Biltmore Associates v. Twin Cities ( 2009 )


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  •                   FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    BILTMORE ASSOCIATES, LLC, as           
    Trustee of the Visitalk Creditors
    Trust,
    Plaintiff-Appellant,
    v.
    TWIN CITY FIRE INSURANCE
    COMPANY, an Indiana corporation;             No. 06-16417
    GREAT AMERICAN INSURANCE
    COMPANY, a New York                           D.C. No.
    corporation; CAROLINA CASUALTY             CV-05-04220-FJM
    INSURANCE COMPANY; OLD REPUBLIC
    INSURANCE COMPANY, a
    Pennsylvania corporation; NORTH
    AMERICAN SPECIALTY INSURANCE
    COMPANY, a New Hampshire
    corporation,
    Defendants-Appellees.
    
    8563
    8564          BILTMORE ASSOCIATES v. TWIN CITY FIRE
    BILTMORE ASSOCIATES, LLC, as             
    Trustee of the Visitalk Creditors
    Trust,
    Plaintiff-Appellant,
    v.
    TWIN CITY FIRE INSURANCE
    COMPANY, an Indiana corporation;               No. 07-16036
    GREAT AMERICAN INSURANCE
    COMPANY, a New York                             D.C. No.
    CV-05-04220-FJM
    corporation; CAROLINA CASUALTY
    OPINION
    INSURANCE COMPANY; OLD REPUBLIC
    INSURANCE COMPANY, a
    Pennsylvania corporation; NORTH
    AMERICAN SPECIALTY INSURANCE
    COMPANY, a New Hampshire
    corporation,
    Defendants-Appellees.
    
