Court Opinion

ID: 4107244
Source: CourtListenerOpinion
Date Created: 2016-12-14 21:01:19.329394+00
Date Added: 2024-06-11T07:45:42.361385
License: Public Domain

NOT FOR PUBLICATION                          FILED
                      UNITED STATES COURT OF APPEALS                     DEC 14 2016
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

 FEDERAL INSURANCE COMPANY,                      No.    15-56701

                   Plaintiff-Appellee,           D.C. No.
                                                 2:15-cv-00393-SVW-PJW
    v.

 AMERICAN MEDICAL SYSTEMS, INC.,                 MEMORANDUM*

                   Defendant-Appellant.

                     Appeal from the United States District Court
                         for the Central District of California
                     Stephen V. Wilson, District Judge, Presiding

                            Submitted December 9, 2016**
                                Pasadena, California

Before: PREGERSON, NGUYEN, and OWENS, Circuit Judges.

         American Medical Systems, Inc. (“AMS”) appeals the district court’s order

granting Federal Insurance Company (“Federal”) summary judgment. The district

court concluded that Federal had no duty to defend AMS because AMS was not

         *
             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).
insured under the policy issued to Caldera Medical, Inc. (“Caldera”). We have

jurisdiction under 28 U.S.C. § 1291 and Federal Rule of Civil Procedure 54(b).

Reviewing de novo, see Michelman v. Lincoln Nat’l Life Ins. Co., 685 F.3d 887,

892 (9th Cir. 2012), we affirm.

      Whether a contractual duty to defend applies in a given situation “requires

interpretation of the insurance policy.” Alex Robertson Co. v. Imperial Cas. &

Indem. Co., 10 Cal. Rptr. 2d 165, 167 (Ct. App. 1992). Because AMS is not a

party to the insurance contract between Caldera and Federal, whatever rights it has

are those of a third party beneficiary. Garcia v. Truck Ins. Exch., 682 P.2d 1100,

1104 (Cal. 1984). The burden is on AMS, the third party seeking performance, to

prove that Caldera and Federal, the contracting parties, intended the policy for its

benefit. See id. at 1104-05.

      If possible, the contracting parties’ intent should be inferred “solely from the

written provisions of the contract.” Crown Capital Sec., L.P. v. Endurance Am.

Specialty Ins. Co., 186 Cal. Rptr. 3d 1, 5 (Ct. App. 2015). When “clear and

explicit,” the contractual language governs. Id. “Uncertainties in the terms of

coverage are resolved in favor of the insured,” but “expectations of coverage must

be reasonable in light of the plain language of the policy.” Alex Robertson Co., 10

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Cal. Rptr. 2d at 167-68. In determining whether an insurance policy provides for a

defense, courts look to the reasonable coverage expectations of the named insured,

“not the reasonable expectations of someone claiming to be an additional insured

thereunder.” Wint v. Fid. & Cas. Co., 507 P.2d 1383, 1388 (Cal. 1973).

      Although it is true that “the carrier must defend a suit which potentially

seeks damages within the coverage of the policy,” Gray v. Zurich Ins. Co., 419

P.2d 168, 176 (Cal. 1966), whether AMS is entitled to a defense under the policy

depends, as a preliminary matter, on whether it is entitled to enforce the policy at

all. See Chicken Delight of Cal., Inc. v. State Farm Mut. Auto. Ins. Co., 111 Cal.

Rptr. 79, 83 (Ct. App. 1973) (concluding that the party seeking coverage “was

neither a named nor an additional insured on the . . . policy,” making it

“unnecessary to consider” application of “the basic rule that the duty to defend

arises when the insurer ‘ascertains facts which give rise to the potential of liability

under the policy’” (citation and ellipsis omitted)); see also id. at 92 (Stephens, J.,

concurring) (“Clearly, one rule to be drawn from Wint is that the Gray duty to

defend does not arise automatically upon the filing of a complaint that alleges facts

which, if true, would cause a defendant who was allegedly an unnamed insured to

fall within some policy’s definition of an additional insured.” (footnote omitted));

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cf. Gray, 419 P.2d at 176 (“[W]e should hardly designate the third party [plaintiff]

as the arbiter of the policy’s coverage.”).

      Caldera’s insurance policy unambiguously did not cover AMS. Caldera was

not a joint venture of which AMS was a member, and AMS was not a “vendor”

because it did not sell or distribute Caldera’s products. The district court correctly

concluded that AMS was not an insured under Caldera’s policy without resort to

the allegations against AMS in the underlying tort litigation. Consequently, we

need not address Federal’s alternative ground for summary judgment that AMS fell

into the policy exclusion for “organization[s] . . . from whom you have acquired

your product.”

      AFFIRMED.

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