Allied World Assurance Company (US) Incorporated v. Farm Bureau Property & Casualty Insurance Company et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Allied World Assurance Company,
Plaintiff,
v.
Farm 	Bureau 	Property 	& 	Casualty
Insurance Company, et al.,
Defendants.
No. CV-24-01677-PHX-SMM
ORDER
This matter is before the Court on Plaintiff’s and Defendants’ cross-motions for
summary judgment. (Docs. 52, 64). Plaintiff Allied World Assurance Company (“Allied
World”) seeks equitable contribution from Defendants Farm Bureau Property & Casualty
Assurance Company (“Farm Bureau”) and Western Agricultural Insurance Company
(“Western”) 	for 	three 	prior 	lawsuits, 	arising 	from 	E. 	Coli 	infections 	from 	the
consumption of romaine lettuce, that Plaintiff defended and settled. (Doc. 1). For the
following reasons, the Court denies Plaintiff’s Motion (Doc. 64) and grants Defendants’
Motion (Doc. 52).
I. 	BACKGROUND
A. The Insurance Policies
Plaintiff insured Andrew Smith Company (“ASC”), a California limited liability
company, under an Umbrella Liability Insurance Policy, bearing Policy No. 0309-1606,
with a policy period of August 21, 2017, through August 21, 2018. (Docs. 53 at 1; 65 at
12). ASC contracted to purchase romaine lettuce from nonparties Marlatt Brothers
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Produce, LLC (“Marlatt”) and Desert Premium Farms, LLC (“Desert Premium”). (Id. at
2; Id.). ASC’s grower agreements with Marlatt and Desert Premium required Marlatt and
Desert Premium to obtain liability insurance coverage listing ASC as an additional
insured “with insurance companies licensed in the State of California and acceptable to
ASC.” (Id.) It further required that “[t]he insurance coverages listed above, shall be
primary and not entitled to contribution from any insurance maintained by ASC, and shall
list ASC as an additional insured….” (Id.)
Defendants Farm Bureau and Western are not licensed to write insurance policies
in California. (Id.) However, Defendant Farm Bureau insured Marlatt under a Member’s
Choice Personal Package liability policy bearing number 7552973, with a policy period
of March 1, 2018, through March 1, 2019. (Id.) The policy included a “communicable
disease” exclusion that included, in relevant part, that “[t]here is no coverage for any
‘damages’ 	or 	‘medical 	expenses’ 	‘arising 	out 	of’ 	any 	transmission, 	or 	threat 	of
transmission, of any communicable disease or sickness.” (Id.)
Defendant Western insured Desert Premium under a commercial liability policy
bearing number AMP 6006135 (primary) and an Umbrella Liability Policy bearing
number AMU 001357 (umbrella). (Id.) The primary and umbrella policies shared an
effective policy period of July 9, 2017, through July 1, 2018. These policies also included
a communicable disease exception that states that “[t]his insurance does not apply to: . .
.’[b]odily injury’ or ‘property damage’ arising out of the actual or alleged transmission of
a communicable disease.” (Id.) 	The umbrella policy’s exclusion states that insurance
does not apply to “Bodily Injury” . . . “arising out of a communicable disease by an
insured.” (Id.)
B. Liability Certificate
Marlatt 	and 	Desert 	Premium 	shared 	insurance 	agent 	Joseph 	Robbins 	(“Mr.
Robbins”). (Doc. 53 at 3-4). In 2017, John Boelts (“Mr. Boelts”), an owner of Desert
Premium, asked Mr. Robbins to purchase insurance for Desert Premium adding ASC as
an additional insured on Desert Premium’s liability policies. (Docs. 65 at 13; 74 at 3).
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Mr. Robbins was an authorized representative for both Defendants and issued
liability insurance certificates on behalf of Defendants Farm Bureau and Western to ASC.
