George Demarco v. Everest Indemnity Insurance Co , 370 F. App'x 795 ( 2010 )


Menu:
  •                                                                            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    NOT FOR PUBLICATION                              MAR 09 2010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 Montrose
    Chem.
    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.