Paul Evert’s Rv Country, Inc.; v. Universal Underwriters Insurance Company

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PAUL EVERT’S RV COUNTRY, INC.;
et al.,
Plaintiffs-Appellants,
v.
UNIVERSAL UNDERWRITERS
INSURANCE COMPANY,
Defendant-Appellee,
v.
AARON LYON,
Cross-defendant-Appellee.
No. 17-15730
D.C. No.
1:15-cv-00124-WBS-SKO
MEMORANDUM*
Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, District Judge, Presiding
Submitted April 13, 2018**
San Francisco, California
FILED
APR 25 2018
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).

-- 1 of 3 --

Before: KLEINFELD, W. FLETCHER, and TALLMAN, Circuit Judges.
Paul Evert’s RV Country, Inc. sues its insurer, Universal Underwriters
Insurance Company. In an underlying state action brought against Evert’s RV and
defended by Universal, the court awarded punitive damages against three Evert’s
RV employees for willfully defaming a competitor. Evert’s RV then filed this suit
against Universal, alleging breach of contract and breach of the implied covenant
of good faith and fair dealing. The parties stipulated below to the dismissal with
prejudice of each of Evert’s RV’s claims against Universal, except for the
indemnification claim based on the punitive damages award in the underlying
action. The district court entered judgment in favor of Universal on that claim.
We have jurisdiction under 28 U.S.C. § 1291 and affirm.
Under California law, “an insured may not shift to its insurance company,
and ultimately to the public, the payment of punitive damages awarded in [a] third
party lawsuit against the insured as a result of the insured’s intentional, morally
blameworthy behavior against the third party.” PPG Indus., Inc. v. Transamerica
Ins. Co., 975 P.2d 652, 658 (Cal. 1999). Allowing such recovery would violate
California’s “public policy against permitting liability for intentional wrongdoing
2

-- 2 of 3 --

to be offset or reduced by the negligence of another[,]” and it would “defeat the
purposes of punitive damages which are to punish and deter the wrongdoer[.]” Id.
The California Supreme Court’s decision in PPG controls. It bars Evert’s RV from
obtaining indemnification from its insurer for the underlying award of punitive
damages assessed against Evert’s RV’s employees for their morally blameworthy
behavior.
To the extent Evert’s RV seeks a separate punitive damages award against
Universal for Universal’s conduct in defending the underlying action, that claim is
not before us. Evert’s RV stipulated below to the dismissal with prejudice of each
of its claims against Universal, preserving only its claim for indemnification by
Universal of the punitive damages award against Evert’s RV in the underlying
action.
Appellants shall bear the costs of appeal. See Fed. R. App. P. 39(a)(2).
AFFIRMED.
3

-- 3 of 3 --