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Fisher Communications, Inc. v. Travelers Property Casualty Co.

United States District Court, Ninth Circuit

November 6, 2013

FISHER COMMUNICATIONS, INC., Plaintiff,
v.
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Defendant,
v.
CERTAIN UNDERWRITERS AT LLOYD'S subscribing to policy no. DP67048(1), and HOUSTON CASUALTY COMPANY, Third-Party Defendants.

ORDER

THOMAS S. ZILLY, District Judge.

THIS MATTER comes before the Court on cross-motions for partial summary judgment, docket nos. 68 and 71, brought by defendant Travelers Property Casualty Company of America ("Travelers") and plaintiff/third-party defendants Certain Underwriters at Lloyd's and Houston Casualty Company (collectively, "Underwriters"), [1] respectively. Having reviewed all papers filed in support of, and in opposition to, each motion, the Court enters the following Order.

Background

On July 2, 2009, arcing occurred in and damaged two 5000-amp busways located in the subterranean parking garage electrical room of Fisher Plaza East, located on Fourth Avenue North in Seattle. Ex. 1 to Louttit Decl. (docket no. 72-1). These busways ran from the adjacent Seattle City Light utility vault to Fisher Plaza East's switchgear, also located in this electrical room. Id. Power to the building was interrupted, and the arcing activated the sprinklers, causing water to spray over the switchgear cabinets. Id. The parties do not dispute that the switchgear did not experience arcing, but rather was damaged solely as a result of the water discharged by the fire suppression system.[2] Haack Decl. at ΒΆΒΆ 3-4 (docket no. 69); Larkin Dep. at 18:16-19:1, Ex. A to Derrig Decl. (docket no. 70).

Pursuant to the "Boiler and Machinery" or "EnergyMax 21 Equipment Breakdown Protection" Policy issued to Fisher (the "Equipment Policy"), Travelers computed the total covered loss to be $948, 638.94, and after taking into account certain deductibles, Travelers paid Fisher the following amounts:

Property Damage $388, 409.19 Business Income Loss $ 34, 657.00

Extra Expense $475, 572.75 ___________ TOTAL $898, 638.94

Ex. 6 to Louttit Decl. (docket no. 72-8). In calculating the amount due to Fisher under the Equipment Policy, Travelers took the position that the peril resulting in Fisher's loss, namely wear and tear of the bus insulation from normal use, was excluded, but the ensuing Breakdown, i.e. the arcing, was itself covered, and that the subsequent perils of fire and water were also excluded and were not covered under the ensuing loss provision. See Order at 5 (docket no. 43). The Court previously entered partial summary judgment in favor of Travelers, holding that Fisher's damages resulting from fire and water were not covered by the Equipment Policy, but the Court made no ruling concerning whether "wear and tear" or "arcing" was the efficient proximate cause of Fisher's loss. Id. at 10 & 11 n.2.

After deciding the parties' earlier cross-motions for partial summary judgment, the Court directed the parties to file a joint status report indicating what, if any, issues remain for trial in this matter. Id. at 11. In response, the parties outlined the following claims. Underwriters asserted a claim that the Equipment Policy contains a "special grant of coverage for water damage" in the amount of $250, 000; Travelers denies this claim on the grounds that the provision at issue merely states a policy sub-limit and that the water damage at issue is specifically excluded. Travelers asserted a counterclaim that the portion of the Extra Expense paid to Fisher, which was associated with temporarily supplying power to the building, constitutes a "joint loss" for which Underwriters owes to Travelers a pro rata share; Underwriters deny this counterclaim and instead contend that Travelers owes half of the Extra Expense for the period from early July to late October 2009, or in the alternative for the period from early July to early August 2009. Joint Status Report (docket no. 47); Travelers Mtn. at 1-2 (docket no. 68); Underwriters Mtn. at 2 (docket no. 71). This Order will address these claims and related arguments.

Discussion

A. Summary Judgment Standard

The Court shall grant summary judgment if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). To survive a motion for summary judgment, the adverse party must present "affirmative evidence, " which "is to be believed" and from which all "justifiable inferences" are to be favorably drawn. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 257 (1986). "Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and ...


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