The Ninth Circuit agreed with the arguments Horvitz & Levy presented on appeal, holding that its insurer client acted reasonably as a matter of law.
Philadelphia Insurance Company declined to defend the Oak Park Unified School District in a personal injury action filed by a plaintiff who alleged he tumbled down a steep, unfenced, and unmarked embankment next to the spectators’ area on Oak Park’s soccer field. Philadelphia relied on a policy provision excluding coverage for bodily injury “arising out of any design defect or structural maintenance of the premises or loss caused by a premises defect.” Philadelphia nevertheless contributed to a settlement of the action against Oak Park.
Oak Park then sued Philadelphia in federal district court for breach of insurance contract and bad faith, seeking to recover the defense costs it incurred before settlement plus tort damages.
The district court granted summary judgment for Philadelphia, holding it had no duty to defend. On Oak Park’s first appeal (not defended by Horvitz & Levy), the Ninth Circuit reversed, holding the policy exclusion was ambiguous and did not eliminate Philadelphia’s duty to defend. Philadelphia thereafter reimbursed Oak Park for its defense costs and moved for summary judgment on Oak Park’s remaining bad faith and punitive damages claims.
The district court again granted summary judgment, holding that Philadelphia’s interpretation of its policy exclusion, though incorrect according to the Ninth Circuit, was nevertheless reasonable as a matter of law.
On Oak Park’s second appeal (defended by Horvitz & Levy), the Ninth Circuit affirmed the summary judgment. The court agreed with Horvitz & Levy that the court’s earlier opinion was not law of the case because it had addressed the duty to defend only, not bad faith. The Ninth Circuit also agreed Philadelphia’s interpretation of its policy exclusion was reasonable as a matter of law.