1. Defendant Travelers Property Casualty Company of America’s (erroneously sued as Travelers Property Casualty Insurance Company) (“Travelers”) motion for summary judgment or, alternatively, summary adjudication against plaintiff Ryder Truck Rental, Inc. is DENIED.

2. Plaintiff Ryder Truck Rental, Inc. (“Ryder”) motion for an order granting summary adjudication in its favor and against defendant Traveler’s Property Casualty Insurance Company (“Traveler’s”) as to the following issue: That with respect to Ryder’s first cause of action for breach of contract, Ryder is an additional insured who is owed a duty of defense of the claims against it in the action captioned Bugarin, et al. v. Valdez, et al. San Diego County Superior Court Case No. 37- 2009 -00070347-CU-PO-CTL by defendant Travelers is DENIED.

Defendant Travelers Property Casualty Company of America (erroneously sued as Travelers Property Casualty Insurance Company) (“Travelers”) moves for summary judgment or, alternatively, summary adjudication against plaintiff Ryder Truck Rental, Inc. on the grounds that (1) Ryder’s bad faith claim fails as a matter of law and (2) Ryder’s punitive damages claim fails as a matter of law. Plaintiff Ryder Truck Rental, Inc. (“Ryder”) moves for an order granting summary adjudication in its favor and against defendant Traveler’s Property Casualty Insurance Company (“Traveler’s”) as to the following issue: That with respect to Ryder’s first cause of action for breach of contract, Ryder is an additional insured who is owed a duty of defense of the claims against it in the action captioned Bugarin, et al. v. Valdez, et al. San Diego County Superior Court Case No. 37-2009-00070347-CU-PO-CTL by defendant Travelers.

Both motions ask the same question – did Travelers have a duty to defend Ryder in the action captioned Bugarin, et al. v. Valdez, et al. San Diego County Superior Court Case No. 37-2009-00070347-CU-PO-CTL by defendant Travelers. Neither Plaintiff nor Defendant has presented sufficient evidence to establish that there is no material issue of triable fact regarding this question. Therefore, the motions are both DENIED.

Duty to Defend:

“The duty to defend, although broad, is not unlimited; it is measured by the nature and kinds of risks covered by the policy.” Waller v. Truck Ins. Exch. (1995) 11 Cal. 4th 1, 19. An insurer “must defend a suit which potentially seeks damages within the coverage of the policy.” Gray v. Zurich Ins. Co. (1966) 65 Cal. 2d 263. But “where there is no possibility of coverage, there is no duty to defend.” Id.

The insured has the burden of establishing that a claim comes within the scope of coverage. Id. at 16. “The determination whether the insurer owes a duty to defend usually is made in the first instance by comparing the allegations of the complaint with the terms of the policy.” Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal. 4th 1076, 1081; Gray, 65 Cal. 2d at 19; Montrose Chemical Corp. v. Superior Court (1993) 6 Cal. 4th 287.

1. MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION BY DEFENDANT TRAVELERS INSURANCE

The Defendant has sustained its initial burden of establishing that there is no material issue of triable fact that the Defendant did not owe the Plaintiff a duty to defend. However, the Plaintiff has presented evidence which disputes the material facts presented by the Defendant. Therefore, the Plaintiff has sustained its resulting burden of creating a material issue of triable fact and the motion is denied.

Defendant Met Its Initial Burden:

By this lawsuit, Ryder sues Travelers, challenging the Defendant’s denial of the Ryder’s tender of its defense for damages caused while the Defendant’s insured, a Cort employee, was driving a vehicle leased from and owned by Ryder. The Defendant has presented facts that support a finding that because Ryder was being sued for its own negligence, not for anything Cort did or failed to do, Ryder is not covered under the Cort policy for Cort’s negligent maintenance claim. Thus, Defendant has sustained its initial burden to establish that Ryder’s claims fail as a matter of law and the Court grants Travelers’ motion for summary judgment. By this same evidence, the Defendant has also sustained its initial burden to show that, regardless of whether the court grants complete summary judgment, it should dismiss Ryder’s bad faith and punitive damages claims. Therefore, the burden shifts to the Plaintiff.

