Daryl Gregory v. Nationwide Mutual Ins Co

FILED
NOT FOR PUBLICATION JUN 02 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DARYL GREGORY; SHIRLEY No. 13-15161
GREGORY,
D.C. No. 2:10-cv-01872-KJM-
Plaintiffs - Appellants, EFB
v.
MEMORANDUM*
NATIONWIDE MUTUAL
INSURANCE COMPANY; ALLIED
PROPERTY & CASUALTY
INSURANCE COMPANY,
Defendants - Appellees.
Appeal from the United States District Court
for the Eastern District of California
Kimberly J. Mueller, District Judge, Presiding
Submitted May 13, 2015**
San Francisco, California
Before: KOZINSKI, PAEZ and CLIFTON, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
page 2
1. The policy excludes coverage for loss from “[n]esting or infestation, or
discharge or release of waste products or secretions by birds, vermin, rodents,
insects or domestic animals.” Mites are the paradigmatic example of “vermin.”
See Webster’s Third New International Dictionary 2544 (2002) (defining “vermin”
as “small animals (as lice, bedbugs, mice) that tend to occur in great numbers, are
difficult to control, and are offensive as well as injurious”); see also Merriam-
Webster’s Collegiate Dictionary 1390 (11th ed. 2005) (“small common harmful or
objectionable animals (as lice or fleas) that are difficult to control”); XIX The
Oxford English Dictionary 547 (2d ed. 1989) (“creeping or wingless insects (and
other minute animals) of a loathsome or offensive appearance or character, esp.
those which infest or are parasitic on living beings and plants”). Nothing in the
policy suggests we should depart from the “ordinary sense” of the term that we
ascertain from its dictionary definition. See Scott v. Continental Ins. Co., 51 Cal.
Rptr. 2d 566, 569–70 (Ct. App. 1996). Moreover, considering the context of the
“vermin” exclusion—a broad exclusion of loss caused by the “[n]esting or
infestation” of several types of animals including “insects”—plaintiffs could not
have reasonably construed the policy to insure against mite damage. See Blasiar,
Inc. v. Fireman’s Fund Ins. Co., 90 Cal. Rptr. 2d 374, 379 (Ct. App. 1999).
page 3
Plaintiffs argue that “the term ‘vermin’ does not form a proper basis for a
policy exclusion” because it’s “legally ambiguous.” They rely on out-of-state
decisions which found that the term “vermin” was ambiguous and resolved the
ambiguity in favor of the insured. See Sincoff v. Liberty Mut. Fire Ins. Co., 183
N.E.2d 899, 901–02 (N.Y. 1962) (carpet beetles); Jones v. Am. Econ. Ins. Co., 672
S.W.2d 879, 880–81 (Tex. App. 1984) (squirrels). But, even if the “vermin”
exclusion may be ambiguous as to whether it applies to certain animals, it isn’t
ambiguous “in the context of this policy and the circumstances of this case.”
E.M.M.I. Inc. v. Zurich Am. Ins. Co., 84 P.3d 385, 389 (Cal. 2004); see also
Blasiar, 90 Cal. Rptr. 2d at 378–79. Because the only damage claimed by plaintiffs
is excluded, their breach of contract claim fails.
2. Plaintiffs also claim that defendants breached the implied covenant of
good faith and fair dealing because they (1) didn’t conduct any investigation of the
alleged infestation and (2) denied coverage based on fungus or decay without
investigating whether any fungus or decay occurred. But damage from mites is
excluded from coverage, and plaintiffs have never claimed that any damage from
fungus occurred. Because plaintiffs can’t show “that benefits were due under the
policy,” their bad faith claim fails. Benavides v. State Farm Gen. Ins. Co., 39 Cal.
page 4
Rptr. 3d 650, 655–56 (Ct. App. 2006); see also Love v. Fire Ins. Exch., 271 Cal.
Rptr. 246, 255–56 (Ct. App. 1990).
3. In the district court, plaintiffs argued that summary judgment was
inappropriate because defendants failed to comply with their discovery obligations.
The district court rejected this argument on the ground that plaintiffs did not
“describe what facts [they] hope[d] to elicit” from additional discovery. Because
plaintiffs don’t “specifically and distinctly argue[]” this point on appeal, any claim
of error is waived. See Miller v. Fairchild Indus., Inc., 797 F.2d 727, 738 (9th Cir.
1986).
4. Defendants’ motion to strike portions of plaintiffs’ excerpts of record is
denied as moot.
AFFIRMED.