FILED
NOT FOR PUBLICATION APR 08 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
HENRY JAMES ANDERSON, No. 12-17386
individually and as Trustee of the 2004
Henry James Anderson Revocable Trust; D.C. No. 3:11-cv-05760-RS
et al.,
Plaintiffs - Appellants, MEMORANDUM*
v.
CERTAIN UNDERWRITERS AT
LLOYD’S UNDER POLICY NO.
B0146LDUSA0701030,
Defendant - Appellee.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Argued and Submitted February 12, 2015
San Francisco California
Before: PAEZ and BERZON, Circuit Judges and MORRIS,** District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Brian M. Morris, District Judge for the U.S. District
Court for the District of Montana, sitting by designation.
Henry Anderson and other plaintiffs, collectively “Anderson,” were assigned
ePlanning’s rights against Brit UW Limited (“Brit”). Anderson alleges that Brit
breached its contract with ePlanning and its duty of good faith and fair dealing
under California law by refusing to defend ePlanning and to settle Anderson’s
claims. The district court dismissed Anderson’s first amended complaint with
prejudice. Anderson appeals. We review de novo, Lacey v. Maricopa Cnty., 693
F.3d 896, 911 (9th Cir. 2012) (en banc), and affirm.
1. In this diversity suit, we apply California law. To prevail on his claim for
breach of the duty to defend, Anderson need not prove coverage existed. Instead,
Anderson must prove only “the possibility of coverage at the time the claim is
raised.” Food Pro Int’l, Inc. v. Farmers Ins. Exch., 169 Cal. App. 4th 976, 992
(2008).
2. The district court determined that no coverage existed, because the
policy’s “Partial Professional Services Exclusion” barred all of Anderson’s claims.
This exclusion provided that Brit was not liable for any claim under the policy “for
any act, error or omission in connection with the performance of any professional
services by or on behalf of [ePlanning] for the benefit of any other entity or
person.” Anderson alleged in his original complaint that ePlanning had failed to
supervise properly its employees and had failed to audit its own files to determine
whether its employees were selling products not authorized by ePlanning.
3. Anderson argues that the professional services policy exclusion should
not apply here. In support of his argument, Anderson cites numerous cases where
courts have determined that certain acts did not constitute “professional acts” even
if the acts had been committed by a professional. Brit distinguishes Anderson’s
cases as not dispositive here, because the policy exclusion in this case contains “in
connection with” language in the policy exclusion. We agree. The California
Court of Appeals has construed professional services policy exclusions narrowly.
Food Pro, 169 Cal. App. 4th at 991; N. Counties Eng’g, Inc. v. State Farm Gen.
Ins. Co., 224 Cal. App. 4th 902 (2014). The “in connection with” language
nevertheless broadens the exclusion beyond the professional services themselves.
4. Brit argues that ePlanning’s failure to supervise and failure to audit fall
within the professional services policy exclusion. ePlanning provided professional
services related to selling securities. ePlanning’s employees sold securities,
including security products not authorized by ePlanning. ePlanning failed to
supervise its employees properly to ensure no unauthorized securities were being
sold. ePlanning also failed to audit the securities sold by its employees to ensure
that no unauthorized securities had been sold. These omissions fall within the
exclusion for actions done “in connection with” professional services.
5. We reject Anderson’s remaining contentions on appeal. We affirm the
district court’s dismissal of the complaint.
AFFIRMED.