Film Allman, Llc v. New York Marine And General Insurance Company

NOTICE OF MOTION AND MOTION for Partial Summary Judgment as to 1st, 2nd, 3rd Causes of Action

C.D. Cal.October 5, 2016

MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC LEON GLADSTONE (SBN 70967) lgladstone@gladstoneweisberg.com MICHAEL J. AIKEN (SBN 98786) maiken@gladstoneweisberg.com GLADSTONE WEISBERG, ALC 300 Corporate Pointe, Suite 400 Culver City, CA 90230 Tel: (310) 821-9000 • Fax: (310) 943-2764 Mark C. Goodman (SBN 154692) mark.goodman@hoganlovells.com David W. Skaar (SBN 265377) david.skaar@hoganlovells.com HOGAN LOVELLS US LLP 3 Embarcadero Center, Suite 1500 San Francisco, California 94111 Telephone: (415) 374-2300 Facsimile: (415) 374-2499 Attorneys for Defendant, New York Marine and General Insurance Company, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA FILM ALLMAN, LLC, a Georgia limited liability company, Plaintiff, vs. NEW YORK MARINE and GENERAL INSURANCE COMPANY, INC., a New York corporation, and DOES 1-10, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 2:14-cv-07069-ODW-KLS NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES Filed concurrently with: (a) Separate Statement of Uncontroverted Facts and Conclusions of Law; (b) Indexed Exhibits (With Authenticating Declaration); (c) Request for Judicial Notice (d) Proposed Statement of Decision DATE: November 7, 2016 TIME: 1:30 p.m. CTRM: 11 Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 1 of 31 Page ID #:1362 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on November 7, 2016, at 1:30 p.m., or as soon thereafter as the matter may be heard in Courtroom 11 of the above entitled court, located at 312 North Spring Street, Los Angeles, California, defendant New York Marine and General Insurance Company (“New York Marine”) will and hereby does move the Court pursuant to Rule 56 of the Federal Rules of Civil Procedure for an Order granting partial summary judgment on the following claims on the grounds that there is no triable issue of fact and that New York Marine is entitled to judgment as a matter of law: 1. On Plaintiff’s First Cause of Action, for breach of the Motion Picture/Television Producer’s Portfolio Policy (the “Policy”) of insurance attached as Exhibit 1 to the First Amended Complaint (“FAC”), on the grounds that (a) the Policy excludes coverage for losses caused by the criminal acts of Plaintiff’s employees, (b) the uncontroverted facts establish that the loss in issue was caused by the criminal acts of Plaintiff’s employees, and (c) the alleged failure to pay was therefore not a breach of contract; 2. On Plaintiff’s Second Cause of Action, for alleged anticipatory breach of that same Policy “by repudiating [Defendant’s] obligations to provide insurance coverage . . . without cognizable justification” (FAC ¶ 69), on the grounds that (a) the Policy excludes coverage for criminal acts, (b) the uncontroverted facts are that Plaintiff’s loss was caused by the criminal acts of its employees, (c) the alleged failure to provide coverage is therefore fully justified; 3. On Plaintiff’s Third Cause of Action, for breach of the implied covenant of good faith and fair dealing, allegedly by refusing to “pay . . . losses covered under the Policy” (FAC ¶ 74), on two grounds, Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 2 of 31 Page ID #:1363 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC either one of which is cause for summary judgment: (i) the losses were not covered and, under California law, there can be no “bad faith” refusal to pay for a loss that is not covered, and, (ii) the uncontroverted fact that Plaintiff’s employees committed the criminal acts that caused the loss establishes that there is at the very least a reasonable basis to dispute coverage, which constitutes a complete defense under California law; and 4. On Plaintiff’s Eighth Cause of Action, for declaratory relief, to the extent the requested declaration of rights applies to the Producer’s Policy, on the grounds that the uncontroverted facts establish that New York Marine has no obligation to pay for the loss claimed under the Policy’s Cast Coverage. This motion is made following the conference of counsel pursuant to L.R. 7- 3 which took place on September 14, 2016. This motion will be based on this Notice of Motion and Motion for Partial Summary Judgment, the Memorandum of Points and Authorities served and filed concurrently herewith, the Indexed Exhibits and attached declaration of Leon Gladstone, the Request for Judicial Notice filed in connection herewith, on the pleadings and papers on file herein, and on such oral and documentary evidence and argument as may be presented at or prior to the hearing. Dated: October 5, 2016 GLADSTONEWEISBERG, ALC By: /s/ Michael J. Aiken LEON GLADSTONE MICHAEL J. AIKEN Attorneys for Defendant, New York Marine and General Insurance Company, Inc. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 3 of 31 Page ID #:1364 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC TABLE OF CONTENTS Page 1. INTRODUCTION. .......................................................................................... 8 2. SUMMARY OF UNCONTROVERTED MATERIAL FACTS. ................... 9 A. Members Of Plaintiff’s Film Crew Trespass On Railroad Property, Place A Bed On The Tracks, And Cause A Fatal Train Collision. ..................................................................................... 9 B. Plaintiff’s Employees Are Charged With Criminal Trespass And Involuntary Manslaughter. .......................................................... 11 (1) Film Director Randall Miller Pleads Guilty And Is Incarcerated And Fined. ........................................................... 12 (2) Assistant Director Hillary Schwartz Is Tried, Found Guilty, And Sentenced To 10 Years’ Probation. ...................... 12 (3) Plaintiff’s Line Producer, Jay Sedrish, Is Found Guilty On An Alford Plea And Sentenced To Probation. .................... 12 C. Plaintiff Seeks Payment Under An Insurance Policy That Excludes Coverage For Losses Caused By The Criminal Acts Of Plaintiff’s Employees. .................................................................... 13 3. PLAINTIFF CANNOT PROVE ITS FIRST OR SECOND CAUSES OF ACTION BECAUSE THE FACTS ESTABLISH THAT NEW YORK MARINE HAS NO OBLIGATION TO PAY UNDER THE TERMS OF THE POLICY. .......................................................................... 14 A. The Applicable Law Is That Of California. ........................................ 15 B. California Law Requires That The Policy Be Read In Accordance With Its Plain Meaning. If That Is Not Clear, It Must Be Read In Accordance With The Objectively Reasonable Expectations Of The Insured. ............................................................. 16 C. Under The First Rule Of Interpretation, The California Courts Hold That An Exclusion For “Criminal Acts” Is Clear And Unambiguous As A Matter Of Law. ................................................... 17 D. The Dispositive Fact Is That Plaintiff’s Employees Committed A Criminal Act, So The Speculative Possibility That Their Records Might Someday Be Expunged Is Irrelevant. ......................... 19 E. Even Under The Second Rule Of Policy Interpretation, Plaintiff Could Not Reasonably Expect Coverage For Losses Resulting From Acts Prohibited By Law And For Which Its Employees Would Be Indicted, Found Guilty, And Sentenced. ........................... 22 F. The Absence Of Coverage Negates Any Possibility That Plaintiff Can Prove Its First Cause Of Action, For Breach Of Contract. .............................................................................................. 23 Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 4 of 31 Page ID #:1365 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC G. The Same Undisputed Facts Dispose Of Plaintiff’s Second Cause Of Action, For Anticipatory Breach. ........................................ 24 4. THE FACTS ESTABLISH THAT NEW YORK MARINE DID NOT UNREASONABLY REFUSE TO PAY PER THE TERMS OF THE POLICY, WHICH DISPOSES OF PLAINTIFF’S THIRD CAUSE OF ACTION, FOR INSURANCE BAD FAITH. ......................................... 25 A. Where There Is No Coverage To Begin With, Refusal To Pay A Claim Cannot Constitute Bad Faith. ................................................... 25 B. The Admitted Acts Of Criminal Trespass At The Very Least Constitute A Reasonable Basis For Disputing Coverage, Which Eliminates Any Grounds For Finding Bad Faith. ............................... 26 5. ON THE ACTION FOR DECLARATORY RELIEF, THE UNDISPUTED FACTS SHOW NEW YORK MARINE HAS NO CONTRACTUAL OBLIGATION TO PAY UNDER THE CAST COVERAGE OF THE PRODUCER’S POLICY. ........................................ 28 A. Rule 56 Allows Summary Adjudication Of Each Part Of A Claim For Which There Is No Triable Issue. ...................................... 28 B. Summary Adjudication Is Proper On The Producer’s Policy Because There Is No Triable Issue As To Whether The Loss Was Caused By The Criminal Acts Of Plaintiff’s Employees. .......... 29 6. CONCLUSION. ............................................................................................ 