Defendant’s Facts:

The Defendant has presented the following evidence:

Since 1979, Ryder has leased trucks to Travelers’ insured, Cort, for use in Cort’s furniture rental business. [Defendant’s UMF 1, 12, 23] The parties agreed that Cort would purchase liability insurance that covered Ryder as an additional insured for bodily injury or property damage caused by Cort’s negligence in operating the leased vehicles, but that did not give Ryder “additional insured” status for claims based on Ryder’s negligent maintenance of the leased vehicles. [Defendant’s UMF 2, 13, 24] Cort purchased a commercial policy from Travelers that contained the agreed-upon coverages [Defendant’s UMF 3 and 4, 14 and 15, 25 and 26] On February 12, 2009, a multi-vehicle accident occurred on Interstate 8 in San Diego. When the driver of a vehicle (Delia Valdez) changed lanes in front of a bobtail truck, the truck swerved, jumped the median, and collided head-on with another vehicle. The truck was owned by Ryder and leased to Cort. The truck driver (a Cort employee) and the driver of the oncoming vehicle (Jorge Flores) were both killed in the head-on collision. [Defendant’s UMF 5, 16, 27]

The Flores estate sued Cort, Valdez, and others. Cort tendered the defense of that lawsuit to its insurer, defendant Travelers, and Travelers accepted the tender. [Defendant’s UMF 6, 17, 28] Cort later cross-complained against Ryder for allegedly failing to properly maintain the truck that had been leased to Cort. [Defendant’s UMF 7, 18, 29] Ryder, claiming to be an additional insured under the Cort policy, tendered the defense of Cort’s cross-complaint to Travelers. [Defendant’s UMF 8, 19, 30] Travelers declined Ryder’s tender because it was not an additional insured for claims based on its own negligent maintenance. [Defendant’s UMF 9, 20, 31]

Plaintiff Met Its Subsequent Burden:

The Plaintiff has sustained its subsequent burden by presenting sufficient evidence to create a material issue of triable fact. Specifically, the Plaintiff disputes whether the 1979 Agreement was modified by the 1994 Agreement and has presented facts which establish that the 1994 Agreement with the 2000 Schedule A required Cort to provide insurance for the Plaintiff as an additional insured without restriction as to whether the damage was caused by Ryder or not. Additionally, the Plaintiff has presented facts which establish that the Plaintiff tendered to Defendant the Complaint in Bugarin, et at v. Valdez which triggered a duty to defend which the Defendant failed to provide. Thus, the Plaintiff has sustained its resulting burden and the motion is denied.

Plaintiff’s Facts:

The Plaintiff has presented evidence which creates a material issue of triable fact regarding whether the Policy was purchased pursuant to the 1979 lease agreement between Cort and Ryder or another agreement. The Plaintiff has presented evidence that the 1979 agreement was superseded by a 1994 agreement assumed by Cort. [Plaintiff’s Disputed Fact 3, 14, 25] Plaintiff argues that under the 1994 agreement, Cort was required to purchase a policy which covers the Plaintiff and the loss at issue.

The Plaintiff also presents evidence that disputes that Ryder was not named as a defendant in the Bugarin Action Complaint. The Plaintiff has presented evidence that on February 3, 2011, plaintiffs in the Bugarin Action filed an amendment to the Bugarin Action Complaint naming Ryder as a defendant in place of “Doe 2”.

[Plaintiff Fact 6, 17, 28].

The Plaintiff disputes the Defendant’s Material Issue of Triable Facts 7, 18 and 29 which provide that the Bugarin Action Cross Complaint by Cort alleges that Ryder’s inadequate maintenance, utilizing different tread designs and inadequate treaded tires” caused or contributed to the accident. The Plaintiff presents evidence that the Cross Complaint also alleged indemnity generally in paragraph 8 which was not connected to work specifically done by Ryder. [Plaintiff Fact 7, 18, 29]

The Plaintiff presents evidence which creates a material issue of triable fact regarding whether Ryder tendered defense of all claims against it in the Bugarin Action or whether as the Defendant asserts it tendered the defense of only the Cort Cross Complaint. [Plaintiff’s Fact 8, 19, 30].

2. MOTION FOR SUMMARY ADJUDICATION BY PLAINTIFF RYDER TRUCK RENTAL

The Plaintiff has sustained its initial burden of establishing that there is no material issue of triable fact that the Defendant owed the Plaintiff a duty to defend. However, the Defendant has presented evidence which disputes the material facts presented by the Plaintiff. Therefore, the Defendant has sustained its resulting burden of creating a material issue of triable fact and the motion is denied.

Plaintiff Met Its Initial Burden:

The Plaintiff has presented facts which establish that Ryder first contracted with Cort in 1979 and that such agreement was superseded by a 1994 Agreement which was assumed by Cort in 1999 and appended in 2000. (Plaintiffs Facts 6-17) The Plaintiff has presented facts which establish that the 1994 Agreement with the 2000 Schedule A required Cort to provide insurance for the Plaintiff as an additional insured without restriction as to whether the damage was caused by Ryder or not. The Plaintiff has presented facts that Ryder’s additional insured status is supported by Certificate of Liability Insurance identifying Ryder as such. [Plaintiff’s Fact 18]. Lastly, the Plaintiff has presented facts which establish that the Plaintiff tendered to Defendant the Complaint in Bugarin, et at v. Valdez which triggered a duty to defend which the Defendant failed to provide. [Facts 19-34]

Plaintiff’s Facts:

The Plaintiff has presented evidence supporting the following facts:

Superseding Agreement:

Ryder has been doing business with Cort for a long time having first entered into a leasing contract with an indefinite duration with Cort May 15, 1979 which has never been cancelled (the “1979 Agreement”). (UMF 6, 7, 9).

