NATIONWIDE MUTUAL INSURANCE COMPANY v. MURRAY (2025)

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [ECF No. 23]

I. SUMMARY OF DECISION

During a Fourth of July party in 2019, Defendant David E. Murray negligently disposed of fireworks at a house located in Spring, Texas (the “Property”), which caused the Property to burn to the ground. The Property was owned by ME Alpha III, LLC, which is a limited liability company that Murray managed and controlled. Following the fire, Murray's brother was named the manager of ME Alpha III, and ME Alpha III sued Murray over the damage to the Property. Murray then demanded that his homeowner's insurance carrier, Plaintiff Nationwide Mutual Insurance Company, defend him in that lawsuit and indemnify him for any losses.

Presently before the Court is Nationwide's motion for summary judgment.¹ The Court conducted a hearing on the Motion in December 2024. After considering the papers filed in support and in opposition,² as well as the argument of counsel at the hearing, the Court GRANTS Nationwide's Motion, for the reasons set forth below.

II. PROCEDURAL Background

Nationwide commenced this action against Murray in October 2023.³ Through its Complaint, Nationwide seeks declaratory judgment that Nationwide is not required to indemnify Murray for the damage he caused to the Property.⁴

In November 2024 Nationwide filed the instant Motion, through which it argues that there are no material facts in dispute and that it is entitled to judgment as a matter of law.⁵ Murray agrees that there are no material factual disputes, but he requests, instead, that judgment be entered in his favor, pursuant to Rule 56(f)(1) of the Federal Rules of Civil Procedure.⁶

III. LEGAL STANDARD

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). When deciding a motion for summary judgment, the court construes the evidence in the light most favorable to the non-moving party. See Barlow v. Ground, 943 F.2d 1132, 1135 (9th Cir. 1991). However, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986) (emphasis in original). The substantive law determines the facts that are material. See id. at 248. “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. Factual disputes that are “irrelevant or unnecessary” are not counted. Id. A dispute about a material fact is “genuine” “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

Under that standard, the moving party has the initial burden of informing the court of the basis for its motion and identifying the portions of the pleadings and the record that it believes demonstrate the absence of an issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the non-moving party bears the burden of proof at trial, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. See id. at 325. Instead, the moving party need only prove that there is an absence of evidence to support the non-moving party's case. See id.; In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010). The party seeking summary judgment must show that “under the governing law, there can be but one reasonable conclusion as to the verdict.” Anderson, 477 U.S. at 250.

If the moving party sustains its burden, the non-moving party must then show that there is a genuine issue of material fact that must be resolved at trial. See Celotex, 477 U.S. at 324. A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson, 477 U.S. at 248. “This burden is not a light one. The non-moving party must show more than the mere existence of a scintilla of evidence.” Oracle Corp. Sec. Litig., 627 F.3d at 387 (citing Anderson, 477 U.S. at 252). The non-moving party must make that showing on all matters placed at issue by the motion as to which it has the burden of proof at trial. See Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 252.

Furthermore, a party “may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). “The burden is on the proponent to show that the material is admissible as presented or to explain the admissible form that is anticipated.” Advisory Committee Notes, 2010 Amendment, to Fed. R. Civ. P. 56. Reports and declarations in support of an opposition to summary judgment may be considered only if they comply with Rule 56(c), which requires that they “be made on personal knowledge, set forth facts that would be admissible evidence, and show affirmatively that the declarant is competent to testify to the matters stated therein.” Nadler v. Nature's Way Prod., LLC, 2015 WL 12791504, at *1 (C.D. Cal. Jan. 30, 2015); see also Loomis v. Cornish, 836 F.3d 991, 996–97 (9th Cir. 2016) (noting that hearsay statements do not enter into the analysis on summary judgment).

