Premier Construction & Remodel v. Music ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 7 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
PREMIER CONSTRUCTION AND No. 21-55496
REMODEL, INC., a California corporation; 21-55835
ROBERT DEVILLE, an individual,
D.C. No.
Plaintiffs-Appellants, 5:18-cv-02582-JGB-KK
v.
MEMORANDUM*
MESA UNDERWRITERS SPECIALTY
INSURANCE COMPANY, a New Jersey
corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Jesus G. Bernal, District Judge, Presiding
Argued and Submitted January 13, 2023
Pasadena, California
Before: CALLAHAN, R. NELSON, and H.A. THOMAS, Circuit Judges.
Appellants Premier Construction and Remodel, Inc., and its owner, Robert
Deville (collectively, Premier), appeal the district court’s grant of summary
judgment to Appellee Mesa Underwriters Specialty Insurance Company (MUSIC),
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
on Premier’s causes of action for breach of contract, bad faith, and negligent
misrepresentation. Premier also appeals the district court’s dismissal of its
declaratory relief claim, its decision not to address Premier’s request for punitive
damages, and its imposition of sanctions on Premier’s counsel.
We have jurisdiction under 28 U.S.C. § 1291. We review de novo the district
court’s grant of summary judgment. Adir Int’l, LLC v. Starr Indem. & Liab. Co.,
994 F.3d 1032, 1038 (9th Cir. 2021). In doing so, we must determine “whether
there are any genuine issues of material fact and whether the district court correctly
applied the relevant substantive law,” while “viewing the evidence in the light
most favorable to the nonmoving party.” Id. (quoting Baker v. Liberty Mut. Ins.
Co., 143 F.3d 1260, 1263 (9th Cir. 1998)). We review the district court’s award of
sanctions for abuse of discretion. United States v. Associated Convalescent Enters.,
Inc., 766 F.2d 1342, 1345 (9th Cir. 1985). We affirm.
1. Under California law, the “settled rule” concerning an insurer’s duty to
defend is that the duty exists “where a pleading against the insured raises the
potential for coverage.” Continental Cas. Co. v. Super. Ct., 92 Cal. App. 4th 430,
439 (2001) (citing Montrose Chem. Corp. v. Super. Ct., 6 Cal. 4th 287, 295
(1993)). There is no such duty where the complaint in the underlying action
“cannot by any conceivable theory raise a single issue” which would trigger
coverage under the applicable policy. See id. at 438–39.
2
The First Amended Complaint (FAC) in the underlying action alleged that
Premier had failed to return keys and a garage door opener to the owner of a
condominium that Premier had been contracted to remodel. Premier argues that
these allegations raised the potential for coverage under provisions of the MUSIC
insurance policy offering coverage for “property damage” caused by an
“occurrence” (i.e., an accident). Specifically, Premier argues that its failure to
return the keys and garage door opener may have caused the condo’s owner to be
locked out of his property in a manner constituting a “[l]oss of use” of the condo.
Because the FAC here “cannot by any conceivable theory raise a single
issue” that would trigger coverage under the applicable policy, the district court
properly granted summary judgment to MUSIC on Premier’s breach of contract
claim. See id. at 438–39. While Premier argues that a “loss of use” can be
reasonably inferred from separate allegations in the FAC that Premier had
unreasonably delayed work on the project, causing building permits to expire and
subjecting the condo’s owner to fines from the homeowners’ association, we have
previously held that an insurer need not defend the insured when the potential for
liability is “tenuous and farfetched.” Lassen Canyon Nursery, Inc. v. Royal Ins. Co.
of Am., 720 F.2d 1016, 1018 (9th Cir. 1983) (quoting Giddings v. Indus. Indemn.
Co., 112 Cal. App. 3d 213, 220 (1980)). Nor does an insurer’s duty to defend
3
encompass liability that would only exist if new facts were alleged. 1 See Upper
Deck Co., LLC v. Fed. Ins. Co., 358 F.3d 608, 615–16 (9th Cir. 2004).
2. Under California law, a bad faith claim against an insurer fails if the
insured was not entitled to benefits. Grebow v. Mercury Ins. Co., 241 Cal. App. 4th
564, 581–82 (2015). Since Premier’s breach of contract claim fails, its bad faith
claim also fails.
3. The district court correctly held that Premier failed to oppose MUSIC’s
motion for summary judgment as to its negligent misrepresentation claim. “We are
not required to consider an argument that was not properly presented to the district
court or otherwise preserved for review.” Moreno Roofing Co., Inc. v. Nagle, 99
F.3d 340, 343 (9th Cir. 1996).
4. Because Premier does not present argument concerning its declaratory
relief claim, we affirm the district court’s dismissal of this claim. See Greenwood
v. FAA, 28 F.3d 971, 977 (9th Cir. 1994) (“We review only issues which are
argued specifically and distinctly in a party’s opening brief.”).
5. “In California . . . actual damages are an absolute predicate for an award
of . . . punitive damages.” Kizer v. County of San Mateo, 53 Cal. 3d 139, 147
1
Because we conclude that MUSIC had no duty to defend Premier prior to June
28, 2016, we decline to decide (i) whether the FAC colorably alleged an
“occurrence,” or (ii) whether the insurance policy’s “faulty workmanship”
exclusions also preclude coverage.
4
(1991). Given the failure of Premier’s claims, there is no basis for an award of
actual damages in this case and therefore no basis for an award of punitive
damages.
6. The district court cited ample evidence of Premier’s counsel’s failure to
comply with the court’s filing rules and properly exercised its discretion to impose
sanctions. Federal courts possess the inherent power “to manage their own affairs
so as to achieve the orderly and expeditious disposition of cases.” Am. Unites for
Kids v. Rousseau, 985 F.3d 1075, 1088 (9th Cir. 2021) (quoting Goodyear Tire &
Rubber Co. v. Haeger, 581 U.S. 101, 107 (2017)). This includes the power “to
impose sanctions short of dismissal for violations of court orders.” See State Farm
Fire & Cas. Co. v. U.S. ex rel. Rigsby, 580 U.S. 26, 37 (2016).
AFFIRMED.
5