Admiral Insurance Company v. Pif High Yield Fund Ii, formerly known as WM Trust High Yield Fund

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ADMIRAL INSURANCE COMPANY,
Plaintiff-Appellee,
v.
PIF HIGH YIELD FUND II, formerly
known as WM Trust High Yield Fund; PIF
INCOME FUND, formerly known as WM
Trust Income Fund; PVC INCOME
ACCOUNT, formerly known as WM
Variable Trust Income Fund; TONGA
PARTNERS, L.P.; ANEGADA MASTER
FUND, LTD.; CUTTYHUNK FUND,
LTD.; CANNELL CAPITAL, L.L.C.;
NEBO INVESTMENT FUND,
Counter-claimants-Appellants.
SONICBLUE INCORPORATED,
Debtor.
No. 10-15830
D.C. 5:07-cv-04185 JF
MEMORANDUM *
FILED
SEP 29 2011
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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The Honorable Richard Mills, Senior United States District Judge for**
the Central District of Illinois, sitting by designation.
ADMIRAL INSURANCE COMPANY,
Plaintiff-Appellant,
v.
PIF HIGH YIELD FUND II, formerly
known as WM Trust High Yield Fund; PIF
INCOME FUND, formerly known as WM
Trust Income Fund; PVC INCOME
ACCOUNT, formerly known as WM
Variable Trust Income Fund; TONGA
PARTNERS, L.P.; ANEGADA MASTER
FUND, LTD.; CUTTYHUNK FUND,
LTD.; CANNELL CAPITAL, L.L.C.;
NEBO INVESTMENT FUND,
Counter-claimants-Appellees.
SONICBLUE INCORPORATED,
Debtor.
No. 10-16020
D.C. No. C 07-4185
Appeal from the United States District Court
for the Northern District of California
Jeremy D. Fogel, District Judge, Presiding
Argued and Submitted May 13, 2011
San Francisco, California
Before: W. FLETCHER and N.R. SMITH, Circuit Judges, and MILLS, Senior**
District Judge.

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A group of holders of notes issued by now-defunct SONICblue, Inc. (the
“1996 Bondholders”) appeal the district court’s grant of summary judgment to
Admiral Insurance Company (“Admiral”) on the basis of recision, and the district
court’s denial of the 1996 Bondholders’ cross-motion for summary judgment.
Admiral cross-appeals, challenging the district court’s denial of the alternative
bases for relief contained in its motion for summary judgment. We have
jurisdiction under 28 U.S.C. § 1291, and we affirm.
“We review a district court’s decision on cross-motions for summary
judgment de novo.” Avery v. First Resolution Mgmt. Corp., 568 F.3d 1018, 1021
(9th Cir. 2009). “The meaning and construction of an insurance policy is a
question of law reviewed de novo. Words used in an insurance policy are to be
interpreted according to the plain meaning that a layperson would attach to them.”
Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir. 1998) (citation
omitted).
The November 14, 2002, letter constituted a written demand for money or
services. Therefore, SONICblue should have revealed the letter to Admiral in
response to question 24 of the policy application. As a result, recision is warranted
in this case. See Nieto v. Blue Shield of Cal. Life & Health Ins. Co., 181 Cal. App.

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4th 60, 75-78 (2010); Mitchell v. United Nat’l Ins. Co., 127 Cal. App. 4th 457,
468-69 (2005).
Accordingly, we affirm the district court’s grant of summary judgment on
the recision claim. The 1996 Bondholders’ remaining arguments are unavailing.
Because we affirm on the recision claim, we do not reach the issues raised
by Admiral in the cross-appeal.
AFFIRMED.

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