IV. REQUEST FOR JUDICIAL NOTICE

Nationwide requests that the Court take judicial notice of the following documents and related items:⁷

• certified Texas Franchise Tax Board public information reports related to ME Alpha III, for the years 2016–2024;8

• certified Texas Franchise Tax Board public information reports for Murray Equity, LLC, for the years that those records are available between 2014–2024;9

• the petition that ME Alpha III filed against Murray in Texas state court;10 and

• the disclosures and expert designations that ME Alpha III served on March 10, 2023, in the state court case against Murray.11

Murray opposes each of those requests for judicial notice.¹²

The Federal Rules of Evidence permit a district court to take judicial notice of facts that are “not subject to reasonable dispute” because they “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Such facts include “matters of public record.” Intri-Plex Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir. 2007). Additionally, “[t]he court may judicially notice a fact that is not subject to reasonable dispute because it ․ can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(c). In the Ninth Circuit, “court filings and other matters of public record” are sources whose accuracy cannot reasonably be questioned for the purpose of Rule 201. Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). “The court ․ must take judicial notice if a party requests it and the court is supplied with the necessary information.” Fed. R. Evid. 201(c)(2).

Here, it is appropriate for the Court to take judicial notice of the existence of the Texas Franchise Tax Board records and the filings that ME Alpha III made in state court, because each of those documents is a public record. See Reyn's Pasta Bella, 442 F.3d at 746; see also Lacayo v. Seterus, Inc., 2018 WL 3326660, at *6 n.4 (C.D. Cal. April 30, 2018) (taking judicial notice of the existence of publicly available tax records). The Court does not, however, take the facts stated within those records as true. See Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001).

V. FACTUAL BACKGROUND

The material facts set forth below are sufficiently supported by admissible evidence and are uncontroverted. They are “admitted to exist without controversy” for the purpose of summary judgment. See Fed. R. Civ. P. 56(e)(2); L.R. 56-3. The court deems a fact undisputed when the parties’ “disputes” of that fact are merely restatements of the same fact, they do not actually contradict the substance of a fact, or they argue the relevancy and materiality of an otherwise undisputed fact. See Fed. R. Civ. P. 56(e)(2); L.R. 56-3.¹³

A. Murray, Murray Equity, and ME Alpha III

Murray has been in the business of flipping houses—i.e., purchasing houses to renovate and sell them—for more than 11 years.¹⁴ As a part of his business, in 2013 Murray formed Murray Equity, LLC.¹⁵ At the time that Murray Equity was created, Murray was its only manager or member.¹⁶

In 2015 Murray formed another limited liability corporation, ME Alpha III, which exists for the “sole purpose of holding title to the properties that were intended to be ‘flipped’ by Murray Equity.”¹⁷ To the extent that paper records exist for ME Alpha III, those records are stored at the home of Murray's brother, Daniel, as they have been since at least 2019.¹⁸ But those records are sparse. For example, although Murray was the sole member of ME Alpha III at the time of its founding,¹⁹ Murray asserts that ME Alpha III gained approximately 12 new members at some point between its formation and July 2019, or, alternatively, that ME Alpha III is in fact a wholly owned subsidiary of Murray Equity.²⁰ But to the extent that either of those assertions is true, no records exist that evidence when or how the membership interest in ME Alpha III changed.²¹ Similarly, ME Alpha III has no signed operating agreement or other governing document.²²

Murray was the sole manager of ME Alpha III until approximately April 2021, at which time Daniel became the manager of ME Alpha III.²³

B. The Property

In October 2017 Murray Equity purchased the Property—located at 6514 Kodes Clay Court, Spring, Texas—for approximately $220,000.²⁴ Murray, through Murry Equity, then transferred the title and purchase rights for the Property from Murray Equity to ME Alpha III, which made ME Alpha III the title owner of the Property.²⁵

To offset the cost of renovations on the Property and to fund other property purchases, Murray obtained a $198,000 loan on behalf of ME Alpha III, for which Murray provided a personal guaranty.²⁶ In connection with that loan, Murray was required to purchase insurance up to the amount of the loan—i.e., $198,000.²⁷ Murray complied with that obligation, but he did not purchase any additional insurance for the Property.²⁸ That choice was deliberate: Murray determined that it was more cost effective to forego purchasing excess insurance for the houses that he intended to resell.²⁹

Shortly after purchasing the Property, Murray and Daniel—who worked as an independent contractor supervised by Murray ³⁰ —began renovations.³¹ Those renovations were nearly finished when, in July 2019 Murray travelled to Texas to attend a property auction.³² Murray received permission from the manager of ME Alpha III—i.e., himself—to stay at the Property after the auction to celebrate the Fourth of July with his assistant and his son.³³ While he was there, Murray decided to shoot fireworks in the neighborhood near the Property.³⁴ Murray disposed of the firework debris among construction materials in a garbage can located in the garage of the Property.³⁵ The Property—on which 90 to 95% of the renovations had been completed—caught on fire, and it was destroyed.³⁶

