Golden Bear Insurance Company v. Evanston Insurance Company

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * * 7 Golden Bear Insurance Company, Case No. 2:20-cv-00027-RFB-EJY 8 Plaintiff, 9 v. ORDER 10 Evanston Insurance Company, StarStone Specialty Insurance Company, 11 Defendants. 12 13 I. INTRODUCTION 14 Before the Court for consideration is Plaintiff’s Motion for Summary Judgment or in the 15 alternative, Partial Summary Judgment [ECF No. 51], Defendant StarStone’s Counter Motion for 16 Summary Judgement [ECF No. 64], Defendant Evanston’s Motion for Summary Judgement [ECF 17 No. 66], and Plaintiff’s Appeal of the Magistrate Judge’s Order on Plaintiff’s Motion to Strike 18 [ECF No. 90]. 19 20 II. PROCEDURAL BACKGROUND 21 Plaintiffs filed suit in federal court on January 7, 2020. ECF No. 1. The complaint asserts 22 two claims for relief: a duty to defend claim (for both declaratory relief against Evanston and 23 equitable contribution against both defendants) and a duty to indemnify claim (for both declaratory 24 relief and equitable contribution against both defendants). On February 27, 2020, Defendant 25 Evanston filed an answer and a counterclaim against Plaintiff, seeking declaratory relief on both 26 the duty to defend and duty to indemnify causes of action. ECF Nos. 14, 15. On February 28, 2020 27 Defendant StarStone filed an answer. ECF No. 18. On March 20, 2020, Plaintiff filed an answer 28 to the Counterclaims. ECF No. 24. 1 On October 5, 2020, Defendant StarStone filed a motion for judgment on the pleadings. 2 ECF No. 39. On August 27, 2020, the Court denied the motion for judgment on the pleadings. ECF 3 No. 93. 4 On February 22, 2021, Plaintiff filed a motion for summary judgment or, in the alternative, 5 motion for partial summary judgment. ECF No. 51. On March 15, 2021, Defendants filed a 6 separate motion for summary judgment. ECF Nos. 64, 66. All of the foregoing motions were fully 7 briefed as of April 19, 2021. 8 On March 10, 2021, Plaintiff filed a motion to strike Defendant StarStone’s Designation 9 of Initial Expert Witness, the Expert Report, and all testimony from the Expert. ECF No. 59. 10 Plaintiff argued that the expert’s materials are inadmissible because the expert improperly 11 interprets the insurance policies at issue, invading the province of the Court. Defendant StarStone 12 countered that the expert’s testimony did not reach any ultimate conclusion of law. ECF No. 67. 13 The Magistrate Judge granted the motion in part and denied the motion in part, finding that some 14 elements of the expert’s opinion were inadmissible as improper, and some were inadmissible as 15 irrelevant. Plaintiff requests that the Court set aside the Magistrate Judge’s ruling to the extent that 16 some elements of the report were deemed admissible. ECF No. 90. 17 Oral argument was held on these motions on August 27, 2021. ECF No. 93. This written 18 order follows. 19 20 III. FACTUAL BACKGROUND 21 A. Undisputed Facts 22 The Court finds the following facts to be undisputed. Plaintiff Golden Bear Insurance 23 Company issued a commercial general liability policy to Henderson Waterpark d/b/a Cowabunga 24 Bay [hereinafter “Cowabunga Bay”] with a period of April 15, 2017 to April 15, 2018. This 25 primary policy had an each occurrence limit of $1,000,000. Plaintiff also issued an excess policy 26 for the same period which had an each occurrence and aggregate limit of $5,000,000. Innovative 27 Attraction Management [hereinafter “IAM”] is a waterpark management company with which 28 Cowabunga Bay entered into a contract for aquatic operations management, consulting services, 1 risk prevention, and lifeguard training. Defendant Evanston Insurance Company issued a 2 commercial general liability policy to IAM with a period of November 27, 2016, to November 26, 3 2017, with an each occurrence limit of $1,000,000. ECF No. 66-11. Defendant StarStone issued 4 an excess policy for the same period with a per occurrence and aggregate of $10,000,000. ECF 5 No. 51. 6 1. The Underlying Actions 7 On June 18, 2017, an eight-year old boy drowned while visiting Cowabunga Bay. His estate 8 and parents brought suit against Cowabunga Bay and IAM seeking damages (the “Bankston suit”). 9 Golden Bear accepted Cowabunga Bay’s defense of the Bankston suit. Evanston denied 10 Cowabunga Bay’s additional insured tender of the Bankston suit, but accepted IAM’s tender. 