Paragraph 20 of that agreement states that Cort, as “Lessee,” must provide insurance coverage for Ryder, as “Lessor”: A standard policy of automobile liability insurance (hereafter Liability Insurance) with limits (not less than $500,000 CSL) as shown on Schedule A shall be furnished and maintained by Lessee at its sole cost, written by a company reasonably satisfactory to Lessor covering both Lessor and Lessee as insureds for the ownership, use, or operation of the vehicles and any vehicles being provided as a substitute therefore. This Liability Insurance shall not include coverage for Lessor’s negligence in failing to properly maintain Vehicles. (UMF 8.)

On April 28,1999, Cort entered into an assignment and assumption agreement (the “1999 Assignment and Assumption”) with Alco Furniture Rental, Inc., (“Alco”) a company which had an existing Truck Lease and Service Agreement with Ryder dated March 10,1994 (the “1994 Superseding Agreement”) (UMF 10.) The 1999 Assignment and Assumption was executed by Alco and Cort, together with Ryder. (UMF 11.) Under the 1999 Assignment and Assumption, Alco agreed to assign “all of its right title and interest” in the 1994 Superseding Agreement to Cort. (UMF 12.) In turn, Cort agreed to “assume all of the obligations and liabilities imposed upon [Alco] pursuant to [the 1994 Agreement]….” (UMF 13.)

1994 Superseding Agreement Paragraph 10.A.(1) of the 1994 Superseding Agreement provides:

A standard policy of automobile liability insurance (hereafter Liability Insurance) with limits specified on each Schedule A will be furnished and maintained by the party designated on Schedule A at its sole cost, written by a company satisfactory to Ryder, covering both Ryder and Customer as insureds for the ownership. maintenance, use or operation of the Vehicles and any substitute vehicle. Such policy will provide that the coverage is primary and not additional or excess coverage over insurance otherwise available to either party and that it cannot be cancelled or materially altered without 30 days prior written notice to both parties. The party designated will furnish to the other certificates to evidence compliance with the provision. (UMF 14).

“Schedule A,” dated August 18, 2000, was appended to the 1994 Superseding Agreement, indicates that Cort, as “Customer,” is the party with responsibility for furnishing and maintaining liability insurance. (UMF 15.)

Paragraph 10.A.(1) of the 1994 Superseding Agreement differs from Paragraph 20 of the 1979 Agreement. A review of the two Agreements makes it clear that Paragraph 20 of the 1979 Agreement did not require Cort to provide coverage “for Lessor’s negligence in failing to properly maintain Vehicles,” Paragraph 10.A.(1) of the 1994 Superseding Agreement expressly requires the lessee to provide coverage for “maintenance… of the Vehicles….” (UMF 16.) The Plaintiff has established that the 1994 Superseding Agreement is of indefinite duration and Ryder continues to lease vehicles to Cort under that agreement today. (UMF 17.)

Certificate of Liability:

As evidence of Ryder’s status as an additional insured, Traveler’s issued a Certificate of Liability Insurance identifying Ryder as an additional insured under the Policy. (UMF 18.)

Tender of Complaint and Cross Complaint and Denial:

On October 20, 2009, a wrongful death action captioned Bugarin, et at v. Valdez, et al, San Diego County Superior Court Case No. 37-2009-00070347-CU-PO-CTL (the “Bugarin Action”), was filed naming Cort and others as defendants, including Does 1-50. (UMF 19.)

The Complaint alleged that “on or about February 12, 2009, Plaintiffs’ decedent, JORGE FLORES, was the driver of a…vehicle traveling eastbound on Interstate 8 in San Diego County.” (UMF 20.) The Complaint alleged that Mr. Flores’ death was caused by defendants’ negligence: At said time and place defendants.. .did so negligently and carelessly own, operate, repair, maintain, manage, control and entrust their vehicles so as to cause the truck driven by HENDERSON [alleged to have been an Cort employee] to careen out of control, crossing the center-divide of Interstate 8, and striking the automobile in which [Mr. Flores] driving and thereby legally causing fatal injuries to [Mr. Flores]. (UMF 21.) The Complaint also contained an allegation that “Defendant CORT was, or should have been… aware of… certain unsafe conditions of the truck… including.. inadequate maintenance, the vehicle using different tread designs and the vehicle using inadequately treaded tires.” (UMF 22.)

