# Liberty Mutual Fire Insurance Company v. Bosa Development California II, Inc.

> District Court, S.D. California · April 13, 2020

URL: https://www.frixlaw.com/law-library/cases/10080921

## Case

- **Court:** District Court, S.D. California
- **Decided:** April 13, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
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11 LIBERTY MUTUAL FIRE INSURANCE Lead Case No.: 17-cv-0666-AJB-BGS
COMPANY,
12 ORDER:
Plaintiff,

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v. (1) GRANTING LIBERTY MUTUAL
14 FIRE INSURANCE COMPANY’S
BOSA DEVELOPMENT CALIFORNIA
MOTION FOR SUMMARY
15 II, INC., et al.,
JUDGMENT, (Doc. No. 156);
Defendants.
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(2) DENYING BOSA DEVELOPMENT
17
CALIFORNIA II, INC.’S MOTION
18 FOR PARTIAL SUMMARY
AND RELATED CONSOLIDATED JUDGMENT, (Doc. No. 157); AND
19 ACTION
20 (3) DENYING LIBERTY MUTUAL
FIRE INSURANCE COMPANY’S
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MOTION FOR LEAVE TO FILE A
22 FIRST AMENDED COMPLAINT,
(Doc. No. 166)
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1 Presently before the Court is: (1) Liberty Mutual Insurance Company’s (“Liberty”)
2 motion for summary judgment, (Doc. No. 156); (2) Bosa Development California II, Inc.’s
3 (“Bosa”) motion for partial summary judgment, (Doc. No. 157); and (3) Liberty’s motion
4 for leave to file a First Amended Complaint, (Doc. No. 166). All motions were fully
5 briefed, and the Court held oral argument on December 5, 2019. After the Court heard oral
6 argument, Bosa filed supplemental briefing in support of its motion for partial summary
7 judgment. (Doc. No. 187.) Liberty and the Insurance Company of the State of Pennsylvania
8 (“ICSOP”) opposed the supplemental briefing. (Doc. Nos. 188, 191–192.) For the reasons
9 set forth below, the Court GRANTS Liberty’s motion for summary judgment, DENIES
10 Bosa’s motion for partial summary judgment, and DENIES Liberty’s motion for leave to
11 amend.
12 I. BACKGROUND
13 This case arises out of several defects found in a condominium construction project.
14 The central issue for determination by the Court is how many “occurrences” arose under
15 an applicable insurance policy, and accordingly, how many “deductibles” the insured, Bosa
16 is liable for.
17 Bosa was the developer1 of the Legend condominium project (“the Legend Project”).
18 (Doc. No. 156-1 at 9.) Before Bosa began construction on the Legend Project, Bosa
19 purchased a “wrap-up”2 insurance policy issued by Liberty for all contractors and
20 subcontractors involved in the project (“the Liberty Policy”). (Id. at 10.) The excess
21 insurance policy was issued by ICSOP. (Complaint “Compl.” ¶ 19.)
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1 Bosa was the developer—and not the general contractor—of the Legend Project. (Doc. No. 156-1 at 12.)
25 Bosa did not perform any work on the project. (Id. at 13.) Instead, the general contractor of the Legend
Project was Bosa Development California I, Inc. (“Bosa I”). Bosa I was not a named insured on the
26 applicable insurance policy at issue here. (Id.)
2 As defined by Cal. Ins. Code § 11751.82, “a ‘wrap-up insurance policy’ is an insurance policy, or series
27 of policies, written to cover risks associated with a work of improvement, as defined in Section 8050 of
the Civil Code, and covering two or more of the contractors or subcontractors that work on that work of
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1 A. The Liberty Policy and the ISCOP Policy
2 The Liberty Policy provides that the amount Liberty will pay for “bodily injury” and
3 “property damage” is limited to $2,000,000 for each “occurrence,” subject to a total
4 aggregate limit for all damages within the “products/completed operations hazard” of
5 $4,000,000. (Id. ¶ 24.) The Liberty Policy also required Bosa to pay a $500,000 deductible
6 for each “occurrence.” (Id.) The Liberty Policy defines an “occurrence” as “an accident,
7 including continuous repeated exposure to substantially the same general harmful
8 conditions.” (Id. ¶ 25.)
9 The ISCOP Excess Policy sits excess, and follows form to the Liberty Policy,
10 providing $15,000,000 for each occurrence/aggregate. (Doc. No. 156-1 at 12.)
11 B. The Legend Project and Subsequent Lawsuits
12 Bosa, as the developer of the project, hired several subcontractors to perform work
13 on the Legend Project. (Id. at 13.) In its agreement with the subcontractors, Bosa
14 disclaimed responsibility for supervising the subcontractor’s work, and required each
15 subcontractor to enroll in the Liberty Policy. (Id.)
16 On February 12, 2012, the homeowners of the Legend condominium building, “The
17 Legend Condominium Association” (“the Association”), provided notice to Bosa of
18 various construction and engineering defects. (Compl. ¶ 29.) The defects included: (1)
19 defective installation of exterior concrete flatwork, planters, canopies, balconies, and
20 waterproofing, resulting in water damage; (2) defective installation of plumbing and
21 HVAC; and (3) improper selection of materials such as cast iron piping and an Eccoduct
22 In-Slab Duct Ventilation System. (Doc. No. 156-1 at 29.)
23 On March 16, 2015, the Association filed suit against Bosa (“the underlying Legend
24 Action”) seeking damages for these defects in San Diego Superior Court. (Compl. ¶ 30;
25 Doc. No. 157-1 at 21.) On September 10, 2015, Bosa filed a cross-complaint against
26 various subcontractors, arguing the subcontractors caused the harm alleged against Bosa.