29 Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 5 of 31 Page ID #:1366 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC TABLE OF AUTHORITIES Page Cases 20th Century Ins. Co. v. Schurtz, 92 Cal. App. 4th 1188 (2001) .................18, 21, 22 20th Century Ins. Co. v. Stewart, 63 Cal. App. 4th 1333 (1998) .................... passim AIU Insurance Company v. Superior Court, 51 Cal.3d 807 (1990) ........................16 Allstate Ins. Co. v. Burrough, 120 F.3d 834 (8th Cir. Ark. 1997) .....................19, 20 Allstate Ins. Co. v. Carmer, 794 F. Supp. 871 (S.D. Ind. 1991) ........................19, 20 Allstate Ins. Co. v. Miller, 732 F. Supp. 2d 1128 (D. Haw. 2010) ..........................19 Allstate Ins. Co. v. Raynor, 93 Wn. App. 484 (1999) .......................................19, 20 Allstate Ins. Co. v. Talbot, 690 F. Supp. 886 (N.D. Cal. 1988) ...............................18 Bank of the West v. Superior Court, 2 Cal.4th 1254 (1992) ....................................17 Benach v. County of Los Angeles, 149 Cal. App. 4th 836 (2007) ...........................23 Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) ..........................................................................................................24 Century National Ins. Co. v. Glenn, 86 Cal. App. 4th 1392 (2001) ..................22, 23 Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co., 90 Cal.App.4th 335 ..................................................................................................26, 27 City of Elmira v Selective Ins. Co. of N.Y., 83 A.D. 3d 1262 (N.Y. App. Div. 3d Dep’t 2011) .........................................................................................................17 Clausen v. M/V New Carissa, 339 F.3d 1049 (9th Cir. Or. 2003) ..........................15 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78; 58 S. Ct. 817, 822; 82 L. Ed 1188 (1938) .............................................................................................................15 Everett v. State Farm General Ins. Co., 162 Cal. App. 4th 649 (2008) ............25, 26 Fraley v. Allstate Ins. Co., 81 Cal.App.4th 1282 (2000) ...................................26, 27 Glickman v. Collins, 13 Cal.3d 852, 857, footnote 1 (1975) ...................................15 Gold Mining & Water Co. v. Swinerton, 23 Cal. 2d 19 (1943) ...............................24 Guebara v. Allstate Ins. Co., 237 F.3d 987 (9th Cir. Cal. 2001) .......................27, 28 Hurtado v. Superior Court, 11 Cal. 3d 574 (1974) .................................................15 Int’l Serv. Ins. Co. v. Gonzales, 194 Cal. App. 3d 110 (1987) ................................15 Love v. Fire Ins. Exchange, 221 Cal. App. 3d 1136, (1990) ............................25, 26 Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 6 of 31 Page ID #:1367 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC N.C. v. Alford, 400 U.S. 25, 37; 91 S. Ct. 160; 27 L. Ed. 2d 162 (1970) ................13 Parsons v. Bristol Development Company, 62 Cal.2d 861 (1965) ..........................16 Paslay v. State Farm General Ins. Co., 248 Cal. App. 4th 639 (2016) .............26, 28 Renaissance Art Invs., LLC v AXA Art Ins. Corp., 102 A.D. 3d 604 (N.Y. App. Div. 1st Dep’t 2013) .......................................................................................18 Sackett v. Spindler, 248 Cal. App. 2d 220 (1967) ...................................................23 Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., 78 Cal. App. 4th 847 (2000) ................................................................................................25 St. Paul Fire & Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., 101 Cal. App. 4th 1038 (2002) ................................................................................22 State Auto Prop. & Cas. Co. v. Matty, 286 Ga. 611 (2010) ....................................17 Stein v. International Ins. Co., 217 Cal.App.3d 609 (1990) ....................................16 Stinson v. Allstate Ins. Co., 212 Ga. App. 179 (1994) .............................................18 Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1 (1995) ...........................16, 22, 26 Wilson v. 21st Century Ins. Co., 42 Cal.4th 713 ....................................................26 Statutes California Insurance Code § 22 ...............................................................................16 Official Code of Georgia (“O.C.G.A.”) § 16-7-21(b)(2) ..........................................8 O.C.G.A. § 16-5-3(a) .................................................................................................8 O.C.G.A. § 42-8-60 .................................................................................................20 O.C.G.A. § 46-8-380 ...............................................................................................21 Federal Rules of Civil Procedure F.R.C.P. Rule 56 ......................................................................................................29 Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 7 of 31 Page ID #:1368 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC MEMORANDUM OF POINTS AND AUTHORITIES 1. INTRODUCTION. It is a crime in the state of Georgia to enter upon the property of another after receiving notice from the owner that such entry is forbidden.1 On February 20, 2014, Plaintiff’s film production crew did exactly that. They entered upon railroad property, placed a hospital bed across the track, and filmed a movie scene after the railroad had twice denied them permission to access its property in Wayne County, Georgia. The result was a train collision that killed a member of the film crew, Sarah Jones, and injured several others, including film director Randall Miller. He and two of Plaintiff’s other employees were later charged with criminal trespass and involuntary manslaughter for causing the death of Ms. Jones through the commission of the unlawful trespass.2 All three were found guilty. The First Amended Complaint (“FAC”) alleges that Plaintiff is entitled to payment under a Motion Picture/Television Producer’s Portfolio Policy of insurance (the “Policy”). However, the Policy expressly states that defendant New York Marine will not pay for losses resulting from the criminal acts of Plaintiff’s employees. The applicable law of California holds that an exclusion for losses caused by criminal acts is clear, unambiguous, and enforceable as a matter of law. This conclusively negates Plaintiff’s first cause of action, for breach of contract by wrongful failure to pay under the terms and conditions of the Policy. It also nullifies Plaintiff’s second cause of action, for anticipatory breach, and the third cause of action, for unreasonable (“bad faith”) refusal to pay for the claimed loss. It also establishes that New York Marine is entitled to partial summary 1 Official Code of Georgia (“O.C.G.A.”) § 16-7-21(b)(2). 2 O.C.G.A. §16-5-3(a). Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 8 of 31 Page ID #:1369 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC judgment on Plaintiff’s eighth cause of action, which seeks declaratory relief as to multiple insurance policies, to the extent it seeks a declaration of the parties’ rights and obligations under this particular contract. 2. SUMMARY OF UNCONTROVERTED MATERIAL FACTS. On February 20, 2014, a fatal train accident occurred on the set of Midnight Rider (the “Film”), a “biopic” about the Allman Brothers Band. [FAC ¶¶ 2, 14, and 20; UF No. 1]3 The “set” was on the Doctortown railroad trestle bridge in Wayne County, Georgia. [UF No. 2] Plaintiff Film Allman is a limited liability company. It was formed and operated by its officers, filmmakers Randall Miller (“Miller”) and Jody Savin, as the production entity for the Film. [FAC ¶¶ 7 and 15; UF No. 3 and 4] Miller was also the director of the Film. [FAC ¶ 2, UF No. 5] Hillary Schwartz (“Schwartz”) was an assistant director. [UF No. 6] Jay Sedrish (“Sedrish”) was Plaintiff’s “unit production manager” and “line producer.” [UF No. 7] Charles Baxter (“Baxter”) was Plaintiff’s location manager. [UF No. 8] Baxter, whose responsibilities included getting permission to film from proper authorities, reported to line producer Sedrish. [UF Nos. 9 and 10] A. Members Of Plaintiff’s Film Crew Trespass On Railroad Property, Place A Bed On The Tracks, And Cause A Fatal Train Collision. Prior to the accident, Plaintiff’s film crew was informed that a railroad company, CSX Transportation (“CSX”), owned the track and trestle where they wanted to film. [UF Nos. 11 and 12] Baxter made several attempts to get permission from CSX to film on its track. [UF No. 13] The railroad never gave permission. [UF No. 14] 3 “UF #” refers to the Statement of Uncontroverted Facts. “FAC” refers to the First Amended Complaint. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 9 of 31 Page ID #:1370 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC In January, Baxter requested permission so the crew could film a scene showing Gregg Allman riding a motorcycle on the railroad track. [UF No. 15] On January 27, 2014, CSX sent him an email denying permission and stating that CSX did not permit filming on its property for safety and security reasons and to ensure on-schedule train operations. [UF Nos. 16 and 17] Baxter forwarded the email to others in the production, and the motorcycle scene was cut from the screenplay. [UF Nos. 17 and 18] Plaintiff’s crew nevertheless wanted to shoot a scene that would require placing a hospital bed on the railroad track at the trestle. [UF Nos. 20 and 21] Baxter suggested shooting near the tracks with the trestle in the background, but the idea was rejected. [UF No. 22] He also requested assistance from others who he thought might be able to convince CSX to grant permission. [UF No. 23] As of February 14, 2014, with commencement of principal photography approaching, the various “department heads” at Film Allman were asking Baxter whether they had permission to shoot the scene on the trestle. [UF No. 24] That day Baxter received a phone call from Carla Groleau of CSX. [UF No. 25] She reiterated that CSX had a no-film policy but said that she would see what she could do to help. To do that, she said, she needed an email from Baxter with a specific request to film and setting out the details of “who, what, where, and when.” [UF No. 26] That evening, Baxter sent Groleau an email requesting permission to access the CSX tracks for filming. [UF Nos. 27] The email was jointly composed by Baxter, Schwartz, and Sedrish. [UF No. 28] The email requested permission for the film crew “to access CSX tracks” at “Rayonier’s Jessup Mill location” near the Doctortown trestle on February 20, 2014, between 4 p.m. and 6 p.m. [UF No. 29] As of the time he sent that email, Baxter and others at Film Allman were aware that CSX had not granted permission to be on its tracks. [UF No. 30] Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 10 of 31 Page ID #:1371 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC On the morning of February 20, 2014 (the day of the accident), Baxter received an email from CSX in which it once again denied permission to film on its property. [UF No. 31] He promptly forwarded the email to others at the production, including Schwartz and Sedrish. [UF No. 32] He also discussed it with 10 or 12 people at the production, again including Jay Sedrish. [UF No. 33] Nevertheless, the crew prepared to go to the location to film. [UF No. 34] Plaintiff’s crew arrived at the location sometime after 2:00 p.m. [UF No. 35] After seeing two trains pass through, they placed a bed on the track, perpendicular to the rails, and began filming. [UF No. 36] By then, members of the crew, including Sedrish and Schwartz, knew they had been denied permission to enter upon railroad property. [UF No. 37] The accident occurred when a train came through while the crew and the bed were still on the track. [UF No. 38] The incident resulted in the death of assistant camera technician Sara Jones. [FAC ¶20, UF No. 39] Several other crew members were hurt, including the director, Randall Miller. (FAC ¶20; UF No. 66) B. Plaintiff’s Employees Are Charged With Criminal Trespass And Involuntary Manslaughter. In September 2014, Miller, his wife Jody Savin, and others involved in the production were indicted by the Wayne County Grand Jury on multiple counts arising from the accident. [FAC ¶ 2, UF No. 40] The first count charged Miller, Savin, Sedrish, and Schwartz with criminal trespass for their entry upon the CSX railroad tracks and trestle at Doctortown after receiving notice that permission to do so had been denied. [UF No. 41] Each of the next four counts were directed against them individually for involuntary manslaughter for causing the death of Ms. Jones “by the commission of an unlawful act,” i.e., the criminal trespass onto CSX property. [UF No. 42] Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 11 of 31 Page ID #:1372 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC (1) Film Director Randall Miller Pleads Guilty And Is Incarcerated And Fined. Plaintiff’s founder and director, Miller, was also a Film Allman employee on the date of the accident. [UF No. 43] On March 9, 2015, he appeared in court on Counts 1 and 2 of the indictment. [UF Nos. 46 and 47] He was placed under oath, after which he admitted that he was “in fact” guilty as charged in Counts 1 and 2, i.e., trespassing on CSX property after having been denied permission to enter. [UF Nos. 48, 49, and 50] Miller later affirmed, in these proceedings, that he testified truthfully when he admitted the truth of the charges. [UF No. 51] Miller was found guilty on both counts, sentenced to 10 years, with 2 years to be served in county jail and the remainder on probation, and fined $20,000. [UF Nos. 52 and 53] (2) Assistant Director Hillary Schwartz Is Tried, Found Guilty, And Sentenced To 10 Years’ Probation. Assistant director Hillary Schwartz [UF No. 6] was also an employee of Film Allman. [UF No. 45] She knew that the film crew was trespassing on the day of the accident. [UF No. 37] On March 10, 2015, Schwartz was tried and found guilty on charges of criminal trespass and involuntary manslaughter. [UF Nos. 54 and 55] The charges were based on and directly related to the acts and events that resulted in the death of Ms. Jones and the claim in issue. [FAC ¶¶ 2 and 5; UF Nos. 40 and 69] (3) Plaintiff’s Line Producer, Jay Sedrish, Is Found Guilty On An Alford Plea And Sentenced To Probation. Jay Sedrish, Plaintiff’s “line producer” [UF No. 7] was another employee indicted in connection with the February 20, 2014, incident. [UF Nos. 40, 41, 42, and 44] He, like Schwartz, knew the film crew had been denied permission to film on railroad property. [UF No. 37] Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 12 of 31 Page ID #:1373 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC On March 9, 2015, Sedrish entered an “Alford” plea4 and was found guilty on the charges of criminal trespass and involuntary manslaughter. [UF No. 57] He was sentenced to 10 years’ probation and fined. [UF No. 58] Again, the charges were based on and directly related to the acts and events that resulted in the death of Ms. Jones and the claim in issue. [FAC ¶¶ 2 and 5; UF Nos. 40 and 69] C. Plaintiff Seeks Payment Under An Insurance Policy That Excludes Coverage For Losses Caused By The Criminal Acts Of Plaintiff’s Employees. Prior to the accident, Plaintiff had procured multiple insurance policies from New York Marine in connection with the Film. One of these was the Policy, a copy of which is attached as Exhibit 1 to the First Amended Complaint. [FAC ¶¶ 1, 17, FAC Exhibit 1; UF Nos. 59 and 60] The Policy provides multiple, separate coverages for various risks associated with making films. [FAC ¶ 18; UF No. 61] It also contains certain terms and conditions, including the following exclusion, which applies to all coverages: V. EXCLUSIONS APPLICABLE TO ALL COVERAGES OF THIS POLICY * * * b. We will not pay for loss or damage caused by or resulting from any of the following: (1) Dishonest or criminal acts committed by: (a) You, any of your partners, members, officers, managers, employees, leased employees … [FAC Ex. 1, at p. 18 (Docket Doc. 31-1, Page ID # 805); UF No. 64] 4 N.C. v. Alford, 400 U.S. 25, 37; 91 S. Ct. 160; 27 L. Ed. 2d 162 (1970) (“An individual accused of crime may . . . consent to the imposition of a prison sentence even if he is unwilling or unable to admit his participation in the acts constituting the crime.”) Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 13 of 31 Page ID #:1374 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC One of the coverages provided by the Policy is the “Cast Coverage.” It applies to certain losses sustained when a cast member or other “Covered Person” becomes unable to perform his or her duties due to injury, sickness, or death as long as the condition is not from a cause of loss listed in the Exclusions. [FAC ¶ 17, FAC Exhibit 1; UF No. 62, 63, and 65] After the accident, Plaintiff notified New York Marine of various claims under the policies, including a civil claim by the railroad, CSX, against Film Allman for trespass. [FAC ¶¶ 3, 32, 33, and 51; UF 67] Plaintiff also submitted a claim under the Cast Insurance Coverage based on Miller’s injuries. [FAC ¶ 21; UF No. 68] In March 2014, New York Marine reserved all rights under the Policy, including the right to disclaim any obligation to Film Allman. [FAC ¶ 3; UF 70] Indeed, Plaintiff admits its insurance claims have a “direct relationship” to the criminal actions that were brought against its employees. [FAC ¶ 5] Plaintiff nevertheless claims it is entitled to coverage under the terms of the Policy. 