Starr Indemnity & Liability Co v. Point Ruston LLC ( 2022 )


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  •                            NOT FOR PUBLICATION                           FILED
    UNITED STATES COURT OF APPEALS                        JUN 1 2022
    MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    STARR INDEMNITY & LIABILITY                     No.    21-35702
    COMPANY,
    D.C. No. 3:20-cv-05539-RSL
    Plaintiff-Appellant,
    v.                                             MEMORANDUM*
    POINT RUSTON LLC; et al.,
    Defendants-Appellees,
    and
    JLW POINT RUSTON INVESTMENTS
    LLC,
    Defendant.
    Appeal from the United States District Court
    for the Western District of Washington
    Robert S. Lasnik, District Judge, Presiding
    Submitted May 19, 2022**
    Seattle, Washington
    Before: WARDLAW, GOULD, and BENNETT, Circuit Judges.
    *
    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).
    Plaintiff-Appellant Starr Indemnity & Liability Company appeals the district
    court’s denial of its motion for summary judgment and grant of partial summary
    judgment in favor of Defendant-Appellees Point Ruston, LLC, et. al. We have
    jurisdiction under 
    28 U.S.C. § 1291
    . We affirm the district court’s ruling that
    Appellant has a duty to defend, reverse the district court’s ruling that Appellant has
    a duty to indemnify, and vacate the district court’s denial of costs.
    “We review the district court’s grant of summary judgment de novo.
    Construction of a contractual insurance policy provision is a question of law and
    therefore subject to de novo review.” Trishan Air, Inc. v. Fed. Ins. Co., 
    635 F.3d 422
    , 426 (9th Cir. 2011) (citations and quotation marks omitted).
    1. The district court did not err in determining that Appellant has a duty to
    defend. Appellant provided a directors and officers insurance policy for Appellees
    (the “Policy”). The mere fact that Thomsen Ruston, LLC is a Member under the
    Policy does not trigger the Policy’s Insured vs. Insured Exclusion. The Policy’s
    definition of Insured Person includes an Executive. An Executive, in turn, is
    defined as any “past, present or future duly elected or appointed director, officer,
    trustee, governor, management committee Member or Member of the board of
    managers.” The plain and unambiguous definition of Executive does not include
    any Member; rather, it only includes certain types of Members: any “management
    committee Member or Member of the board of managers.” See Quadrant Corp. v.
    2
    Am. States Ins. Co., 
    110 P.3d 733
    , 737 (Wash. 2005) (requiring courts enforce
    “clear and unambiguous” language). A “management committee Member” is any
    Member who is part of the management committee. A “Member of the board of
    managers” is any Member who is also on the board of managers. Appellant does
    not claim that Thomsen Ruston, LLC is part of the management committee or on
    the board of managers. Thomsen Ruston, LLC, then, is not an Insured Person
    under the Policy.1
    Appellant’s argument that the Insured vs. Insured Exclusion applies because
    the underlying complaint (the “Complaint”) was “brought by or on behalf of” Ken
    Thomsen also fails. The Policy does not define “brought by or on behalf of.”
    Undefined terms in an insurance policy are “given their plain, ordinary, and
    popular meaning.” Int’l Marine Underwriters v. ABCD Marine, LLC, 
    313 P.3d 395
    , 400 (Wash. 2013) (quotation marks omitted). “[W]here multiple reasonable
    definitions of an undefined term in an insurance policy exist, . . . courts adopt the
    definition that most favors the insured.” McLaughlin v. Travelers Com. Ins. Co.,
    
    476 P.3d 1032
    , 1037 (Wash. 2020). Appellees are correct that, as a matter of basic
    1
    Even if the Policy’s language were deemed ambiguous, any ambiguities would be
    construed against Appellant because it drafted the Policy. See Panorama Vill.
    Condo. Owners Ass’n Bd. of Dirs. v. Allstate Ins. Co., 
    26 P.3d 910
    , 914 (Wash.
    2001); Dickson v. U.S. Fid. & Guar. Co., 
    466 P.2d 515
    , 518 (Wash. 1970)
    (“Exclusionary clauses in an insurance policy are to be construed most strongly
    against the company writing the policy, and in favor of the insured.”).
    3
    corporate law, officers and principals of companies bring lawsuits on behalf of the
    companies, not the other way around. See, e.g., Grayson v. Nordic Constr. Co.,
    
    599 P.2d 1271
    , 1273 (Wash. 1979) (“A corporation exists as an organization
    distinct from the personality of its shareholders.”). In this context, “brought by or
    on behalf of” means as a representative of or as an agent of. Appellant offers no
    evidence that the Complaint was filed by or on behalf of Ken Thomsen personally,
    so the Complaint was not “brought by or on behalf of” Ken Thomsen.
    2. The district court erred in holding that Appellant has a duty to indemnify.
    The duties to defend and indemnify are separate; even though Appellant has a duty
    to defend, it does not necessarily have a duty to indemnify. See Woo v. Fireman’s
    Fund Ins. Co., 
    164 P.3d 454
    , 459 (Wash. 2007). Neither Appellant’s motion for
    summary judgment nor Appellees’ cross-motion for partial summary judgment
    made substantive arguments regarding the duty to indemnify. The district court,
    without requesting briefing on the issue, then sua sponte ruled on the duty to
    indemnify and did not give Appellant reasonable notice to develop the facts to
    oppose this portion of the summary judgment order. See Norse v. City of Santa
    Cruz, 
    629 F.3d 966
    , 971–72 (9th Cir. 2010) (en banc). We therefore reverse the
    district court’s grant of summary judgment regarding the duty to indemnify.
    3. In light of our other holdings, we also vacate the district court’s denial of
    costs.
    4
    Each party shall bear its own costs on appeal.
    AFFIRMED in part, REVERSED in part, and VACATED in part.
    5
    

Document Info

Docket Number: 21-35702

Filed Date: 6/1/2022

Precedential Status: Non-Precedential

Modified Date: 6/1/2022