11 Golden Bear settled the Bankston suit for an amount in excess of Golden Bear’s primary policy 12 per occurrence limit. 13 Also on June 18, 2017, two other patrons sustained injuries at the water park. On June 17, 14 2019, they filed suit against Cowabunga Bay, later adding IAM. Golden Bear accepted Cowabunga 15 Bay’s tender (the “Hicks suit”). Evanston denied Cowabunga Bay’s additional insured tender, but 16 accepted IAM’s tender. 17 2. StarStone’s and Evanston’s Insurance Policy 18 IAM’s excess policy (issued by Defendant StarStone) is a “follow form” policy to the 19 Evanston policy. This means that the interpretation of the Evanston policy would and does apply 20 equally to the StarStone policy. The Evanston’s primary policy contains a “Blanket Additional 21 Insured Endorsement” which provides that, 22 “A. Who is an Insured is amended to include as an additional insured any person 23 or entity to whom you are obligated by valid, written contract to provide such 24 coverage, but only with respect to negligent acts or omissions of the Named Insured and only with respect to any coverage not otherwise excluded in the 25 policy. However: (1) the insurance afforded to such additional insured only applies to the extent permitted by law; and (2) if coverage provided to the 26 additional insured is required by a contract or agreement, the insurance afforded 27 to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.” 28 1 A $500 premium to include the Blanket Additional Insured was paid as part of the “Commercial 2 General Liability Coverage Part Declarations.” 3 3. Contracts between IAM and Cowabunga 4 It is undisputed that there were two written contracts between IAM and Cowabunga Bay, 5 (1)a December 24, 2015 Contract for Consulting Services (including risk prevention and lifeguard 6 training) and (2) a December 24, 2015 Contract for Services (including aquatic operations 7 management). The second of these contracts for aquatic operations management, includes the 8 following language: 9 “Indemnity. (A) Manager shall defend, indemnify and hold harmless the Client, its agents, 10 officers, directors, employees, successors and assigns from and against losses, liabilities, 11 damages, claims, costs, settlements, suits and attorney fees relating to or arising from the acts or omissions by Consultant, its employees, agents, sub-contractors in performance or 12 non-performance of this Contract from any cause whatsoever, including, but not limited to: (i) breach of its representations or warranties or other obligations hereunder, and/or (ii) 13 negligent acts or omissions, and/or (iii) willful misconduct…. Insurance. (A) The Manager 14 shall procure and keep in force and effect at all times during the term of this Agreement and any extension thereof, insurance policies and coverages as noted in the sample 15 certification in Annex C hereto.” 16 While a majority of the text of Annex C appears illegible, the title of the document is “Certificate 17 of Liability Insurance” and it is issued to IAM by their insurance agent, Haas & Wilkerson 18 Insurance. 19 4. Events Related to the Blanket Additional Insured 20 Finally, it is undisputed that Cowabunga Bay at some point prior to April 12, 2017 21 requested to be added as an additional blanket insured under IAM’s Evanston Policy and that on 22 April 12, 2017, Cowabunga Bay requested that IAM provide proof that it was added as an 23 additional insured to IAM’s Evanston Policy. IAM’s insurance agent, Haas & Wilkerson, and a 24 representative from RT Specialty, the managing general agency for Evanston, once again 25 discussed the blanket additional insured issue on July 20, 2017. 26 27 28 1 IV. LEGAL STANDARD A. Summary Judgment 2 Summary judgment is appropriate when the pleadings, depositions, answers to 3 interrogatories, and admissions on file, together with the affidavits, if any, show “that there is no 4 5 genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 6 Fed. R. Civ. P. 56(a); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322(1986). 7 When considering the propriety of summary judgment, the court views all facts and draws 8 all inferences in the light most favorable to the nonmoving party. Gonzalez v. City of Anaheim, 9 747 F.3d 789, 793 (9th Cir. 2014). If the movant has carried its burden, the nonmoving party “must 10 11 do more than simply show that there is some metaphysical doubt as to the material facts …. Where 12 the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, 13 there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (alteration in original) 14 (internal quotation marks omitted). 