On December 8, 2010, plaintiffs and Cort in the Bugarin Action filed an exparte application seeking leave to file a First Amended Cross Complaint naming Ryder as a cross-defendant and stating that “plaintiffs’ counsel… will be filing a DOE amendment to add RYDER as a defendant” which the court granted. (UMF 23, 24.) On January 21, 2011, Cort filed a First Amended Cross-Complaint naming Ryder as a cross-defendant. (UMF 25.) The First Amended Cross-Complaint contained allegations that Ryder’s negligence and/or fault contributed to the Bugarin Action plaintiffs’ damages. (UMF 26.) Thereafter, on February 3, 2011, plaintiffs amended their Complaint to name Ryder as a defendant in place of “Doe 2.” (UMF 27.)

Ryder tendered defense of the claims against him in the Bugarin Action to Traveler’s on February 4, 2011. (UMF 28.) On February 22, 2011, Traveler’s responded stating that it “cannot provide Ryder with a defense regarding” the Bugarin Action and quoted language in Paragraph 20 of the 1979 Agreement stating that “[t]his Liability Insurance shall not include coverage for Lessor’s negligence in failing to properly maintain Vehicles.” Travelers also stated that the “pleadings allege that Ryder did not properly maintain the tires to the subject vehicle, which may have contributed to the accident.” (UMF 29.)

On September 16, 2011, Ryder again tendered its defense to Traveler’s. (UMF 30.) Traveler’s responded on November 11, 2011 by again denying coverage stating “that based on the long term lease agreement between Ryder and Cort Business Services coupled with the pleadings we cannot provide Ryder with a defense and indemnity….” (UMF 31.) The Plaintiff has established that following resolution of the case, on December 21, 2012, Defendant denied Ryder’s request for coverage in the form of reimbursement of its settlement and defense costs. (UMF 33, 34.)

Defendant Met Its Subsequent Burden:

A contract may validly incorporate the terms of another document, even an unsigned document. (Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 45.) The contract need not recite that it incorporates another document, so long as it guides the reader to the incorporated document. (Id.) Based on these facts set forth by defendants in response to plaintiffs’ separate statement, a triable issue is raised as to whether the 1979 Agreement was superseded or effected by the 1994 Agreement. The court does not resolve issues of fact, rather it seeks to find contradictions in the evidence, or inferences reasonably deducible from the evidence which raise a triable issue of material fact. (Acota v. Glenfed Development Corp. (2005) 128 Cal. App. 4th 1278, 1292.)

The court cannot weigh the evidence or consider the contractual interpretation of these two contracts as a matter of law to rule on the ultimate issues raised regarding whether the 1994 Agreement supersedes the 1979 Agreement. This issue is beyond the scope of this motion as brought by plaintiffs.

Defendant’s Facts:

The Defendant has presented evidence which supports facts which dispute that the 1979 agreement was superseded or effected by the 1994 Agreement which was assumed by Cort in 1999 and appended in 2000. (Defendant’s Facts 10-17) The Defendant has presented facts which dispute that the 2000 Schedule A was intended to append the 1994 Agreement rather than the 1979 Agreement and thus dispute whether Cort was required to provide insurance for the Plaintiff as an additional insured without restriction as to whether the damage was caused by Ryder or not. [Defendant’s Fact 15] The Defendant has disputed the Plaintiff’s fact that Ryder’s additional insured status is supported by Certificate of Liability Insurance identifying Ryder as such. [Defendant’s Fact 18]. Lastly, the Defendant has presented facts which dispute that the Plaintiff tendered to Defendant the Complaint in Bugarin, et at v. Valdez and whether such triggered a duty to defend which the Defendant. [Defendant’s 21, 28]

Evidentiary Objections:

Defendant’s Objections to Plaintiff’s Evidence:

The objections are not ruled upon because Defendants failed to comply with Cal. Rules of Court, R. 3.1354 in its entirety. The portion of the objectionable evidence is not quoted for the court to review and there is no section for the court to rule on the objections.

If they were in proper format, the objections would each be overruled. The evidence does not lack foundation, is not irrelevant and is not a improper legal conclusion. Furthermore, the arguments presented in support of the objections go to the weight of the evidence not the admissibility.

Plaintiff’s Objections to the Defendant’s Evidence:

The objections to George Lee Declaration paragraph 6 lines 16-25 and Exhibit 3 are sustained. The testimony and exhibit contain hearsay statements made out of court and offered for the truth of the matters asserted.

Plaintiff’s Requests for Judicial Notice in Support of Motion for Summary Adjudication and in Opposition to Defendant’s Motion for Summary Judgment:

The unopposed requests for judicial notice of Tabs 6 – 10 for Motion and Tabs 6 – 12 for Opposition are GRANTED. The documents are each documents filed in Bugarin v. Valdez.