Clear Blue Specialty Insurance Company v. Karimi
3:24-cv-07351
| N.D. Cal. | Aug 25, 2025Background
- Clear Blue Specialty Insurance provided a commercial general liability policy to Rami Karimi (dba Karimi Construction), who was acting as general contractor on a tennis court construction project in Atherton, California.
- During construction, a concrete truck tipped over, injuring employees Castro and Chong, who worked for subcontractors Saviano and Ting.
- Multiple state court lawsuits (the "Underlying Actions") were filed over the accident—two personal injury suits and two insurance subrogation actions.
- Clear Blue defended Karimi in the Underlying Actions under a reservation of rights, then filed this federal suit seeking reimbursement of defense costs and a declaratory judgment that the claims are not covered by the policy.
- Karimi, joined by Castro and Chong, moved to stay the federal coverage action pending the outcomes of the Underlying Actions, citing overlapping factual issues and prejudice.
- The court considered whether a stay is appropriate under federal procedural law (Landis factors), not the more insurer-friendly Brillhart/Wilton abstention standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Should the federal action be stayed? | Clear Blue will be harmed by delay and defense costs; coverage disputes are separate from the Underlying Actions. | Karimi/Chong/Castro argue stay avoids inconsistent factual determinations, prevents prejudice to non-insured defendants, and forestalls needing to take inconsistent legal positions. | Stay granted to avoid inconsistent factual determinations and prejudice to defendants; minimal speculative harm to plaintiff. |
| Prejudice to Plaintiff (Clear Blue) from Delay | Delay in seeking reimbursement is materially harmful. | Delay is not recognized harm for coverage/reimbursement; speculative at best. | Delay in reimbursement is not cognizable harm. |
| Prejudice to Defendants from Proceeding | Defendants are merely required to litigate, which is not prejudicial. | Defendants (especially non-insureds) would be forced to litigate similar issues in dual forums and risk inconsistent positions or estoppel. | Defendants would suffer prejudice if stay is denied. |
| Overlap of Factual/Legal Issues | Coverage turns on policy interpretation, not facts from Underlying Actions. | Facts about roles and conduct are at issue in both state and federal cases (e.g., subsidence exclusion, scope of work, employment status). | Overlapping factual issues support a stay. |
Key Cases Cited
- CRST Van Expedited, Inc. v. Werner Enterprises, Inc., 479 F.3d 1099 (federal courts apply federal procedural law in diversity cases)
- Landis v. North American Co., 299 U.S. 248 (courts have inherent authority to stay proceedings based on interests of justice)
- CMAX, Inc. v. Hall, 300 F.2d 265 (articulates factors for granting a stay: prejudice, hardship, orderly course of justice)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (delay in monetary recovery is not cognizable harm under stay analysis)
- Scottsdale Ins. Co. v. MV Transportation, 36 Cal. 4th 643 (duty to defend can be triggered by extrinsic facts)