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Safeco Insurance Company of Illinois v. Marc E. Klein

October 3, 2012

SAFECO INSURANCE COMPANY OF ILLINOIS, PLAINTIFF,
v.
MARC E. KLEIN, AN INDIVIDUAL; WILLIAM GREEN AND STEPHANIE GREEN, INDIVIDUALLY AND DOING BUSINESS AS PERK'S BAR; BILLIE J. SHERWOOD, AN INDIVIDUAL; FLOYD DEATS; DOES I THROUGH X; ELAINE TWITCHELL, INDIVIDUALLY AS SURVIVING SPOUSE OF JORY TWITCHELL, AND ON BEHALF OF HER MINOR CHILDREN, R.T., T.T. AND C.G.; E.G. "JERRY" TWITCHELL, AN INDIVIDUAL; NANCY L. FARMER, AN INDIVIDUAL; AND AMANDA PARISH, ON BEHALF OF HER MINOR CHILD G.T., DEFENDANTS.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

MEMORANDUM DECISION AND ORDER

Before the Court is Plaintiff's Motion for Summary Judgment (Dkt. 50). The matter is fully briefed, and the Court heard oral argument on July 11, 2011. Being familiar with the record and having considered the parties' oral and written arguments, the Court will grant the Motion, for the reasons stated below.

BACKGROUND

On November 11, 2010, Defendant Marc Klein drove into oncoming traffic, causing fatal injuries to Jory Twitchell. At the time of the accident, Klein's blood alcohol content was .279. Compl., Dkt. 1 at 5. Twitchell's family filed a wrongful death action against Klein, and Defendants William and Stephanie Green, owners of Perk's Bar. The suit claims that Klein was served alcohol at Perk's Bar despite being obviously drunk, making them liable for Twitchell's death. Id. at 3-4.

The Greens tendered their defense to Safeco Insurance Company of Illinois, the Plaintiff here. Id. at 5-6. Although it accepted tender, Safeco retained another firm to represent the Greens in the Twitchells' suit. Id. at 5-6. Safeco filed this action for declaratory judgment, claiming that it has no duty to defend or indemnify the Greens. Safeco now moves for summary judgment.

LEGAL STANDARD

Summary judgment is appropriate where a party can show that, as to any claim or defense, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). One of the principal purposes of the summary judgment "is to isolate and dispose of factually unsupported claims . . .." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is "not a disfavored procedural shortcut," but is instead the "principal tool[ ] by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources." Id. at 327. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). There must be a genuine dispute as to any material fact -- a fact "that may affect the outcome of the case." Id. at 248.

The evidence must be viewed in the light most favorable to the non-moving party, and the Court must not make credibility findings. Id. at 255. Direct testimony of the non-movant must be believed, however implausible. Leslie v. Grupo ICA, 198 F.3d 1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).

The moving party bears the initial burden of demonstrating the absence of a genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001)(en banc). To carry this burden, the moving party need not introduce any affirmative evidence (such as affidavits or deposition excerpts) but may simply point out the absence of evidence to support the nonmoving party's case. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir.2000).

This shifts the burden to the non-moving party to produce evidence sufficient to support a jury verdict in her favor. Id. at 256-57. The non-moving party must go beyond the pleadings and show "by her affidavits, or by the depositions, answers to interrogatories, or admissions on file" that a genuine dispute of material fact exists. Celotex, 477 U.S. at 324.

However, the Court is "not required to comb through the record to find some reason to deny a motion for summary judgment." Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quoting Forsberg v. Pac. Northwest Bell Tel. Co., 840 F.2d 1409, 1418 (9th Cir. 1988)). Instead, the "party opposing summary judgment must direct [the Court's] attention to specific triable facts." Southern California Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003).

ANALYSIS

Defendants William and Stephanie Green was insured by Safeco under a homeowner's insurance policy in effect on the date of the accident which claimed Jory Twitchell's life. Policy, Ex. A to Skinner Aff., Dkt. 51-1. Twitchell's family sued the Greens -- as owners of Perk's Bar -- in state court, for allegedly providing the alcohol that caused Twitchell's death. At issue here is whether the Greens' policy covers their defense and indemnification of the Twitchells' suit and, if so, whether any policy exclusion applies.

In their briefs and at oral argument, the parties focused on whether coverage was precluded by the "business" activities exclusion in the Greens' policy. However, the Court will first address another argument raised by Safeco -- whether the Greens violated the Policy's cooperation clause. The cooperation clause provides: "the insured shall not, except at the insured's own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to others at the time of the bodily injury." Policy (Ex. A to Skinner Aff.), Dkt. 51-1 at 42. On May 1, 2012, William Green signed a Stipulation in which he admitted liability, and stipulated to judgment for plaintiffs in the amount of $1,000,000.*fn1 Stipulation (Ex. M to Skinner Aff.), ...


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