3. PLAINTIFF CANNOT PROVE ITS FIRST OR SECOND CAUSES OF ACTION BECAUSE THE FACTS ESTABLISH THAT NEW YORK MARINE HAS NO OBLIGATION TO PAY UNDER THE TERMS OF THE POLICY. Plaintiff’s first two causes of action are premised on the assertion that New York Marine has a contractual obligation to pay under the Policy. The first cause of action alleges that New York Marine breached its contractual duties by failing to pay “for the covered losses in accordance with the terms and conditions of the Policy.” [FAC ¶ 62] The second, for anticipatory breach, alleges that New York Marine repudiated its insurance obligations “without cognizable justification.” [FAC ¶ 69] Both claims fail as a matter of law because the uncontroverted facts establish that New York Marine has no contractual obligation to pay. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 14 of 31 Page ID #:1375 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC A. The Applicable Law Is That Of California. In diversity actions, federal courts apply federal procedural law and state substantive law. Clausen v. M/V New Carissa, 339 F.3d 1049, 1065 (9th Cir. Or. 2003). The applicable substantive law is that of the state in which the federal court is located. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78; 58 S. Ct. 817, 822; 82 L. Ed 1188 (1938). Where the law of the states involved is the same, there is no conflict to resolve, and a California court will therefore apply the law of California. Int’l Serv. Ins. Co. v. Gonzales, 194 Cal. App. 3d 110, 116 (1987); Hurtado v. Superior Court, 11 Cal. 3d 574, 580 (1974). Plaintiff was formed under the law of Georgia and its principal place of business is in California. (FAC ¶ 7). New York Marine was organized in New York. (FAC ¶ 8) As discussed below, the courts of California, New York, and Georgia all interpret insurance policies in accordance with their plain meaning, and all hold that an exclusion for loss caused by criminal acts is unambiguous and enforceable as a matter of law, so there is no conflict. Furthermore, where the parties assume that California law applies, a California court will likewise determine all issues according to California law. Glickman v. Collins, 13 Cal. 3d 852, 857, footnote 1 (1975). In this case, Plaintiff has already taken the position that California law applies.5 5 See, e.g., Plaintiff’s May 15, 2015, Reply re Motion To File An Amended Complaint, at pp. 7-12 (citing only California case authorities in support of its argument on contract and insurance issues). Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 15 of 31 Page ID #:1376 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC B. California Law Requires That The Policy Be Read In Accordance With Its Plain Meaning. If That Is Not Clear, It Must Be Read In Accordance With The Objectively Reasonable Expectations Of The Insured. By statute, an insurance policy is a contract in which the insurer agrees to indemnify the insured “against loss, damage or liability from a contingent or unknown event.” California Insurance Code § 22. Therefore, to decide the parties’ rights and obligations, the court must look to the language of the policy. Stein v. International Ins. Co., 217 Cal. App. 3d 609, 613 (1990). Interpretation of an insurance policy is a matter of law. Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 18 (1995); Parsons v. Bristol Development Company, 62 Cal. 2d 861, 865 (1965). The governing rule is that the “clear and explicit” meaning of the policy terms, read in their “ordinary and popular sense,” determines the parties’ rights and obligations: Under statutory rules of contract interpretation, the mutual intention of the parties . . . governs interpretation. [citations] Such intent is to be inferred, if possible, solely from the written provisions of the contract. [Citations] The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’... controls judicial interpretation. [Citation] Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. AIU Insurance Company v. Superior Court, 51 Cal. 3d 807, 821-822 (1990) [Emphasis added]. Therefore, the court must “... look first to the language of the contract in order to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it. [Citations] [emphasis added].” Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal. 4th at 18. The contract must be read “as a whole” and with regard for the particular circumstances of the case, and “cannot be found ambiguous in the abstract. [Citation]” Id. at 18-19 [Emphasis added]. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 16 of 31 Page ID #:1377 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC However, if, the policy language is susceptible to two or more reasonable interpretations when read under the first rule, it must then be interpreted according to the “objectively reasonable expectations of the insured.” Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264-1265 (1992). In other words, would Plaintiff in this case reasonably expect coverage under the Policy if its employees were to commit a criminal act that caused a loss? The courts of New York and Georgia are in accord. See, City of Elmira v. Selective Ins. Co. of N.Y., 83 A.D. 3d 1262, 1263-1264 (N.Y. App. Div. 3d Dep’t 2011) (unambiguous provisions are given their “plain and ordinary” meaning, and the test for ambiguity is the “reasonable expectations of the average insured”); State Auto Prop. & Cas. Co. v. Matty, 286 Ga. 611, 618 (2010) (undefined terms of an insurance policy “are to be given their plain, ordinary meaning.”) C. Under The First Rule Of Interpretation, The California Courts Hold That An Exclusion For “Criminal Acts” Is Clear And Unambiguous As A Matter Of Law. The Policy states: “We will not pay for loss or damage caused by or resulting from . . . criminal acts committed by . . . your . . . employees . . . .” As discussed below, the California courts have already held that the plain meaning of an exclusion for “criminal acts” is clear and the language is unambiguous. In 20th Century Ins. Co. v. Stewart, 63 Cal. App. 4th 1333 (1998) (“Stewart”), the court held that a policy provision barring coverage for injury or damage “which is a foreseeable result of an intentional or criminal act” was unambiguous and barred coverage for a claim resulting from a gunshot wound, regardless of whether the shooting was an accident. Id. at 1338. In that case, the insured youth, Guglietti, had played Russian roulette on New Year’s Eve, then, after the drinking continued into the following day, pointed the gun at a friend, Stewart, only to have it discharge. Guglietti claimed he didn’t know the gun was loaded, but pled guilty to involuntary manslaughter. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 17 of 31 Page ID #:1378 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC Stewart’s mother sued for wrongful death, Guglietti tendered his defense to 20th Century, and 20th Century sought declaratory relief. The trial court found the exclusion unambiguous and granted summary judgment for 20th Century. The court of appeal affirmed, holding that the exclusion was clear and “unambiguously excluded coverage....” Stewart, supra, 63 Cal. App. 4th at 1338. Likewise, in 20th Century Ins. Co. v. Schurtz, 92 Cal. App. 4th 1188 (2001), the insured woman had shot a man. She claimed the gun went off accidentally during a confrontation, but pled no contest to assault with a firearm. In an action for declaratory relief, the court affirmed summary judgment for the insurer, finding the language of the exclusion clear and unambiguous. Id. at 1195-1196. The fact that the conviction was “undisputed and indisputable” entitled the insurer to summary judgment. Id. at 1196-1197. In Allstate Ins. Co. v. Talbot, 690 F. Supp. 886 (N.D. Cal. 1988), the district court applied California law in granting summary judgment where the insured had pled no contest to a charge of child molestation. The policy excluded coverage for damages “which may reasonably be expected from the . . . criminal acts of an insured person.” The court found, “[a]s a matter of law, the criminal exclusion applies to the facts of this case, [and] no reasonable jury could find that these acts did not constitute criminal activity.” Id. at 890. The courts in numerous states agree that exclusions for “criminal acts” are unambiguous. See, Stewart, supra, 63 Cal. App. 4th at 1338. Once again, the courts of New York and Georgia are in accord. See, Renaissance Art Invs., LLC v AXA Art Ins. Corp., 102 A.D. 3d 604, 604-605 (N.Y. App. Div. 1st Dep’t 2013) (policy “contained an unambiguous exclusion” for any “fraudulent, dishonest or criminal act”); Stinson v. Allstate Ins. Co., 212 Ga. App. 179, 181 (1994) (finding exclusion for criminal acts not ambiguous and “clearly creates a universal objective standard.”) Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 18 of 31 Page ID #:1379 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC In this case, Miller, Sedrish, and Schwartz admitted in criminal, civil, and administrative (OSHA) proceedings that they and other members of the crew entered railroad property after being told they could not. That is criminal conduct in the state of Georgia, and it caused the loss. D. The Dispositive Fact Is That Plaintiff’s Employees Committed A Criminal Act, So The Speculative Possibility That Their Records Might Someday Be Expunged Is Irrelevant. The Policy states that New York Marine will not pay for losses caused by or resulting from criminal acts—but it does require that anyone be formally charged or convicted. The uncontroverted facts are that the loss was indeed caused by the criminal acts committed by Miller, Sedrish, Schwartz, and others in the film crew, each of whom violated Georgia law by entering upon railroad property after permission had been denied. New York Marine therefore did not have any obligation to pay, regardless of whether the criminal charges were filed. Allstate Ins. Co. v. Miller, 732 F. Supp. 2d 1128 (D. Haw. 2010) is directly on point. Following rules similar to those of California for interpreting insurance policies (i.e., interpreting the policy as a whole, terms according to the “plain, ordinary and accepted sense,” and in accordance with reasonable expectations), the court held that an exclusion for “criminal acts” precluded coverage for an insured, who served alcohol to a minor later involved in a fatal automobile collision, even though the insured was never actually charged with a criminal offense. The court held that the “plain language” of the exclusion “does not require criminal charge or conviction.” Id. at 1140-1141. The court noted similar decisions in other states, including Allstate Ins. Co. v. Raynor, 93 Wn. App. 484 (1999), Allstate Ins. Co. v. Burrough, 120 F.3d 834 (8th Cir. Ark. 1997), and Allstate Ins. Co. v. Carmer, 794 F. Supp. 871 (S.D. Ind. 1991), all coming to the same conclusion. Allstate Ins. Co. v. Raynor, supra, 93 Wn. App. 484, is particularly instructive because that court specifically cited Stewart, supra, 63 Cal. App. 4th Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 19 of 31 Page ID #:1380 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC 1333, in holding that neither a criminal charge nor conviction is required to effectuate an exclusion for criminal acts: “[The insured’s] actions clearly violated criminal statutes, and the average purchaser of insurance would understand such actions to be excluded criminal acts. [citing Stewart, supra][Emphasis added]” Allstate v. Raynor, supra, 93 Wn. App. at 495. In Allstate Ins. Co. v. Burrough, supra, 120 F.3d 834, the court affirmed summary judgment for an insurer based on a criminal acts exclusion where the insured, a minor, was neither charged nor convicted. Under Arkansas law, the offending act (providing a gun to a another minor) was a crime if committed by an adult, but a “delinquent act” if committed by a minor. “Regardless of whether he could be tried as an adult or be adjudged a juvenile delinquent, under the plain language of the Arkansas Criminal Code, Burrough committed an act defined as criminal. Hence, he committed a criminal act for purposes of Allstate’s criminal acts exclusion.” Id. at 839. In Allstate Ins. Co. v. Carmer, supra, 794 F. Supp. 871, a minor furnished beer to a friend but could not be criminally prosecuted because, again, his age rendered the act a delinquency instead of a crime. The court explained, “The question is not ... whether the actor could be prosecuted criminally. The Indiana criminal code does not say ‘this is a criminal act unless you are a juvenile’ - it simply defines the crime. Since [insured’s] actions constitute a violation of the Indiana criminal code, we hold that the exclusion applies.” Id. at 873. In this case, there is no dispute that members of the Film Allman crew committed a criminal act. Plaintiff has nevertheless asserted that the contingent possibility that the three who were prosecuted, Miller, Sedrish and Schwartz, might someday be exonerated under the Georgia “First Offender” statute6 should 6 O.C.G.A. § 42-8-60. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 20 of 31 Page ID #:1381 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC somehow preclude application of the criminal act exclusion. The argument, which is based on hopeful speculation,7 is a red herring. As the foregoing authorities make clear, the fact that Miller, Sedrish, Schwartz, and other members of the crew each committed acts against the law of Georgia8 that caused the loss9 absolves New York Marine of any contractual obligation to pay under the Policy. Also, Miller’s recent assertion that he did not intend to commit a crime does not create a triable issue. First, it does not change the fact that Sedrish and Schwartz admitted they knew they were trespassing, which alone establishes that the loss was caused by criminal acts of Plaintiff’s employees. Second, it ignores Miller’s own admission, under oath, that he actually did commit the act constituting the crime. Third, this same argument was rejected in Schurtz, supra, 92 Cal. App. 4th 1188, the declaratory relief action between the shooter’s liability insurer and the victim: “... [A]lthough Schurtz now contends that [the shooter’s] conduct was not criminal because it was not intentional, Schurtz’s characterization of the legal effect of [the shooter’s] act cannot change the undisputed fact that she was convicted of a crime. [Citations]” Id. at 1196-1197. Miller admitted in the criminal proceeding that he committed the acts constituting trespass, i.e., entering CSX property after having been denied permission. Whether he intended to commit a crime is irrelevant. 7 Plaintiff assumes that Miller, for example, who will be on probation for another nine years, will never violate the terms of his probation, so the argument may well dissipate upon any number of events that might occur in the future. 8 In addition to the crimes for which they were charged, they also violated O.C.G.A. § 46-8-380: “Intruding on railroad tracks: Any person intruding unlawfully upon the constructed track of a railroad company, contrary to the will of the company, shall be guilty of a misdemeanor.” 9 Plaintiff admits that Mr. Miller’s injuries were caused by the same criminal acts that caused the death of Ms. Jones. [FAC ¶¶ 20 and 21] Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 21 of 31 Page ID #:1382 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC E. Even Under The Second Rule Of Policy Interpretation, Plaintiff Could Not Reasonably Expect Coverage For Losses Resulting From Acts Prohibited By Law And For Which Its Employees Would Be Indicted, Found Guilty, And Sentenced. The foregoing authorities, particularly Stewart, supra, 63 Cal. App. 4th 1333 and Schurtz, supra, 92 Cal. App. 4th 1188, hold that the plain meaning of the exclusion for losses caused by criminal acts relieves New York Marine of any obligation to pay under the Policy. Regardless, Plaintiff would also lose under the second rule of interpretation, i.e., the objectively reasonable expectations of the insured. Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal. 4th at 18-19. Determining the objectively reasonable expectations of the insured “requires a consideration of the policy as a whole, the circumstances of the case in which the claim arises and ‘common sense.’ [Citation]” St. Paul Fire & Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co., 101 Cal. App. 4th 1038, 1058 (2002). Thus, an insured cannot reasonably expect coverage for losses resulting from criminal acts where the policy clearly excludes such coverage. Century National Ins. Co. v. Glenn, 86 Cal. App. 4th 1392, 1397 (2001). In Century National Ins. Co. v. Glenn, supra, 86 Cal. App. 4th 1392, a homeowner’s insurance policy excluded coverage for the “foreseeable result of an intentional or criminal act of any insured . . . .” During a disturbance at a party, the insured attempted to frighten some youths out of his yard by firing a gun, but accidentally hit one of them with a bullet. The insured later pled no contest to a charge of willful discharge of a gun. The insurer brought an action for declaratory relief, claiming it had no liability under the policy. The trial court granted summary judgment for Century National and the court of appeal affirmed. Noting that the Stewart court had already found an exclusion for criminal acts unambiguous, the Glenn court concluded that the insured “could not reasonably expect insurance coverage for Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 22 of 31 Page ID #:1383 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC committing felony willful discharge of a firearm under the facts shown in the face of an exclusion for ‘criminal acts’ . . . .” Century National Ins. Co. v. Glenn, supra, 86 Cal. App. 4th at 1397. Indeed, the Stewart court itself had also noted that, given the insured’s guilty plea, the insured could not have reasonably expected coverage. Stewart, supra, 63 Cal. App. 4th 1338-1339. Here, the Policy excludes coverage for losses caused by criminal acts. Plaintiff’s director admitted his guilt as charged in the indictment, i.e., unlawfully entering onto CSX property after having been denied permission. Another employee, Schwartz, admitted she knew she was trespassing [UF 37, Ex. G at I.E. pp. 143-144], and was found guilty after trial on the same charges. Sedrish too, admitted he was aware that the railroad had denied permission to film on its property. [UF 37, Ex. E at I.E. pp. 210 and 125] Under these circumstances, Plaintiff could not reasonably expect coverage. F. The Absence Of Coverage Negates Any Possibility That Plaintiff Can Prove Its First Cause Of Action, For Breach Of Contract. Plaintiff’s first cause of action is for breach of contract. By law, a breach of contract is “an unjustified or unexcused failure to perform all or any part of what is promised in a contract. [Citation] [Emphasis added].” Sackett v. Spindler, 248 Cal. App. 2d 220, 227 (1967); Benach v. County of Los Angeles, 149 Cal. App. 4th 836, 848 (2007) (“. . . imposition of liability for breach of contract requires an unexcused failure to perform and resulting damages.”) Indeed, Plaintiff alleges that New York Marine breached its contractual obligations by failing to pay for “covered losses in accordance with the terms and conditions of the [Producer’s] Policy”10 However, the facts show otherwise. The Policy plainly states that New York Marine will not pay for losses caused by the 10 FAC ¶ 62. