NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS AUG 24 2020

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARTIN S. ROOD, No. 19-15920

Plaintiff-Appellant, D.C. No. 2:16-cv-02586-JAD-NJK v.

LIBERTY INSURANCE MEMORANDUM*

UNDERWRITERS, INC., DBA Liberty Mutual Group,

Defendant-Appellee.

Appeal from the United States District Court for the District of Nevada Jennifer A. Dorsey, District Judge, Presiding

Submitted July 6, 2020** Portland, Oregon

Before: BENNETT and MILLER, Circuit Judges, and PEARSON, *** District Judge.

Martin S. Rood (“Rood”) appeals a district court judgment granting Liberty

* 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). *** The Honorable Benita Y. Pearson, United States District Judge for the Northern District of Ohio, sitting by designation. Insurance Underwriters, Inc., dba Liberty Mutual Group’s (“Liberty”) motion for

summary judgment and denying Rood’s motion for summary judgment in a

diversity insurance coverage action.

We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

Liberty issued a professional liability insurance policy to Jack Paul Gillespie

(“Gillespie”), effective from November 2, 2010 to November 2, 2011 (“Liberty’s

2010-2011 policy”). At the heart of this appeal is the meaning, scope, and

application of Exclusion N in Liberty’s policies.

Interpreting an insurance contract is a question of law in Nevada. Fed. Ins.

Co. v. Coast Converters, 339 P.3d 1281, 1284 (Nev. 2014). Insurance contracts

“should be interpreted broadly, affording the greatest possible coverage to the

insured.” Farmers Ins. Grp. v. Stonik ex rel. Stonik, 867 P.2d 389, 391 (Nev.

1994). Clauses in an insurance contract excluding coverage are to be interpreted

narrowly against the insurer. Nat’l Union Fire Ins. Co. of the State of Pa., Inc. v.

Reno’s Exec. Air, Inc., 682 P.2d 1380, 1383 (Nev. 1984). An exclusionary

provision must meet three requirements to be legally effective and the basis of a

denial of coverage. The insurer must: “(1) draft the exclusion in ‘obvious and

unambiguous language,’ (2) demonstrate that the interpretation excluding coverage

is the only reasonable interpretation of the exclusionary provision, and (3) establish

that the exclusion plainly applies to the particular case before the court.” Century

2 Sur. Co. v. Casino W., Inc., 329 P.3d 614, 616 (Nev. 2014) (quoting Powell v.

Liberty Mut. Fire Ins. Co., 252 P.3d 668, 674 (Nev. 2011)).

1. The plain language of Exclusion N applies to Gillespie’s appraisal of

Cielo Vista, LLC’s vacant land site located in Las Vegas, Nevada because the

site’s intended use was “for multiple unit single family housing developments,

condominium developments, co-operative housing developments or apartment

developments consisting of 10 units or more.” Therefore, there was not a triable

issue whether Liberty had an obligation to indemnify Gillespie against Rood’s

claim for negligence and professional malpractice in the underlying lawsuit.

2. There also was not a triable issue whether Exclusion N applied to

appraisals done by appraisers approved to appraise commercial property. Liberty’s

2011-2012 policy by its express and plain terms does not cover Rood’s claim in the

underlying lawsuit. There is no evidence in the record that a change to a

subsequent policy automatically resets all of the past policies “like falling

dominoes.” It simply evidences the parties’ intent to adapt to past claims and

insure for future ones. Moreover, Gillespie did not testify, and Rood never

inquired of Liberty about the changes made to Exclusion N. These policies are

“claims made and reported” policies that have a one-year term. It is undisputed

that the claim was made during the policy period of Liberty’s 2010-2011 policy. A

retroactive application of a changed exclusion by judicial fiat does violence to

3 basic contract interpretation, the purpose of which is “to determine the parties’

intent when they entered into the contract.” Century Sur. Co., 329 P.3d at 616

(citing Sheehan & Sheehan v. Nelson Malley & Co., 117 P.3d 219, 224 (Nev.

2005)). Such remediation in Liberty’s 2011-2012 policy does not relate back to

create coverage for a claim made in 2010.

3. Exclusion N was not ambiguous. “Any ambiguity in an insurance

contract must be interpreted against the drafting party and in favor of the insured.”

