Pacific American Title Insurance and Escrow Company v. Evanston Insurance Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 23, 2026
• Docket: 25-2705
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 23 2026 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

PACIFIC AMERICAN TITLE No. 25-2705 INSURANCE AND ESCROW D.C. No. COMPANY; LOURDES P. SAN 1:22-cv-00021 NICOLAS,

Plaintiffs - Appellants, MEMORANDUM*

v.

EVANSTON INSURANCE COMPANY,

Defendant - Appellee.

Appeal from the District Court of Guam Ramona V. Manglona, Chief District Judge, Presiding

Argued and Submitted February 10, 2026 Honolulu, Hawaii

Before: BYBEE, R. NELSON, and FORREST, Circuit Judges.

Plaintiff-Appellant Pacific American Title Insurance and Escrow Company

(PATICO) and its employee Lourdes P. San Nicolas1 seek a declaratory judgment

that Defendant-Appellee Evanston Insurance Company must defend them in an

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. 1 We refer to Plaintiffs collectively as ‘PATICO’ given that they have not made any arguments that legally distinguish San Nicolas from his employer. underlying dispute. On cross motions for summary judgment, the district court

concluded that Evanston owed them no such duty. We have jurisdiction under 28

U.S.C. § 1291 and affirm.

We review the district court’s decision on cross motions for summary

judgment de novo. Csutoras v. Paradise High Sch., 12 F.4th 960, 965 (9th Cir. 2021)

(citation omitted). The determination of the possibility of insurance coverage—and

thus a duty to defend—under Guam insurance law is a two-step process.2 First, the

“court must determine whether the event is within the insurance policy’s basic

coverage, with the burden of proof resting on the insured.” Guam Indus. Servs., Inc.

v. Zurich Am. Ins. Co., 2013 WL 5068873, at *7 (D. Guam Sept. 13, 2013) (citation

omitted), aff’d, 787 F.3d 1001 (9th Cir. 2015). Second, if the event is covered, the

burden shifts to the insurer “to demonstrate that the allegations of the complaint can

be interpreted only to exclude coverage.” Nat’l Union Fire Ins. Co. v. Guam Hous.

and Urban Renewal Auth., 2003 Guam 19 ¶ 23 (citation omitted); see also Atl.

Mutual Ins. Co. v. J. Lamb, Inc., 123 Cal. Rptr. 2d 256, 272 (Cal. Ct. App. 2002)

(holding that to prevail, the insurer must demonstrate “that the exclusion applies in

all possible worlds”).

2 In addition to applying its own law, Guam looks to California law in interpreting insurance policies because Guam’s insurance statutes were adopted from California’s. See Nat’l Union Fire Ins. Co. v. Guam Hous. and Urban Renewal Auth., 2003 Guam 19 ¶ 63.

2 25-2705 We assume without deciding that PATICO’s policy potentially covered the

conduct here. But Evanston does not owe PATICO a duty to defend because Policy

Exclusion B.7 applies here. That exclusion states that the policy will not cover “any

Claim” “[b]ased upon or arising out of: [a]ny conversion, misappropriation,

commingling, defalcation, theft, disappearance, or insufficiency in the amount of

escrow funds, monies, monetary proceeds, funds or property, or any other assets,

securities, negotiable instruments or any other thing of value.” And the exclusion

applies “irrespective of which individual, party, or organization actually or allegedly

committed or caused in whole or in part the conversion, misappropriation,

commingling, defalcation, theft, disappearance, or insufficiency in amount.”

Evanston has shown that “the exclusion applies in all possible worlds”

presented by the Complaint. Atl. Mutual Ins., 123 Cal. Rptr. 2d. at 272. All five of

the underlying claims are premised on allegations that PATICO assisted an

underlying co-defendant in obtaining two million dollars from an allegedly illegal

property transaction. That conduct was a conversion. See Jacot v. Miller, 2017 WL

4320322, at *4 (D. Guam Sept. 28, 2017). That conduct concerned “funds or

property”: the underlying real estate and the two million dollars paid for it. And the

exclusion applies “irrespective” of who actually committed or caused the theft or

conversion. Simply put, the claims here arise out of a conversion, which Evanston

has no duty to defend under the text of the exclusion. See Waller v. Truck Ins. Exch.,

3 25-2705 Inc., 900 P.2d 619, 627 (Cal. 1995) (“[W]here there is no possibility of coverage,

there is no duty to defend.” (citation modified)).

AFFIRMED.

4 25-2705