Court Opinion

ID: 9931236
Source: CourtListenerOpinion
Date Created: 2024-02-08 18:01:18.40021+00
Date Added: 2024-06-11T12:17:35.420625
License: Public Domain

NOT FOR PUBLICATION                            FILED
                   UNITED STATES COURT OF APPEALS                         FEB 8 2024
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PRIMARY COLOR SYSTEMS                           No.   23-55199
CORPORATION, California corporation,
                                                D.C. No.
                Plaintiff-Appellant,            8:22-cv-02029-CJC-JDE

  v.
                                                MEMORANDUM*
HISCOX INSURANCE COMPANY INC.,
an Illinois corporation,

                Defendant-Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                   Cormac J. Carney, District Judge, Presiding

                          Submitted February 5, 2024 **
                             Pasadena, California

Before: OWENS, BUMATAY, and MENDOZA, Circuit Judges.

       Plaintiff-Appellant Primary Color Systems Corporation (“Primary Color”)

appeals from the district court’s order granting Defendant-Appellee Hiscox

Insurance Company, Inc.’s (“Hiscox”) motion to dismiss pursuant to Federal Rule

       *     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).
of Civil Procedure 12(b)(6) and denying Primary Color’s motion for partial

summary judgment. Primary Color alleged three claims under California law:

(1) breach of an insurance contract between the parties; (2) breach of the implied

covenant of good faith and fair dealing; and (3) a claim for declaratory judgment,

whereby Primary Color sought a declaration that Hiscox was obligated under the

insurance contract to indemnify Primary Color for a one-million-dollar loss that

Primary Color sustained in an arbitration against its former employee. As the

parties are familiar with the facts, we do not recount them here. We review de

novo the district court’s dismissal with prejudice of Primary Color’s three claims

and denial of Primary Color’s motion for partial summary judgment, Telesaurus

VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010); Alaska R.R. Corp. v.

Flying Crown Subdivision Addition No. 1 & Addition No. 2 Prop. Owners Ass’n,

89 F.4th 792, 798 (9th Cir. 2023), and we affirm.

      The district court did not err in finding that Hiscox had no contractual

obligation to indemnify Primary Color for the one-million-dollar arbitration award

that an arbitrator awarded to Vincent Randazzo, Primary Color’s former employee,

on his fraud claim.1 Pursuant to the insurance contract between the parties, Hiscox

1 The district court properly considered the insurance contract between Primary

Color and Hiscox and the initial arbitration award in favor of Randazzo at the
motion to dismiss stage because Primary Color filed both documents as exhibits in
support of its complaint and the complaint referred to both documents extensively.
United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

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agreed to indemnify Primary Color for certain covered losses, but the contract

expressly excluded coverage for any claim “arising out of, based upon or

attributable to the committing of any . . . deliberate fraudulent act if any final

adjudication establishes that such . . . deliberate fraudulent act was committed.”

      The arbitrator expressly held that, “as to Randazzo’s Cause of Action for

Fraud against Primary Color, . . . Randazzo has met his burden of proof” based on

clear evidence that Primary Color “made certain representations to him about his

receiving an ‘equity interest’ in Primary Color with the intent to induce him to stay

[with the company], which he did. The evidence also clearly indicates that

Primary Color never intended to give him any ‘equity’ in the company.” Under

California law, the arbitrator’s holding that Randazzo prevailed on his claim for

intentional fraud amounts to a final adjudication of that claim and Primary Color

was therefore not entitled to indemnification under the insurance contract. See

Haworth v. Superior Ct., 50 Cal. 4th 372, 380 (2010) (“[I]t is the general rule that

parties to a private arbitration impliedly agree that the arbitrator’s decision will be

both binding and final.” (alteration in original) (quoting Moncharsh v. Heily &

Blase, 3 Cal. 4th 1, 9 (1992))); see also Moshonov v. Walsh, 22 Cal. 4th 771, 779

(2000) (“Because the disputed issue of contractual interpretation . . . was

committed to final adjudication by the arbitrator, rather than the courts, we

decline, as did the Court of Appeal, to consider the issue’s merits.” (emphasis

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added)). Because the district court correctly held that Primary Color was not

entitled to indemnification for the arbitration award in favor of Randazzo, we

affirm the district court’s dismissal with prejudice of Primary Color’s claim for

declaratory judgment.2

      Moreover, Primary Color does not dispute that its claims for breach of

contract and the implied covenant of good faith and fair dealing, and its motion for

partial summary judgment on the issue of indemnification, rise and fall with its

claim for declaratory judgment. Accordingly, because we hold that the district

court did not err in dismissing Primary Color’s claim for declaratory judgment, we

also affirm the district court’s dismissal of Primary Color’s other claims, and

affirm the district court’s denial of Primary Color’s motion for partial summary

judgment.3

      AFFIRMED.

2 Primary Color argues for the first time on appeal that the district court erred in

relying on the arbitration award to determine whether Primary Color was entitled
to indemnification under the parties’ insurance contract because such reliance
violates the California Supreme Court’s decision in Vandenberg v. Superior Court,
21 Cal. 4th 815 (1999). But Primary Color forfeited this argument by failing to
raise it below and offers no persuasive reason to apply an exception to the rule that
“[a] party normally may not press an argument on appeal that it failed to raise in
the district court.” One Indus., LLC v. Jim O’Neal Distrib., Inc., 578 F.3d 1154,
1158 (9th Cir. 2009) (citing Allen v. Ornoski, 435 F.3d 946, 960 (9th Cir. 2006)).
3 Primary Color’s pending motion for judicial notice is GRANTED.

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