In April 2021 Daniel took over as manager of ME Alpha III.³⁷ Two months later, ME Alpha III filed a lawsuit against Murray in Texas state court,³⁸ through which ME Alpha III sought at least $664,890.53 in economic damages.³⁹ If awarded, a portion of those damages would be credited back to Murray, but it is unclear how large that portion would be.⁴⁰

C. The Nationwide Homeowner's Insurance Policy

In connection with Murray's primary residence located in Mission Viejo, California, Nationwide issued to Murray Homeowner's Insurance Policy No. 7204HR060259 (the “Policy”).⁴¹ The Property was not listed on the Policy, and Nationwide had no knowledge that the Property existed.⁴² Yet when ME Alpha III sued Murray, Murray asserted that the Policy provided coverage and that Nationwide had a duty to defend Murray in the lawsuit and to indemnify him for any losses.⁴³ Nationwide agreed to defend Murray, but it reserved its rights related to its duty to indemnify.⁴⁴

In general, the Policy covers property damage that “result[s] from negligent personal acts or negligence arising out of the ownership, maintenance or use of real or personal property,”⁴⁵ including damage “to the property of others, caused by an ‘insured, regardless of legal liability.’ ”⁴⁶ But the Policy contains two significant exclusions.

First, the Policy excludes coverage for damage to any premises “[o]wned by an ‘insured’ ” that “is not an ‘insured location’ ” (the “Uninsured Property Exclusion”).⁴⁷ Insured locations include residences, “[a]ny premises used by [the insured] in connection with a [residence],” “[a]ny part of a premises” that is “[n]ot owned by an insured” but at which an “ ‘insured’ is temporarily residing,” and “[a]ny part of a premises occasionally rented to an ‘insured’ for other than ‘business’ use.”⁴⁸

Second, the Policy excludes coverage for property damage “arising out of or in connection with a ‘business’ ․ engaged in by an ‘insured,’ ”⁴⁹ as well as third-party property damage “[a]rising out of” “[a]ny act or omission in connection with a premises owned, rented, or controlled by an ‘insured’ other than the insured location’ ”⁵⁰ (the “Business Exclusion”). The Policy defines “business” as “a trade, profession or occupation, including self-employment, engaged in on a full-time, part-time or occasional basis.”⁵¹

VI. ANALYSIS

Nationwide argues that the Policy bars coverage for the damage that Murray caused to the Property for two reasons. First, Nationwide contends that the damage falls within the Uninsured Property Exclusion because ME Alpha III is the alter ego of Murray, which makes Murray the true owner of the Property. Second, Nationwide asserts that the damage falls within the Business Exclusion because the damage arose out of business in which Murray was engaged. For the reasons explained below, the Court concludes that both exclusions apply.

A. Legal Framework

“An insurance policy is, fundamentally, a contract between the insurer and the insured.” LaBarbera v. Sec. Nat'l Ins. Co., 86 Cal. App. 5th 1329, 1340 (2022) (citation omitted). The “interpretation of policy language is a question of law.” MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 641 (2003). “In construing the language of an insurance policy, a court should give the words used their plain and ordinary meaning, unless the policy clearly indicates to the contrary.” Giddings v. Indus. Indem. Co., 112 Cal. App. 3d 213, 218 (1980).

The insured has the burden to establish that its claim is within the basic scope of insurance coverage. See Aydin Corp. v. First State Ins. Co., 18 Cal. 4th 1183, 1188 (1998). If the insured makes that showing, then the insurer bears the burden to prove that the claim is specifically excluded. See id. “When an insurer seeks summary judgment ‘on the ground the claim is excluded,’ the insurer has the burden ‘to prove that the claim falls within an exclusion.’ ” Imperium Ins. Co. v. Unigard Ins. Co., 16 F. Supp. 3d 1104, 1115 (E.D. Cal. 2014) (citing Roberts v. Assurance Co. of America, 163 Cal. App. 4th 1398, 1406 (2008)).