(Id.) However, Farm Bureau did not list ASC as an additional insured under Marlatt’s
Policy no. 7552973. (Id. at 3). The certificate issued to ASC states that “[t]his certificate
certifies liability is afforded” and “is issued as a matter of information only and does not
amend, alter or extend any of the coverages in the Farm Bureau Member’s Choice
Personal Package policy.” (Id.)
Defendant Western also issued a certificate of liability insurance” to ASC via Mr.
Robbins that states that ASC was “listed as additional insured” on Desert Premium’s
polices. (Id. at 3). However, the certificate states “[t]his certificate is issued as a matter of
information 	only 	and 	confers 	no 	rights 	upon 	the 	policy 	holder” 	and 	“does 	not
affirmatively or negatively amend extend or alter the coverage afforded by the polices
below.” (Id.) It further provided, “Important: If the certificate holder is an ADDITIONAL
INSURED, 	the 	policy(ies) 	must 	have 	ADDITIONAL 	INSURED 	provisions 	or 	be
endorsed.” (Id.)
Additionally, Mr. Robbins never advised Desert Premium, Western, or ASC that it
was not an additional insured, and Mr. Field, a senior underwriter at Defendant Farm
Bureau, never informed Desert Premium or ASC that it was not an additional insured.
(Docs. 65 at 15; 74 at 5).
C. Lawsuits
Beginning 	in 	2018, 	ASC 	faced 	three 	personal 	injury 	lawsuits 	following 	an
outbreak of E. coli infections associated with the consumption of romaine lettuce, during
the applicable policy period. (Id. at 18; Id. at 8). The lawsuits included the Cullinan,
Ingberg 	and 	Ruocchio 	lawsuits. 	(Id.) 	The 	FDA, 	Center 	for 	Disease 	Control 	and
Prevention (“CDC”), and state investigators determined that consumption of romaine
lettuce grown on farms in Yuma County, Arizona and the Wellton, Arizona area “was the
cause of the outbreak.” (Doc. 65 at 17; Id.).
On July 9, 2021, ASC agreed to settle claims brought by nonparty Nancy Cullinan
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based on allegations that Cullinan was injured after eating food contaminated with E. coli
on March 20, 2018. (Docs. 53 at 4; 65 at 19). On February 20, 2022, ASC agreed to settle
claims brought by nonparty Stephanie Ingberg based on allegations that Ingberg was
injured after consuming food contaminated with E. coli on March 20, 2018. (Id.) Finally,
on March 17, 2022, ASC agreed to settle claims brought by nonparties James and
Ruocchio based on allegations that the Ruocchios were injured after consuming food
contaminated with E. coli on March 22, 2018. (Id.) Allied World continues to incur
defense 	costs 	in 	the 	Ruocchio 	natter; 	despite 	the 	settlement, 	as 	Freshway 	filed
crossclaims in the United States District Court for the Eastern District of New York and
the matter remains ongoing. (Id.)
Plaintiff tendered defense and indemnity of its E. coli lawsuits to Defendants on
December 	13, 	2019, 	and 	on 	January 	24, 	2020, 	Defendants 	rejected 	those 	tenders
maintaining that the liability insurance policies issued by Defendants do not “include
ASC as an additional insured.” (Id.)
Plaintiff admitted in its answers to Defendants’ interrogatories that it settled the
relevant cases over one year before Plaintiff commenced this case. (Docs. 53 at 4; 65 at
11). Plaintiff admits that it paid the Ingberg settlement in full on March 17, 2022, the
Ruocchio settlement in full on April 4, 2022, and the Cullinan settlement in-full on July
15, 2021. (Id.)
Plaintiff commenced this action on July 9, 2024. (Doc. 1). Plaintiff brings claims
for equitable contributions against Defendant Western (Count I) and Defendant Farm
Bureau (Count II). (Id.) The Court allowed Defendants to amend their answer to assert a
statute of limitations defense. (Doc. 63). Defendants filed a Motion for Summary
Judgment (Doc. 52) and Plaintiff filed a Cross-Motion for Summary Judgment (Doc. 64).
