1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ACCREDITED SPECIALTY 2:24-cv-2418-CKD

INSURANCE COMPANY,

12 Plaintiff, 13 ORDER v. 14 NIELSON MOTOR CO., et al., 15 Defendants. 16

17 18 This is a diversity declaratory judgment action filed by plaintiff, Accredited Specialty 19 Insurance Company (“Accredited”), involving an insurance coverage dispute pertaining to an 20 underlying state court action. Pursuant to the parties’ consent and the court’s order, this case is 21 before the undersigned for all purposes including trial and entry of judgment. (See ECF No. 15.) 22 Defendants Linda Wrenne, Craig Wrenne,1 and the Estate of Kevin Wrenne (“Wrenne 23 defendants”) filed an unopposed motion to stay this case pending resolution of an underlying state 24 court appeal. (ECF No. 18.) The court previously found this matter to be appropriate for decision 25 without oral argument under Local Rule 230(g). (ECF No. 22.) For the following reasons, a stay 26 is appropriate and the motion is granted. 27 1 Defendant Craig Wrenne’s name was incorrectly entered to the docket and will be corrected to 28 reflect the correct spelling. 1 I. Background 2 On March 28, 2024, the Wrenne defendants filed premises liability and negligence claims 3 in the Shasta County Superior Court against J.A. Sutherland, Inc. (“J.A. Sutherland”), Nielsen 4 Motor Co., and other defendants in Linda Wrenne, et al. v. J.A. Sutherland, Inc., et al., Case No. 5 204643 (“Underlying Lawsuit”). (ECF No. 1, ¶¶ 14, 27.) The Wrennes allege Nielson owns the 6 property where the decedent, Kevin Wrenne, was stabbed to death on March 28, 2022, while 7 taking an employee lunch break in the Taco Bell parking lot. (Id., ¶¶ 15, 16.) They allege Nielson 8 had knowledge of dangerous conditions, safety issues, and a history of criminal activity on or 9 near the premises and failed to take reasonable and adequate steps to protect employees and 10 customers. (Id., ¶¶ 22, 23.) 11 Accredited issued the insurance policy to the named insured, J.A. Sutherland. (ECF No. 1, 12 ¶ 29.) J.A. Sutherland, as tenant, allegedly leased the Taco Bell restaurant property from Nielson, 13 as landlord. (Id., ¶ 46.) 14 Accredited agreed to participate in Nielsen’s defense in the Underlying Lawsuit pursuant 15 to a reservation of rights. (ECF No. 1, ¶ 33.) The defendants in the Underlying Lawsuit filed a 16 demurrer alleging a worker’s compensation exclusivity rule bars the claims that were brought. 17 (ECF No. 18-1 at 4.) The demurrer was granted and is currently being appealed to the state 18 appellate court. (Id.) 19 In the present federal suit, Accredited alleges Nielson is not an insured or additional 20 insured under the policy. (ECF No. 1, ¶ 50.) Accredited seeks to establish it owes no coverage 21 obligation to Nielsen with respect to the claims in the Underlying Lawsuit. (Id.) Accredited also 22 seeks reimbursement of defense costs in the Underlying Lawsuit. (Id., ¶¶ 69-74.) 23 The Wrenne defendants filed the present motion to stay on November 25, 2024, arguing 24 the coverage issues in this case are being litigated in the pending appeal in the Underlying 25 Lawsuit and that there is a significant risk of inconsistent rulings if this case is not stayed, among 26 other arguments. (ECF No. 18.) Accredited filed a response and the Wrenne defendants filed a 27 reply (ECF No. 20, 21.) 28 //// 1 II. Standard 2 “[T]he power to stay proceedings is incidental to the power inherent in every court to 3 control the disposition of the causes on its docket with economy of time and effort for itself, for 4 counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). “[A] trial court may, 5 with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a 6 stay of an action before it, pending resolution of independent proceedings which bear upon the 7 case.” Levya v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979), cert. denied, 8 444 U.S. 827 (1979). Such a stay may be entered whether or not such proceedings are necessarily 9 controlling of the action before the court. Id. at 863-64. In considering whether to grant a stay, 10 this court weighs the competing interests that will be affected by the granting or refusal to grant a 11 stay. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). “Among these considerations are [1] 12 the possible damage which may result from the granting of a stay, [2] the hardship or inequity 13 which a party may suffer in being required to go forward, and [3] the orderly course of justice 14 measured in terms of the simplifying or complicating of issues, proof, and questions of law which 15 could be expected to result from a stay.” Id. (citing Landis, 299 U.S. at 254-255). 16 III. Discussion 17 The Wrenne defendants argue Accredited seeks through the present suit an adjudication of 18 “the exact same issue” currently being litigated on appeal in the Underlying Lawsuit. (ECF No. 19 18-1 at 3.) However, the Wrenne defendants do not argue the Underlying Lawsuit specifically 20 addresses whether Accredited owes coverage to Nielsen. Instead, they argue Accredited, through 21 this federal action, seeks an adjudication of whether the decedent was in the course and scope of 22 his employment when he was stabbed. (Id. at 3, 5.) They further argue there is a risk of 23 inconsistent verdicts should this court make factual and legal determinations on this issue. (Id. at 24 10-11.) They also argue there is a possibility of substantial prejudice if no stay is entered, and that 25 principles of judicial economy support a stay. (Id. at 12-13.) 