    Appeal from the United States District Court
    for the District of Arizona
    Frederick J. Martone, District Judge, Presiding
    Argued and Submitted
    May 15, 2008—San Francisco, California
    Filed July 10, 2009
    Before: Andrew J. Kleinfeld and N. Randy Smith,
    Circuit Judges, and Richard Mills,* District Judge.
    Opinion by Judge Kleinfeld
    *The Honorable Richard Mills, United States District Judge for the
    Central District of Illinois, sitting by designation.
    BILTMORE ASSOCIATES v. TWIN CITY FIRE        8567
    COUNSEL
    Andrew S. Jacob, Shughart Thompson & Kilroy, P.C., Phoe-
    nix, Arizona, for the appellant.
    Michael F. Perlis, Stroock & Stroock & Lavan LLP, Los
    Angeles, California, for appellee Twin City Fire Insurance
    Company.
    E. J. Kotalik, Jr., Peshkin & Kotalik, P.C., Phoenix, Arizona,
    for appellee Old Republic Insurance Company.
    8568          BILTMORE ASSOCIATES v. TWIN CITY FIRE
    Mark G. Worischeck (briefed), Sanders & Parks, P.C., Phoe-
    nix, Arizona, for appellee Carolina Casualty Insurance Com-
    pany.
    Greg S. Comol (briefed), Lewis Brisbois Bisgaard & Smith
    LLP, Phoenix, Arizona, for appellee Great American Insur-
    ance Company.
    Gena L. Sluga (briefed), Harper Christian Dichter Graif, PC,
    Phoenix, Arizona, for appellee North American Specialty
    Insurance Company.
    OPINION
    KLEINFELD, Circuit Judge:
    This is an insurance coverage dispute arising in the context
    of bankruptcy. It turns on the insured versus insured exclu-
    sion. We also resolve an associated attorneys’ fees dispute.
    I.   Facts.
    The district court dismissed the case for failure to state a
    claim on which relief could be granted, under Rule 12(b)(6).
    The complaint was supplemented by attachment of the insur-
    ance policies at issue to the defendants’ motions.1 The com-
    plaint and the insurance policies control the outcome.
    Visitalk, an Arizona corporation, purchased directors and
    officers liability insurance from Reliance Insurance Company
    1
    A court may consider documents, such as the insurance policies, that
    are incorporated by reference into the complaint. Van Buskirk v. CNN,
    Inc., 
    284 F.3d 977
    , 980 (9th Cir. 2002). There was a dispute about whether
    two endorsements, nos. 99 and 100, could properly be considered. The
    endorsements do not matter to the insured versus insured exclusion, which
    controls the outcome.
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                 8569
    and Twin City Fire Insurance Company.2 A corporation fre-
    quently agrees to protect and indemnify its directors and offi-
    cers against claims made against them, such as in
    shareholders’ derivative suits, on account of their work for the
    company. The policies in this case named Visitalk.com, Inc.,
    and its directors and officers as insureds, and promised to pay
    losses that Visitalk and the directors and officers became lia-
    ble to pay as a result of covered claims:
    I.   INSURING AGREEMENTS
    This policy affords the following cover-
    ages:
    (A)    DIRECTORS’ AND OFFICERS’
    LIABILITY
    Except for Loss which the Insurer
    pays pursuant to Insuring Agreement
    (B) of this Policy, the Insurer will pay
    on behalf of the Directors and Offi-
    cers Loss which the Directors and
    Officers shall become legally obli-
    gated to pay as a result of a Claim
    first made during the Policy Period or
    the Discovery Period, if applicable,
    against the Directors and Officers for
    a Wrongful Act which takes place
    during or prior to the Policy Period;
    (B)    COMPANY REIMBURSEMENT
    The Insurer will pay on behalf of the
    Company Loss for which the Com-
    2
    The complaint alleges that Twin City “succeeded in interest” to the
    Reliance policy. The parties dispute whether this issue was sufficiently
    pleaded. Because we resolve this case on the insured versus insured exclu-
    sion, which is the same in both policies, we do not resolve the dispute
    about whether Twin City’s successorship was adequately pleaded.
    8570        BILTMORE ASSOCIATES v. TWIN CITY FIRE
    pany has, to the extent permitted or
    required by law, indemnified the
    Directors and Officers, and which the
    Directors and Officers have become
    legally obligated to pay as a result of
    a Claim first made during the Policy
    Period or Discovery Period, if appli-
    cable, against the Directors and Offi-
    cers for a Wrongful Act which takes
    place during or prior to the Policy
    Period. . . .
    The policies excluded from this coverage various claims, such
    as personal injury, defamation, and, central to this case,
    claims brought by Visitalk itself against its own officers or
    directors. There is an exception to this exclusion for stock-
    holder derivative actions and claims by former officers and
    directors for wrongful termination, discrimination or sexual
    harassment:
    V.   EXCLUSIONS
    The Insurer shall not be liable to make any pay-
    ment for Loss in connection with any Claim
    made against the Directors and Officers . . .:
    (D)     brought or maintained by or on behalf
    of an Insured in any capacity or by an
    security holder of the company
    except:
    (1)     a Claim, including, but not limited
    to, a security holder class or deriva-
    tive action that is instigated and
    continued totally independent of,
    and totally without the solicitation
    of, or assistance of, or active partic-
    ipation of, or intervention of an
    Insured;
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                  8571
    (2)   an Employment Practice Claim3 by
    a former Director or a present or
    former Officer;
    (3)   a claim for contribution or indem-
    nity if the Claim directly results
    from another Claim that is other-
    wise covered under this Policy; or
    (4)   a claim by any employee(s) of the
    Company described in IV.(D)(2) of
    the Policy.
    This case turns on the exclusion from coverage quoted above,
    commonly called the “insured versus insured” exclusion.
    Basically, if Visitalk sues its directors or officers itself, they
    have no liability coverage. Some covered claims, such as
    shareholders’ derivative actions, are excepted from the exclu-
    sion, even though they are at least in theory on behalf of the
    corporation. But the exception to the exclusion only applies
    if the claims are “instigated and continued totally independent
    of” the corporation.
    The exclusion was put at issue when, after two years in
    business, Visitalk filed a chapter 11 bankruptcy petition. Visi-
    talk, as “debtor and debtor in possession,” sued some of its
    recently discharged officers and directors for breaches of their
    fiduciary duties. The attorney representing Visitalk as debtor
    in possession told the insurers that officers and directors of
    Visitalk had looted the company. He asserted that they had
    charged grossly excessive amounts as expenses for inappro-
    priate things, such as “personal expenses, strippers, lavish
    3
    The policies define an Employment Practice Claim as “any Claim for
    or arising out of . . . any actual or alleged wrongful dismissal, discharge
    or termination (either actual or constructive) of employment, sexual
    harassment of an employee, unlawful employment discrimination, wrong-
    ful failure to hire or promote, or failure to grant tenure.”
    8572         BILTMORE ASSOCIATES v. TWIN CITY FIRE
    trips, and gifts” of no value to the company, and failed to
    institute appropriate financial controls to prevent this sort of
    thing. He claimed that the directors and officers purchased
    unnecessary software and usurped corporate opportunities. He
    also claimed that the directors had paid one officer more than
    a million dollars to cover up the inappropriate issuance of
    warrants to other officers to purchase Visitalk’s common
    stock. The insurers declined to cover the claims.
    This case arises out of a variation on what insurance litiga-
    tors often call the “confession of judgment, assignment of
    rights, covenant not to execute” technique. Sometimes when
    a liability insurer denies coverage and declines to defend, the
    injured party sues the insured tortfeasor, and they agree on a
    confession of judgment, assignment of rights, and covenant
    not to execute. That way the insured party obtains protection
    from having to pay anything, and the injured party steps into
    the insured’s shoes in order to sue the liability insurer. The
    injured party may be able to get more than the policy limits
    from the insurer, if he prevails on coverage, because damages
    for bad faith denial of coverage and punitive damages are in
    the nature of tort damages, not limited by the insurance con-
    tract.
    Visitalk filed a chapter 11 reorganization plan which
    assigned its claims against the directors and officers to a trust
    established for its creditors (the ‘Visitalk Creditors Trust’)
    and named Biltmore as trustee. Biltmore and four directors
    and officers against whom Visitalk had asserted claims then
    agreed to settle Visitalk’s claims for about $175 million. The
    four directors and officers assigned to the creditors’ trust their
    rights against the liability insurers. The complaint does not
    say whether the confession of judgment and assignment of
    rights was coupled with the typical covenant not to execute
    against the settling directors and officers personally. But the
    existence of such a covenant does not matter here. Basically,
    Visitalk sued its directors and officers for breach of their fidu-
    ciary duties, the directors and officers liability insurers
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                8573
    refused coverage under the insured versus insured exclusion,
    Visitalk assigned the claims to its creditors’ trust, and Bilt-
    more, as trustee, then settled with four directors and officers
    for a confession of judgment of $175 million and an assign-
    ment of whatever claims the directors and officers had against
    the insurers.
    Biltmore, as trustee for the creditors’ committee, then sued
    the insurance companies on the basis of these claims.4 The
    district court dismissed the case because the complaint failed
    to set forth sufficient facts to show that the named defendant,
    Twin City, had obligated itself as successor to Reliance to
    cover the Reliance policy period, and failed to allege suffi-
    cient facts to show that the underlying claims were made
    within the Twin City policy period. The district court also
    relied in part on a local rule governing motions practice. The
    district court awarded attorneys’ fees to the insurers and
    against Biltmore personally, under Arizona’s statute adopting
    the English rule for contract cases.5 Biltmore timely appeals
    both decisions.6
    We affirm the dismissal of the complaint, but on different
    grounds (also urged in district court and fully briefed here),
    that the insured versus insured exclusion applies. We do not
    decide whether the district court’s grounds for dismissal were
    correct. We remand the award of attorneys’ fees to clarify that
    Biltmore is not personally liable, because it was acting as rep-
    resentative of the trust and was not personally at fault.
    4
    There are multiple insurance companies involved in this case because
    several layers of coverage were issued by multiple carriers.
    5
    Ariz. Rev. Stat. Ann. § 12-341.01(A) (2003).
    6
    No. 06-16417 is the merits appeal, No. 07-16036 is the attorneys’ fees
    appeal.
    8574             BILTMORE ASSOCIATES v. TWIN CITY FIRE
    II.    The insured versus insured exclusion.
    In appeal number 06-16417, Biltmore appeals the dismissal
    of its complaint for failure to state a claim. We review the
    12(b)(6) dismissal de novo.7 We can affirm on any ground
    supported by the record.8 We conclude that insured versus
    insured exclusion in the relevant policies bars coverage for
    Biltmore’s claims, because a post-bankruptcy debtor in pos-
    session acts in the same capacity as the pre-bankruptcy debtor
    for the purpose of directors and officers liability insurance.
    There are two issues; (1) what the insured versus insured
    exclusion means, and (2) how bankruptcy law affects its
    application.
    A.     The meaning of the exclusion.
    As shareholder’s derivative suits and class actions against
    directors and officers became more common, people began to
    demand that companies indemnify them against the risks of
    liability if they were to serve as directors and officers. Corpo-
    rations accordingly bought liability insurance for their direc-
    tors and officers to induce qualified people to serve.9 Insured
    versus insured exclusions are boilerplate in these and other
    kinds of liability policies.10 Directors and officers liability pol-
    icies are colloquially called “D & O insurance.” The exclu-
    sion arose in D & O policies as a reaction to several lawsuits
    in the mid-1980s in which insured corporations sued their
    own directors to recoup operational losses caused by improvi-
    dent or unauthorized actions.11 Such lawsuits created prob-
    7
    Cholla Ready Mix, Inc. v. Civish, 
    382 F.3d 969
    , 973 (9th Cir. 2004).
    8
    Adams v. Johnson, 
    355 F.3d 1179
    , 1183 (9th Cir. 2004).
    9
    See generally Michael D. Sousa, Making Sense of the Bramble-Filled
    Thicket: The “Insured vs. Insured” Exclusion in the Bankruptcy Context,
    23 Emory Bankr. Dev. J. 365, 372-77 (2007).
    10
    Barry R. Ostrager & Thomas R. Newman, 2 Handbook on Insurance
    Coverage Disputes § 20.02[g], at 1384 (14th ed. 2008).
    11
    See, e.g., Nat’l Union Fire Ins. Co. v. Seafirst Corp., No. C85-396R,
    