15 It is improper for the Court to resolve genuine factual disputes or make credibility 16 17 determinations at the summary judgment stage. Zetwick v. Cty. of Yolo, 850 F.3d 436, 441 (9th 18 Cir. 2017) (citations omitted). 19 V. DISCUSSION 20 Plaintiff moves for summary judgment as to all claims or in the alternative as to specific 21 points of law regarding the duty to indemnify and duty to defend claims. Defendants move for 22 23 summary judgment regarding each of Plaintiff’s causes of action. Plaintiff seeks a declaratory 24 judgment clarifying the parties’ rights and obligations regarding the duty to defend and duty to 25 indemnify. Plaintiff also seeks equitable contribution from Evanston/StarStone for its share of 26 Cowabunga Bay’s defense of the Underlying Actions under the insurance policies at issue and 27 28 1 Plaintiff’s settlement of the Bankston Action and any settlement or judgment of the Hicks suit 2 under the policies of insurance at issue. 3 A. Choice of Law 4 The Court must first decide the law which applies to the disputes and policies at issue in 5 6 this case. Nevada law honors the expressed intention of the parties as to the applicable law in the 7 construction of a contract if the parties acted in good faith and not to evade the law of the real situs 8 of the contract. See Ferdie Sievers & Lake Tahoe Land Co. v. Diversified Mortgage Investors, 603 9 P.2d 270, 273 (Nev. 1979) (citing cases); See Progressive Gulf Ins. Co. v. Faehnrich, 327 P.3d 10 1061, 1063–64 (Nev. 2014). However, while both the December 24, 2015 Contract for Consulting 11 12 Services (including risk prevention and lifeguard training) and the December 24, 2015 Contract 13 for Services (including aquatic operations management) provide that the respective agreement 14 shall be interpreted under Florida law, the relevant contract that determines the rights of the parties 15 in this case is the contract between IAM and Evanston, which lacks a choice of law provision. 16 Nevada follows the Restat. 2d of Conflict of Laws (2nd 1988) in determining choice of law 17 18 questions involving contracts, generally, and insurance contracts, in particular. Progressive Gulf 19 Ins. Co. v. Faehnrich, 327 P.3d 1061, 1063–64 (Nev. 2014); see also Ferdie Sievers, 603 P.2d at 20 273 (citing and applying Restatement (Second) of Conflict of Laws § 187 to a contractual choice- 21 of-law clause), Sotirakis v. USAA, 787 P.2d 788, 790-91 (Nev. 1990) (citing and applying 22 Restatement (Second) of Conflict of Laws §§ 188 and 193 to an insurance choice-of-law question 23 24 where the policy did not include a choice-of-law clause). Section 188 of the Restatement (Second) 25 of Conflict of Laws sets out the “most significant relationship” test, establishing a five-factor test 26 in the absence of an effective choice of law provision. Restat. 2d of Conflict of Laws, § 188 (2nd 27 1988) (“In the absence of an effective choice of law by the parties, the contacts to be taken into 28 1 account. . . .to determine the law applicable to an issue include: (a) the place of contracting, (b) 2 the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject 3 matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place 4 of business of the parties.”) Section 193 of the Restatement (Second) of Conflict of Laws indicates 5 6 a more specific principle for contracts of liability insurance, indicating that “the validity of [such 7 a] contract and the rights created thereby are determined by the local law of the state which the 8 parties understood was to be the principle location of the insured risk during the term of the 9 policy….” Restat. 2d of Conflict of Laws, § 193 (2nd 1988), see also Progressive Gulf Ins. Co., 10 327 P.3d 1061, Sotirakis, 787 P.2d 788 (following the approach set out in § 193). The Court in 11 12 Sotirakis reasons that the rule in § 193 is rational because “the principal location of the risk and 13 cost of the policy were probably established according to” the law of the state where the insured 14 risk was located. Sotirakis at 791. Here, the insured risk was a waterpark located in Henderson, 15 Nevada during the entire term of the policy. As a result, the Court finds that Nevada law is the 16 relevant law for interpreting the validity and rights of the contract between IAM and Defendants. 