Court Opinion

ID: 6105357
Source: CourtListenerOpinion
Date Created: 2022-01-20 21:01:40.481613+00
Date Added: 2024-06-11T08:53:48.130128
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                               JAN 20 2022
                    UNITED STATES COURT OF APPEALS                         MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

ZURICH AMERICAN INSURANCE                        No.   18-16937
COMPANY; AMERICAN GUARANTEE
AND LIABILITY INSURANCE                          D.C. No.
COMPANY,                                         2:15-cv-00460-JAD-PAL

              Plaintiffs-Appellants,
                                                 MEMORANDUM*
 v.

IRONSHORE SPECIALTY INSURANCE
COMPANY,

              Defendant-Appellee.

                    Appeal from the United States District Court
                              for the District of Nevada
                    Jennifer A. Dorsey, District Judge, Presiding

                        Submission Deferred April 14, 2020
                          Submitted January 18, 2022**
                            San Francisco, California

      *
             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).
Before: BERZON and IKUTA, Circuit Judges, and LEMELLE,*** District Judge.

      Plaintiff insurance companies (collectively, “Zurich”) appeal the district

court’s grant of summary judgment in favor of Ironshore Specialty Insurance

Company (“Ironshore”). We have jurisdiction under 28 U.S.C. § 1291, and we

affirm.1

      Ironshore’s insurance contract with eight subcontractors included an

exclusion providing (among other things) that the policy did not apply to any

property damage for the subcontractors’ work “performed prior to policy

inception.” Zurich Am. Ins. Co. v. Ironshore Specialty Ins. Co., 964 F.3d 804, 807

(9th Cir. 2020). This exclusion was subject to an exception, which stated that the

exclusion provision did not apply to property damage that “is sudden and

      ***
             The Honorable Ivan L.R. Lemelle, United States District Judge for the
Eastern District of Louisiana, sitting by designation.
      1
        We decide this appeal (referred to as Zurich I) concurrently with an appeal
raising substantially identical issues, Zurich American Insurance Co. v. Ironshore
Specialty Insurance Co., ___ Fed. Appx.___ (2022) (Zurich II).
                                          2
accidental and takes place within the policy period.” Id.2 After the eight

subcontractors were sued for work they had performed, Zurich defended and

indemnified the subcontractors, and then brought an action against Ironshore in

district court seeking contribution and indemnification for defense and settlement

costs on the ground that the exception to the exclusion in Ironshore’s policy

applied. Id. at 808–09. The district court granted summary judgment in favor of

Ironshore on the grounds that (1) all construction work at issue had been completed

before the inception of Ironshore’s policy, (2) none of the complaints against the

subcontractors alleged that sudden and accidental damage had occurred after the

inception of Ironshore’s policy, and (3) Zurich failed to carry its burden of

showing that the exception to the exclusion was applicable, potentially or

otherwise. Id. Zurich appealed, arguing that the district court erred by placing the

      2
          The relevant exclusion provision states:
               This insurance does not apply to any “bodily injury” or “property
               damage”:
               1. which first existed, or is alleged to have first
               existed, prior to the inception of this policy.
               “Property damage” from “your work”, or the work of
               any additional insured, performed prior to policy
               inception will be deemed to have first existed prior
               to the policy inception, unless such “property
               damage” is sudden and accidental and takes place
               within the policy period . . . .
Id.
                                           3
burden of proof regarding the applicability of the exception to the exclusion on

Zurich. Id. at 810.

      In order to adjudicate this appeal, we certified two open questions of state

law to the Nevada Supreme Court. See Zurich Am. Ins. Co. v. Ironshore Specialty

Ins. Co., 964 F.3d 804, 806 (9th Cir. 2020), certified questions answered, 497 P.3d

625 (Nev. 2021). In response, the Nevada Supreme Court held that (1) the burden

“of proving the applicability of an exception to an exclusion for coverage in an

insurance policy” falls on the insured, and (2) the insured “may rely on any

extrinsic evidence that was available to the insurer at the time the insured tendered

the defense to the insurer.” Zurich Am. Ins. Co. v. Ironshore Specialty Ins. Co.,

497 P.3d 625, 626 (Nev. 2021).

      In light of this ruling, we reject Zurich’s argument that the lack of any

evidence that sudden and accidental property damage occurred after the inception

of Ironshore’s policy is sufficient to carry Zurich’s burden of proving that the

exception to the exclusion is applicable, potentially or otherwise. Instead, we

affirm the district court’s ruling that Zurich failed to carry its burden of proving the

applicability of the exception to the exclusion in Ironshore’s policy. Zurich does

not ask for an opportunity to present evidence to the district court that was

available to the insurer when the defense was tendered and that shows that sudden

                                           4
and accidental property damage occurred after the inception of Ironshore’s

policy. Therefore, Ironshore is entitled to summary judgment as a matter of law.

      AFFIRMED.

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