Chartis Property Casualty Co v. Robert Alpert

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 3 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHARTIS PROPERTY CASUALTY No. 13-16864
COMPANY, a Pennsylvania company,
D.C. No. 2:11-cv-02067-SMM
Plaintiff-counter-defendant -
Appellee,
MEMORANDUM*
v.
ROBERT ALPERT, Husband; HILLARY
ALPERT, Wife,
Defendants-counter-claimants -
Appellants.
Appeal from the United States District Court
for the District of Arizona
Stephen M. McNamee, Senior District Judge, Presiding
Argued and Submitted November 19, 2015
San Francisco, California
Before: MELLOY,** IKUTA, and HURWITZ, Circuit Judges.
After he was sued by Eye Level Holdings, LLC (“ELH”), in Arizona state
court, Robert Alpert tendered the defense of the action to Chartis Property Casualty
*
This disposition is not appropriate for publication and is not precedent except
as provided by 9th Cir. R. 36-3.
**
The Honorable Michael J. Melloy, Senior Circuit Judge for the U.S. Court of
Appeals for the Eighth Circuit, sitting by designation.
Company (“Chartis”) under his homeowner’s and excess liability insurance policies.
Chartis denied coverage and Alpert settled the suit. Chartis then filed this action in
the District of Arizona, seeking a declaration that it had no duty to indemnify Alpert
for the settlement. The district court granted summary judgment to Chartis. We
have jurisdiction over Alpert’s appeal under 28 U.S.C. § 1291, and affirm in part
and dismiss in part.
1. The Chartis homeowner’s policy excludes from coverage “[p]ersonal
injury or property damage arising out of an insured person’s business property or
business pursuits,” and the excess liability policy contains a virtually identical
exclusion. “The exclusion of business liability, particularly in personal liability
policies, removes coverage which is not essential to the purchasers of the policy and
which would normally require specialized underwriting and rating, and thus help
keep premium rates at a reasonable level.” Fimbres v. Fireman’s Fund Ins. Co.,
708 P.2d 756, 757-58 (Ariz. Ct. App. 1985). This is because “[b]usiness activities
present additional risks over and beyond the ordinary and usual hazards to be found
in the operation and maintenance of a home.” Kepner v. W. Fire Ins. Co., 509 P.2d
222, 223 (Ariz. 1973).
2. Under Arizona law, these provisions exclude from coverage any liability
“originating from, having its origin in, growing out of, or flowing from, or in short,
having incident or connection with” the insured’s business pursuits. Fimbres, 708
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P.2d at 757-58 (internal quotation marks omitted). Alpert claims that the
communications for which the state court complaint sought to impose liability were
“whistleblower” statements, not made to further his own businesses. But the
district court correctly found that any liability for these statements, which sought to
correct communications Alpert made while a consultant for ELH, had their origin in
and were connected both with that prior employment, and with controversies arising
out of Alpert’s subsequent operation of businesses for which he hired former ELH
personnel.
3. Because the business pursuits exclusions applied, Chartis had no duty to
defend the state court litigation. N. Ins. Co. of N.Y. v. Morgan, 918 P.2d 1051,
1053-55 (Ariz. Ct. App. 1995) (holding insurer has no duty to defend if claim is
within a policy exclusion). And, because Chartis did not breach its duty to defend,
it also did not breach its duty to indemnify Alpert for the funds used to settle the
state court case. United Servs. Auto. Ass’n v. Morris, 741 P.2d 246, 250 (Ariz.
1987); Lennar Corp. v. Auto-Owners Ins. Co., 151 P.3d 538, 544 (Ariz. Ct. App.
2007).
4. Because Chartis did not unreasonably fail to defend or indemnify, Alpert’s
bad faith claim necessarily fails. Nardelli v. Metro. Grp. Prop. & Cas. Ins. Co., 277
P.3d 789, 794-95 (Ariz. Ct. App. 2012).
5. Because the district court denied Chartis’ attorneys’ fee request without
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prejudice to renewal after disposition of this appeal, we lack jurisdiction to review
that order under 28 U.S.C § 1291. See Webb v. Ada Cty., 195 F.3d 524, 526 (9th
Cir. 1999) (holding that the court did not have jurisdiction over the one remaining
attorney’s fees issue the magistrate judge did not address); 15B Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure § 3916 (“Final disposition of
the merits is appealable notwithstanding failure to resolve demands for attorney fees,
and separate appeal must be taken upon conclusion of the attorney fee dispute.”).
6. In the exercise of our discretion, we decline to award Chartis its attorney
fees on appeal pursuant to Arizona Revised Statutes § 12-341.01(A). Assoc. Indem.
Corp. v. Warner, 694 P.2d 1181, 1184 (Ariz. 1985) (holding that “the statutory
language is permissible,” and a court is not required to “grant attorney’s fees to the
prevailing party in all contested contract actions”) (alteration and internal quotation
marks omitted).
AFFIRMED IN PART, DISMISSED IN PART.
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