17 18 B. Nevada Contract Law 19 Generally, interpretation of an insurance contract is a question of law, to be decided by the 20 court. Shelton v. Shelton, 78 P.3d 507, 510 (Nev. 2003), Grand Hotel Gift Shop v. Granite St. Ins., 21 839 P.2d 599, 602 (Nev. 1992). Under Nevada law, the terms of a contract must be given their 22 plain meaning. See Traffic Control Servs. v. United Rentals Northwest, Inc., 87 P.3d 1054 (Nev. 23 24 2004). In interpreting an insurance policy, specifically, courts must examine the language from the 25 viewpoint of one not trained in law or insurance, “giving the terms their plain, ordinary and popular 26 meaning.” McDaniel v. Sierra Health & Life Ins. Co., 53 P.3d 904, 906 (Nev. 2002). Any 27 ambiguity in the terms of an insurance contract shall be resolved in favor of the insured and against 28 1 the insurer. Farmers Ins. Exch. v. Young, 832 P.2d 376, 377 (Nev. 1992). Courts must consider 2 not merely the language of the policy, but also the intent of the parties, the subject matter of the 3 policy, and the circumstances surrounding its issuance, in order to implement the reasonable 4 expectations of the insured. See Nat'l Union Fire Ins. Co. of State of Pa,. v. Reno's Executive Air, 5 6 Inc., 682 P.2d 1380, 1383-1384 (Nev. 1984) Sullivan v. Dairyland Ins. Co., 649 P.2d 1357 (Nev. 7 1982). 8 Under Nevada law, parties to a contract, even a written contract, may modify that contract 9 by mutual agreement, including an oral agreement. Jensen v. Jensen, 753 P.2d 342, 344 (Nev. 10 1988), Joseph F. Sanson Inv. Co. v. Cleland, 625 P.2d 566, 567 (Nev. 1981), Clark County Sports 11 12 Enterprises, Inc. v. City of Las Vegas, 606 P.2d 171, 175 (Nev. 1980). Further, an agreement can 13 modify a written contract even if that contract states that any modification of its terms must be in 14 writing. Silver Dollar Club v. Cosgriff Neon Co., 389 P.2d 923, 924 (Nev. 1964) (“Parties may 15 change, add to, and totally control what they did in the past. They are wholly unable by any 16 contractual action in the present, to limit or control what they may wish to do contractually in the 17 18 future. Even where they include in the written contract an express provision that it can only be 19 modified or discharged by a subsequent agreement in writing, nevertheless their later oral 20 agreement to modify or discharge their written contract is both provable and effective to do so.” 21 citing Laurence P Simpson, Handbook On the Law of Contracts, § 63 (1964)) (internal citations 22 omitted). 23 24 C. Blanket Additional Insured Addendum 25 The central dispute between the parties focuses on whether Cowabunga Bay was entitled 26 to coverage for the underlying actions because it had been added as an additional insured to IAM’s 27 28 1 policy with Evanston. The Court finds that Cowabunga Bay is entitled to coverage as a validly 2 added insured. 3 Defendants make two distinct arguments regarding the blanket additional insured 4 addendum: first, they argue that the language of the blanket additional insured document is clear 5 6 and unambiguous: a written contract is required for additional insured status. In support of this 7 point, they cite to courts that have found that the language is unambiguous and requires a “written 8 contract” for a party to qualify as an additional insured. See, e.g., Longwood Club Mgmt., LLC v. 9 Depositors Ins. Co., No. 4:17-CV-1694 (S.D. Tex. 2018). Second, they argue that the language in 10 the underlying contracts between IAM and Cowabunga Bay are unambiguous and that neither of 11 12 them require IAM to add Cowabunga Bay as an additional insured under IAM’s insurance policies. 13 The Court finds IAM’s Evanston policy allows for additional insured to be added by 14 “agreement” or “written contract” and does not provide a definitive or exclusive mechanism by 15 which an entity becomes an additional insured. The plain text of the policy does indicate that 16 anyone “to whom [the insured] is obligated by valid written contract to provide such coverage” is 17 18 automatically covered by the agreement at its inception. However, contrary to what Defendants 19 argue, this is not the exclusive way that an entity might become covered by the policy. The contract 20 contemplates a situation where “coverage provided to the additional insured” is required “by 21 contract or agreement.” At a minimum, the contract terms create ambiguity as to whether or not 22 an additional insured must be added by a written contract or may be added by a simple agreement. 