Exclusionary language in an insurance policy “must be plain, clear, and conspicuous.” ML Direct, Inc. v. TIG Specialty Ins. Co., 79 Cal. App. 4th 137, 141 (2000). An exclusion is plain and clear if it is “stated precisely and understandably, in words that are part of the working vocabulary of the average layperson.” Dominguez v. Fin. Indem. Co., 183 Cal. App. 4th 388, 396 (2010). Courts “find limiting language to not be plain and clear where the provision is ambiguous, the provision uses complicated words not within the knowledge of average lay persons, or where the language is ‘confusing.’ ” Marentes v. State Farm Mut. Auto. Ins. Co., 224 F. Supp. 3d 891, 910 (N.D. Cal. 2016) (collecting cases). “Ambiguities are construed against the insurer.” Madera Grp., LLC v. Mitsui Sumitomo Ins. USA, Inc., 545 F. Supp. 3d 820, 834 (C.D. Cal. 2021). “However, ‘when the terms of the policy are plain and explicit, the courts will not indulge in a forced construction so as to fasten a liability on the insurance company which it has not assumed.’ ” Id. (citing First Am. Title Ins. v. XWarehouse Lending Corp., 177 Cal. App. 4th 106, 115 (2009)).

B. Uninsured Property Exclusion

Under California law, “[a] corporate identity may be disregarded ․ where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation.” Cam-Carson, LLC v. Carson Reclamation Authority, 82 Cal. App. 5th 535, 549 (2022). The doctrine is equitable in nature, and it applies when two conditions are met. First, there must be “ ‘such a unity of interest and ownership that the individuality, or separateness, of the said person and corporation has ceased.’ ” In re Schwarzkopf, 626 F.3d 1032, 1038 (9th Cir. 2010) (quoting Wood v. Elling Corp., 20 Cal. 3d 353, 363 n.9 (1977)). Second, “ ‘adherence to the fiction of the separate existence of the corporation’ ” must effectively “ ‘sanction a fraud or promote injustice.’ ” Id. (quoting Wood, 20 Cal. 3d at 363 n.9).

As a threshold matter, Murray does not engage with Nationwide's alter ego theory in any significant way. According to Murray, alter ego liability is irrelevant because “shamming ME Alpha III only gets Nationwide to Murray Equity,”⁵² and Nationwide has not attempted to establish that Murray Equity was also Murray's alter ego. Murray's argument is somewhat difficult to follow, but it seems to rest on a mistaken understanding of the alter ego doctrine. Murray appears to believe that applying the alter ego theory is synonymous with declaring ME Alpha III a “sham” corporation, which would mean that ME Alpha III is not a real legal entity and that ME Alpha III's owner, Murray Equity, is the true owner of the Property.⁵³ In other words, Murray views the alter ego doctrine as capable of serving only one purpose: disregarding the corporate form in order to hold its owner liable for the corporation's malfeasance.⁵⁴

Although Murray's view may be a common way to apply the alter ego doctrine, the Court cannot find any reason to apply it that way here. It is well settled that a court need not fully “dissolve the corporation” to make an alter ego finding. Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290, 299 (1985). Rather, to pierce the corporate veil is to decide that “under certain circumstances a hole will be drilled in the wall of limited liability erected by the corporate form; for all purposes other than that for which the hole was drilled, the wall still stands.” Id. Thus, an analysis regarding whether the alter ego doctrine applies must be tailored to the specific purpose for which a party seeks to pierce the corporate veil. See id. Here, Nationwide does not, as Murray suggests, seek to hold ME Alpha III or Murray liable in any way—it merely seeks a declaration that, for the purpose of determining ownership of the Property with respect to insurance coverage, Murray and ME Alpha III are the same entity.⁵⁵ Thus, the Court undertakes the alter ego analysis for that limited purpose, not with respect to whether Nationwide could ultimately reach through ME Alpha III to its owner or members. See id.⁵⁶

1. Unity of Interest

When deciding whether a unity of interest exists between two related entities, a court must consider “the commingling of funds and assets of the two entities, identical equitable ownership in the two entities, use of the same offices and employees, disregard of corporate formalities, identical directors and officers, and use of one as a mere shell or conduit for the affairs of the other.” Cam-Carson, 82 Cal. App. 5th at 550; see also Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal. App. 2d 825, 838–40 (1962) (listing factors to consider). No magic test exists for determining whether there is a unity of interest between a corporation and its member, and a court need not find that all of the factors listed above are satisfied to conclude that a unity of interest exists. See Highland Springs Conference & Training Ctr. v. City of Banning, 244 Cal. App. 4th 267, 285 (2016). Instead, a court “must look at all the circumstances to determine whether the doctrine [of alter ego liability] should be applied.” Cam-Carson, 82 Cal. App. 5th at 550.