    1986 WL 1174695
    , at *6 (W.D. Wash. Mar. 19, 1986) (“After carefully
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                 8575
    lems of moral hazard, collusion, and unintended expansion of
    coverage. The reasonable expectations of the parties were that
    they were protecting against claims by outsiders, not intra-
    company claims.
    [1] The exclusion at issue in this case provides “[t]he
    Insurer shall not be liable to make any payment for Loss in
    connection with any Claim made against the Directors and
    Officers . . . brought or maintained by or on behalf of an
    Insured in any capacity.” This is not the gobbledygook it
    sounds like to the uninitiated on an overly rapid reading.
    Insurance against shareholders derivative suits and employ-
    ment claims is essentially liability insurance. The trigger for
    liability insurance is a claim by someone not under the control
    of the insured himself. By contrast, people buy casualty insur-
    ance against the risks created by their own bad luck or care-
    lessness. Thus, one buys fire insurance and gets indemnified
    even for carelessly leaving a lit candle untended and burning
    down one’s own house. And one buys automobile compre-
    hensive and collision coverage to get indemnified for care-
    lessly damaging one’s own car.
    Though there is overlap, many of the risks that affect the
    price of liability insurance differ from the risks that affect
    casualty insurance, particularly moral hazard and collusion.
    For example, almost nobody intentionally induces someone
    else to collide with his car, but someone might have an inter-
    est in burning down his own house if he owed more on it than
    it was worth. Companies have traditionally purchased “fidel-
    ity bonds” to insure the company against employees’ dishones-
    ty.12 Thus if an employee was “bonded” and stole from the
    reviewing the language of the policy, the court concludes that the policy
    plainly and unambiguously covers direct actions by Seafirst itself against
    its own directors and officers. According to the policy terms, National
    Union must pay for loss suffered as a result of ‘any claim or claims’
    against the directors and officers.”).
    12
    David L. Bickelhaupt, General Insurance 748-50 (9th ed. 1974); Wil-
    liam R. Vance & Buist M. Anderson, Handbook on the Law of Insurance
    § 197 (3d ed. 1951).
    8576          BILTMORE ASSOCIATES v. TWIN CITY FIRE
    company, the insurance company that had issued the bond
    would have to indemnify the company for the loss.
    Because risks such as collusion and moral hazard are much
    greater for claims by one insured against another insured on
    the same policy than for claims by strangers, liability policies
    typically exclude them from coverage. Allowing such claims
    would turn liability insurance into casualty insurance, because
    the company would be able to collect from the insurance com-
    pany for its own mistakes, since it acts through its directors
    and officers. The exclusion protects of course against collu-
    sion, and also against the risk of selling liability insurance for
    what amounts to a fidelity bond. If the exclusion were
    ignored, then those companies who only want to pay for pro-
    tection against third party claims they cannot control would
    have to bear the additional financial burden of paying for
    claims over which companies have more control.
    [2] Biltmore does not (and could not) argue that the excep-
    tions to the insured versus insured exclusion apply. The claim
    is not by a fired director for wrongful termination or one of
    the other excepted employment practice claims, and the claim
    is not brought “by . . . a security holder,” as the exception to
    the exclusion for shareholders’ derivative actions requires.
    The only question before us on the language of the exclusion
    is whether the underlying suit was “brought or maintained on
    behalf of an Insured in any capacity.”
    [3] Appellant argues that this claim is on behalf of the cred-
    itors and brought by the creditors’ trustee, Biltmore, so it is
    not “brought or maintained on behalf of an Insured in any
    capacity.” We conclude that this argument is mistaken. First,
    the underlying lawsuit, for which coverage is sought, alleged
    that the directors and officers of Visitalk breached their statu-
    tory and fiduciary duties. A cause of action for mismanage-
    ment belongs to the corporation.13 Shareholders and creditors
    13
    Ross v. Bernhard, 
    396 U.S. 531
    , 538-39 (1970); Hidalgo v. McCauley,
    
    70 P.2d 443
    , 445-46 (Ariz. 1937); Realty Exch. Corp. v. Cadillac Land &
    Dev. Co., 
    475 P.2d 522
    , 545-46 (Ariz. Ct. App. 1970). See generally 18B
    Am. Jur. 2d Corporations § 1597.
    BILTMORE ASSOCIATES v. TWIN CITY FIRE               8577
    can bring a suit for mismanagement only derivatively, on
    behalf of the corporation. True, the directors and officers have
    coverage for derivative claims, but not for claims by Visitalk.
    Coverage is excluded if Visitalk sues them, and it did. The
    lawsuit was “instigated and continued” by Visitalk. That the
    creditors rather than the shareholders will get whatever money
    the insurer pays does not avoid the exclusion. Creditors get
    much, most, or even all of the money any business collects,
    as part of the business’s overhead, which is why a landlord is
    always happy to see diners in his tenant’s restaurant.
    [4] Second, the claim has to be made by an insured party
    for it to have any contractual basis in the insurance policies.
    The named insured and others insured are defined in all the
    policies here to be Visitalk, Inc., and its directors and officers,
    and no one else. None of the insurance companies issued any
    policies to Biltmore, or to Visitalk’s creditors. Sometimes a
    promisee buys insurance to protect against a potential debtor’s
    risk, as when a concert promoter buys life insurance on a star,
    but Visitalk’s creditors bought no insurance on Visitalk and
    its principals. The creditors have no independent contractual
    claim against the insurance companies, because they are not
    insureds.
    [5] Third, the claim for which coverage is sought was
    indeed “instigated and continued” by Visitalk, as a chapter 11
    “debtor and debtor in possession.” The First Amended Com-
    plaint says in paragraphs 22 and 24 that Visitalk filed a com-
    plaint in the underlying case against the four directors and
    officers, and then assigned its claims to the creditors’ trust
    with Biltmore as trustee. Biltmore sued the insurers as
    assignee of the directors’ and officers’ claims for failure to
    cover and its bad faith in so doing. An assignee of a claim
    against an insurance company can have no stronger claim
    than the assignor who assigned the claim.14 Biltmore has to
    14
    Bassidji v. Goe, 
    413 F.3d 928
    , 939 (9th Cir. 2005); Stephens v. Tex-
    tron, Inc., 
    619 P.2d 736
    , 739 (Ariz. 1980); Carpenter v. Superior Court,
    
