Arrow Electronics, Inc. v. Aetna Casualty and Surety Co. ( 2019 )

NOT FOR PUBLICATION
FILED
UNITED STATES COURT OF APPEALS
AUG 13 2019
FOR THE NINTH CIRCUIT MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
ARROW ELECTRONICS, INC., a New York No. 18-55810
Corporation,
D.C. No.
Plaintiff-counter- 2:17-cv-05247-JFW-JEM
defendant-Appellant,
v. MEMORANDUM*
LIBERTY MUTUAL INSURANCE
COMPANY, a Massachusetts Corporation,
Defendant-Appellee,
TRAVELERS CASUALTY AND SURETY
COMPANY, FKA Aetna Casualty and Surety
Company, AKA St. Paul Travelers,
Defendant-counter-claimant-
Appellee.
Appeal from the United States District Court
for the Central District of California
John F. Walter, District Judge, Presiding
Argued and Submitted June 6, 2019
Portland, Oregon
Before: MURGUIA and HURWITZ, Circuit Judges, and GAITAN,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Fernando J. Gaitan, Jr., United States District Judge
for the Western District of Missouri, sitting by designation.
This is an insurance-coverage dispute arising from environmental
contamination at Arrow Electronics, Inc.’s (“Arrow”) research facility located in
Huntsville, Alabama (the “Huntsville Facility”). After determining that California
substantive law applied, the district court granted summary judgment in favor of
the insurers, Travelers Casualty and Surety Company and Liberty Mutual
Insurance Company. Arrow appeals, arguing that the district court should have
applied Alabama law.
We have jurisdiction under 28 U.S.C. § 1291, and we review the district
court’s grant of summary judgment de novo, see Cassirer v. Thyssen-Bornemisza
Collection Found., 862 F.3d 951, 959 (9th Cir. 2017). We reverse and remand with
instructions to apply Alabama law.1
To determine which state’s substantive law applies, we look to California
choice-of-law rules. See Narayan v. EGL, Inc., 616 F.3d 895, 898 (9th Cir. 2010).
Under California law, a “contract is to be interpreted according to the law and
usage of the place where it is to be performed; or, if it does not indicate a place of
performance, according to the law and usage of the place where it is made.” Cal.
Civ. Code § 1646. “A contract indicates a place of performance within the meaning
of section 1646 if the contract expressly specifies a place of performance or if the
intended place of performance can be gleaned from the nature of the contract and
1
We deny Arrow’s motion for judicial notice, Dkt. No. 29, because the
submitted documents are unnecessary to deciding this appeal.
2
its surrounding circumstances.” Frontier Oil Corp. v. RLI Ins. Co., 153 Cal. App.
4th 1436, 1443 (2007) (internal quotation marks omitted and alteration
incorporated). The intended place of performance for a commercial liability
insurance policy covering “operations at one or more fixed locations” is generally
“the jurisdiction where the operations are located” because this is where the insurer
and insured expect a third-party to file a complaint against the insured. Id. at 1461.
This case begins and ends with Frontier Oil. See Stoner v. N.Y. Life Ins. Co.,
311 U.S. 464, 467 (1940) (“[I]n cases where jurisdiction rests on diversity of
citizenship, federal courts . . . must follow the decisions of intermediate state courts
in the absence of convincing evidence that the highest court of the state would
decide differently.”). Each of Arrow’s primary insurance policies explicitly
mentions the Huntsville Facility or Alabama, and each of the excess policies is
clearly drafted with reference to the primary policies. Thus, there is “little doubt”
that “the understanding of the parties at the time they entered into the insurance
contract[s]” was that Alabama law would apply to claims arising from the
Huntsville Facility. Frontier Oil, 153 Cal. App. 4th at 1461. Accordingly, Alabama
was the intended place of performance within the meaning of California Civil
Code § 1646 for purposes of this case.
REVERSED and REMANDED for further proceedings consistent with this
decision.
3