Case3:05-cv-00984-SI Document1 Filed03/08/05 Page1 of 8

1 MARTIN L. SEEGER, IV (SBN: 58264)

BABIN & SEEGER, LLP
2 3550 Round Barn Boulevard, Suite 201
Santa Rosa, California 95403
3 Telephone: (707) 526-7370
Facsimile: (707) 526-0307
4
Attorneys for Defendant
5 CALPINE CORPORATION
6
7
8 UNITED STATES DISTRICT COURT
9 NORTHERN DISTRICT OF CALIFORNIA
10 SAN FRANCISCO DIVISION
11
CALPINE CORPORATION, a California CASE NO.
12 Corporation,
13 Plaintiff, COMPLAINT FOR
DECLARATORY RELIEF
14 v. [28 USC §2201, et seq.]

15
ACE AMERICAN INSURANCE DEMAND FOR JURY TRIAL
16 COMPANY,
17 Defendant.
18 /
19
20 JURISDICTION
21 1. Jurisdiction of this action is based on Title 28, United States Code, §
22 1332(a), there being diversity of citizenship between the parties. The amount in
23 controversy exceeds $75,000, exclusive of interest and costs.
24
25 VENUE
26 2. Venue is proper in the Northern District of California because a
27 substantial part of the events or omissions giving rise to the claim occurred in this
28 District.

1
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page2 of 8

1 INTRADISTRICT ASSIGNMENT
2 3. The San Francisco Division of the Northern District California is proper
3 under Northern District California Local Rule 3-2(d) as the events or omissions giving
4 rise to the claims occurred in Sonoma County.
5
6 THE PARTIES
7 4. Plaintiff, CALPINE CORPORATION, is and was at all times mentioned, a
8 corporation duly organized and existing under the laws of the State of Delaware, with
9 its principal place of business at 50 West San Fernando Street, San Jose in the State
10 of California.
11 5. Defendant ACE AMERICAN INSURANCE COMPANY was, and is now,
12 a corporation duly organized and existing under the laws of the State of Pennsylvania,
13 with its principal place of business at Two Liberty Place, 1601 Chestnut Street,
14 Philadelphia in the State of Pennsylvania.
15
16 RIGHT TO DECLARATORY JUDGMENT
17 6. There is now existing between the parties hereto an actual, justiciable
18 controversy in respect to which Plaintiff is entitled to have a declaration of its rights
19 and further relief pursuant to the provision of the Declaratory Judgment Act, 28 USC
20 §2201, et seq..
21
22 STATEMENT OF CASE
23 7. On August 15, 2002, Plaintiff CALPINE and Marley Cooling Tower
24 Company (hereinafter “Marley”) entered into a written contract entitled “Continuing
25 Services Agreement” (hereinafter referred to as the “CSA”), whereby MARLEY agreed
26 to perform certain services for Plaintiff CALPINE, the operator of geothermal powered
27 electric generating facilities.
28 ///

2
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page3 of 8

1 8. On February 26, 2003, Plaintiff CALPINE and Marley entered into

2 Purchase Order No. SV33641 (hereinafter referred to as the “PO”) involving a project
3 designated as the “RidgeLine Unit 8 Cooling Tower Rebuild.” Under the terms of said
4 PO, MARLEY agreed to rebuild the cooling tower at Plaintiff CALPINE’s Unit 8 facility
5 (hereinafter “Calpine project”) located at The Geysers near Middletown in Sonoma
6 County, California.
7 9. The parties to the CSA and the PO agreed that MARLEY would obtain a
8 policy of liability insurance during the term of the CSA, naming CALPINE as an
9 additional insured. The purpose of the insurance was understood by CALPINE to be
10 for the protection of CALPINE from any and all claims arising out of Marley’s
11 performance of work under the CSA and PO.
12 10. On May 13, 2003, George McVay, a Marley employee, was killed in the
13 course of his employment at the Calpine project. McVay’s successor filed a lawsuit
14 against Plaintiff CALPINE in the Superior Court of California, County of Santa Clara,
15 Case No. 104CV026059 (the “Action”), seeking damages, which are believed to be in
16 excess of $75,000.
17 11. At the time of the incident, Defendant ACE AMERICAN INSURANCE
18 COMPANY (hereinafter “ACE”) afforded Marley commercial general liability
19 (hereinafter “CGL”) insurance. Plaintiff was a named additional insured on Marley’s
20 Comprehensive General Liability (“CGL”) policy.
21 12. After commencement of the underlying lawsuit by McVay’s successor,
22 Plaintiff CALPINE tendered its defense to Marley under the terms of the contract.
23 Marley refused to defend or indemnify Plaintiff CALPINE in the McVay lawsuit.
24 13. In September 2004, Plaintiff CALPINE tendered its defense of the
25 McVay lawsuit to Defendant ACE. ACE refused to respond for 4 months, and Plaintiff
26 CALPINE finally received word from ACE acknowledging receipt of Plaintiff’s tender
27 letter in January 2005. ACE has employed the tactic of delay and refuses to admit its
28 obligations in this matter.

