Corky McMillin Construction Services, Inc. v. U.S. Specialty Insurance

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED

FOR THE NINTH CIRCUIT JAN 15 2015

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

CORKY MCMILLIN CONSTRUCTION No. 12-56787 SERVICES, INC., a California corporation; et al., D.C. No. 3:11-cv-01686-DMS-

KSC

Plaintiffs - Appellees,

v. MEMORANDUM*

U.S. SPECIALTY INSURANCE

COMPANY, a Texas corporation,

Defendant - Appellant.

Appeal from the United States District Court for the Southern District of California Dana M. Sabraw, District Judge, Presiding

Submitted December 12, 2014** Pasadena, California

Before: SILVERMAN, BEA, and CHRISTEN, Circuit Judges.

Defendant-Appellant U.S. Specialty Insurance Company appeals from the

district court’s partial summary judgment in favor of Plaintiffs-Appellees Corky

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). -2- McMillin Construction Services,…

MEMORANDUM **

Defendant-Appellant U.S. Specialty Insurance Company appeals from the district *926 court’s partial summary judgment in favor of Plaintiffs-Appellees Corky without oral argument. See Fed. R.App. P. 34(a)(2). McMillin Construction Services, Inc., McMillin-NTC 129, LLC, McMillin-NTC 80, LLC, McMillin-NTC 138, LLC, and McMillin-NTC, LLC (collectively, the Insureds). We have jurisdiction under 28 U.S.C. § 1291 . Reviewing the district court’s summary judgment and interpretation of the insurance policy de novo, Trishan Air, Inc. v. Fed. Ins. Co., 635 F.3d 422, 426 (9th Cir.2011), we affirm.

The policy issued by U.S. Specialty to the Insureds provides a general grant of coverage for claims alleging that the Insureds engaged in “wrongful acts,” which include any “actual or alleged act, error, misstatement, misleading statement, omission or breach of duty.” However, the “Errors & Omissions Exclusion” states that U.S. Specialty is not liable for any claim “arising out of, based upon or attributable to the rendering of or failure to render services for others, including without limitation services performed for or on behalf of customers or clients.”

The ambiguity of this…

dissenting:

The majority misunderstands California law and thereby ignores the plain meaning of the insurance contract to which it purports to give effect. I dissent.

I agree with the majority that the “services” exclusion covers a broad range of acts and transactions. I also agree that “breadth of meaning does not equal ambiguity.” Op. at 926. And, California recognizes that a broad term is often used because a broad meaning is intended. Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 5 Cal.4th 854, 865 , 21 Cal. Rptr.2d 691 , 855 P.2d 1263 (Cal.1993). I disagree with the majority, however, on two points.

First, the majority construes the “services” exclusion narrowly because the third-party complaint alleged “the kind of breaches of duty and misstatements that are generally covered by the policy.” Mem. Dispo. at 3. But, defining the scope of an insurance policy exclusion by determining what risks should be covered under the grant of coverage is a nonsense. An exclusion of coverage cannot obtain unless there is coverage of the risk. If a finding of coverage eliminates an exclusion, the exclusion is illusory. For example, a baseball team might buy a special “Tommy…