FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CALIBER ONE INDEMNITY COMPANY, 

a foreign corporation,

Plaintiff-Appellee,

v. No. 04-35181

WADE COOK FINANCIAL D.C. No. CORPORATION, a foreign  CV-01-01128-JCC corporation,

Defendant, OPINION

and

DIANA K. CAREY,

Trustee-Appellant. 

Appeal from the United States District Court

for the Western District of Washington

John C. Coughenour, Chief District Judge, Presiding

Argued and Submitted

July 27, 2006—Seattle, Washington

Filed June 22, 2007

Before: J. Clifford Wallace, Kim McLane Wardlaw and

Raymond C. Fisher, Circuit Judges.

Opinion by Judge Fisher;

Partial Concurrence and Partial Dissent by Judge Wardlaw

7531
COUNSEL

H. Troy Romero and Michael E. Wiggins (argued), Romero

Montague P.S., Bellevue, Washington, for appellant Wade

Cook Financial Corporation. 

7534 CALIBER ONE INDEMNITY v. CAREY
William A. Pelandini (argued), Melissa O’Loughlin White

and Thomas J. Braun, Cozen O’Connor, Seattle, Washington,

for appellee Caliber One Indemnity Company.

OPINION

FISHER, Circuit Judge: 

This case arises from a commercial property insurance policy Plaintiff-Appellee Caliber One Indemnity Company

(“Caliber One”) issued to the Defendant Wade Cook Financial Corporation (“Cook”). Cook — through its trustee Diana

K. Carey — appeals the district court’s summary judgment

under Washington law that the insurance contract between

Cook and Caliber One limited earthquake coverage to

$500,000, subject to a deductible calculated as a percentage

of the total insured value of the property affected by an earthquake rather than of the claimed earthquake loss. Cook also

appeals the district court’s refusal to consider affidavits submitted in connection with its motion for reconsideration. We

affirm in part and reverse in part. 

BACKGROUND

In 1998, Cook purchased a comprehensive commercial

property insurance policy from Caliber One that, among its

various terms and conditions, provided $5 million in earthquake coverage for various buildings Cook owned. In 1999,

Cook — through its insurance broker, Crump Insurance Services, Inc. (“Crump”) — told Caliber One that Cook wanted

to renew the policy “under exactly the same terms” as the initial 1998 policy. Contrary to Cook’s asserted intent and apparently unbeknownst to it, the 1999-2000 policy Caliber One

issued and Cook accepted contained only a $500,000 sublimit

for earthquake coverage. Caliber One acknowledges that the

reduction in earthquake coverage from $5 million to $500,000

CALIBER ONE INDEMNITY v. CAREY 7535
was simply the result of a “clerical error in the preparation of

that policy.” 

In 2000, Cook sought to renew the policy once again, “on

the same terms and conditions” as the 1999-2000 policy. Consequently, the mistaken $500,000 earthquake sublimit carried

through to the renewal policy. Caliber One gave Cook

(through Crump) a quotation confirmation including the

$500,000 earthquake sublimit, and Cook “accept[ed] the

quote” and expressed its “wish[ ] to have the agreement

bound.” The final insurance policy in effect from December

2000 to December 2001 therefore had a stated earthquake

coverage limit of $500,000. Also relevant to this appeal, the

insurance policy provided that in the event of a claim, Cook

would be responsible for a “5.00% deductible Earthquake per

occurrence, minimum $50,000.” 

On February 28, 2001, Cook’s corporate headquarters in

Tukwila, Washington, suffered significant damage as a result

of a large earthquake in the Puget Sound area. Losses, according to Cook, were in excess of $8 million. After Cook submitted a claim, Caliber One discovered the $500,000 sublimit

and traced it to the much earlier clerical error. It notified Cook

of the limit and stated its intent to seek declaratory judgment

that its liability would be only that lesser amount. Moreover,

Caliber One notified Cook that its claim would be subject to

a deductible of $695,100, calculated as 5% of the total insured

value (“TIV”) of the damaged corporate headquarters building ($13,902,000). Cook contended that the deductible was

only about $400,000, calculated as 5% of the loss suffered

rather than 5% of the TIV. 

