Court Opinion

ID: 9892625
Source: CourtListenerOpinion
Date Created: 2023-10-24 17:02:52.668152+00
Date Added: 2024-06-11T08:24:29.168495
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            OCT 24 2023
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

IRONSHORE INDEMNITY, INC.,                       No.   22-16592

              Plaintiff-Appellee,                D.C. No.
                                                 2:21-cv-01706-JAD-BNW
 v.

ADAM ROGAS,                                      MEMORANDUM*

              Defendant,

 and

ERIC KAY,

              Defendant-Appellant.

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

                      Argued and Submitted October 5, 2023
                               Las Vegas, Nevada

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: RAWLINSON and OWENS, Circuit Judges, and PREGERSON,** District
        Judge.

      Eric Kay (Kay) appeals the district court’s entry of judgment on the

pleadings in favor of Ironshore Indemnity, Inc. (Ironshore). Reviewing de novo,

we affirm. See Webb v. Trader Joe’s Co., 999 F.3d 1196, 1201 (9th Cir. 2021).

      The district court did not err in entering judgment on the pleadings in favor

of Ironshore. See Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d

1542, 1550 (9th Cir. 1989), as amended. Under Nevada law, “[d]etermining

whether an insurer owes a duty to defend is achieved by comparing the allegations

of the complaint with the terms of the policy.” United Nat’l Ins. Co. v. Frontier

Ins. Co., Inc., 99 P.3d 1153, 1158 (Nev. 2004) (en banc) (footnote reference

omitted). “There is no duty to defend where there is no potential for coverage. . . .”

Zurich Am. Ins. Co. v. Ironshore Spec. Ins. Co., 497 P.3d 625, 629 (Nev. 2021)

(citation, alteration, and emphasis omitted).

      The Warranty Exclusion in the Ironshore excess policy broadly excluded

from coverage any claim “arising from” knowledge or information of any insured

“of any act, error or omission which might give rise to a claim(s), suit(s) or

action(s)” under the original or first excess coverage policy. “Arising [from]

      **
             The Honorable Dean D. Pregerson, United States District Judge for
the Central District of California, sitting by designation.
                                           2
encompasses originating from, having its origin in, growing out of, flowing from,

incident to, or having connection with. . . .” Los Angeles Lakers, Inc. v. Fed. Ins.

Co., 869 F.3d 795, 801 (9th Cir. 2017) (citation, alterations, and internal quotation

marks omitted).

      The allegations in the demand letter for which Kay seeks coverage arise

from Kay’s failure to respond to the fraudulent activity of the company’s former

CEO and fellow insured, Adam Rogas (Rogas), which began at the latest in 2019

according to the Securities and Exchange Commission (SEC) complaint referenced

in the letter. Thus, Rogas had knowledge or information that could give rise to a

claim, suit, or action in May 2019 when the Warranty Exclusion was executed.

      We are not persuaded that there is any potential for coverage due to some

allegations in the demand letter possibly deriving from knowledge or information

that Rogas acquired after executing the Warranty Exclusion. Presuming that

allegations in the demand letter could be traced to knowledge or information that

Rogas obtained post-warranty, the broad language excluding any claim “arising

from” pre-execution knowledge would nevertheless exclude those claims. See id.

at 801 (recognizing that “arising out of is . . . broadly construed in exclusionary

clauses” if there is a “minimal causal connection or incidental relationship”)

(citations and internal quotation marks omitted).

                                           3
      The provisions in the original coverage policy precluding imputation of

knowledge or acts of one insured to another for the purpose of applying exclusions

were expressly limited to the exclusions “above” them, and therefore did not

preclude Ironshore from denying coverage pursuant to the Warranty Exclusion,

which was not “above” those provisions. See Watson v. Watson, 596 P.2d 507,

508 (Nev. 1979) (“Courts are bound by language which is clear and free from

ambiguity and cannot, through the guise of interpretation, distort the plain meaning

of an agreement.”) (citations omitted).1

      AFFIRMED.

      1
       Because we resolve this appeal on a different basis, we need not and do not
reach Ironshore’s alternative arguments for affirming.
                                           4