Court Opinion

ID: 4232468
Source: CourtListenerOpinion
Date Created: 2017-12-26 21:00:45.194507+00
Date Added: 2024-06-11T12:46:23.925722
License: Public Domain

NOT FOR PUBLICATION                             FILED
                     UNITED STATES COURT OF APPEALS                          DEC 26 2017
                                                                         MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

LIBERTY INSURANCE                                 No.    16-55711
UNDERWRITERS, INC.,
                                                  D.C. No.
                 Plaintiff-Appellee,              2:15-cv-00859-DMG-JC

 v.
                                                  MEMORANDUM*
DAVIES LEMMIS RAPHAELY LAW
CORPORATION; et al.,

                 Defendants-Appellants.

                    Appeal from the United States District Court
                       for the Central District of California
                      Dolly M. Gee, District Judge, Presiding

                      Argued and Submitted December 7, 2017
                               Pasadena, California

Before: WARDLAW and GOULD, Circuit Judges, and COLLINS,** Chief
District Judge.

      Liberty Insurance Underwriters (“Liberty”) sought a declaratory judgment in

a federal district court in the Central District of California to limit its exposure

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              The Honorable Raner C. Collins, Chief United States District Judge
for the District of Arizona, sitting by designation.
while defending seven state court lawsuits brought against its insureds, Davies

Lemmis Raphaely Law Corporation, et al. (“DLR”), who were the defendants in

those lawsuits. The district court gave relief to Liberty. DLR appeals the district

court’s grant of summary judgment in Liberty’s favor, which ended Liberty’s

defense of the underlying lawsuits.

      We consider whether the district court erred by denying DLR’s motion to

stay Liberty’s declaratory judgment action pending disposition of the underlying

lawsuits. We also consider whether the district court erred in granting summary

judgment for Liberty on the ground that DLR’s alleged conduct in the underlying

actions arose from the same or related wrongful conduct subjecting DLR to a

single claim policy limit. We have jurisdiction to consider this appeal under 28

U.S.C. § 1291, and we affirm.

      DLR argues that the district court erred by denying its motion to stay

Liberty’s declaratory judgment action because the district court should have

abstained from considering this state law issue. Reviewing the district court’s

decision for abuse of discretion, however, we conclude that the district court did

not abuse its discretion here. See United States v. Peninsula Commc’ns, Inc., 287
F.3d 832, 838 (9th Cir. 2002). The district court did not needlessly resolve state

law issues, its decision did not encourage forum shopping, and the adjudication did

not result in duplicative litigation. Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220,

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1225 (9th Cir. 1998). Further, there is no overlap between Liberty’s claim for

relief and the underlying state court actions. Id. (“We know of no authority for the

proposition that an insurer is barred from invoking diversity jurisdiction to bring a

declaratory judgment action against an insured on an issue of coverage.”) (quoting

Aetna Cas. & Sur. Co. v. Merritt, 974 F.2d 1196, 1199 (9th Cir. 1992)). The

district court did not abuse its discretion when it denied DLR’s motion to stay.

      DLR also argues that the district court erred by concluding that the insurance

policy’s single claim limit of liability applied to the seven underlying lawsuits.

The policy states, in relevant part, “[c]laims, alleging, based upon, arising out of or

attributable to the same or related wrongful acts shall be treated as a single claim.”

The seven underlying actions for which Liberty provided DLR a defense all

alleged that DLR had conflicts of interests by representing both the buyers and

promoters of real estate investments and that DLR drafted offering documents that

included a material misrepresentation regarding the inclusion of commissions in

the asking price. These allegations are sufficient to meet the policy’s definition of

“related wrongful acts.” See Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut.

Ins. Co., 5 Cal. 4th 854, 873 (1993) (“[T]he term ‘related’ as it is commonly

understood and used encompasses both logical and causal connections.”). While

the underlying actions are not causally related, they are logically related to each

other by the “common purpose or plan”—a scheme to incentivize investments by

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signifying that sellers would pay commissions, while hiding the fact that the price

of the investment included the commissions. See Safeco Ins. Co. of Am. v.

Fireman’s Fund Ins. Co., 148 Cal. App. 4th 620, 633 (2007) (looking to the cause

of the injury “rather than the number of injurious effects”). The district court did

not err in concluding that this common plan satisfied the related conduct language

in the policy. Liberty was entitled to declaratory judgment.

      We further deny DLR’s request that we certify these questions to the

California Supreme Court.

AFFIRMED.

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