27 (Compl. ¶ 31.) Then on December 2, 2015, after the filing of the complaint, the Association
28 provided additional notices to Bosa regarding newly-discovered deficiencies at the Legend
1 Project. (Id. ¶ 32.) In May 2016, the Association sent an additional notice of defects to
2 Bosa. (Doc. No. 156-1 at 17.)
3 In response to Bosa’s and the subcontractors’ tenders, Liberty agreed to defend Bosa
4 and the subcontractors in the underlying Legend Action pursuant to the terms and
5 conditions of the Liberty Policy, subject to a reservation of rights. (Compl. ¶ 33.) Once all
6 of the claims had been made, Liberty originally determined that there were as many as 12
7 claims comprising of 11 occurrences for which Bosa owed separate deductibles of up to
8 $500,000 each. (Doc. No. 157-1 at 22.) Starting at least by January 15, 2016, Bosa
9 challenged Liberty’s position, and maintained that Bosa’s supervision of the project
10 constituted one occurrence, and thus it was only liable for one $500,000 deductible. (Id.)
11 The Association eventually settled their claims against Bosa and the subcontractors
12 in the underlying Legend Action. (Doc. No. 156-1 at 17.) In the settlement, Liberty paid
13 the full $4,000,000 aggregate limit. (Id.)
14 II. PROCEDURAL HISTORY
15 On April 3, 2017, Liberty filed a complaint for declaratory relief in this Court against
16 Bosa, ISCOP, and various other defendants. (Doc. No. 1.) Liberty’s complaint sought a
17 judicial declaration that there were multiple occurrences for which Bosa is liable for in the
18 underlying Legend Action in San Diego Superior Court. (Id.) On the same day, Bosa filed
19 a complaint against Liberty in San Diego Superior Court. Bosa’s complaint includes,
20 among other things, a claim for declaratory relief. Bosa’s action was then removed to this
21 Court on May 8, 2017. (See Bosa Development California, Inc. et al. v. Liberty Mutual
22 Fire Insurance Company et al., Case No. 19-cv-01847-AJB-BGS, Doc. No. 1.) Bosa’s
23 action and Liberty’s action were consolidated in this Court, and Liberty’s action was
24 designated as the lead case. (Doc. No. 48.)3
25

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3 On September 25, 2019, a third related case between the parties was filed in this Court. (See Liberty
27 Mutual Fire Insurance Company v. Bosa Development California II, Inc. et al., 19-cv-01847-AJB-BGS.)
In that case, Liberty seeks monetary relief from both Bosa, and the excess insurer, ISCOP if it is
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1 On August 16, 2019, Liberty filed a motion for summary judgment, (Doc. No. 156),
2 and Bosa filed a motion for partial summary judgment, (Doc. No. 157.) The cross-motions
3 for summary judgment were fully briefed on September 20, 2019. On September 24, 2019,
4 Liberty filed a motion for leave to file a First Amended Complaint. (Doc. No. 166.) That
5 motion was fully briefed on November 27, 2019.
6 On December 5, 2019, the Court heard oral argument on the cross-motions for
7 summary judgment and motion for leave to file a First Amended Complaint. Then on
8 January 21, 2020, Bosa filed supplemental briefing regarding the issues raised at oral
9 argument. (Doc. No. 187.) Both Liberty and ISCOP opposed the supplemental briefing.
10 (Doc. Nos. 188, 191–192.) This order follows.
11 III. REQUESTS FOR JUDICIAL NOTICE
12 Federal Rule of Evidence 201(b) permits judicial notice of a fact when it is “not
13 subject to reasonable dispute because it: (1) is generally known within the trial court’s
14 territorial jurisdiction; or (2) can be accurately and readily determined from sources whose
15 accuracy cannot reasonably be questioned.” Welk v. Beam Suntory Imp. Co., 124 F. Supp.
16 3d 1039, 1041–42 (S.D. Cal. 2015).
17 A. Bosa’s Request for Judicial Notice
18 Bosa requests judicial notice of “the pleadings, papers and proceedings to date in the
19 underlying Legend Action entitled The Legend Condominium Association, etc. v. Bosa
20 Development California II, Inc., etc., et al., currently pending [in] the Superior Court of
21 the State of California for the County of San Diego, Central Divisions, Case No. 37-2015-
22 00008869-CU-COCTL.” (Doc. No. 162-2 at 2.) Specifically, Bosa asks the Court to take
23 judicial notice of (1) the Register of Actions, (2) the plaintiffs’ request for dismissal in the
24 underlying Legend Action, (3) the Superior Court’s minute order staying the underlying
25 Legend Action, (4) the Superior Court’s minute order vacating the trial date and the trial
26 readiness conference, and (5) the fact that Bosa’s cross-complaint in the Legend Action
27 remains at issue, and has not yet been adjudicated. (Id. at 2–3.) Liberty does not oppose
28 Bosa’s requests for judicial notice.
1 B. Liberty’s and ISCOP’s Request For Judicial Notice
2 Additionally, Liberty and ISCOP both seek judicial notice of the dismissal and
3 certification orders in the action, Lexington Ins. Co. v. Ill. Union Ins. Co., Case No. A-12-
4 668035-C (8th Jud. Dist. Ct. Clark Cnty., Nev.) and related appeals in Lexington Ins. Co.