3
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page4 of 8

1 FIRST CLAIM FOR RELIEF

Breach of Written Contract
2
3 14. Plaintiff CALPINE incorporates by reference each and every allegation in
4 the foregoing paragraphs as if fully set forth herein.
5 15. Marley and Defendant ACE entered into a written contract with Marley
6 wherein Defendant ACE provided Marley with CGL insurance for the Calpine project.
7 McVay’s death occurred during the effective policy dates under the ACE insurance
8 policy.
9 16. Plaintiff CALPINE was an additional insured on Marley’s CGL insurance
10 policy provided by Defendant ACE at the time of McVay’s death.
11 17. As an additional insured to Marley’s CGL insurance policy, Defendant
12 ACE was contractually obligated to pay any and all sums Plaintiff CALPINE would be
13 legally obligated to pay arising from Marley’s involvement in the Calpine project under
14 the CSA and PO and to defend CALPINE in the Action.
15 18. As an additional insured, Defendant ACE was required to respond to and
16 investigate Plaintiff CALPINE’s tender of defense under Marley’s CGL insurance
17 policy.
18 19. On September 10, 2004, Plaintiff CALPINE tendered defense of the
19 underlying McVay action to Defendant ACE. Defendant ACE failed to acknowledge or
20 respond to this letter.
21 20. On November 15, 2004, more than two months later, Plaintiff CALPINE
22 again tendered defense of the McVay action to Defendant ACE. Defendant ACE again
23 failed to acknowledge or respond to this letter.
24 21. On December 31, 2004, more than three months from the initial tender
25 of defense, Plaintiff CALPINE tendered defense of the McVay action for a third time.
26 On January 21, 2005, Defendant ACE finally responded to Plaintiff CALPINE’s tender.
27 22. In Defendant ACE’s January 21, 2005 response, Defendant ACE simply
28 advised Plaintiff CALPINE that Defendant ACE had received Plaintiff CALPINE’s

4
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page5 of 8

1 tender of defense and requested further documentation. Defendant ACE further

2 informed Plaintiff CALPINE that Crawford & Co, Defendant ACE’s third-party
3 administrator, would contact Plaintiff CALPINE in the future. Although it is unclear
4 when ACE notified Crawford and Co. of Plaintiff CALPINE’s tender of defense, it is
5 clear that Crawford and Co. had not opened a file to investigate Plaintiff CALPINE’s
6 tender of defense at the time of the letter and still has not contacted Plaintiff CALPINE.
7
8 23. Defendant ACE breached its contract by failing: 1) to acknowledge and
9 respond to Plaintiff CALPINE‘s tender letters within a reasonable time as Plaintiff
10 CALPINE was an additional insured under the terms of Marley’s CGL policy; and 2) to
11 acknowledge its duty to defend and indemnity Plaintiff CALPINE.
12 24. Plaintiff CALPINE has been compelled to incur attorney fees,
13 investigative, Court and other costs to protect itself in the Action and have, therefore,
14 been damaged as a result of Defendant ACE’s failure to respond to and investigate
15 Plaintiff CALPINE’s tender of defense.
16 25. Plaintiff CALPINE seeks damages accord to proof at the time of trial.
17
18 SECOND CLAIM FOR RELIEF
Breach of Implied Covenant of Good Faith and Fair Dealing
19
20 26. Plaintiff CALPINE incorporates by reference each and every allegation in
21 the foregoing paragraphs as if fully set forth herein.
22 27. Defendant ACE approved the addition of Plaintiff CALPINE as an
23 additional insured on Marley’s CGL policy for the Calpine Project. As an additional
24 insured under Marley’s insurance policy, Defendant ACE owed Plaintiff CALPINE a
25 duty of good faith and fair dealing in Plaintiff CALPINE’s tender of defense under
26 Marley’s CGL policy.
27 28. In the case at bar, Defendant ACE’s implied promise to Plaintiff
28 CALPINE was to promptly acknowledge and investigate Plaintiff CALPINE’s tender of

