Court Opinion

ID: 4184553
Source: CourtListenerOpinion
Date Created: 2017-07-07 20:01:23.751845+00
Date Added: 2024-06-11T07:47:20.474313
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            JUL 7 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

GENESIS INSURANCE COMPANY,                       No.   15-16999

              Plaintiff-counter-claim-           D.C. No. 5:06-cv-05526-EJD
              defendant-Appellee,

 v.                                              MEMORANDUM*

MAGMA DESIGN AUTOMATION,
INC.,

              Defendant-counter-claim-
              3rd-party-plaintiff-
              Appellee,

  v.

NATIONAL UNION FIRE INSURANCE
COMPANY, of Pittsburgh, PA,

              Third-party-defendant-
              Appellant,

 and

EXECUTIVE RISK INDEMNITY, INC.,

              Third-party-defendant.

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                     Appeal from the United States District Court
                       for the Northern District of California
                     Edward J. Davila, District Judge, Presiding

                          Argued and Submitted June 16, 2017
                               San Francisco, California

Before: SCHROEDER, FISHER,** and N.R. SMITH, Circuit Judges.

      National Union Fire Insurance Company (“National Union”) appeals the

district court’s order granting partial summary judgment in favor of Genesis

Insurance Company (“Genesis”) and Magma Design Automation, Inc. (“Magma”).

We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

      1.1 Under the law of the case doctrine, “a court is generally precluded from

reconsidering an issue previously decided by the same court, or a higher court in

the identical case.” United States v. Lummi Nation, 763 F.3d 1180, 1185 (9th Cir.

2014) (citation omitted). “For the doctrine to apply, the issue in question must have

been decided explicitly or by necessary implication in the previous disposition.”

Id. (citation omitted).

      **
            The Honorable D. Michael Fisher, United States Circuit Judge for the
U.S. Court of Appeals for the Third Circuit, sitting by designation.
      1
        Judge Fisher would resolve this first issue on summary judgment, rather
than law of the case, grounds.
                                          2
      The issue presented in this case is whether the information Magma provided

to Executive Risk Indemnity, Inc. (“ERII”) is sufficient to constitute a “notice of

circumstances” under ERII’s 2003-04 Policy (“2003-04 Policy”). In Genesis I, this

court held that the information Magma provided to Genesis was not sufficient to

constitute a “notice of circumstances.” Genesis Ins. Co. v. Magma Design

Automation, Inc. (“Genesis I”), 386 F. App’x 728, 730 (9th Cir. 2010) (mem.).

Because Magma provided the same material information to ERII as it provided to

Genesis, the law of the case doctrine applies and our prior holding that the

information was not sufficient to constitute a “notice of circumstances” is

applicable here.

      Even if the law of the case doctrine did not apply, the district court properly

entered partial summary judgment against National Union when it held that the

2003-04 Policy was not triggered, because no reasonable jury could find that the

information Magma provided to ERII was sufficient to constitute a “notice of

circumstances” under the terms of the insurance policy. The parties agree that the

only information Magma provided to ERII that it did not provide to Genesis was a

phone call whereby Magma explained how the patent litigation could morph into a

directors and officers lawsuit. However, this “additional information” is not

relevant under the “notice of circumstances” provision, because it is not “a

                                          3
description of the Claim [or] circumstances,” it does not involve “the nature of the

alleged or potential damage,” it does not include “the names of all actual or

potential claimants,” and it does not include “the manner in which [the] Insured

first became aware of the Claim [or] circumstances.” And even if the information

provided during the phone call were relevant, no reasonable jury could find this

information constitutes a “notice of circumstances” or corrects the deficiencies of

the earlier written information, because the policy requires that a “notice of

circumstances” be in writing.

      Because we now hold that ERII was not provided a “notice of

circumstances” under the 2003-04 Policy, ERII can properly “adjust its records” to

reflect exhaustion of its 2004-06 Policy. Since ERII’s 2004-06 Policy is deemed

exhausted, National Union is now liable for providing first-layer excess insurance

coverage pursuant to the National Union 2004-06 Policy. Therefore, Genesis is

entitled to recover its $5 million settlement payment from National Union.

      2. The district court used the correct date of accrual in calculating the

prejudgment interest award. California courts have “uniformly . . . interpreted the

‘vesting’ requirement as being satisfied at the time that the amount of damages

become certain or capable of being made certain, not the time liability to pay those

amounts is determined.” Evanston Ins. Co. v. OEA, Inc., 566 F.3d 915, 921 (9th

                                           4
Cir. 2009) (listing cases). It is the “amount [that] must be vested, not . . . the legal

entitlement to that amount.” Id.

       The amount of damages became certain on July 21, 2008, when Genesis

made the $5 million payment to the settlement of the securities litigation. Thus, the

district court properly held that July 21, 2008, was the date of accrual.

       3. The district court applied the correct interest rate in calculating the

prejudgment interest award. “In the insurance context, [equitable subrogation]

permits the paying insurer to be placed in the shoes of the insured and to pursue

recovery from third parties responsible to the insured for the loss for which the

insurer was liable and paid.” Fireman’s Fund Ins. Co. v. Md. Cas. Co., 26 Cal.

Rptr. 2d 762, 767-68 (Cal. Ct. App. 1994). Equitable subrogation rights are “purely

derivative.” State Bar of Cal. v. Statile, 86 Cal. Rptr. 3d 72, 81 (Cal. Ct. App.

2008).

       Because the right to which Genesis has become subrogated is the right to

coverage defined by the insurance policy between Magma and National Union, it is

a contractual right to which Genesis has succeeded and which defines the

obligation in question. In contract cases, the applicable rate of prejudgment interest

is “10 percent per annum” after the breach. Cal. Civ. Code § 3289(b). Therefore,

the district court applied the correct interest rate.

                                             5
AFFIRMED.

            6