Mayer Hoffman Mccann, PC v. Camico Mutual Insurance Company

MOTION for Summary Judgment

N.D. Cal.February 9, 2017

1 MusicK, PEELER & GARRETT LLP AnORNEYS AT LAW 2 ONE WIlShIRE BOULEV.\RD, SUITE 2000 I_OS ANGELES. CAI_WORNI:\ 9(1(II7-33S3 3 ‘ii].IU’IIONE: 2I3-629.776 IACSIMII.I: 213-624.1376 4 David A: Tartaglio (State Bar No. 117232) d.tartag1io@mp1aw.com Laura K. Kim (State Bar No. 197944) 6 1.kim@rnpi1aw.com 7 Attorneys for Defendant and Counter-Claimant CAMICO MUTUAL INSURANCE COMPANY 8 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 12 MAYER HOFFMAN McCANN, P.C., Case No. 3:15-cv-01207-SI a Missouri Corporation, 13 . . (Case assigned to Hon. Susan Iliston) Plaintiff, 14 REDACTED VERSION OF vs. CAMICO MUTUAL INSURANCE 15 COMPANY’S NOTICE OF CAMICO MUTUAL INSURANCE MOTION AND MOTION FOR 16 COMPANY, a California Corporation, SUMMARY JUDGMENT MEMORANDUM OF POINTS AND 17 Defendant. AUTHORITIES IN SUPPORT THEREOF 18 19 [Filed Concurrently with Declarations of Ricardo Rosario, Gwen Thetis and David A. 20 Tartaglio, Compendium of Exhibits, and Proposed Order] 21 Date: March 3, 2017 22 Time: 9:00 am. Crtrm.: I 23 ________________________________________ Trial Date: May 15. 2017 24 25 26 27 28 1029202.1 Case No. 3:15-cv-01207-SI REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 1 of 28 1 TO ALL PARTIES HEREIN AND THEIR RESPECTIVE COUNSEL OF 2 RECORD: 3 PLEASE TAKE NOTICE that on March 3, 2017 at 9:00 a.m. or as soon 4 thereafter as this matter may be heard in Courtroom 1 of the above-entitled court, S located at 450 Golden Gate Avenue, San Francisco, CA 94102-3489, Defendant and 6 Counter-Claimant CAMICO MUTUAL INSURANCE COMPANY will and hereby 7 does move the Court for an order granting summary judgment in its favor as against 8 Plaintiff and Counter-Defendant MAYER HOFFMAN McCANN, P.C. (“MHM”). 9 The motion for summary judgment is made, pursuant to Federal Rules of 10 Civil Procedure Rule 56, on the grounds that no triable issue of material fact 11 requiring trial on the merits exists and CAMICO is entitled to judgment against 12 Plaintiff as a matter of law on the Complaint and on CAMICO’s Counter-claims. 13 This Motion is supported by this Notice, the attached Memorandum of Points 14 and Authorities, the Declarations of Ricardo Rosario, Gwen Theus and David 15 Tartaglio, the Compendium of Exhibits, the complete file and records herein, such 16 additional evidence and argument as may be presented at the hearing, and any other 17 grounds the Court deems just and proper. 18 This motion is made in accordance with the Court’s Pretrial Preparation Order 19 entered on June 3, 2016. 20 21 DATED: January 27, 2017 MUSICK, PEELER & GARRETT LLP 22 23 By: Is! David A. Tartaglio David A. Tartaglio - Attorneys for Defendant and Counter- 25 Claimant CAMICO MUTUAL ‘6 INSURANCE COMPANY 27 28 MUSICK,PEELER 1029202.1 2 CaseNo.3:15-cv-01207-SI REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY KrloJlNEysxr lAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 2 of 28 1 TABLE OF CONTENTS 3 I. INTRODUCTION 1 4 II. PROCEDURAL HISTORY 2 5 A. The Prior Cross-Motions for Summary Judgment 2 6 B. MHM’s Motion to Alter or Amend Judgment 3 7 III. FACTUAL BACKGROUND 4 S A. THE CAMICO POLICIES 4 9 B. UNDERWRITING OF THE CAMICO 2006-2007 POLICY 4 10 1. MHM Sought New Coverage During the 2006-2007 Renewal 4 11 2. The Reinstatement Policy Wording Negotiations 6 12 3. MHM And LEMME Never Told CAMICO That MHM Was Seeking Coverage For a Single Claim Under Both the Primary and 13 Reinstatement Layers 8 14 C. UNDERWRITING OF THE CAMICO 2007-2008 POLICY 9 15 D. UNDERWRITING OF THE CAMICO 2008-2009 POLICY 10 16 E. MHM HAS F[LED A PROFESSIONAL LIAB[LITY CLAIM AGAINST LEMME 12 17 IV. LEGAL DISCUSSION 13 18 A. CAMICO D NOT BREACH ANY A DUTY TO DISCLOSE 13 19 B. MHM IS NOT ENTITLED TO REFORM THE CAMICO POLICY 16 20 1. There Is No Evidence of Any Inequitable Conduct by CAMICO 16 21 2. The Term “Round the Clock” Reinstatement Is An Arcane Term 19 3. The Reinstatement Wording Did Not Have to Be Finalized Prior to 23 Policy Inception 19 24 4. MHM Had The Exact Wording Of the Reinstatement Endorsement For Eight Months Prior to the Inception of the CAMICO 2007-2008 25 Policy 20 26 5. MHM’s Acceptance of Successive Policies Precludes Reformation Containing The Exact Same Reinstatement Endorsement 21 27 C. The Concept of Judicial Estoppel Precludes MHM’s Claims 21 28 MUSICIçPEELER 1029202.1 Case No. 3:15-cv-01207-SJ& GARREfl LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYArL(’I{Nl:VSArJAw JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 3 of 28 1 V. CONCLUSION .22 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 MUSICK, PEELER 10292b2.I jj Case No. 3:15-cv-01207-SI& GARRETT LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY AflflRSLVSATJAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 4 of 28 1 2 TABLE OF AUTHORITIES Page(s) CASES 5 Ahern v. Dillenback, 6 Cal.App.4th 36 (1991) 20 American Home Ins Co. v. Travelers Indemn. Co., 8 122Ca1.App.3d951 (1981) 17,18 Century Sur. Co. v. Crosby Ins., Inc., 10 124 Cal.App.4th 116 (2004) 15 11 Chase v. Blue Cross of California, 12 42Cal.App.4th 1142 (1996) 21 13 Chicago Title Ins. Co. v. AMZ Ins. Servs.. Inc., 14 188 Cal.App.4th 401 (2010) 19 15 City of Cypress v. New Amsterdam Cas. Co., 259 Cal.App.2d 219 (1968) 17 16 Gillis v. Sun Ins. Office. LTD., 17 238Ca1.App.2d408(1965) 18 18 Jackson v. Counl of Los Aiweles 19 60 Cal.App.4th 171 (1997) 21,22 20 Mercury Ins. Co. v. Pearson, 21 169 Cal.App.4th 1064 (2008) 17 22 Mission Vielo Emergency Medical Associates v. Beta Healthcare 23 Group, 197 Cal.App.4th 1146 (2011) 21 24 25 Paper Savers, Inc. v. Nacsa, 51 Cal. App. 4th 1090 (1996) 13, 14, 16 26 Shupe v. Nelson, 27 254 Cal.App.2d 693 (1967) 17 28 MUSICK, PEELER 1029202.1 jjj Case No. 3:15-cv-01207-SI& GARREt’ LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYirr(Iksiysxr A JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 5 of 28 1 Solomon v. Federal Ins. Co., 2 176 Cal. 133 (1917) 15 Strangio v. Consolidated Indem. & Ins. Co., 66 F.2d 330 (9th Cir. 1933) 15 Taffy. Atlas Assur. Co., 58 Cal.App.2d 696 (1943) 19,21 6 Westflck v. State Farm Insurance, 137 Cal.App.3d 685 (1982) 13, 14, 16 8 STATUTES 9 Cal. Civ. Code § 1577 17 10 - ____ Cal. Civ. Code § 3399 16, 17 12 OTHER AUTHORITIES 13 Croskey, Heeseman, Ehrlich and Klee. California Practice Guide: 14 Insurance Litigation (Rutter Group August 2016, suppl. ed.), Ch.5-E 16 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MUSICK,PEELER 0292021 iv Case No. 3:15-cv-01207-SI& GARREn In REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY Ar’ ,>jLNL:ysNr LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 6 of 28 1 MEMORANDUM OF POINTS AUTHORITIES 2 I. INTRODUCTION 3 This is a coverage dispute over whether CAMICO’s 2007-2008 Policy, which 4 fully exhausted in the defense and indemnification of two claims against MHM, is 5 “reinstated” and provides additional coverage limits to MHM with respect to those 6 very same claims. By this Court’s order dated May 6, 2016, the Court set aside the 7 judgment granted in favor of CAMICO against MHM finding that “there are issues 8 of fact regarding, inter alia, whether CAMICO breach its duty to disclose and 9 whether CAMICO knew or suspected that MHM had a mistaken belief as to the 10 scope of the reinstatement endorsement coverage.” 11 MHM’s case now is premised on the contention that it requested a certain type 12 of coverage from CAMICO, CAMICO provided more restricted coverage than 13 requested, and CAMICO breached a duty to explain to MHM how the coverage 14 provided was less than the coverage requested. For reformation, MHM also 15 contends that CAMICO defrauded MI-TM or knew MHM was laboring under a 16 misapprehension that the coverage provided matched the coverage requested and it 17 was inequitable for CAMICO not to correct that misapprehension. MHM seeks to 18 rewrite the coverage to express the parties’ alleged “true intentions.” 19 Discovery has revealed that every element of MHM’s contention is false and 20 the facts are undisputed. The truth is that: 21 1. MHM never asked CAMICO for the form of coverage it now claims it 22 was seeking all along. MHM and its broker Lemme Insurance Group (“LEMME”), 23 both admitted that they never told CAMICO that MHM was seeking coverage for a 24 single claim under both the original and reinstated layers. (Exh. 27 to Compendium 25 of Exhibits (‘tOE”), [Hancock Depo., p. 24, lns. 4-8, p. 55, lns. 24-25 - p. 56, Ins. 26 1-3, pp. 70-72, Ins. 1-9 and p. 118, lns. 7-12]; Exh. 28 to COE [Hecht Depo., p.43, 27 lns. 4-8, p. 44, Ins. 17-23, p. 54, Ins. 22-25 - p. 55, Ins. 1-5 and p. 66, lns. 16-21]; 28 Tartaglio DecI., (ft 2.) MUSICK, PEELER 1029202.1 1 Case No. 3:15-cv-01207-SI& GARREfl LiP REDACTEI3 VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY xrrflItNLYSATIAw JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 7 of 28 1 2. LEMME admitted it mistakenly gave CAMICO incorrect sample 2 language. (Exh. 29 to COE [Barkin Depo., p. 66, lns. 11-19, Exh. 11 previously 3 marked at the deposition of Ron Parisi].) 4 3. LEMME admitted that it repeatedly erred when it told CAMICO it S “agreed” with the CAMICO policy wording and that, indeed, LEMME told 6 CAMICO the wording was “perfect” during the underwriting of the CAMICO 7 policies. (Exh. 28 [Hecht Depo., p. 69, lns 13-15, p. 71, lns. 1-18 and p. 94-98, lns. 8 1-41; Tartaglio Decl., ¶915-8.) 9 4. CAMICO had no knowledge during the underwriting process that 10 MHM thought the coverage being provided differed from the coverage requested or 11 that MHIvI misunderstood the coverage provided. (Theus Decl., ¶91 18, 29, and 38; 12 Rosario DecI., 9191 5 and 6.) 13 5. MHM has asserted a claim against LEMME for professional 14 negligence in procuring coverage from CAMICO (Exh. 27 to COE [Hancock, 15 Depo., p. 66, lns. 12-24, and p. 67, Ins. 1-6].) and it is contrary to the concept of 16 judicial estoppel for MHM to contend in this action that CAMICO cheated MHM, 17 while also maintaining a claim that LEMME’s negligence actually caused the 18 problem. 19 As will be further shown below, CAMICO did not breach any duty to disclose 20 and MHM’s reformation claim fails as a matter of law. Thus, CAMICO is entitled 21 to summary judgment as against Plaintiff and Counter-Defendant MHM on MHM’s 22 Complaint and on CAMICO’s Counter-Claims. 23 II. PROCEDURAL HISTORY 24 A. The Prior Cross-Motions for Summary judgment 25 On March 13, 2015, MHM filed a Complaint against CAMICO alleging 26 causes of action for breach of contract, breach of covenant of good faith and fair 27 dealing, declaratory relief and reformation. (Docket No. 1.) CAMICO filed its 28 Counter-Claims seeking reimbursement of $1,450,707.84 from MHM, plus interest, MUSICK,PEELER 1029202.1 2 Case No. 3:15-cv-0I207-Sl& GARRETr LU’ REDACTED VERSION 0? CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY Nrr{}HM:YSAT 4W JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 8 of 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MUSICK, PEELER & GARREt’ LLP Ar[c,J{NEVS Ar JAW on April 2, 2015. (Docket No. 10) Thereafter, the parties filed Cross-Motions for Summary Judgment. (Docket Nos. 24 and 26.) On February 17, 2016, this Court granted CAMICO’s Motion for Summary Judgment in its entirety and awarded CAMICO S 1,450,707.84, plus interest at the legal rate, against MHM and denied MHM’s Motion. (Docket No.47.) In doing so, among other things, the Court found the following with respect to the Reinstatement Endorsement: (1) “This language is clear and unambiguous - the policy does not reinstate limits towards any Claim for which any part of the original CAMICO policy limits were paid, whether for defense and indemnity.” (S Order, Docket No. 47, p. 13, lns. 18-20.) (2) “The policy is not illusory because there are conditions under which reinstated coverage would exist.” (See Order, Docket No. 47, p. 15, lns. 14-17.) and (3) “The reinstatement endorsement is conspicuous, plain and clear.” ($ Order, Docket No. 47, p. 16, In. 5.) B. MHM’s Motion to Alter or Amend Judgment On March 24, 2016, MHM filed a Motion to Alter or Amend the Judgment or for Relief from Judgment. (Docket No. 52.) On May 6, 2016, the Court granted MHM’s Motion to set aside judgment, and denied both parties’ motions for summary judgment. (Docket No. 58.) The Court, however, did not reverse its previous findings that the Reinstatement Endorsement is unambiguous, clear and not illusory. The only issues raised by MHM, as to which the Court believed relief was warranted, were whether CAtvIICO breached a duty to disclose and/or knew that MHM had a mistaken belief as to the scope of the reinstatement coverage. 