1 NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

MICHAEL FEIZ MEDICAL CORP. , Plaintiff

- Appellant ,

v. SCOTTSDALE INSURANCE CO.,
Defendant

- Appell ee
. No. 15

- 56652
D.C. No. 2:1 5

- cv - 0 4195

- MWF

PJW
MEMORANDUM *

Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding Argued and Submitted April 5, 2017 Pasadena , California
B efore: M. SMITH and N.R. SMITH , Circuit Judges, and FEINERMAN , District Judge. ** Plaintiff Michael Feiz Medical Corp oration appeals from the d istrict c ourt’s denial of its summary judgment motion and grant of Defendant Scottsdale
Insurance Co mpany ’s cross

- motion for summary judgment. The parties dispute

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36

- 3.

** The Honorable Gary Feinerman, District Judge for the U.S. District Court for the Northern District of Illinois, sitting by designation. 

# FILED

APR 27 2017 MOLLY C. DWYER, CLER K U.S. COURT OF APPEAL S2

whether Feiz’s business lia bility insurance policy (the policy) require s Scottsdale to indemnify Feiz for two components

— prejudgment interest on the breach of contract damages, and attorney fee s and cost s

— of an adverse arbitration award in a

case brought by a former employee against Feiz for breach of employment contract and related California Labor C ode violations. The district c ourt held that Scottsdale did not promise to indemnify Feiz for those amounts. We affirm in part, reverse i n part, vacate in part, and remand for further proceedings. Under California law, language in an insurance policy is given its ordinary meaning as a layperson would understand it , and ambiguities are resolved in favor of coverage. See AIU Ins. Co. v. Superior Court , 799 P.2d 1253, 1264

- 65 (Cal. 1990); Crane v. State Farm Fire & Cas. Co. , 485 P.2d 1129, 1130 (Cal. 1971). Exclu sionary language must be “ plain and clear , ” and is “ construed strictly against the insurer. ” See Crane , 485 P.2d at 1130.
1. As to the arbitrator’s awar d of prejudgment interest on the breach of contract damages, we reverse the district court’ s ruling; the policy requires Scottsdale to indemnify Feiz. The policy requires Scottsdale to pay any “Loss” that Feiz incurred if it were sued for an “Employment Practices Wrongful Act.” Among th ose wrongful acts is “breach of an actual or implied employment contract.” The policy’s definition of “Loss” includes “d amages, judgments,3

settlements, front pay and back pay, [and] pre - judgment or post judgment interest awarded by a court ” (emphasis added). Scottsdale identifies no policy language that unambiguously negates the policy’s express promise of coverage for prej udgment interest

. The policy language on which Scottsdale relies excluded from coverage “amounts owed under any employment contract

. ” However, the employment contract at issue is silent on prejudgment interest , and it therefore cannot be said that prejudgment interest is owed under that contract . Scottsdale next argues that California law treats
pre judgment interest as a component of the underlying contract damages, which the policy indisputably excludes from coverage because it is an “amount[] owed under any employment contract

. ” But the relevant question is how the contract damages and prejudgment interest we re treated not under California law , but under the policy . The policy expressly referred to “damages ” and “prejudgment

... interest” separately in its promise of coverage

. Id

. I f the policy treated prejudgment interest as part and parcel of damages , there would have been no need
to mention prejudgment interest in the promise of coverage

. Therefore, b ecause prejudgment interest is expressly included in the policy’s coverage, and there is no “plain and clear” language excluding that coverage, Scottsdale must indemnify Feiz for amount of the prejudgment interest award

.4

2. As to the award of attorney f ee s and costs, we affirm the district court only to the extent that it held Scottsdale is not required to indemnify Feiz for attorney fees and costs attributable to the breach of contract claim , but we vacate and remand for further proceedings on the indemni fication of attorney fees and
costs attributable to the California Labor Code claims.
T he arbitrator awarded attorney fees and costs under the employment contract, which expressly provided for the pay ment of such costs and fees required to enforce the te rms of the contract. Although attorney fees and costs are generally included in the policy’s coverage, the policy expressly excludes from coverage “amounts owed under any employment contract.” Because the attorney fees and costs spent on the breach of co ntract claim a re “amounts owed under [the] employment contract,” the district court correctly held th o se amounts are excluded from coverage, and Scottsdale is not required to indemnify Feiz for those amounts. However, by pegging the fees and costs award s olely to the contract claim, the arbitrator neglected to determine what amount of fees and costs was spent on the Labor Code claims. 1 Under California law, Feiz is entitled to attorney fees and

1 The happenstance that the arbitrator lumped all the fees and costs together and deemed them awarded only under the contract does not relieve Scottsdale of its duty to indemnify; rather, the court must look past the labels used to describe a judgment to t he nature of the obligation that underlies it. See Vandenberg v. Superior Court , 982 P.2d 229, 245 (Cal. 1999) (“[C]ourts must focus on the nature of the risk and the injury, in light of the policy provisions, to [determine coverage].”).5

costs spent on the Labor Code claims. See California Labor C ode section 218.5 (an employee who prevails in an action for the nonpayment of wages is entitled to attorney fees and costs); Kirby v. Immoos Fire Prot., Inc. , 274 P.3d 1160, 1167 (Cal. 2012). Those fees and costs fall within the policy ’s coverage for “re asonable and necessary legal costs, charges, fees, and expenses , ” and th ere are no applicable exclusions that remove these costs and fee s from coverage. T herefore, Scottsdale must indemnify Feiz for the se amounts

. On remand, the district court should apportion the attorney fees and costs attributable to arbitrating the Labor Code claims and those attributable to arbitrating the breach of contract claims, and require Scottsdale to indemnify Feiz only for those fees and costs apportioned to the Labor Cod e violations.
REVERSED in part as to prejudgment interest , AFFIRMED in part
and VACATED in part as to attorney fees and costs , and REMANDED

.