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 23 of 31 Page ID #:1384 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC criminal acts of Plaintiff’s employees, and the indisputable facts are that the loss in issue was caused by the criminal acts of Plaintiff’s employees. New York Marine therefore had no obligation to pay under the terms and conditions of the Policy, and the alleged failure to do so does not constitute a breach of contract. “... Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Since Plaintiff cannot prove breach, New York Marine is entitled to summary judgment on the first cause of action. G. The Same Undisputed Facts Dispose Of Plaintiff’s Second Cause Of Action, For Anticipatory Breach. Plaintiff’s second causes of action, for anticipatory breach of contract, is based on the allegation that New York Marine repudiated its insurance obligations by asserting grounds to avoid coverage, failing to pay, etc., “without cognizable justification.” [FAC ¶ 69] The uncontroverted facts show this is simply not true. An anticipatory breach occurs when “the promisor without justification and before he has committed a breach, makes a positive statement ... indicating that he will not . . . perform his contractual duties. [Citation]” Gold Mining & Water Co. v. Swinerton, 23 Cal. 2d 19, 29 (1943). Once again, however, the Policy plainly states that New York Marine will not pay for losses caused by the criminal acts of Plaintiff’s employees. The undisputed facts show that the loss was indeed caused by the criminal acts of Plaintiff’s employees, so New York Marine has no obligation to pay for Plaintiff’s claimed loss. New York Marine’s alleged refusal to pay does not constitute a repudiation of its contractual duties, and Plaintiff cannot prove anticipatory breach. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 24 of 31 Page ID #:1385 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC 4. THE FACTS ESTABLISH THAT NEW YORK MARINE DID NOT UNREASONABLY REFUSE TO PAY PER THE TERMS OF THE POLICY, WHICH DISPOSES OF PLAINTIFF’S THIRD CAUSE OF ACTION, FOR INSURANCE BAD FAITH. The uncontroverted facts establish two defenses to Plaintiff’s third causes of action, which is for insurance bad faith. Under California law, each of these constitutes a complete defense. A. Where There Is No Coverage To Begin With, Refusal To Pay A Claim Cannot Constitute Bad Faith. Plaintiff alleges that New York Marine breached the implied covenant of good faith and fair dealing by refusing to “pay . . . losses covered under the Policy.” (FAC ¶ 74) That allegation is conclusively disproven by the uncontroverted facts, which show that the loss was not covered. Under California law, that absence of coverage constitutes a complete defense to Plaintiff’s cause of action for bad faith. Insurance bad faith is an unreasonable breach of the insurance contract. Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., 78 Cal. App. 4th 847, 879 (2000). Therefore, it necessarily follows that, where there is no contractual obligation to pay, refusal to pay cannot constitute a breach of the implied covenant of good faith and fair dealing. Everett v. State Farm General Ins. Co., 162 Cal. App. 4th 649, 663 (2008) (“Because there was no breach of contract, there was no breach of the implied covenant. Citation]”). In Love v. Fire Ins. Exchange, 221 Cal. App. 3d 1136, 1153 (1990), the court explained the rationale: the implied covenant of good faith and fair dealing ensures that each party to the contract gives the other the benefit of the bargain, e.g., prompt payment of benefits due. However, if a loss is not covered, the insurer has no obligation to pay. In such a case, the implied covenant does not impose any additional obligations on the insurer: Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 25 of 31 Page ID #:1386 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract. Thus, when benefits are due an insured, delayed payment . . . may breach the implied covenant because it frustrates the insured’s primary right to receive the benefits of his contract -- i.e., prompt compensation for losses. Absent that primary right, however, the auxiliary implied covenant has nothing upon which to act as a supplement, and should not be endowed with an existence independent of its contractual underpinnings. Id. at 1153; see also, Waller v. Truck Ins. Exchange, supra, 11 Cal. 4th at 36. In this case, Plaintiff is not entitled to policy benefits because the loss was caused by the criminal acts of its employees. Since no policy benefits are due under the contract, the alleged failure to pay them does not constitute breach of the covenant of good faith and fair dealing. Everett, supra, 162 Cal. App. 4th at 663; Love, supra, 221 Cal. App. 3d at 1151. B. The Admitted Acts Of Criminal Trespass At The Very Least Constitute A Reasonable Basis For Disputing Coverage, Which Eliminates Any Grounds For Finding Bad Faith. Since bad faith is by definition an unreasonable breach of contract, allegations of bad faith failure to pay policy benefits require proof of misconduct “more egregious than an incorrect denial of policy benefits. [Emphasis added]” Paslay v. State Farm General Ins. Co., 248 Cal. App. 4th 639, 652 (2016). Conversely, denial of payment “due to the existence of a genuine dispute with its insured as to the existence of coverage liability” excuses an insurer from liability for bad faith, even in cases where it might still be liable for breach of contract. Wilson v. 21st Century Ins. Co., 42 Cal. 4th 713, 723 (quoting Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co., 90 Cal. App. 4th 335, 347 (2001) [emphasis added]. Thus, in Fraley v. Allstate Ins. Co., 81 Cal. App. 4th 1282 (2000), the court affirmed summary judgment for an insurer that had been accused of hiring Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 26 of 31 Page ID #:1387 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC “captive” contractors and “low balling” repair estimates on a claim for fire loss. Although the court found no breach of contract, it also found that, regardless of the coverage issue, Allstate had relied on a genuine dispute between its experts and the plaintiffs’ experts in withholding the claimed payments. “‘[A] court can conclude as a matter of law that an insurer’s denial of a claim is not unreasonable, so long as there existed a genuine issue as to the insurer’s liability.’ [Citation.]” Id. at 1292. The record showed “a genuine dispute regarding Allstate’s contractual obligation,” so the plaintiff’s “bad faith claim fails as a matter of law.” Id. at 1293. In Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co., supra, 90 Cal. App. 4th 335, the court affirmed summary adjudication for an insurer on a cause of action for bad faith even though it had actually breached its contractual duty on a claim for earthquake damage. The insurer had offered substantially less than the insured had claimed under the policy because its investigation indicated that at least some of the claimed earthquake damage had been caused by pre-existing problems. That evidence, said the court, showed that the insurer had “a reasonable and legitimate basis for questioning [the plaintiff’s] claim . . .” Id. at 350. Thus, “[t]he parties had a clear contract dispute . . . there is no factual issue as to ‘bad faith’ . . .” Id. at 351. Likewise, in Guebara v. Allstate Ins. Co., 237 F.3d 987 (9th Cir. Cal. 2001), the court affirmed partial summary judgment on the issue of bad faith even though a jury later found breach of contract. The insured and her daughter had given inconsistent statements regarding personal property which had supposedly been lost in a fire, and fire investigators had found no remains consistent with the destruction of such property. Noting that “[u]nder California law, a bad faith claim can be dismissed on summary judgment if the defendant can show that . . . ‘there existed a genuine issue as to the insurer’s liability. . ,” 237 F.3d at 992, the court concluded: “Allstate had a legitimate basis for disputing Guebara’s contents claim ... Thus, we find that Allstate’s refusal to pay Guebara’s claim was reasonable.” Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 27 of 31 Page ID #:1388 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC Id. at 995. The “genuine dispute” doctrine was recently re-affirmed in Paslay v. State Farm General Insurance Co., supra, 248 Cal. App. 4th 639. In that case, the court affirmed an order granting summary adjudication of the plaintiff’s cause of action for insurance bad faith and a claim for punitive damages even though it found a triable dispute as to whether the insurer had breached the insurance contract. Id. at 642, 655, 659. In this case, the uncontroverted facts show the loss was caused by the criminal acts of Plaintiff’s employees. Baxter admitted receiving CSX’s denial or permission to film on its property and testified that he informed the others of that denial. Miller and Schwartz admitted trespassing on CSX property after having been denied permission to enter. Sedrish, too, admitted he knew permission had been denied. Since the Policy states that New York Marine will not pay for losses caused by criminal acts of Plaintiff’s employees, there is clearly a reasonable basis for disputing Plaintiff’s claim that the loss is covered. 5. ON THE ACTION FOR DECLARATORY RELIEF, THE UNDISPUTED FACTS SHOW NEW YORK MARINE HAS NO CONTRACTUAL OBLIGATION TO PAY UNDER THE CAST COVERAGE OF THE PRODUCER’S POLICY. The eighth cause of action seeks declaratory relief as to each of the four insurance policies attached to the First Amended Complaint. [FAC ¶¶ 107, 108, 115] However, insofar as it concerns the Producer’s Policy, the uncontroverted facts show that there is no triable issue as to the alleged contentions regarding the parties’ respective rights and obligations regarding the claim submitted under the Cast Coverage. A. Rule 56 Allows Summary Adjudication Of Each Part Of A Claim For Which There Is No Triable Issue. Plaintiff alleges that New York Marine contends that it has no obligation Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 28 of 31 Page ID #:1389 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC under the Policy to pay for amounts incurred as a result of injuries suffered by Randall Miller (FAC ¶ 107), whereas Plaintiff contends that it does (FAC ¶ 108). Plaintiff therefore requests a declaration of the rights and obligations of both Film Allman and New York Marine. [FAC Prayer for Relief, ¶ 14]. F.R.C.P. Rule 56(a) provides for summary adjudication of a part of each claim or defense. Therefore, to the extent Plaintiff seeks a declaration or rights and obligations under the Policy (i.e., Plaintiff’s claim for loss under the Cast Coverage), the Court may determine the parties’ respective rights and obligations. B. Summary Adjudication Is Proper On The Producer’s Policy Because There Is No Triable Issue As To Whether The Loss Was Caused By The Criminal Acts Of Plaintiff’s Employees. The Policy states that New York Marine will not pay for losses caused by the criminal acts of Plaintiff’s employees. By its terms, the exclusion applies to all coverages, one of which is the Cast Coverage. The undisputed facts show the loss was caused by the criminal acts of Plaintiff’s employees. Therefore, New York Marine has no obligation to pay under the Cast Coverage. It is therefore respectfully requested that the Court issue an order declaring that Plaintiff’s loss is excluded from coverage and that New York Marine has no obligation to pay for losses claimed under the Policy’s Cast Coverage. 6. CONCLUSION. Each of the causes of action based on the Policy asserts that New York Marine failed to pay for covered losses “in accordance with [its] terms and conditions.” Yet the same pleading admits that (a) the Policy excludes coverage for losses caused by the criminal acts of Plaintiff’s employees, and (b) Plaintiff’s employees were indicted for the acts that caused the loss. The uncontroverted facts fill in the gaps in Plaintiff’s allegations. Plaintiff’s employees violated Georgia law by entering upon railroad property after Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 29 of 31 Page ID #:1390 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC permission was denied. Their criminal acts caused the loss for which Plaintiff seeks payment under the Policy. Under California law, the exclusion for criminal acts is unambiguous and enforceable. And, in any event, the plain meaning is clear: Plaintiff could not reasonably expect coverage for losses caused by the criminal acts of its employees. New York Marine therefore has no obligation to pay for the claimed loss. Since all of the claims in issue are premised on allegations that New York Marine breached its contractual obligations by failing to pay in accordance with the terms and conditions of the Policy, this conclusively disposes of the first cause of action for breach of the Policy, the second cause of action for anticipatory breach, the third cause of action for insurance bad faith, and, to the extent it concerns the Producer’s Policy, the eighth cause of action, for declaratory relief. For the foregoing reasons, New York Marine respectfully requests that the Court grant partial summary judgment, as set forth in the notice of this motion. Dated: October 5, 2016 GLADSTONEWEISBERG, ALC By: /s/ Michael J. Aiken LEON GLADSTONE MICHAEL J. AIKEN Attorneys for Defendant, New York Marine and General Insurance Company, Inc. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 30 of 31 Page ID #:1391 MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:14-cv-07069-ODW-RZ Page 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC CERTIFICATE OF SERVICE I hereby certify that on October 5, 2016, a copy of the following document was filed electronically: NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES Notice of this filing will be sent to the following parties by operation of the Court’s electronic filing system. Parties may access this filing through the Court’s System: Douglas W. Gastelum Email: dwg@dwglegal.com Douglas W. Gastelum, Esq. 235 East Broadway, 8th Floor Long Beach, CA 90802 Mark C. Goodman Email:mark.goodman@hoganlovells.com David W. Skaar Email: david.skaar@hoganlovells.com Hogan Lovells US LLP 3 Embarcadero Ctr., Suite 1500 San Francisco, CA 94111 Attorneys for Plaintiff Film Allman, LLC Attorneys for Defendant New York Marine and General Insurance Company, Inc. DATED: October 5, 2016 GLADSTONEWEISBERG, ALC By: /s/ Michael J. Aiken LEON GLADSTONE MIKE AIKEN Attorneys for Defendant, New York Marine and General Insurance Company, Inc. Case 2:14-cv-07069-ODW-KS Document 66 Filed 10/05/16 Page 31 of 31 Page ID #:1392 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC LEON GLADSTONE (SBN 70967) lgladstone@gladstoneweisberg.com MICHAEL J. AIKEN (SBN 98786) maiken@gladstoneweisberg.com GLADSTONE WEISBERG, ALC 300 Corporate Pointe, Suite 400 Culver City, CA 90230 Tel: (310) 821-9000 • Fax: (310) 943-2764 Mark C. Goodman (SBN 154692) mark.goodman@hoganlovells.com David W. Skaar (SBN 265377) david.skaar@hoganlovells.com HOGAN LOVELLS US LLP 3 Embarcadero Center, Suite 1500 San Francisco, California 94111 Telephone: (415) 374-2300 Facsimile: (415) 374-2499 Attorneys for Defendant, New York Marine and General Insurance Company, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA FILM ALLMAN, LLC, a Georgia limited liability company, Plaintiff, vs. NEW YORK MARINE and GENERAL INSURANCE COMPANY, INC., a New York corporation, and DOES 1-10, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 2:14-cv-07069-ODW-KLS [PROPOSED] STATEMENT OF DECISION Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 1 of 7 Page ID #:1393 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC I. INTRODUCTION The instant action concerns a dispute between an insured, Film Allman, LLC (“Film Allman”), and an insurer, New York Marine and General Insurance Company, Inc. (“New York Marine”) concerning several insurance policies. New York Marine filed a motion for partial summary judgment as to certain claims arising from one particular policy, the Motion Picture/Television Producers Portfolio Policy (the “Policy”), a copy of which is attached as Exhibit 1 to the First Amended Complaint (“FAC”). The motion addresses the first cause of action for breach of contract, the second cause of action for anticipatory breach, the third cause of action for breach of the implied covenant of good faith and fair dealing, and a portion of the eighth cause of action, for declaratory relief, to the extent it concerns the parties’ rights and obligations under the Policy. For the reasons discussed below, the Court GRANTS the motion. II. ALLEGATIONS IN ISSUE On February 20, 2014, a fatal train accident occurred on the set of the film Midnight Rider (the “Film”). (FAC ¶ 2, 14) The accident caused the death of assistant camera technician Sarah Jones and injured other members of the crew, including the director, filmmaker Randall Miller. (FAC ¶¶ 2, 20). Film Allman is a limited liability company formed by Miller and Jody Savin as the production entity for the Film. (FAC ¶¶ 7, 15). Film Allman was insured under several policies issued by New York Marine, one of which, the Policy. (FAC ¶¶ 17, 18; FAC Ex. 1) The Policy provides multiple, separate coverages for various risks associated with making films, one of which is the Cast Coverage. (Id.) Cast Coverage applies to certain losses sustained by reason of a cast member or other “Covered Person” being injured or otherwise prevented from performing his or her duty or role in an insured production. (FAC Ex. 1) The Policy also states that New York Marine will not pay for losses caused by criminal acts committed by Film Allman or its employees. (FAC Ex. 1). Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 2 of 7 Page ID #:1394 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC After the accident, Plaintiff submitted a claim for loss under the Cast Coverage based on Miller’s injuries. [FAC ¶ 21] New York Marine reserved all rights under the Policy, including the right to disclaim any obligation to Film Allman. [FAC ¶ 3] III. EVIDENCE PRESENTED The evidence supporting the motion includes sworn testimony given Miller and other Film Allman employees in these proceedings, in Georgia civil and criminal proceedings, and in hearings conducted by the Occupational Safety and Health Administration (“OSHA”). The witnesses included assistant director Hillary Schwartz, unit production manager Jay Sedrish, and location manager Charles Baxter. Other evidence includes Film Allman’s responses to interrogatories propounded by CSX Transportation, Inc. (“CSX”), the company that owned the property and operated the train involved in the accident, in a Georgia state action. The script called for two scenes to be filmed on a railroad track. [Ex. D (Baxter depo) at I.E. pp. 059, 05, 069, 077; Ex. B (Plaintiff depo, Miller as PMQ) at I.E. 037, 040] It was Baxter’s job to get permission to film from the railroad. [Ex. G (Schwartz OSHA testimony) at I.E. p. 137] In January, Baxter asked CSX for permission to film a motorcycle scene on its railroad track. CSX sent him an email stating that for security, safety, and train scheduling reasons it did permit filing on the tracks. [Ex. H (CSX email); Ex. D (Baxter Depo) at I.E. 069, 071] Baxter forwarded the email to others at Film Allman and the scene was deleted from the script. [Ex. A (Miller depo) I.E. 22; Ex. B (Miller as PMQ) I.E. 035; Ex. P (Film Allman resp. to CSX interrogatories) at I.E. 181] On February 14, 2014, Baxter, with help from Sedrish and Schwartz, composed and sent an email to Carla Groleau of CSX requesting permission to film on CSX tracks near the Doctortown trestle on the afternoon of February 20, Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 3 of 7 Page ID #:1395 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC 2014. [Ex. I (the email); Ex. B (Baxter depo) at I.E. pp. 86-88; Ex. F (Sedrish) at I.E. 118-119; Ex. G (Schwartz) at I.E. 138). On the morning of February 20, 2014, CSX sent Baxter an email once again denying permission to film on its tracks. [Ex. J] Baxter forwarded the email to others at Film Allman and discussed it with them, as well. [Ex. D (Baxter) at I.E. pp. 057-058, 094-095, 098; Ex. F (Sedrish) at I.E. 120-122; Ex. G (Schwartz) at I.E. 140-141] Plaintiff’s film crew nevertheless proceed to the location and filmed on the track. [Ex. B (Miller as PMQ) at I.E. pp. 038-040] The members of the crew knew they had been denied permission to be there. [Ex. D (Baxter) at I.E. pp. 098-100; Ex. F (Sedrish) at I.E. 120; Ex. G (Schwartz) at I.E. 143-144] The incident occurred when a train came through while they were filming. [Ex. B (Miller as PMQ) at I.E. pp. 040-041] The incident led to a criminal indictment against Miller, Sedrish, Schwartz, and Miller’s wife, Jody Savin for trespass on CSX property and manslaughter. [Ex. Q] Miller, Sedrish, and Schwartz were convicted and sentenced. [Ex. R, S, T, U, and V (court records), Ex. N (Plaintiff’s Response to Request for Admission Nos. 25, 26, 28, 29, 35, and 36)] III. APPLICABLE LAW This diversity action is governed by federal procedural law and state substantive law. Clausen v. M/V New Carissa, 339 F.3d 1049, 1065 (9th Cir. Or. 2003). Procedurally, F.R.C.P. Rule 56 “mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). IV. DISCUSSION Interpretation of an insurance policy is a matter of law. Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 18 (1995); Parsons v. Bristol Development Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 4 of 7 Page ID #:1396 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC Company, 62 Cal. 2d 861, 865 (1965). The governing rule is that the “clear and explicit” meaning of the policy terms, read in their “ordinary and popular sense,” determines the parties’ rights and obligations. AIU Insurance Company v. Superior Court, 51 Cal. 3d 807, 821-822 (1990). If policy language is susceptible to two or more reasonable interpretations when read under the first rule, it must then be interpreted according to the “objectively reasonable expectations of the insured.” Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264-1265 (1992). California courts hold that an exclusion for “criminal acts” is unambiguous as a matter of law. 20th Century Ins. Co. v. Stewart, 63 Cal. App. 4th 1333, 1338 (1998); 20th Century Ins. Co. v. Schurtz, 92 Cal. App. 4th 1188, 1195-1196 (2001). Moreover, an insured cannot reasonably expect coverage for losses resulting from criminal acts where the policy clearly excludes such coverage. Century National Ins. Co. v. Glenn, 86 Cal. App. 4th 1392, 1397 (2001). Official Code of Georgia (“OCGA”) §16-7-21 defines criminal trespass as including entry upon land of another after receipt of notice that such entry is forbidden. OCGA § 46-8-380 states that any person “intruding unlawfully upon the constructed track of a railroad company, contrary to the will of the company, shall be guilty of a misdemeanor.” The evidence shows there is no triable issue that the February 20, 2014, incident that caused Mr. Miller’s injuries occurred because Film Allman’s employees trespassed on CSX property after their request for permission was denied. Baxter testified that he received CSX’s email and that he both forwarded it to and discussed it with others at Film Allman. That testimony is corroborated by Ex. K (Baxter’s forwarding email) as well as the testimony of Sedrish and Schwartz. Miller, an officer of Film Allman, admitted the truth of the criminal charges against him—if he now equivocates as to whether he knew permission had been denied, that does not negate the testimony of Sedrish and Schwartz that they knew they were trespassing or the significance of Film Allman’s responses to Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 5 of 7 Page ID #:1397 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC CSX’s interrogatories, that, once other trains crews had observed the film crew in the area, CSX should have sent someone to remove them and their equipment, which implicitly admits that the crew was trespassing on CSX’s property. [Ex. P at I.E. p. 177] These acts of trespass constitute criminal acts under Georgia law, and they caused the loss in issue. New York Marine therefore has no obligation to pay under the terms and conditions of the Policy. Thus, Plaintiff can not prove an essential element of its claims for breach of contract, anticipatory breach, or breach of the implied covenant of good faith and faith dealing as alleged in its pleadings. V. CONCLUSION For the reasons discussed above, the Court GRANTS New York Marine’s Motion for Partial Summary Judgment. Judgment shall be entered for New York Marine on the first, second, and third causes of action of the First Amended Complaint. On the eighth cause of action, to the extent the requested declaration of rights applies to the Producer’s Policy, this Court determines that Plaintiff’s loss is excluded from coverage, that New York Marine has no obligation to pay for losses claimed under the Policy’s Cast Coverage, and New York Marine is entitled to judgment on that issue. IT IS SO ORDERED. Dated: HONORABLE OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 6 of 7 Page ID #:1398 57721 [PROPOSED] STATEMENT OF DECISION CASE NO. 2:14-cv-07069-ODW-RZ Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G LA D ST O N EW EI SB ER G , A LC CERTIFICATE OF SERVICE I hereby certify that on October 5, 2016, a copy of the following document was filed electronically: [PROPOSED] STATEMENT OF DECISION Notice of this filing will be sent to the following parties by operation of the Court’s electronic filing system. Parties may access this filing through the Court’s System: Douglas W. Gastelum Email: dwg@dwglegal.com Douglas W. Gastelum, Esq. 235 East Broadway, 8th Floor Long Beach, CA 90802 Mark C. Goodman Email:mark.goodman@hoganlovells.com David W. Skaar Email: david.skaar@hoganlovells.com Hogan Lovells US LLP 3 Embarcadero Ctr., Suite 1500 San Francisco, CA 94111 Attorneys for Plaintiff Film Allman, LLC Attorneys for Defendant New York Marine and General Insurance Company, Inc. DATED: October 5, 2016 GLADSTONEWEISBERG, ALC By: /s/ Michael J. Aiken LEON GLADSTONE MIKE AIKEN Attorneys for Defendant, New York Marine and General Insurance Company, Inc. Case 2:14-cv-07069-ODW-KS Document 66-1 Filed 10/05/16 Page 7 of 7 Page ID #:1399