1029202.1 3 Case No. 3:15-cv-01207-51 REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 9 of 28 1 III. FACTUAL BACKGROUND 2 A. THE CAMICO POLICIES 3 CAMICO issued to MHM numerous Accountants Professional Liability 4 Insurance Policies, including Policy No. KSL103721-02, for the period December 5 31, 2006 to December 31, 2007 (the “CAMICO 2006-2007 Policy”), Policy No. 6 KSL103721-03, for the period December 31, 2007 to December 31, 2008 (the 7 “CAMICO 2007-2008 Policy”), and Policy No. KSL103721-04, for the period 8 December 31, 2002 to December 31, 2009 (the “CAMICO 2008-2009 Policy”) 9 (collectively, the “CAMICO POLICIES”). (Theus Decl. ¶ 2, Exhs. 1, 2 and 3 to 10 COE.) 11 B. UNDERWRITING OF THE CAMICO 2006-2007 POLICY 12 1. MHM Sought New Coverage During the 2006-2007 Renewal 13 MHM is one of the top ten accounting firms in the country. (Exh. 27 to COE 14 [Hancock Depo. p. 79, lns. 19-231.) During the renewal of the 2006-2007 Policy, 15 MHM stated it became concerned that one large claim could exhaust its entire 16 primary and excess coverage limits and MHM sought to protect itself from a second 17 loss. (Exh. 27 to COE [Hancock Depo. p. 50, lns. 5-13, p. 51, lns. 19-25 - p. 52, 18 lns. 1-7, p. 53, his. 6-18 (referring to Exh. 41 marked at Hecht Depo) and p. 71, lns. 19 23-25- p. 72, Ins. 1-9]; Tartaglio Decl., ¶ 3.) Therefore, MHM sought new coverage 20 from CAMICO involving a reinstatement or second loss layer. (14.) 21 In negotiating the terms and conditions of the CAMICO 2006-2007 Policy, 22 including the Reinstatement Endorsement made part of that policy, MHM was 23 represented by LEMME, an experienced insurance broker. (Exh. 27 to COE 24 [Hancock Depo., p. 19, Ins. 6-10, p. 26, lns. 9-19]; Theus Decl., ¶ 4.) LEMME had 25 authority to act on MHM’s behalf. (Exh. 27 to COE [Hancock Depo., p. 105 - 106, 26 Ins. 1-8].) Gwen Theus, lead underwriter for CAMICO, communicated with Mr. 27 Brad Barkin and Mr. John Hecht of LEMME concerning the 2006-2007 Policy. 28 (Theus DecI., ¶ 4.) Mr. Hecht was Mr. Barldn’s supervisor. (Exh. 28 to COE MUSICK.PEELER 10292021 4 Case No. 3;15-cv-01207-S1& GARREfl LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY All DRSLLYSAE JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 10 of 28 1 [Hecht Depo., p. 52, ins. 8-18 and p. 93, ins. 11-15; Exh. 29 to COE [Barkin Depo., 2 p. 39, Ins. 4-5, 19-22].) 3 During the period of October 4, 2006 to December 29, 2006, numerous 4 communications were exchanged between CAMICO and LEMME regarding the S pricing information for CAMICO’s primary and reinstatement layers, as well as 6 information relating to the “insurance tower” of excess insurance applicable to a 7 first loss. (Theus Decl.. 919 5-8; Exhs. 4, 5 6 and 7 to COE.) On October 16, 2006, 8 CAMICO provided LEMME with a renewal quote for the primary policy for MHM 9 and advised that it would address what LEMME called the “Round the Clock” 10 option in a separate e-mail. (Theus Deci., ¶ 7; Exh. 6 to COE.) 11 CAMICO had never previously issued a reinstatement endorsement as part of 12 a CAMICO professional liability policy. (Theus Decl., ¶ 9.) In early December, 13 2006, Ms. Theus requested from Mr. Barkin and Mr. Hecht some sample language 14 for the reinstatement coverage. (Id. at ¶ 10.) On December 6, 2006, Mr. Hecht 15 provided some sample language for the reinstatement endorsement. (Id. at ¶ 11; 16 Exh. 8 to COE.) One option provided by Mr. Hecht stated: 17 “It is understood and agreed that this policy is to provide $5,000,000 x $20,000,000, subject to a per claim limit of $20,000,000.” (Exh 8 to 18 COE.) 19 In discovery, LEMME has now admitted it provided incorrect language. (Exh. 29 to 20 COE [Barkin Depo., p. 66, Ins. 11-19, Exh. 11 previously marked at the deposition 21 of Ron Parisi.].) LEMME states that the sample language should have said “subject 22 to a per claim limit of $5,000,000” instead of”$20,000,000.” (Ii, p.68, Ins. 15-20 23 p. 74, Ins. 5-12.) LEMME had no explanation as to why it failed to advise 24 CAMICO of this mistake. (Id., p.74, Ins. 17-19.) 25 After receiving the sample language from LEMME and another broker, 26 CAMICO decided that it should draft its own version of a clear and unambiguous 27 reinstatement endorsement that would be was acceptable to CAMICO. (Theus 28 Decl., ¶ 12.) CAMICO retained an outside attorney, Ms. Susan Halman, to assist MUSICK, PEELER 1029202.1 5 case No. 3:15-cv-0I207-Sl& GARRETr LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 11 of 28 1 and draft the endorsement containing the reinstatement layer. (Theus Deci., ¶91 3 2 and 12.) 3 On December 8, 2006, CAMICO provided LEMME with a December 7, 2006 4 quote for the reinstatement option. (Thetis Deci., ¶ 13; Exh. 9 to COE.) CAMICO 5 also advised LEMME that the mechanics of the quote needed to be ironed out and 6 that CAMICO was leaning toward issuing a second policy. (thid.) 7 CAMICO’s December 7, 2006 quote for the reinstatement coverage offered to 8 provide $5 million in additional limits that are “applicable to a second loss during 9 the applicable policy year and are in excess of any limits remaining in $20 million 10 first loss tower.” (Theus DecI. 9113; Exh. 9 to COE, emphasis added.) After 11 receipt and review of the December 7, 2006 quote, LEMME never told 12 CAMICO that MHM wanted coverage to apply to a single claim under both 13 the first loss layer and the second loss layer of coverage. (Exh. 28 to COE [Hecht 14 Depo., 43, ins. 4-8, p. 44, Ins. 17-23, p. 54, lns. 22-25 - p. 55, lns. 1-5 and p. 66, ins. 15 16]; Theus DecI., ¶ 13.) 16 On December 28, 2006, LEMME bound coverage for the primary and 17 reinstatement layer. (Theus DecI., ¶ 14; Exh. 10 to COE.) At the time coverage was 18 bound, LEMME, MHM and CAMICO all understood that they would work out the 19 specific wording of the policy at a later time. (Exh. 27 to COE [Hancock Depo., p. 20 13, Ins. 24-25 - p. 14, lns. 1-3]; Exh. 28 to COE [Hecht Depo., p. 68, lns. 1-6]; 21 Theus Decl., ¶ 15.) With sophisticated insureds, it is not unusual to continue to 22 negotiate manuscript endorsements to commercial policies after inception. (Thetis 23 Decl., ¶ 17.) 24 2. The Reinstatement Policy Wording Negotiations 25 On January 29, 2007, CAMICO advised LEMME that it was working on the 26 reinstatement endorsement. (Theus Decl., ¶ 16; Exh. 11 to COE.) On April 11, 27 2007, Ms. Theus forwarded by email to Mr. Barldn and Mr. Hecht, a copy of the 28 CAMICO manuscript Reinstatement Endorsement that CAMICO proposed to be MUSICK,PEELER 1029202.1 6 Case No. 3:15-cv-01207-SI& GARRET!’ LU’ REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 12 of 28 REDACTED VERSION OF DOCUMENT(S) TO BE SEALED 1 offered as part of the renewal coverage under the CAMICO 2006-2007 Policy. 2 (Theus Deci., ¶ 17; Exh. 12 to COE.) LEMME was provided with the endorsement 3 containing the following specific reinstatement wording: 4 Upon payment by the Named Insured, or on its behalf by an excess liability insurer(s), of S20,000,000 in Claims Expenses and/or Damages with respect to Claims that would otherwise have been covered b this Policy but for the exhaustion of the Policy’s $5,000,000 Limit o 6 Liability - Policy Aggregate, the Company agrees thereafter to reinstate the Named Insured’s $5 000,000 Limit of Liability-Policy 7 Aggregate under this Policy, EXCkPT THAT the reinstated Limit ot Liability - Policy Aggregate shall not apply to any Claim for 8 which Claim Expenses anwor Damages have been or are paid in whole or in part by the Policy’s original Limit of Liability- Policy 9 Aggregate. (Bold supplied.) (Theus DecL, 9117; Exh. 12 to COE.) On April 12, 2007, LEMME approved the wording of the Reinstatement 12 Endorsement. (Theus Decl., ¶ 17; Exh. 13 to COE; Exh. 28 to COE [Hecht Depo., 13 p. 77, Ins. 2-12 and Exh. 34 thereto].) LEMME did not question the point that 14 coverage under the reinstated limit would not apply to any claim for which defense or indemnity payments had been made under the original limit. (Theus DecI., ¶ 17.) 16 CAMICO relied on LEMME’s approval of the wording of the Reinstatement 17 Endorsement and issued the Endorsement. (Theus Decl., ¶ 18.) During discovery, Mr. Hecht admitted he made a mistake when reviewing the Reinstatement 18 Endorsement. 19 20 21 22 23 24 (Exh. 28 to COE [Hecht Depo., p. 69, lns. 23-25 - . 71, 25 lns. 1-18]; Tartaglio Deci., ¶ 5.) 26 a-- . -. 27 28 MUSICK,PEELER 10Z9202.l 7 Case No. 3:15-cv-0i207-SI& GARRETT LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY Kr L.W JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 13 of 28 REDACTED VERSION OF DOCUMENT(S) TO BE SEALED 1 (Exh. 28 to COE [Hecht Depo., p. 72, ins. 12-17]; 2 Tartaglio Deci., ¶ 5.) 3 3. MHM And LEMME Never Told CAMICO That MHM Was Seeking Coverage For a Single Claim Under Both the 4 Primary and Reinstatement Layers 5 MHM’s theory of this case is that it “always intended” that the only 6 restriction on the reinstatement layer is that no more than $5 million would be 7 available for any single claim under both the original and reinstated layers of 8 coverage. In fact, however, MHM and LEMME never told CAMICO that MHM 9 was seeking any coverage for the same claim under both the first and second loss 10 limits. (Rosario Decl., ¶915 and 6; Theus Deci., ¶91 13 and 18; Exh. 27 to COE 11 [Hancock Depo., p. 24, Ins. 4-8, p. 55. ins. 24-25 - p. 56, Ins. 1-3, PP. 70-72, lns. 1-9 12 and p. 118, ins. 7-12]; Exh. 28 COE [Hecht Depo., p. 43, ins. 4-8, p. 44, ins. 17-23, 13 p. 54, Ins. 22-25 - p. 55, ins. 1-5, and p. 66, ins. 16-21].) It was only after this 14 coverage dispute arose that LEMME, in a May 31, 2011 to Ron Parisi of CAMICO, 15 said 16 (Exh. 28 to COE [Hecht Depo., p.99, lns. 17 14-19 and Exh. 37 thereto.) Such an intent was never previously expressed by 18 LEMME and/or MHM to CAMICO. (Rosario Decl., ¶91 5 and 6; Theus Deci., ¶91 13 19 and 18; Exh. 26 to COB [Hancock Depo., p. 24, ins. 4-8, p.55, ins. 24-25 - p. 56, lns. 20 1-3, pp. 70-72, Ins. 1-9 and p. 118, Ins. 7-12]; Exh. 28 COB [Hecht Depo., p. 43, Ins. 21 4-8, p. 44, lns. 17-23, p. 54, ins. 22-25 - p. 55, ins. 1-5, p. 66, ins. 16-21].) 22 CAMICO had no knowledge or reason to believe that MHM misunderstood 23 the reinstatement coverage that was offered by CAMICO nor did CAMICO know 24 that it was different than what MHM now claims it wanted. (Theus Deci., ¶ 18.) 25 CAMICO relied on MHM’s representations that the wording was acceptable to issue 26 the Reinstatement Endorsement. (Theus Decl., ¶ 18.) 27 Indeed, the parties’ communications during the underwriting process were 28 consistent with the notion that the concept of reinstatement coverage was for a MUSICK,PEELER 1029202.1 8 Case No. 3:15-cv-0I207-SI& GARRETT LU’ REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYArrc,jcsty,ATLAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 14 of 28 I second claim. Mr. Hancock started the dialogue by saying he wanted the 2 reinstatement coverage for a second loss, not that he wanted to increase the layer of 3 coverage for a first loss. (Exh. 27 to COE [Hancock Depo., p. 55, ins. l2-23j.) The 4 quote referred to “second loss” coverage. (Theus DecI., ¶ 13, Exh. 9 to COB.) 5 LEMME’s gratuitous, after-the-fact notion that both layers of coverage would apply 6 to the same claim, subject to a $5,000,000 limit, is contrary to both the concept the 7 parties first discussed and, of course, the actual wording of the endorsement offered 8 by CAMICO and accepted by MHM. Neither Hancock, Hecht nor Barkin ever 9 informed CAMICO that MHM was seeking coverage under both limits for the same 10 claim. 11 C. UNDERWRITING OF THE CAMICO 2007-2008 POLICY 12 MHM elected to renew its coverage with CAMICO for the period 13 December 31, 2007-December 31, 2008. (Theus Decl., ¶ 19; Exh. 2 to COE.) 14 MHM was again represented by LEMME in negotiating the terms and conditions of 15 the CAIVIICO 2007-2008 Policy. (Theus Decl., ¶ 20.) 