Court Opinion

ID: 9889541
Source: CourtListenerOpinion
Date Created: 2023-10-10 17:02:00.622681+00
Date Added: 2024-06-11T12:40:42.253477
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       OCT 10 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

AV BUILDER CORP., a California                  No.    22-55445
corporation; et al.,
                                                D.C. No.
                Plaintiffs-Appellants,          3:20-cv-01679-W-KSC

 v.
                                                MEMORANDUM*
HOUSTON CASUALTY COMPANY, a
Texas corporation,

                Defendant-Appellee.

                   Appeal from the United States District Court
                     for the Southern District of California
                   Thomas J. Whelan, District Judge, Presiding

                            Submitted October 4, 2023**
                               Pasadena, California

Before: BYBEE, BENNETT, and DESAI, Circuit Judges.

      This is an insurance coverage suit arising out of an underlying sexual

harassment lawsuit filed against Plaintiffs AV Builder Corp., RestorCorp, and

Antonio Madureira by Laura Dusina, a former employee of RestorCorp and ex-

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
girlfriend of Madureira.1 Plaintiffs had employment practices liability insurance

through Defendant Houston Casualty Company (“HCC”), which denied coverage

in the underlying sexual harassment lawsuit. In this action, Plaintiffs sued for

breach of contract and breach of the implied covenant of good faith and fair

dealing, claiming that HCC wrongfully denied coverage. On cross-motions for

summary judgment, the district court granted summary judgment for HCC.

Plaintiffs appeal. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

      We review de novo the district court’s grant of summary judgment. Adir

Int’l, LLC v. Starr Indem. & Liab. Co., 994 F.3d 1032, 1038 (9th Cir. 2021). The

only relevant question is whether Plaintiffs’ notice to HCC was timely.

      The relevant insurance policy is a “claims-made-and-reported” policy

covering “‘discrimination’, ‘harassment’ and ‘inappropriate employment conduct’

liability.”2 See Pension Tr. Fund for Operating Eng’rs v. Fed. Ins. Co., 307 F.3d

944, 956–57 (9th Cir. 2002) (“[I]n a claims-made-and-reported policy, notice [to

the insurer] is the event that actually triggers coverage.”). The policy provides that

it “applies only if . . . a ‘claim’ because of an ‘insured event’ is first made against

1
 RestorCorp is an affiliate of AV Builder Corp., and they are treated as one entity
by the parties. Madureira is the President of both AV Builder Corp. and
RestorCorp. All are insureds.
2
 Because the 2017 and 2018 insurance policies are substantively identical, we do
not distinguish between them in our analysis.

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any insured . . . ; and . . . the ‘claim’ is first reported in accordance with [the

timing sections of the policy]” (emphasis added).

      The parties dispute whether Plaintiffs had thirty or sixty days from the time

they learned of Dusina’s “claim” to notify HCC. One policy provision states:

“You must see to it that we or our authorized representative are notified within

sixty (60) days or as soon as practicable after a ‘claim’ is made.” Another

provision states:

      You must see to it that we receive written notice of a “claim” as soon
      as practicable, but in no event later than sixty (60) days after your actual
      notice or receipt of the “claim,” or thirty (30) days after the expiration,
      termination, or cancellation of the Policy or any Extended Reporting
      Period, whichever comes first.

The parties dispute whether these provisions create a contractual ambiguity as to

the relevant notice period. Were there such an ambiguity, we would resolve it in

Plaintiffs’ favor. See E.M.M.I. Inc. v. Zurich Am. Ins. Co., 84 P.3d 385, 389 (Cal.

2004) (noting that California courts require construing ambiguous terms in favor of

the insured against the insurer).

      We assume, without deciding, that the longer notice period controls, because

even applying the sixty-day notice provision and construing the facts in the light

most favorable to Plaintiffs, Plaintiffs’ October 15, 2018 notification to HCC was

untimely. The policy states that “‘Claim’ means a written demand received by the

insured alleging damages or the filing of a ‘suit’ . . . .” (emphasis added).

                                            3
Plaintiffs argue that they did not receive notice of Dusina’s “claim” until

September 13, 2018, when Plaintiffs’ attorney received a draft of Dusina’s

complaint alleging employment discrimination and harassment. But both an

August 1, 2018 email from Dusina and an August 14, 2018 email from Dusina’s

attorney included “written demand[s] received by the insured alleging damages.”

Thus, under the policy definition(s), Plaintiffs received “notice” of Dusina’s claim

by at least August 14, 2018, more than sixty days before their October 15, 2018

notification to HCC. Thus, Plaintiffs October 15, 2018 notice to HCC was

untimely.3

      Both the August 1, 2018 and August 14, 2018 communications made clear

that Dusina’s claim concerned an “insured event.”4 By at least August 14, 2018,

3
  This interpretation is consistent with California law. See, e.g., Westrec Marina
Mgmt., Inc. v. Arrowood Indem. Co., 163 Cal. App. 4th 1387, 1393 (2008) (letter
threatening lawsuit absent some form of negotiated compensation constituted a
written demand for damages and was therefore a claim); Abifadel v. Cigna Ins.
Co., 8 Cal. App. 4th 145, 160 (1992) (“[A] claim is a demand for something as a
right or as due. A formal lawsuit is not required before a claim is found to have
been made.”).
4
  The policy defines “Insured Event” as including “actual or alleged acts of
‘discrimination,’ ‘harassment,’ and/or ‘inappropriate employment conduct’ by an
Insured against an ‘employee,’ former ‘employee,’ or an applicant . . . .” More
specifically, the policy defines “harassment” as including “physical conduct . . .
implicitly made a condition of employment,” and “inappropriate employment
conduct” as including “actual or constructive termination of an employment
relationship in a manner which is against the law and wrongful or in breach of an
implied agreement to continue employment” or “an employment related incident
resulting in . . . wrongful failure to employ or promote; . . . wrongful . . .

                                          4
Madureira and his lawyer had been informed, in writing, that Dusina had been

negotiating severance payments related to the contested end of her employment,

that Dusina’s negotiation emails referred to her sexual relationship with Madureira,

that the proposed severance agreement would have released Dusina’s Title VII

claims, that Dusina was unhappy with the amount of money offered to release her

“claims,” and that she had hired her own lawyer to sue Madureira, AV Builder

Corp., and RestorCorp.5 Because we agree with the district court that no

reasonable juror could find that Plaintiffs did not have actual notice of a “claim”

for “harassment” or “inappropriate employment conduct” by August 14, 2018, we

affirm.6

      AFFIRMED.

deprivation of career opportunity; . . . ‘retaliation’; . . . employment terminations,
disciplinary actions, demotions or other employment decisions which violate
public policy . . . .”
5
 Also, during the negotiations between Madureira and Dusina, and prior to August
14, 2018, Madureira contacted his insurance broker to double the limits of his
policy.
6
  We also take judicial notice that Plaintiffs filed a complaint against their former
lawyer alleging that the lawyer was professionally negligent for failing to notify
HCC of Dusina’s claims in a timely manner. See Avilez v. Garland, 69 F.4th 525,
527 n.3 (9th Cir. 2023) (stating that a court “may take notice of proceedings in
other courts, both within and without the federal judicial system, if those
proceedings have a direct relation to matters at issue” (quoting Trigueros v. Adams,
658 F.3d 983, 987 (9th Cir. 2011))). Thus, HCC’s unopposed motion for judicial
notice (Dkt. No. 43) is GRANTED.

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