The parties filed replies to their cross-motions. (Docs. 73, 75).
II. 	LEGAL STANDARD
A party seeking summary judgment “bears the initial responsibility of informing
the district court of the basis for its motion [ ] and identifying those portions of [the
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record] which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment is appropriate if
the evidence, viewed in the light most favorable to the nonmoving party, shows “that
there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c). Only disputes over facts that might
affect the outcome of the suit will preclude the entry of summary judgment, and the
disputed evidence must be “such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
III. 	DISCUSSION
Plaintiff 	seeks 	reimbursement 	under 	an 	equitable 	contribution 	theory 	from
Defendants for three lawsuits it settled and crossclaims it continues litigating on behalf of
ASC, arising from E. coli infections from the consumption of romaine lettuce. (Doc. 64).
Defendants argue that they do not have a duty to defend and indemnify ASC because
they did not insure ASC and/or the same risks. (Doc. 52). Defendants allege that the
insurance policies did not include ASC as an additional insured, the policies did not cover
a communicable disease injury, and that Plaintiff’s claims are untimely under the statute
of limitations. (Id.) For the reasons set forth, the Court finds that Plaintiff’s claims are
untimely under the relevant statute of limitations. Therefore, the Court need not address
the merits of Plaintiff’s equitable contribution claims.
A. Statute of Limitations
At issue here is whether Plaintiff’s equitable contribution claims are time barred.
(Docs. 52, 64, 73, 75). Defendant contends that the UCATA’s one-year statute of
limitations applies to Plaintiff’s equitable contribution claims. (Doc. 52 at 8-9). In
response, Plaintiff contends that the one-year statute of limitations does not apply in this
case because (1) Plaintiff asserts an independent equitable right to contribution from co-
insurers of the same risk that falls outside of the UCATA’s scope and (2) courts in other
jurisdictions have held that contribution claims between insurers are governed by general
statute of limitations provisions, not the UCATA one-year statute of limitations. (Doc. 64
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at 11); see A.R.S. § 12-253. At minimum, both parties agree that the three-year statute of
limitations under A.R.S. § 12-543 applies. (Docs. 73 at 12-13; 75 at 9).
Under Arizona law, “a cause of action accrues, and the statute of limitations
commences, when one party is able to sue another.” Gust, Rosenfeld & Henderson v.
Prudential Ins. Co. of Am., 898 P.2d 964, 967 (Ariz. 1995). “The very purpose of
enacting a statute of limitations is to fix a limit within which an action must be brought
and to prevent the unexpected enforcement of stale claims against persons who have been
thrown off their guard by want of prosecution.” Hall v. Romero, 685 P.2d 757, 763 (Ariz.
Ct. App. 1984).
When a defendant asserts the statute of limitations as a defense, the defendant has
the burden of proving that the complaint falls within the statute. Troutman v. Valley Nat.
Bank of Arizona, 826 P.2d 810, 814 (Ariz. Ct. App. 1992). “However, the burden of
proving that the statute was tolled or that the defendant is estopped from relying on the
statute falls on the plaintiff.” Id. If doubt exists “as to which of two limitations periods
apply, courts generally apply the longer.” Gust, 898 P.2d at 968.
1. 	A.R.S. § 12-2503(D)
Arizona has adopted a modified version of the Uniform Contribution Among
Tortfeasors Act (“UCATA”), A.R.S. §§ 12-2501 to 2509. The UCATA abolished the
prior common law rule prohibiting claims of contribution among joint tortfeasors and
made each joint tortfeasor responsible for that tortfeasor’s pro rata share of the entire
liability, which was to be allocated according to “relative degrees of fault.” See § 12-
2502. A right of contribution against other joint tortfeasors was created in favor of any
tortfeasor who has paid more than that tortfeasor’s “pro rata share of the common
liability.” See § 12-2501(B). Additionally, the Arizona UCATA creates a separate and
distinct cause of action for contribution which does not accrue until after one of several
joint tortfeasors has paid more than its share of the common liability. § 12-2501(B); § 12-
2503; see Nikolous v. Superior Court In & For Maricopa Cnty., 756 P.2d 925, 926 (Ariz.