    422 P.2d 129
    , 131 (Ariz. 1966).
    8578          BILTMORE ASSOCIATES v. TWIN CITY FIRE
    step into an insured’s shoes as assignee to have any claim
    against their insurers, since Biltmore is not an insured. And in
    those shoes, it is barred by the exclusion. Biltmore cannot
    jump into the insureds’ shoes to bring the lawsuit, out of their
    shoes to claim not to be suing as though it were the insureds,
    and then back into their shoes to get compensatory and puni-
    tive damages for the insurers’ failure to cover their liabilities.
    B.     Bankruptcy.
    The additional feature of this case is bankruptcy. Biltmore
    argues that Visitalk, the chapter 11 debtor in possession that
    brought the underlying suit, is not the same entity as Visitalk,
    the insured corporation. Several bankruptcy decisions around
    the country, including one in this circuit, treat a post-
    bankruptcy entity as different from the debtor before it went
    into chapter 11 for purposes of the insured versus insured exclu-
    sion.15 Several others hold that they are the same entity for
    15
    Unified W. Grocers, Inc. v. Twin City Fire Ins. Co., 
    457 F.3d 1106
    ,
    1116-17 (9th Cir. 2006) (bankruptcy trustee of subsidiary different entity
    than subsidiary itself); Alstrin v. St. Paul Mercury Ins. Co., 
    179 F. Supp. 2d
    376, 403-05 (D. Del. 2002) (Chapter 11 estate representative distinct
    entity from debtor); Grafenauer v. Mukamal (In re Laminate Kingdom,
    LLC), Nos. 07-10279, 07-01792, 
    2008 WL 704396
    , at *3-4 (Bankr. S.D.
    Fla. Mar. 13, 2008) (Chapter 7 trustee is distinct entity from debtor);
    Cohen v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. (In re County Seat
    Stores, Inc.), 
    280 B.R. 319
    , 324-26 (Bankr. S.D.N.Y. 2002) (trustee
    legally distinct entity from debtor, distinguishing trustee from debtor in
    possession); Gray v. Executive Risk Indem., Inc. (In re Molten Metal
    Tech., Inc.), 
    271 B.R. 711
    , 728-31 (Bankr. D. Mass. 2002) (Chapter 11
    trustee not same entity as debtor, distinguishing debtor in possession),
    aff’d, No. 02-10289, 
    2002 WL 923936
    (D. Mass. May 6, 2002), see also
    Narath v. Executive Risk Indem., Inc., No. 01-10122, 
    2002 WL 924231
    ,
    at *2 (D. Mass. Mar. 14, 2002) (same, also arising from Molten Metal’s
    insolvency); Rieser v. Baudendistel (In re Buckeye Countrymark, Inc.),
    
    251 B.R. 835
    , 840-41 (Bankr. S.D. Ohio 2000) (Chapter 7 trustee not the
    same entity as debtor); Rigby v. Underwriters at Lloyd’s, London, 
    907 So. 2d
    1187, 1188-89 (Fla. Dist. Ct. App. 2005) (Chapter 7 trustee, listed as
    insured, still different entity from debtor), review granted sub nom. Cer-
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                    8579
    this purpose.16 Few cases, and no circuit court decisions, deal
    with the specific situation of a chapter 11 debtor in possession.17
    tain Underwriters at Lloyd’s of London v. Rigby, 
    917 So. 2d 192
    (Fla.),
    review dismissed as improvidently granted, 
    934 So. 2d 1183
    (2006); Cirka
    v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., No. 20250, 
    2004 WL 1813283
    , at *7-9 (Del. Ch. 2004) (creditor’s committee not same entity or
    assignee of debtor in possession, which was specifically covered by the
    insured versus insured exclusion at issue).
    16
    Nat’l Union Fire Ins. Co. v. Olympia Holding Corp., 
    148 F.3d 1070
    (11th Cir. 1998) (unpublished table disposition) (affirming partial sum-
    mary judgment that exclusion bars coverage for a bankruptcy’s trustee
    claim against former directors and officers) (11th Circuit Rule 36-2 says
    that “[u]npublished opinions are not considered binding precedent, but
    they may be cited as persuasive authority.”), aff’g, inter alia, No. 94-2081,
    
    1996 WL 33415761
    , at *6-7 (N.D. Ga. June 4, 1996); Reliance Ins. Co.
    of Ill. v. Weis, 
    5 F.3d 532
    (8th Cir. 1993) (unpublished table disposition)
    (affirming “on the basis of the well-reasoned opinion of the district
    court.”), aff’g 
    148 B.R. 575
    , 581-83 (E.D. Mo. 1992) (bankruptcy plan
    agent is assignee of debtor’s claims, “no significant legal difference”
    between debtor and debtor’s bankruptcy estate); Federal Ins. Co. v. Suru-
    jon, No. 07-22819, 
    2008 WL 2949438
    , at *6 & n.5 (S.D. Fla. July 29,
    2008) (reorganized post-bankruptcy company same entity as pre-
    bankruptcy debtor); Stratton v. Nat’l Union Fire Ins. Co. of Pittsburgh,
    Pa., No. 03-12018, 
    2004 WL 1950337
    , at *4-6 (D. Mass. Sept. 3, 2004)
    (reorganized post-bankruptcy company successor entity of pre-bankruptcy
    debtor).
    17
    Compare Terry v. Federal Ins. Co. (In re R.J. Reynolds-Patrick
    County Mem’l Hosp., Inc.), 
    315 B.R. 674
    , 678-82 (W.D. Va. 2003) (litiga-
    tion trustee, assignee of debtor in possession, same entity as debtor, distin-
    guishing bankruptcy trustee) with HA 2003, Inc. v. FDIC (In re HA 2003,
    Inc.), 
    310 B.R. 710
    , 717-19 (Bankr. N.D. Ill. 2004) (Debtor in possession
    not same entity as pre-bankruptcy debtor under exception to insured ver-
    sus insured exclusion for claims “brought by or on behalf of a bankruptcy
    trustee, magistrate or any other person appointed by a bankruptcy court or
    judge, or authorized under applicable law to act on behalf of a debtor”)
    and Pintlar Corp. v. Fid. & Cas. Co. of N.Y. (In re Pintlar), 
    205 B.R. 945
    ,
    947-48 (Bankr. D. Idaho 1997) (litigation trustee, assignee of debtor in
    possession, not same entity as debtor under terms of trust precluding debt-
    or’s successor entities from receiving any benefit from the prosecution of
    claims), aff’d sub nom. Cigna Ins. Co. v. Gulf USA Corp., No. 97-250,
    