26 In response, Accredited disputes the grounds stated for the requested stay, stating, 27 specifically, the determination whether Nielsen is an additional insured under the policy is a 28 threshold issue that can be resolved based solely on examination of the complaint, the policy, and 1 relevant lease agreement. (ECF No. 20.) Nevertheless, Accredited has “no objection to a stay of 2 this matter[.]” (Id.) Accredited agrees that the resolution of the appeal in the Underlying Lawsuit 3 regarding Keven Wrenne’s employment status may be dispositive of coverage in this case, and, 4 thus, may moot the need to seek an adjudication of Nielsen’s insured status. (Id. at 2.) 5 In the present declaratory judgment action, Accredited claims, first, that Nielsen is not an 6 insured under the Accredited policy. (ECF No. 1, ¶¶ 36-50.) Accredited claims, second, the 7 employer’s liability exclusion applies to bar coverage. (Id., ¶¶ 51-55.) Accredited claims, third, a 8 “cross suits exclusion” applies to bar coverage. (Id., ¶¶ 56-64.) According to the Wrenne 9 defendants, the issue on appeal in the Underlying Lawsuit is whether the worker’s compensation 10 exclusivity rules bars litigation against the decedent’s employer. (ECF No. 18-1 at 9.) And 11 further, “[i]f Decedent was in the course and scope of his employment at the time of the stabbing, 12 then worker’s compensation exclusivity rules would bar litigation against his employer.” (Id.) 13 Thus, both the appeal in the Underlying Lawsuit and this declaratory judgment action hinge on 14 whether the decedent was in the course and scope of his employment when he was stabbed. 15 In exercising discretion whether to stay this case, the court first considers the possible 16 damage accompanying the granting of a stay. No party asserts possible damage may result from 17 the granting of a stay. This interest appears to be neutral. 18 As to the hardship or inequity that may result with this case moving forward, the Wrenne 19 defendants argue there is a risk of prejudice to the insured due to the possibility of collateral 20 estoppel. (ECF No. 18-1 at 11.) They argue that, in general, there is a risk of prejudice due to 21 collateral estoppel because there is a factual overlap between the two lawsuits. (Id. at 11-13.) The 22 Wrenne defendants fail to explain the hardship or inequity that exists under the specific facts and 23 circumstances in this case, instead focusing solely on the facts of other cases. Nevertheless, they 24 have established that there are overlapping factual issues between the Underlying Lawsuit and 25 this declaratory relief action, and thus the court finds this factor to weigh in favor of a stay. See, 26 e.g., Colony Ins. Co. v. Temescal Rei, LLC, No. 1:19-CV-01778-NONE-JLT, 2021 WL 535414, 27 at *6 (E.D. Cal. Feb. 12, 2021) (finding this interest favors a stay where “the Underlying Action 28 will include the making of factual determinations upon which coverage may hinge”); Aspen 1 Specialty Ins. Co. v. Ivie McNeill & Wyatt, APLC, No. CV 17-7973-DOC (JCX), 2018 WL 2 4751740, at *10 (C.D. Cal. May 9, 2018) (finding a possibility of prejudice supported a stay 3 “because of the overlap between the disputed facts in this action and in the state court action”). 4 Finally, the court considers the orderly course of justice. “Given the overlapping factual 5 issues between the declaratory relief action and Underlying [Lawsuit] discussed above, the court 6 finds that the orderly administration of justice will be served by a stay.” Colony Ins. Co., 2021 7 WL 535414, at *6; see also GOJO Indus., Inc. v. Barough, No. SACV-17-1382-DOC-JDE-X, 8 2018 WL 5880829, at *12 (C.D. Cal. Apr. 2, 2018) (“As there are similar questions of facts and 9 law in this action and the [State] Action, … granting a stay in this case will promote judicial 10 economy and efficiency.”). 11 Because the appeal pending in the state appellate court may be dispositive of this 12 declaratory judgment action, the court will not compel the defendants to actively litigate both 13 actions at the same time. The relevant factors weigh in favor of staying this matter pending 14 resolution of the state court appeal under the court’s inherent case-management authority. 15 IV. Conclusion and Order 16 In accordance with the above, IT IS HEREBY ORDERED as follows: 17 1. The Clerk of the Court is directed to correct the spelling of the name on the docket for 18 defendant, Craig Wrenn, to reflect the correct spelling as follows: Craig Wrenne. 19 2. The Wrenne defendants’ unopposed motion to stay this declaratory relief action (ECF 20 No. 18) is GRANTED. 21 3. The court VACATES all dates in the pretrial scheduling order entered on November 22 14, 2024 (ECF No. 17). 23 ///// 24 ///// 25 ///// 26 ///// 27 ///// 28 ///// ] 4. This action is administratively STAYED pending the resolution of the underlying state 2 || court appeal. The parties are directed to file a joint status report every six months, beginning six 3 || months from the date of this order, or within thirty days of the resolution of the underlying state 4 || court appeal, whichever is sooner. 5 | Dated: January 23, 2025 Card ft 4 LA g. ae 6 CAROLYN K DELANEY? 7 UNITED STATES MAGISTRATE JUDGE 8 9H 8, accr24ev2418.stay.o 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28