Court Opinion

ID: 3171597
Source: CourtListenerOpinion
Date Created: 2016-01-22 21:01:11.2564+00
Date Added: 2024-06-11T11:59:08.185975
License: Public Domain

FILED
                           NOT FOR PUBLICATION                               JAN 22 2016

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

JAMES P. PREVITI, et al.,                        No. 13-56368

                 Plaintiffs - Appellants,        D.C. No. 5:13-CV-00190-DDP-OP

  v.
                                                 MEMORANDUM*
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                    Dean D. Pregerson, District Judge, Presiding

                      Argued and Submitted October 22, 2015
                               Pasadena, California

Before: RAWLINSON and NGUYEN, Circuit Judges, and PONSOR, Senior
District Judge.**

       Appellants James P. Previti, The James Previti Family Trust, Previti Realty

Fund, LP, Larry Day, Empire Partners, Inc., Empire Residential, Inc., Forecast

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The Honorable Michael A. Ponsor, Senior District Judge for the U.S.
District Court for Massachusetts, sitting by designation.
Corporation, Guardian Commercial Real Estate, LP, Guardian Investment Capital,

LLC, Neil Miller, and Paul Roman (“Previti Parties”) appeal from the partial

judgment entered against them and in favor of Appellee National Union Fire

Insurance Company of Pittsburgh. National Union issued to the Previti Parties

three Directors, Officers and Private Company Liability insurance policies for the

consecutive periods December 31, 2007, to April 28, 2009 (the “2007-2009

Policy”), April 28, 2009, to April 28, 2010 (the “2009-2010 Policy”), and April 28,

2010, to April 28, 2011 (the “2010-2011 Policy”). Each policy provided a limit of

liability of $10 million. In November 2008, the Previti Parties sent to National

Union a copy of a motion for entry of order converting Chapter 11 bankruptcy

cases to Chapter 7 (the “Conversion Motion”), which alleged preferential and

fraudulent transfers of money from the debtor companies to non-debtor affiliates.

National Union accepted the Conversion Motion as a Notice of Circumstances

invoking coverage under the 2007-2009 Policy.

      After the Chapter 7 trustee filed its first action on May 12, 2009, the Previti

Parties submitted a claim under the 2007-2009 Policy, for which National Union

agreed to advance defense costs. Thereafter, the Previti Parties argued that the

subsequent twenty-seven claims filed against them fell under the later two policies,

thus entitling them to advancement of an additional $20 million in defense costs

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under the 2009-2010 and 2010-2011 Policies. The district court granted partial

summary judgment for National Union, finding that all twenty-eight actions,

together called the Underlying Actions, fell under the 2007-2009 Policy alone,

entitling the Previti Parties only to $10 million in coverage, and not to an

additional $20 million provided through the subsequent policies.

      We have jurisdiction to review the district court’s final decision under 28

U.S.C. § 1291. We review de novo both the district court’s granting of partial

summary judgment and its interpretation of the contract. U.S. Cellular Inv. Co. v.

GTE Mobilnet, Inc., 281 F.3d 929, 933-34 (9th Cir. 2002). We affirm.

      On appeal, the Previti Parties offer three arguments: first, that in granting

partial summary judgment the district court applied an incorrect burden of proof;

second, that the district court construed the term “Related Wrongful Acts” in the

relevant policies over broadly; and, third, that the district court erred in concluding

that the 2008 Notice of Circumstances constituted sufficient notice as to all of the

Underlying Actions.

      None of these arguments withstands scrutiny.

      First, the district court applied the proper burden of proof in concluding that

National Union produced sufficient evidence establishing that there was no

potential for coverage and that, therefore, the burden shifted to the Previti Parties

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to set forth specific facts to create a genuine issue of material fact regarding this

issue. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099,

1102-03 (9th Cir. 2000) (stating that the moving party has the burden of production

and persuasion on a motion for summary judgment, but once that burden is met,

the non-moving party must produce sufficient evidence to create a genuine issue of

material fact, otherwise the “moving party wins the motion”); Gasaway v. Nw.

Mut. Life Ins. Co., 26 F.3d 957, 959-60 (9th Cir. 1994) (stating that once the

moving party shows there is no genuine issue of material fact, the non-moving

party must overcome that showing by going “beyond the pleadings” and with more

than “mere allegations or denials”) (quotations omitted).

      Second, the Previti Parties’ argument that the district court’s interpretation

of the term “Related Wrongful Acts” was overly broad is foreclosed by the

unambiguous language of the contract. Stanford Univ. Hosp. v. Fed. Ins. Co., 174
F.3d 1077, 1083 (9th Cir. 1999) (stating that contract language “must be

interpreted as a whole and in the circumstances of the case”); Bay Cities Paving &

Grading, Inc. v. Lawyers’ Mut. Ins. Co., 5 Cal. 4th 854, 867 (1993) (same). The

term “Related Wrongful Acts,” when construed with the other contract provisions,

encompasses a broad range of acts clearly extending to all the Underlying Actions.

Indeed, the Previti Parties themselves repeatedly conceded during the course of the

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bankruptcy litigation that the Underlying Actions were related. Given this, the

district court did not err in determining that the Underlying Actions were excluded

from coverage under the two later policies because the actions all arose out of

“Related Wrongful Acts,” as defined under the first policy. See Bay Cities Paving

& Grading, Inc., 5 Cal. 4th at 873 (noting the broad scope of the term “related”).

      Third, the record firmly establishes that the Notice of Circumstances

submitted under the 2007-2009 Policy qualified as a notice for all the Underlying

Actions, as it alleged a broad fraudulent scheme involving both debtor insiders and

non-debtor affiliates, as well as questionable pre- and post-petition transfers. Cf.

Cont’l Ins. Co. v. Metro-Goldwyn-Mayer, Inc., 107 F.3d 1344, 1348 (9th Cir.

1997) (concluding that a notice was sufficiently specific where it provided all the

information that was available during the policy period, set forth the details of the

events and potential consequences, and gave a “laundry list” of potential claims).

      AFFIRMED.

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