    1997 WL 1878757
    , at *3-5 (D. Idaho Sept. 11, 1997). See also Federal
    8580            BILTMORE ASSOCIATES v. TWIN CITY FIRE
    [6] We conclude that for purposes of the insured versus
    insured exclusion, the prefiling company and the company as
    debtor in possession in chapter 11 are the same entity. The
    bankruptcy code defines a Chapter 11 debtor in possession as
    the debtor.18 The debtor, in turn, is defined as the “person or
    municipality concerning which a case under this title has been
    commenced.”19 Bankruptcy cases can be filed only with
    respect to pre-bankruptcy persons.20 Thus the debtor in pos-
    session is the debtor, and the debtor is the person, Visitalk,
    that filed for bankruptcy. Applying these statutory provisions
    literally, Visitalk, the debtor in possession, is the same person
    for bankruptcy purposes as Visitalk, the pre-bankruptcy cor-
    poration. There is no good reason to interpret the language
    other than literally in this context.
    In NLRB v. Bildisco & Bildisco, the Supreme Court reached
    the same conclusion in the labor law context, stating “it is
    sensible to view the debtor-in-possession as the same ‘entity’
    which existed before the filing of the bankruptcy petition.”21
    While the Court divided on other points, it unanimously
    agreed that the ‘new entity’ theory should be rejected.22 Bilt-
    more argues that Bildisco did not treat the debtor-in-
    Ins. Co. v. D’Aniello, No. 05-305, 
    2006 WL 3386625
    , at *13 (W.D. Pa.
    Nov. 22, 2006) (debtor in possession not the same entity as debtor, claims
    brought originally brought by unsecured creditor’s committee by leave of
    the district court, then assigned to litigation trust on behalf of creditors, not
    debtor in possession).
    We overrule the bankruptcy and district court opinions in Pintlar Corp.
    v. Fid. & Cas. Co. of N.Y. (In re Pintlar), 
    205 B.R. 945
    (Bankr. D. Idaho
    1997), aff’d sub nom. Cigna Ins. Co. v. Gulf USA Corp., No. 97-250, 
    1997 WL 1878757
    (D. Idaho Sept. 11, 1997), for the reasons stated in this opin-
    ion.
    18
    11 U.S.C. § 1101(1) (2006).
    19
    11 U.S.C. § 101(13) (2006).
    20
    Cf. 1 U.S.C. § 1 (2006) (person includes corporate entities).
    21
    
    465 U.S. 513
    , 528 (1984).
    22
    
    Id. at 544
    (Brennan, J. concurring in part and dissenting in part).
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                   8581
    possession as the same entity as the debtor, because it permit-
    ted the debtor-in-possession to reject a labor agreement which
    the debtor could not. That argument confuses the right of a
    bankrupt to reject an executory contract with the question of
    whether it is the promisor under the contract. Bildisco
    explains that “[o]bviously, if the [debtor-in-possession] were
    a wholly ‘new entity,’ it would be unnecessary for the Bank-
    ruptcy Code to allow it to reject executory contracts, since it
    would not be bound by such contracts in the first place.’ ”23
    The converse applies to the case at bar. Two subsequent, simi-
    larly unanimous opinions of the Court treat a bankrupt entity
    as the same as the pre-bankruptcy entity.24
    Our own authorities speak variously in different contexts to
    whether a chapter 11 debtor in possession should be treated
    as a different entity for various purposes. Biltmore points to
    two 1993 cases in which we stated that the debtor and debtor-
    in-possession are “legally distinct entities,” Hillis Motors, Inc.
    v. Hawaii Automobile Dealers’ Ass’n25 and Bonner Mall Part-
    nership v. U.S. Bancorp Mortgage Co. (In re Bonner Mall
    Partnership).26 Hillis Motors does not involve a debtor in pos-
    session or insurance. It concerns application of the automatic
    stay provision to the involuntary dissolution of a corporation
    23
    
    Id. at 528.
      24
    O’Melveny & Myers v. FDIC, 
    512 U.S. 79
    , 86 (1994) (FDIC as a bank
    receiver under 12 U.S.C. § 1821 is treated as if it were pre-receivership
    bank — “The FDIC as receiver ‘steps into the shoes’ of the failed S&L”
    and “ ‘any defense good against the original party is good against the
    receiver.’ ”) (citations omitted); Commodity Futures Trading Commission
    v. Weintraub, 
    471 U.S. 343
    (1985) (Trustee, as bankrupt corporation’s
    management, has the power to waiver attorney-client privilege just like
    pre-bankruptcy corporation’s management).
    25
    
    997 F.2d 581
    , 585 n.6 (9th Cir. 1993).
    26
    
    2 F.3d 899
    , 915 (9th Cir. 1993) (“Bankruptcy law is very formalistic
    in that it treats the debtor, the debtor-in-possession, and old equity as
    legally distinct entities when in reality they may all be one and the same.”)
    (emphasis added), cert. granted, 
    510 U.S. 1039
    (1994), aff’d as moot, 
    513 U.S. 18
    .
    8582          BILTMORE ASSOCIATES v. TWIN CITY FIRE
    by a governmental entity.27 Bonner Mall addresses application
    of the “new value doctrine” to priorities between a bank and
    providers of new capital in a reorganization of a debtor in
    possession under chapter 11.28 Neither speaks to insurers’
    obligations or the effect of the insured versus insured exclu-
    sion in debtor in possession in chapter 11 bankruptcies. Nor
    do they speak to the insuperable problem appellant has in this
    case, that if Biltmore stands in Visitalk’s shoes, it has no cov-
    erage because of the insured versus insured exclusion.
    The more appropriate precedents are DiSalvo v. DiSalvo (In
    re DiSalvo)29 and Teerlink v. Lambert (In re Teerlink Ranch
    Ltd.),30 though they too involve different factual circum-
    stances. In DiSalvo v. DiSalvo, a debtor personally owed
    money to a creditor, but as debtor in possession sued the cred-
    itor for abuse of process and other torts.31 The debtor’s pur-
    pose was to dump his debt into the pot for unsecured
    creditors, but recover outside the bankruptcy for a debt flow-
    ing the other way, to himself. We held that “in the chapter 11
    context a debtor and debtor in possession are not to be treated
    as separate legal entities,” applying the Supreme Court’s anal-
    ysis in Bildisco, though we recognized that Bildisco was a
    labor law case and DiSalvo was not.32
    Similarly, in Teerlink v. Lambert, we treated the debtor in
    27
    Hillis 
    Motors, 997 F.2d at 585
    (“In this appeal, we must decide
    whether federal bankruptcy law prohibited the DCCA from involuntarily
    dissolving Hillis pursuant to state law in 1986.”); see also 
    id. at 592
    (“Bankruptcy does not grant debtors rights greater than those they would
    receive outside bankruptcy.”).
    28
    Bonner Mall 
    P’ship, 2 F.3d at 901
    (“This case requires us to decide
    whether the new value ‘exception’ to the absolute priority rule surives the
    enactment of the Bankruptcy Reform Act of 1978 . . . .”).
    29
    
