Jacqueline Keller v. Federal Insurance Company ( 2019 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 1 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JACQUELINE KELLER; PHILLIP No. 17-55323
YANEY,
D.C. No.
Plaintiffs-Appellants, 2:16-cv-03946-GW-PJW
v.
MEMORANDUM*
FEDERAL INSURANCE COMPANY, a
corporation; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted March 6, 2019
Pasadena, California
Before: KLEINFELD, GILMAN,** and NGUYEN, Circuit Judges.
In this insurance-coverage case, Jacqueline Keller and Phillip Yaney seek to
recover under a homeowner’s insurance policy issued by Federal Insurance
Company (Federal). A backup of water and sewage in the downstairs bathroom
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Ronald Lee Gilman, United States Circuit Judge for
the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
flooded portions of Keller and Yaney’s Beverly Hills home and damaged parts of
their newly installed hardwood flooring. At issue in this appeal is whether a clause
in the policy that provides for a one-year suit-limitation period prevents them from
recovering under the policy.
The policy has a Legal Action Against Us (LAAU) clause, which reads as
follows:
You agree not to bring legal action against us unless you have first
complied with all conditions of this policy. For property, you also
agree to bring any action against us within one year after a loss
occurs, but not until 30 days after proof of loss has been submitted to
us and the amount of loss has been determined.
Around November or December 2012, Keller and Yaney noticed “warping”
or “cupping” in portions of their newly installed hardwood floors as a result of the
flooding. By June or July 2013, they determined that the cupping was not
subsiding and that it would not be resolved on its own. Keller and Yaney finally
notified Federal of the sewage backup and damage to their floors on September 15,
2014. After Federal denied coverage, Keller and Yaney filed their complaint on
December 10, 2015.
This court reviews de novo a district court’s decision granting summary
judgment. Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070, 1086
(9th Cir. 2013). We also review de novo a district court’s interpretation of an
insurance contract and its conclusions that judicial estoppel and collateral estoppel
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are inapplicable as a matter of law. Stanford Ranch, Inc. v. Md. Cas. Co., 89 F.3d
618, 624 (9th Cir. 1996) (interpretation of a contract); Tritchler v. County of Lake,
358 F.3d 1150, 1154 (9th Cir. 2004) (judicial estoppel); Dias v. Elique, 436 F.3d
1125, 1128 (9th Cir. 2006) (collateral estoppel). Finally, we review the district
court’s decision not to apply equitable estoppel under the abuse-of-discretion
standard. O’Donnell v. Vencor Inc., 466 F.3d 1104, 1109 (9th Cir. 2006) (per
curiam).
We conclude that the LAAU clause establishes both conditions precedent
and establishes a one-year suit-limitation period that begins “after a loss occurs.”
The conditions precedent and the suit-limitation period are distinct elements of the
clause, and each must be given effect. Kelley and Yaney’s interpretation of the
clause—that it does not create a suit-limitation period at all or, in the alternative,
that the suit-limitation period is triggered only after a claim is filed and Federal
makes its final determination regarding the amount of the insured’s claim—is
inconsistent with the clear language that the suit-limitation period begins “after a
loss occurs.” Their reading is also inconsistent with the purpose of the
suit-limitation period, which is to preclude stale claims, require the insured’s
diligence, and prevent fraud. See State Farm Fire & Cas. Co. v. Superior Court,
258 Cal. Rptr. 413, 418 (Ct. App. 1989); see also Prudential-LMI Commercial Ins.
v. Superior Court, 798 P.2d 1230, 1235–36 (Cal. 1990) (discussing the limitations
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period embodied in section 2071 of the California Insurance Code and explaining
that it has been “interpreted to mean that . . . the insured was compelled to satisfy
all conditions precedent as well as institute suit within the same 12-month period”
(quoting Proc v. Home Ins. Co., 217 N.E.2d 136, 138 (N.Y. 1966))).
Keller and Yaney failed to comply with the one-year suit-limitation
provision in the LAAU clause because they filed their claim over one year after the
loss occurred. The loss in this case occurred in November or December 2012,
when Keller and Yaney noticed the cupping of their floors. And even if we were
to assume that the loss did not occur until July 2013, when Keller and Yaney
decided that the cupping issue would not resolve itself over time, they were still
late in submitting their claim to Federal in September 2014. True enough, the
limitations period was tolled while Federal was evaluating Keller and Yaney’s
claim between September 2014 and December 2015. See, e.g., id. at 1240–43
(holding that the insured’s submission of his or her claim tolls the statutory
limitations period for fire-insurance policies). But the December 10, 2015
complaint was still time-barred by the LAAU’s suit-limitation provision because
Keller and Yaney waited over a year after the loss occurred before even filing their
claim with Federal.
Keller and Yaney seek to avoid this result by arguing that either collateral
estoppel or judicial estoppel precludes Federal’s interpretation of the LAAU clause
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because of the Eleventh Circuit’s decision in Swaebe v. Federal Insurance Co.,
374 F. App’x 855 (11th Cir. 2010), and Federal’s position taken in that case. But
neither collateral estoppel nor judicial estoppel apply in the present case because
Swaebe concerned a different issue and Federal did not take a clearly inconsistent
position in that case. Swaebe concerned the provision within the LAAU clause
that prohibits the insured from filing suit prior to complying with certain
conditions precedent, not the suit-limitation provision, and these provisions are
discrete requirements.
Equitable estoppel and waiver are also inapplicable in the present case.
“[C]onduct by the insurer after the limitation period has run—such as failing to
cite the limitation provision when it denies the claim, failing to advise the insured
of the existence of the limitation provision, or failing to specifically plead the time
bar as a defense—cannot, as a matter of law, amount to a waiver or estoppel.”
Prudential-LMI Commercial Ins., 798 P.2d at 1240 n.5 (emphasis in original). All
of the alleged statements by Jeffrey Gesell, Federal’s coverage counsel, were made
in 2015, well after the limitations period had already expired. Accordingly, the
district court did not abuse its discretion in concluding that Gesell’s statements did
not give rise to any waiver or equitable estoppel by Federal.
Finally, Keller and Yaney argue that Federal failed to show that they acted
with unnecessary delay or that Federal was prejudiced by their delay in filing the
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claim. Keller and Yaney’s reliance on the notification provision of the policy is
misguided, however, because Federal did not deny coverage based on lack of
notification. It instead denied coverage based on the one-year suit-limitation
provision in the LAAU clause. As the district court held, the notification and
suit-limitation provisions are “separate and distinct policy condition[s],” so the
notification provision is “irrelevant to the question of whether the limitation period
had run.” See State Farm Fire & Cas. Co. v. Superior Court, 258 Cal. Rptr. 413,
418 (Ct. App. 1989) (“The courts require no showing of prejudice to enforce a
statute of limitations, in insurance cases or otherwise.”). Accordingly, the district
court did not err in holding that Federal did not need to show that Keller and
Yaney acted with unnecessary delay in filing their lawsuit or that Federal suffered
any prejudice because of this delay.
We conclude by ruling on Keller and Yaney’s motion to take judicial notice
of (1) filings from Majagah v. AIG Property Casualty Insurance Agency, Inc.,
No. 15-06178, 2016 WL 475362 (D.N.J. Feb. 8, 2016), (2) Chubb Limited’s 10K
form filed with the Securities and Exchange Commission, and (3) Keller and
Yaney’s request for judicial notice of documents filed in support of their motion
for partial summary judgment before the district court. We considered all of these
documents in reaching this disposition, so the motion to take judicial notice is
denied as moot.
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For all of the reasons set forth above, we AFFIRM the judgment of the
district court.
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