SAN FRANCISCO (LN) — The 9th Circuit affirmed summary judgment for Columbia Casualty Co., ruling that unambiguous lending exclusions in a commercial liability policy bar coverage for Pacific Premier Bancorp Inc. and Pacific Premier Bank in litigation alleging they prolonged a real estate Ponzi scheme.
The bank sought coverage from Columbia and other insurers for settlement and defense costs arising from the underlying litigation, which accused the bank of facilitating a fraud through loans authorized from investment pools to external parties.
The district court had granted summary judgment for Columbia, determining that the policy’s lending exclusions barred coverage for the costs. The court denied the bank’s cross-motion for summary judgment as moot.
Pacific Premier argued that the district court erred by relying on the policy’s lending exclusions, contending the terms were ambiguous and failed to meet California’s “conspicuous, plain and clear” standard.
The 9th Circuit rejected that argument, applying ordinary rules of contractual interpretation to the insurance contract. The panel found that the policy’s three relevant lending exclusions — Exclusion 16, Endorsement 15, and Endorsement 6 — were unambiguous, conspicuous, plain, and clear.
Exclusion 16, located of the policy, states that Columbia is not liable for loss in connection with a claim “based upon or arising out of any actual or alleged purchase, sale, origination, participation, grant, commitment, restructuring, termination, transfer, repossession or foreclosure of any loan.”
The court noted that Exclusion 16 bars coverage for the bank’s conduct because it precludes coverage for loans and any loss “based upon or arising out of” that loan participation.
Pacific Premier had contended that the exclusions did not bar coverage for its alleged non-lending conduct, specifically loans authorized from investment pools. The 9th Circuit found that the exclusion language was broad enough to cover the loss arising from the underlying litigation.
The panel consisted of U.S. Circuit Judges Richard Paez, Mary M. Callahan, and Daniel Bumatay.
The disposition is not for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.