Century Surety Company v. Popelinos Transportation, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 7, 2023
• Docket: 23-55051
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 7 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

CENTURY SURETY COMPANY, No. 23-55051

Plaintiff-Appellee, D.C. No. 5:21-cv-01987-RGK-RAO v. Central District of California, Riverside POPELINOS TRANSPORTATION, INC., a corporation; JOSE POPELINO; JOSE MEMORANDUM* BARRAGAN; POPELINOS GREEN WASTE RECYCLING, a business entity of unknown; ROSARIO RIOS; JUSTICE CUTS, DBA Recycling and Recovery, a corporation; RICHARD BOYD; ELISA BOYD,

Defendants,

and

D & R WOODS ENTERPRISE, CORP., a corporation,

Defendant-Appellant.

Appeal from the United States District Court for the Central District of California R. Gary Klausner, Chief District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Submitted December 5, 2023** Pasadena, California

Before: CALLAHAN, R. NELSON, BADE, Circuit Judges.

This is an insurance coverage dispute. Plaintiff sued its insured and its

judgment creditors, asking for a declaration that there was no coverage. Defendant

D&R Woods appeals the district court’s grant of Plaintiff’s summary judgment

motion. We review de novo. Sony Comput. Ent. Am., Inc. v. Am. Home Assurance

Co., 532 F.3d 1007, 1011 (9th Cir. 2008).

1. On or around December 3, 2020, a fire broke out at 1880 Brown Avenue in

Riverside, California, where Jose Barragan operates Popelino’s Green Waste

Recycling (PGWR). The fire spread to adjacent properties, including one owned by

D&R Woods. D&R Woods sued a different business owned by Barragan,

Popelino’s Transportation, Inc. (PTI), in a separate action (the D&R Action), related

to the fire. Plaintiff had issued an insurance policy for general commercial liability

coverage that insured PTI and Barragan, solely with respect to Barragan’s duties as

PTI’s president, at the time of the fire (the Policy). Plaintiff agreed to defend PTI

and Barragan in the D&R Action, subject to a reservation of rights.

2. We affirm the district court’s order granting declaratory relief that (1) there

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

2 was no duty to defend or indemnify and that (2) Century was entitled to rescind the

Policy because of the concealment of material information in the application for the

Policy, and therefore, it was void. Under California law, each party to an insurance

contract “shall communicate to the other, in good faith, all facts within his

knowledge which are or which he believes to be material to the contract.” Cal. Ins.

Code. § 332. “Materiality is [] determined not by the event, but solely by the

probable and reasonable influence of the facts upon the party to whom the

communication is due, in forming his estimate of the disadvantages of the proposed

contract.” Id. § 334. The concealment of any material information “entitles the

injured party to rescind insurance.” Id. § 331. Any “[n]eglect to communicate that

which a party knows, and ought to communicate, is concealment.” Id. § 330.

3. The central question is whether the concealed fact could reasonably

influence the insurer in deciding whether to issue the policy, in evaluating the degree

of risk, or in calculating the appropriate premium. See Old Line Life Ins. Co. v.

Super. Ct., 229 Cal. App. 3d 1600, 1604 (Cal. Ct. App. 1991). Plaintiff submitted

the declaration of Mr. Foreman, Plaintiff’s Senior Vice President – Underwriting, to

describe the application process for the Policy. Mr. Foreman stated that (1) the

application stated that “the insured ha[d] no exposure to flammables,” (2) PTI’s

Office Manager told the inspector “that Barragan did not own or operate any other

businesses at that time,” and (3) Barragan “did not disclose his ownership of the

3 property at 1880 Brown Ave., Riverside[,] California, or any of his operations at that

address.” Mr. Foreman further attested that Plaintiff “would not have issued [the

Policy] to PTI for the premium indicated on the policy if it had been aware of the

existence of PGWR and the operations at the 1880 Brown Avenue property.”

Instead, Plaintiff would have “calculated the total premium based upon the proper

classification code for the recycling operations in addition to the trucking

classification.”

Based on these undisputed facts, Barragan failed to disclose information

material to Plaintiff’s calculation of the Policy’s appropriate premiums. This failure

constituted concealment, see Cal. Ins. Code § 330, and therefore Plaintiff is entitled

to rescind the Policy, see id. § 331. Because there is no coverage, there is also no

duty to defend or indemnify.

AFFIRMED.