Alaska Interstate Construction, LLC v. Crum & Forster Specialty Insurance Co.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 22 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ALASKA INTERSTATE No. 15-35973
CONSTRUCTION, LLC,
D.C. No. 3:14-cv-00126-RRB
Plaintiff-Appellant,
v. MEMORANDUM*
CRUM & FORSTER SPECIALTY
INSURANCE COMPANY, INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Alaska
Ralph R. Beistline, District Judge, Presiding
Argued and Submitted August 15, 2017
Anchorage, Alaska
Before: GRABER, CLIFTON, and M. SMITH, Circuit Judges.
Alaska Interstate Construction, LLC (AIC) brought this action against its
insurer, Crum & Forster Specialty Insurance Company, Inc. (C&F), after C&F
denied AIC coverage for a claim it brought under its professional errors and
omissions (E&O) liability policy. The district court granted summary judgment
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
for C&F, and AIC appeals. We affirm the district court.
C&F issued AIC an initial policy with a policy period of December 1, 2011,
to May 1, 2013, and then a renewal policy with a policy period of May 1, 2013, to
May 1, 2014. Both were “claims-made” policies; they limited E&O coverage to
claims made and reported during the “policy period,” which was defined as “the
period shown in the Declarations.” AIC concedes that a “claim,” within the
meaning of the policy, was made against it by VC Sellers Reserve, LLC on
January 10, 2013, during the initial policy period. AIC further concedes that it did
not report the claim until June 19, 2013, during the renewal policy period. The
district court held that C&F was entitled to summary judgment because the claim
was not made against AIC and reported to C&F during the same policy period, as
the policies required.
Following Alaska law, we construe the policies “in such a way as to honor a
lay insured’s reasonable expectations [of coverage].” State Farm Mut. Auto. Ins.
Co. v. Dowdy, 192 P.3d 994, 998 (Alaska 2008). “Ambiguities in . . . insurance
policies are to be construed most favorably to an insured, but ambiguities only
exist when there are two or more reasonable interpretations of particular policy
language.” Id.AIC argues that the definition of “policy period” as “the period shown in the
Declarations” does not narrow “Declarations” to those in one specific policy, and
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thus “policy period” can reasonably be interpreted as encompassing both the initial
and renewal policy periods (i.e., December 1, 2011, to May 1, 2014). Under this
interpretation, AIC would have made and reported the claim within the single,
continuous policy period.
AIC’s proposed interpretation of “policy period” is not reasonable.
According to the plain language of the policies, a claim must be made and reported
within a single policy period, as stated in the Declarations for a given policy. The
parties agree that the claim was made against AIC during the initial policy period
and reported to C&F about six months later, during the renewal policy period. An
insured cannot reasonably expect coverage under such circumstances.
AIC’s citations to distinguishable, non-binding cases are unavailing. See,
e.g., Cast Steel Prods., Inc. v. Admiral Ins. Co., 348 F.3d 1298 (11th Cir. 2003);
Helberg v. Nat’l Union Fire Ins. Co., 657 N.E.2d 832 (Ohio Ct. App. 1995) (per
curiam). While it appears that Alaska has not addressed this issue, “most courts
that have confronted [this issue] have concluded that a renewal [of a claims-made
policy] does not extend the reporting period for claims made during the earlier
policy period.” Checkrite Ltd., Inc. v. Ill. Nat’l Ins. Co., 95 F. Supp. 2d 180, 194
(S.D.N.Y. 2000). AIC’s cited line of cases represents a minority view that has
been criticized. See, e.g, GS2 Eng’g & Envtl. Consultants, Inc. v. Zurich Am. Ins.
Co., 956 F. Supp. 2d 686, 693 n.11 (D.S.C. 2013) (finding Cast Steel
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“unpersuasive as it appears to have followed Helberg based on a generalized
notion of fairness, rather than based on analysis of the language in the policy
before the court”). We predict that Alaska would follow the majority position and
hold that, unless policy language provides otherwise, renewals of claims-made
policies generally do not extend claims reporting periods.
AIC should not be granted an extended reporting period (ERP) after the
conclusion of the initial policy period. The policy provided an automatic 90-day
ERP for an insured when the policy “is canceled or not renewed by [C&F] for any
reason except non-payment of premium.” AIC argues that if the policies are
viewed separately for purposes of determining the “policy period,” then a policy
must be viewed as effectively canceled when its policy period ends, making the
automatic ERP applicable. However, the plain language of the policy states that
cancellation and non-renewal are the events that trigger the ERP. Thus, because
AIC renewed its policy, the ERP did not apply.
AFFIRMED.
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