Court Opinion

ID: 8604849
Source: CourtListenerOpinion
Date Created: 2022-11-24 02:21:43.657887+00
Date Added: 2024-06-11T16:55:14.884627
License: Public Domain

RAWLINSON, Circuit Judge, dissenting.
I respectfully dissent. In my view, the allegations of the Third Amended Complaint (Complaint) were stretched almost beyond recognition by the majority to preserve the semblance of a covered claim.
I agree, with the majority that the Complaint is the appropriate starting point for determining an insurer’s duty to defend. See Pension Trust Fund v. Fed. Ins. Co., 307 F.3d 944, 949 (9th Cir.2002). However, I disagree that the allegations of the Complaint in this case trigger that duty.
The Plaintiffs in this case seek insurance coverage for the tort of disparagement. The pivotal inquiry in resolving the coverage issue is whether the Plaintiffs were acting within the scope of their duties as employees of myCFO when the disparaging statements were made. I part company with the majority because I do not read the Complaint as supporting the conclusion that the Plaintiffs were acting within the scope of their duties as employees of myCFO. Rather, I read the allegations of the Complaint as asserting loudly and clearly that Plaintiffs were in no wise acting for the benefit of myCFO when they uttered the disparaging remarks.
In a nineteen-page Complaint, the majority relies on a mere eight lines to sup*906port its conclusion that the Plaintiffs were acting for the benefit of myCFO when they disparaged the successor company to myCFO.
In deciding whether a duty to defend exists, we must consider the Complaint in its entirety. Buena Vista Mines, Inc. v. Indus. Indent. Co., 87 Cal.App.4th 482, 488, 104 Cal.Rptr.2d 557 (2001). Doing so compels the conclusion that the Plaintiffs were not acting for the benefit of myCFO. Rather, the Complaint asserts a systematic effort by the Plaintiffs to siphon myCFO’s clients for the benefit of a competing company formed by the Plaintiffs. The allegations in the Complaint, including those linked to the disparagement claim, echo that theme, which is the antithesis of acting for the benefit of myCFO. See Milazo v. Gulf Ins. Co., 224 Cal.App.3d 1528, 1539, 274 Cal.Rptr. 632 (1990) (“To hold that a partner could be covered under a partnership general liability policy for his acts against the very business organization that gives him his status as an insured person would turn the concept of partnership coverage on its head____ [W]hen a partner acts to misappropriate a partnership asset, interest or economic opportunity ... he cannot, as a matter of law, be deemed to be acting in his capacity as a partner ...”). (emphasis in the original); see also Lomes v. Hartford Fin. Srvs. Grp., 88 Cal.App.4th 127, 134, 105 Cal. Rptr.2d 471 (applying Milazo in a corporation setting).
We should not be lured into concluding otherwise by the Plaintiffs’ newly-minted and farfetched argument that they were duty-bound to disparage myCFO to obtain client consent forms permitting myCFO to continue servicing the clients’ accounts. What client would sign a consent form after being told that myCFO would be unable to continue to perform satisfactorily? If the Plaintiffs disparaged myCFO, one would be hard-pressed to say that it was for the benefit of myCFO. In relying on Plaintiffs’ after-the-fact explanation, the majority opinion fails to focus on the allegations of the Complaint. See Lomes at 132, 105 Cal.Rptr.2d 471 (explaining that the court must “comparte] the allegations of the complaint with the terms of the policy”) (citation omitted); see also Pension Trust Fund, 307 F.3d at 949.
Because I conclude that the Plaintiffs were not acting for the benefit of myCFO when they disparaged myCFO, I would affirm the district court’s ruling in favor of the insurers.