Both parties sought summary judgment in the federal district court as to the amount of coverage and the meaning of

“deductible.” The district court determined that the $500,000

sublimit was unambiguous and declined to consider extrinsic

evidence to contradict that amount. The court also rejected

Cook’s claim of mutual mistake, and refused to reform the

7536 CALIBER ONE INDEMNITY v. CAREY
contract on the ground that Crump, Cook’s insurance broker,

knew about the $500,000 sublimit and its knowledge was

imputed to Cook. As to the definition of “deductible,” the district court held that the term was ambiguous, rejecting Cook’s

argument that the term plainly referred to the amount of loss.

Relying on evidence submitted by Caliber One to elucidate

the meaning of deductible, including documents Crump

drafted referring to the deductible as 5% of TIV, the district

court granted summary judgment in favor of Caliber One. 

Cook moved for reconsideration and offered two declarations from Crump employees. Cook argued that these declarations supported its mutual mistake claim and directly

contradicted the district court’s finding that Crump knew of

the mistake in the earthquake sublimit. The district court

refused to reconsider its earlier summary judgment or the new

declarations, concluding that Cook could not satisfy the strict

test for admission of new evidence. 

STANDARD OF REVIEW

We review de novo the district court’s rulings on crossmotions for summary judgment. See Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 F.3d 1140, 1143 (9th Cir. 2003).

The district court’s ruling on a motion for reconsideration is

reviewed for abuse of discretion. See Smith v. Pac. Props. &

Dev. Corp., 358 F.3d 1097, 1100 (9th Cir. 2004). 

DISCUSSION

1. Earthquake Sublimit

[1] The district court erred in holding the mutual mistake

doctrine inapplicable, precluding Cook from obtaining reformation of the contract. Under Washington law, “a mutual

mistake occurs when the parties, although sharing an identical

intent when they formed a written document, did not express

that intent in the document.” Seattle Prof’l Eng’g Employees

CALIBER ONE INDEMNITY v. CAREY 7537
Ass’n v. Boeing Co., 991 P.2d 1126, 1130 (Wash. 2000)

(internal quotation marks and citation omitted). Cook claims

that a mutual mistake occurred when the contract for the

2000-01 term failed to express the parties’ identical intent that

the earthquake sublimit provide $5 million in coverage. 

[2] Negligence in failing to observe that a writing does not

express what has been assented to “is not a bar to reformation

of a contract when the reformation claim is based upon

mutual . . . mistake.” Wash. Mut. Sav. Bank v. Hedreen, 886

P.2d 1121, 1125 (Wash. 1994). Here, Cook was negligent in

failing to confirm that the terms of the 1999-2000 contract

were the same as those in the 1998-99 contract and were in

turn correctly restated in the 2000-01 contract. Caliber One

was similarly negligent in failing to catch the mistake in the

1999-2000 contract, which Cook claims Caliber One unwittingly repeated in the 2000-01 policy. 

[3] The most reasonable inference to be drawn is that both

Caliber One and Cook intended the terms of the original

1998-99 contract to carry over into the contracts governing

policy years 1999-2000 and 2000-01. Because Caliber One

has provided no contemporaneous evidence to refute the reasonable inference that both parties shared an identical intent

that the 2000-01 contract provide $5 million in earthquake

coverage, and because the parties’ mutual mistake in providing only $500,000 in coverage does “relate to a basic assumption on which both parties relied when making the contract,”

Denaxas v. Sandstone Court of Bellevue, 63 P.3d 125, 131

(Wash. 2003), reformation is warranted. See Denny’s Rest.,

Inc. v. Sec. Union Title Ins. Co., 859 P.2d 619, 629 (Wash. Ct.

App. 1993). 