5 v. Illinois Union, Nevada Supreme Court, Case No. 72047. (Doc. Nos. 188, 191, 194.)
6 A court has authority to take judicial notice that certain proceedings occurred, but a
7 court may not take “judicial notice of disputed facts stated in public records.” Perdue v.
8 Rodney Corp., No. 13CV2712-GPC BGS, 2014 WL 3726700, at *4 (S.D. Cal. July 25,
9 2014). As such, the Court GRANTS Bosa, Liberty, and ISCOP’s request to the extent they
10 seek judicial notice that certain proceedings occurred in San Diego Superior Court and
11 Nevada state court. See ReadyLink Healthcare, Inc. v. State Comp. Ins. Fund, 754 F.3d
12 754, 756 n.1 (9th Cir. 2014) (granting request for judicial notice of state court proceedings).
13 IV. BOSA AND LIBERTY’S CROSS-MOTIONS FOR SUMMARY JUDGMENT
14 A. Legal Standard and Burden of Proof
15 Before turning to the merits of the cross-motions, the Court will first address the
16 applicable legal standard, and the arguments as to which party bears the burden of proof.
17 Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is
18 proper when the “pleadings, depositions, answers to interrogatories, and admissions on file,
19 together with the affidavits, if any, show that there is no genuine issue as to any material
20 fact and the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
21 56(c). Entry of summary judgment is proper “against a party who fails to make a showing
22 sufficient to establish the existence of an element essential to that party’s case, and on
23 which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S.
24 317, 322 (1986). The moving party has the initial burden of “identifying those portions of
25 the pleadings, depositions, answers to interrogatories, and admissions on file, together with
26 the affidavits, if any, “which it believes demonstrate the absence of a genuine issue of
27 material fact.” Celotex, 477 U.S. at 323.
28 If a moving party carries its burden of production, the nonmoving party must
1 produce evidence to support its claim or defense. See Nissan Fire & Marine Ins. Co., Ltd.
2 v. Fritz Cos, Inc., 210 F.3d 1099, 1103 (9th Cir. 2000). Rule 56(e) requires “the nonmoving
3 party to go beyond the pleadings and by her own affidavits, of by the ‘depositions, answers
4 to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a
5 genuine issue for trial.’” Celotex, 477 U.S. at 324. The nonmoving party cannot “rest upon
6 mere allegations or denials of his pleadings.” Anderson v. Liberty Lobby, Inc., 477 U.S.
7 242, 256 (1986).
8 The mere existence of some factual dispute between the parties will not defeat an
9 otherwise properly supported motion for summary judgment; the requirement is that there
10 be no genuine issue of material fact. Anderson, 477 U.S. at 247–48. “Summary judgment
11 will not lie if the dispute about a material fact is ‘genuine,’ that is, if the evidence is such
12 that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S.
13 at 248. The inquiry is whether “the evidence presents a sufficient disagreement to require
14 submission to a jury or whether it is so one-sided that one party must prevail as a matter of
15 law.” Id. at 251–52. The evidence of the non-movant is to be believed, and all justifiable
16 inferences are to be drawn in his favor. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158–
17 59 (1970).
18 “When parties submit cross-motions for summary judgment, ‘[e]ach motion must be
19 considered on its own merits.’” Fair Housing Council of Riverside Cnty., Inc. v. Riverside
20 Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (quotations and citations omitted). The Court
21 must review the evidence submitted in support of each cross-motion and determine whether
22 disputed issues of material fact are present, even if both parties assert that there are no
23 uncontested issues of material fact. Id.; see also United States v. Fred A. Arnold, Inc., 573
24 F.2d 605, 606 (9th Cir. 2000). If, however, the cross-motions are before the court at the
25 same time, the court is obliged to consider the evidence proffered by both sets of motions
26 before ruling on either one. Fair Housing Council of Riverside Cnty., Inc., 249 F.3d at
27 1134.
28 As a preliminary matter, the parties disagree as to who has the burden of persuasion
1 at trial on the central issue of the litigation—the number of occurrences that arose from the
2 construction defects. Under California law, the insured has the initial burden of showing
3 that an event should be covered under an applicable insurance policy. See Whittaker Corp.
4 v. Allianz Underwriters, Inc., 11 Cal. App. 4th 1236, 1244 (1992). Once an event has been
5 shown to fall within the scope of coverage, the burden shifts to the insurer to demonstrate
6 that an exclusion or limitation applies to exclude coverage. See Essex Ins. Co. v. City of
7 Bakersfield, 154 Cal. App. 4th 696, 705 (2007).
8 The parties point to each other as to who bears the burden of persuasion on the
9 number of occurrences. Liberty contends Bosa—as the insured—has the burden to
10 establish that the “occurrence forming the basis of its claim is within the basic scope of
11 insurance coverage.” Aydin Corp. v. First State, 18 Cal. 4th 1183, 1188 (1998). Liberty
12 argues that because Bosa bears the burden of showing that an occurrence is covered, Bosa
13 also bears the ultimate burden of persuasion at trial on its claim that there was a single
14 occurrence. (Doc. No. 156-1 at 20.) Bosa, on the other hand, argues Liberty—as the
15 insurer—has the burden of persuasion on the number of occurrences because insurers
16 generally have the burden to establish exclusion to coverage. (Doc. No. 157-1 at 20.) Bosa
17 reasons that the determination of how many occurrences affects the number of deductibles
18 Bosa is liable for, and deductibles should be considered a limitation to coverage. (Id.)
19 The Court agrees Liberty carries the burden of persuasion as to the number of
20 occurrences. Here, the preliminary question of “whether an occurrence is within the scope
21 of coverage” is not in dispute. (Doc. No. 157-1 at 31 n.9; Doc. No. 162 at 13.) As noted by
22 Bosa, “any burden borne by Bosa to prove the existence of an occurrence triggering
23 coverage under the Legend Policy has been met.” (Doc. No. 162 at 13.) Indeed, Liberty
24 has paid $4,000,000 to settle the Legend claims, and neither party disputes the coverage.