    219 F.3d 1035
    (9th Cir. 2000).
    30
    
    886 F.2d 1233
    (9th Cir. 1989).
    31
    
    DiSalvo, 219 F.3d at 1037-39
    .
    32
    
    Id. at 1038
    (citing 
    Bildisco, 465 U.S. at 528
    ).
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                 8583
    possession as “still the same old debtor satisfying the same
    old debt.”33 This quotation was the holding of Teerlink, reject-
    ing the debtor in possession’s argument that “it was no longer
    a debtor paying its own debt, but a hypothetical judicial lien
    creditor paying a stranger’s debt.”34 That argument resembles
    Biltmore’s, that for purposes of the insured versus insured
    exclusion, Visitalk as debtor in possession is a different entity
    than it was before bankruptcy. As in Bildisco, DiSalvo, and
    Teerlink, Visitalk in chapter 11 and out of it “are not to be
    treated as separate entities”35 for purposes of what its directors
    and officers owe Visitalk.
    [7] It is certainly true that the interests differ once a debtor
    goes into bankruptcy. Prior to Visitalk’s bankruptcy, the
    underlying lawsuit belonged to Visitalk as a corporation.
    Once it filed its voluntary bankruptcy petition, ownership of
    the cause of action fell into the bankruptcy estate.36 Visitalk
    became the debtor in possession of the bankruptcy estate,
    empowered to act as a trustee and required to act as a fidu-
    ciary for its creditors and shareholders.37 The differences in
    the fiduciary responsibilities of Visitalk’s management on
    account of bankruptcy, however, do not make Visitalk a dif-
    ferent entity for purposes of the insured versus insured exclu-
    sion.38
    33
    
    Teerlink, 886 F.2d at 1236
    .
    34
    
    Id. at 1235.
       35
    
    DiSalvo, 219 F.3d at 1038
    ; see also 
    Bildisco, 465 U.S. at 528
    ; Teer-
    
    link, 886 F.2d at 1236
    .
    36
    11 U.S.C. § 541 (2006).
    37
    11 U.S.C. §§ 1107, 1104 (2006).
    38
    Before bankruptcy, the principals must exercise their business judg-
    ment to act in the best interest of the shareholders. See Ariz. Rev. Stat.
    Ann. § 10-830 (2004); see generally 3A Fletcher Cyc. Corp. § 1036. In
    bankruptcy, the principals must exercise their business judgment to act in
    the best interest of the bankruptcy estate. Bennett v. Williams, 
    892 F.2d 822
    , 824 (9th Cir. 1989); see generally 7 Collier’s on Bankruptcy
    ¶ 1108.07 (15th ed. 2008).
    8584         BILTMORE ASSOCIATES v. TWIN CITY FIRE
    Biltmore argues that Visitalk, as debtor in possession,
    brought the underlying suit as representative of the creditors
    of the bankruptcy estate, so the insured versus insured exclu-
    sion does not apply. This argument presupposes that a suit
    brought as representative of the creditors is brought on their
    behalf, conflating ‘for the benefit of’ and ‘on behalf of.’ Just
    because the “creditors could have asserted fiduciary duty
    claims outside the bankruptcy context similar to those pressed
    by the Trustee, . . . does not prove that the Trustee is asserting
    ‘creditors’ claims’ . . . . Rather, it is simply because state law
    often permits creditors to pursue derivative claims on an
    insolvent corporation’s behalf.”39 Even if Visitalk, as debtor
    in possession, is acting in the capacity of representative for
    the creditors, it is advancing their interests by bringing suit on
    behalf of the pre-bankruptcy corporation. The suit is for the
    benefit of the creditors, but on behalf of the pre-bankruptcy
    corporation.
    It may be (we do not know) that every penny recoverable
    from the liability insurers would go to the creditors of Visitalk
    and its principals. But that might happen even if there were
    no bankruptcy, and a debtor owed creditors every penny it
    could recover. In a sense, when any business obtains revenue,
    its success is on behalf of its employees and suppliers as well
    as (or more than) its owners, but that does not avoid the
    insured versus insured exclusion. The liability insurance that
    the corporation and its principals bought to protect against
    shareholders’ derivative suits cannot be turned into an avail-
    able pot for the corporation’s creditors by enforcing the insur-
    ers’ obligations while disregarding the parties’ agreement to
    limit those obligations to exclude insured versus insured
    claims.
    [8] Biltmore argues that this analysis creates windfall for
    the insurance companies, because creditors would have a cov-
    39
    Smith v. Arthur Andersen, LLP, 
    421 F.3d 989
    , 1006 (9th Cir. 2005)
    (emphasis added).
    BILTMORE ASSOCIATES v. TWIN CITY FIRE                  8585
    ered claim before the bankruptcy against the principals of an
    insolvent corporation, but not after. That is not quite right,
    because before bankruptcy, the creditor would first have to
    demand that the insolvent corporation bring the claim,40 and
    if the corporation did, then the insured versus insured exclu-
    sion would still bar recovery. Bankruptcy does not erect the
    bar to recovery, the insurance policy does. All bankruptcy did
    to the creditors was impose the automatic stay and require
    them to advance their claims within the bankruptcy proceed-
    ing;41 it did not change the insurance policies.
    [9] We therefore affirm the dismissal of the complaint. The
    alternative position would create a perverse incentive for the
    principals of a failing business to bet the dwindling treasury
    on a lawsuit against themselves and a coverage action against
    their insurers, bailing the company out with the money from
    the D & O policy if they win and giving themselves covenants
    not to execute if they lose. That is among the kinds of moral
    hazard that the insured versus insured exclusion is intended to
    avoid.
    40
    Ariz. Rev. Stat. Ann. § 10-742 (2004); see also Fed. R. Civ. P.
    23.1(a).
    41
    A creditor can demand that the debtor in possession bring an action
    on its behalf. If the debtor in possession refuses, the creditor “may appear
    and be heard” on the issue in the bankruptcy proceeding. 11 U.S.C.
    § 1109(b) (2006). After such a hearing, the court must allow the creditors’
    committee to sue independent of the debtor in possession if the failure to
    bring suit does not adequately protect the creditor’s interests or the chose
    in action is of inconsequential value to the estate. 11 U.S.C. §§ 362(d)(1),
    554(b) (2006). Compare Terry v. Federal Ins. Co. (In re R.J. Reynolds-
    Patrick County Mem’l Hosp., Inc.), 
    315 B.R. 674
    , 678-82 (W.D. Va.
    2003) (litigation trustee, assignee of debtor in possession, same entity as
    debtor) with Federal Ins. Co. v. D’Aniello, No. 05-305, 
    2006 WL 3386625
    , at *13 (W.D. Pa. Nov. 22, 2006) (litigation trustee, assignee of
    unsecured creditor’s committee that brought suit by leave of the district
    court, not same entity as debtor in possession).
    8586          BILTMORE ASSOCIATES v. TWIN CITY FIRE
    III.    Attorneys’ fees.
    In appeal number 07-16036, Biltmore contests the
    $88,565.59 attorneys’ fees award in favor of the insurers. The
    fees were awarded under the Arizona fee shifting statute for
    contract cases,42 not as a sanction.43 Biltmore does not chal-
    lenge whether the fees were properly awarded at all, nor does
    it challenge the amount. Its challenge goes to whether fees
    could properly be awarded against Biltmore personally, rather
    than in its representative capacity. The judgment says that it
    is against “Biltmore Associates, L.L.C., as Trustee of the
    Visitalk Creditors Trust,” but the judge denied Biltmore’s
    motion to bar execution against its own assets.
    Biltmore makes two arguments on appeal. First, relying on
    bankruptcy law, it contends that our decision in Metcalf v.
    Golden (In re Adbox, Inc.)44 barred the district court from
    properly imposing judgment against its personal assets
    because it acted solely in the representative capacity of a
    bankruptcy trustee. Second, relying on the general law of
    trusts, Bilmore posits that because it captioned its pleading
    “Biltmore Associates, L.L.C., as Trustee of the Visitalk Cred-
    itors Trust,” and because it was acting for the creditors’ trust,
    fees should have been awarded only against the trust. We deal
    with each of these arguments in turn.
    A.     Bankruptcy trustees.
    Biltmore’s bankruptcy law argument has no merit, because
    42
    Ariz. Rev. Stat. Ann. § 12-341.01(A) (2003) (“In any contested action
    arising out of a contract, express or implied, the court may award the suc-
    cessful party reasonable attorney fees.”).
    43
    Ariz. Rev. Stat. Ann. § 12-341.01(C) (2003) (“The court shall award
    reasonable attorney fees in any contested action upon clear and convincing
    evidence that the claim or defense constitutes harassment, is groundless
    and is not made in good faith.”).
    44
    
