Opinion ID: 1468847
Heading Depth: 1
Heading Rank: 2

Heading: .Liability for Costs of Defense and Settlement

Text: OEA challenges the district court's grant of summary judgment on the amounts paid for defense and settlement, arguing that the district court erred by resolving a factual dispute when it determined that the Shugart and Wise claims were first made prior to the Evanston and Royal policy period. We review a district court's grant of summary judgment de novo. Arakaki v. Hawaii, 314 F.3d 1091, 1094 (9th Cir.2002). In reviewing the grant of summary judgment for Evanston and Royal, [w]e must determine, viewing the evidence in the light most favorable to [OEA], whether there are any genuine issues of material fact and whether the district court correctly applied the substantive law. See Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir.2004). We do not weigh the evidence or determine the truth of the matter; instead, we only determine whether there is a genuine issue for trial. See Balint v. Carson City, 180 F.3d 1047, 1054 (9th Cir.1999) (en banc). It is undisputed that OEA became aware of the Shugart complaint in June 1997 and the Wise complaint in November 1997, before the Evanston and Royal policy periods commenced on May 1, 1998. Relying on this fact and the content of the complaints, the district court held that the claims were first made in 1997. But, OEA contends that it did not become aware of Shugart's and Wise's intention to hold OEA liable for their injuries until October 1998, by which time the policies were in effect. OEA argues that in granting summary judgment on this issue, the district court wrongly decided a disputed factwhether it was reasonable for OEA to read the complaints as not evincing an intent to hold OEA liable for the injuries at issue. We disagree. The complaints make clear Shugart's and Wise's intention to hold OEA liable, and the district court properly held that there was no genuine issue of material fact as to the date the claims were first made. Only claims FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD are covered by the Evanston and Royal policies. A claim is defined in the Evanston policy as a notice received by the insured of an intention to hold the Insured responsible for an Occurrence involving this policy and shall include the service of suit or institution of arbitration proceedings against the Insured. The district court interpreted this language as follows: The policy defines claim as a notice. Without saying so explicitly, Evanston and OEA appear to agree that the language incorporates a reasonable person standard. A foolish or overly sophisticated failure or refusal to realize that one is the intended object of suit would be of no assistance to an insured. Similarly, a confusingly vague or indefinite notification would not amount to a claim if a reasonable insured would not deem it such. OEA agrees with this interpretation, but argues that whether a reasonable insured would understand the complaint as evincing an intention to hold OEA liable is a question for the jury. Given the undisputed content of the complaints and OEA's receipt of both complaints, there is no genuine dispute as to when OEA received notice of Shugart's and Wise's intention to hold OEA responsible for their injuries. Both complaints clearly list OEA, OEA Aerospace, and Does 1 to 200 as defendants. OEA and OEA Aerospace are described as separate business organizations in the complaints. The causes of action are listed as (1) general negligence, (2) products liability, (3) premises liability, and (4) strict liability. In alleging a cause of action for products liability, Shugart and Wise alleged that OEA alone sold the gunpowder, storage bins and trays, protective gear, and other products that contributed to their injuries. Elsewhere in the complaints, facts are alleged against both OEA and OEA Aerospace. OEA argues that other evidence nonetheless creates a genuine issue of material fact as to the reasonableness of OEA's understanding that Shugart and Wise did not intend to hold OEA liable. The evidence does indicate that, as a general matter, OEA and Aerospace were frequently confused as corporate entities and that, at times, Aerospace was referred to as OEA. It is also undisputed that Shugart and Wise did not seek to serve OEA independently from Aerospace in 1997. And, finally, OEA has proffered direct and circumstantial evidence of various individuals' subjective beliefs that the complaints did not state a cause of action against OEA. Despite OEA's subjective belief, the complaints at issue clearly name OEA as a defendant separate from Aerospace. Taking the evidence in the light most favorable to OEA, the complaints constituted a notice received by OEA of an intention to hold OEA responsible for injuries. Any subjective belief that the complaints solely allege worker's compensation claims against Aerospace was unreasonable where the complaints specifically allege that OEA is liable for injuries caused by products it manufactured and sold. The factual disputes cited by OEA are immaterial against the undisputed content of the complaints. OEA's contention that summary judgment was improper because reasonableness is generally a factual inquiry left to the jury, is also unavailing. Although the jury's unique competence in applying the reasonable man standard is thought ordinarily to preclude summary judgment, we have squarely rejected the contention that reasonableness is always a question of fact which precludes summary judgment. In re Software Toolworks Inc., 50 F.3d 615, 622 (9th Cir.1994) (internal quotation marks and citation omitted). Rather, reasonableness becomes a question of law and loses its triable character if the undisputed facts leave no room for a reasonable difference of opinion. Id. at 621-622 (internal quotation marks and citations omitted). In this case, the facts leave no room for a reasonable difference of opinion, and summary judgment was appropriate. Because the claims were made prior to the policy period, they were not even potentially covered. OEA did not pay premiums to cover these claims, and when Evanston made payments for OEA's defense and settlement, OEA received more than its bargained-for coverage. Therefore, Evanston is entitled to the reimbursement of $1,544,924.32 in defense and settlement costs.