Premier Construction & Remodel v. Music

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 7, 2023
• Docket: 21-55496
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 7 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

PREMIER CONSTRUCTION AND No. 21-55496 REMODEL, INC., a California corporation; 21-55835 ROBERT DEVILLE, an individual, D.C. No. Plaintiffs-Appellants, 5:18-cv-02582-JGB-KK

v. MEMORANDUM* MESA UNDERWRITERS SPECIALTY INSURANCE COMPANY, a New Jersey corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Central District of California Jesus G. Bernal, District Judge, Presiding

Argued and Submitted January 13, 2023 Pasadena, California

Before: CALLAHAN, R. NELSON, and H.A. THOMAS, Circuit Judges.

Appellants Premier Construction and Remodel, Inc., and its owner, Robert

Deville (collectively, Premier), appeal the district court’s grant of summary

judgment to Appellee Mesa Underwriters Specialty Insurance Company (MUSIC),

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. on Premier’s causes of action for breach of contract, bad faith, and negligent

misrepresentation. Premier also appeals the district court’s dismissal of its

declaratory relief claim, its decision not to address Premier’s request for punitive

damages, and its imposition of sanctions on Premier’s counsel.

We have jurisdiction under 28 U.S.C. § 1291. We review de novo the district

court’s grant of summary judgment. Adir Int’l, LLC v. Starr Indem. & Liab. Co.,

994 F.3d 1032, 1038 (9th Cir. 2021). In doing so, we must determine “whether

there are any genuine issues of material fact and whether the district court correctly

applied the relevant substantive law,” while “viewing the evidence in the light

most favorable to the nonmoving party.” Id. (quoting Baker v. Liberty Mut. Ins.

Co., 143 F.3d 1260, 1263 (9th Cir. 1998)). We review the district court’s award of

sanctions for abuse of discretion. United States v. Associated Convalescent Enters.,

Inc., 766 F.2d 1342, 1345 (9th Cir. 1985). We affirm.

1. Under California law, the “settled rule” concerning an insurer’s duty to

defend is that the duty exists “where a pleading against the insured raises the

potential for coverage.” Continental Cas. Co. v. Super. Ct., 92 Cal. App. 4th 430,

439 (2001) (citing Montrose Chem. Corp. v. Super. Ct., 6 Cal. 4th 287, 295

(1993)). There is no such duty where the complaint in the underlying action

“cannot by any conceivable theory raise a single issue” which would trigger

coverage under the applicable policy. See id. at 438–39.

2 The First Amended Complaint (FAC) in the underlying action alleged that

Premier had failed to return keys and a garage door opener to the owner of a

condominium that Premier had been contracted to remodel. Premier argues that

these allegations raised the potential for coverage under provisions of the MUSIC

insurance policy offering coverage for “property damage” caused by an

“occurrence” (i.e., an accident). Specifically, Premier argues that its failure to

return the keys and garage door opener may have caused the condo’s owner to be

locked out of his property in a manner constituting a “[l]oss of use” of the condo.

Because the FAC here “cannot by any conceivable theory raise a single

issue” that would trigger coverage under the applicable policy, the district court

properly granted summary judgment to MUSIC on Premier’s breach of contract

claim. See id. at 438–39. While Premier argues that a “loss of use” can be

reasonably inferred from separate allegations in the FAC that Premier had

unreasonably delayed work on the project, causing building permits to expire and

subjecting the condo’s owner to fines from the homeowners’ association, we have

previously held that an insurer need not defend the insured when the potential for

liability is “tenuous and farfetched.” Lassen Canyon Nursery, Inc. v. Royal Ins. Co.

of Am., 720 F.2d 1016, 1018 (9th Cir. 1983) (quoting Giddings v. Indus. Indemn.

Co., 112 Cal. App. 3d 213, 220 (1980)). Nor does an insurer’s duty to defend

3 encompass liability that would only exist if new facts were alleged. 1 See Upper

Deck Co., LLC v. Fed. Ins. Co., 358 F.3d 608, 615–16 (9th Cir. 2004).

2. Under California law, a bad faith claim against an insurer fails if the

insured was not entitled to benefits. Grebow v. Mercury Ins. Co., 241 Cal. App. 4th

564, 581–82 (2015). Since Premier’s breach of contract claim fails, its bad faith

claim also fails.

3. The district court correctly held that Premier failed to oppose MUSIC’s

motion for summary judgment as to its negligent misrepresentation claim. “We are

not required to consider an argument that was not properly presented to the district

court or otherwise preserved for review.” Moreno Roofing Co., Inc. v. Nagle, 99

F.3d 340, 343 (9th Cir. 1996).

4. Because Premier does not present argument concerning its declaratory

relief claim, we affirm the district court’s dismissal of this claim. See Greenwood

v. FAA, 28 F.3d 971, 977 (9th Cir. 1994) (“We review only issues which are

argued specifically and distinctly in a party’s opening brief.”).

5. “In California . . . actual damages are an absolute predicate for an award

of . . . punitive damages.” Kizer v. County of San Mateo, 53 Cal. 3d 139, 147

1 Because we conclude that MUSIC had no duty to defend Premier prior to June 28, 2016, we decline to decide (i) whether the FAC colorably alleged an “occurrence,” or (ii) whether the insurance policy’s “faulty workmanship” exclusions also preclude coverage.

4 (1991). Given the failure of Premier’s claims, there is no basis for an award of

actual damages in this case and therefore no basis for an award of punitive

damages.

6. The district court cited ample evidence of Premier’s counsel’s failure to

comply with the court’s filing rules and properly exercised its discretion to impose

sanctions. Federal courts possess the inherent power “to manage their own affairs

so as to achieve the orderly and expeditious disposition of cases.” Am. Unites for

Kids v. Rousseau, 985 F.3d 1075, 1088 (9th Cir. 2021) (quoting Goodyear Tire &

Rubber Co. v. Haeger, 581 U.S. 101, 107 (2017)). This includes the power “to

impose sanctions short of dismissal for violations of court orders.” See State Farm

Fire & Cas. Co. v. U.S. ex rel. Rigsby, 580 U.S. 26, 37 (2016).

AFFIRMED.