16 During the period of November 14,2007 through December 28, 2007, 17 numerous communications were exchanged between LEMME and CAMICO 18 concerning the renewal. (Theus Decl., ¶‘3 2 1-23, Exhs. 14-17 to COB.) On 19 December 26, 2007, Mr. Barldn advised Ms. Theus that MI-11M has elected to renew 20 coverage with CAMICO for the 2007-2008 year. (Theus Deci., ¶ 24; Exh. 18 to 21 COE.) On December 28, 2007, CAMICO confirmed the binding of coverage by 22 MHM. (Theus Decl., ¶ 24; Exh. 19 to COB.) CAMICO issued the CAMICO 2007- 23 2008 Policy. (Theus Decl., ¶ 25; Exh. 2 to COB.) 24 The CAJvIICO 2007-2008 Policy is a $5 million primary policy in an 25 “insurance tower” that provided a total limit of $25 million in insurance to MHM 26 during that policy period. (Theus Decl., ¶ 26.) 27 The Reinstatement Endorsement contained in the CAMICO 2007-2008 Policy 28 is worded identically to the Reinstatement Endorsement that was made part of the MUSICK,PEELER 1029202.1 9 Case No. 3:15-cv-01207-S1& GARREVr LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY ALt[)KNLYSAF LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 15 of 28 1 CAMICO 2006-2007 Policy issued by CAMICO to MHM, except for the specific 2 policy information for the excess insurers in the “insurance tower” for that policy 3 period. (Theus Decl., ¶ 27; Exh. 2 to COE.) LEMME and MFIM had the 4 reinstatement wording for at least eight months before the CAMICO 2007-2008 S Policy was issued. (Theus Deci., ¶ 29; Exh. 28 to COB {Hecht Depo., p. 177, lns 8- 6 12].) The CAMICO 2007-2008 Policy is the policy in dispute in this case. 7 After the CAMICO 2007-2008 Policy was in effect for nine months, on 8 September 8, 2008, CAMICO received an email from LEMME correcting the 9 “insurance tower” limit information in the Reinstatement Endorsement for the 10 CAMICO 2007-2008 Policy. (Theus Decl., ¶ 28, Exh. 20 to COB). LEMME did 11 not ask for the Reinstatement Endorsement to be amended or revised in any other 12 way, except for the change in the insurance tower limits. (Theus Decl., ¶ 28; Exh. 13 20 to COB.) 14 LBMME now admits it never notified CAMICO that the reinstatement 15 coverage offered was different than what MHM wanted. (Theus Deci.. ¶ 29, Exh. 16 28 to COB [Hecht Depo., p. 179, Ins. 22-25 - p. 180, Ins. 1-2].) LEMMB admits 17 that it did not review the policy closely because it was a renewal. (Exh. 28 to COE 18 [Hecht Depo., p. 87, lns. 18-25].) Having presented the same language as contained 19 in the Reinstatement Endorsement in the 2006-2007 Policy already approved and 20 accepted by LEMMB during the underwriting process for the prior year’s policy, 21 CAMICO understood the wording for the CAMICO 2007-2008 Policy was 22 acceptable to MHM and CAMICO had no understanding that LEMME or MHM 23 misunderstood the wording, that MHM thought that it had broader coverage, or that 24 MHM had ever requested broader coverage. (Theus Decl., ¶ 29.) 25 U. UNDERWRITING OF THE CAMICO 2008-2009 POLICY 26 The next year, MHM elected to renew its coverage with CAMICO for the 27 period December 31, 2008-December 31, 2009. (Theus DecI.,9j 30.) MHM was 28 MUSICK,PEELER 1029202.1 10 Case No. 3:15-cv-01207-S1& GARRETt LU’ REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY Kri >kSLYSX lAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 16 of 28 I again represented by LEMME in negotiating the terms and conditions of the 2 CAMICO 2008-2009 Policy. (Theus Decl., ¶ 31.) 3 During the period of October 10, 2008 to December 29, 2008, numerous 4 communications were exchanged between CAMICO and LEMME concerning the S renewal. (Theus Deci., ¶I 32-34, Exhs. 21-23 to COE.) On December 29, 2008, 6 CAMICO confirmed that MHM had bound coverage for the 2008-2009 year. 7 (Theus Decl., ¶ 35; Exh. 24 to COE.) 8 On December 30, 2008, Mr. Hecht wanted to confirm that CAMICO’s 9 maximum policy liability for MHM was $10,000,000, rather than $5,000,000 as 10 stated on CAMICO’s binder. (Theus Deci., ¶ 36; Exh. 25 to COE.) On 11 December 30, 2008, Ms. Theus advised Mr. Hecht that CAMICO’s maximum limit 12 is $10,000,000, but the limit is applied as per the Reinstatement Endorsement and 13 she repeated the exact wording of the endorsement in the email. (Theus Decl., ¶ 37; 14 Exh. 26 to COE.) Later in the day, Mr. Hecht responded to the email, stating 15 “Perfect.” (Theus Deci., ¶ 37; Exh. 26 to COE; Exh. 28 to COE [Hecht Depo., p. 16 95, ins. 2-7 and Exh. 36 thereto].) 17 Mr. Hecht notified CAMICO that the wording was “perfect” without reading 18 the reinstatement wording. (Exh. 28 to COE [Hecht Depo., p. 95, ins. 9-24]; 19 Tartaglio Decl., ¶ 7.) LEMME admitted that CAMICO had no way of knowing of 20 Mr. Hecht’s mistake of failing to read the Reinstatement Endorsement. (Exh. 28 to 21 COE [Hecht Depo., p. 97, lns. 18-22 and p. 98, lns. 1-4].) 22 Again, having presented the same Reinstatement Endorsement for the 23 CAMICO 2006-2007 Policy, the CAMICO 2007-2008 Policy, and the CAMICO 24 2008-2009 Policy, and having never received any objection, but only approval of the 25 wording from MHM’s authorized broker, CAMICO believed the wording was 26 acceptable to MHM and CAMICO had no understanding that LEMME or MHM 27 misunderstood the wording, that they thought that MHM had broader coverage, or 28 that they had ever requested broader coverage. (Theus Decl., ¶ 38.) MUSICISPEELER 1029202.1 11 Case No, 3:15-cv-01207-S1 REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYkrrc)RsLwAr jAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 17 of 28 1 The current claim that CAMICO somehow tricked MHM is outrageous. The 2 evidence here supports only two possible conclusions: (1) the wording actually was 3 “perfect” as LEMME, acting for MHM, said at the time, and MHM now seeks to 4 rewrite history; or (2) LEMME, unbeknownst to CAMICO, made mistakes in not 5 telling CAMICO what MHM wanted and in not proposing any revisions to the 6 endorsement at any time. Either way, MHM has no basis to charge CAMICO with 7 fraud or inequitable conduct. 8 The key here is that LEMME never shared its purported concept of 9 reinstatement coverage with CAMICO and there is nothing inherent in the nature of 10 the coverage to suggest that a single claim must always be covered under both layers 11 of coverage. If anything, the notion of “first loss” and “second loss” coverage is 12 that a single claim would not be covered by both layers. Yet, these general notions 13 of reinstatement coverage must give way to the parties’ freedom to negotiate 14 coverage as reflected by the written contract. This was novel, manuscript coverage 15 negotiated by sophisticated insurance professionals. MHM now cannot be heard to 16 say it is entitled to some “standard” or “the usual” coverage because “that’s what 17 everybody else does.” No, this was a specifically-negotiated agreement between 18 parties with equal bargaining power. 19 E. MHM HAS FILED A PROFESSIONAL LIABILITY CLAIM AGAINS’I’ LEMME 20 21 MHM believes the numerous approvals of the reinstatement wording by 22 LEMME to CAMICO were due to mistakes on Mr. Hecht’s part and, as a result, 23 MHM has filed a professional liability claim against LEMME. (Exh. 27 to COE 24 [Hancock, Depo., p. 66, lns. 12-24, and p. 67, lns. 1-6].) LEMME also placed its 25 own professional liability insurer on notice of a potential claim by MHM. (Exh. 28 26 to COE [Hecht Depo. p.49, Ins. 6-16].) That claim is currently unresolved. (Exh. 27 27 to COE [Hancock, Depo., p. 67, Ins. 7-9].) 28 MUSICK, PEELER 1029202.1 12 Case No. 3:15-cv-01207-S1& GARREfl LLP REDACTED VERSION OF cAMICo MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY ATI RSEVSNr lAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 18 of 28 1 IV. LEGAL DISCUSSION 2 A. CAMICO DID NOT BREACH ANY A DUTY TO DISCLOSE 3 MHM contends that CAMICO has a duty to inform an insured of certain 4 rights and obligations under the insurance policy. MHM has relied on Westrick v. 5 State Farm Insurance, 137 Cal.App.3d 685 (1922) and Paper Savers, Inc. v. Nacsa, 6 51 Cal. App. 4th 1090, 1097 (1996). Neither case is apposite. 7 In Westrick, the Court of Appeal did not reform the policy to afford coverage 8 to the insured for an accident involving a recently purchased truck. Rather, the 9 parties stipulated that the insurance policy did not, by its terms, provide coverage 10 for the 6-wheeled welding truck. Westrick, supra, 137 Cal.App.3d at p. 687. The 11 case proceeded to trial against two insurance agents for State Farm, who were father 12 (Jim) and son (Doug), and State Farm, their principal, on tiegtigence theories alone, 13 seeking to recover for the uncovered damage to the truck. Id.. at p. 687-688. The 14 Court of Appeal reversed a directed verdict in favor of Doug and State Farm, based on the existence of evidence in the record that the insured had called Jim the night 16 before the accident specifically seeking to secure coverage for the truck, and Jim 17 told him that was not necessary and he should speak to Doug, the insured’s regular 18 agent, the next day. Id. at pp. 689-69 1. The Court of Appeal treated father and son 19 as each other’s agents by mutual agreement. Id. at p. 691. Thus, the Court of 20 Appeal concluded there was sufficient evidence to allow a jury determination of 21 whether the State Farm agents, including Doug, were liable for negligence even 22 though Jim’s alleged negligence consisted of inaction, i.e., not advising the insured 23 during the telephone call that the automatic coverage provision of the insured’s 24 policy only applied to 4-wheeled and not 6-wheeled vehicles. JcL at pp. 691-693. 25 The Court of Appeal speciFically expressed no opinion concerning State Farm’s 26 liability because it had not been reached in the trial cour. Id. at p. 694, in. 2. 27 If anything, the Westrick case merely supports MHM’s professional 28 negligence claim against LEMME for failing to procure the coverage that MHM MUSICIcPEELER 029202.1 13 case No. 3:15-cvMI2O7-SJ& GARRETr LLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYAr’ DRSEVS cr LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 19 of 28 1 claims it wanted. Any language in Westrick regarding the disclosure obligations of 2 insurance companies is entirely dicta. \Vestrick is inapposite because CAMICO 3 cannot be liable for LEMME’s professional negligence, because LEMME was 4 MHM’s agent, not CAMICO’s. 5 Paper Savers is not a reformation case either. In Paper Savers, the Court of 6 Appeal reversed a summary judgment in favor or an insurer and its agent on causes 7 of action for negligence and implied indemnity, because the insured testified that the 8 unsophisticated insurance agent affirmatively misrepresented the coverage available 9 under a “replacement cost coverage” endorsement when the insured specifically 10 asked about the coverage and the agent told him that “he was fully insured against 11 loss.” (51 Cal.App.4th at pp. 1094, t095.) The Court followed a long line of cases 12 holding that a special duty of care arises on the part of an insurance agent not to 13 misrepresent policy terms or the extent of coverage when an insurer’s agent 14 responds to the insured’s specific questions about coverage. Paper Savers, 51 15 Cal.App.4th at pp. 1097-1098. Again, Paper Savers is entirely inapt. 16 CAMICO did not make any false statement to MHM or conceal any policy 17 wording. To the contrary, CAMICO presented the actual reinstatement wording to 18 LEMME, LEMME reviewed and approved ii multiple times (or, more precisely, it 19 told CAMICO that it had reviewed the wording), and never complained about it or 20 objected to C’AMJCO that the policy language did not afford the coverage that MHM 21 was seeking. If anything, it is inequitable for MHM (through LEMME) to accept 22 and approve CAMICO’s wording and then reverse course and now say it must be 23 rewritten, simply to secure $5 million in additional coverage that the policy as 24 written does not provide. 25 MHM argues that CAMTCO had some special duty to disclose any change or 26 reduction in coverage to MHM. However, MHM was seeking reinstatement 27 coverage for the rrst time during the renewal of CAMICO 2006 - 2007 Policy. The 28 parties stailed with a clean slate. There was no reduction or change in already MUSICIçPEELER 1029202.1 14 Case No. 3:15-cv-01207-SI& GARREVr LU’ REDAcTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY ArrcI{svsxr LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 20 of 28 1 existing coverage such that CAMICO had a special duty to disclose any changes in 2 the policy to the insured. And, CAMICO presented the exact Reinstatement 3 Endorsement in dispute for review and approval by MI-fM’s broker and received the 4 express approval of that language. S Moreover, we are not dealing with unsophisticated insureds seeking consumer 6 coverage for an automobile, a home or a business from an insurance agent 7 representing an insurance company. MHM is a sophisticated insured. LEMME 8 was its broker and worked for MHM. not CAMICO. The Reinstatement 9 Endorsement was negotiated at arms-length between MHM’s broker and CAMICO. 