1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 PHILADEPHIA INDEMNITY No. 2:19-cv-00382-JAM-CKD

INSURANCE COMPANY,

12 Plaintiff, 13 ORDER DENYING PLAINTIFF’S MOTION v. FOR SUMMARY JUDGMENT 14

ASSOCIATED INDUSTRIES

15 INSURANCE COMPANY, INC., 16 Defendant. 17 18 This matter is before the Court on Philadelphia Indemnity 19 Insurance Company’s (“Plaintiff” or “PIIC”) Motion for Summary 20 Judgment. See Pl.’s Mot. Summ. J. (“Mot.”), ECF No. 22. 21 Associated Industries Insurance Company, Inc. (“Defendant” or 22 “AIIC”) filed an opposition, see Opp’n, ECF No. 27, to which 23 Plaintiff replied, see Reply, ECF No. 32. For the reasons set 24 forth below, the Court DENIES Plaintiff’s Motion for Summary 25 Judgment.1 26

27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for October 13, 2020. 1 I. BACKGROUND 2 Plaintiff, a liability insurer, filed this lawsuit against 3 Defendant, another liability insurer, for declaratory relief and 4 reimbursement in an ongoing dispute between the two insurers. 5 See Compl., ECF No. 1. The dispute concerns fees and costs 6 Plaintiff has incurred in six underlying personal injury lawsuits 7 against Plaintiff and Defendant’s insurees. Compl. ¶¶ 5-7. 8 Specifically, Plaintiff insured In-Shape Health Clubs, LLC (“In- 9 Shape”) under a policy of Commercial General Liability Insurance, 10 while Defendant insured Califitness Inc. (“Califitness) under a 11 policy of Commercial General Liability Insurance. See Stip. 12 Statement of Undisputed Facts (“SSUF”), ECF No. 24. From October 13 1, 2009 to May 22, 2018, Plaintiff and Defendant’s insurees, In- 14 Shape and Califitness, had an Equipment Management Agreement 15 (“EMA”), under which Califitness performed maintenance, repair, 16 and service for exercise machines located in In-Shape’s fitness 17 facilities. SSUF No. 6. During this period, six individuals 18 were injured while using exercise machines in various In-Shape 19 facilities across California and each filed a complaint against 20 In-Shape (the “Sickler,” “Robinson,” “Ibrahimi,” “Taylor,” 21 “Hover,” and “Lawson” complaints). SSUF No. 7-12. The Sickler, 22 Taylor, Hover, and Lawson complaints also named Califitness as a 23 defendant. SSUF No. 7, 10-12. In Ibrahimi and Robinson, In- 24 Shape filed a cross-complaint against Califitness. SSUF No. 13- 25 14. 26 According to Plaintiff, Defendant was required to undertake 27 and pay fully for In-Shape’s defense in all six lawsuits because 28 In-Shape qualified as an insured under Defendant’s policies and 1 further, Defendant’s policies provided primary insurance to In- 2 Shape. Compl. ¶ 6. Defendant, however, has refused to undertake 3 In-Shape’s defense, leaving Plaintiff to defend In-Shape. Id. 4 In response, Plaintiff filed this lawsuit, bringing three claims 5 for declaratory relief as to Plaintiff’s rights against Defendant 6 in the underlying lawsuits. Compl. ¶¶ 23-42. 7 On September 15, 2020, Plaintiff moved for summary judgment 8 on all three causes of action. See Mot. In the alternative, 9 Plaintiff seeks summary adjudication as to AIIC’s duty to defend 10 In-Shape and to reimburse PIIC in each of the six personal injury 11 complaints. Mot. at 1. 12 13 II. OPINION 14 A. Evidentiary Objections 15 In opposition to Plaintiff’s motion, Defendant raised 16 several objections to Plaintiff’s evidence. See Def.’s Obj., 17 ECF No. 31. The Court has reviewed these evidentiary objections 18 but declines to rule on each one individually as courts self- 19 police evidentiary issues on motions for summary judgment and a 20 formal ruling is unnecessary to the determination of this 21 motion. See Burch v. Regents of the University of California, 22 433 F.Supp.2d 1110, 1118–1122 (E.D. Cal. 2006) (objections 23 challenging the characterization of the evidence are improper on 24 a motion for summary judgment). 