    488 F.3d 836
    (9th Cir. 2007).
    BILTMORE ASSOCIATES v. TWIN CITY FIRE           8587
    Biltmore is not a bankruptcy trustee. A bankruptcy proceed-
    ing may be crowded with trustees, perhaps the trustees under
    deeds of trust on real property seeking relief from the stay so
    that they can foreclose, trustees for minors and for inter vivos
    trusts trying to keep assets out of the bankruptcy estate, and
    trustees for decedents, but they are not all the same. Biltmore
    was not appointed as trustee of the bankruptcy estate. Visi-
    talk, the bankrupt, remained a debtor in possession.
    [10] The creditors’ committee hired Biltmore as its trustee.
    Under 11 U.S.C. § 1102, the United States Trustee appoints
    a committee of the creditors holding unsecured claims, to pro-
    vide access to information for unsecured creditors not on the
    committee and to solicit and receive comments from them.45
    The creditors committee can hire attorneys, accountants, and
    other agents to perform services for it.46 In this case, the credi-
    tors’ committee retained Biltmore Associates, L.L.C., as a
    trustee, with the approval of the bankruptcy court. The com-
    mittee provided that the trustee would “hold all, right, title
    and interest in and to the causes of action on behalf of the
    beneficiaries of the Creditors’ Trust,” and could “sue and be
    sued in a representative capacity for the trust.” This lawsuit
    took place outside the bankruptcy court, as an ordinary civil
    action for breach of contract between a trustee on behalf of a
    beneficiary against promissors, the insurance companies. No
    bankruptcy authority of which we are aware provides immu-
    nity to a trustee hired by the creditors’ committee, as opposed
    to the chapter 11 trustee appointed by the court. Metcalf v.
    Golden (In re Adbox, Inc.)47 and the other authorities cited by
    Biltmore only speak to chapter 11 trustees appointed by the
    court.
    45
    11 U.S.C. § 1102(a)(1), (b)(3) (2006).
    46
    11 U.S.C. § 1103(a) (2006).
    47
    
    488 F.3d 836
    (9th Cir. 2007).
    8588           BILTMORE ASSOCIATES v. TWIN CITY FIRE
    B.     Trustees generally.
    [11] Biltmore’s second argument, that the general law of
    trusts shields its personal assets from liabilities incurred while
    acting as a representative for the trust, is correct. Trustees
    used to be personally liable, albeit with indemnity rights, for
    obligations incurred on behalf of the trust.48 But this doctrine
    has changed. Over the last few decades, the law has become
    more protective of trustees.49 The Uniform Trust Code, in
    force in Arizona, provides that the trustee is personally liable
    only if he is personally at fault for the obligation.50 Otherwise,
    the trustee is liable only in his representative capacity.
    Haskett v. Villas at Desert Falls, Inc.51 speaks to this issue,
    albeit in California rather than Arizona. The California Court
    of Appeal applied a California statute (identical to Arizona’s)
    to a nearly identical set of facts. A trustee filed a contract
    claim against an individual and a corporation.52 The complaint
    was dismissed, with attorneys’ fees and costs awarded against
    48
    Restatement (Second) of Trusts §§ 261, 265 (1959); Richardson v.
    Cortner, 
    105 So. 2d 456
    , 456 (Miss. 1958) (“When a party brings . . . a
    suit in his name in such representative capacity (trustee in a chattel deed
    of trust), he is individually liable for costs, insofar as the opposite party
    and the officers of the court are concerned.”).
    49
    See Restatement (Second) of Trusts §§ 265 cmt. a, 271A cmt. a (1959)
    (both noting “the modern trend” limiting a trustee’s personal liability); see
    generally, e.g., George Gleason Bogart et al., The Law of Trusts and
    Trustees § 732 (describing the evolution from the “Orthodox Common
    Law Rule—No Direct Representative Liability” to the “Statutory Trend
    Toward Direct Representative Liability”).
    50
    Ariz. Rev. Stat. Ann. § 14-11010(B) (West Supp. 2008) (“A trustee is
    personally liable . . . for obligations arising from ownership or control of
    trust property . . . only if the trustee is personally at fault.”); Unif. Trust
    Code § 1010(b), 7C U.L.A. 227 (Supp. 2003) (same). While the revision
    to the Arizona Trust Code only became effective this year, it continues the
    previous limitation of liability found in Arizona Revised Statutes Anno-
    tated § 14-7306(B) (2005) (repealed 2009).
    51
    
