Court Opinion

ID: 150431
Source: CourtListenerOpinion
Date Created: 2010-07-12 21:39:38+00
Date Added: 2024-06-11T17:24:12.605567
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUL 12 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

GENESIS INSURANCE COMPANY,                       No. 09-15204

            Plaintiff-counter-claim-             D.C. No. 5:06-cv-05526-JW
defendant - Appellant,

  v.                                             MEMORANDUM *

MAGMA DESIGN AUTOMATION,
INC.,

             Defendant-counter-claim-3rd-
party-plaintiff - Appellee,

  v.

NATIONAL UNION FIRE INSURANCE
COMPANY, of Pittsburgh, PA and
EXECUTIVE RISK INDEMNITY, INC.,

             Third-party-defendants -
Appellees.

GENESIS INSURANCE COMPANY,                       No. 09-15297

             Plaintiff-counter-claim-            D.C. No. 5:06-cv-05526-JW
defendant - Appellee,

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
  v.

MAGMA DESIGN AUTOMATION,
INC.,

              Defendant-counter-claim-3rd-
party-plaintiff - Appellant,

  v.

NATIONAL UNION FIRE INSURANCE
COMPANY, of Pittsburgh, PA and
EXECUTIVE RISK INDEMNITY, INC.,

              Third-party-defendants -
Appellees.

                   Appeal from the United States District Court
                     for the Northern District of California
                     James Ware, District Judge, Presiding

                       Argued and Submitted April 15, 2010
                            San Francisco, California

Before: SCHROEDER and RAWLINSON, Circuit Judges, and COLLINS, District
Judge.**

       Appellant and Cross-Appellee Genesis Ins. Co. (Genesis) challenges the

district court’s summary judgment in favor of Appellee and Cross-Appellant

Magma Design Automation, Inc. (Magma). The district court concluded that

        **
             The Honorable Raner C. Collins, United States District Judge for the
District of Arizona, sitting by designation.

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Genesis was at risk to provide coverage for certain post-policy period claims made

against Magma and its officers and directors. On cross-appeal, Magma contends

that if we determine that Genesis was not at risk to provide coverage, then we

should direct the district court to enter a summary judgment concluding that

Appellee National Union Fire Ins. Co. of Pittsburgh, PA (National Union) was at

risk to provide coverage.

      1. We do not agree that the notice of circumstances provided to Genesis

triggered coverage for the post-policy period claims. The notice did not contain

any of the specific information called for in Section 15(c) of the policy and falls

short of the types of notice we have upheld as sufficiently specific under similar

notice provisions. See, e.g., Continental Ins. Co. v. Metro-Goldwyn-Mayer, Inc.,

107 F.3d 1344, 1348 (9th Cir. 1997); see also Continental Ins. Co. v. The Superior

Court of Los Angeles County, 37 Cal.App.4th 69, 76 (1995). Accordingly, because

the notice provided by Magma was not sufficiently specific, it “cannot be regarded

as providing the kind of written notice that constitutes an insuring event under the

[notice of circumstances] provision.” KPFF, Inc. v. California Union Ins. Co., 56

Cal.App.4th 963, 975 (1997) (footnote reference omitted).

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      2. Contrary to Magma’s assertion, Genesis cannot be charged with

constructive notice of any facts it would have discovered had it conducted an

investigation. Under California law, an insurer “cannot be charged with

constructive notice of circumstances it had no duty to investigate.” Id. at 978.

Because Magma failed to comply with the written notice requirements of the

Genesis Policy, no duty to investigate arose. See id. at 977-78.

      3. Genesis did not waive its right to object to the sufficiency of the notice of

circumstances provided by Magma. “California courts will find waiver when a

party intentionally relinquishes a right, or when that party’s acts are so inconsistent

with an intent to enforce the right as to induce a reasonable belief that such right

has been relinquished.” Intel Corp. v. Hartford Acc. & Indem. Co., 952 F.2d 1551,

1559 (9th Cir. 1991) (citation omitted). In the insurance context, “where waiver

has been found, there is generally some element of misconduct by the insurer or

detrimental reliance by the insured.” Id. Magma has not demonstrated that

Genesis intentionally relinquished its right to object to the sufficiency of the notice

of circumstances, does not allege misconduct, and has failed to provide evidence

establishing detrimental reliance. Magma’s reliance on California Insurance Code

                                           4
§ 553 is misplaced. That statutory provision has not been applied when assessing

the adequacy of a notice of circumstances proffer for a claims-made policy.

      4. We agree with Genesis that coverage did not extend to the post-policy

period claims through the related claims provision. The related claims provision

was not intended to provide coverage for post-policy period claims that related to

an admittedly uncovered claim.

      Accordingly, we reverse the summary judgment entered against Genesis,

and vacate the summary judgment to the extent it granted National Union’s motion

and dismissed Magma’s claims against Appellee Executive Risk Indemnity, Inc.

We remand this matter to the district court for further proceedings consistent with

this disposition.

      REVERSED in part, VACATED in part, AND REMANDED.

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