U.S. Specialty Insurance Company v. Silver Electric Builders, Inc. ( 2024 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 U.S. SPECIALTY INSURANCE Case No. 21-cv-00564-JD COMPANY, 8 Plaintiff, ORDER RE SUMMARY JUDGMENT 9 v. 10 SILVER ELECTRIC BUILDERS, INC., et 11 al., Defendants. 12 13 Plaintiff U.S. Specialty Insurance Company (USSIC) seeks summary judgment on its 14 claim for a declaration that it has no obligation under certain insurance policies to indemnify 15 Defendant Silver Electric Builders, Inc. (Silver Electric) for any damages awarded in the action 16 initiated in California state court by defendant Richard Spieker against Silver Electric for allegedly 17 negligent contractor work. See generally Dkt. No. 39. The parties’ familiarity with the record is 18 assumed. Summary judgment is granted to USSIC. 19 This case is on all fours with All Green Electric, Inc. v. Security National Insurance Co., 20 22 Cal. App. 5th 407 (2018). There, the California Court of Appeal interpreted policy language 21 materially identical to Exclusion “m” in the policies at issue here to exclude coverage where a 22 contractor had performed work on a mammogram machine and the machine ceased functioning 23 because of a loose screw the medical center asserted was negligently left loose by the contractor. 24 Id. at 410-11, 413-14. In the state-court action, Spieker is seeking damages -- in the form of lost 25 rental income and tenant relocation costs -- caused by Silver Electric’s allegedly negligent failure 26 to pull building permits and arrange an inspection. See Dkt. Nos. 41-1 at ECF 4.1 As in All 27 1 Green, Spieker suffered damages from not being able to make use of particular property (there a 2 mammogram machine, here apartment units) because of a condition affecting the property that 3 was brought about as a result of the insured contractor’s allegedly negligent work. See 22 Cal. 4 App. 5th at 413. This is also so for Spieker’s argument that subpart (1) of Exclusion “m” does not 5 exclude coverage, because summary judgment for USSIC is appropriate under subpart (2) on the 6 ground that the claimed loss of use was due to “[a] delay or failure by [Silver Electric]” to 7 “perform a contract or agreement in accordance with its terms” -- namely, ensuring that the 8 remodeling was compliant with the local building code. Dkt. No. 40-1 at ECF 27; 40-2 at ECF 21. 9 Spieker says that there is no basis in the record for so concluding because USSIC did not 10 introduce into evidence his contract with Silver Electric.2 The point is not well taken. The record 11 supportably shows that procuring building permits and inspection was required by local law, see 12 Dkt. No. 41-1 at ECF 4, and that it was Spieker’s standard practice to provide hired contractors 13 “with drawings, plan sets and all supporting documents for the contractor to obtain individual 14 building permits for each apartment unit,” Dkt. No. 46-1 at 2. These facts were not contested. 15 Consequently, the record shows that, even if the failure to obtain a permit was the result of 16 inadvertence or carelessness and so was an “occurrence,” the resultant loss of use of the 17 apartments was due to Silver Electric’s “failure” to “perform a contract or agreement in 18 accordance with its terms.” Dkt. No. 40-1 at ECF 27; 40-2 at ECF 21. Although the Court views 19 the evidence in the light most favorable to Spieker and draws all reasonable inferences in his 20 favor, see Winding Creek Solar LLC v. Peevey, 293 F. Supp. 3d 980, 989 (N.D. Cal. 2017), there 21 is no basis in the record for inferring that his contract with Silver Electric deviated from the norm 22 and so the failure to obtain building permits was not also a failure to perform the contract’s terms. 23 Overall, the record reveals no triable questions of material fact. Further, under All Green, 24 the policies here exclude coverage for the claimed damages, and Spieker makes no argument that 25 state court. See Fed. R. Ev. 201(b)(2); Plichcik v. Safeco Ins., No. 21-cv-05137-JD, 2024 WL 26 497138, at *2 n.2 (N.D. Cal. Feb. 8, 2024). 27 2 USSIC made the particular argument as to loss of use under Exclusion “m” and All Green in a 1 the Supreme Court of California would have decided that case differently. Consequently, USSIC 2 || is entitled to summary judgment and the declaratory relief it seeks. 3 IT IS SO ORDERED. 4 Dated: November 12, 2024 5 6 JAM ONATO 7 Uniteff States District Judge 8 9 10 11 12 13 © 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28