The Court concludes that there is a sufficient unity of interest between Murray and ME Alpha III to support alter ego liability. Indeed, Murray not only concedes the facts necessary to establish that many of the above factors exist in this case; he embraces those facts. Take, for example, the “commingling of funds and assets of the two entities,” see id., which Murray views as the most important factor of the analysis. Murray maintains that “[t]hat didn't happen here,”⁵⁷ but he also stresses that he had “no business reason” to stay in Texas for the Fourth of July,⁵⁸ that he “did not act in any official capacity ․ when he decided to stay at the Kodes Clay Property,”⁵⁹ that he “was not on business of any kind on July 3, 2024,”⁶⁰ and that he was using the Property for vacation purposes rather than for any business purpose. Murray further maintains that the Property was an asset of ME Alpha III, which, as the manager of ME Alpha III, he allowed himself to use.⁶¹ In other words, Murray readily admits that he used ME Alpha III's assets as if they were his own personal assets—thereby “commingling” them. See id.

Similarly, there is no doubt that ME Alpha III was a “mere shell or conduit” for Murray's own affairs. See id. Until a few months before ME Alpha III filed a lawsuit against Murray for the damage to the Property, Murray was the only manager of both ME Alpha III and Murray Equity, as well as a member of both LLCs—if not the sole member of those LLCs.⁶² Murray was the only person with full authority to access ME Alpha III's bank account,⁶³ and there is no evidence that any person other than Murray exercised any authority or made any decision on behalf of ME Alpha III until Daniel became the manager of ME Alpha III in April 2021.⁶⁴ To the extent that business records exist, those records reflect only Murray's own interest in ME Alpha III.⁶⁵ Murray likewise provided a personal guaranty for the loan to purchase the Property, and, to the extent that anyone else worked for ME Alpha III—including Daniel—that person was as an independent contractor working under Murray's supervision.⁶⁶

The only evidence to suggest that ME Alpha III operated separately from Murray himself is the fact that ME Alpha III's paper records were stored at Daniel's home.⁶⁷ But in view of the sparsity of those records, even that fact supports the conclusion that ME Alpha III was Murray's alter ego. ME Alpha III has no finalized operating agreement, no corporate meeting minutes, no record of any meeting between its members, no emails or written communications between those members, no formal documentation of financial information, and no formal membership records of any kind. Indeed, to the extent that any information exists about ME Alpha III at all, that information comes solely from Murray himself—which further suggests that ME Alpha III is merely Murray's shell. See id.

Accordingly, the Court concludes that a unity of interest exists between Murray and ME Alpha III.

2. Fraud or Injustice

When deciding whether upholding the corporate form would promote fraud or injustice, “[t]he issue is not so much whether, for all purposes, the corporation is the alter ego of its stockholders or officers, nor whether the very purpose of the organization of the corporation was to defraud the individual who is now in court complaining.” Mesler v. Bragg Management Co., 39 Cal. 3d 290, 300–01 (1985) (quoting Kohn v. Kohn, 95 Cal. App. 2d 708, 718 (1950)). Rather, the issue is “whether in the particular case presented ․ justice and equity can best be accomplished and fraud and unfairness defeated” by disregarding the corporate form. Id. at 301. “The purpose of the doctrine is ․ to afford [a creditor] protection, where some conduct amounting to bad faith makes it inequitable ․ for the equitable owner of a corporation to hide behind its corporate veil.” Mid-Century Ins. Co. v. Gardner, 9 Cal. App. 4th 1205, 1213 (1992) (quoting Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal. App. 2d 825, 842 (1962)) (emphasis in original).