10 LEMME was paid a commission of 15% of each premium charged by the insurers 11 (Exh. 28 of COE [Hecht Depo., p. 55, Ins. 19-25 - p. 56, Ins. 1-4, Exh. 32 thereto.]). 12 LEMME was paid a commission of $ 79,893 (15% of $532,619 premium) for the 13 CAMICO 2006-2007 Policy and approximately another commission of $ 66,200 14 (15% of $441,335 premium) for CAMICO 2007-2008 Policy, precisely to assure 15 that it requested, negotiated and procured the appropriate coverage MHM desired. 16 An insurance broker is the agent of the insured; thus, the insured is 17 responsible for the brokers acts and is charged with the broker’s knowledge. 18 Solomon v. Federal Ins. Co., 176 Cal. 133, 138-39 (1917); see also, Century Sur. 19 Co. v. Crosby Ins.. Inc., 124 Cal.App.4th 116, 123 (2004) (“Ordinarily one who 20 procures another to obtain insuraiwe for him thereby makes such person his agent 21 and assumes full responsibility for his acts,” quoting Purcell v. Pacific Automobile 22 Ins. Co, 19 Cal.App.2d 230, 233 (1937)); Strangio v. Consolidated Indem. & Ins. 23 Co., 66 F.2d 330, 335 (9th Cir. 1933) (“An insurance broker, like other brokers, is 24 primarily the agent of the person who first employs him, and therefore, an insurance 25 broker or agent employed to procure insurance for another, ordinarily is not the 26 agent of the company, and owes no duty to it; but is the agent of the insured as to all 27 matters within the scope of his employment, and acts or knowledge of such broker 28 or agent will be binding on or imputed to the insured and not to the company”). MUSICK,PEELER 1029202.1 15 Case No. 3:15-cv-01207-SI& GARRETt LLP REDACTED VERSION OF CAMJCO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY SW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 21 of 28 1 Fundamentally, CAMICO could not disclose what it did not know. MHM 2 and/or LEMME never told CAMICO that MUM was seeking coverage for a single 3 claim under both the primary and reinstatement layers. Thus, CAMICO could not 4 breach any duty to disclose that the clear and explicit language of the Reinstatement S Endorsement did not offer the coverage that MUM claims it was seeking. CAMICO 6 is not like the agent in Westrick who knew the insured wanted immediate coverage 7 for his new truck or the agent in Paper Savers who knew that the insured wanted full 8 replacement coverage for his business inventory. 9 B. MHM IS NOT ENTITLED TO REFORM THE CAMICO POLICY 10 1. There Is No Evidence of Any Inequitable Conduct by 11 CAMICO 12 MHM contends that it is entitled to reformation of the CAMICO Policy 13 because CAMICO engaged in fraud and/or inequitable conduct. MUM claims that 14 CAMICO somehow tricked MUM by inserting language into the Reinstatement 15 Endorsement that was contrary to the negotiation between the parties or MHM’s 16 stated need for coverage. MUM’s allegations are contrary to the actual evidence. 17 California Civil Code section 3399 states: 18 When, through fraud or a mutual mistake of the parties, or a mistake of one party, which (lie other at the time knew or suspected, a written 19 contract does not truly express the intention of the parties, it may be revised on the application of the party aggrieved, so as to express the 20 intention, so far as it can be done without prejudice to the rights acquired by third persons, in good faith and tor value. (Emphasis 21 adaed.) 22 23 California courts have interpreted the “inequitable conduct” provision of section 24 3399 to include where a party knows a mistake was made, and tries to take 25 advantage of that mistake. Croskey, Heeseman, Ehrlich and Klee, California 26 Practice Guide: Insurance Litigation (Rutter Group August 2016, suppl. ed.), Ch. 5- E, Reformation, ¶ 5:127. 27 28 MUSICISPEELER 1029202.1 16 Case No, 3:15-cv-01207-SI& GARRETr LLP REDACTED VERSION OF CAMJCO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYNr[c, SEV Ar LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 22 of 28 1 MHM has the burden to prove the true intent of both parties by clear and 2 convincing evidence. Shupe v. Nelson, 254 Cal.App.2d 693, 700 (1967). MHM 3 bears the burden of proving that CAIvIICO either (1) shared in the mistake; or (2) 4 knew or suspected that MHM was mistaken as to the written contract’s terms. 5 MHM cannot meet either of these burdens based on the evidence developed 6 during discovery. MHM and LEMME admitted they never asked CAMICO for 7 coverage for a single claim under both the original and reinstated layers. (Exh. 8 27 to COE, [Hancock Depo., p. 24, Ins. 4-8. p.55, ins. 24-25 - p. 56, Ins. 1-3, pp. 70- 9 72, Ins. 1-9 and p. 118, lns. 7-12; Exh. 28 to COE [HechtDepo., p.43, ins. 4-8, p. 10 44, ins. 17-23, p. 54, ins. 22-25 - p. 55, ins. 1-5 and p. 66, lns. 16-21].) These 11 admissions are fatal to MHM’s reformation claim. CAMICO cannot be charged 12 with fraud and/or inequitable conduct when it had no knowledge at the time it issued 13 the Reinstatement Endorsement that it was different coverage than what MFIM now 14 claims it wanted and CAMICO had no reason to believe that MHM misunderstood 15 the reinstatement coverage that was offered by CAMTCO because MHM’s broker 16 never complained or objected to the wording of the Reinstatement Endorsement, but 17 instead approved it, not once, but three times, and even stated it was ‘Perfect.” 18 The fact that one party is mistaken as to a material term of the agreement does 19 not justify reformation if the other party was acting in goodfaith and unaware of 20 the mistake. American Home Ins Co. v. Travelers lndemn. Co., 122 CaI.App.3d 21 951, 962 (1981); see also, Mercury Ins. Co. v. Pearson, 169 Cai.App.4th 1064, 22 1073-1074 (2008); City of Cypress v. New Amsterdam Cas. Co.. 259 CaI.App.2d 23 219, 224 (1962); Cal. Civ. Code § 3399; Cal. Civ. Code § 1577. Moreover, 24 reformation cannot be granted if the parties had different understanding of their 25 agreement, nor may a court make a new contract for the parties on matters on which 26 they never agreed. American Home, supra, 122 Cal .App.3d at p. 954; Gillis v. Sun 27 Ins. Office. LTD., 238 Cal.App.2d 408, 414 (1965). 28 MUSICK,PEELER 1029202.1 17 Case No. 3:15-cv-01207-SI& GARRETr LU’ REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY Al LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 23 of 28 1 CAMICO drafted the manuscript endorsement to reflect the terms of 2 reinstatement coverage it intended to offer MHM. CAMICO provided the draft 3 endorsement to Mr. Hecht, including the conspicuous limiting language at issue in 4 this dispute. There was no trickery or sleight of hand here. LEMME approved the 5 language of the Reinstatement Endorsement when it was originally presented for 6 inclusion in the CAMICO 2006-2007 Policy. The Reinstatement Endorsement was 7 issued retroactively to the December 31, 2006 policy inception date. 8 Although LEMME has now admitted in deposition testimony that it made a 9 mistake and misread the endorsement when giving CAMICO approval of the 10 language, LEMME never told CAMICO of this mistake. (Rosario Decl., ¶91 5 and 6; 11 Theus Decl., ¶91 13 and 18; Exh. 28 COE [Hecht Depo., p. 69, Ins. 23-25 - p. 71, lns. 12 1-18, p.72. Ins. 12-17 and p. 177, Ins. 8-12].) The Court will recall that, on the 13 prior cross-motions for summary judgment, MHM and LEMME representatives 14 submitted declarations to this Court (with great indignation) purporting to explain 15 the coverage that they allegedly wanted, but they never told the Court that: (1) they 16 never actually asked CAMICO to provide such coverage; or (2) the real problem is 17 LEMME never bothered to read the reinstatement wording. They did not tell the 18 Court what actually happened here: the sample reinstatement wording LEMME 19 provided made no sense, their alleged desire to have reinstatement coverage for any 20 claim -- subject only to a $5 million per claim limit -- was never communicated to 21 CAMICO. and LEMME accepted the clear and explicit Reinstatement Endorsement 22 as drafted by CAMICO without revision or objection that it did not reflect MHM or 23 LEMME’s intentions. CAMICO relied in good faith on the unqualified approval 24 and acceptance of the Reinstatement Endorsement wording proffered by CAMICO 25 and there is no evidence to demonstrate otherwise. 26 Reformation of an insurance policy on ground of mistake without exercise of 27 reasonable care on part of the insured is not to be encouraged. Taff v. Atlas Assur. 28 ç, 58 Cal.App.2d 696, 702 (1943). Any unilateral mistake solely on the part of MUSICK, PEELER 10292021 18 Case No. 3:1 5-cv-0I 207-SI& GARREfl LLP REDACTED VERSION OF cAMico MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY All IIISEVSAr (SW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 24 of 28 1 MHM (if there even was one) cannot give rise to a reformation of the policy 2 language where the Reinstatement Endorsement expresses CAMICO’s intent and 3 CAMICO had no reason to suspect that MHM and its broker, LEMME, could hold a 4 contrary understanding of the clear and unambiguous policy language. 5 2. The Term “Round the Clock” Reinstatement Is An Arcane ‘I’erm 6 MHM may argue that CAMICO knew that MHM wanted reinstated limits to 8 cover losses up to a $5,000,000 per claim limit under both the original and reinstated layers because LEMME used the term “Round the Clock” and that term somehow 10 inherently connotes coverage for all claims under both layers. The undisputed evidence indicates that this was not the case. CAMICO had never previously issued 12 a reinstatement endorsement. (Theus DecI., ¶ 9.) Mr. Rosario had never heard the term “Round the Clock” reinstatement before and did not know how it worked. 13 14 (Rosario Decl., ¶3[ 5 and 6.) Ms. Theus also had never heard the term before and, after making inquiries, concluded that the term had no specialized meaning in the 16 insurance business. (Theus DecI., ¶ 12.) Thus, Ms. Theus proceeded to determine what sort of reinstatement of limits CAMICO was willing to offer to MHM after 17 consulting with other CAMICO underwriters and outside counsel, Susan Halman. 18 19 (Thetis Decl., ¶ 12.) The wording of the manuscript Reinstatement Endorsement was a matter of negotiation between MHM and CAMICO. 20 3. The Reinstatement Wording Did Not Have to Be Finalized 21 Prior to Policy Inception 22 The fact that the language of the Reinstatement Endorsement was negotiated 23 and finalized after the CAMICO 2006-2007 Policy was bound in late December, 24 2006 is of no moment. As noted in Chicago Title Ins. Co. v. AMZ Ins. Sen’s., Inc., 25 188 Cal.App.4th 401,419 (2010), a binder gives the insured temporary protection 26 until the issuance of a formal policy and is not necessarily a comprehensive 27 document. As a matter of law, a binder is jjj a policy. Ahem v. Dillenback, I 28 Cal.App.4th 36,48 (1991). It identifies the limits of coverage, not the scope of MUSICK, PEELER 1029202.1 19 Case No.3:1 5-cv-Ol 207-SI& GARRETT LU’ REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY ArIDRMWSA1IAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 25 of 28 1 coverage. More importantly, a binder is only effective until the application is 2 rejected or the policy is issued. Id. 3 Moreover, at the time coverage was bound for the CAMICO 2006-2007 4 Policy, LEMME, MHM and CAMICO all understood that they would work out the 5 specific wording of the policy including the Reinstatement Endorsement at a later 6 time. (Exh. 27 to COE [Hancock Depo., p. 13, lns. 24-25 - p. 14, Ins. 1-3; Exh. 28 7 to COE [Hecht Depo., p. 68, lns. 1-6]; Theus Decl., ¶ 15.) It was not unusual to 8 continue to negotiate manuscript endorsements to commercial policies after 9 inception. (Theus DecI., ¶ 17.) In fact, that is exactly what occurred. 10 4. MHM Had The Exact Wording Of the Reinstatement Endorsement For Eight Months Prior to the Inception of the 11 CAMICO 2007-2008 Policy. 