25 B. Legal Standard 26 A court must grant a party’s motion for summary judgment 27 “if the movant shows that there is no genuine dispute as to any 28 material fact and the movant is entitled to a judgment as a 1 matter of law.” Fed. R. Civ. Proc. 56(a). The movant bears the 2 initial burden of “informing the district court of the basis for 3 its motion, and identifying [the documents] which it believes 4 demonstrate the absence of a genuine issue of a material fact.” 5 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is 6 material if it “might affect the outcome of the suit under the 7 governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 8 248 (1986). Once the movant makes this initial showing, the 9 burden rests upon the nonmoving party to “set forth specific 10 facts showing that there is a genuine issue for trial.” Id. An 11 issue of fact is genuine if “the evidence is such that a 12 reasonable jury could return a verdict for the nonmoving party.” 13 Id. 14 C. Analysis 15 1. Failure to Plead Equitable Claims 16 Defendant first argues that Plaintiff’s motion must be 17 denied because Plaintiff seeks to recover on a theory that was 18 not pled in the operative complaint. Opp’n at 2, 5-6. 19 Specifically, Defendant points out that while Plaintiff only 20 pled three causes of action for declaratory relief in its 21 complaint, Plaintiff now moves for summary judgment on a theory 22 of equitable indemnity, the elements of which were not 23 specifically pled in the complaint. Opp’n at 5. 24 Plaintiff does not dispute that it is moving for summary 25 judgment on an equitable theory. Reply at 2. Indeed, the 26 motion is clear on this point: “Since PIIC paid the costs to 27 defend In-Shape – an obligation that should have been solely 28 undertaken by AIIC – PIIC may obtain reimbursement under a 1 theory of equitable subrogation or equitable indemnity.” Mot. 2 at 10. Nevertheless, Plaintiff insists the Court has the power 3 to grant relief, despite its failure to “specifically plead a 4 cause of action for equitable indemnity.” Reply at 2. As 5 explained below, the Court agrees with Defendant that the motion 6 must be denied because it proceeds on a theory not pled in the 7 operative complaint. 8 Defendant argues that while the caption of the complaint 9 is labeled “Complaint for Declaratory Relief, equitable 10 reimbursement/contribution” and the footer of the complaint 11 reads “Complaint for Dec. Relief Equitable Contribution, 12 Indemnity, and Subrogation,” the only causes of action actually 13 pled are the three for declaratory relief. Opp’n at 5. 14 Notably, Plaintiff, in its reply brief, does not identify any 15 allegations in the complaint where an equitable claim was 16 specifically pled. Rather, Plaintiff only directs the Court to 17 page 10, lines 16-26 of the complaint: the prayer for relief. 18 Reply at 1. The Court has carefully reviewed this part of the 19 complaint and does not find the elements of an equitable 20 indemnity claim pled there. Nor did the Court find an equitable 21 claim specifically pled anywhere else in the complaint. Cf. 22 Amended Complaint Interstate Fire & Cas. Ins. Co. v. First 23 Specialty Ins. Co., No. 2:17-cv-01795-KJM-AC, 2020 WL 5107612 24 (E.D. Cal. Aug. 31, 2020) (specifically pleading eight causes of 25 action, including two for declaratory relief, two for equitable 26 indemnity, two for equitable contribution, and two for equitable 27 subrogation). In sum, the Court finds Plaintiff only 28 specifically pled three claims for declaratory relief, not any 1 equitable claims. Compl. ¶¶ 23-42. 