Caliber One argues that Cook had “constructive knowledge

of the circumstances giving rise to the alleged mistake,”

Denaxas, 63 P.3d at 131, and is not entitled to reformation

because Cook’s belief was actually in accord with the stated

sublimit in the 2000-01 contract and thus not mistaken. How7538 CALIBER ONE INDEMNITY v. CAREY
ever, there is no evidence that Crump actually knew that the

sublimit had been reduced from the original 1998-99 amount

— although had Crump compared the original policy with the

second-generation 2000-01 policy, the discrepancy would

have surfaced. Moreover, although Crump acted as Cook’s

agent in securing insurance, see Orsi v. Aetna Insurance Co.,

703 P.2d 1053, 1057 (Wash. Ct. App. 1985), Crump’s role in

renewing Cook’s insurance contract with Caliber One insofar

as the earthquake sublimit is concerned was ministerial.

Unlike the project architect in Denaxas, who had actual

knowledge of the true square footage and who had the authority to create a project that would fit the available land, there

is no evidence that Crump had the unilateral discretion to

accept a change in the earthquake sublimit coverage. Crump

was merely obeying Cook’s instructions to renew on the

terms Caliber One had previously provided, which both Cook

and Crump assumed were the same as those set forth in the

1998 policy. See Roderick Timber Co. v. Willapa Harbor

Cedar Prods., Inc., 627 P.2d 1352, 1355 (Wash. Ct. App.

1981), cited in Denaxas, 63 P.3d at 130. 

[4] Importantly, Caliber One has admitted that both parties

intended the original and first renewal insurance contracts to

provide $5 million in earthquake coverage and that the change

to $500,000 was simply a clerical error. Accordingly, the parties here are unlike the seller and purchaser in Denaxas,

whose respective intentions differed as to the formulation of

a price offer based on square footage. Denaxas, 63 P.3d at

132-33. The parties’ contractual intentions were identical, and

even though Cook or Crump may bear some responsibility for

not discovering Caliber One’s error, that does not preclude

reformation for mutual mistake. See Hedreen, 886 P.2d at

1126 (stating that “mere carelessness, however, is not necessarily a defense to an action for reformation” and that “[i]f

negligence were a defense to a reformation claim, then reformation would almost never be available as a remedy because

. . . negligence generally results from mistake”) (internal quotation marks and alterations omitted). 

CALIBER ONE INDEMNITY v. CAREY 7539
[5] Because the district court erred in holding the mutual

mistake doctrine inapplicable on the basis of Crump’s supposed knowledge of the stated $500,000 sublimit, we reverse

the court’s summary judgment to Caliber One in this respect.

Upon remand the district court should reform the 2000-01

contract to reflect the parties’ intent that the earthquake sublimit provide $5 million in coverage. 

2. Deductible Amount

[6] Cook argues that the term “deductible” is itself unambiguous and is necessarily tied to the amount of loss claimed.

Caliber One counters that the term is ambiguous in context

here, and that the parties demonstrably intended the amount

of the deductible to be tied to the TIV of the building giving

rise to the loss. Under Washington law, “[a] policy provision

is ambiguous when, on its face, it is fairly susceptible to two

different interpretations, both of which are reasonable.” Morgan v. Prudential Ins. Co. of Am., 545 P.2d 1193, 1195

(Wash. 1976). 

[7] Washington law cautions against a court “creat[ing]

ambiguity where none exists,” Ross v. Hall & Co., 870 P.2d

1007, 1010 (Wash. Ct. App. 1994), and if a term is undefined,

“[it] must be given [its] plain, ordinary, and popular meaning,” Tyrrell v. Farmers Ins. Co. of Wash., 994 P.2d 833, 836

(Wash. 2000) (quotation omitted). However, Washington law

provides that “if a contract is ambiguous on its face . . . the

court [will] look to evidence of the parties’ intent as shown

by the contract as a whole, its subject matter and objective,

the circumstances of its making, the subsequent conduct of

the parties, and the reasonableness of their interpretations.”

