City of Fullerton v. Ins. Co. of the State of Penn. , 664 F. App'x 618 ( 2016 )

FILED
NOT FOR PUBLICATION
OCT 20 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CITY OF FULLERTON, et al., No. 14-56434
Plaintiffs -Appellants, D.C. No. 8:13-cv-00926-CJC-
RNB
v.
MEMORANDUM*
INSURANCE COMPANY OF THE
STATE OF PENNSYLVANIA, et al.,
Defendants- Appellees.
On Appeal from the United States District Court
for the Central District of California,
Cormac J. Carney, District Judge, Presiding
Argued and Submitted October 4, 2016
Pasadena, California
Before: D.W. NELSON and PAEZ, Circuit Judges, and BUCKLO,** District
Judge.
The City of Fullerton and a group of homeowners (together, “appellants”)
appeal the district court’s grant of summary judgment in favor of the Insurance
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Elaine E. Bucklo, United States District Judge for the
Northern District of Illinois, sitting by designation.
Company of the State of Pennsylvania (“ICSOP”) and Lexington Insurance
Company (“Lexington,” and together, “the insurers”). The district court concluded
that the insurers had no duty to defend the City in an inverse condemnation action
(the “Hanson” action) the homeowners brought against it.1 We have jurisdiction
under 28 U.S.C. § 1291, and we affirm the district court’s judgment.
1. Exclusion X of the relevant policies limits coverage for “property
damage” by excluding claims “arising out of land subsidence for any reason
whatsoever.”2 “Land subsidence” is defined as “the movement of land or earth,
including, but not limited to, sinking or settling of land, earth movement, earth
expansion and/or contraction, landslide, slipping, falling away, caving in, eroding,
earth sinking, and earth rising or shifting or tilting.” Exclusion Y precludes
coverage for all claims “[a]rising out of . . . inverse condemnation,” except where
there is “physical injury or []destruction of tangible property.”
The district court correctly concluded that the property damage alleged in
Hanson fell within the scope of Exclusion X. Neither the facts nor the law supports
1
The City and homeowners ultimately settled the Hanson action. The
terms of the settlement included an agreement to pursue this coverage action
jointly against the insurers.
2
“Property damage” is defined as “(1) [p]hysical injury to or
destruction of tangible property, including all resulting loss of use of that property;
or (2) [l]oss of use of tangible property that is not physically injured or destroyed.”
2
appellants’ theory that the homeowners’ claimed loss of lateral and subjacent
support encompasses a claim for property damage in the form of earth
“weakening” unaccompanied by earth movement. On its face, the Hanson
complaint expressly alleges damages resulting from landslides “in all areas,” as
well as “on-going movement and progressive destabilization.” The City’s
description of the Hanson action in its communications with the insurers confirms
this interpretation of the claims. And at summary judgment, appellants conceded
that “[a]ny property damage alleged in the Hanson Action was expressly alleged to
result from earth movement.” None of the evidence in the record–including the
testimony of the homeowners’ expert in the underlying litigation–reasonably
suggests that Hanson involved physical damage to property that was unrelated to
earth movement.
Nor do appellants articulate a legal theory under which such a claim could
be actionable. They do not identify any case in which a plaintiff asserted a claim
for loss of lateral and subjacent support that was not directly tied to land
subsidence. The cases they do cite, Rosen v. State Farm Gen. Ins. Co., 70 P.3d 351
(Cal. 2003), Strickland v. Fed. Ins. Co., 246 Cal. Rptr. 345 (Cal. Ct. App. 1988),
and Hughes v. Potomac Ins. Co. of D.C., 18 Cal. Rptr. 650 (Cal. Dist. Ct. App.
1962), do not support such a theory.
3
2. Appellants do not contest the district court’s conclusion that to the
extent Hanson claimed damages other than those arising out of physical injury to
property, those claims fall within the scope of Exclusion Y.
3. Because we conclude that the district court’s analysis was correct, we
do not reach the alternative grounds the insurers raise for affirmance.
AFFIRMED.
4