eartal action was requested by the Special Master in that matter, William Nagle, with the parties'oncurrence. Before that continuance was requested, plaintiff stated in his Opposition to 28 defendants'revious Motion to Continue the Trial that plaintiff Chang wants the trials of the two matters to proceed "in close time proximity." Opposition to Motion for Continuance of Trial dated 1/25/13, at 4:10-11. PRINTED ON RECYCLED PAPER 2 MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIAL CONTINUANCE 346063. I damages that may or may not be assessed against him in the underlying action and that may arise &om a number of different legal theories, some of which might be covered and some of which may 3 not. Indeed, trial of the coverage action before the underlying action is concluded presents the very 4 real possibility of dramatically divergent and conflicting results. Moreover, to establish the absence of coverage for many of Kartal's claims against Chang, 6 Farmers and Truck will be required to introduce evidence that could adversely impact Chang's defense in the underlying Kartal action. Thus, for example to establish the fact that the Farmers' 9 pollution exclusion applies to the claims against Chang, it would be in Farmers'nterests in this 10 action to demonstrate the full extent of the contamination of the property, but such evidence would 11 be adverse to Chang's defense of the underlying action and could also be adverse to Farmers in the event the claims against Chang in the underlying action actually are covered by the Farmers'3 policies. Such a procedural posture would not benefit either Chang or Farmers, since it would only 14 serve to increase both of their exposures &om the underlying action. These are precisely the reasons 15 California courts routinely stay trial of coverage actions pending resolution of the underlying action 16 1 7 against the insured. See, e.g., Haskell, Inc. v. Superior Court (1 995) 33 Cal.App.4 963: 18 There are three concerns which the courts have about the trial of coverage issues which necessarily turn upon the facts to be litigated in the underlying action. First, the 19 insurer, who is supposed to be on the side of the insured and with whom there is a special relationship, effectively attacks its insured and thus gives comfort to the 20 claimant in the underlying suit; second, such a circumstance requires the insured to 21 fight a two-&ont war,...and third, there is a real risk that, if the declaratory relief action proceeds to judgment before the underlying action is resolved, the insured could 22 be collaterally stopped to contest issue in the latter by the results in the former. (Id., at 979). 23 24 For all of these reasons, good cause exists to continue the trial of this action for at least three months to allow trial of the underlying action to go forward. Accordingly, pursuant to California 26 Rules of Court 3.1332 and 3.1335, Farmers asks this Court to enter an order vacating the August 26, 27 2013 trial date and continuing trial for three months to allow the August 26, 2013 trial of the 28 underlying Kartal action to go forward. PRINTED ON RECYCLED PAPER 3 MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIALCONTINUANCE 346063.1 H. BRIEF STATEMENT OF RELEVANT FACTS A. THE UNDERLYINGLOSS AND THE KARTALACTION Plaintiff Michael Chang has owned adjoining commercial properties at 233 and 235 Baldwin Avenue in San Mateo, California since 1977. For many years the property was utilized for dry cleaning operations. Dry cleaning operators installed four underground storage tanks, ranging in size &om 650-gallon to 1,200-gallon capacities. Three of these tanks apparently were used to store a dry cleaning chemical known as Stoddard solvent. Previous owners of the premises abandoned the four tanks in the ground, seemingly without emptying or sealing the tanks. Unfortunately, those 10 operations apparently have led to significant amounts of Stoddard solvent and perchloroethlene (PCE) contamination. 12 In the late 1980s, Mr. Chang began leasing a part of the premises for use as a restaurant. In 13 S~ y 1992, the restaurant tenant constructed a patio deck that extended over the yard behind the restaurant . 8 14 and later enclosed the deck for use as a banquet hall. Ultimately, Chang leased the restaurant .O Cl N E oi 15 >~ C 0 $ premises to Bilal Kartal, the plaintiffin the underlying Kartal v. Chang action. 16 17 Sometime around 2002, a peculiar odor permeated the restaurant and banquet hall and 18 allegedly persisted for years, worsening over time, and allegedly damaging Mr. Kartal's business. 19 Efforts to determine the source of the odor led to the discovery of the first of the four abandoned 20 tanks in 2006. Three more abandoned tanks were discovered in 2007. Two of the three tanks found 21 in 2007 were nearly empty, one containing an amount of residual Stoddard solvent, a flammable, 22 hazardous substance, and sludge, and the other an amount of fuel oil and sludge. The tank 23 discovered in 2006 and one of the three tanks discovered in 2007 were filled with a mixture of water 24 25 and Stoddard solvent. Further investigation and remediation efforts ensued, ultimately involving 26 significant amounts of other toxic substances, including PCE, and involving several other parties. 