Berg v. Hudesman, 801 P.2d 222, 228 (Wash. 1990). Moreover, “[i]f the clause is ambiguous . . . extrinsic evidence of

intent of the parties may be relied upon to resolve the ambiguity.” Panorama Village Condo. Owners Ass’n Bd. of Dirs. v.

Allstate Ins. Co., 26 P.3d 910, 913-14 (Wash. 2001) (citation

omitted). 

7540 CALIBER ONE INDEMNITY v. CAREY
[8] The district court did not err in finding ambiguous the

2000-01 policy definition of deductible — “5.00% deductible

Earthquake per occurrence, minimum $50,000” — because

nothing within that definition or the contract considered as a

whole explains what figure serves as the basis for the 5% calculation. Nor does the clause become unambiguous if given

its “plain, ordinary, and popular meaning,” Tyrrell, 994 P.2d

at 836, because the text’s plain, ordinary and popular meaning

is not evident. 

[9] Here, the policy does not explain whether “deductible

. . . per occurrence” refers to the loss claimed or the total

insured value of the property suffering a covered loss.1 The

dissent’s conclusion, based on dictionary definitions, that the

word “deductible” unambiguously refers to a percentage of

loss is not persuasive. See Diss. at 7544. Dictionaries do not

“uniformly” define the word “deductible” in relation to the

amount of loss suffered. See Boeing Co. v. Aetna Cas. & Sur.

Co., 784 P.2d 507, 511 (Wash. 1990). The American Heritage

College Dictionary 362 (3d ed. 2000), for example, defines

“deductible” as “[a] clause in an insurance policy that

exempts the insurer from paying a specified amount in the

event of a claim.” Here, the “specified amount” is defined in

terms of percentage, but we cannot conclusively tell from the

four corners of the contract what the percentage is in relation

to. Even assuming as true, as an empirical matter, that most

deductible provisions are defined in relation to the amount of

loss claimed — a proposition not supported by any evidence

before us — we still disagree that the word “deductible” is so

consistently defined in relation to amount of loss that the term

is unambiguous on its face. 

[10] Nor does the policy definition’s reference to a “mini1The examples provided in Caliber One’s Commercial Property Building Coverage Form do not resolve this ambiguity, because, although they

show how a deductible functions when a claim of loss is processed, they

do not explain how the deductible itself is calculated. 

CALIBER ONE INDEMNITY v. CAREY 7541
mum $50,000” deductible obviate the ambiguity, as Cook

argues. Cook’s theory is that there would be no need to specify an alternative minimum if the percentage basis referred to

TIV — because the TIV of covered property would presumably be fixed from the start, 5% of which would be thus specifiable. Although this argument has some force, the policy at

issue covers multiple buildings, any one or a combination of

which could potentially be damaged by an earthquake or

appreciate or depreciate in value during the course of the policy’s effectiveness. Thus, the alternative minimum deductible

is not superfluous if the percentage basis is understood as

referring to TIV. 

[11] Given the ambiguity in the deductible definition, the

district court did not err in admitting “extrinsic evidence of

[the] intent of the parties . . . to resolve the ambiguity.” Panorama Village, 26 P.3d at 913-14 (internal citation omitted).

Nor did the district court err in holding that the extrinsic evidence reveals the parties’ intent and resolves the ambiguity in

Caliber One’s favor. Cook offered no extrinsic evidence to

prove that it intended the deductible to correlate with the

amount of loss claimed. By contrast, Caliber One offered into

evidence documents Crump prepared — a certificate of liability insurance and a property insurance proposal — that

expressly tied the deductible to TIV. Summary judgment is

appropriate where, as here, the undisputed evidence supports

only one reasonable inference. See Braxton-Secret v. A.H.