Stonik, 867 P.2d at 391. “Whether an insurance policy is ambiguous turns on

whether it creates reasonable expectations of coverage as drafted.” Fed. Ins. Co.,

339 P.3d at 1285 (brackets and citation omitted).

Exclusion N lists examples of single-family housing developments. It is

written in the disjunctive to indicate that however the units are labeled

(condominium, apartment, etc.), Exclusion N applies if there are “10 units or

more.” Rood’s argument that the court should find that Exclusion N is ambiguous

is not persuasive because, as the district court concluded, by appraising vacant land

intended to be the site of a mixed-use high rise with over 400 units, Gillespie had

no “reasonable expectation” of professional liability coverage under Liberty’s

2010-2011 policy.

4. We also reject Rood’s argument that Exclusion N did not apply

because Gillespie was retained to do an “as-is” valuation of the property, and not

4 an appraisal for any proposed use. Gillespie’s appraisal was not based on the “as-

is” value of the land. Rather, it depended on the vacant land’s capacity for

becoming a high rise. Several parts of Gillespie’s report contradict Rood’s

contention that Gillespie appraised the land “as is”—i.e., the value of “the land

alone” that was not contingent on any future development. The report

demonstrates that Gillespie’s valuation was based on the ability and plan to

develop the land into a mixed-use high rise. For Exclusion N to apply, the land

must be “undeveloped or vacant,” and have a proposed use, among other things,

for “multiple unit single family housing developments.” As the district court

found, the facts fit squarely within Exclusion N.

5. Exclusion N was legally effective because it clearly communicated

coverage limitations to Gillespie. Any exclusion must be narrowly tailored so that

it “clearly and distinctly communicates to the insured the nature of the limitation,

and specifically delineates what is and is not covered.” Griffin v. Old Republic Ins.

Co., 133 P.3d 251, 255 (Nev. 2006) (internal quotation marks and footnotes

omitted). An exclusion provision bars coverage when (1) the insurer has written it

“in obvious and unambiguous language in the policy,” (2) “the interpretation

excluding covering under the exclusion is the only interpretation of the exclusion

that could fairly be made,” and (3) the exclusion “clearly applies” to the particular

case before the court. Powell, 252 P.3d at 674. Exclusion N in Liberty’s 2010-

5 2011 policy is in obvious and unambiguous language that plainly states the policy

does not apply to a development project on property entitled for a 37-story building

with 414 residential units and 32,970 square feet of commercial space. This

interpretation appears to be the only fair interpretation of Exclusion N.

We hold Exclusion N: (1) is obvious and unambiguous; (2) is susceptible to

only one reasonable interpretation; and, (3) plainly applies to exclude coverage in

the underlying lawsuit. Because Exclusion N is enough to determine whether the

policy applied to the underlying lawsuit, like the district court, we decline to

address whether Exclusion L in Liberty’s 2010-2011 policy would also preclude

coverage because it is unnecessary.

6. Finally, Rood has failed to preserve certain issues on appeal by not

raising them before the district court, including the relevance of a subsequent

2011-2012 insurance policy on coverage of the claim, whether changes to that

policy evidence the parties’ intent to provide coverage for the prior policy, the

effect of the commercial appraisal endorsement, and whether language in the

insured’s renewal application affects the applicability of Exclusion N. Having

failed to present these arguments to the district court, Rood cannot raise them for

the first time here. See Bowers v. Whitman, 671 F.3d 905, 917 n.7 (9th Cir. 2012)

(“[g]enerally, we will not consider an issue raised for the first time on appeal”).

Although there are exceptions to this rule, see Greger v. Barnhart, 464 F.3d 968,

6 973 (9th Cir. 2006),1 this case does not fall within any of them.

AFFIRMED.

1 We recognize three exceptions to the general rule that the court will not consider an issue raised for the first time on appeal: “in the ‘exceptional’ case in which review is necessary to prevent a miscarriage of justice or to preserve the integrity of the judicial process, when a new issue arises while appeal is pending because of a change in the law, or when the issue presented is purely one of law and either does not depend on the factual record developed below, or the pertinent record has been fully developed.” Bolker v. Comm’r, 760 F.2d 1039, 1042 (9th Cir. 1985) (citations omitted).

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