Court Opinion

ID: 150979
Source: CourtListenerOpinion
Date Created: 2010-07-20 00:02:35+00
Date Added: 2024-06-11T15:02:17.601231
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                 JUL 19 2010

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

                            FOR THE NINTH CIRCUIT

CHRISTOPHER PERKINS, an individual               No. 09-15831
and CALIFORNIA ONCOLOGY OF THE
CENTRAL VALLEY MEDICAL                           D.C. No. 1:08-cv-00687-LJO-SMS
GROUP, INC., a California corporation,

              Plaintiffs - Appellants,           MEMORANDUM*

  v.

MARYLAND CASUALTY COMPANY,

              Defendant - Appellee.

                   Appeal from the United States District Court
                       for the Eastern District of California
                   Lawrence J. O’Neill, District Judge, Presiding

                       Argued and Submitted April 12, 2010
                            San Francisco, California

Before: KLEINFELD, TASHIMA and THOMAS, Circuit Judges.

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

v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001). This is a diversity

jurisdiction case. Therefore, we apply the law of the forum state, California, and

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
must decide issues of state law as we believe the highest court of that state would

decide them. Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); HS Servs., Inc. v.

Nationwide Mut. Ins. Co., 109 F.3d 642, 644 (9th Cir.1997).

      Under California law, an insurer’s duty to defend against litigation brought

against the insured by a third party arises whenever the insurer ascertains facts that

give rise to even the potential for indemnity under the policy. Scottsdale Ins. Co.

v. MV Transp., 36 Cal. 4th 643, 654 (Cal. 2005). In determining whether there is a

duty to defend, the insurer looks not only to the facts of the complaint, but also to

extrinsic evidence available from any source regarding the facts of the underlying

litigation. Id. at 654. Any doubt as to whether the facts give rise to a duty to

defend is resolved in favor of the insured. Horace Mann Ins. Co. v. Barbara B., 4

Cal. 4th 1076, 1081 (Cal. 1993).

      Perkins argues that the potentially covered claim in this litigation is

McQuown’s potential claim for false imprisonment, based on her testimony that

Cardoza backed her and “bottled” her against a wall for two to three minutes while

yelling at her. Under California law, the elements of the tort of false imprisonment

are: “(1) the nonconsensual, intentional confinement of a person, (2) without

                                          2
lawful privilege, and (3) for an appreciable period of time, however brief.” Lyons

v. Fire Ins. Exch., 161 Cal. App. 4th 880, 888 (Cal. App. 2008). Based on the facts

available to the insurer, McQuown could possibly have asserted a plausible claim

for false imprisonment.

      Maryland argues that any potential claim could not possibly have been

covered because it would have been excluded by the employment-related practices

exclusion of the policy. The exclusion applies to personal injury to a person

“arising out of any . . . [e]mployment-related practices, policies, acts or omissions,

such as coercion, demotion, evaluation, reassignment, discipline, defamation,

harassment, humiliation or discrimination directed at that person. . . .” The

exclusion does say that it arises out of “any” employment -related acts, but then

qualifies “any” with “such as” followed by a list of examples. The question, thus,

is whether false imprisonment in the present context is similar enough to the listed

examples for the exclusion to apply. The answer is unclear, and the provision

therefore ambiguous. Because we construe ambiguities in an insurance policy

contra proferentem, as well as in favor of the insured, see Kearney v. Standard Ins.

Co., 175 F.3d 1084, 1090 (9th Cir. 1999) (en banc), we hold that the exclusion

does not apply and the insurer had a duty to defend.

                                          3
      We conclude that the insurance company had a duty to defend its insured

against the underlying litigation, arising out of the dispute between the insured’s

employees Nina McQuown and Cheryl Cardoza. The facts known to the insurer

established the possibility that McQuown could assert a false imprisonment claim

within the coverage and outside the exclusion under the interpretation of California

law in Zurich Ins. Co. v. Smart & Final Inc., 996 F. Supp. 979 (C.D. Cal. 1998).

      REVERSED.

                                          4
                                                                                FILED
Perkins v. Maryland Casualty Company, No. 09-15831                                 JUL 19 2010

                                                                            MOLLY C. DWYER, CLERK
TASHIMA, Circuit Judge, dissenting:                                           U.S. COURT OF APPEALS

         I respectfully dissent.

         In my view, the plain language of the insurance policy excludes from

coverage any claim for false imprisonment when that claim arises out of

employment-related acts. Because the confrontation underlying McQuown’s

lawsuit was clearly employment related, any potential claim for false imprisonment

was therefore unambiguously excluded from coverage.

         The fundamental flaw in the majority’s reasoning is its conflation of the

offenses that broadly define the policy’s coverages and exclusions with the acts

that give rise to those offenses. The policy treats the two in a fundamentally

different manner. Its inclusionary and exclusionary provisions speak in terms of

offenses. In contrast, it uses the acts that give rise to those offenses as the means

of qualifying the precise circumstances under which coverage does or does not

exist.

         This structure is apparent from the policy’s use of the phrase “personal and

advertising injury” to define its coverage. The policy defines this phrase in terms

of offenses: “‘Personal and advertising injury’ means injury . . . arising out of one

or more of the following offenses . . . .” Importantly, all of the enumerated

offenses are actionable torts; they include false arrest, malicious prosecution,
wrongful eviction, slander and libel, and copyright infringement.

       Outside of this definition, references in the policy to “personal and

advertising injury” speak in terms of the acts that give rise to the enumerated

offenses. This is true for the policy’s primary coverage provision: “This insurance

contract applies to ‘personal and advertising injury’ caused by an offense arising

out of your business . . . .” The policy’s general exclusionary provision uses

similar language; it excludes, for example, injuries “[c]aused by or at the direction

of the insured with the knowledge that the act would violate the rights of another,”

as well as injuries “[a]rising out or oral or written publication of material, if done

by or at the direction of the insured with knowledge of its falsity.” The specific

exclusion at issue in this case is no different. It provides that coverage does not

apply to “personal and advertising injury . . . arising out of any . . . [e]mployment-

related practices, policies, acts or omissions . . . .”

       Thus, the correct question before us is not, as the majority frames it,

“whether false imprisonment in the present context is similar enough to the listed

examples [of employment-related acts] for the exclusion to apply.” Maj. dispo. at

3. False imprisonment is an offense, not an act; comparing it to the examples of

employment-related acts is comparing apples to oranges. The correct question is

whether the acts that give rise to McQuown’s false imprisonment claim –

                                            -2-
Cardoza’s upbraiding of McQuown and momentarily trapping her against the wall

– were “employment-related acts” similar to the example of “acts” listed in the

policy exclusion.1 It is difficult to conclude other than that Cardoza’s acts were

similar to the acts listed in the exclusion.

      Thus, I conclude that the policy’s language and structure unambiguously

excludes McQuown’s potential false imprisonment claim from its coverage as

employment related. I would therefore affirm the district court.

      1
             The listed employment-related acts are acts “such as coercion,
demotion, evaluation, reassignment, discipline, defamation, harassment, humiliaion
or discrimination directed at that person . . . .”

                                           -3-