12 MHM ignores that the policy which is the subject of this insurance dispute is 13 the CAMICO 2007-2008 Policy. The December 7, 2006 binder related to the earlier 14 CAMICO 2006-2007 Policy. More than a year later, during the renewal process for 15 the CAMICO 2007-2008 Policy, the Reinstatement Endorsement with the identical 16 language was again approved by MHM’s broker with minor revisions relating to the 17 excess coverage. (Theus Deci., ¶ 28, Exh. 2 to COE.) LEMME admitted it did not 18 review the endorsement carefully because the CAMICO 2007-2008 Policy was a 19 renewal. (Exh. 28 to COE [Hecht Depo., p. 87, lns. 18-25].) LEMME’s negligence 20 is not a basis to reform the CAMICO policy. CAMICO had no knowledge or reason 21 to believe that MHM or LEMME, a sophisticated insurance broker hired by MHM 22 for that expertise, misunderstood the clear and explicit reinstatement coverage 23 wording nor did CAMICO know or have any reason to know that MHM’s 24 understanding of the coverage was different than the coverage as clearly and 25 conspicuously stated in the Reinstatement Endorsement. 26 27 28 MUSICK,PEELER 1029202.1 20 case No. 3:15-cv-01207-SI& GARRETT US REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYxrroIIstv%AT lAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 26 of 28 1 5. MHM’s Acceptance of Successive Policies Precludes Reformation Containing ‘l’he Exact Same Reinstatement 2 Endorsement 3 The CAMICO 2007-2008 Policy was renewed for the 2008-2009 policy period with the identical Reinstatement Endorsement. (Theus Deci., ¶ 30; Exh. 3 to 6 COE.) During the renewal process for the CAMICO 2008-2009 Policy, the Reinstatement Endorsement with the identical language was again approved by 8 MHM’s broker Mr. Hecht who told CAMICO it was “Perfect.” (Theus Deci., 1 37; Exh. 26 to COE; Exh. 28 to COE [Hecht Depo., p. 95, ins. 2-7 and Exh. 36 thereto].) 10 A claim for reformation will not lie where an insured accepts successive policies containing the exact same language that it claims it did not read or understand. Taff 12 v. Atlas Assur. Co., supra, 58 Cal.App.2d at 702-703; Chase v. Blue Cross 13 of California, 42 Cal.App.4th 1142, 1155 (1996)Q’It is a general rule that the receipt 14 of a policy and its acceptance by the insured without an objection binds the insured as well as the insurer and he cannot thereafter complain that he did not read it or 15 16 know its terms. It is a duty of the insured to read his policy.”); Mission Viejo 17 Emergency Medical Associates v. Beta Healthcare Group, 197 Cal.App.4th 1146, 18 1155-1156 (2011) (failure to read policy is insufficient reason to hold a clear and 19 conspicuous policy provision unenforceable, particularly where the provision is contained in successive policies, because “it would permit any party to a contract to 21 avoid a disadvantageous provision by claiming that they were not aware it existed” 22 and insurer had no duty to call special attention to policy language that was plain, clear and explicit). 23 C. The Concept of Judicial Estoppel Precludes MHM’s Claims 24 25 “Judicial estoppel is an equitable doctrine designed to maintain the integrity 26 of the courts and to protect the parties from unfair strategies. The doctrine is sometimes referred to as “the doctrine of preclusion of inconsistent positions.” 26 Jackson v. County of Los Angeles 60 CaI.App.4th 171, 181 (1997). The concept is MUSICI PEELER 1029202.1 i Case No. 3: I5-cvOI2O7-SI&GARRETTLLP - REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYAT LAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 27 of 28 1 premised on a simple, common-sense notion: “It seems patently wrong to allow a 2 person to abuse the judicial process by first [advocating] one position, and later, if it 3 becomes beneficial, to assert the opposite. [Citation omitted].” fl Stated 4 differently: “... it has long been settled that ‘{o]ne to whom two inconsistent courses 5 of action are open and who elects to pursue one of them is otherwise precluded from 6 pursing the other. [Citation omitted]” Id. at 182. 7 MHM believes the numerous approvals of the reinstatement wording by 8 LEMME to CAMICO were due to mistakes on Mr. Hecht’s part and, as a result, 9 MHM has filed a professional liability claim against LEMME. (Exh. 27 to COE 10 [Hancock, Depo., p. 66, lns. 12-24, and p. 67, lns. 1-61.) LEMME also placed its 11 own professional liability insurer on notice of a potential claim by MHM. (Exh. 28 12 to COE [Hecht Depo. p. 49, Ins. 6-16].) That claim is currently unresolved. Exh. 27 13 to COE [Hancock, Depo., p. 67, lns. 7-9.) In a court of equity, MHM should not be 14 allowed to hedge its bets by arguing that it was tricked by CAMICO while 15 simultaneously reserving the right to turn on MHM and argue it failed to procure the 16 proper coverage. This presently is not judicially estoppel per se, but it does 17 undermine MHM’s claim for reformation as equitable relief. 18 V. CONCLUSION 19 For the foregoing reasons, CAMICO is entitled to summary judgment against 20 MHM on the Complaint and on CAMICO’s Counter-Claims. 21 22 DATED: January 27, 2017 MUSICK, PEELER & GARRETT LLP 23 24 By: fs/ David A. Tartaglio 25 David A. Tartaglio Attorneys for Defendant and Counter- 26 Claimant CAMICO MUTUAL 27 INSURANCE COMPANY 28 MUSICK. PEELER 10292011 22 Case No. 3;I5-cv-01207-S1& GARREV LU’ REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARYAIH)RSILflAE lAW JUDGMENT Case 3:15-cv-01207-SI Document 81 Filed 02/09/17 Page 28 of 28 1 MUSICK, PEELER & GARRETT LU’ AflOLNEYS AT LAW 2 ONE WIJSI lIRE BOULEV.\RL), SUITE 2000 LOS \NGEI-ES, C:LIFORN1A 90017-3383 3 iItl.EPI lONE: 213-629-7768FACSIMILE 213-621-1376 4 David A: Tartaglio (State Bar No. 117232) d.tartagllo(Wrnpulaw.corn Laura K. Kim (State Bar No. 197944) 6 L kirnrnpglaw. corn 7 Attorneys for Defendant and Counter-Claimant CAMICO MUTUAL INSURANCE COMPANY 8 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 12 MAYER HOFFMAN McCANN, P.C., Case No. 3:15-cv-0 1207-SI a Missouri Corporation, 13 . . (Case assigned to Hon. Susan Iliston) Plaintiff, 14 vs. DECLARATION OF RICARDO 15 ROSARIO IN SUPPORT OF CAMICO MUTUAL INSURANCE CAMICO MUTUAL INSURANCE 16 COMPANY, a California Corporation, COMPANY’S MOTION FOR SUMMARY JUDGMENT 17 Defendant. 18 [Filed Concurrently with Notice ofMotion and Motion for Summary Judgment; Declarations 19 of Gwen The us and David Tartaglio, 20 Compendium ofExhibits and Proposed Order] 21 Date: March3,2017 Time: 9:00 a.m. 22 Crtrm.: I 23 ______________________________________ Trial Date: May 15. 2017 24 25 26 27 28 1027468.1 Case No. 3:15-cv-01207-SI DECLARATION OF RICARDO ROSARIO IN SUPPORT OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-1 Filed 02/09/17 Page 1 of 3 1 I, Ricardo Rosario, declare as follows: 2 1. 1 am over the age of eighteen years and am employed as an underwriter 3 by CAMICO. I have personal knowledge of the facts set forth herein and, if called 4 as a witness, I could and would competently testify thereto. 5 2. I am currently employed by CAMICO as Chief Executive Officer. I 6 have been Chief Executive Officer since January 1, 2009. Prior to that, I was 7 Executive Vice President of Risk Management for CAMICO. As Executive Vice 8 President, my duties varied from time to time included overseeing the undenvriting, 9 claims, marketing and risk management departments. 10 3. On October 3, 2006, I attended a meeting with Mayer Hoffman and 11 McCann (“MWvI”) at its Kansas City offices. MWVI’s CEO, William Hancock, was 12 present. Other MI-fivI representatives may have been in attendance. No underwriter 13 for CAMICO was present at the meeting. fvil-llvI’s broker, Mr. John Hecht of 14 Lemme Insurance Group (“LEMME”), also participated in the meeting. The 15 meeting was an informational meeting that initiated the renewal process at which 16 MI-TM and LEMME discussed the general risks that faced the accounting industry 17 and MI-PA’s exposures, including exposure to embezzlement claims and liability 18 based on its acquisition of additional CPA firms. There were also general 19 discussions about a possible “second loss” tower of coverage. 20 4. During the October 3, 2006 meeting, MHIVI and/or LEMME brought up 21 “reinstatement” coverage and what they called “Round the Clock” coverage. I did 22 not know what reinstatement coverage was. I had no knowledge if CAMICO could 23 issue any reinstatement coverage. I also had never heard the term “Round the 24 Clock” coverage and did not know what that was. I did advise MI-TM and LEMME 25 that a split limits was an option for MHM’s insurance needs. 26 5. I understand that in this case MI-TM contends that it requested a 27 reinstatement layer with the sole limitation that there would be no more that $5 28 million in coverage available any single claim under both the original and reinstated MUSICIcPEELER 1027468.1 2 CaseNo. 3:15-cv-01207-SI& GARREn LLP DECLARATION OF RICARDO ROSARIO IN SUPPORT OF ATtORNEATL%W CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-1 Filed 02/09/17 Page 2 of 3 1 layer. Yet, I don’t recall that anyone at Ivflfvl or LEMME ever communicated to 2 me at the October 3, 2006 meeting that the same claim might be covered under both 3 the original and reinstated layer of coverage. 4 6. On October 15, 2007, I attended a meeting with Ivll-ll4 at CAMICO’s 5 offices in San Mateo. Ivil-livI’s CEO, William Hancock, was present. Other MEvI 6 representatives may have been in attendance. John Hecht of LEMIV1F was also 7 present. The meeting was another informational meeting that initiated the renewal 8 process at which IvllIJvI and LEIVIIVIE discussed the general risks that faced the 9 accounting industry and MHM’s exposures, including exposure to embezzlement 10 claims and liability based on its acquisition of additional CPA firms. There were 11 also general discussions about the “second loss” tower of coverage. Again, I don’t 12 recall that anyone at MI-tM or LEMIVIE ever communicated to me that MHM was 13 requesting coverage for a single claim under both the original and reinstated layer of 14 coverage or that sole limitation for the reinstated layer was that there would be no 15 more that $5 million in coverage available for any single claim under both the 16 original and reinstated layer. 17 7. Other than the October 3, 2006 and October 15, 2007 meeting, I never 18 personally met with any representative from MHM. 19 20 1 declare under penalty of perjury under the laws of the United States of 21 America that the foregoing is true and correct. Executed on this2 day of January 22 2017,atc Thc,c , - Rfcardo Rosari6 25 26 27 28 MUSICK,PEELER 1027468.1 3 Case No. 3:I5-cv-01207-S1 &GARREflLLP DECLARATION OF RICARDO ROSARIO iN SUPPORT OF AflORNEVSATIAW CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-1 Filed 02/09/17 Page 3 of 3 1 MUSICK, PEELER & GARRETT LLP AnORNEYS AT LAW 2 ONE \VI1.SI lIRE I3OULEVARD, SUITE 2000 LOS ;\NGELES, CALIFORNIA 90017-3383 3 TELEI’I lONE: 213-629-7768FACSIMILE 213-624-1376 4 David A: Tartaglio (State Bar No. 117232) d.tartaglio(Wrnpglaw.com 5 - Laura K. Kim (State Bar No. 197944) 6 1. Jdrnrnpg1aw. corn 7 Attorneys for Defendant and Counter-Claimant CAPvIICO MUTUAL INSURANCE COMPANY 8 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 12 MAYER HOFFMAN McCANN, P.C., Case No. 3:15-cv-01207-SI a Missouri Corporation, 13 . (Case assigned to Hon. Susan Iliston) Plaintiff; 14 vs. DECLARATION OF GWEN THEUS15 IN SUPPORT OF CAMICO CAMICO MUTUAL INSURANCE MUTUAL INSURANCE16 COMPANY, a California Corporation, COMPANY’S MOTION FOR SUMMARY JUDGMENT 17 Defendant. 18 [Filed Concurrently with Notice ofMotion and A-lotion for Summary Judgment, Declarations19 ofRicardo Rosario and David Tartaglio, 20 Compendium ofExhibits and Proposed Order] 21 Date: March3,2017 Time: 9:00 a.m. 22 Crtrm.: 1 23 ________________________________________ Trial Date: May 15. 2017 24 25 26 27 28 1027345.1 Case No. 3:1 5-cv-01207-SI DECLARATION OF GWEN THEUS IN SUPPORT OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 1 of 10 I I, Gwen Theus, declare as follows: 2 1. I am over the age of eighteen years and am employed as an underwriter 3 by CAMICO. I have personal knowledge of the facts set forth herein and, if called 4 as a witness, I could and would competently testify thereto. 