N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT

SOUTHER

N C ALIFOR

NIA C OUNSELING C ENTER , Pla intiff - Appe lla nt,
v. GR EAT AM ER IC AN INSUR ANC E C OM PANY, De fe nda

nt - Appe lle e . No. 14-56169 D.C . No. 2:13-c v-05468-AB C (AGR )
M EM OR ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Audre y B . C ollins, Distric t Judge , Pre siding Argue d a nd Subm itte d June 9, 2016 Pa sa de n a , C a l ifornia B e fore : R EINHAR

DT a nd W AR DLAW , C irc uit J udge s an d KO R M AN, ** Se nior Distric t Judge
. S ou th e rn C a lifornia C ounse ling C e nte r (“ SC C C ” ) a p pe a ls the gra nt of Gr eat Am e ric a n Insura

nc e C om pa ny ’ s (“ GAIC ” ) m otion for su m m ar y judgm e nt a nd the



# FIL ED
JUN 28 2016 M OLLY C. DW Y ER, CLERK U

. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.
** The Honora

ble Edwa rd R . Korm a n, Se n i or Distric t Judge for the U.S. Distric t C ourt for the Ea s te rn Distric t of Ne w York, sitting by de signa tion.d e nia l of its own m otion for pa rtia l sum m a ry j udgm e nt in a c a se a rising o u t o f t h e
re je c tion of SC CC’s r ei m

burse m e nt c la im unde r a G AIC -issue d insura nc e polic y ’ s
c ove ra ge for losse s due to c om pute r fra ud. The distric t c o urt found tha t the polic y ’ s
e xc lusion for losse s c a

use d by “ a uthoriz e d re p r es e nta t ive s” – he re , SC C C ’ s pa y rollse rvic e s a ge n t, B e n Fra nklin Pa y roll Se rvice, an d / or its p rinc i pa l, R ic ha rd Z a ka ria n
– a pplie d. W e a ffirm
. Se c tion D.1.c of the polic y e x c lude s from c ove ra ge losse s c a use d by the dishone st a c ts of “ a

uthoriz e d re pre se nta tive s.” B la c k’ s La w Dic t iona ry d e fine s “ to
a uthoriz e ” a s “ [t] o give le ga l a uthority ; to e m

p o we r,” and “ re pre se n ta tive ” a s

“ [ s ] om e o ne w ho s ta

nds for or a c ts on b e ha lf of a n othe r.” B lac k ’s Law Dic tionary (10th e d
. 2014)
. Web s te r’ s Dic tiona ry pre se n ts substa

n tia lly sim ila

r de finitions. Web s te r’s Third N

e w Inte rnational Dic tionary (Unabridge d) 146

! 47, 1926

! 2 7 (1981). As a re sul t , a

uthoriz e d re pre se nta tive s a re “ in e sse n c e , those whom the insure d e m

powe rs t o a c t on its be ha lf. ” Stanford U niv

. Hosp. v . Fe d. Ins. C

o. , 174 F.3d 1077, 1085 (9th C ir. 1999). Just a s we found in Stanford with re ga rd to a sim ila

r provision in a n insura

n c e polic y , “ the pla in m e a ning of t he ‘ a uthoriz e d re pre s e nta tive ’ la ngua ge [he re ]
. . . is no t a m biguous a nd c ove rs those who by a uthoriz a t ion of the insure d a re give n a c c e ss to a

nd pe rm itte d to ha

n dle the insure d’ s funds.” Id. This unde rst anding c om

ports with the func tion o f the provision within the
-2-p olic y : to pla c e the o nus of ve tting the individua ls a nd e ntitie s whom th e i n s u r ed

e nga ge s to sta

nd in its shoe s – a

nd thus t he risk o f loss s te m

m ing from the ir c onduc t

– squa re ly o n the insure d. In othe r words, the te rm “ a uthoriz e d re pre s e nta tive ” is “ a stra ightforwa

rd e ffort to e m

bra c e a ll sta

tuse s tha t a re ‘ au t h oriz e d,’ a nd thus a re the insure d’ s re sponsibility to supe rvise .” Id. (quoting Stop & Shop C os. v . Fe d. Ins. C

o . , 136 F.3d 71, 76 (1st C ir. 1998)). SC C C e xe c ute d m

ultiple a gre e m e nts with B e n Fra nklin Pa y roll Se rvic e a nd/or its princ ipa l, R ic ha

rd Za ka ria n, to a llow the l at te r pa rty or pa rtie s t o provide pa

y roll
s er v ic e s. In doing s o, SC C C ga ve the m dire c t a c c e ss t o its ba nk a cco u n t an d pe rm ission to file ta x doc um e n ts on its be ha l f. T h e se a g re e m e nts use d the word

“ a u thoriz e ” num e rous tim e s; inde e d, i t is diffic ult t o im a gine c ontra c ts t ha t c ould m ore
e xplic itly “ a

uth o r i ze” a “ re pre se nta tive ” to a c t on one ’ s b e ha lf. Unde r the se
c irc um s ta nc e s , the d i stric t c ourt did not er r i n conc luding tha t the only re a sona ble
co n st ruc tion of the te rm “ a uthoriz e d re pre se nta tive ” e nc om pa sse s B e n Fra nklin Pa y roll Se rvic e a nd/or Za ka ria n, a nd, a s a re sult, the e xc lusion u na m biguously a

pplie s. Tha t B e n Fra nklin Pa y roll Se rvic e wa s not a n inc orpora te d or re giste re d busine ss is of no signific a nc e be c a

use i t is c le a r tha t a n e n tity or i ndividua l doing b usine ss unde r the na m e B e n Fra nkl in P ayr o l l Se rvic e e n te re d into the a gre e m e nts with SC C C a n d
e ve n pa rtia lly pe rform e d for a pe riod of tim e . Se e Pink e rton’s Inc

. v . Supe rior C ourt , -3-57 C a l. R

ptr. 2d 356, 360 (C t. App. 1996). AFFIRM E D
.

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