1988); see also Kriz v. Buckeye Petroleum Co., 701 P.2d 1182, 1188 (Ariz. 1985).
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Although contribution is an equitable remedy, the limitations period for such a
claim is governed by statute. Nikolous, 756 P.2d at 926 (“contribution is statutory”); see
Freeman v. Sorchych, 245 P.3d 927, 932 (Ariz. App. 2011) (“In Arizona, contribution is
an equitable remedy that has been recognized by the Arizona courts and legislature in
limited circumstances, most notably in the insurance and tort contexts.”) (collecting
cases). Specifically, A.R.S. § 12-2503(D) states the following:
If there is no judgment for the injury or wrongful death against the tortfeasor
seeking contribution, his right of contribution is barred unless he has either:
1. Discharged by payment the common liability within the statute of limitations
period applicable to the claimant's right of action against him and has commenced
his action for contribution within one year after payment.
2. Agreed while action is pending against him to discharge the common liability
and has within one year after the agreement paid the liability and commenced his
action for contribution.
Here, Plaintiff contends that the Arizona UCATA does not apply to equitable
contribution claims among insurers. (Doc. 64 at 11). Rather, Plaintiff contends that the
UCATA only applies to tortfeasors seeking contribution from other tortfeasors and
insurers subrogated to its insured’s rights against tortfeasors, but it asserts an independent
right of contribution from co-insurers of the same risk. (Id.)
In response, Defendants contend that the distinction between seeking contribution
from another tortfeasor and seeking contribution from another insurer is essentially the
same. (Doc. 73 at 10-11). Further, Defendants contend that, in both scenarios, Plaintiff
must show that ASC was covered under Defendants’ policies for the same risk or
casualty. (Id. at 10); see Nucor Corp. v. Employers Ins. Co. of Wausau, 296 P.3d 74, 83-
84 (Ariz. App. 2012). Therefore, Defendants contend that Plaintiff is subject to the same
defenses that ASC would be subject to if it were asserting a coverage claim directly,
including: (1) that ASC was not an insured, and (2) that ASC was subject to a coverage
exclusion. (Doc. 73 at 10-11); see California Cas. Ins. Co. v. Am. Family Mut. Ins. Co.,
94 P.3d 616, 622 (Ariz. App. 2004).
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Plaintiff also contends that this Court should follow decisions from the District of
Nevada interpreting the Nevada UCATA. (Doc. 64 at 13-14). However, as Defendants
correctly point out, decisions in other judicial districts are not binding on this Court.
(Doc. 73 at 12); Camreta v. Greene, 563 U.S. 692, 709 n.7 (2011) (“[a] decision of a
federal district court judge is not binding precedent in either a different judicial district,
the same judicial district, or even upon the same judge in a different case.”)
This Court previously determined that the Arizona UCATA applies to insurance
companies seeking equitable contribution for liability in a tort action. (Doc. 63). Once the
statute of limitations is determined, the plaintiff has “the burden of proving that the
statute was tolled or that the defendant is estopped from relying on the statute.”
Troutman, 826 P.2d at 814. However, Plaintiff does not argue that the statute should be
tolled or that Defendants are estopped from relying on the statute.
Plaintiff admitted in its answers to Defendants’ interrogatories that it settled the
relevant cases over one-year before Plaintiff commenced this case. (Docs. 53 at 4; 65 at
11). Specifically, Plaintiff admits that it paid the Ingberg settlement in full on March 17,
2022, the Ruocchio settlement in full on April 4, 2022, and the Cullinan settlement in-full
on July 15, 2021. (Id.) However Plaintiff commenced this suit on July 9, 2024, which is
nearly three-years after the first settlement was paid in-full. (Doc. 1). Thus, Plaintiff was
approximately two years late in bringing this action. Accordingly, the Court finds that
Plaintiff’s claims are time barred under A.R.S. § 12-2503(D).
