Continental Casualty Co. v. Kool Radiators Inc.

689 F. App'x 877

• Court: Court of Appeals for the Ninth Circuit
• Decided: April 25, 2017
• Docket: 15-16023
• Status: Unpublished

Opinion

MEMORANDUM **

We affirm the grant of summary judgment in favor of Continental Casualty.

Stephen Evans asked Kool Radiators to invest in Aegis Jet, a company that Evans partially owned. Kool Radiators later sued Evans in connection with this transaction and won. As a judgment creditor, Kool Radiators stands in the shoes of Evans in this case. See Carpenter v. Superior Court, 101 Ariz. 565, 422 P.2d 129, 131 (1966).

To be covered by the Continental Casualty professional liability insurance policy, Evans’s conduct must have met the policy’s definition of “professional services.” The policy specified that “professional services” are either work performed for remuneration for HarnerEvans or approved pro bono work:

Professional services mean those services:

A. performed in the practice of public accountancy by you for others for remuneration that inures to the benefit of the Named Insured [that is, HarnerEvans], including but not limited to consulting services and investment advisory services;

B. pro bono services ..., if at the time such services were undertaken, a partner, officer or director of the Named Insured approved the rendering of such services without compensation... - 1

There is no evidence in the district court record that the investment solicitation by Evans was for remuneration inuring to the benefit of HarnerEvans. Nor is there any evidence that the investment solicitation constituted pro bono work. Pro bono services are unpaid, with the possible exception of court-ordered fees at the end of some lawsuits. See Blum v. Stenson, 465 U.S. 886, 894-95, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984) (quoting Stanford Daily v. Zurcher, 64 F.R.D. 680, 681 (N.D. Cal. 1974), rev’d on other grounds, 436 U.S. 547, 98 S.Ct. 1970, 56 L.Ed.2d 525 (1978)); Pro Bono, Black’s Law Dictionary (10th ed. 2014) (defining “pro bono” as “[ujncompensated, esp. regarding free legal services performed for the indigent or for a public cause”). Evans stood to benefit from the investment in Aegis Jet because he had a financial stake in the company as a partner. And Evans paid himself $32,000 from the Aegis Jet bank account holding the Kool Radiators investment, just one day after Kool Radiators made the investment. Soliciting an investment in a company in which Evans had a financial stake, and then taking some of that money for himself, was not pro bono investment advice.

Because the investment solicitation by Evans fell outside the policy’s definition of covered “professional services,” we decline to address Continental’s arguments that coverage was separately foreclosed by the fraud exclusion or by the “prior knowledge” provision in the policy.

AFFIRMED.

** This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

1 . The policy places defined terms in bold font.