Century Surety Company v. David Blackburn

FILED
NOT FOR PUBLICATION AUG 22 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CENTURY SURETY COMPANY, No. 11-56694
an Ohio corporation,
D.C. No. 3:05-cv-01548-L-BGS
Plaintiff-counter-
defendant - Appellee,
MEMORANDUM*
v.
350 W.A., LLC, a California limited
liability company,
Defendant-counter-
claimant - Appellant,
DAVID A. BLACKBURN,
Counter-claimant -
Appellant,
and
JACQUELINE HELLEIS, individually
and doing business as Flagship Research,
Defendant.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Appeal from the United States District Court
for the Southern District of California
M. James Lorenz, Senior District Judge, Presiding
Argued and Submitted August 9, 2013
Pasadena, California
Before: TALLMAN, CLIFTON, and CALLAHAN, Circuit Judges.
Appellants David Blackburn and 350 W.A., LLC, appeal the district court’s
grant of summary judgment. We affirm.
An insurance policy is properly rescinded when the insured makes material
misrepresentations when applying for insurance. See Cal. Ins. Code §§ 330, 331
(West 2005). Appellants made misrepresentations when applying for insurance
with Century by stating on their application form that they did not contemplate any
demolition exposure or structural additions when, in fact, they did. Contrary to
appellants’ argument, to “contemplate” means to consider the possibility of action;
it does not require firm and final decisions.
Appellants’ misrepresentations were material. Misrepresentations are
material when the insurer would have evaluated the risk to be insured differently,
such as by denying the policy or charging different premiums, if the true facts had
been known. See Old Line Life Ins. Co. v. Superior Court, 229 Cal. App. 3d 1600,
1606 (1991). Century produced undisputed evidence demonstrating that it would
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have denied the policy, issued a different policy, or charged different premiums if
it had known the truth about the planned construction. Therefore, the district court
properly concluded that the insurance contract was rescinded.
As the policy has been rescinded, appellants’ counterclaims fail as a matter
of law.
AFFIRMED.
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