American National Insurance Co. v. Vartan Akopyan ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 24 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMERICAN NATIONAL INSURANCE No. 22-55208
COMPANY, a Texas Corporation,
D.C. No.
Plaintiff-Appellant, 2:20-cv-08502-RGK-E
v.
MEMORANDUM*
VARTAN AKOPYAN, Trustee of the
Sogomon Akopyan Family Irrevocable Life
Insurance Trust,
Defendant-Appellee,
and
DOES, 1 through 10, inclusive,
Defendant.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Submitted January 13, 2023**
Pasadena, California
*
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).
Before: WATFORD, FRIEDLAND, and BENNETT, Circuit Judges.
Dissent by Judge BENNETT.
Plaintiff-Appellant American National Insurance Company (“ANICO”)
appeals the district court’s denial of its motion for attorney’s fees, which ANICO
filed after prevailing in a lawsuit against Defendant-Appellee Vartan Akopyan
(“Vartan”) involving his father’s life insurance policy. Reviewing de novo
because the fee question turns on issues of contract interpretation, FDIC v. Lugli,
813 F.2d 1030, 1034 (9th Cir. 1987), we affirm.
ANICO issued a life insurance policy to Sogomon Akopyan (“Sogomon”),
which designated Sogomon’s life insurance policy trust as the owner of the policy
and Vartan as the successor trustee. After Sogomon died and his son Vartan
submitted a claim for death benefits to ANICO, ANICO investigated and learned
that Sogomon had concealed material facts about his health history when applying
for the life insurance policy. ANICO therefore denied Vartan’s claim and returned
Sogomon’s premium payments.
ANICO then sued for rescission of the policy and for declaratory relief.
ANICO argued that it would not have issued the policy if the Akopyans had been
truthful about Sogomon’s health history. In response, Vartan filed counterclaims
for breach of contract, breach of the covenant of good faith and fair dealing, and
violation of California’s unfair competition law. The district court granted
summary judgment in favor of ANICO.
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ANICO subsequently filed a motion for attorney’s fees. ANICO sought the
amount that it claimed it incurred in filing its complaint and in obtaining dismissal
of Vartan’s counterclaims. In support, ANICO invoked the attorney’s fee clause in
the Trust Certification attachment to the insurance policy application, which
certified Sogomon’s life insurance policy trust as the beneficiary on the policy.
That paragraph provides:
Each of the undersigned, jointly and severally, individually, and as trustee,
indemnifies the Company and agrees to hold the Company harmless against
all obligations, demands, losses or liabilities (including attorney’s fees) that
the Company incurred, suffered, or paid or may incur, suffer or pay in the
future because of the Company’s reliance on this Certification and/or
transactions or actions by the undersigned. By indemnifying the Company,
each of the undersigned, jointly and severally, individually, and as trustee,
indemnifies the Company’s agents, officers and employees. This
indemnification shall survive termination of this document or the life
insurance policy.
The district court denied ANICO’s motion.
In California, “[a] contract must be so interpreted as to give effect to the
mutual intention of the parties as it existed at the time of contracting.” Cal. Civ.
Code § 1636. When a court is interpreting the words of a contract, “words . . . are
to be understood in their ordinary and popular sense, rather than according to their
strict legal meaning.” Cal. Civ. Code § 1644.
The fee clause states that “the undersigned”—Vartan—will “indemnif[y]”
ANICO for “attorney’s fees . . . that [ANICO] incurred . . . because of [ANICO’s]
reliance on th[e] [Trust] Certification and/or transactions or actions by [Vartan].”
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ANICO argues that Vartan’s “actions” forced ANICO to incur fees. First, Vartan
attested that the answers on the application about Sogomon’s health history were
true when they were not, causing ANICO to later need to seek rescission and incur
fees as a result. Second, when ANICO sued for rescission, Vartan brought
counterclaims, thus leading ANICO to incur fees to defend against those
counterclaims. ANICO argues that because each of those “actions” caused it to
incur fees, it is entitled to fees under the plain meaning of the fee clause in the
Trust Certification.