There is no question that upholding the corporate form in this case would promote fraud and injustice. If Nationwide indemnifies Murray for the damage that Murray caused to the Property, that payment will be routed back to Murray through his membership interest in Murray Equity.⁶⁸ That course, in turn, would allow Murray to escape liability for destroying the Property and to recover some portion of that same liability—thereby ensuring that Murray suffers no loss in connection with his role as the negligent actor or with his role as a member and manager of ME Alpha III. But such a scot-free escape should be possible only if Murray or ME Alpha III purchased insurance for the Property prior to the fire, but Murray deliberately chose not to purchase such insurance. And, worse, upholding the corporate form would motivate Murray to hinder Nationwide's efforts to defend him in the underlying lawsuit because the larger the judgment against him, the more he stands to gain. In view of factors including the degree of control that Murray exerted over ME Alpha III; Murray's deliberate choice to forego obtaining insurance on the Property; the timing of the transfer of the management of ME Alpha III away from Murray; and Murray's absolute responsibility for both the damage to the Property and the absence of insurance on the Property, the Court concludes that upholding the corporate form would indeed promote fraud and injustice.

Murray offers no serious argument otherwise. He maintains, for example, that Nationwide cannot rely upon equitable principles because it is an insurance company, and insurance companies “have amassed well over 100 years of caselaw grounded on the principle that the contract controls, and their insureds are stuck with the policy they purchased.”⁶⁹ But whether insurance companies have historically obtained favorable caselaw is of no moment—the proper question is whether, in this case, it would be inequitable to force Nationwide to provide coverage for Murray's negligence. Murray likewise takes issue with Nationwide's decision to commence this action against him because, in his view, there is no question that this case should be decided in his favor, and litigation was “not what Murray thought he was buying.”⁷⁰ Murray's annoyance and displeasure aside, the Court sees no reason why Nationwide's decision to pursue its rights should bar Nationwide from obtaining the benefits that flow from those rights.

Murray also contends that ruling in Nationwide's favor would result in drastic consequences for two reasons: (1) it would mean that any loss that occurs on uninsured business property is excluded from coverage;⁷¹ and (2) it would bar coverage for any shareholder of a corporation who damages a building owned by that corporation—such as an Apple shareholder who negligently burns down an iPhone warehouse.⁷² Those concerns are unfounded. By concluding that ME Alpha III is Murray's alter ego, the Court holds that the Uninsured Property Exclusion applies in this case only because Murray owns the Property. That conclusion has no bearing on whether another insurer would be obligated to provide coverage for damage that occurs on property that is in fact owned by a third party. Similarly, the Court's conclusion that ME Alpha III is Murray's alter ego is entirely unrelated to whether an Apple shareholder who negligently burns down a warehouse could be indemnified for his negligence. Indeed, even under this Court's analysis, the result that the loss is not covered would be obtained only if a court first found that Apple was the alter ego of the shareholder—which is an outcome that seems, at best, unlikely.

Accordingly, the Court concludes that ME Alpha III was the alter ego of Murray, such that Murray owns the Property. Thus, the Uninsured Property Exclusion applies, and Nationwide is not required to provide coverage for the loss to the Property.

C. Business Exclusion

The Court also concludes that coverage is barred under the Business Exclusion. Per the Business Exclusion, Nationwide is not obligated to provide coverage for property damage “arising out of or in connection with a ‘business’ ․ engaged in by an ‘insured.’ ”⁷³ Nationwide contends that the Business Exclusion is plainly satisfied here: the damage to the Property is related to Murray's house-flipping business, and, as such, it arose out of a business in which the insured engaged.⁷⁴

Murray disagrees, but none of his arguments is persuasive. For example, Murray asserts that the Business Exclusion must be read narrowly to apply only if the cause of the property damage was itself a business use.⁷⁵ That argument, however, is based upon a misreading of California law. It is true that, when damage is “jointly caused by an insured risk ․ and an uninsured risk,” the “insurer is liable so long as one of the causes is covered by the policy.” Ohio Casualty Ins. Co. v. Hartford Accident & Indemnity Co., 148 Cal. App. 3d 641, 645 (1983) (emphasis in original). But for that circumstance to exist, the insured risk must “not in any way [be] dependent on the” instrument or conditions for which coverage is excluded. Id. at 646. Thus, while an insurer must provide coverage for damage that could have been independently caused by an insured risk, the insurer need not provide coverage for damage if “the only way in which the plaintiff could have” caused such damage was “through the operation or use” of the instrument or conditions for which coverage is barred. Id. at 645–46 (emphasis in original).

