Summary
holding that Partridge did not apply because "[t]he measure of damages for each and every claim [was] loss based upon the [excluded instrumentality]."
Summary of this case from Evanston Ins. Co. v. Atain Specialty Ins. Co.Opinion
No. 10-55060.
Argued and Submitted June 9, 2011 Pasadena, California.
July 20, 2011.
Appeal from the United States District Court for the Central District of California Cormac J. Carney, District Judge, Presiding D.C. No. 8:07-cv-01095-CJC-RNB.
This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.
We affirm the district court's order granting summary judgment in favor of the Appellee/Insurer, Illinois Union Insurance Company.
The professional liability insurance policy provides, in relevant part, the following exclusion:
The Insurer shall not be liable for Loss on account of any Claim made against any Insured:
. . . .
W. Based upon, arising out of, or attributable to the sale, attempted sale, or servicing of:
1. Commodities, commodity future contracts, any type of option contract or derivative.
The policy clearly excluded losses arising out of investments in derivatives. The collateralized mortgage bonds in Appellant's portfolio were derivatives.
The district court held that collateralized mortgage bonds fell within the definition of derivatives. Appellant did not appeal that issue.
Appellant argues that part of her damage arises out of conduct that is separate and apart from the sale of derivatives. She contends that the Insured, Brookstreet Securities Corporation, breached its fiduciary duty, committed fraud, made misrepresentations, omitted material facts, acted negligently, and violated state and federal securities laws before buying derivatives. Appellant argues the insurance policy covers this distinct conduct under a theory of concurrent causation or efficient proximate cause analysis. See, e.g., State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123, 129-32 (Cal. 1973).
We are not persuaded by this argument. The exclusion at issue in this case applies irrespective of the legal theory of recovery asserted against the Insured. See Century Transit Sys., Inc. v. Am. Empire Surplus Lines Ins. Co., 49 Cal. Rptr. 2d 567, 571 (Ct. App. 1996). The plain terms of the policy exclude coverage for any loss attributable to an investment in derivatives. The fact that the Insured allegedly made intentional misrepresentations of fact or breached a fiduciary duty sets up the purchase of collateralized mortgage bonds. The measure of damages for each and every claim is loss based upon the purchase and sale of derivatives; therefore, these claims directly arise from a category of claims arising from a loss specifically excluded from coverage. See Cont'l Cas. Co. v. City of Richmond, 763 F.2d 1076, 1081-82 (9th Cir. 1985); Century Transit, 49 Cal. Rptr. 2d at 571-72 n. 6.
AFFIRMED.
Appellant argued in her Reply Brief that she had an actionable claim against Brookstreet under California's "concurrent cause doctrine," notwithstanding the policy exclusion. See Cont'l Cas. Co. v. City of Richmond, 763 F.2d 1076, 1081 (9th Cir. 1985) ("[U]nder California insurance law, when two different risks concur in proximately causing a loss, coverage will be upheld if either risk is covered, notwithstanding the exclusion of the other." (citing State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123, 129 (Cal. 1973) (emphasis added)). Although her concurrent cause claim may have merit, Appellant waived this argument by failing to raise it (1) before the district court, see Hillis v. Heineman, 626 F.3d 1014, 1019 (9th Cir. 2010), and (2) in her Opening Brief, see Dilley v. Gunn, 64 F.3d 1365, 1367 (9th Cir. 1995). We must therefore affirm the district court's summary judgment order.