23 24 Given this ambiguity and the possible construction that an added insured may be added by a mere 25 agreement, Nevada law dictates that this ambiguity must construed in favor of coverage. Farmers 26 Ins. Exch. 832 P.2d at 377. Here, a liberal interpretation of the text of this policy provision favors 27 28 1 finding that an agreement between the parties that a blanket additional insured be added is a valid, 2 alternative to a “written contract” to establish coverage. 3 The Court further finds that it is undisputed that an agreement to add Cowabunga Bay as 4 an additional insured did exist. There was an actual written contract between IAM and Cowabunga 5 6 Bay for aquatic operations management that explicitly contemplated indemnification and the 7 requirement that IAM obtain and maintain insurance during the lifetime of the contract. The 8 Evanston policy permitted an additional insured to be added by IAM. It also provided that such 9 coverage would arise when IAM agreed with the potential insured, in this case Cowabanga Bay, 10 to provide it. It is undisputed that prior to April 2017, Cowabunga Bay asked to be added as an 11 12 additional insured and, crucially, that IAM agreed. Indeed, the April 12, 2017 email exchange, 13 referenced at length by the parties, demonstrates unequivocally the existence of such an agreement 14 as Cowabunga Bay would not have requested “proof” of coverage if there had not been an 15 antecedent agreement to provide such coverage. 16 Additionally, the Court rejects the Defendants’ argument that, to the extent there was 17 18 coverage, the effective date of such coverage was July 19, 2017. This argument is based upon the 19 more narrow construction of the policy as relates to the additional blanket insured that the Court 20 has rejected. The Court has found that Nevada law requires that the contract be construed to allow 21 an additional blanket insured to be added to the policy simply upon an agreement between the 22 parties. The Court further finds that any ambiguity as to when such coverage for an additional 23 24 blanket insured commences be construed in favor of coverage. This means that such coverage 25 would begin upon the date of the agreement between IAM and its additional blanket insured. In 26 this case, it is undisputed that IAM and Cowabunga Bay reached an agreement to add Cowabunga 27 28 1 Bay to IAM’s insurance prior to April 12, 2017, as this was the date that Cowabunga Bay required 2 proof of the coverage to which the parties had already agreed. 3 The Court thus finds that Cowabunga Bay was added as an additional blanket insured to 4 the Evanston and StarStone policies and that this coverage was in effect at the time of the incidents 5 6 in the underlying legal actions. 7 D. Professional Services Exclusion 8 Defendant StarStone also claims that Plaintiff cannot seek equitable contribution from 9 Defendants due to the exclusion pertaining to liability arising in connection with performance of 10 services [hereinafter “professional services exclusion”] that exists in both Golden Bear’s insurance 11 12 policy contract1 and in StarStone’s insurance policy contract.2 Defendant’s arguments are 13 predicated upon the assumption that the injuries alleged in the underlying suits arose from the 14 negligence of IAM in providing water park management services to Cowabunga Bay. Defendant 15 StarStone argues, first, that because Golden Bear had a professional services exclusion in its 16 primary and excess policy, that its payment under the excess policy was voluntary and therefore 17 18 that Golden Bear cannot demonstrate that it has paid more than its fair share of liability to satisfy 19 20 21 1 “With respect to any professional services, this insurance does not apply to “bodily injury”, “property damage”, “personal injury” or “advertising injury” due to the rendering or failure to 22 render any professional service, arising out of any wrongful act of the insured, or of any other person for whose actions the insured is legally responsible arising out of any breach of duty, 23 neglect, error, misstatement, performance of duty, misleading statement of omission in performing or failing to perform services for others for a fee.” ECF No. 1-3, 35. These exclusions are 24 incorporated by reference in Golden Bear’s excess policy. See ECF No. 1-4, 4 (“the terms, conditions, agreements definitions, exclusions and limitations of the controlling underlying 25 insurance policy are incorporated by reference as part of this Policy.”) The Excess Policy also contains language that states that “This policy shall not apply to liability arising out the 26 performance or non-performance of any clerical or professional function or duty in the conduct of the business of the named insured.” Id. at 20. 