27 28 PRINTED ON RECYCLED PAPER 4 MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIALCONTINUANCE 346063. I B. THE INSURANCE POLICIES AT ISSUE IN THIS ACTION Farmers has insured Mr. Chang's commercial properties at 233 and 235 Baldwin Avenue for 3 consecutive annual periods &om December 28, 1991 to the present. The policy (No. 60150-85-11) 4 includes coverage for businessowners'iability to others and for property loss. C. THE CLAIMS SUBMITTED UNDER MR. CHANG'S POLICIES WITH DEFENDANTS 1. Denial of Mr. Chang's Pronertv Claim In September 2006, following the discovery of the first leaking tank, Mr. Chang made a first 9 party claim to defendants for property damage and business losses. Farmers denied coverage for 10 Chang's property loss claim on October 3, 2006, because there was no "covered cause of loss" based 11 on the exclusions for property damage arising &om pollution, water and negligent work. 12 2. Denial of Mr. Chang's Liabilitv Claims 13 W 8~y On October 6, 2006, Kartal sued Chang in San Mateo County Superior Court Case No. CIV 14 w y'>i 458146, alleging nuisance and constructive eviction relating to his restaurant losses allegedly as a x Ego o Ili 15 16 result of the Stoddard solvent odors. Chang cross-complained against Kartal, claiming that the 17 tenant's negligence in building the structures and maintaining the area caused the odors that 18 allegedly disrupted Kartal's business. The litigation has expanded as additional contamination has been discovered and numerous additional parties were brought in, including past and current owners 20 and operators of the dry cleaning business. (See Request For Judicial Notice, Ex. A and B [Minute 21 Orders from the Kartal action].) 22 Mr. Chang tendered the Kartal action to Farmers for defense and indemnity under his 23 policies. On January 16, 2007, Farmers denied coverage based on the absolute exclusion for third party claims arising &om the release of pollutants. 26 On October 26, 2009, Chang filed the instant action against Farmers for breach of contract and insurance bad faith concerning the denials of these two claims. By this action Chang sought to 28 force Farmers to defend his interests in the Kartal action brought against him, and also seeks to force PRINTED ON RECYCLED PAPER 5 MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIALCONTINUANCE 346063.1 Farmers to indemnify him for any money or equitable judgment that may be awarded against him in the Kartal action. (See Complaint, at g 56-61 [First Cause Of Action regarding duty to defend] and 3 gtt 62-68 [Second Cause of Action regarding duty to pay]). As noted above, Farmers has now agreed 4 to provide a defense for Chang in the Kartal action under a reservation of rights to seek recoupment, 5 and is continuing to defend Chang's interests in that action. (See Peer Decl, ltd[ 7-8.) The remaining issue is whether any claims that Kartal actually may prove against Chang at trial are ripe for adjudication before those underlying claims actually are adjudicated. Adjudication of Chang's first 8 9 party claims at this point similarly could adversely impact the outcome of the Kartal action for both 10 Chang and Farmers. 12 D. THE FACTUALISSUES IN THE UNDERLYINGACTION ARE DIRECTLY RELATED TO 13 IA .I THE ISSUES TO BE ADJUDICATED IN THE INSTANT ACTION ~ l~gj 14 The ultimate facts regarding how the environmental losses occurred will be determined in the Ie- underlying Kartal action when the trier of fact finds which party or parties actually are liable for the 17 pollution and resulting losses at the property. (Peer Decl., at $ 9.) In the instant action, the trier of 18 fact will be asked to apply the language of Mr. Chang's insurance policies to the facts that are determined in the Kartal action. (Id., at 10.) Thus, by definition, trial and final adjudication of the 20 underlying Kartal action will allow a resolution of the ultimate facts that must be proven in this case, 21 and which will be directly relevant to proving or disproving plaintifF s coverage and bad faith claims 22 at trial. (Id.) 23 24 Conversely, allowing trial of the coverage action to go forward before the underlying action 25 is concluded could result in conflicting results on those very issues. In short, it makes no sense, and 26 presents the very real prospect for a waste of judicial resources, to have a trial on whether Farmers 27 owes coverage for a judgment or judgments against its insured that may never be entered and any 28 such judgment in this action might need to be set aside because the underlying action on which that PRINTED ON RECYCLED PAPER 6 MEMORANDUMOF POINTS & AUTHORITIES IN SUPPORT OF MOTION FOR TRIAL CONTINUANCE 346063. I indemnification obligation would be based reached a contrary conclusion. Ifthe underlying action is allowed to proceed first on August 26, this Court and the parties can avoid a potentially needless 3 "trial within a trial", and the parties (and the Court) will be able to rely on the facts of loss as they 4 actually were adjudicated in the underlying action in determining Farmers'overage obligations. 5 Speculation about what might happen in the Kartal action will be avoided regarding plaintifFs