PUBLISH UNITED STATES CO URT OF APPEALS FOR THE TENTH CIRCUIT

C.L. FRATES & COMPANY, an Oklahoma corporation, Plaintiff-Appellee,

v. WESTCHESTER FIRE INSURANCE COMPANY, a Pennsylvania corporation, Defendant-Appellant. No. 12-6274

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. No. 5:11-CV-01020-L)

Thomas Rowe Kendrick, Timothy L. Mar tin of Durbin, Larimore & Bialick, Oklahoma City, Oklahoma; Joseph K. Powers of Sedgwick LLP, New York, New York, for Defendant - Appellant. Ryan S. Wilson, Elizabeth A. Price, Mi chael L. Brooks of Hartzog Conger Cason & Neville, Oklahoma City, Oklahoma, for Plaintiff - Appellee.

Before HOLMES , BACHARACH , and PHILLIPS , Circuit Judges. 1

1 The Defendant has requested oral argumen t to clarify certain legal standards. But in their briefs, the parties have suffi ciently presented thei r positions on the legal standards. As a result, the Court has decided the appeal based on the briefs. See Tenth Cir. R. 34(a)(2)(C). FILED United States Court of Appeals Tenth Circuit 

### September 4, 2013
Elisabeth A. Shumaker Clerk of Court- 2 - BACHARACH , Circuit Judge.
This action involves a dispute over the interpretation of an errors-andomissions policy issued by Westchester Fi re Insurance Company to C.L. Frates & Company. The policy excludes coverage fo r claims “arising out of” bankruptcy or insolvency. The dispute grew out of a stop-loss policy issued by United Re to a company that had hired Frates as a broker. Afte r issuance of the polic y, United filed for bankruptcy protection. When Frates learne d of the bankruptcy, it investigated and learned that United was not an insurance co mpany, had been sued in Ohio, and had filed bankruptcy to stall the Ohio litigation. Ultimately, Frates recommended to its client that it move the stop-loss insurance to another insurer. The client agreed. However, Frates had to reimburse the cl ient for what it lost through higher deductibles. Saddled with the cost of this reim bursement, Frates sued Westchester under the errors-and-omissions policy. In cross-motions for summary judgment, Westchester contended that Frates’s clai m “arose out of” United’s bankruptcy or insolvency. In turn, Frates contends that the claim “a rose out of” United’s deception. The district court agreed with Frates a nd granted its motion for summary judgment. In this appeal, we are asked: Could a reas onable trier of fact c onclude that Frates’s claim arose out of United’s bankruptcy or inso lvency? We think so. As a result, we reverse the award of summary judgment to Frates.- 3 - Elements of the Decision In considering the award of summary j udgment, we must examine the standard applicable in the district court proceedings, the meani ng of the phrase “arising out of,” and the possible inferences that c ould be drawn by a rational fact-finder. Standard for Summary Judgment To begin, we consider the summary- judgment standard. In reviewing the award of summary judgment, we view the evidence in the light most favorable to Westchester. See Justice v. Crown Cork & Seal Co., Inc. , 527 F.3d 1080, 1085 (10th Cir. 2008). When the evidence could lead a rational fact-finder to resolve the dispute in favor of either party, summary judgment is improper. SCO Grp., Inc. v. Novell, Inc. , 578 F.3d 1201, 1215 (10th Cir. 2009). Reasonableness of a Finding for Frates We must apply this standard against the backdrop of the underlying question, the meaning of the phrase “arising out of.” Under Oklahoma law, 2 we broadly interpret the phrase “arising out of” as requi ring only some connec tion to the injury. See Fed. Ins. Co. v. Tri-State Ins. Co. , 157 F.3d 800, 80 4 (10th Cir. 1998) (interpreting Oklahoma law). Viewing the evidence in th e light most favorable to Westchester, a reasonable fact-f inder could conclude that Fr ates’s injury had at least some connection to United’s bankruptcy or insolvency.

2 Both parties rely on Oklahoma law.- 4 - I. A Potential Connection to United’s Bankruptcy Frates’s vice-president contends that United changed insurers for reasons unrelated to the bankruptcy. Appellant’s App. at A-105 ¶ 10. Even so, a fact-finder could reasonably conclude that Frates’s loss bore at least some connection to United’s bankruptcy. After all, Frates’s investigation was prompted by news of United’s bankruptcy and the insured refe rred to the bankruptcy when following Frates’s advice to switch insurers. Id. at A-104, A-137. II. A Potential Connection to United’s Insolvency The fact-finder could also infer at least some connection between Frates’s injury and United’s inso lvency (apart from its bankruptcy). To address this part of the exclusion, we must know what the te rm “insolvency” means. Under Oklahoma law, the term “insolvency” re fers to an inability to pay debts as they become due. Illinois Ref. Co. v. Illinois Oil Co. , 264 P. 904, 906 (Okla. 1928). With this definition of “insolvency,” a reasonable tr ier of fact could regard United as insolvent. This conclusion could be supported, in part, by the stipulation that United had filed bankruptc y to stall the Ohio lawsuit. Appellant’s App. at A-104 ¶ 8. The bankruptcy filing could suggest insolvency, for “debtors do not generally file for bankruptcy unless they are insolvent.” See Dumont v. Ford Motor Credit Co. (In re Dumont) , 581 F.3d 1104, 1116 (9th Cir. 2009) . This seems to be true of United, as it submitted bankruptcy sche dules reflecting asse ts of $505,000 and- 5 - liabilities exceeding $2 ,000,000. Appellant’s App. at A-90. Thus, a fact-finder could reasonably find that United was insolvent. This insolvency could also be linked to Frates’s injury. Pr esumably, Frates did not see United’s bankruptcy sc hedules. But under the s tipulated facts, Frates ultimately learned that United had filed for bankruptcy protection. Id. at A-104 ¶ 8. With knowledge of the bankrupt cy filing, Frates could r easonably have inferred that United was unable to pay its debts as they became due. The resulting question is whether Un ited’s insolvency bor e at least some connection to Frates’s loss. A fact-finde r could reasonably infer this connection from the contentions by a Frates executive that he: (1) would no t have recommended United if he had known of its financial probl ems associated with the Ohio litigation, and (2) recommended a switch in insurers in part because he questioned United’s “financial status.” Id. at A-105 ¶¶ 9-10. Together, concerns about United’s “financial problems” and “f inancial status” could supp ly the required connection between its insolvency and Frates’s loss. Conclusion A fact-finder could reasonably infer that Frates’s injury arose out of United’s bankruptcy or insolvency based on: (1) evidence that Frates’s investigation was precipitated by news of th e bankruptcy, (2) the insure d’s reference to United’s bankruptcy when following the recommenda tion to change insurers, and (3) the stipulation regarding the effect of Un ited’s financial problems on Frates’s- 6 - recommendation to switch insurers. As a result, we reverse the award of summary judgment to Frates and remand to the di strict court for further proceedings.