Employers Insurance v. Granite State Insurance

Opinion by Judge CYNTHIA HOLCOMB HALL; Dissent by Judge DAVID R. THOMPSON

The instant case is a subrogation action between a primary insurer, Employers Insurance of Wausau (“Wausau”), and an excess insurer, Granite State Insurance Company (“Granite”). The parties dispute whether Granite is liable to Wausau as a result of a settlement paid by Wausau on behalf of California Water Services (“CWS”), a mutual insured.

Wausau appeals the district court’s decision to vacate a $9,549,950 judgment against Granite, 1 arguing that the district court improperly applied a two-year statute of limitations. Granite cross-appeals the district court’s original grant of summary judgment to Wausau. Granite contends that even if the action is not time-barred, Granite is not liable for any portion of the CWS settlement because coverage under Wausau’s primary policy was never exhausted.

This court has jurisdiction pursuant to 28 U.S.C. § 1291 . We REVERSE the district court’s decision to dismiss the action as time-barred, REVERSE the district court’s decision that Granite’s excess policy was triggered, and REMAND with instructions to enter judgment in favor of Granite.

Facts

Wausau issued five…

dissenting:

I agree with the majority on the statute of limitations issue, but I would affirm the district court’s judgment on the stacking issue. Thus, I respectfully dissent.

In the present case, there was one occurrence causing damages in successive policy years. This fact distinguishes this case from the California Court of Appeal’s decision in Stonewall Ins. Co. v. City of Palos Verdes, 46 Cal.App.4th 1810 , 54 Cal.Rptr.2d 176 (1996), in which there were multiple occurrences. In Stonewall, the court relied upon “occurrences” that were “continuously occurring throughout a period of time....” Id. at 1853 , 54 Cal.Rptr.2d 176 . The court’s use of the plural “occurrences” was not, as the majority asserts in footnote 7, a “reference to broad principles of law.” It reflected the facts of the case as recounted by the court:

Id. at 1843 , 54 Cal.Rptr.2d 176 .

We are compelled to decide the present case according to California law. That law was set forth in FMC Corp. v. Plaisted & Cos., 61 Cal.App.4th 1132 , 72 Cal.Rptr.2d 467 (1998). FMC was a property damage case involving alleged continuous injury-arising out of a single occurrence. The California Court of Appeal specifically…