25 (Id.) Thus, the burden is on Liberty to prove that there was not only one occurrence, but
26 actually multiple occurrences, to recoup multiple deductibles as a limitation to coverage.
27 See Whittaker Corp., 11 Cal. App. 4th at 1243 (“[T]he number of occurrences for
28 purposes of applying coverage limitations is determined by referring to the cause or causes
1 of the damage and not to the number of injuries or claims. . .”) (emphasis added).
2 Additionally, the Court finds that there is authority supporting the contention that it is the
3 insurer who bears the burden of persuasion on the issue of the number of occurrences. See
4 Evanston Ins. Co. v. Ghillie Suits.com, Inc., No. C 08-2099 JF (HRL), 2009 WL 734691,
5 at *8 (N.D. Cal. Mar. 19, 2009) (“[T]he court found that the insurer had not met its burden
6 of showing that there had been only one occurrence. . . .”); Golden Eagle Ins. Corp. v.
7 Moon Marine (U.S.A.) Corp., No. 3:12-CV-05438-WHA, 2013 WL 12174693, at *4 (N.D.
8 Cal. Nov. 15, 2013) (insurance carrier failed to establish a single occurrence on summary
9 judgment). As such, the Court holds that it is Liberty who has the ultimate burden of
10 persuasion at trial concerning the number of occurrences under the Liberty Policy. Afterall,
11 it is Liberty who seeks to establish multiple occurrences giving rise to Bosa’s liability for
12 three deductibles as a limitation on coverage so Liberty can recoup another $1 million
13 above the first $500,000 deductible paid to settle the underlying claims.
14 B. Discussion
15 Because the cross-motions for summary judgment request adjudication of the same
16 issue and contain arguments common to both, the Court will address the motions together,
17 giving due merit to each motion. See Schutza v. City of San Diego, No.
18 313CV2992CABKSC, 2016 WL 11621283, at *2 (S.D. Cal. June 29, 2016).
19 The basic facts underlying this action are not in dispute. The central issue presented
20 in both motions for summary judgment is whether there was only one “occurrence” under
21 the Liberty Policy, and accordingly whether Bosa is only liable for one deductible. Liberty
22 seeks summary judgment on its single claim for declaratory relief, requesting an order that
23 there were three, or at least three “occurrences” as a matter of law. (Doc. No. 156-1 at 9.)
24 Liberty argues there were at least three, discrete events that caused the damage at the
25 Legend condominium: (1) the alleged defective installation of exterior concrete flatwork,
26 planters, canopies and balconies, and waterproofing; (2) the alleged defective installation
27 of interior plumbing and the HVAC system; and (3) the alleged negligent selection of
28 materials, namely pipes and an Eccoduct system. (Doc. No. 156-1 at 26.)
1 Bosa, on the other hand, seeks partial summary judgment as to Liberty’s single claim
2 for declaratory relief, and Bosa’s claim for declaratory relief.4 Bosa seeks a judicial
3 declaration that Bosa is liable for no more than one $500,000 deductible for the one
4 “occurrence” arising out of its negligent development and supervision of the Legend
5 Project. (Doc. No. 157-1 at 9.)
6 1. The Proper Application of the Causation Test
7 The parties’ extensive briefing on the cross-motions for summary judgment focuses
8 almost entirely on a single question of law. The parties agree that as a matter of law, the
9 proper application of the “causation test” governs the determination of the number of
10 “occurrences” under an insurance policy. (See Doc. No. 156-1 at 21; Doc. No. 157-1 at
11 27.) The parties disagree, however, on how the test works and how it should be applied.
12 Under California law, the causation test states that the number of occurrences under
13 an insurance policy depends on the cause of injury rather than the number of injurious
14 effects or harms. See State Farm Fire & Cas. Co. v. Elizabeth N., 9 Cal. App. 4th 1232,
15 1236 (1992). Indeed, an “occurrence has generally been held to mean the underlying cause
16 of the injury, rather than the injury or claim itself; otherwise, the insurer’s effort to limit its
17 liability per occurrence would be substantially weakened.” Whittaker Corp., 11 Cal. App.
18 4th at 1242. However, when a cause is interrupted, or when there are several autonomous
19 causes, there are multiple “occurrences” for purposes of determining policy limits and
20 assessing deductibles. Caldo Oil Co. v. State Water Resources Control Bd., 44 Cal. App.
21 4th 1821, 1828 (1996). Therefore, the critical fact supporting a finding of multiple
22 occurrences is whether there are different causal conditions. Id.
23 Liberty argues there were multiple occurrences because there were multiple, discrete
24 events that caused the damage to the condominium building. Specifically, Liberty’s
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4 Bosa’s complaint asserts claims for relief for (1) breach of written contract, (2) declaratory relief, (3)
27 breach of implied covenant of good faith and fair dealing, (4) fraud, (5) conversion, (6) civil theft, (7)
unlawful and fraudulent business practices under California Business and Professions Code § 17200, (8)
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1 position is that different subcontractors worked on different areas of the building, and those
2 different subcontractors caused different damage to the condominium building. (Doc. No.