27 2 “This Policy shall not apply to any liability, damage, loss, cost or expense arising out of: 1. The 28 rendering of; or 2. Failure to render; any professional services by or for any insured.” ECF No.1- 6, 18. 1 the elements of an equitable contribution claim. Second, they claim that StarStone’s own 2 professional services exclusion in its excess policy bars coverage for IAM and Cowabunga Bay 3 for these types of claims and precludes StarStone from contribution to the settlement or defense of 4 either of these suits. 5 6 The Court finds that the “professional services exclusion” does not bar recovery by Golden 7 Bear. Defendant StarStone argues that because the contract between IAM and Cowabunga contains 8 language involving the word “services,” that the water park operations management services 9 provided to Henderson by IAM fall within the category of “professional services.”3 However, the 10 Court finds that the term “professional services” does not apply to the operations management 11 12 services provided to Cowabunga by IAM and therefore that this exemption does not prevent 13 coverage in this case. Nevada law indicates that a “professional service” must involve a profession 14 where some degree of special authorization is required. See, e.g., Grayson v. Jones, 710 P.2d 76, 15 77 (Nev. 1985), Estate of Curtis v. S. Las Vegas Med. Inv’rs, LLC, 466 P.3d 1263, 1269 (Nev. 16 2020). 4 NRS § 89.020 defines a “professional service” as a “type of personal service which may 17 18 19 3 In their opposition, Plaintiff argues that the professional services exception should be understood 20 as limited to the provision of lifeguard services (including training and overseeing the pools) only and does not extend to IAM’s responsibilities in “supervising, operating and managing the Park.” 21 Defendant StarStone argues the opposite: that nearly everything that IAM was contractually obligated to do for Cowabunga Bay constitutes a professional service for the purpose of the 22 exclusion. Defendants’ evidence for this proposition is the contract between IAM and Cowabunga, citing the list of “primary operations” and other assorted operations that IAM was obligated to 23 perform. 24 4 Defendant StarStone cites to Ninth Circuit case law in support of its argument that the exemption is enforceable in this context. See Shepardson Eng'g Assocs., Inc. v. Cont'l Ins. Companies, 21 25 F.3d 1115 (9th Cir. 1994) (regarding the professional services exclusion in context of engineers), HotChalk, Inc. v. Scottsdale Ins. Co., 736 F. App’x 646, 648–49 (9th Cir. 2018) (regarding the 26 professional services exclusion in context of corporate directors and officers); Begun v. Scottsdale Ins. Co., 613 F. App’x 643, 644 (9th Cir. 2015) (regarding the professional services exclusion in 27 context of corporate directors and officers). However, the Court finds these cases to support the contention that “professional services” has a particularized meaning given that all cases arise in 28 the context of professions where specialized training and/or special licensing or certification is required. 1 legally be performed only pursuant to a license, certificate of registration or other legal 2 authorization.” Black’s Law Dictionary defines “professional” as “someone who belongs to a 3 learned profession or whose occupation requires a high level of training and proficiency.” Black's 4 Law Dictionary (11th ed. 2019), see also “profession”, Bryan A. Garner, Garner’s Dictionary of 5 6 Legal Usage (3d ed. 2011) (in defining “professional” places “emphasis on prolonged specialized 7 training in a body of abstract knowledge.”) (internal citation omitted). Defendants’ argument fails 8 because, while it does acknowledge that IAM is engaged in the provision of “services,” it does not 9 adequately reconcile the meaning of the modifier “professional.” Defendants do not outline why 10 the supervision, management, and operation of the waterpark is the kind of service considered to 11 12 be “professional.” Under the definition above, the supervision, management, and operation of the 13 waterpark does not require the special authorization of a “professional service” under the term’s 14 plain meeting or in reference to how the term is used in Nevada law. As a result, the underlying 15 suits are not excluded under the professional services exclusion in StarStone’s excess policy. 