FILED
NOT FOR PUBLICATION NOV 17 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
WESTPORT INSURANCE ) No. 10-35075
CORPORATION, )
) D.C. No. 2:08-CV-00221-RHW
Plaintiff – Appellant, )
) MEMORANDUM *
v. )
)
MARKHAM GROUP INC. PS; )
MARK KAMITOMO; RACHEL )
NAIDU, individually and as )
personal representative of the )
Estate of James L. Overcash, )
)
Defendants – Appellees. )
)
Appeal from the United States District Court
for the Eastern District of Washington
Robert H. Whaley, Senior District Judge, Presiding
Argued and Submitted November 3, 2010
Seattle, Washington
Before: B. FLETCHER, FERNANDEZ, and BYBEE, Circuit Judges.
Westport Insurance Corporation appeals the district court’s grant of
summary judgment and attorney’s fees against it and in favor of the Markham
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Group, Inc., P.S. law firm and one of its members, Mark Kamitomo (collectively
“insureds”) and one of their former clients, Rachel Naidu. We have jurisdiction 1
and we reverse and remand.
(1) Insureds had a claims made and reported policy (hereafter “claims
made policy”) with Westport effective July 1, 2007, which, inter alia, provided an
exclusion for “any act, error, omission, circumstance or PERSONAL INJURY
occurring prior to the effective date of this POLICY if any INSURED at the
effective date knew or could have reasonably foreseen that such act, error,
omission, circumstance or PERSONAL INJURY might be the basis of a CLAIM.”
Prior to that date, the insureds knew that, due to errors on their part, a client’s case
had been dismissed and could not be refiled.2 Indeed, they had been sanctioned at
that time for filing a baseless claim without proper investigation. They assert that
the exclusion does not apply because its language regarding reporting if their
actions “might be the basis” of a claim was ambiguous. We disagree. Under the
law of Washington, clear and unambiguous policy language is enforced as written,
and a court “may not modify it or create ambiguity where none exists.” Am. Nat’l.
1
28 U.S.C. § 1291.
2
That is, it could not be refiled unless the trial court’s judgment was
overturned on appeal. It was not; in fact, the insureds were sanctioned for bringing
a frivolous appeal.
2
Fire Ins. Co. v. B & L Trucking & Constr. Co., Inc., 951 P.2d 250, 256 (Wash.
1998); see also Assurance Co. of Am. v. Wall & Assocs. LLC of Olympia, 379
F.3d 557, 560 (9th Cir. 2004); Greenfield v. W. Heritage Ins. Co., 226 P.3d 199,
202 (Wash. Ct. App. 2010). Here, any reasonable insured would have recognized
that the errors in question “might” result in a claim. See Tewell, Thorpe &
Findlay, Inc., P.S. v. Cont’l Cas. Co., 825 P.2d 724, 726–28 (Wash. Ct. App.
1992); see also Allstate Ins. Co. v. Peasley, 932 P.2d 1244, 1249 (Wash. 1997). In
short, the district court erred when it declared that the policy was ambiguous and,
in effect, amended it to create coverage.
(2) The insureds then assert that an earlier claims made policy, with an
effective date of July 1, 2006, should provide coverage even though they violated
its terms by not giving notice at the proper time. They argue that the notice-
prejudice rule should apply. However, while that rule is applied to occurrence
policies, claims made policies are fundamentally different in character. See Am.
Cont’l Ins. Co. v. Steen, 91 P.3d 864, 867 (Wash. 2004). They, by their very
nature, require reporting “during the policy period.” Schwindt v. Commonwealth
Ins. Co., 997 P.2d 353, 356 n.3 (Wash. 2000). As the Washington Court of
Appeals has stated in rejecting application of the notice-prejudice rule to a claims
made policy, its application “would . . . provide coverage the insurer did not intend
3
to provide and the insured did not contract to receive.” Safeco Title Ins. Co. v.
Gannon, 774 P.2d 30, 35 (Wash. Ct. App. 1989). In fact, it “‘[would negate] the
inherent difference between’” occurrence and claims made policies, and would
rewrite the insurance contract. Id.; see also Manufactured Hous. Cmtys. of Wash.
v. St. Paul Mercury Ins. Co., 660 F. Supp. 2d 1208, 1214–15 (W.D. Wash. 2009).
We are satisfied that the Washington Supreme Court would agree with that
reasoning. Thus, again, we must disagree with the district court.3
In short, judgment should have been and should now be entered in favor of
Westport.
REVERSED and REMANDED.
3
Because of our resolution of the merits, the attorney’s fee award against
Westport must also fall. Cf. Smith v. Ohio Cas. Ins. Co., 678 P.2d 829, 831
(Wash. Ct. App. 1984).
4