Zurich American Insurance Company; American Guarantee and Liability Insurance Company v. Ironshore Specialty Insurance Company

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ZURICH AMERICAN INSURANCE
COMPANY; AMERICAN GUARANTEE
AND LIABILITY INSURANCE
COMPANY,
Plaintiffs-Appellants,
v.
IRONSHORE SPECIALTY INSURANCE
COMPANY,
Defendant-Appellee.
No. 18-16937
D.C. No.
2:15-cv-00460-JAD-PAL
MEMORANDUM*
Appeal from the United States District Court
for the District of Nevada
Jennifer A. Dorsey, District Judge, Presiding
Submission Deferred April 14, 2020
Submitted January 18, 2022**
San Francisco, California
FILED
JAN 20 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* 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).

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Before: BERZON and IKUTA, Circuit Judges, and LEMELLE,*** District Judge.
Plaintiff insurance companies (collectively, “Zurich”) appeal the district
court’s grant of summary judgment in favor of Ironshore Specialty Insurance
Company (“Ironshore”). We have jurisdiction under 28 U.S.C. § 1291, and we
affirm.1
Ironshore’s insurance contract with eight subcontractors included an
exclusion providing (among other things) that the policy did not apply to any
property damage for the subcontractors’ work “performed prior to policy
inception.” Zurich Am. Ins. Co. v. Ironshore Specialty Ins. Co., 964 F.3d 804, 807
(9th Cir. 2020). This exclusion was subject to an exception, which stated that the
exclusion provision did not apply to property damage that “is sudden and
*** The Honorable Ivan L.R. Lemelle, United States District Judge for the
Eastern District of Louisiana, sitting by designation.
1 We decide this appeal (referred to as Zurich I) concurrently with an appeal
raising substantially identical issues, Zurich American Insurance Co. v. Ironshore
Specialty Insurance Co., ___ Fed. Appx.___ (2022) (Zurich II).
2

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accidental and takes place within the policy period.” Id.2 After the eight
subcontractors were sued for work they had performed, Zurich defended and
indemnified the subcontractors, and then brought an action against Ironshore in
district court seeking contribution and indemnification for defense and settlement
costs on the ground that the exception to the exclusion in Ironshore’s policy
applied. Id. at 808–09. The district court granted summary judgment in favor of
Ironshore on the grounds that (1) all construction work at issue had been completed
before the inception of Ironshore’s policy, (2) none of the complaints against the
subcontractors alleged that sudden and accidental damage had occurred after the
inception of Ironshore’s policy, and (3) Zurich failed to carry its burden of
showing that the exception to the exclusion was applicable, potentially or
otherwise. Id. Zurich appealed, arguing that the district court erred by placing the
2 The relevant exclusion provision states:
This insurance does not apply to any “bodily injury” or “property
damage”:
1. which first existed, or is alleged to have first
existed, prior to the inception of this policy.
“Property damage” from “your work”, or the work of
any additional insured, performed prior to policy
inception will be deemed to have first existed prior
to the policy inception, unless such “property
damage” is sudden and accidental and takes place
within the policy period . . . .
Id.
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burden of proof regarding the applicability of the exception to the exclusion on
Zurich. Id. at 810.
In order to adjudicate this appeal, we certified two open questions of state
law to the Nevada Supreme Court. See Zurich Am. Ins. Co. v. Ironshore Specialty
Ins. Co., 964 F.3d 804, 806 (9th Cir. 2020), certified questions answered, 497 P.3d
625 (Nev. 2021). In response, the Nevada Supreme Court held that (1) the burden
“of proving the applicability of an exception to an exclusion for coverage in an
insurance policy” falls on the insured, and (2) the insured “may rely on any
extrinsic evidence that was available to the insurer at the time the insured tendered
the defense to the insurer.” Zurich Am. Ins. Co. v. Ironshore Specialty Ins. Co.,
497 P.3d 625, 626 (Nev. 2021).
In light of this ruling, we reject Zurich’s argument that the lack of any
evidence that sudden and accidental property damage occurred after the inception
of Ironshore’s policy is sufficient to carry Zurich’s burden of proving that the
exception to the exclusion is applicable, potentially or otherwise. Instead, we
affirm the district court’s ruling that Zurich failed to carry its burden of proving the
applicability of the exception to the exclusion in Ironshore’s policy. Zurich does
not ask for an opportunity to present evidence to the district court that was
available to the insurer when the defense was tendered and that shows that sudden
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and accidental property damage occurred after the inception of Ironshore’s
policy. Therefore, Ironshore is entitled to summary judgment as a matter of law.
AFFIRMED.
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