16 Moreover, Nevada law would require coverage even if the Court did not find that the 17 18 exclusion was unambiguous and did not apply. That is because, at best, in terms of Defendant’s 19 argument, there is ambiguity as to the meaning of the term and the exclusion. The existence of 20 such ambiguity leads to coverage under Nevada law. Farmers Ins. Exch. 832 P.2d at 377. 21 For the reasons stated above, StarStone’s argument that Golden Bear’s contribution to the 22 Bankston settlement was voluntary and “cannot be considered a payment of more than Golden 23 24 Bear’s fair share of the settlement payment for which it can seek equitable contribution from 25 StarStone,” also fails here. 26 / / / 27 / / / 28 1 E. Duty to Defend and Duty to Indemnify 2 In its Complaint, Plaintiff asks this court to issue declaratory and equitable relief on the 3 basis of Defendants’ breach of the duty to defend and the duty to indemnify. Under Nevada law, 4 an insurer bears a duty to defend whenever it ascertains facts which give rise to the potential of 5 6 liability under the policy. United Natl Ins. Co. v. Frontier Ins. Co., 99 P.3d 1153, 1158 (Nev. 2004). 7 If there is any doubt about whether the duty to defend arises, this doubt must be resolved in favor 8 of coverage. Id. The duty to indemnify arises when an insured becomes legally obligated to pay 9 damages in the underlying action that gives rise to a claim under the policy or when the resulting 10 loss or damage actually falls within a policy’s coverage. Century Surety Co. v. Andrew, 432 P.3d 11 12 180, 184 (Nev. 2018) (internal citations omitted). 13 Here, the coverage issue resolved above is dispositive of the duties to defend and 14 indemnify. As the Court has found that Cowabunga Bay was an additional insured under IAM’s 15 Evanston policy and that the professional services exception does not apply to the underlying 16 claims in this suit, the Court further finds that Evanston and potentially StarStone have a duty to 17 18 defend and indemnify Golden Bear in the underlying actions. It is beyond dispute that the facts of 19 the Bankston and Hicks suits give rise to potential liability triggering an insurer’s duty to defend. 20 Because Cowabunga Bay was an additional insured not subject to the professional services 21 exclusion, the facts here also trigger Evanston’s duty to defend. Because the Court finds that the 22 loss and damages related to the Bankston and Hicks suits fall within the policy’s coverage, 23 24 Evanston and potentially StarStone also have a duty to indemnify. 25 F. Equitable Contribution 26 In its Complaint, Plaintiff asks this court to order equitable contribution based on 27 Defendants’ duty to defend and the duty to indemnify. Plaintiff has not submitted a full accounting 28 1 of its expenses related to the above claims. However, this lack of evidence does not affect the 2 Court’s ability to find that Defendant is liable for the expenses it should have contributed in 3 defending and indemnifying Bankston and Hicks actions. See Fed. R. Civ. P. 56(d). 4 Nevada has not addressed the duty of an insurer to contribute to an insured’s defense by 5 6 another insurer. See, e.g., Great Am. Ins. Co. of New York v. N. Am. Specialty Ins. Co., 542 F. 7 Supp. 2d 1203, 1211 (D. Nev. 2008), Assurance Co. of Am. v. Nat'l Fire & Marine Ins. Co., No. 8 2:09-CV-01182-JCM (D. Nev. 2012), aff'd, 595 F. App'x 670 (9th Cir. 2014). In the absence of 9 controlling precedent on state law, the Ninth Circuit has held that “a federal court must predict 10 how the highest state court would decide the issue using intermediate appellate court decisions, 11 12 decisions from other jurisdictions, statutes, treatises, and restatements as guidance.” Arizona Elec. 13 Power Co-op., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995) (internal citations omitted). 