Wirum v. Shapiro et al

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Entered on Docket
November 02, 2009
US BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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7 UNITED STATES BANKRUPTCY COURT
8 NORTHERN DISTRICT OF CALIFORNIA
9} Inre
10 || 360 VIANSA, LLC, No. 07-50206 (D.Nev.)
11 Debtor(s).
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3 ANDREA A. WIRUM, Liquidating Trustee,
14 Plaintiff(s),
15 V. A.P. No. 08-1019
16 || JOEL A. “JAKE” SHAPRIO, et al.,
17 Defendant(s).
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19 Second Memorandum on Motion for Summary Judgment
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The court has outlined the facts in its pnor memorandum. There is an additional fact which
7 must be considered in detenmining if the directors were covered by the National Union insurance
“2 policy. Relying only on the onginal and since-amended complaint in this adversary proceeding,
a National Union alleges that the purchase of the tungsten mine was part of a “a series of complex
we business transactions” which rendered the debtor insolvent and that one of the transactions, the
. purchase of a granite and gravel quarry in Texas, occurred prior to the issuance of the National Union
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INFORMATION

CRS 08-01019 Doc#97 Filed: 11/02/09 Entered: 11/02/09 16:30:36 Page 1 of 4

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26 	1Erroneously referred to by National Union in its brief as Endorsement #8.
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policy.
Endorsement #12 to the policy1 specifies that National Union is not liable under the policy for
any wrongful act occurring prior to March 3, 2006. It also specifies that a loss arising out of the same
or related wrongful act shall be deemed to arise from the first such same or related wrongful act.
Again relying only on the original complaint, National Union alleges that the Texas quarry was
purchased on June 27, 2005. From these facts alone, National Union argues that the purchase of the
tungsten mine was related to the Texas quarry purchase so it is deemed to have arisen before the policy
was in effect.
The court agrees with National Union that the pleadings of an adverse party are properly
considered to be judicial admissions which should be considered in ruling on a motion for summary
judgment. Brunet & Redish, Summary Judgment Fed. L. & P. (Third Ed.2006), § 8:5. However,
the admissions in the original complaint at most create an ambiguity as to whether the purchase of the
Texas quarry was a related wrongful act. 	If there is no further evidence on the issue and the trial is to
be a bench trial, the court may summarily interpret an evaluate evidence in order to derive legal
conclusions. Schwarzer, The Analysis and Decisions of Summary Judgment Motions (Federal Judicial
Center 1991), p. 39. Before doing so the court must be sure that trial would add nothing to its ability to
decide the case. Summary judgment is appropriate only when a complete factual development could
not possibly alter the outcome and the credibility of the witnesses is not at issue. Transworld Airlines
v. American Coupon Exchange, 913 F.2d 676, 684-85 (9th Cir. 1990).
The court is very close to granting summary judgment in favor of Wirum and against National
Union. Insurance policy exclusions are strictly construed, while exceptions to exclusions are broadly
construed in favor of the insured. An insurer cannot escape its basic duty to insure by means of an
exclusionary clause that is unclear. Any exception to the performance of the basic underlying
obligation must be so stated as clearly to apprise the insured of its effect; the burden rests upon the
Case: 08-01019 Doc# 97 Filed: 11/02/09 Entered: 11/02/09 16:30:36 Page 2 of 4

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insurer to phrase exceptions and exclusions in clear and unmistakable language. The exclusionary
clause must be conspicuous, plain and clear. This rule applies with particular force when the coverage
portion of the insurance policy would lead an insured to reasonably expect coverage for the claim
purportedly excluded. E.M.M.I. Inc. v. Zurich American Ins. Co., 32 Cal.4th 465, 471, 84 P.3d 385,
389-90 (2004). 	If the court were sure no further evidence is forthcoming on what the policy means by
“related,” it would apply these basic principles of insurance contract interpretation to grant summary
judgment in favor of Wirum. However, since a complete factual development might conceivably alter
the outcome by showing that the Texas quarry and the tungsten mine acquisitions were related, no
matter how “related” is interpreted, the court will refrain from further summary adjudication.
The court notes in passing that it declines to allow National Union to collaterally attack the
default judgments in the guise of an evidentiary objection, and it rejects National Union’s
“indispensable party” argument for the same reasons as the court in Brown v. American Intern. Group,
Inc., 339 F.Supp2d 336, 342 (D.Mass.2004).
For the foregoing reasons, both Wirum’s motion and National Union’s countermotion for
summary judgment will be denied, except for the partial adjudication set forth in this court’s order of
October 29, 2009.
Dated: November 2, 2009
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 08-01019 Doc# 97 Filed: 11/02/09 Entered: 11/02/09 16:30:36 Page 3 of 4

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Case: 08-01019 Doc# 97 Filed: 11/02/09 Entered: 11/02/09 16:30:36 Page 4 of 4
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