Court Opinion

ID: 3033520
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:49:38.456162+00
Date Added: 2024-06-11T12:46:36.976885
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              FEB 22 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

ROBERT L. YOUNG,                                 No. 09-15054

             Plaintiff - Appellant,              D.C. No. 4:07-cv-05711-SBA

  v.
                                                 MEMORANDUM *
ILLINOIS UNION INSURANCE
COMPANY; ACE WESTCHESTER
SPECIALTY CLAIMS,

             Defendants - Appellees.

                   Appeal from the United States District Court
                      for the Northern District of California
                  Saundra B. Armstrong, District Judge, Presiding

                      Argued and Submitted February 9, 2010
                            San Francisco, California

Before: NOONAN, BERZON and IKUTA, Circuit Judges.

       The district court properly determined that no potential for coverage was

available to Young under the Directors and Officers Coverage Section of the

insurance policy issued to TRI by Illinois Union (“the Policy”). Exclusion q

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
excludes all claims “based upon, arising out of, directly or indirectly resulting from

or in consequence of, or in any way relating to any act, error or omission in

connection with performance of any professional service.” California courts, and

this court applying California law, have interpreted similar language broadly. See,

e.g., Cont’l Cas. Co. v. City of Richmond, 763 F.2d 1076, 1080–81 (9th Cir. 1985).

The allegations brought against Young by Raybern plainly “arise out of” or

“relat[e] to” Young’s provision of services as an attorney for Raybern.

Accordingly, there is no potential for coverage of these claims, and the district

court properly granted summary judgment to Illinois Union.

      The district court also properly determined that no coverage was available to

Young under the Employment Practices Coverage Section of the Policy. No

potential for coverage existed for claims brought by TRI against Young, because

this section of the policy covers only claims brought by an “Employee,” and TRI is

not an “Employee” as defined in section 7. Likewise, no potential for coverage

exists for claims brought by Fults against Young. “[A]n insurer has a duty to

defend an insured if it becomes aware of, or if the third party lawsuit pleads, facts

giving rise to the potential for coverage under the insuring agreement.” Waller v.

Truck Ins. Exch., Inc., 11 Cal. 4th 1, 19 (1995). Here, the pertinent complaint did

not indicate that Fults “perform[ed] work or service solely for or on behalf of”

TRI, but rather indicated that Fults “held himself out as president of Keystone
Financial, a different corporation than TRI,” and also referenced the existence of

“various business entities owned and/or controlled by Fults.” Raybern Complaint

¶¶ 2–3. Nor does the record otherwise reflect that Illinois Union knew Fults

performed work or services solely for or on behalf of TRI. See Upper Deck Co. v.

Fed. Ins. Co., 358 F.3d 608, 613 (9th Cir. 2004). In the absence of facts giving rise

to the potential that Fults was an “Employee” as defined in section 7, Illinois

Union did not breach its duty to defend.

      AFFIRMED.