Robins Co., 769 F.2d 528, 531 (9th Cir. 1985) (holding that

“where the palpable facts are substantially undisputed, such

issues can become questions of law which may be properly

decided by summary judgment”). Accordingly, we affirm the

district court’s conclusion that the contract’s deductible refers

to the TIV of the property affected by an earthquake. 

3. Affidavits

[12] We also affirm the district court’s refusal to consider

the affidavits Cook submitted with its motion for reconsidera7542 CALIBER ONE INDEMNITY v. CAREY
tion. Cook has not argued that the facts sworn to in them were

“newly discovered or unknown to it” prior to the filing of its

motion for reconsideration, nor has Cook shown that “it could

not with reasonable diligence have discovered and produced”

the affidavits earlier. See Frederick S. Wyle P.C. v. Texaco,

Inc., 764 F.2d 604, 609 (9th Cir. 1985). 

The parties shall bear their own costs. 

AFFIRMED in part, REVERSED in part.

WARDLAW, Circuit Judge, concurring in part and dissenting

in part: 

I agree that the mutual mistake doctrine is applicable, the

contract should be reformed, and that the district court properly excluded Cook’s affidavits. However, I dissent because

both the district court and the majority have erred by using

extrinsic evidence to create ambiguity where none exists.

Nothing in the policy language supports the majority’s view

that “5.00% deductible” meant a percentage of the total

insured value (“TIV”) of properties affected by the earthquake, or that the TIV would be adjusted during the policy

term for appreciation or depreciation of the covered properties. 

This is a diversity action, which requires us to apply Washington State’s law. When interpreting insurance contracts,

“[t]he pertinent rules are simple enough. If the policy language is clear and unambiguous, the court may not modify the

contract or create an ambiguity where none exists.” E-Z

Loader Boat Trailers, Inc. v. Travelers Indem. Co., 726 P.2d

439, 443 (Wash. 1986). Here, the insurance policy expressed

the deductible in terms of a percentage per occurrence. The

policy does not expressly define “deductible.” Under Washington law, “[w]e give undefined terms in a policy their popuCALIBER ONE INDEMNITY v. CAREY 7543
lar and ordinary meaning, turning to dictionaries if the plain

meaning of the term is not clear.” State Farm Fire & Cas. Co.

v. English Cove Ass’n, Inc., 88 P.3d 986, 989 (Wash. Ct. App.

2004) (footnotes omitted). Only after Washington courts

examine the dictionary meaning of a term is ambiguity evaluated. See id. 989-91. The Washington Supreme Court has

examined both standard and insurance-specific dictionaries in

order to divine the plain meaning of terms in an insurance

contract. See Boeing Co. v. Aetna Cas. & Sur. Co., 784 P.2d

507, 511 (Wash. 1990). The term “deductible” is defined by

one insurance dictionary cited by the Washington Supreme

Court as the “[a]mount of loss that insured pays in a claim.”

Barron’s Dictionary of Insurance Terms 124 (4th ed. 2000).

Similarly, the Insurance Information Institute defines deductible as “[t]he amount of loss paid by the policyholder. Either

a specified dollar amount, [or] a percentage of the claim

amount.” http://www.iii.org/media/glossary/alfa.D; see also

Black’s Law Dictionary 444 (8th ed. 2004) (“Under an insurance policy, the portion of the loss to be borne by the insured

before the insurer becomes liable for a payment.”). Each definition of deductible defines the term only in relation to the

amount of loss suffered, which is the same as the claim

amount, and we should do the same. 

A commonsense reading of the policy dictates that the

deductible was expressed as a percentage because it could

only be determined by reference to a claim made against the

policy—and thus that the deductible was a percentage of the

claimed loss. The insured value of the various properties was

known, and if a fixed deductible based on those values was

intended, it could easily have been expressed in the contract.

The majority goes astray by failing to follow Washington

State rules of interpretation and incorporating the ambiguity

it finds in the term “occurrence” into what should be a

straightforward analysis of the plain meaning of “deductible.”

7544 CALIBER ONE INDEMNITY v. CAREY