Crum & Forster Indemnity Company v. Robb Report Media LLC

Background

Crum & Forster Indemnity Company insured Ferrari’s 2018 Ferrari 812 Superfast. Robb Report Media LLC borrowed the car for an auto event in Napa. Anatoly Borokhovich drove the car, and it was crashed and totaled; Emil Borokhovich was a passenger. Crum paid Ferrari $292,508.35 for the damage and sued the defendants to recover that amount.

Crum relied on a loan agreement between Ferrari and Robb Report, which required Robb Report to return the car in the same condition and pay for damage. The Borokhoviches signed waivers incorporating the loan agreement. In an earlier order, the court granted Crum summary judgment on the defendants’ breach of contract and ordered additional briefing on whether Crum was entitled to damages. This order addressed equitable subrogation and revisited the earlier interlocutory conclusions concerning Emil Borokhovich.

Equitable Subrogation

Equitable subrogation allows an insurer that has paid an insured’s loss to pursue the responsible third party by stepping into the insured’s legal position. The court explained that the insurer generally must show, among other things, that the insured suffered a loss for which the defendant is liable, that the insurer paid the insured for that loss, that the insurer was not primarily responsible, and that fairness requires shifting the loss to the defendant.

The court held that Crum adequately pleaded a subrogation claim. Crum alleged that it was suing as Ferrari’s subrogee, described the insurance policy and the defendants’ contracts, described the accident, and alleged its payment to Ferrari. The court also found that Crum paid Ferrari under its policy and was not a volunteer.

Robb Report and Anatoly Borokhovich

The court held that Crum was entitled to subrogation against Robb Report and Anatoly Borokhovich. Anatoly directly caused the damage by crashing the car, so Crum had superior equities against him. Robb Report did not directly cause the crash, but it signed a loan agreement making it responsible for damage and requiring it to return the car in the same condition. The court concluded that Robb Report assumed responsibility for the damage and was in a better position to avoid the loss or, in fairness, should ultimately bear it.

The court therefore granted Crum summary judgment against Robb Report and Anatoly Borokhovich.

Emil Borokhovich

The court reached a different conclusion as to Emil, who was a passenger. His waiver incorporated Robb Report’s loan agreement and required drivers to have their licenses with them, but the court read the waiver’s plain language as imposing responsibility for damage on drivers, not passengers.

The court added that, even if Emil had assumed responsibility for the loss, Crum’s equities were not superior to his on the briefing before the court. Emil did not cause the loss, and the waiver did not identify a risk to a passenger as opposed to a driver. The court therefore denied Crum summary judgment against Emil for both breach of contract and equitable subrogation.

Rule 56(d) Issue and Disposition

The court noted that Crum’s principal equitable-subrogation argument appeared in its reply brief. It had ordered supplemental briefing to give the defendants an opportunity to respond. At oral argument, the defendants suggested that they had not had enough opportunity to address Crum’s evidence and present facts under Federal Rule of Civil Procedure 56(d), which concerns additional time or discovery needed to oppose summary judgment.

The court stated that the supplemental-briefing process was intended to avoid fairness or Rule 56(d) problems. It directed the defendants to confer with Crum and raise any objections with the court, preferably in a joint statement or, if necessary, through briefing.

The court granted Crum summary judgment against Robb Report and Anatoly Borokhovich and denied Crum summary judgment, both for breach of contract and equitable subrogation, against Emil Borokhovich. The court described the order as interlocutory to the extent the defendants had Rule 56(d) concerns about the briefing process.