Court Opinion

ID: 4368602
Source: CourtListenerOpinion
Date Created: 2019-02-15 21:01:19.710929+00
Date Added: 2024-06-11T14:49:07.706760
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        FEB 15 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

ATTORNEYS INSURANCE MUTUAL                      No.    17-55597
RISK RETENTION GROUP, INC.,
                                                D.C. No.
                Plaintiff-Appellee,             2:15-cv-04756-FMO-JC

 v.
                                                MEMORANDUM*
LIBERTY SURPLUS INSURANCE
CORPORATION,

                Defendant-Appellant.

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

                           Submitted February 7, 2019**
                              Pasadena, California

Before: WARDLAW and BEA, Circuit Judges, and MURPHY,*** District Judge.

      *
             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).
      ***
             The Honorable Stephen J. Murphy, III, United States District Judge
for the Eastern District of Michigan, sitting by designation.
      During both the 2009–2010 and 2010–2011 insurance policy periods,

attorney J. Wayne Allen (“Allen”) was insured through his employer by Appellant

Liberty Surplus Insurance Corporation’s (“Liberty”) professional liability

insurance. Third parties filed suit against Allen on February 1, 2010 (during the

2009–2010 policy period) in a probate case and again on September 24, 2010

(during the 2010–2011 policy period) in a related civil action. Liberty declined

coverage for Allen in the civil action. Appellee Attorneys Insurance Mutual Risk

Retention Group, Inc. (“AIMRRG”), which had been defending Allen with a

reservation of rights, sued Liberty for contribution of defense costs. The district

court entered summary judgment for AIMRRG against Liberty. Liberty appeals the

decision, challenging the district court’s conclusion that the “Multiple Insureds,

Claims, and Claimants” paragraph of Liberty’s 2010–2011 policy (“2010–2011

Policy”) did not disclaim Liberty’s obligation to contribute to the costs of

defending Allen in the civil action. We agree with the district court’s conclusion

and therefore affirm.

      Liberty’s argument involves interpretation of one of the 2010–2011 Policy’s

defined terms, “Policy Period.” The 2010–2011 Policy is “a claims-made and

reported policy,” which requires that any claim made during the 2010–2011 policy

period against the insured be reported during the 2010–2011 policy period. One

                                          2
provision limits Liberty’s liability for multiple related claims and states, in relevant

part:

        Claims alleging, based upon, arising out of or attributable to the same
        or related acts, errors or omissions shall be treated as a single Claim
        regardless of whether made against one or more than one Insured. All
        such Claims, whenever made, shall be considered first made during the
        Policy Period or any Extended Reporting Period in which the earliest
        Claim arising out of such acts, errors or omissions was first made, and
        all such Claims shall be subject to the same Limits of Liability.

The 2010–2011 Policy defines “Policy Period” as “the period from the Inception

Date of this Policy to the Policy Expiration Date as set forth in the Declarations or

its earlier termination date, if any.” The “Declarations” identify the policy period

as from July 31, 2010 until July 31, 2011.

        Liberty argues that the 2010–2011 Policy thus limits coverage so that if

multiple claims regarding the same set of facts are made against an insured in

multiple policy periods, the claims are all considered initially made during the

policy period in which the first claim is made. Because claims must be reported

during the policy period in which they are made, Liberty insists that it has no

obligation to defend Allen against the civil action because he failed to report the

related probate claim during the 2009–2010 policy period. As the district court

correctly concluded, however, Liberty’s definition of “Policy Period” within the

policy precludes this interpretation.

                                           3
      As the district court correctly noted, “[a]dopting Liberty’s interpretation

would require the court to give different meanings to the same term used in the

same policy, which would run afoul of the rules of contract interpretation.”

E.M.M.I. Inc. v. Zurich Am. Ins. Co., 84 P.3d 385, 393 (Cal. 2004). Rather, the

definition of “Policy Period” necessitates that the “Multiple Insureds, Claims and

Claimants” provision be read to mean any relevant claims will be “considered first

made during the Policy Period,” i.e., during the period from July 31, 2010 until

July 31, 2011. See Cal. Civ. Code § 1644 (noting that if parties give a term a

special meaning, courts must follow the special meaning). Although Liberty’s

chosen definition of “Policy Period” may create an ambiguity in the meaning of the

multiple related claims provision as a whole, the district court did not err because

ambiguities in an insurance policy are resolved against the insurer.1 See Harris v.

Glens Falls Ins. Co., 493 P.2d 861, 862 (Cal. 1972) (in bank) (applying the “settled

rule that any ambiguity or uncertainty in an insurance policy is to be resolved

against the insurer and that if semantically permissible, the contract will be given

1
  Before resolving ambiguities against the insurer, California courts interpret
uncertainties or ambiguities “in the sense in which the promisor believed, at the
time of making it, that the promisee understood it.” Cal. Civ. Code § 1649. But
here, the parties do not argue or explain what Liberty believed that Allen
understood the Single Claim Provision to mean. We therefore proceed to the final
step of contract interpretation and interpret the uncertainty “most strongly against”
Liberty as “the party who caused the uncertainty to exist.” Cal. Civ. Code § 1654.

                                          4
such construction as will fairly achieve its object of providing indemnity for the

loss to which the insurance relates.”).

      AFFIRMED.

                                          5