5 2. I was the primary underwriter on the Accountants Professional Liability 6 Insurance Policies issued by CAMICO to MHM including Policy No. KSL103721- 7 02, issued by CAMICO to MHM for the period December 31, 2006 to December 8 31, 2007 (the “CAMICO 2006-2007 Policy”), Policy No. KSLI 03721-03, to MHM 9 for the period December 31, 2007 to December 31, 2008 (the “CAMICO 2007-2008 10 Policy”), Policy No. KSL103721-04, to MHM for the period December 31, 2008 to 11 December 31, 2009 (the “CAMICO 2008-2009 Policy”) (collectively “CAMICO 12 POLICIES”). Copies of the CAMICO 2006-2007 Policy, CAMICO 2007-2008 13 Policy and CAMICO 2008 -2009 are maintained in the ordinary course of business 14 by CAMICO in the underwriting files for the policies. True and correct copies of 15 the CAMICO POLICIES are attached to the Compendium of Exhibits as Exhibits 16 “1,” “2,” and “3,” respectively. 17 3. I worked with other CAMICO employees, including Ricardo Rosario 18 and Ron Klein, in underwriting the CAMICO 2006-2007 Policy. I also worked with 19 outside attorney Susan Halman concerning the reinstatement endorsement. The 20 CAMICO 2006-2007 Policy was the first MHM policy to contain a Reinstatement 21 Endorsement. 22 4. In negotiating the terms and conditions of the CAMICO 2006-2007 23 Policy, including the Reinstatement Endorsement made a part of that policy, MHM 24 was represented by Lemme Insurance Group, Inc. (“LEMME”), an experienced 25 insurance broker. The two LEMME brokers with whom I communicated were Mr. 26 Brad Barkin and Mr. John Hecht. I had dealt with these brokers from LEMME on 27 this account when I was underwriting the two earlier policies issued to MHM by 28 CAMICO and had also worked with them on other corporate accounts underwritten MUSICK,PEELER 1027345.1 2 Case No. 3:15-cv-01207-S1& GARREVt LLP DECLARATION OF GWEN THEUS IN SUPPORT OF.TIVR%fl5AflAW CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 2 of 10 1 by CAMICO. I dealt exclusively with the brokers at LEMME during the 2 underwriting process, and not anyone at MHM, which is typical in situations 3 involving large, sophisticated corporate accounts, such as this one. 4 5. On October 4, 2006, Mr. Barkin emailed me as the lead underwriter to 5 obtain pricing on the renewal coverage as well as new coverage for a $5 million 6 reinstatement layer. Mr. Barkin requested pricing information by October 20, 2006 7 prior to a October 23, 2006 MHM board meeting. A true and correct copy of Mr. 8 Barkin’s October 4, 2006 email is to the Compendium of Exhibits as Exhibit “4.” 9 6. On October 16, 2006, Mr. Barkin provided information as to MHM’s 10 existing insurance program to assist CAMICO in pricing what he called the “Round 11 the Clock” Reinstatement. I had never heard that term before Mr. Barkin advised 12 that CAMICO would insure a $5,000,000 layer excess of $25,000,000 on a 13 reinstatement basis. A true and correct copy of Mr. Barkin’s October 16, 2006 14 email is attached to the Compendium of Exhibits as Exhibit “5.” 15 7. On October 16, 2006, L provided Mr. Hecht and Mr. Barkin with a 16 renewal quote for MHM. I also advised that I would address the requested “Round 17 the Clock” option in a separate e-mail. A true and correct copy of my October 16, 18 2006 email is attached to the Compendium of Exhibits as Exhibit “6.” 19 8. On December 5, 2006, Mr. Barkin provided some updates as to the 20 insurance tower that LEMME had put together thus far for MHM in order CAMICO 21 to further price the renewal of the CAMICO 2006-2007 Policy. A true and correct 22 copy of Mr. Barkin’s December 5, 2006 email is attached to the Compendium of 23 Exhibits as Exhibit “7.” 24 9. LEMME referred to the reinstatement layer as “Round the Clock” and 25 as a second loss layer. I had never previously issued a reinstatement endorsement as 26 part of a CAMICO professional liability policy and I did not know how that would 27 work. Neither Mr. Rosario, Vice President of Risk Management at the time nor Mr. 28 Klein, CAMICO underwriter with whom I consulted on the MHM account, had any MUSICK,PEELER 1027345.1 3 Case No. 3:15-cv-01207-S1& GARREn LLP DECLARATION OF GWEN THEUS IN sUPPORT OF‘rtoRsThMI3w CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 3 of 10 I prior experience with reinstatement endorsements. We looked into this at 2 LEMME’s request. 3 10. In a telephone conversation in early December, 2006 with Mr. Barkin 4 and Mr. Hecht, I requested that the LEMME brokers suggest some possible wording 5 of the reinstatement coverage to be afforded by CAMICO after the exhaustion of 6 the excess policy limits in the “insurance tower.” I also reached out to another 7 broker I knew to obtain some draft wording for the reinstatement coverage to be 8 afforded by CAMICO. 9 11. On December 6, 2006, Mr. Hecht provided some sample language for 10 the reinstatement endorsement. A true and correct copy of Mr. Hecht’s December 6, 11 2006 email is attached to the Compendium of Exhibits as Exhibit “8.” 12 12. The sample language I received from Mr. Hecht and the other broker 13 were such different versions that, after I consulted with the other underwriters on the 14 account, we decided that CAMICO should draft its own version of a clear and 15 unambiguous reinstatement endorsement that would be was acceptable to CAMICO. 16 One of our outside attorneys, Ms. Susan Halman assisted CAM1CO and drafted the 17 endorsement containing the reinstatement layer. It ties into the actual policy 18 language and expressed the extent to which we were willing to provide this 19 coverage. 20 13. On December 8, 2006, I provided Mr. Barkin with a December 7, 2006 21 quote for the reinstatement option. I also advised Mr. Barkin that the mechanics of 22 the quote needed to be resolved and that CAMICO was leaning toward issuing a 23 second policy. The coverage proposal dated December 7, 2006 stated that 24 CAMICO would agree to provide S5 million in additional limits “applicable to a 25 second loss during the applicable policy year and are in excess of any limits 26 remaining in $20 million first loss tower.” A true and correct copy of my December 27 8, 2006 email and the coverage proposal are attached to the Compendium of 28 Exhibits as Exhibit “9.” I do not recall that anyone from LEMME stated or MUSICK,PEELER 1027345.1 4 Case No. 3:15-cv-01207-S1& GARRETr LLr DECLARATION OF GWEN TIIEU5 IN SUPPORT OFA19ORSLYSMI. CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 4 of 10 I suggested that coverage would apply to a single claim under both the first loss layer 2 and the second loss layers of coverage. 3 14. On December 27, 2006, Mr. Barkin advised that MHM had given 4 authority to bind coverage for the primary and reinstatement layer. A true and 5 correct copy of Mr. Barkin’s December 27, 2006 email is attached to the 6 Compendium of Exhibits as Exhibit “10.” 7 15. For the CAMICO 2006-2007 Policy, the standard accountants 8 professional liability policy form offered by CAMICO was the core component of 9 the CAMICO policy to be renewed for MHM, along with several standard 10 endorsements that CAMICO would normally include in such a policy and the 11 MHM-specific endorsements that CAMICO was renewing from the prior year’s 12 coverage. Thus, the coverages and endorsements to be renewed were agreed upon 13 by CAMICO and MHM by the time of the renewal on December 31, 2006. 14 However, as is typically the case with respect to large corporate accounts like this 15 one, after December 31, 2006, CAMICO and MHM’s broker, LEMME, were still 16 negotiating the exact terms of several special endorsements to the renewal policy, 17 including the terms of the Reinstatement Endorsement to be added to the policy. It 18 is customary in the insurance industry for parties to bind coverage and work out the 19 specific wording of the policy at a later time. 20 16. In that regard, on January 29, 2007, I advised Mr. Hecht that CAMICO 21 was working on the reinstatement endorsement and requested the names of the 22 companies in the “insurance tower.” On the same day, Mr. Barkin provided the 23 insurance information. A true and correct copy of my January 29, 2007 email is 24 attached to the Compendium of Exhibits as Exhibit “1 1.” 25 17. On April 11, 2007, 1 forwarded by email to Mr. Barkin and Mr. Hecht, 26 a copy of the CAMICO manuscript Reinstatement Endorsement that CAMICO 27 proposed to be offered as part of the renewal coverage under the CAMICO 2006- 28 2007 Policy. The next day, Mr. Hecht responded by email to me, approving the MUSICK. PEELER 1027345.1 5 Case No. 3:15-cv-01207-S1& GARRErr LIP DECLARATION OF GWEN THEU5 IN SUPPORT OF CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 5 of 10 I wording of the Reinstatement Endorsement as written, although he had some issues 2 with the sub-limit for embezzlement claims and trustee exclusion endorsement. A 3 true and correct copy of my April 11,2007 email and the April 12, 2007 response 4 from Mr. Hecht are attached to the Compendium of Exhibits as Exhibit “12” and 5 “13,” respectively. He did not question the point that coverage under the reinstated 6 limit would not apply to claims for which defense or indemnity payments had been 7 made under the original limit. I continued thereafter to negotiate several additional 8 endorsements with Messrs. Barkin and Hecht until we reached final agreement on 9 those endorsements in May of 2007. Again, negotiation of the final policy terms 10 after the date of the issuance of the policy is common in dealing with large accounts 11 like MUM. 12 18. CAMICO made no mistake in issuing the Reinstatement Endorsement. 13 It had the specific scope of coverage that CAMICO was willing to provide. Based 14 on LEMME’s approval of our wording, I understood that MUM also accepted this 15 wording. I had no knowledge or reason to believe that MHM misunderstood the 16 reinstatement coverage that was offered by CAMICO nor did I believe that it was 17 different than what MHM now claims it wanted. I understand that in this case 18 MUM contends that it requested a reinstatement layer with the sole limitation that 19 there would be no more that $5 million in coverage available any single claim under 20 both the original and reinstated layer. To my knowledge, however, no one at 21 LEMME ever communicated that to me. I have no recollection that Lemme ever 22 told me that MUM was seeking coverage for the same claim under both the first and 23 second loss limits. After the instant coverage dispute arose, it is my understanding 24 that, in a May 31, 2011 to Ron Parisi of CAMICO, Mr. Hecht said “[tjhe intent that 25 we both understood, was simply that CAMICO would never pay more than $5MM 26 on any one claim.” Mr. Hecht, however, never expressed such an intent in his 27 written communications with me. I have no recollection he ever told me that. 28 MUSICK, PEELER 1027345.1 6 Case No. 3:I5-cvO12O7-SI& GARRETr LLP DECLARATION OF GWEN TF[EUS [N SUPPORT OF CAMICO MUTUAL INSURANCE COMPANYS MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 6 of 10 I CAMLCO’s proposed wording did not provide for such a situation. 1 relied on Mr. 2 Hecht’s representation that the wording I provided to him was acceptable. 3 19. MHM elected to renew its coverage with CAMICO for the period 4 December 31, 2007-December 31, 2008. I was the lead underwriter on the renewal. 5 20. MHM was again represented by LEMME in negotiating the terms and 6 conditions of the CAMICO 2007-2008 Policy. I dealt exclusively with LEMME 7 brokers in negotiating the renewal coverage and not with anyone at MHM. 8 21. On November 14, 2007, 1 emailed to Mr. Hecht a renewal proposal for 9 MHM. A true and correct copy of my November 14, 2007 email is attached to the 10 Compendium of Exhibits as Exhibit “14.” 11 22. On December 12, 2007, Mr. Barkin advised that MHM was looking for 12 pricing on tower limit options up to $30,000,000 in coverage which would affect the 13 reinstatement layer. On the same day, I provided Mr. Barkin with an amended 14 renewal proposal which addressed the increase in the “insurance tower.” A true and 15 correct copy of Mr. Barkin’s December 12, 2007 email and my e-mail of the same 16 date are attached to the Compendium of Exhibits as Exhibits “15” and “16,” 17 respectively. 18 23. On December 17, 2007, Mr. Barkin provided updated information as to 19 MHM’s “insurance tower.” On December 18, 2007, I provided Mr. Barkin with a 20 renewal premium for the reinstatement layer. A true and correct copy of Mr. 21 Barkin’s December 17, 2007 email and my e-mail dated December 18, 2007 are 22 attached to the Compendium of Exhibit as Exhibit “17.” 