National Union Fire Ins. Co. of Pittsburgh, Pa. v. Argonaut Ins. Co.

Citation701 F.2d 95
Decision Date08 March 1983
Docket NumberNo. 82-5350,82-5350
PartiesNATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Plaintiff-Appellant, v. ARGONAUT INSURANCE COMPANY, Defendant-Appellee. CA
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Stephen A. Lax, Pachter, Gold & Schaffer, Los Angeles, Cal., for plaintiff-appellant.

Michael J. Cereseto, Buchalter, Nemer, Fields, Chrystie & Younger, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before CHAMBERS and FARRIS, Circuit Judges, and PRICE, * District Judge.

FARRIS, Circuit Judge:

Plaintiff National Union Fire Insurance Company of Pittsburgh, Pennsylvania, appeals from a grant of summary judgment to defendant Argonaut Insurance Company in an action on an insurance contract. We affirm.

FACTS

In February 1975 certain events in Texas gave rise to claims against United Rent-All, Inc., National's equitable subrogor, which it eventually settled for $1,540,000. Commerce and Industry Insurance Company, United's primary insurer, contributed to the settlement to the limit of its coverage, $300,000, subject to a $10,000 deductible. National contributed the remainder pursuant to its umbrella liability policy providing coverage of $5,000,000 in excess of underlying coverage of $300,000.

National then sued Argonaut, contending that at the relevant time Argonaut insured United by a primary policy to a limit of $300,000 and was thereby obligated to indemnify National for that amount. Argonaut argues that its policy covered United only to a limit of $10,000, the amount of the deductible under the Commerce and Industry policy.

The district court looked to extrinsic evidence in order to determine the intent of the parties to the contract by which Argonaut insured United for alternative reasons. California law permits reception of such evidence to ascertain the parties' intent, even when the contract appears unambiguous on its face, if "the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible." Pacific Gas and Electric Co. v. G.W. Thomas Drayage Co., 69 Cal.2d 33, 37, 69 Cal.Rptr. 561, 442 P.2d 641 (1968); see Kock v. Quaker Oats Co., 681 F.2d 649, 657 n. 5 (9th Cir.1982); Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d 866, 871 (9th Cir.), cert. denied, 444 U.S. 981, 100 S.Ct. 483, 62 L.Ed.2d 407 (1979). Thus, the court received extrinsic evidence of the parties' intent even while observing that certain clauses in the policy "may appear to unambiguously include [United] as a fully insured party." Conclusion of Law 2. Alternatively, the court found that resolution of various ambiguities and inconsistencies arising from different sections of the policy required recourse to extrinsic evidence. See Cal.Civ.Code Sec. 1638 (1973).

The district court undertook an exhaustive review of the history of United's insurance coverage as revealed in the evidence proffered by Argonaut. It concluded that Argonaut's policy insured United only to a limit of $10,000, as both parties to the contract contended. In the absence of a genuine issue of material fact, the court granted Argonaut summary judgment.

STANDARD OF REVIEW

"This court reviews de novo decisions granting summary judgment," Bank of California, N.A. v. Opie, 663 F.2d 977, 979 (9th Cir.1981), applying "the same standard as that binding on the trial court," National Industries, Inc. v. Republic National Life Insurance Co., 677 F.2d 1258, 1265 (9th Cir.1982). We will affirm a grant of summary judgment "if it appears from the record, after viewing all evidence and factual inferences in the light most favorable to the appellant, that there are no genuine issues of material fact and that the appellee is entitled to prevail as a matter of law." Heiniger v. City of Phoenix, 625 F.2d 842, 843 (9th Cir.1980).

ANALYSIS

This case involves the somewhat unusual situation in which the district court considered extrinsic evidence challenging the arguably unambiguous meaning of an insurance contract, as California law permitted it to do, and then concluded that that evidence established a competing interpretation for purposes of summary judgment. Nevertheless, we see no need to duplicate the district court's discussion of the evidence. The parties to the contract, Argonaut and United, agree on its meaning. National concedes that it can offer no evidence to contradict Argonaut's amply supported version of the history of United's insurance coverage in general and the development of this contract in particular. 1 Appellant's Opening Brief at 36. In the district court it offered no evidence to oppose the summary judgment motion except an expert's affidavit, which the court properly refused to admit. 2

While offering nothing to support the interpretation it urges, National contends that once the district court determines that a contract is reasonably susceptible to more than one reading, as its findings suggest here, it cannot resolve a dispute over the proper interpretation of the contract on a summary judgment motion. National cites numerous authorities for the proposition that "[i]n contract cases, summary judgment is appropriate only if the contract or the contract provision in question is unambiguous." Castaneda v. Dura-Vent Corp., 648 F.2d 612, 619 (9th Cir.1981), citing Bear Brand Hosiery Co. v. Tights, Inc., 605 F.2d 723, 726 (4th Cir.1979); accord Heyman v. Commerce and Industry Ins. Co., 524 F.2d 1317, 1318-20 (2d...

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