Certain Underwriters at Lloyd’s, Syndicates 2623/623 v. Packard, Packard & Johnson

Case Name: Certain Underwriters at Lloyd’s, Syndicates 2623/623 v. Packard, Packard & Johnson

Case No.: 1-14-CV-271138

Motion by Defendant Packard, Packard & Johnson for Stay of Action filed by Plaintiff Certain Underwriters at Lloyd’s, Syndicates 2623/623

Defendant seeks an order staying this action in its entirety until the conclusion of another action entitled Roberts v. Packard, Packard & Johnson, JAMS # 1220043791. The Roberts action was initiated in Los Angeles Superior Court on April 11, 2011, and has proceeded as a JAMS arbitration. The first two phases have been completed and hearing of the final phase is underway. Defendant expects a decision in the Roberts case by May or June of this year. (Declaration of Robert Sallander, at 1:20-22.) This action was filed on September 26, 2014, and a summary judgment hearing is set for April 28, 2015.

Defendant argues first that “the outcome of coverage issues raised by [Plaintiff] depends on issues of facts to be determined in [the underlying Roberts] action.” (Memorandum in Support, at 1:2-3.) “A court considering whether to stay a declaratory relief action must therefore consider precisely which issues are to be litigated in order to resolve the declaratory relief action, and whether those issues are related to factual issues yet to be litigated in the underlying action. If the factual issues to be resolved in the declaratory relief action overlap with issues to be resolved in the underlying litigation, the trial court must stay the declaratory relief action. If there is no such factual overlap and the declaratory relief action can be resolved on legal issues or factual issues unrelated to the issues in the underlying action, the question as to whether to stay the declaratory relief action is a matter entrusted to the trial court’s discretion.” (Great American Ins. Co. v. Superior Court (2009) 178 Cal. App. 4th 221, 235 (internal citation omitted).)

In framing its argument, Defendant does not contend that there are overlapping factual issues, but rather that issues in the coverage case “depend on” issues in the underlying action (Memorandum in Support, at 1:2-3)—which is not the correct test. In explaining the factual basis of the motion, although Defendant states the conclusion that there is an “overlap with fact issues” (id., at 7:10), it does not identify what those facts are. What Defendant argues is not “overlap” but a lack of evidence to support a grant of declaratory relief: “[u]ntil this ruling [from the arbitrator] is made and the amount of any damages determined, the parties will not have the evidence necessary to present to this Court to make a decision on the coverage issues.” (Id., at 7:6-8.) If Defendant is correct, then Plaintiff’s summary judgment motion may be denied, but that is no basis for a stay.

As to the alternative ground of undue prejudice, Defendant argues that the filing of a coverage action, of itself, is sufficient prejudice to warrant a stay, citing Montrose Chemical Corp. v. Superior Court (1994) 25 Cal.App.4th 902, 910. However, Montrose does not support such a tautology. The moving papers do not argue or prove prejudice of the type that would warrant a stay: e.g., the underlying action involves a negligence claim, while the coverage action raises the issue of whether the conduct was intentional. (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 301.) Defendant’s argument that Plaintiff “relies on the Arbitrator’s orders” who then “clarified those rulings” (Memorandum in Support, at 8:3-6) does not articulate any factual basis for a concern about collateral estoppel. Plaintiff’s hiring of “very large law firms” (id., 8:8) does not provide a basis for a stay.

The motion is denied.

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