14 The Court finds that Nevada Supreme Court would recognize the duty of an insurer to 15 contribute to an insured’s defense by another insurer in the circumstances of this case. The Court 16 notes that this is the majority rule. The doctrine of equitable contribution is recognized in the 17 18 majority of states. See § 5:2. Equitable contribution, Allocation of Losses in Complex Insurance 19 Coverage Claims (2020) (citing Alaska, Alabama, California, Arizona, Colorado, Georgia, 20 Illinois, Indian, Montana, New York, Ohio, Oregon, Utah, New Jersey, Connecticut, 21 Massachusetts, Pennsylvania, Tennessee, and Maine case law). Additionally, the District of 22 Nevada has consistently indicated that the Nevada Supreme Court would likely find a cause of 23 24 action for equitable contribution. See Evanston Ins. Co. v. W. Cmty. Ins. Co., No. 2:13-CV-01268- 25 GMN, 2014 WL 4798536, at *11 (D. Nev. Sept. 26, 2014) (“The Nevada Supreme Court has often 26 turned to California decisions when faced with issues of first impression…Accordingly, this court 27 will also turn to California law in this case. Under California law, the right to contribution arises 28 1 when more than one insurer is obligated to defend the same loss or claim, and one insurer has ... 2 defended the action without any participation by the others.) (internal citations omitted), see also 3 Great Am. Ins. Co. of New York v. N. Am. Specialty Ins. Co., 542 F. Supp. 2d 1203, 1211–12 (D. 4 Nev. 2008), Assurance Co. of Am. v. Nat'l Fire & Marine Ins. Co., No. 2:09-CV-01182-JCM (D. 5 6 Nev. 2012), aff'd, 595 F. App'x 670 (9th Cir. 2014), McClain v. Nat'l Fire & Marine Ins. Co., No. 7 2:05-CV-00706-LRH-RJJ (D. Nev. June 23, 2008) (all citing Fireman's Fund Ins. Co. v. Md. Cas. 8 Co., 77 Cal. Rptr. 2d 296, 301 (Cal. Ct. App. 1989)). 9 Generally, contribution is only appropriate where the policies insure the same entities, the 10 same interest in the same property, and the same risks. See 15 Couch on Ins. § 218:3 (2021), see 11 12 also Northern Ins. Co. of New York v. Allied Mut. Ins. Co., 955 F.2d 1353 (9th Cir. 1992), Great 13 West Cas. Co. v. Truck Ins. Exchange, 358 F.2d 883 (10th Cir. 1966); Vance Trucking Co. v. 14 Canal Ins. Co., 395 F.2d 391 (4th Cir. 1968). Additionally, where contribution is appropriate, the 15 aim of equitable contribution is to apportion a loss between two or more insurers who cover the 16 same risk, so that each pays its fair share and one insurer does not profit at the expense of the 17 18 others. See 16 Couch on Ins. § 222:98 (2021), see also XL Specialty Ins. Co. v. Progressive Cas. 19 Ins. Co., 411 F. App'x 78, 81 (9th Cir. 2011), In re Plant Insulation Co., 734 F.3d 900, 907 (9th 20 Cir. 2013), Am. States Ins. Co. v. Ins. Co. of Pennsylvania, 800 F. App'x 452, 454–55 (9th Cir. 21 2020). 22 The Court finds that equitable contribution is appropriate here because the policies ensured 23 24 the same entities for at least some of the same risks. Golden Bear bore the full loss of settlement 25 and has defended the Bankston and Hicks actions without the participation of Defendant Insurers, 26 who had a duty to defend and a duty to indemnify under Nevada law. However, because the parties 27 have not sufficiently briefed the total costs of defense and indemnification, nor the exact amount 28 1 | and type of coverage their policies provide, the court cannot find the proportion of □□□□□□□□□□□ 2 expenses Defendant must contributed as a matter of law. Therefore, this issue remains for trial ° before this Court. 4 5 6 VI. CONCLUSION 7 IT IS THEREFORE ORDERED that [ECF No. 51] Plaintiffs’ Motion for Partial 8 Summary Judgment is GRANTED. 9 IT IS FURTHER ORDERED that [ECF No. 64] Defendant Starstone Specialty Insurance 10 Company’s Counter Motion for Summary Judgment is DENIED. 1 IF IS FURTHER ORDERED that [ECF No. 66], Defendant Evanston Insurance 12 Company’s Motion for Summary Judgment is DENIED. 13 IT IS FURTHER ORDERED that [ECF No. 90] Objection to Magistrate Judge’s Order is DENIED as moot. 15 As the determination of relief is unresolved, the Court will allow parties an opportunity to 16 | brief the issue and a separate proceeding to determine the amount of equitable contribution will be 17 | held. Parties may submit a joint scheduling order within two weeks of the issuance of this order. 18 IT IS FURTHER ORDERED that a status conference is set in this case for October 22, 19 2021, at 11:00 am in LV Courtroom 7C by videoconference before Judge Richard F. Boulware, II. 20 | The instruction regarding videoconference appearance to be issued. 21 DATED: September 30, 2021. 22 aS" 24 RICHARD F. BOULWARE, 25 UNITED STATES DISTRICT JUDGE 26 27 28 -17-