N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
ST. PAUL M ER C UR

Y INSUR ANC E C OM PANY,

Pla i ntiff-Appe lla

nt,
v. FEDER AL DEPOSIT INSUR

ANC E C ORPOR ATION, a s re c e ive r for Pa c ific C oa st Na tiona l B an k, De fe nda n t-Appe l le e . No. 14-56830 D.C . No. 8:13-c v-00424-AG-R

NB
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Andre w J. Guilford, Distric t Judge , Pre siding Argue d and Subm i tte d

Oc tobe r 6, 2016 Pa sa de n a , C a l ifornia B e fore : REINHAR

DT, OW E NS, and FR IEDLAND, C irc uit Judge s St. Pa u l M e rc ury

Insura n c e C om pa ny , a subsidia

ry of The Tra ve le rs C om pa nie s, Inc . (Trav e le rs), a

p pe a ls from the distric t c o urt’ s de c ision gra nting the Fe de ra l De posit Insura

nc e C orporation (FDIC )’ s m otion for sum m ary judgm e nt 

# FIL ED OCT 19 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 Ninth C irc uit R

ule 36-3.and de ny i ng Tra v e le rs’ m otion for sum

m ary judgm e nt. As thepa

rtie s are fa m ilia

r with the fa c ts, we do not re c ount the m he re . W e re vie w de novo the distric t c ourt’ s de c ision. Av e ry

v . First Re

solution Mgmt. C

orp. , 568 F.3d 1018, 1021 (9th C ir. 2009). W e have jurisdic tion unde r 28 U.S.C . § 1291, a nd we a ffirm
. 1. Pre lim i na

rily , we note tha

t the pre c ise la

ngua ge of this pre c ise insura nc e polic y ha s be e n he ld to be a m

biguous by

the Ele ve nth C irc uit, whic h c o nc lude d that the FDIC wa s e ntitle d to re lie f for the sa m e re a sons it a dva

nc e s he re . Se e St. Paul Me rc ury

Ins. C o . v . FDIC , 774 F.3d 702, 710-11 (11th C i r. 2014). W e are re luc ta nt to a fford a

diffe re nt m e aning to the

provisions of a

n insura nc e polic y

tha n it ha s be e n give n in a

nothe r c irc uit in the

a bse nc e of a

c le arly e rrone o u s c onstruc tion by

tha t c irc uit. He re , we c an by no m e ans so c ha

ra c te riz e the Ele v e n th C irc uit’ s inte rpre tation of thepolic y . In fa c t , we be lie v e it to be c o rre c t. 2. The distric t c ourt prope rly he ld tha t the insura

nc e polic y ’ s “ unre pa id loa n c arve -out” doe s not una

m biguously ba r c o ve ra ge for the dam a ge s sought by the FDIC in its a c tion a ga inst thedire c tors a nd offic e rs a

nd tha t it the re fore m

u st be
c onstrue d to a llow c ove ra ge . The FDIC is not se e king re pa ym e nt of loa

ns but is inste a d using c ha

rge -offs on loa

ns to c a lc ulate the losse s c a use d by the dire c tors’
and offic e rs’ a lle ge dly tortious c onduc t in ope ra ting a nd m a n a ging the le nding func tion of thenow-de func t Pa c ific C oa st Na tiona l B ank. Ha d Trave le rs inte nde d
2the c arve -out to a pply una m biguously to the s e dam a ge s, it c ould ha ve use d broa de r la ngua ge , sim ila

r to la ngua ge it use d e lse whe re in the insura nc e polic y , to ba

r c ove ra ge for loss tha

t is “ ba se d upon, a

rising out of, or a

ttributa ble to” any

loa n. In the a bse nc e of tha

t broa de r la

n gua ge , the c arve -out doe s not a p p ly una m biguously to the tort da

m a ge s the FDIC se e ks. Eve n if one re a s ona ble inte rpre tat ion of the
c arve -out would ba