The California Court of Appeal's decision in Safeco Insurance Co. v. Gilstrap, 141 Cal. App. 3d 524, 526 (1983), is instructive. There, a plaintiff filed a lawsuit against two insured parents for negligently entrusting a motorcycle to their 14-year-old son, who injured the plaintiff while the son was driving the motorcycle. See id. at 526. The insureds sought indemnification, but the insurer contended that coverage was barred by an exclusionary clause that applied to “body injury or property damage arising out of the ․ use [of] ․ any motor vehicle owned or operated by” the insureds. Id. The Court of Appeal agreed. Because “there would have been no accident without the use or operation of the motorcycle,” the Safeco court held that coverage was “expressly excluded under the terms of the policy.” Id. at 529–30.

Here, as in Safeco, there is no reasonable dispute that the damage that Murray caused to the Property arose out of his business role as the manager of ME Alpha III, rather than independently from that role. Although Murray stresses that he had no business justification for staying at the Property,⁷⁶ Murray could not have stayed at the Property if he had not, in his official business capacity, given himself permission to do.⁷⁷ Thus, although shooting fireworks or celebrating the Fourth of July were not themselves business activities, those activities necessarily arose out of “business ․ engaged in by” Murray—they arose out of Murray's role as the manager of ME Alpha III and, more broadly, his decision to purchase and restore the Property.

Similarly, Murray asks the Court to read the Business Exclusion narrowly, so that it would exclude coverage only for damage caused by activities that are themselves business-related.⁷⁸ But the Business Exclusion cannot support such a narrow reading. Indeed, unlike exclusionary clauses in other insurance contracts, see, e.g., West Am. Ins. Co. v. Cal. Mut. Ins. Co., 195 Cal. App. 3d 314, 324 (1987), nothing in the Business Exclusion suggests that it should be limited to “activities” or “pursuits.” To the contrary, the Business Exclusion applies to damage “arising out of” any business engaged in by an insured.⁷⁹ And while Murray asks the Court to limit “arising out of” to its narrowest possible construction, California courts have repeatedly taken the opposite view and have held that “arising out of” must be interpreted broadly to “link[ ] a factual situation with the event creating liability”; “arising out of” “connotes only a minimal causal connection or incidental relationship.” Medill v. Westport Ins. Corp., 143. Cal. App. 4th 819, 830 (2006). In view of Murray's extensive business relationship to the Property itself, that standard is satisfied here.

Accordingly, the Court concludes that the Business Exception applies.

VII. DISPOSITION

For the foregoing reasons, the Court hereby ORDERS as follows:

1. Nationwide's instant Request for Judicial Notice [ECF No. 27] is GRANTED.

2. Nationwide's instant Motion for summary judgment [ECF No. 23] is GRANTED.

3. Judgment will issue accordingly.

IT IS SO ORDERED.

FOOTNOTES

1.   Pl.’s Mot. for Summ. J. (the “Motion”) [ECF No. 23].

2.   The Court considered the documents of record in this action, including the following papers: (1) Compl. (the “Complaint”) [ECF No. 1]; (2) Motion; (3) Pl.’s Mem. in Supp. of the Motion (the “Memorandum”) [ECF No. 24]; (4) Joint Statement of Undisputed Facts and Genuine Disputes (the “Joint Statement”) [ECF No. 25]; (5) Joint Ex. (the “Joint Exhibit”) [ECF Nos. 27-29]; (6) Req. for Judicial Notice (the “Request for Judicial Notice”) [ECF No. 27]; (7) Def.’s Mem. in Opp'n to the Motion (the “Opposition”) [ECF No. 30]; and (8) Pl.’s Reply in Supp. of the Motion (the “Reply”) [ECF No. 34].

3.   See Complaint.

4.   See id.

5.   See generally Memorandum.

6.   See Opposition 24:13–17.

7.   See Request for Judicial Notice.

8.   See Joint Exhibit Part D 1373-1384.

9.   See id. at 1385-1400.

10.   See id. at 1333-1339.

11.   See id. at 1340-1368.

12.   Opposition 20:1-6; Joint Statement Nos. 66–71.

13.   The parties object to multiple items of evidence filed with the Motion. “[O]bjections to evidence on the ground that it is irrelevant, speculative, and/or argumentative, or that it constitutes an improper legal conclusion are all duplicative of the summary judgment standard itself”; they are thus “redundant” and need not be considered. Burch v. Regents of Univ. of California, 433 F. Supp. 2d 1110, 1119 (E.D. Cal. 2006); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Factual disputes that are irrelevant or unnecessary will not be counted.”). The Court therefore OVERRULES all such objections. Additionally, the Court need not consider some of the evidence to which the parties have objected in order to decide the Motion. Objections not specifically addressed are OVERRULED.