2 Despite the Court’s finding that no equitable claims have 3 been specifically pled in the operative complaint, Plaintiff 4 still contends that the Court may grant its motion for summary 5 judgment herein. Reply at 2. In support of this argument, 6 Plaintiff cites to Westport Ins. Co. v. Cal. Cas. Mgmt. Co., 916 7 F.3d 769 (9th Cir. 2019). In Westport, the plaintiff-insurer 8 incorrectly labeled a cause of action “equitable contribution” 9 instead of “equitable subrogation.” 916 F.3d at 781. The 10 district court awarded damages to the plaintiff on the equitable 11 subrogation theory despite plaintiff’s mislabeling of the cause 12 of action. Id. The Ninth Circuit affirmed, finding the 13 “district court did not abuse its discretion in holding that 14 notwithstanding the erroneous title for its claim, Westport’s 15 action is one for equitable subrogation.” Id. at 782. 16 Therefore, the issue in Westport was one of mislabeling, of 17 “erroneous title.” Here, unlike in Westport, the issue is not 18 one of mislabeling. Rather, it is one of complete omission: 19 Plaintiff did not specifically plead any equitable cause of 20 action, not for equitable indemnity nor for equitable 21 contribution nor for equitable subrogation. 22 Thus, Westport is readily distinguishable and does not 23 provide authority for this Court to grant the relief sought by 24 Plaintiff here. Moreover, other courts in this district have 25 rejected plaintiffs’ attempts to raise a theory not pled in the 26 complaint for the first time at the summary judgment stage. See 27 e.g. Pena v. Taylor Farms Pac., Inc., No. 2:13-CV-01282-KJM-AC, 28 2014 WL 1330754 at *3-6 (E.D. Cal. Mar. 28, 2014) (rejecting 1 plaintiff’s attempt to raise a new theory of liability for the 2 first time at the summary judgment stage as improper). 3 In sum, the Court finds that Plaintiff neither specifically 4 pled an equitable claim in its operative complaint nor presented 5 the Court with any binding authority supporting its argument 6 that the motion may proceed despite this pleading issue. 7 Accordingly, Plaintiff’s motion must be DENIED. 8 2. Declaratory Relief 9 Because the Court denies Plaintiff’s motion on the grounds 10 explained above, the Court does not need to reach the merits of 11 the parties’ arguments about the availability of declaratory 12 relief for the five underlying lawsuits that have settled. See 13 Opp’n at 5-6; Reply at 1-2. However, the Court briefly notes its 14 prior opinion, explaining that: “declaratory judgment is a 15 remedy, not a theory of recovery. . . declaratory relief operates 16 prospectively, enabling parties to avoid a breach, rather than to 17 address past wrongs.” Wallace v. Nationstar Mortg. LLC, No. 18 2:18-CV-02768-JAM-DB, 2019 WL 1382499 at *5 (E.D. Cal. Mar. 27, 19 2019) (citations and internal quotation marks omitted). Other 20 Eastern District courts have likewise instructed: “declaratory 21 relief operates prospectively to declare future rights. . . if a 22 party has a fully matured cause of action for money, the party 23 must seek the remedy of damages, and not pursue a declaratory 24 relief claim. This is because declaratory relief is intended to 25 offer guidance in shaping future conduct so as to avoid breach of 26 a party’s obligations.” Public Service Mut. Ins. Co. v. Liberty 27 Surplus Ins. Corp., 51 F. Supp. 3d 937, 950 (E.D. Cal. 2014) 28 (citations and internal quotation marks omitted). nnn enn enn nnn oon ne nnn nn nn nO OD 2 IIl. ORDER 3 For all the reasons set forth above, the Court DENIES 4 Plaintiff’s Motion for Summary Judgment in its entirety. If 5 Plaintiff intends to seek relief on a theory of equitable 6 indemnity, it must first obtain leave of the Court to amend its 7 complaint. 8 IT IS SO ORDERED. 9 Dated: December 28, 2020 10 kA 1 teiren staves odermacr 7008 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28