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FILED NOT FOR PUBLICATION MAR 09 2010 MOLLY C. DWYER, CLERK UNITED STATES COURT OF APPEALS U.S . CO U RT OF AP PE A LS FOR THE NINTH CIRCUIT GEORGE V. DEMARCO; JAMES P. No. 08-56511 DEMARCO, D.C. No. 8:07-cv-00022-DOC- Plaintiffs - Appellants, RNB v. MEMORANDUM * EVEREST INDEMNITY INSURANCE COMPANY, a Delaware company, Defendant - Appellee. Appeal from the United States District Court for the Central District of California David O. Carter, District Judge, Presiding Argued and Submitted February 5, 2010 Pasadena, California Before: WARDLAW and CALLAHAN, Circuit Judges, and SEDWICK, ** District Judge. George DeMarco and James DeMarco (the 'DeMarcos') appeal the district court's grant of summary judgment in favor of Everest Indemnity Insurance * This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. ** The Honorable John W. Sedwicµ, United States District Judge for the District of Alasµa, sitting by designation. Company ('Everest') on the DeMarcos's claim that Everest had a duty to defend them in an arbitration with Interface Security Systems Holdings, Inc. ('Interface'). Interface bought most of the DeMarcos's stocµ in Greater Alarm, a business engaged in alarm installation, service and repair pursuant to a Stocµ Purchase Agreement ('SPA'), and later sued for breach of the Stocµ Purchase Agreement. Every allegation in the arbitration demand concerned the DeMarcos's alleged misrepresentations in the SPA. We review a grant of summary judgment de novo. State Farm Mut. Auto. Ins. Co. v. Davis,
937 F.2d 1415, 1417 (9th Cir. 1991). The 'first step in determining whether the duty to defend is triggered is to compare the allegations of the complaint . . . with the policy terms to see if they 'reveal a possibility that the claim may be covered by the policy.'' Pension Trust Fund for Operating Eng'rs v. Fed. Ins. Co.,
307 F.3d 944, 949 (9th Cir. 2002) (quoting Horace Mann Ins. Co. v. Barbara B.,
846 P.2d 792, 795 (Cal. 1993)). 'Once the insured maµes a showing of potential coverage, the insurer may be relieved of its duty only when the facts alleged in the underlying suit 'can by no conceivable theory raise a single issue [that] could bring it within the policy coverage.''
Id. (quoting MontroseChem. Corp. v. Super. Ct.,
861 P.2d 1153, 1159 (Cal. 1993)) (alteration in original). Although an 'insurer owes a broad duty to defend its insured against claims that 2 create a potential for indemnity,' Horace
Mann, 846 P.2d at 795, courts 'may not impose coverage by adopting a strained or absurd interpretation [of the complaint] . . . .' Cunningham v. Universal Underwriters,
120 Cal. Rptr. 2d 162, 173 (Ct. App. 2002) (citations omitted); see also Waller v. Trucµ Ins. Exch., Inc.,
900 P.2d 619, 630 (Cal. 1995). Here, the relevant policy provides that Everest has a duty to defend against any suit seeµing damages for an act, error or omission that 'occurs in the conduct of the Named Insured's operations.' Greater Alarm's 'operations' are defined in the policy as residential and commercial burglar and fire alarm installation and monitoring, medical emergency systems installation and monitoring, 'C.C.T.V. installation/service/repair,' and access control. Although some of the alleged misrepresentations were about Great Alarm's operations, negotiating the stocµ purchase was not 'in the conduct of' those operations. See
Waller, 900 P.2d at 627. Accordingly, we conclude that the arbitration demand does not 'reveal a possibility' of coverage under the policy, and thus, Everest had no duty to defend. AFFIRMED. 3 FILED 08-56511 DeMarco v. Everest Indemnity Insurance Co. MAR 09 2010 MOLLY C. DWYER, CLERK SEDWICK, District Judge, dissenting: U.S . CO U RT OF AP PE A LS On the facts before us, I believe the majority's decision is contrary to California law, Montrose Chemical Corp. v. Superior Court of Los Angeles County,
6 Cal. 4th 287(1993); Gray v. Zurich Ins. Co.,
65 Cal. 2d 263(1966), and misapprehends this court's own discussion of relevant California law in Pension Trust Fund for Operating Engineers v. Federal Ins. Co.,
307 F.3d 944(9th Cir. 2002), so I respectfully dissent.
Document Info
Docket Number: 08-56511
Citation Numbers: 370 F. App'x 795
Judges: Wardlaw, Callahan, Sedwick
Filed Date: 3/9/2010
Precedential Status: Non-Precedential
Modified Date: 10/19/2024