3 156-1 at 22.) Bosa, however, asserts that there was only one occurrence because the
4 damage was the result of a single event—its own negligent supervision of the
5 subcontractors. (Doc. No. 157-1 at 9.)
6 An analysis of case law helps shed light on how the causation test should be applied.
7 For example, in Landmark Am. Ins. Co. v. Liberty Surplus Ins. Corp., No.
8 CV1210728MWFJEMX, 2014 WL 12558121 (C.D. Cal. Apr. 9, 2014), the district court,
9 applying the causation test under California law, addressed the question of whether
10 multiple occurrences arose in a construction defect case. Id. at *5. The excess insurers in
11 that case argued that there were two occurrences—the defective installation of: (1) window
12 systems and sliding glass doors, and (2) glass handrails along the second and third floor
13 balconies. Id. The defective window installation resulted in water leakage due to a failure
14 to properly apply sealant and failure to properly integrate the window and door systems.
15 Id. In contrast, on the guard rails, the builders allegedly improperly installed lag screws
16 attached to clips fastened to the deck structure, which penetrated the waterproofing
17 elements of the rails and substrates. . . .” Id.
18 The primary insurers in Landmark, argued that there was only one occurrence
19 because “both of the alleged defects were installed by the same company on the same
20 property pursuant to the same contract.” Id. at *6. The Landmark court disagreed. In
21 applying the causation test, the Landmark court reasoned that if a “general negligent
22 approach to its construction projects” were sufficient to make multiple occurrences a single
23 occurrence, then there would “rarely be multiple ‘occurrences’ under the policies.” Id. The
24 Landmark court held that “[d]istinct accidents caused by distinct defects in distinct areas
25 of the property cannot be treated as a single occurrence under California law.” Id. The
26 Landmark court explained that the defects in the windows and doors were generally the
27 result of the same causal conditions—failure to appropriately apply sealant and integrate
28 the systems. Id. at *6. And the defects in the handrails, by contrast, were caused by fully
1 distinct conditions in a fully distinct area of the property. Id. The water intrusion from the
2 handrails was caused by physical penetrations into the waterproofing systems. That cause
3 was not at all similar to the failure to properly integrate the window and door systems and
4 the improper application of sealant. Id.
5 Similarly, in St. Paul Fire & Marine Ins. Co. v. Ins. Co. of the State of Pennsylvania,
6 No. 15-CV-02744-LHK, 2017 WL 897437 (N.D. Cal. Mar. 7, 2017), the court resolved
7 the question of whether there was a single occurrence or multiple occurrences as a matter
8 of law in a construction defect suit. Id. at *22. St. Paul involved construction defects to 17
9 student dormitories constructed by various subcontractors. Id. at *1. The alleged defects
10 were found in (1) the interior drywall, and (2) the exterior stucco work. Id. After settling
11 the underlying construction defect claim, the primary insurer sought contribution from the
12 excess insurers. Id. at *4. The excess insurers argued there was only one occurrence. Id. at
13 *21. They maintained that the defects were not caused by “separate installation defects, but
14 are both caused by the negligent supervision.” Id. at *23. Applying the causation test, the
15 St. Paul court rejected the excess insurers’ position. The court held that “there is no
16 evidence that the defective stucco installation was caused by the same type of actions as
17 the interior defective green board installation or vice versa. Indeed, the record shows that
18 completely different individuals did the work and different foremen supervised the exterior
19 and interior work.” Id. at *22.
20 Bosa, on the other hand, relies heavily on a Massachusetts appellate court opinion,
21 RLI Ins. Co. v. Simon’s Rock Early College, 54 Mass. App. Ct. 286 (2002) for the
22 proposition that “when the issue is the number occurrences, we must look to the ‘cause’ of
23 the injury by reference to the conduct of the insured for which coverage is afforded.” Id. at
24 290 (emphasis added). The Simon’s Rock case arose from a shooting spree by a college
25 student who killed two and injured four. Id. at 287. The victims and their families alleged
26 liability on the part of the college based on negligent supervision of the student shooter. Id.
27 at 295. Prior to the shooting, the college learned the shooter had firearms on campus in
28 violation of school policy, confronted the student, but did not search his dorm room or
1 seize the weapons. Id. at 289–90. The first issue was whether the cause of the incident was
2 the shooter or the negligent supervision of the college for the purposes of the causation test.
3 The second issue was whether there was one occurrence—the general negligent
4 supervision by the school—or whether there were multiple occurrences, i.e., the failure to
5 search the shooter’s room, to confiscate his weapons, to call the shooter’s parents, to call
6 the police. Id. at *295. The court held that “it is with reference to the conduct of the college
7 and its employees that we now determine the question of the number of occurrences under
8 [the primary insurer’s] policy of insurance.” Id. at 293–94. Focusing on the college’s
9 conduct, rather than the student who had pulled the trigger, the court held that the college’s
10 negligence was the sole cause of the college’s liability such that there was only one
11 occurrence. Id. at *296.
