Court Opinion

ID: 2792164
Source: CourtListenerOpinion
Date Created: 2015-04-08 20:01:05.683552+00
Date Added: 2024-06-11T11:11:35.884297
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              APR 08 2015

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

HENRY JAMES ANDERSON,                            No. 12-17386
individually and as Trustee of the 2004
Henry James Anderson Revocable Trust;            D.C. No. 3:11-cv-05760-RS
et al.,

              Plaintiffs - Appellants,           MEMORANDUM*

  v.

CERTAIN UNDERWRITERS AT
LLOYD’S UNDER POLICY NO.
B0146LDUSA0701030,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Northern District of California
                     Richard Seeborg, District Judge, Presiding

                     Argued and Submitted February 12, 2015
                            San Francisco California

Before: PAEZ and BERZON, Circuit Judges and MORRIS,** District Judge.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Brian M. Morris, District Judge for the U.S. District
Court for the District of Montana, sitting by designation.
Henry Anderson and other plaintiffs, collectively “Anderson,” were assigned

ePlanning’s rights against Brit UW Limited (“Brit”). Anderson alleges that Brit

breached its contract with ePlanning and its duty of good faith and fair dealing

under California law by refusing to defend ePlanning and to settle Anderson’s

claims. The district court dismissed Anderson’s first amended complaint with

prejudice. Anderson appeals. We review de novo, Lacey v. Maricopa Cnty., 693

F.3d 896, 911 (9th Cir. 2012) (en banc), and affirm.

      1. In this diversity suit, we apply California law. To prevail on his claim for

breach of the duty to defend, Anderson need not prove coverage existed. Instead,

Anderson must prove only “the possibility of coverage at the time the claim is

raised.” Food Pro Int’l, Inc. v. Farmers Ins. Exch., 169 Cal. App. 4th 976, 992

(2008).

      2. The district court determined that no coverage existed, because the

policy’s “Partial Professional Services Exclusion” barred all of Anderson’s claims.

This exclusion provided that Brit was not liable for any claim under the policy “for

any act, error or omission in connection with the performance of any professional

services by or on behalf of [ePlanning] for the benefit of any other entity or

person.” Anderson alleged in his original complaint that ePlanning had failed to

supervise properly its employees and had failed to audit its own files to determine

whether its employees were selling products not authorized by ePlanning.
      3. Anderson argues that the professional services policy exclusion should

not apply here. In support of his argument, Anderson cites numerous cases where

courts have determined that certain acts did not constitute “professional acts” even

if the acts had been committed by a professional. Brit distinguishes Anderson’s

cases as not dispositive here, because the policy exclusion in this case contains “in

connection with” language in the policy exclusion. We agree. The California

Court of Appeals has construed professional services policy exclusions narrowly.

Food Pro, 169 Cal. App. 4th at 991; N. Counties Eng’g, Inc. v. State Farm Gen.

Ins. Co., 224 Cal. App. 4th 902 (2014). The “in connection with” language

nevertheless broadens the exclusion beyond the professional services themselves.

      4. Brit argues that ePlanning’s failure to supervise and failure to audit fall

within the professional services policy exclusion. ePlanning provided professional

services related to selling securities. ePlanning’s employees sold securities,

including security products not authorized by ePlanning. ePlanning failed to

supervise its employees properly to ensure no unauthorized securities were being

sold. ePlanning also failed to audit the securities sold by its employees to ensure

that no unauthorized securities had been sold. These omissions fall within the

exclusion for actions done “in connection with” professional services.

      5. We reject Anderson’s remaining contentions on appeal. We affirm the

district court’s dismissal of the complaint.
AFFIRMED.