We are not persuaded by ANICO’s argument, which depends on reading
“actions” more broadly than makes sense in the context of the contractual language
here. Read in context, it is clear that the fee clause in the Trust Certification
reflects the parties’ intention that ANICO would be indemnified not for fees
incurred as a result of any action by Vartan or even any action by Vartan involving
the life insurance policy, but for fees incurred as a result of actions by Vartan
involving the Trust Certification. Importantly, the fee clause exists solely in the
Trust Certification—a document that was completed only because a trust was
being named as owner or beneficiary of the life insurance policy. If the parties
intended there to be fee shifting for litigation related to the life insurance policy as
a whole, one would expect the life insurance policy itself to contain a fee-shifting
clause, but it does not. In addition, the fee clause in the Trust Certification is
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surrounded by a list of “Declarations and Certifications” that relate to the trust as
owner and beneficiary of the life insurance policy. That suggests that the fee
clause is concerned with actions specifically related to the Trust Certification, not
the life insurance policy more generally. And to the extent there is any ambiguity
about what the parties intended the fee clause to mean, we must construe it against
ANICO, which drafted the contract. See Linton v. Contra Costa, 31 Cal. App. 5th
628, 636 (2019) (holding that when a contract remains ambiguous after
considering both its plain meaning and the objectively reasonable expectations of
the parties, courts must construe the language “most strongly against the party who
caused the uncertainty to exist” (quoting Cal. Civ. Code § 1654)).
The best reading, therefore, is that ANICO is entitled to fees incurred
because of actions by Vartan related to the Trust Certification. Because the fees
ANICO incurred were the result of actions related not to the Trust Certification but
to the life insurance policy, ANICO cannot rely on the fee clause to obtain fees
here.
AFFIRMED.
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FILED
American National Insurance Company v. Vartan Akopyan, No. 22-55208 FEB 24 2023
BENNETT, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
The contract here is not ambiguous, and Plaintiff-Appellant American
National Insurance Company (“ANICO”) is entitled to the reasonable attorneys’
fees it incurred because of Vartan Akopyan’s (“Vartan”) actions: applying for the
life insurance policy with his father, Sogomon; filing a claim for a payout from the
policy; and asserting counterclaims against ANICO for breach of contract. Thus, I
respectfully dissent.
The attorneys’ fees clause states that “the undersigned”—Vartan—will
“indemnif[y]” ANICO for “attorney’s fees . . . that [ANICO] incurred . . . because
of [ANICO’s] reliance on th[e] [Trust] Certification and/or transactions or actions
by [Vartan].” The majority characterizes ANICO’s argument on appeal as
claiming that “ANICO would be indemnified . . . for fees incurred as a result of
any action by Vartan.” Finding this interpretation of the contract to be “more
broad[] than makes sense in the context of the contractual language,” the majority
concludes that the clause covers only “fees incurred as a result of actions by Vartan
involving the Trust Certification.”
First, the contractual interpretation that the majority rejects is not ANICO’s
argument. ANICO does not claim that the provision would entitle it to fees for
actions by Vartan that are unrelated to the life insurance policy. Even then, “in
construing a contract[, our] function is not merely to import all of the possible
definitions or even the broadest definition.” Mirpad, LLC v. Cal. Ins. Guar. Ass’n.,
132 Cal. App. 4th 1058, 1069 (2005) (emphasis added). Instead, we must “glean
the meaning of the words from the context and usage of the words in the contract
itself.” Id. And we must “not strain to create an ambiguity where none exists.”
Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 627 (Cal. 1995), as modified on
denial of reh’g (Oct. 26, 1995). In context, the fee clause neither extends to “any
action by Vartan” nor is it limited to “actions . . . involving the Trust
Certification.”
Unlike the majority, I start with the text of the contract. The clause
explicitly requires Vartan to indemnify ANICO for attorneys’ fees it incurred
because of its reliance on the Trust Certification, and the clause separately requires
Vartan to indemnify ANICO for attorneys’ fees it incurred because of “transactions
or actions” by Vartan. If the second obligation were limited to transactions and
actions involving the Trust Certification, as the majority posits, the relevant
provision would necessarily have read as follows: “because of the Company’s
reliance on this Certification and/or transactions or actions by the undersigned that
specifically relate[] to the Trust Certification.” However, a “Judge is simply to
ascertain and declare what is in terms or in substance contained therein, not to
insert what has been omitted.” Cal. Civ. Proc. Code § 1858 (emphasis added). See
also Rosen v. State Farm Gen. Ins. Co., 70 P.3d 351, 356 (Cal. 2003) (“[W]e do
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not rewrite any provision of any contract, including [an insurance policy], for any
purpose.”).
In addition, the majority’s interpretation renders part of the attorneys’ fees
clause itself surplusage. We must “favor an interpretation that gives meaning to
each word in a contract over an interpretation that makes part of the writing
redundant.” Yahoo Inc. v. Nat’l Union Fire Ins. Co., 519 P.3d 992, 999 (Cal.