12 Bosa extends the reasoning of Simon’s Rock to say that “Bosa’s alleged negligent
13 supervision is a single, proximate and continuous cause of all damage alleged at the
14 Legend. Once coverage for Bosa’s liability was triggered based on allegations of negligent
15 supervision of all operations on the Legend Project, there is no reason to look any further
16 back in the chain of causation.” (Doc. No. 162 at 18.) Bosa uses Simon’s Rock, and similar
17 cases, to focus the causal event on the insured, Bosa, and not on the subcontractors
18 responsible for the actual construction of the Legend Project. But the Court finds Simon
19 Rock’s and similar cases cited by Bosa inapposite because those cases addressed instances
20 where the injury arose out of clearly non-covered conduct by intentionally inflicted
21 injuries. In the cases cited by Bosa, the courts had to focus on the insured because
22 otherwise, the causal event would be the intentional tortfeasor. See, e.g., Simon’s Rock, 54
23 Mass. App. Ct. at 292 (“[A]s we conclude, in the matter at hand, it is an insured’s actions
24 or failures to act (here the alleged negligence) and not the deliberate acts of a wrongdoer
25 that constitute the “cause” of the victims’ injuries.”); World Trade Ctr. Properties, L.L.C.
26 v. Hartford Fire Ins. Co., 345 F.3d 154 (2d Cir. 2003), abrogated by Wachovia Bank v.
27 Schmidt, 546 U.S. 303 (2006) (addressing issue of whether the two separate planes in
28 September 11th terrorist attack constituted one or two “occurrences”). This is not the case
1 here where both Bosa and the subcontractors were named in the Liberty Policy, and the
2 actions alleged to have resulted in the damage to the Legend Project were acts of
3 negligence.
4 All in all, the Court finds Bosa’s position that there was merely one occurrence
5 unpersuasive. As Liberty explains, the undisputed facts show there were three occurrences.
6 First, the negligent installation of concrete flatwork, balconies, and waterproofing by
7 subcontractors Peter Ross, Starline Windows, and Newway led to water damage
8 throughout the Legend condominium building. (Doc. No. 156-1 at 26.) Second, the
9 defective installation of plumbing by a subcontractor, William Kelly, led to various damage
10 through the building. (Id. at 29.) Specifically, chilled water piping insulation was not
11 properly installed resulting in condensation, leaks, and eventually corrosion of the pipes.
12 (Id.) In some areas, the plumbing was not properly sloped, and caused sewage backups and
13 improper drainage. (Id. at 28–29.) And third, the improper selection of cast iron piping and
14 Eccoduct in-slab dryer vent systems was another occurrence as the materials selected were
15 inherently defective. (Id. at 30.)
16 Here, there is no showing that the “negligent supervision” of the waterproofing that
17 allegedly caused the water damage is the same as the “negligent supervision” that caused
18 the improper installation of plumbing, or the improper selection of materials. In fact, Bosa
19 fails to produce any evidence that it was negligent as a developer of the project at all.
20 Indeed, as Liberty highlights, Bosa argued in the underlying Legend Action in state court
21 that it was not and cannot be negligent because it disclaimed all liability for construction
22 defects. (Doc. No. 156-1 at 31.) Bosa even filed a cross-complaint against the various
23 subcontractors, arguing the subcontractors caused the harm alleged against Bosa. (Compl.
24 ¶ 31.)
25 Further, the allegations here—that the harms were caused by Bosa’s “general
26 negligent approach” to supervising construction projects are analogous to Landmark and
27 St. Paul. Landmark, 2014 WL 12558121 at *5. As the Landmark court illuminated, such
28 an interpretation would mean that there would never be more than a single occurrence in
1 the course of a single construction project, no matter how disparate the harms. Id.; see also
2 Ins. Co. of N. Am. v. Nat’l Am. Ins. Co., 37 Cal. App. 4th 195, 206 (1995) (“In this case,
3 however, there was not a ‘single cause.’ Buildings 4 through 6 were not damaged because
4 of the work done on buildings 1 through 3, but instead were damaged by the work done on
5 buildings 4 through 6.”); AIG Specialty Ins. Co. v. Liberty Mut. Fire Ins. Co., No.
6 217CV01260APGNJK, 2018 WL 1863056, at *4 (D. Nev. Apr. 18, 2018) (“Such an
7 interpretation in the context of a complex construction project would make almost all
8 construction defects a single occurrence because the insurer could simply characterize them
9 all as a . . . failure to adequately supervise subcontractors, regardless of the dissimilarities
10 in time, space, impact to different parts of the project, or bases of liability.”). Under Bosa’s
11 interpretation of the insurance policy, there would never be more than one occurrences.
12 This cannot be the case as the policy clearly contemplates multiple occurrences by its
13 definition of what constitutes an occurrence. As such, the Court will not take such an
14 expansive view of an “occurrence” in this construction defect context.5
15 The supplemental authority submitted by Bosa does not compel a contrary
16 conclusion. (Doc. No. 187.) Bosa submits supplemental case law to bolster its argument
17 that even under “wrap policies”—where multiple subcontractors are also insured along
18 with the developer—there is still one occurrence from the perspective of the developer. (Id.
19 at 7.) But Bosa’s first problem is one of the cases it cites to the Court is a vacated,
20 unpublished Nevada state trial court ruling that the Court may not consider. Durning v.
21 Citibank, N.A., 950 F.2d 1419, 1424 n.2 (9th Cir. 1991) (“A decision may be reversed on
22

23
5 Bosa also offers two other similar disputes between Bosa and Liberty on different condominium projects
24
to demonstrate the parties’ course of dealings. In those two projects, Bosa claims Liberty advised Bosa’s
25 outside coverage counsel that they would treat claims asserted under similar circumstances as one single
occurrence, i.e., Bosa’s negligent supervision of construction. (Doc. No. 157-1 at 17–20.) But having
26 determined the meaning of occurrence as relevant under California law, the Court need not look further
into the course of dealings between the two parties, and need not address Bosa’s arguments attempting to
27 create a dispute of immaterial fact because those projects do not relate to the Legend Project. See T.W.
