Attorneys Insurance Mutual Risk Retention Group, Inc. v. Liberty Surplus Insurance Corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ATTORNEYS INSURANCE MUTUAL
RISK RETENTION GROUP, INC.,
Plaintiff-Appellee,
v.
LIBERTY SURPLUS INSURANCE
CORPORATION,
Defendant-Appellant.
No. 17-55597
D.C. No.
2:15-cv-04756-FMO-JC
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Fernando M. Olguin, District Judge, Presiding
Submitted February 7, 2019**
Pasadena, California
Before: WARDLAW and BEA, Circuit Judges, and MURPHY,*** District Judge.
* 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 Stephen J. Murphy, III, United States District Judge
for the Eastern District of Michigan, sitting by designation.
FILED
FEB 15 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

-- 1 of 5 --

2
During both the 2009–2010 and 2010–2011 insurance policy periods,
attorney J. Wayne Allen (“Allen”) was insured through his employer by Appellant
Liberty Surplus Insurance Corporation’s (“Liberty”) professional liability
insurance. Third parties filed suit against Allen on February 1, 2010 (during the
2009–2010 policy period) in a probate case and again on September 24, 2010
(during the 2010–2011 policy period) in a related civil action. Liberty declined
coverage for Allen in the civil action. Appellee Attorneys Insurance Mutual Risk
Retention Group, Inc. (“AIMRRG”), which had been defending Allen with a
reservation of rights, sued Liberty for contribution of defense costs. The district
court entered summary judgment for AIMRRG against Liberty. Liberty appeals the
decision, challenging the district court’s conclusion that the “Multiple Insureds,
Claims, and Claimants” paragraph of Liberty’s 2010–2011 policy (“2010–2011
Policy”) did not disclaim Liberty’s obligation to contribute to the costs of
defending Allen in the civil action. We agree with the district court’s conclusion
and therefore affirm.
Liberty’s argument involves interpretation of one of the 2010–2011 Policy’s
defined terms, “Policy Period.” The 2010–2011 Policy is “a claims-made and
reported policy,” which requires that any claim made during the 2010–2011 policy
period against the insured be reported during the 2010–2011 policy period. One

-- 2 of 5 --

3
provision limits Liberty’s liability for multiple related claims and states, in relevant
part:
Claims alleging, based upon, arising out of or attributable to the same
or related acts, errors or omissions shall be treated as a single Claim
regardless of whether made against one or more than one Insured. All
such Claims, whenever made, shall be considered first made during the
Policy Period or any Extended Reporting Period in which the earliest
Claim arising out of such acts, errors or omissions was first made, and
all such Claims shall be subject to the same Limits of Liability.
The 2010–2011 Policy defines “Policy Period” as “the period from the Inception
Date of this Policy to the Policy Expiration Date as set forth in the Declarations or
its earlier termination date, if any.” The “Declarations” identify the policy period
as from July 31, 2010 until July 31, 2011.
Liberty argues that the 2010–2011 Policy thus limits coverage so that if
multiple claims regarding the same set of facts are made against an insured in
multiple policy periods, the claims are all considered initially made during the
policy period in which the first claim is made. Because claims must be reported
during the policy period in which they are made, Liberty insists that it has no
obligation to defend Allen against the civil action because he failed to report the
related probate claim during the 2009–2010 policy period. As the district court
correctly concluded, however, Liberty’s definition of “Policy Period” within the
policy precludes this interpretation.

-- 3 of 5 --

4
As the district court correctly noted, “[a]dopting Liberty’s interpretation
would require the court to give different meanings to the same term used in the
same policy, which would run afoul of the rules of contract interpretation.”
E.M.M.I. Inc. v. Zurich Am. Ins. Co., 84 P.3d 385, 393 (Cal. 2004). Rather, the
definition of “Policy Period” necessitates that the “Multiple Insureds, Claims and
Claimants” provision be read to mean any relevant claims will be “considered first
made during the Policy Period,” i.e., during the period from July 31, 2010 until
July 31, 2011. See Cal. Civ. Code § 1644 (noting that if parties give a term a
special meaning, courts must follow the special meaning). Although Liberty’s
chosen definition of “Policy Period” may create an ambiguity in the meaning of the
multiple related claims provision as a whole, the district court did not err because
ambiguities in an insurance policy are resolved against the insurer.1 See Harris v.
Glens Falls Ins. Co., 493 P.2d 861, 862 (Cal. 1972) (in bank) (applying the “settled
rule that any ambiguity or uncertainty in an insurance policy is to be resolved
against the insurer and that if semantically permissible, the contract will be given
1 Before resolving ambiguities against the insurer, California courts interpret
uncertainties or ambiguities “in the sense in which the promisor believed, at the
time of making it, that the promisee understood it.” Cal. Civ. Code § 1649. But
here, the parties do not argue or explain what Liberty believed that Allen
understood the Single Claim Provision to mean. We therefore proceed to the final
step of contract interpretation and interpret the uncertainty “most strongly against”
Liberty as “the party who caused the uncertainty to exist.” Cal. Civ. Code § 1654.

-- 4 of 5 --

5
such construction as will fairly achieve its object of providing indemnity for the
loss to which the insurance relates.”).
AFFIRMED.

-- 5 of 5 --