Western Insurance Co., in Liq. v. Frontier Homes, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 20, 2020
• Docket: 19-55101
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 20 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

WESTERN INSURANCE CO., IN No. 19-55101 LIQUIDATION, D.C. No. Plaintiff-Appellee, 5:17-cv-02181-R-MRW

v. MEMORANDUM* FRONTIER HOMES, LLC, a California limited liability company; et al.,

Defendants-Appellants,

and

DOES, 1 to 20, inclusive,

Defendant.

Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding

Submitted April 17, 2020** Pasadena, California

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

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: W. FLETCHER and LEE, Circuit Judges, and SETTLE,*** District Judge.

Frontier appeals from the district court’s order granting summary judgment

for Western Insurance Company.1 We have jurisdiction under 28 U.S.C. § 1291.

We review de novo the district court’s grant of summary judgment, see Devereaux

v. Abbey, 263 F.3d 1070, 1074 (9th Cir. 2001) (en banc), and review the pre-

judgment interest award for abuse of discretion, see Vance v. Am. Haw. Cruises,

Inc., 789 F.2d 790, 794 (9th Cir. 1986). We affirm.

1. Western seeks payment for claims brought by the cities of Victorville and

Lancaster (the “Cities”) against surety bonds that Western had issued to Frontier.

The parties’ Continuing Indemnification Agreement (the “Agreement”) gave

Frontier the right to demand litigation of such claims. Frontier argues that under the

Agreement, Western had an implied duty to give Frontier notice of the claims such

that it could demand litigation, even though the Agreement itself is silent on this

issue.

Even assuming the Agreement contained an implied notice duty, Frontier had

sufficient notice. First, the Cities themselves notified Frontier of their demands, but

*** The Honorable Benjamin H. Settle, United States District Judge for the Western District of Washington, sitting by designation. 1 The term “Frontier” refers to all of the appellants collectively: Frontier Homes, LLC, Sorrento Hills, LLC, Falcon Pointe, LLC, James L. Previti, FH Construction Management, and Frontier Homebuilders, Inc.

2 Frontier chose to ignore them. Then Frontier discussed the Cities’ demands with

Western. When Western was placed in liquidation, Western notified Frontier’s

attorney. Later, Western sent Frontier three demand letters, each containing contact

information in case Frontier wished to inquire further or dispute the claims. Frontier

was repeatedly put on notice of its default, Western’s liquidation, and the Cities’

claims such that Frontier could have made a written demand to Western to litigate

the claims. In any event, Frontier did not make this argument in the district court

and has waived it. See Armstrong v. Brown, 768 F.3d 975, 981 (9th Cir. 2014).

2. Frontier’s implied good faith and fair dealing argument fails for the same

reason: Frontier received adequate notice to challenge the claims but chose to ignore

it. Moreover, Frontier raises this argument for the first time on appeal and has

waived it. See id.

3. Frontier breached the Agreement when it refused to indemnify Western for

the Cities’ claims. The district court therefore properly rejected its impossibility

argument as irrelevant. See Habitat Trust for Wildlife, Inc. v. City of Rancho

Cucamonga, 96 Cal. Rptr. 3d 813, 843 (Cal. App. 2009) (“A thing is impossible in

legal contemplation when it is not practicable . . . .”).

4. Western showed that it suffered actual loss. The Utah Court approved the

Cities’ claims in the amount of $1,925,880.84 in underlying litigation, and Frontier

agreed to indemnify Western for damages incurred because of the bonded work.

3 Western’s damages are “the amount which will compensate” it for loss incurred

because of Frontier’s breach. Cal. Civ. Code § 3300; see also Bayer v. Neiman

Marcus Grp., Inc., 861 F.3d 853, 871–72 (9th Cir. 2017).

5. Finally, the pre-judgment interest award was not an abuse of discretion, as

the district court “rationally could have based [its] decision” on the first demand

letter. See Kali v. Bowen, 854 F.2d 329, 331 (9th Cir. 1988) (quoting another

source).

AFFIRMED.