2. 	A.R.S. § 12-543
However, to the extent doubt exists “as to which of two limitations periods apply,
courts generally apply the longer.” Gust, 898 P.2d at 968; Continental Cas. Co. v. Gabe
Brick Co., 401 P.2d 168, 170 (Ariz. 1965) (“where two constructions are possible, the
one which gives the longer period of limitations is the one which is to be preferred.”).
Plaintiff contends that the three-year statute of limitations should apply and that its
claims are timely. (Doc. 64 at 14). Plaintiff further contends in its reply that the
applicable limitations period did not begin running until it paid final payment or
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settlement, and asks the Court to follow non-binding precedent in the District of Nevada
and the Northern District of Illinois. (Doc. 75 at 9). In contrast, Defendants contend that
even if the three-year statute of limitations applies, Plaintiff’s claims are still time-barred
because the cause of action began accruing when Defendants first denied coverage. (Doc.
73 at 12-13).
In Arizona, “a cause of action accrues whenever one person may sue another.”
Healey v. Coury, 783 P.2d 795, 799 (Ariz. App. 1989). In the context of equitable
contribution, Arizona law does not require an insurer to provide a complete defense
before it can file suit. Nucor, 296 P.3d at 84; see also Am. Cont’l Ins. Co., Inc., 903 P.2d
at 611 (“In determining whether a claim for equitable contribution may lie, we see no
reason why the question should be limited to whether a claim was made or a lawsuit filed
against the insured.”).
Rather, accrual occurs when the claim for a defense and indemnity is denied. See
Healey v. Coury, 783 P.2d 795, 799–800 (Ariz. App. 1989) (applying § 12-543 and
holding that “cause of action arose and the statute of limitations began to run. . .when
[Plaintiff] demanded payment and [Defendant] refused to pay”); Don Kelland Materials,
Inc. v. Langel, 560 P.2d 1281, 1282 (Ariz. App. 1977) (applying § 12-543 and holding
that claim “accrued when appellant’s claim under the policy was denied”).
Here, Defendants first denied coverage in March 2019. (Doc. 65 at 99–102.)
Defendants also denied coverage in letters to Plaintiff’s counsel sent in January 2020
(Doc. 65 at 104–09), and again in May 2020 (Doc. 65 at 111–15). All these letters were
sent more than three years before Plaintiff commenced this lawsuit on July 9, 2024. (Doc.
1). Thus, even if § 12-543’s three-year limitation applies, Plaintiff’s claims are still
barred. Moreover, Plaintiff has the burden of proving that the statute of limitations was
tolled, but Plaintiff does not argue that the statute of limitations should be tolled. See
Troutman, 826 P.2d at 814.
Thus, even if this Court applies the three-year statute of limitations under A.R.S §
12-543, Plaintiff’s claims are still time-barred because they accrued more than three years
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before Plaintiff commenced suit. Accordingly, the Court finds that Plaintiff’s claims are
barred under A.R.S. § 12-543.
IV. 	CONCLUSION
Upon 	reviewing 	the 	parties’ 	briefing 	on 	their 	cross-motions 	for 	summary
judgment, the Court concludes that Plaintiff’s claims are time-barred under both statute
of limitations, A.R.S. § 12-2503(D) and A.R.S. § 12-543. Therefore, the Court need not
reach the merits of Plaintiff’s equitable contribution claims.
Accordingly, for the reasons set forth,
IT IS ORDERED granting Defendants’ Motion for Summary Judgment. (Doc.
52).
IT IS FURTHER ORDERED denying Plaintiff’s Cross-Motion for Summary
Judgment. (Doc. 64).
IT IS FURTHER ORDERED dismissing Plaintiff’s Complaint with prejudice.
(Doc. 1).
IT IS FURTHER ORDERED directing the Clerk of Court to enter judgment
accordingly and terminate this action.
Dated this 11th day of February, 2026.
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