23 24. On December 26, 2007, Mr. Barkin advised that MHM has elected to 24 renew coverage with CAMICO for the 2008-2009 year. On December 28, 2007, 1 25 confirmed that CAMICO was binding coverage as requested by MHM. A true and 26 correct copy of Mr. Barkin’s email and my December 28, 2007 email are attached to 27 the Compendium of Exhibits as Exhibits “18,” and “19,” respectively. 28 MUSTCK,PEELER 1027345.1 7 Case No. 3:15-ev-01207-S1& GARRETT LL DECLARATION OF GWEN THEUS IN SUPPORT OFAflORNIYSATLA’ CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 7 of 10 1 25. CAMICO issued the CAMICO 2007-2008 Policy. (See Exhibit “2” to 2 Compendium of Exhibits). The CAMICO 2007-2008 Policy is a primary policy 3 with a $5 million per Claim limit and an original policy aggregate limit of $5 4 million. 5 26. The CAMICO 2007-2008 Policy is the primary policy in an “insurance 6 tower” that provided a total limit of $25 million in insurance to MHM during that 7 policy period. 1 was provided with the excess policy information by LEMME so 8 that I could finalize the Reinstatement Endorsement. First Interstate Fire & 9 Casualty Company provided S5 million in excess insurance above the CAMICO 10 Policy. Lexington Insurance Company provided an additional S10 million in excess 11 insurance over the Interstate ($5 million) and CAMICO limits ($5 million). Catlin 12 Insurance Company provided the final $5 million in excess coverage to complete the 13 $25 million “insurance tower.” 14 27. The Reinstatement Endorsement contained in the CAMICO 2007-2008 15 Policy is worded identically to the Reinstatement Endorsement that was made part 16 of the CAMICO 2006-2007 Policy issued by CAMICO to MHM, except for the 17 specific policy information for the excess insurers in the “insurance tower” for that 18 policy period, which LEMME subsequently provided to me. 19 28. In early September 2008, 1 received an email from Mr. Barkin 20 correcting information in the Reinstatement Endorsement for the CAMICO 2007- 21 2008 Policy. Mr. Barkin asked that CAMICO revise the Reinstatement 22 Endorsement to show the total excess limits were $20 million, not $15 million, and 23 that Lexington Insurance Company’s limits were $10 million, not $5 million, excess 24 of the $10 million layer. A true and correct copy of Mr. Barkin’s September 3, 25 2008 email correspondence on the subject of the revision of the final wording of the 26 Reinstatement Endorsement in the CAMICO 2007-2008 Policy is attached to the 27 Compendium of Exhibits as Exhibit “20.” Mr. Barkin did not ask for the 28 MUSICK,PEELER 1027345.1 8 Case No. 3:l5-cv-0l207-Sl& GARRET!’ LLP DECLARATION OF GWEN THEUS IN SUPPORT OFATh)kNEVS.TI.%W CAMICO MUTUAL. INSURANCE COMPANYS MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 8 of 10 I Reinstatement Endorsement to be amended or revised in any other way either before 2 or after the issuance of the CAMICO 2007-2008 Policy. 3 29. Prior to the inception of the CAMICO 2007-2008 Policy, LEMME had 4 the language of the Reinstatement Endorsement for eight months. LEMME never 5 notified me that the coverage offered was different than what MHM wanted. To my 6 knowledge, the CAMICO wording was acceptable to MHM and I had no 7 understanding that LEMME or MHM misunderstood the wording, that they thought 8 that they had broader coverage or that they had even requested broader coverage. I 9 disclosed to LEMME what I was willing to provide. 10 30. MHM elected to renew its coverage with CAMICO for the period 11 December 31, 2008-December 31, 2009. I was the lead underwriter on the renewal. 12 31. MHM was again represented by LEMME in negotiating the terms and 13 conditions of the CAMICO 2008-2009 Policy. I dealt exclusively with LEMME 14 brokers in negotiating the renewal coverage and not with anyone at MHM. 15 32. On October 10, 2008, I emailed to Mr. Barkin a renewal proposal for 16 MHM for a $5,000,000 limit on a primary policy. I advised Mr. Barkin that I was 17 working on preparing a quote of$ 10,000,000 limit. A true and correct copy of my 18 October 10, 2008 email is attached to the Compendium of Exhibits as Exhibit “21.” 19 33. On November 11,2008, Mr. Barkin provided information as to the 20 “insurance tower” in order for CAMICO to price the reinstatement layer. On 21 November 14, 2008, I provided Mr. Hecht and Mr. Barkin with a renewal pricing 22 for the reinstatement layer. A true and correct copy of Mr. Barkin’s November 11, 23 2008 email and my e-mail dated November 14, 2008 are attached to the 24 Compendium of Exhibits as Exhibits “22.” 25 34. On December 21, 2008, I provided Mr. Hecht and Mr. Barkin with a 26 revised renewal quotation because MHM made an acquisition of the firm of 27 Mahoney Cohen & Tofias. A true and correct copy of December 21, 2008 email is 28 attached to the Compendium of Exhibits as Exhibit “23.” MUSICK.PEELER 1027345.1 9 Case No. 3:15-cv-01207-SI& GARRETT LLP DECLARATION OF GWEN TFIEUS IN SUPPORT OFmoas,:mTIs’ CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 9 of 10 1 35. On December 29, 2008, I confirmed that MKM had bound coverage for 2 the 2009-2010 year. A true and correct copy of my December 29, 2008 email is 3 attached to the Compendium of Exhibits as Exhibit “24.” 4 36. On December 30, 2008, Mr. Hecht wanted to confirm that CAMICO’s 5 maximum liability on MHM is $10,000,000 rather than $5,000,000 as stated on the 6 binder. A true and correct copy of Mr. Hecht’s December 30, 2008 email is 7 attached to the Compendium of Exhibits as Exhibit “25.” 8 37. On December 30, 2008, I advised Mr. Hecht that CAMICO’s 9 maximum limit is S10,000,000 but the limit is applied as per the Reinstatement 10 endorsement. I also repeated the exact wording of the endorsement in the email. 11 Later in the day, Mr. Hecht responded by stating “Perfect.” A true and correct copy 12 of my December 30, 2008 email and Mr. Hecht’s response of the same date are 13 attached to the Compendium of Exhibits as Exhibit “26.” 14 38. The CAMICO 2008-2009 Policy contains the identically worded 15 Reinstatement Endorsement as the two earlier policies. At no time before binding 16 that renewal policy did any of the brokers at LEMME or anyone else on behalf of 17 MHM object to or request any revision of the Reinstatement Endorsement contained 18 in that renewal policy. I relied on Mr. Hecht’s representation that the coverage 19 offered was “perfect.” I never believed or had any reason to believe that he was 20 under any misapprehension that the coverage under the reinstated limit was broader 21 than the endorsement says it is or that, as he noted, the wording was not “perfect.” 22 I declare under penalty of perjury under the laws of the United States of 23 America that the foregoing is true and correct. Executed on thiaj day of January 24 2017, at San Mateo, California. ‘Gwen Theus 27 28 MUSICK,PEELER 1027345.1 10 Case No. 3:15-cv-01207-SI& GARRETT LLP DECLARATION OF GWEN THEUS TN SUPPORT OF ArIuRNIYSATMW CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-2 Filed 02/09/17 Page 10 of 10 1 MUSICK, PEELER & GARRETT LLP AnORNEYS AT LAW 2 ONE WILShIRE BOULEV:\RD, SLITS 2000 1_OS ANGELES. CALIFORNIA 90017-33113 ‘IhUJPI lONE: 213-629.’76H 3 IA{:sIMlu 213-624-1376 4 David A. Tartaglio (State Bar No. 117232) d.tariaglio@mpglaw.com 5 Laura K. Kim (State Bar No. 197944) 6 Lki,n @mpglaw.conz 7 Attorneys for Defendant and Counter-Claimant CAMICO MUTUAL INSURANCE COMPANY 8 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 12 MAYER HOFFMAN McCANN, P.C., Case No, 3:15-cv-01207-SI a Missouri Corporation, 13 (Case assigned to Hon. Susan Iliston) Plaintiff, 14 vs. REDACTED VERSION OF 15 DECLARATION OF DAVID A. CAMICO MUTUAL INSURANCE TARTAGLIO IN SUPPORT OF 16 COMPANY, a California Corporation, CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR 17 Defendant. SUMMARY JUDGMENT 18 [Filed Concurrently wit/i Notice of Motion and 19 Motion for Swnma’y Judgment; Declarations of Gwen Thetis and Ricardo Rosario, 20 Compendium of Exhibits and Proposed Order] 21 Date: March 3,2017 22 Time: 9:00 a.m. Crtrm.: I 23 ________________________________________ Trial Date: May 15, 2017 24 25 26 27 28 1029176.1 Case No.3: 15-cv-0I 207-SI REDACTED VERSiON OF DECLARATION OF DAViD A. TARTAGLIO iN SUPPORT OF Case 3:15-cv-01207-SI Document 81-3 Filed 02/09/17 Page 1 of 5 1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MUSlCl PEELER & GARREn LU’ xrroj{NEYS Ar SW REDACTED VERSION OF DOCUMENT(S) SOUGHT TO BE SEALED I, David A. Tartaglio, declare as follows: 1. I am an attorney duly admitted to practice before this Court. I am a partner with Musick, Peeler & Garrett LLP, attorneys of record for CAMICO MUTUAL INSURANCE COMPANY. I have personal knowledge of the facts set forth herein and if called as a witness, I could and would competently testify thereto. 2. I took the deposition of the following witnesses in this case: John Hecht on November 4,2016; William Hancock on November 10, 2016 and Brad Barkin on January 10, 2017. 3. Mr. Hancock, then President of Mayer Hoffman McCann (“MHM”) testified that during the renewal of CAMICO 2006-2007 Policy, MHM stated that it became concerned that one large claim could exhaust the primary and excess coverage limits and MHM sought to protect itself from a second loss. m .JF2w’1.d [Hancock Depo., p.50, Ins. 5-13.] 4. MHM was represented by Lemme Insurance Group (“LEMME”), an experienced broker in procuring insurance. W4: [Hancock Depo., p. 19, Ins. 6-10.] 5. Mr. Hecht of LEMME admitted he made a mistake when reviewing the Reinstatement Endorsement provided by CAMICO. 1029176.1 2 case No. 3:15-cv-01207-51 REDACTED VERSION OF DECLARATION OF DAVID A. TARTAOLIO IN SUPPORT OF Case 3:15-cv-01207-SI Document 81-3 Filed 02/09/17 Page 2 of 5 REDACTED VERSION OF DOCUMENT(S) SOUGHT TO BE SEALED I _____________________________________________________ 2 -4W 4 6 __ 7 8 {Hecht Depo., p. 72, ins. 12-17.) 9 6. During the renewal of the CAMICO 2007-2008 Policy, Mr. Hecht 10 admitted he did not review the policy including the Reinstatement Endorsement 11 closely because it was a renewal. 12 nrri 13 14 • jj’a’ [Hecht Depo., p. 15 87, lns. 18-25.] 16 7. During the renewal of the CAMICO 2008-2009 Policy, Mr. Hecht 17 again admitted that he sent an email to Gwen Theus of CAMICO stating that the 18 Reinstatement Endorsement language was “perfect” without reading the wording. 19 - L.rai 20 R _ _ 21 } rr [Hecht 22 Depo. p. 96, Ins. 9-24]. 23 8. Mr. Hecht and Mr. Hancock testified that they never asked CAMICO 24 for coverage for a single claim under both the original and reinstated layers. 25 1 26 __ __ 27 28 1E?] [Hancock Depo., p. 24, Ins. 4-8] MUSICK, PEELER &GARREnLLP 1029176.1 3 case No. 3:15-cv-01207-SI AVIOI(MThATJAW REDACTED VERSION OF DECLARATION OF DAVID A. TARTAGLIO IN SUPPORT OF Case 3:15-cv-01207-SI Document 81-3 Filed 02/09/17 Page 3 of 5 REDACTED VERSION OF DOCUMENT(S) SOUGHT TO BE SEALED 1 ___________________ 2 3 ______ __ ______ __ __ 4 [Hancock Depo., p. 55, ins. 24-25 - p. 56, ins. 1- 3.] 5 6 ‘r- 7 8 - 10 ‘- [Hecht Depo., 11 p. 44, ins. 17-23] 12 _ _ ________ _ _ _ _ _ _______ 13 14 15 ear .‘Iflf 16 [Hecht Depo., p. 54, 17 ins. 22-25 - p. 55, ins. 1-5.] 18 9. Attached hereto as Exhibit 27 to the Compendium of Exhibits are true 19 and correct copies of pages 13, 14, 19,24,26,34,41,50-53,55,56,66,67,70-72, 20 79, 105, 106, 1 i6-1 18 and Exhibit 41 (marked at the deposition of John Hecht) and 21 Exhibit 54 of the deposition of William Hancock taken on November 10, 2016. 22 10. Attached hereto as Exhibit 28 to the Compendium of Exhibits are true 23 and correct copies of pages 43, 44, 49, 52, 54, 55, 65, 66, 68-72, 77, 87, 90, 93, 94- 24 99, 177, 179, 180 and Exhibits 32,34,36 and 37 of the deposition of John Hecht 25 taken on November 4, 2016. 26 27 28 MUSICK, PEELER eGARRETrLLP 029176.1 4 Case No. 3:15-cv-01207-51 ArI”iMvSfiTiAw REDACTED vERsION OF DECLARATION OF DAVID A. TARTAGLIO IN SUPPORT OF Case 3:15-cv-01207-SI Document 81-3 Filed 02/09/17 Page 4 of 5 1 11. Attached hereto as Exhibit 29 to the Compendium of Exhibits are true 2 and correct copies of pages 39, 66, 68, 74 and Exhibit 11 (marked at the deposition 3 of Ron Parisi) of the deposition of Brad Barkin taken on January 10, 2017. 