14.   Joint Statement No. 3.

15.   Id.

16.   Id. at No. 4; see also Joint Exhibit Part C(1) 943 (the “Murray Equity Membership List”).

17.   Joint Statement No. 5; see also id. at No. 87.

18.   Id. at No. 89. The Court refers to Murray's brother by his first name to avoid confusion. No disrespect is intended.

19.   See id. at No. 42; Joint Exhibit Part C(1) 1027 (the “ME Alpha III Membership List”).

20.   See Joint Statement Nos. 41 & 42; cf. Opposition 21:26–28.

21.   See Joint Statement No. 44.

22.   Id. at Nos. 94–96.

23.   Id. at Nos. 8 & 9.

24.   Id. at Nos. 2 & 12.

25.   Id. at Nos. 12 & 23.

26.   Id. at Nos. 24-26.

27.   Id. at No. 27.

28.   Id. at No. 28.

29.   Id. at No. 31.

30.   See Joint Exhibit Part A 1–79 (the “Murray Deposition”) 31:8–20.

31.   Joint Statement Nos. 11 & 14.

32.   Id. at Nos. 15 & 21.

33.   Id. at Nos. 17, 19, & 35–37.

34.   Id. at No. 19.

35.   Id. at No. 20.

36.   Id. at Nos. 21 & 22.

37.   Id. at No. 8.

38.   Id. at No. 23.

39.   Id. at No. 34.

40.   Id. at Nos. 50–59.

41.   Id. at No. 1; Joint Exhibit Part D 1405–1475 (the “Policy”).

42.   Joint Statement No. 2.

43.   See generally Motion.

44.   See generally id.

45.   Joint Statement No. 72; see also Policy 1439.

46.   Policy 1446.

47.   Joint Statement No. 74; Policy 1444.

48.   Joint Statement No. 77; Policy 1416–1417.

49.   Joint Statement No. 73; Policy 1441.

50.   Policy 1446.

51.   Joint Statement No. 76.

52.   Opposition 11:26–12:1.

53.   See id. at 11:24-15:6.

54.   See id.

55.   See generally Motion.

56.   To the extent that Murray intended to argue that ME Alpha III cannot be his alter ego because he has no ownership interest in ME Alpha III, see SEC v. Hickey, 322 F.3d 1123, 1129 (9th Cir. 2003), he did not clearly present that argument in his brief or during the hearing on the Motion, and, accordingly, it is forfeited. In any event, while the precise corporate structure of ME Alpha III is unclear, it is undisputed that Murray has some membership interest in that entity. See, e.g., Joint Statement Nos. 41, 81, & 85.

57.   Opposition 12:8.

58.   Joint Statement No. 120.

59.   Id. at No. 123.

60.   Id. at No. 134.

61.   See id. at No. 37.

62.   Id. at Nos. 42 & 49; see also ME Alpha III Membership List.

63.   Joint Statement No. 63.

64.   See generally Joint Exhibit; see also id., Part A 280–461 (the Daniel Deposition, demonstrating that Murray had control over and knowledge of ME Alpha III's corporate affairs, records, and decisions).

65.   See Joint Statement No. 66–71; ME Alpha III Membership List.

66.   Joint Statement No. 26; Murray Deposition 31:8–20.

67.   Joint Statement No. 89.

68.   Id. at Nos. 51 & 52.

69.   Opposition 17:6–8.

70.   Id. at 17:24–26 (emphasis in original).

71.   Id. at 18:1–25.

72.   Id. at 19:7–19.

73.   Joint Statement No. 73; Policy 1441.

74.   See Memorandum 26:13–28:3.

75.   See Opposition 23:14–26.

76.   See id. at 23:4–24:12.

77.   See Joint Statement No. 37.

78.   See Opposition 23:4–24:12.

79.   See Policy 1441.

John W. Holcomb, UNITED STATES DISTRICT JUDGE