Elec. Serv., Inc., 809 F.2d 626, 630 (9th Cir. 1987) (“Disputes over irrelevant or unnecessary facts will
28
1 other grounds, but a decision that has been vacated has no precedential authority
2 whatsoever.”).
3 And second, the other case Bosa provides, the Park Terrace case, is a distinguishable
4 and unpublished California state trial court case. See Park Terrace Dev. LP v. AIG
5 Specialty Ins. Co., No. 37-2014-00020075-CU-IC-CTL. Even if this case were citable, it
6 is not clear Park Terrace even supports Bosa’s position. In Park Terrace, the San Diego
7 Superior Court held that bodily injury claims alleged in one lawsuit and construction defect
8 claims alleged in another lawsuit both resulted from defects in a building’s plumbing
9 system and were caused by the same occurrence—the general contractor’s negligent
10 supervision. (Doc. No. 187-1 at 25–26.) But the Superior Court did not purport to hold that
11 when applying the causation test under a wrap policy, courts must look from the
12 perspective of the developer or general contractor. In fact, it did not even mention the wrap
13 policy. In any event, the facts of Park Terrace are also distinguishable because the case
14 involved defects arising from the building’s plumbing system. By contrast, here, the
15 problems with the construction were not limited to one area. Instead, the defects may be
16 grouped into three distinct problematic areas: (1) the defective installation of materials
17 leading to water intrusion, (2) defective installation of plumbing/HVAC, and (3) defective
18 selection of materials. See Ins. Co. of N. Am., 37 Cal. App. 4th at 206 (“In this case,
19 however, there was not a ‘single cause.’ Buildings 4 through 6 were not damaged because
20 of the work done on buildings 1 through 3, but instead were damaged by the work done on
21 buildings 4 through 6.”). Thus, these supplemental authorities do not help Bosa’s cause.
22 * * *
23 In summation, neither party has shown a dispute of material fact. Bosa has failed to
24 establish that it is entitled to partial summary judgment as a matter of law. Liberty, on the
25 other hand, has satisfied its burden in proving that there were three occurrences. Therefore,
26 the Court DENIES Bosa’s motion for partial summary judgment, and GRANTS Liberty’s
27 motion for summary judgment.
28 //
1 I. LIBERTY’S MOTION FOR LEAVE TO FILE A FIRST AMENDED
COMPLAINT
2
Next, the Court will address Liberty’s motion for leave to amend. Liberty seeks leave
3
to file a First Amended Complaint after the close of discovery, and after the filing of its
4
motion for summary judgment, in order to add two new claims. (Doc. No. 166-1.) The
5
claims Liberty seeks to add are: (1) “Quasi-Contract/Unjust Enrichment/Reimbursement”
6
against Bosa; and (2) “Equitable Indemnity” against ICSOP, the excess insurer. (Doc. No.
7
166-3 at 10–11.) Bosa and ISCOP opposes Liberty’s motion. (Doc. Nos. 168–169.) For the
8
9
following reasons, the Court DENIES Liberty’s motion for leave to file a first amended
complaint.
10
11 A. Standard of Review
12 Whether leave to amend a pleading should be granted is governed by Federal Rule
13 of Civil Procedure 15 which provides that “leave to amend shall be freely given when
14 justice so requires.” Fed. R. Civ. P. 15(a)(2). Specifically, the Ninth Circuit has instructed
15 that this policy “be applied with extreme liberality.” Owens v. Kaiser Found. Health Plan,
16 Inc., 244 F.3d 708, 712 (9th Cir. 2001) (citations omitted). Despite the policy of
17 “liberality,” leave to amend is not automatic if sought outside of the time limits set forth in
18 Rule 15(a)(1). In such instances, courts consider the following factors in determining
19 whether to grant leave to amend: (1) whether the party seeking the amendment has acted
20 in bad faith; (2) whether undue delay will result from amendment; (3) whether the opposing
21 party will be unduly prejudiced; and (4) whether amendment would be futile. Foman v.
22 Davis, 371 U.S. 178, 182 (1962); see also Smith v. Pac. Prop. Dev. Co., 358 F.3d 1097,
23 1101 (9th Cir. 2004). The consideration of undue prejudice to the opposing party carries
24 the greatest weight. Id.; DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir.
25 1987).
26 B. Request for Judicial Notice
27 Relevant to this motion, Bosa requests judicial notice of the complaint for
28 declaratory relief, and “Order Granting Joint Motion to Continue Discovery Deadlines and
1 Setting Telephonic Status Conference Regarding Settlement” entered August 28, 2018 in
2 this instant matter, Case No. 3:17-cv-0666-AJB-BGS. (Doc. No. 181-2 at 2.) Bosa also
3 requests judicial notice of the docket, complaint, Bosa’s motion to dismiss, and Liberty’s
4 opposition to the motion to dismiss in the case Liberty Mutual Fire Insurance Company v.
5 Bosa Development California II, Inc. et al., Case No. 3: 19-cv-01847-AJB-BGS, pending
6 before this Court.