2022). The fee clause already states that Vartan will “indemnif[y]” ANICO for
“attorney’s fees . . . that [ANICO] incurred . . . because of [ANICO’s] reliance on
th[e] [Trust] Certification.” Other provisions of the Trust Certification already
ensure that the information in the Certification is “accurate and complete” (¶ 1);
the named Trust is “currently in effect” (¶ 2); beneficial interest under the Trust
will be limited to a certain class of people (¶ 3); and that the Trustees will inform
ANICO “immediately in writing” of changes or amendments to the Trust (¶ 8).
Paragraph 4 even states that ANICO is “relying exclusively on the representations
in this Certification.” Therefore, other provisions of the Trust Certification already
list transactions or actions “specifically related to the Trust Certification,” and the
first condition in the attorneys’ fees clause already covers ANICO’s reliance on
them.
As to the supposed absurdity of extending the provision to “any action” by
Vartan (such as Vartan vandalizing ANICO’s corporate headquarters), this
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possibility was already foreclosed by the Trust Certification being signed in
consideration for—and as part of a package with—the life insurance policy. Cf.
Mountain Air Enters., LLC v. Sundowner Towers, LLC, 398 P.3d 556, 566 (Cal.
2017) (holding that courts can “construe together several documents concerning
the same subject and made as part of the same transaction even [when] the
documents were not executed contemporaneously and do not refer to each other”)
(cleaned up). Absent the insurance policy, there would not have been any Trust
Certification. Therefore, “transactions or actions” are neither limited to those
involving only the Trust Certification (because that is not what the provision says),
nor can they be extended to acts of vandalism or other actions or transactions
unrelated to the life insurance policy.
And, of course, ANICO is not making a claim based on “any action by
Vartan”; ANICO is arguing—and the undisputed record demonstrates—that it
incurred attorneys’ fees because of actions taken by Vartan related to the life
insurance policy. Vartan applied for the $1 million life insurance policy with his
father, Sogomon. As the policy’s owner, he attested that “all of the answers in all
pages of this application and any supplements to it are full, complete and true”
even though he knew that Sogomon had misrepresented his health history.1 Three
1
For example, the Application asked if Sogomon had ever “had a heart attack,
heart murmur, chest pains, irregular heartbeat, stroke, high blood pressure, anemia
or any disease or abnormality of the heart, blood or blood vessels.” Sogomon
4
days after Sogomon’s death, Vartan made a claim for benefits under the policy.
After ANICO denied the claim and returned the policy premiums, it sued the
Trustee (Vartan) as the policy’s owner seeking rescission and declaratory relief. In
response, Vartan counterclaimed alleging breach of contract, breach of the duty of
good faith and fair dealing, and unfair business practices under California’s unfair
competition law.2 ANICO had to defend against these claims until it was awarded
summary judgment.
Interpreting the attorneys’ fees clause as applying to the entire life insurance
policy is consistent with its placement in the Trust Certification. The “whole of a
contract is to be taken together, so as to give effect to every part, if reasonably
practicable, each clause helping to interpret the other.” Cal. Civil Code § 1641.
The majority states that the clause’s placement in the Trust Certification and its
surrounding clauses “suggests that the fee clause is concerned with actions
specifically related to the Trust Certification, not the life insurance policy more
generally.” First, of course, that supposed suggestion is inconsistent with the text
answered “No.” Vartan certified that this answer was “full, complete, and true.”
However, Vartan had taken Sogomon to the doctor the date he was diagnosed with
an Abdominal Aortic Aneurysm (“AAA”), and was aware of his diagnosis as well
as a later surgery for the treatment of his AAA.
2
Vartan sought more than nine hundred thousand dollars in compensatory
damages, attorneys’ fees himself, punitive damages, pre-judgment interest, costs,
and other relief.
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of the clause. But moving past that, the Trust Certification refers to obligations
and rights that the Trust has as a result of being the policy’s owner. The provision
preceding the fee clause states:
I/We are duly authorized to act as trustee(s) under the terms
of the trust provisions and/or applicable law. I/We have the
power to exercise all rights associated with ownership of a
life insurance policy, including, but not limited to, purchase,
surrender, selection of and transfers between variable funding
options, withdrawal of funds, taking a loan or other
encumberment and assignment of the policy.
This provision lists several transactions or actions that the Trustee (Vartan)
certifies he is authorized to take as the owner of the life insurance policy. The
attorneys’ fees clause, just after, holds the Trustee (Vartan) responsible for any
attorneys’ fees that ANICO may incur because of those (and other) life insurance
policy transactions or actions. And, of course, Vartan is not “simply” the Trustee
(not that it would matter if he were); he is the beneficiary of the $1 million life
insurance policy.
ANICO is entitled to attorneys’ fees it incurred because of Vartan’s
transactions and actions. Accordingly, I would reverse.
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