    108 Cal. Rptr. 2d 888
    (Ct. App. 2001).
    52
    
    Id. at 892-93.
                   BILTMORE ASSOCIATES v. TWIN CITY FIRE                    8589
    the trustee.53 The California Court of Appeal determined that
    the “trustee cannot be held personally liable . . . unless the
    party seeking to impose such personal liability on the trustee
    demonstrates that the trustee intentionally or negligently acted
    or failed to act in a manner that established a personal fault.”54
    The court reached this conclusion based on California Probate
    Code § 18001, which contains the exact same language as
    Arizona Revised Statutes § 14-11010, “A trustee is personally
    liable for obligations arising from ownership or control of
    trust property only if the trustee is personally at fault.”55 The
    court explicitly rejected the argument that an “innocent third
    party creditor should not have to be concerned with the source
    of the fund that will be used to pay his claim.”56
    The District of Columbia Circuit and several state courts
    have reached similar conclusions. In Pete v. United Mine
    Workers of America Welfare and Retirement Fund of 1950,
    the District of Columbia Circuit said that the “[t]rustees are
    before the court in their fiduciary capacities and thus bear no
    personal liability for the shifted attorney’s fees.”57 The highest
    courts of Maine and Missouri as well as intermediate courts
    in New York, Oregon, and Florida have held likewise.58
    53
    
    Id. 54 Id.
    at 898 (emphasis in original).
    55
    
    Id. at 897
    (emphases in original).
    56
    
    Id. at 899.
       57
    
    517 F.2d 1275
    , 1279, 1292-93 (D.C. Cir. 1975) (en banc).
    58
    In re Estate of Ricci, 
    827 A.2d 817
    , 825-26 (Me. 2003) (clarifying that
    a personal representative of a deceased spouse is not personally liable for
    the plaintiff ’s attorney’s fees in a former spouse’s successful suit to
    enforce a support agreement); Jesser v. Mayfair Hotel, Inc., 
    360 S.W.2d 652
    , (Mo. 1962) (“The judgment should have run against the four surviv-
    ing trustees not in their individual or personal capacity but as trustees rep-
    resenting the voting trust estate since the allowance of attorneys’ fees and
    expenses was proper as a charge or expense of the trust estate.”) (emphasis
    added); Skolnick v. Goldberg, 
    737 N.Y.S.2d 601
    , 602 (N.Y. App. Div.
    2002) (“Since defendant’s decedent could only have brought and main-
    8590           BILTMORE ASSOCIATES v. TWIN CITY FIRE
    [12] Biltmore’s prosecution of the lawsuit was not tortious
    or otherwise unlawful. The costs award against Biltmore, act-
    ing as the creditors’ committee trustee, was an ordinary cost,
    imposed on account of the statutory fee shifting provision in
    contract cases.59 The district court did not impose the fees as
    a sanction or for misconduct or negligence.60 Thus, Biltmore
    is entitled not to be liable for the money personally. The lia-
    bility should, on remand, be imposed on Biltmore in its capac-
    ity as trustee of the Visitalk Creditors Trust.
    IV.    Conclusion
    In appeal number 06-16417, we AFFIRM dismissal of the
    complaint because the insured versus insured exclusion bars
    coverage for claims brought as the assignee of the debtor in
    possession. In appeal number 07-16036, we REMAND the
    award of attorneys’ fees for clarification that Biltmore is only
    liable in its capacity as representative of the trust. Costs in
    favor of appellees in appeal number 06-16417, and in favor
    of appellant in appeal number 07-16036.
    tained the complained of action in her representative capacity, and not in
    her individual capacity, she cannot be held personally liable for any costs
    connected with the action.”); McNeely v. Hiatt, 
    909 P.2d 191
    , 197 (Or. Ct.
    App. 1996) (“It is an entirely different matter affirmatively to order that
    the fees of another person be paid by someone who is, in effect, not a
    party to the lawsuit.”); cf. Taylor v. Richmond’s New Approach Ass’n, 
    351 So. 2d 1094
    , 1096 (Fla. Dist. Ct. App. 1977) (distinguishing Illinois land
    trusts from other trust forms, and holding that Illinois land trustees could
    be held personally liable for attorneys’ fees, in contrast to trustees of ordi-
    nary trusts).
    59
    Ariz. Rev. Stat. Ann. § 12-341.01(A) (2003).
    60
    Ariz. Rev. Stat. Ann. § 12-341.01(C) (2003).
    

Document Info

Docket Number: 06-16417

Filed Date: 7/10/2009

Precedential Status: Precedential

Modified Date: 10/14/2015

Authorities (28)

1993-1-trade-cases-p-70285-29-collier-bankrcas2d-470-bankr-l-rep-p , 997 F.2d 581 ( 1993 )

cholla-ready-mix-inc-v-william-civish-blm-safford-arizona-field-office , 382 F.3d 969 ( 2004 )

Pintlar Corp. v. Fidelity & Casualty Co. of New York (In Re ... , 1997 Bankr. LEXIS 198 ( 1997 )

O'Melveny & Myers v. Federal Deposit Insurance , 114 S. Ct. 2048 ( 1994 )

Commodity Futures Trading Commission v. Weintraub , 105 S. Ct. 1986 ( 1985 )

National Labor Relations Board v. Bildisco & Bildisco , 104 S. Ct. 1188 ( 1984 )

HA 2003, Inc. v. Federal Insurance (In Re HA 2003, Inc.) , 2004 Bankr. LEXIS 799 ( 2004 )

Rieser v. Baudendistel (In Re Buckeye Countrymark, Inc.) , 44 Collier Bankr. Cas. 2d 1107 ( 2000 )

In Re Salvatore W. Disalvo, Debtor. Jodi Disalvo, Appellant-... , 219 F.3d 1035 ( 2000 )

In Re Bonner Mall Partnership, Debtor. Bonner Mall ... , 2 F.3d 899 ( 1993 )

Haskett v. VILLAS AT DESERT FALLS , 90 Cal. App. 4th 864 ( 2001 )

stephen-pete-on-behalf-of-himself-and-all-others-similarly-situated-louis , 517 F.2d 1275 ( 1975 )

charles-adams-josephine-sotro-daniel-abelein-susan-abelein-william-e-allen , 355 F.3d 1179 ( 2004 )

Gray v. Executive Risk Indemnity, Inc. (In Re Molten Metal ... , 2002 Bankr. LEXIS 112 ( 2002 )

Cohen v. National Union Fire Insurance (In Re County Seat ... , 2002 Bankr. LEXIS 716 ( 2002 )

No. 88-6296 , 892 F.2d 822 ( 1989 )

in-re-adbox-inc-debtor-donald-i-metcalf-an-individual-janet-m , 488 F.3d 836 ( 2007 )

Realty Exchange Corp. v. Cadillac Land & Development Co. , 13 Ariz. App. 232 ( 1970 )

In Re Teerlink Ranch Ltd., a California Limited Partnership,... , 886 F.2d 1233 ( 1989 )

Rigby v. Underwriters at Lloyd's, London , 2005 Fla. App. LEXIS 7909 ( 2005 )

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