7 Because the Court need not take judicial notice of filings in its own docket or
8 decisions it has previously issued in order to consider those documents, the Court DENIES
9 Bosa’s request for judicial notice. See Tuan Nguyen v. Aurora Loan Servs., LLC, No.
10 SACV111638AGANX, 2011 WL 13234276, at *2 (C.D. Cal. Dec. 5, 2011).
11 C. Discussion
12 Liberty first filed its initial complaint on April 3, 2017, asserting a single cause of
13 action for declaratory relief—in particular, a declaration from this Court that multiple
14 occurrences arose from the underlying Legend Action. (Doc. No. 1.) Liberty’s single cause
15 of action did not mention a prayer of relief for monetary damages. (Id.) On September 29,
16 2017, Liberty paid its full $4,000,000 aggregate limits to settle the underlying Legend
17 Action. (Doc. No. 166-1 at 3.) Then, over two years later, on September 24, 2019, Liberty
18 filed this motion for leave to amend to add causes of action for monetary relief. (Doc. No.
19 166.) Liberty’s primary position is that monetary relief is inherent in its original complaint
20 for declaratory relief even if not expressly stated. However, Liberty explains it is moving
21 for leave to amend “out of an abundance of caution” to avoid claims of lack of notice that
22 Liberty would seek reimbursement for any amount it overpaid, and any statute of limitation
23 issues. (Doc. No. 166-1 at 2.)
24 The Declaratory Judgment Act permits “declaratory judgment [to] be used as a
25 predicate to further relief.” 28 U.S.C. § 2202. After a declaratory judgment, “[i]f further
26 relief becomes necessary at a later point . . . both the inherent power of the court to give
27 effect to its own judgment, and the Declaratory Judgment Act, 28 U.S.C. § 2202, would
28 empower the district court to grant supplemental relief, including injunctive relief.” Rincon
1 Band of Mission Indians v. Harris, 618 F.2d 569, 575 (9th Cir. 1980) (citations omitted).
2 Liberty asserts that this “further relief” includes the award of damages even if this
3 request was not specifically asserted in a plaintiff’s original complaint. (Doc. No. 166-1 at
4 5.) Liberty seeks to amend its complaint to add two causes of action for monetary relief.
5 Liberty’s position is if the Court holds there were multiple occurrences on summary
6 judgment, Bosa clearly failed to pay multiple deductibles and owes Liberty reimbursement.
7 Liberty’s alternative position is if the Court holds that there was only a single occurrence
8 on summary judgment, then Liberty overpaid by paying its full $4,000,000 aggregate limits
9 when it should have instead only paid one per-occurrence limit of $2,000,000. (Doc. No.
10 166-1 at 8.) Thus, Liberty would seek indemnity against ISCOP.
11 As a preliminary matter, Liberty’s motion should be denied because the day after
12 Liberty filed this instant motion, Liberty filed a separate action in this Court, asserting two
13 causes of action that are identical to the two claims sought to be added here against ISCOP
14 and Bosa. See Liberty Mutual Fire Insurance Company v. Bosa Development California
15 II, Inc., et al., Case No. 19-cv-01847-AJB-BGS, (S.D. Cal. Sept. 25, 2019). That case has
16 been designated as related to this instant matter, and there is now a fully briefed motion to
17 dismiss. Thus, Liberty will not suffer any prejudice because any claims of statute of
18 limitation problems is preserved by the filing of the new action pending before this Court.
19 The new action obviates the need for Liberty’s motion for leave to amend entirely.
20 In any event, there are multiple other grounds to deny Liberty’s motion for leave to
21 amend. First, the defendants would suffer undue prejudice if Liberty’s motion is permitted.
22 Liberty’s original complaint was filed approximately three years ago, fact discovery closed
23 on December 3, 2018, expert discovery closed on February 14, 2020, and the parties have
24 already conducted expert depositions. (Doc. No. 87.) Indeed, permitting an amendment at
25 this point of the litigation, after motions for summary judgment have been fully briefed,
26 would indeed prejudice Bosa and ISCOP because discovery would have to be re-opened
27 for the two new claims. See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir.
28 1990) (“Putting the defendants through the time and expense of continued litigation on a
1 ||new theory, with the possibility of additional discovery, would be manifestly unjust and
2 unduly prejudicial.”’).
3 Second, Liberty should not be granted leave to amend because its request is
4 ||unreasonably delayed. Specifically, ISCOP informed Liberty by February 2019, that
5 || Liberty had not asserted a position against ISCOP for reimbursement. And yet, Liberty
6 || waited seven months to request to amend its complaint. Thus, Liberty was well aware of
7 potential claim for reimbursement and sat on its hands. (Doc. No. 166-1 at 5); see
8 ||AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir. 2006)
9 || (finding eight month delay between time of obtaining relevant fact and seeking leave to
10 ||amend to be unreasonable).
11 Accordingly, for the reasons stated above, granting Liberty leave to amend at this
12 || stage of the litigation would be inappropriate.
13 I. CONCLUSION
14 In light of the foregoing, Liberty has met its burden of proving multiple occurrences
15 || under the Liberty Policy. As such, the Court DENIES Bosa’s motion for partial summary
16 judgment, GRANTS Liberty’s motion for summary judgment, and DENIES Liberty’s
17 || motion for leave to file a First Amended Complaint. The Clerk of Court is DIRECTED to
18 |}enter judgment for the Plaintiff and against Defendant consistent with this order and
19 || CLOSE the case.
20
21 || IT IS SO ORDERED.
22 ||Dated: April 9, 2020 ©
23 Hon. Anthony J.Battaglia
24 United States District Judge
25
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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10080921. Public record. Not legal advice.