Zurich American Insurance Company of Illinois v. Accuire, LLC ( 2019 )

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 ZURICH AMERICAN INSURANCE No. 2:18-cv-02065-JAM-AC COMPANY OF ILLINOIS, 10 Plaintiff, 11 ORDER GRANTING PLAINTIFF’S v. MOTION FOR SUMMARY JUDGMENT 12 ACCUIRE, LLC, and DOES 1 13 through 100, inclusive, 14 Defendants. 15 16 On July 28, 2018, Zurich American Insurance Company of 17 Illinois (“Plaintiff” or “Zurich”) filed suit against Accuire, 18 LLC. (“Defendant” or “Accuire”), alleging breach of contract. 19 Compl., ECF 1. Two months later, Plaintiff filed a Motion for 20 Summary Judgment. Mot. Summ. J. (“Mot.”), ECF No. 14. Defendant 21 failed to timely file an opposition to this motion in accordance 22 with Local Rule 230(c). Because Plaintiff established that no 23 genuine issues of material fact exist, the Court GRANTS 24 Plaintiff’s Motion for Summary Judgment.1 25 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 22, 2019. 1 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 2 Plaintiff issued a workers’ compensation insurance policy to 3 Defendant. Comp. ¶ 7. The initial premium charged for the 4 policy was an estimate subject to adjustment based on a payroll 5 and renumeration audit to be performed after the conclusion of 6 the policy period. Compl. ¶ 7. Once the policy period ended, 7 Plaintiff completed the audit and sent the results to Defendant 8 along with demand for payment of an additional premium totaling 9 $491,614. Compl. ¶ 9. Defendant has not paid any portion of the 10 amount owed. Compl. ¶ 9. 11 Plaintiff filed suit against Defendant alleging that 12 Defendant breached their written insurance contract by failing to 13 pay the additional premium of $491,614 owed after the payroll 14 audit, as required by the terms of the contract. Mot. at 6. 15 Defendant asserts the following three defenses: 16 1. Plaintiff’s managing general agent orally promised 17 Defendant’s broker that the rates used in the audit 18 would be the rates that were in effect at an earlier 19 time; 20 2. Neither Defendant’s insurance broker nor Defendant’s 21 principals read the written insurance contract that 22 included the rates to be charged for the policy prior 23 to accepting the written insurance contract; and 24 3. Defendant was improperly charged a higher than 25 originally quoted experience modification rating when 26 the additional premium was calculated after the payroll 27 audit. 28 Mot. at 6. 1 II. OPINION 2 A. Legal Standard 3 A Court must grant a party’s motion for summary judgment 4 “if the movant shows that there is no genuine dispute as to any 5 material fact and the movant is entitled to a judgment as a 6 matter of law.” Fed. R. Civ. Proc. 56(a). The movant bears the 7 initial burden of “informing the district court of the basis for 8 its motion and identifying [the documents] which is believes 9 demonstrate the absence of a genuine issue of a material fact.” 10 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is 11 material if it “might affect the outcome of the suit under the 12 governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 13 248 (1986). Once the movant makes this initial showing, the 14 burden rests upon the nonmoving party to “set forth specific 15 facts showing that there is a genuine issue for trial.” Id. An 16 issue of fact is genuine if “the evidence is such that a 17 reasonable jury could return a verdict for the nonmoving party.” 18 Id. 19 B. Analysis 20 As Plaintiff establishes in its Motion for Summary 21 Judgment, Accuire’s defenses are without merit and thus, 22 Plaintiff in entitled to judgment as a matter of law. With 23 regard to the first defense, the written contract, by its own 24 terms, makes clear that it was a fully integrated agreement. 25 Exh. B to Aff. of Sheryl Totzke, ECF No. 14-4, at 60 (“. . . 26 [T]his policy, including all endorsements forming a part 27 thereof, constitutes the entire contract of insurance”). And 28 under California law, the unambiguous terms of a fully 1 integrated agreement make alleged prior statements or 2 representations regarding different or contradictory terms 3 inadmissible parol evidence. Masterson v. Sine, 68 Cal.2d 4 222,225 (1968). Given that the prior representations offered by 5 the Defendant would contradict the terms of the written 6 contract, they are inadmissible parol evidence and cannot serve 7 as a defense. 8 The failure to read the written contract before accepting 9 it is likewise not a defense. Vernon v. Drexel Burnham & Co., 10 52 Cal.App.3d 706, 714 (1975) (failure to read the terms of a 11 contract is not a meritorious defense to enforcement of an 12 unread term). Thus, Accuire’s second defense also fails. 13 Accuire’s final defense is just as futile. Endorsement 004 14 of the written contract includes the modified experience 15 modification rating. Exh. B to Aff. of Sheryl Totzke, ECF No. 16 14-4, at 156. As noted above, the policy, “including all 17 endorsements,” make up the terms of the written contract. Id. 18 at 60. Thus, the modified rate was appropriately included in 19 the calculation of the additional premium owed pursuant to the 20 after-policy payroll audit. 21 The undisputed facts establish that Accuire breached a 22 contract it properly entered into with Zurich. Absent a viable 23 defense to this breach, Zurich is entitled to judgment as a 24 matter of law. 25 26 27 28 1 TILT. ORDER 2 For the reasons set forth above, the Court GRANTS 3 Plaintiff’s motion for summary judgment. 4 IT IS SO ORDERED. 5 Dated: October 21, 2019 Lh Ion 7 teiren staves odermacr 7008 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28