4 I declare under penalty of perjury under the laws of the United States of S America that the foregoing is true and correct. Executed on this 27th day of January 6 2017, at Los Angeles, California. David A. Tartagllo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MUSICIç PEELER &GARREflLLP 1029176.1 5 Case No, 3:15-cv-01207-S1 xrroaJuysATtsw REDACTED VERSION OF DECLARATION OF DAVID A. TARTAGLTO IN SUPPORT OF Case 3:15-cv-01207-SI Document 81-3 Filed 02/09/17 Page 5 of 5 1 MUsICK, PEELER & GARRETT LLP 9 10 AnORNEYS AT LW ON It ‘VI LSI rita UOULItV: RD, SC lilt 2000 LOS ANGEIJtS. Cs\i.1FORNIA 900i7-33H3 fliLS’i ONL (213) 629-760t; (213)6241376 David A. Tartaglio (State Bar No. 117232) d. tartagliornpglaw. corn Laura K. Kim (State Bar No. 197944) 1. kimmpglaw. corn NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION MAYER HOFFMAN McCANN, a Missouri Corporation, Plaintiff, CAMICO MUTUAL INSURANCE COMPANY, a California Corporation, Defendant. AND RELATED COUNTER-CLAIM 1029210.1 P.C., I CASE No. 3:1 5-cv-01207-SI REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S COMPENDIUM OF EXHIBITS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT [Filed Concurrently with Notice of Motion and Motion for Summary Judgment; Declarations of Gwen Theus, Ricardo Rosario and David Tartaglio and [Proposed] Order] March 3,2017 9:00 a.m. The Hon. Susan Iliston Trial Date: May 15.2017 Case No. 3:15-cv-01207-Sl 7 3 4 5 6 7 8 Attorneys for Defendant and Counter-Claimant CAMICO MUTUAL INSURANCE COMPANY UNITED STATES DISTRICT COURT vs. 11 12 In I., 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Date: Time: Crtrm.: 1 REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S COMPENDIUM OF EXHIBITS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 1 of 33 7 3 4 5 Exhibit 1 - 6 Insurance Policy, 7 period December 8 Exhibit 2 - 9 Insurance Policy, 10 period December 11 Exhibit 3- 12 Insurance Policy, 13 period December 14 Exhibit 4 15 16 ________ 17 18 ___ 19 20 _ __ 21 22 23 24 25 26 __ 27 28 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: Defendant CAMICO MUTUAL INSURANCE COMPANY (“CAMICO”) submits the following evidence in support of its Motion for Summary Judgment: 1. Declaration of Gwen Theus A true and correct copy of the Accountants Professional Liability Policy No. KSL1O372I-02, issued by CAMICO to MI-TM for the 31, 2006 to December 31, 2007. A true and correct copy of Accountants Professional Liability Policy No. KSL103721-03, issued by CAMICO to MI-TM for the 31, 2007 to December 31, 2008. A true and correct copy of the Accountants Professional Liability Policy No. KSL103721-04, issued by CAMICO to MI-EM for the 31, 2008 to December 31, 2009. A true and correct copy of Brad Barkin’s October 4, 2006 email to Ms. Theus concerning the CAMICO 2006-2007 Policy. Exhibit 5 - A true and to Ms. Theus concerning the Exhibit 6 - A true and to Mr. Hecht and Mr. Barkin Exhibit 7 - A true and to Ms. Theus concerning the Exhibit 8 - A true and to Ms. Theus concerning the Exhibit 9 - A true and to Mr. Hecht concerning the correct copy of Brad Barkin’s October 16, 2006 email CAMICO 2006-2007 Policy. correct copy of Gwen Theus’ October 16, 2006 email concerning the CAMICO 2006-2007 Policy. correct copy of Brad Barkin’s December 5, 2006 email CAMICO 2006-2007 Policy. correct copy of John Hecht’s December 6, 2006 email CAMICO 2006-2007 Policy. correct copy of Gwen Theus’ December 8, 2006 email CAMICO 2006-2007 Policy MUSICK, PEELER & GARRETT LLP AflORNflS AT LAW Exhibit 10- A true and correct copy of Brad Barkin’s December 27, 2006 email to Ms. Theus concerning the CAMICO 2006-2007 Policy. 10292101 2 case No.3: I5-cv-01207-Sl REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S COMPENDIUM OF EXHIBITS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 2 of 33 1 Exhibit 11 - A true and correct copy of Gwen Theus’ January 29, 2007 email 2 to Mr. Hecht concerning the CAMICO 2006-2007 Policy 3 Exhibit 12- A true and correct copy of Gwen Theus’ April 11,2007 email to 4 Mr. Hecht concerning the CAMICO 2006-2007 Policy. 5 Exhibit 13 - A true and correct copy of John Hecht’s April 12, 2007 email to 6 Ms. Theus concerning the CAMICO 2006-2007 Policy. 7 Exhibit 14 - A true and correct copy of Gwen Theus’ November 14, 2007 8 email to Mr. Hecht concerning the CAMICO 2007-2008 Policy. 9 Exhibit 15 - A true and correct copy of Brad Barkin’s December 12, 2007 10 email to Ms. Theus concerning the CAMICO 2007-2008 Policy. 11 Exhibit 16- A true and correct copy of Gwen Theus’ December 12, 2007 12 email to Mr. Barkin concerning the CAMICO 2007-2008 Policy. 13 Exhibit 17 - A true and correct copy of Brad Barkin’s December 17, 2007 14 email to Ms. Theus concerning the CAMICO 2007-2008 Policy. 15 Exhibit 18 - A true and correct copy of Brad Barkin’s December 26, 2007 16 email to Ms. Theus concerning the CAMICO 2007-2008 Policy. 17 Exhibit 19 - A true and correct copy of Gwen Theus’ December 28, 2007 18 email to Mr. Barkin concerning the CAMICO 2007-2008 Policy. 19 Exhibit 20 - A true and correct copy of Brad Barkin’s September 3, 2008 20 email to Ms. Theus concerning the CAMICO 2007-2008 Policy. 21 Exhibit 21 - A true and correct copy of Gwen Theus’ October 10, 2008 email 22 to Mr. Barkin concerning the CAMICO 2008-2009 Policy. 23 Exhibit 22 - A true and correct copy of Brad Barkin’s November 11, 2008 24 email to Ms. Theus and Gwen Theus’s November 14, 2008 email to Mr. Barkin 25 concerning the CAMICO 2008-2009 Policy. 26 Exhibit 23 - A true and correct copy of Gwen Theus’ December 21, 2008 27 email to Mr. Hecht and Mr. Barkin concerning the CAMICO 2008-2009 Policy. 28 MU5ICK, PEELER 1029210.1 3 Case No. 3:1 5-cv-O 1207-SI & ARRETT REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S COMPENDIUM OF EXHIBITS IN ATFQINEYSATLW SUPPORT OF MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 3 of 33 1 Exhibit 24 - A true and correct copy of Gwen Theus’ December 29, 2008 2 email to Mr. Hecht and Mr. Barkin concerning the CAMICO 2008-2009 Policy. 3 Exhibit 25 - A true and correct copy of John Hecht’s December 30, 2008 4 email to Ms. Theus concerning the CAMICO 2008-2009 Policy. 5 Exhibit 26 - A true and correct copy of John Hecht’s December 30, 2008 6 email to Ms. Theus concerning the CAMICO 2008-2009 Policy. 7 2. Declaration of David A. Tartagllo 8 Exhibit 27- True and correct copies of pages 13, 14, 19, 24, 26, 34, 41, 50- 9 53, 55, 56, 66, 67, 70-72, 79, 105, 106, 116-118 and Exhibit 41 (marked at the 10 deposition of JoIm Hecht) and Exhibit 54 of the deposition of William Hancock 11 taken on November 10, 2016. 12 Exhibit 28 - True and correct copies of pages 43, 44, 49, 52, 54, 55, 65, 66, 13 68-72, 77, 87, 90, 93, 94-99, 177, 179, 180 and Exhibits 32,34,36 and 37 of the 14 deposition of John Hecht taken on November 4, 2016. 15 Exhibit 29- True and correct copies of pages 39, 66, 68, 74 and Exhibit 11 16 (marked at the deposition of Ron Parisi) of the deposition of Brad Barkin taken on 17 January 10,2017. 18 DATED: January 27, 2017 MUSICK, PEELER & GARRETT LLP 19 20 21 By: Is! David A. Tartaglio David A. Tartaglio 22 Laura K. Kim 23 Attorneys for Defendant and Counter- Claimant CAPvUCO MUTUAL 24 INSURANCE COMPANY 25 26 27 28 MUSICK, PEELER 1029210.1 4 Case No. 3:1 5-cv-0 1207-SI &GARREnLLP REDACTED VERSION OF CAMICO MUTUAL INSURANCE COMPANY’S COMPENDIUM OF EXHIBITS IN ATrORNEThATL4W SUPPORT OF MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 4 of 33 EXHIBIT 1 ENTIRE EXHIBIT REDACTED Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 5 of 33 EXHIBIT 2 ENTIRE EXHIBIT REDACTED 6 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 6 of 33 EXHIBIT 3 ENTIRE EXHIBIT REDACTED 7 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 7 of 33 EXHIBIT 4 ENTIRE EXHIBIT REDACTED 8 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 8 of 33 EXHIBIT 5 ENTIRE EXHIBIT REDACTED 9 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 9 of 33 EXHIBIT 6 ENTIRE EXHIBIT REDACTED I0 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 10 of 33 EXHIBIT 7 ENTIRE EXHIBIT REDACTED 11 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 11 of 33 EXHIBIT 8 ENTIRE EXHIBIT REDACTED 12 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 12 of 33 EXHIBIT 9 ENTIRE EXHIBIT REDACTED ‘3 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 13 of 33 EXHIBIT 10 ENTIRE EXHIBIT REDACTED 14 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 14 of 33 EXHIBIT 11 ENTIRE EXHIBIT REDACTED 15 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 15 of 33 EXHIBIT 12 ENTIRE EXHIBIT REDACTED 16 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 16 of 33 C- en _ _ _ I _ _ _ _ I c - i ) E n [ 4 ) 1 < I I I _ _ H Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 17 of 33 EXHIBIT 14 ENTIRE EXHIBIT REDACTED 18 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 18 of 33 EXHIBIT 15 ENTIRE EXHIBIT REDACTED 19 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 19 of 33 EXHIBIT 16 ENTIRE EXHIBIT REDACTED 20 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 20 of 33 EXHIBIT 17 ENTIRE EXHIBIT REDACTED 2! Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 21 of 33 EXHIBIT 18 ENTIRE EXHIBIT REDACTED 7 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 22 of 33 m _ _ _ _ _ _ _ _ _ r T _ U ( U r i Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 23 of 33 EXHIBIT 20 ENTIRE EXHIBIT REDACTED 24 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 24 of 33 I n ‘ 4 _ C l [ l r T En _ _ )I4 _ _ P1 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 25 of 33 EXHIBIT 22 ENTIRE EXHIBIT REDACTED 26 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 26 of 33 EXHIBIT 23 ENTIRE EXHIBIT REDACTED 27 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 27 of 33 EXHIBIT 24 ENTIRE EXHIBIT REDACTED 28 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 28 of 33 EXHIBIT 25 ENTIRE EXHIBIT REDACTED 29 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 29 of 33 Cen C l [ l r T _ ( U E n _ _ pI l _ _r Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 30 of 33 EXHIBIT 27 ENTIRE EXHIBIT REDACTED 31 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 31 of 33 EXHIBIT 28 ENTIRE EXHIBIT REDACTED 32 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 32 of 33 EXHIBIT 29 ENTIRE EXHIBIT REDACTED 33 Case 3:15-cv-01207-SI Document 81-4 Filed 02/09/17 Page 33 of 33 1 MUSICK, PEELER & GARRETT LLP ATTORNEYS AT lAW 2 ONE WHSI lIRE BOUI.Ii\’AItD, SUITE 2000 LOS ANGELES, C;\LIFO3tNI.\ 90017-3383 IEIJII’I lONE: 213-629-7768 3 FACSIMII.E 213-621-1376 4 David A. Tartaglio (State Bar No. 117232) d.tarta&io(Wrnpglaw.corn Laura K. Kim (State Bar No. 197944) 6 L kirnmpglaw. corn 7 Attorneys for Defendant and Counter-Claimant 8 CAfvIICO MUTUAL INSURANCE COMPANY 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 12 MAYER HOFFMAN McCANN, P.C., Case No. 3:1 5-cv-01 207-SI a Missouri Corporation, 13 (Case assigned to Hon. Susan Iliston) Plaintiff; 14 vs. [PROPOSED1 ORDER GRANTING 15 CAMICO MUTUAL INSURANCE CAIVIICO MUTUAL INSURANCE COMPANY’S MOTION FOR 16 COMPANY, a California Corporation, SUMMARY JUDGMENT 17 Defendant. Filed Concurrently with Notice of 18 Motion and Motionfor Summary Judgment, Declarations of Gwen Thetis, 19 Ricardo Rosario and David Tartaglio, 20 and Compendium ofExhibitsj 21 Date: March3,2017 Time: 9:00 a.m. 22 Crtrm.: I 23 ____________________________________ Trial Date: May 15. 2017 24 25 26 27 28 1029067.1 Case No. 315-cv-O12O7SI PROPOSED ORDER GRANTING CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-5 Filed 02/09/17 Page 1 of 2 i On March 3, 2017 at 9:00 a.m. or as soon thereafter as the matter could be 2 heard, CAMICO Mutual Insurance Company’s Motion for Summary Judgment 3 came on for hearing before the Court. David A. Tartaglio, Musick, Peeler & 4 Garrett, LLP appeared on behalf of Defendant and Counter-Claimant CAiMICO 5 Mutual Insurance Company. Robert Cutbirth, Tucker & ElIlis LLP, appeared on 6 behalfofPlaintiffand Counter-Defendant Mayer Hoffman McCann P.C. 7 After considering the moving, opposing and reply papers and considering oral 8 argument, pursuant to Federal Rules of Civil Procedure Rule 56, the Court 9 determines that there are no triable issue of material fact requiring trial on the merits 10 and CAMICO is entitled to judgment against Plaintiff as a matter of law on the 11 Complaint and on CAMICO’s Counter-Claims. 12 CAMICO is entitled to be reimbursed by Ivfl4M in the amount of 13 $1,450,707.84. 14 IT IS FURTHER ORDERED that: 15 16 17 18 19 20 21 22 IT IS SO ORDERED. 23 24 25 Dated: _________________________ ________________________________________ 26 Susan Iliston Judge of the United States District Court 27 28 MUSICK,PEELER 1029067.1 2 Case No. 3:15-cv-01207-SI& GARRETT LLP PROPOSED ORDER GRANTING CAMICO MUTUAL INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-01207-SI Document 81-5 Filed 02/09/17 Page 2 of 2