r c ove ra ge , a

nothe r re a sona

ble inte rpre tation e x ists tha t would
a llow c ove ra ge , a

nd the re fore , the c arve -out is a m biguous. W

alle r v . Truc k

Ins. Ex c h., Inc
. , 900 P.2d 619, 627 (C a l. 1995) (“ A polic y provision will be c onside re d
am biguous whe n it is c a

pa ble of two or m ore c onstruc tions, both of whic h a re re a s ona ble .” ). This a m biguity should bec onstrue d a ga inst Tra ve le rs, the insure r, “ to prote c t the insure d’ s re a s ona ble e xpe c tation of c ove ra g e .” Pow e rine Oil C o., Inc
. v . Supe rior C

t. , 118 P.3d 589, 598 (C a l. 2005) (quoting Foste r-Gardne r, Inc . v . N at’l Union Fire

Ins. C o. , 959 P.2d 265, 273 (C a l . 1998)). He re , it wa s re a s ona ble for the insure ds to e xpe c t tha t the polic y

would provide

c o ve ra ge for dam a ge s
awarde d a s the re sult of tortious m ism ana ge m e nt by

the ba nk’ s dire c tors a

nd offic e rs. Ac c ordingly , we a ffirm the distric t c o urt’ s c o n c lusion tha t the “ unre pa id loa n c arve -out” doe s not ba

r c ove ra ge for the dam a ge s sought by the FDIC
.

33. The distric t c ourt a lso prope rly he ld tha t the insura

nc e polic y ’ s “ insure d v. insure d” e xc lusion is a m biguous a s a

pplie d to the FDIC a s re c e ive r an d the re fore
m ust be c onstrue d in fa

vor of c o ve ra ge . C ontra

ry to Tra v e le rs’ c onte ntions, ne ithe r the Supre m e C ourt’ s de c ision in O’Me lv e ny & My e rs v . FDIC , 512 U.S. 79 (1994), nor our de c ision in B iltmore Assoc iate

s, LLC v . Tw i n C

ity Fire Insuranc e C ompany , 572 F.3d 663 (9th C i r. 2009), c om pe l s a c ontra ry re sult, be c a

use ne ithe r
a ddre s se d the spe c ific issue tha t this a ppe a l ra ise s. Inste a d, it is a m biguous whe the r the FDIC a s re c e ive r is pursuing its c la i m s a ga inst thedire c tors a nd offic e rs “ on be ha lf of” the de func t ba nk within the

m e aning of the “ insure d v. insure d” e xc lusion, be c a

u se the FDIC a s re c e ive r re pre se nts a num be r of inte re sts
and doe s not ope ra te a s a

norm a l suc c e ssor in inte re st. Se e FDIC v . O’Me lv e ny

& My e rs , 61 F.3d 17, 19 (9th C ir. 1995) (pe r c uriam ). Furthe rm ore , the “ insure d v. insure d” e xc lusion doe s not re fe r to c la im s brought by the FDIC a s re c e ive r, and the i nsura nc e polic y

doe s not c o nta in a

re gula tory e xc lusion. As the insure r, Trave l e rs be ars the burde n to “phra se e xc e ptions a

nd
e xc lusions in c le ar a

n d unm i sta

ka ble la ngua ge ” and of e sta

blishing tha

t a “ c la im is spe c ific a lly

e xc lude d.” Mac

K innon v
. Truc k

Ins. Ex c h. , 73 P.3d 1205, 1213 (C a l. 2003) (c ita

tions omitte d ). Trave le rs fa i le d to c arry tha t burde n, de spite having notic e tha t sim ila r e xc lusions ha d be e n de e m e d am biguous by

othe r c ourts.
4Ac c ordingly , we a ffirm the distric t c ourt’ s de te rm ination tha t the “ i nsure d

v. insure d” e xc lusion is a

m biguous a nd doe s not ba

r c ove ra ge for the FDIC ’ s a c tion
a ga inst thedire c tors a

nd offic e rs. AFFIRM E D.

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