5
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page6 of 8

1 defense and to provide a defense and indemnity to Plaintiff CALPINE, as an

2 additionally named insured, in connection with the Action.
3 29. Defendant ACE breached the Implied Covenant of Good Faith and Fair
4 Dealing by its failure to acknowledge receipt of Plaintiff CALPINE’s tender of defense
5 within a reasonable time and by failing to investigate the tender of defense.
6 30. Plaintiff CALPINE has been compelled to incur attorney fees,
7 investigative, Court and other costs to protect itself in the underlying McVay litigation
8 and have, therefore, been damaged as a result of Defendant’s breach of its duties and
9 obligations under the CSA and PO.
10 31. Plaintiff CALPINE seeks damages accord to proof at the time of trial.
11
12 THIRD CLAIM FOR RELIEF
Violation of Insurance Code §790.03
13
14 32. Plaintiff CALPINE incorporates by reference each and every allegation in
15 the foregoing paragraphs as if fully set forth herein.
16 33. California Insurance Code Section 790.03(h)(3) specifies that
17 “[f]ailing to acknowledge and act reasonably promptly upon communications with
18 respect to claims arising under insurance policies,” constitutes an unfair claims
19 settlement practice.
20 34. Under Title 10, California Code of Regulations Section 2695.5(e), an
21 insurer has fifteen (15) calendar days to 1) acknowledge receipt of the claimant’s
22 notice; 2) providing the claimant forms and reasonable assistance; and 3) begin any
23 necessary investigation of the claim.
24 35. Defendant ACE had a statutorily-imposed duty to respond within fifteen
25 (15) days of Plaintiff CALPINE’s first tender of defense sent on September 10, 2004.
26 Having failing to comply with this statutory requirement, Defendant ACE had two more
27 opportunities to acknowledge and respond to Plaintiff CALPINE’s tender of defense.
28 Defendant ACE failed to do so.

6
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page7 of 8

1 36. Defendant ACE’s failure to reasonably promptly to acknowledge and

2 respond to Plaintiff CALPINE’s tender of defense constituted an unfair claims
3 settlement practice prohibited by Insurance Code Section 790.03(h)(3).
4 37. Plaintiff CALPINE has been compelled to incur attorney fees,
5 investigative, Court and other costs to protect itself in the Action and have, therefore,
6 been damaged as a result of Defendant’s breach of its duties and obligations under
7 both the CSA and PO.
8 38. Plaintiff CALPINE seeks damages accord to proof at the time of trial.
9
10 FOURTH CLAIM FOR RELIEF
Declaratory Relief
11
12 39. Plaintiff incorporates by reference each and every allegation in the
13 foregoing paragraphs as if fully set forth herein.
14 40. This is an action for declaratory judgment pursuant to Title 28, United
15 States Code, § 2201 et seq., for the purpose of determining a question of actual
16 controversy between the parties.
17 41. Plaintiff CALPINE contends that Defendant ACE is obligated to
18 indemnify and hold Cross-Complainants harmless from any and all liability concerning
19 the matters set forth in Plaintiff’s Complaint.
20 42. Defendant ACE’s unreasonable delaying tactics forced Plaintiff
21 CALPINE to incur unnecessary financial obligations in defending itself from the Action.
22 Accordingly, a declaration from the Court regarding Defendant ACE’s liability and
23 obligation to Plaintiff is necessary to avoid multiple suits and actions.
24
25 PRAYER
26 WHEREFORE, plaintiff prays for judgment as follows:
27 1. Enter a declaratory judgment that under the terms of the appropriate
28 insurance policy contract between CALPINE and ACE, Defendant ACE AMERICAN

7
COMPLAINT
 Case3:05-cv-00984-SI Document1 Filed03/08/05 Page8 of 8

1 INSURANCE COMPANY is required to accept Plaintiff CALPINE’s tender of defense

2 of September 10, 2004;
3 2. Awarding plaintiff compensatory damages;
4 3. Awarding plaintiff costs and expenses of this litigation, including
5 reasonable attorney’s fees;
6 4. Awarding plaintiffs such equitable or other and further relief as may be
7 just and proper under the circumstance.
8
9
DATED: March ___, 2005 BABIN & SEEGER, LLP
10
11
12 Martin L. Seeger, IV
Attorneys for Defendant
13 CALPINE CORPORATION
14
15 JURY DEMAND
16 Plaintiff hereby demands a trial by jury in this matter.
17
18
19
20
21
22
23
24
25
26
27
28

8
COMPLAINT