                                                                           FILED
                            NOT FOR PUBLICATION                             MAY 06 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



AMERICAN GUARANTEE AND                           No. 11-17130
LIABILITY INSURANCE COMPANY,
                                                 D.C. No. 3:10-cv-03009-RS
              Plaintiff - Appellant,

  v.                                             MEMORANDUM *

LEXINGTON INSURANCE COMPANY,

              Defendant - Appellee.



                   Appeal from the United States District Court
                      for the Northern District of California
                    Richard Seeborg, District Judge, Presiding

                       Argued and Submitted April 19, 2013
                            San Francisco, California

Before: SCHROEDER, SILVERMAN, and BEA, Circuit Judges.

       Plaintiff American Guarantee and Liability Insurance Company appeals

from the district court’s holding on cross-motions for summary judgment that

Defendant Lexington Insurance Company did not have a duty to defend BBI

Construction in a lawsuit brought by an employee of RCM Fire Protection, David


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Trahan. We have jurisdiction under 28 U.S.C. § 1291 and now reverse and

remand.

      The insurance policy that Lexington Insurance issued to RCM extended

coverage to additional insureds where required by written contract. The Letter of

Intent between BBI and RCM satisfied this requirement. There is no genuine issue

of material fact as to whether the letter was a binding contract to furnish documents

evidencing general liability coverage naming BBI as an additional insured. See

Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989) (“There is also no genuine

issue of fact if, on the record taken as a whole, a rational trier of fact could not find

in favor of the party opposing the motion.”).

      Moreover, BBI qualified as an additional insured under the insurance policy

because Trahan’s injuries arose out of RCM’s ongoing operations performed for

BBI. RCM was subcontracted by BBI to furnish and install fire sprinklers inside

the Veterans Memorial Building. David Trahan was on the job site walking

towards an official exit gate when a piece of lumber fell from the roof and hit him

on the head. This is sufficient to establish the requisite minimal connection

between RCM’s ongoing operations performed for BBI and Trahan’s injury. See

Acceptance Ins. Co. v. Syufy Enters., 69 Cal. App. 4th 321 (Cal. Ct. App. 1999)

(“California courts have consistently given a broad interpretation to the terms

‘arising out of’ or ‘arising from’ in various kinds of insurance provisions. It is
settled that this language does not import any particular standard of causation or

theory of liability into an insurance policy. Rather, it broadly links a factual

situation with the event creating liability, and connotes only a minimal causal

connection or incidental relationship.”).

      REVERSED and REMANDED.
                                                                             FILED
American Guarantee v. Lexington Insurance Co., 11-17130
                                                                              MAY 06 2013
BEA, Circuit Judge, concurring in the judgment:
                                                                         MOLLY C. DWYER, CLERK
                                                                           U .S. C O U R T OF APPE ALS

      Although I concur in the judgment, I disagree with the majority’s reasoning.

The Additional Insured Endorsement on RCM’s insurance policy extended

insurance coverage to any entities to whom RCM promised such coverage in a

“written contract.” The Letter of Intent is not supported by consideration, so it

cannot be the written contract required for additional insured coverage of BBI.

However, the Subcontract agreement between BBI and RCM triggers coverage of

BBI as an additional insured on the Lexington policy: it is a valid written contract,

and it requires RCM to provide additional insured coverage to BBI. That the

Subcontract was executed after Trahan’s accident is immaterial under the terms of

the Lexington policy.

      1. In the Ninth Circuit, when parties refer to a document as a “letter of

intent,” they generally intend the document “to be a nonbinding expression in

contemplation of a future contract.” Rennick v. O.P.T.I.O.N. Care, 77 F.3d 309,

315 (9th Cir. 1996). However, “this is not to say that a letter of intent cannot be a

contract. Regardless of the title, if the content shows that the parties intended to be

bound, and the other requisites of a contract have been satisfied, it may be a

contract. We have to study the words and context to decide.” Id.



                                           1
      It is a basic principle of California contract law that an agreement cannot be

an enforceable contract unless it is supported by consideration. See, e.g., Forgeron

Inc. v. Hansen, 149 Cal. App. 2d 352, 360-61 (1957). Consideration may be either

a benefit conferred or agreed to be conferred upon the promisor or some other

person, or a detriment suffered or agreed to be suffered by the promisee or some

other person. Cal. Civ. Code § 1605. The Letter of Intent is bereft of

consideration to promisor RCM. In the Letter of Intent, BBI requested that RCM

submit documents “as soon as possible” in which RCM named BBI as an

additional insured on RCM’s insurance policy, but BBI made no return promise to

RCM in exchange for RCM’s acceptance of its obligation to provide these

documents. BBI did not promise to contract with RCM if RCM submitted the

requested documents.1 BBI did not promise to negotiate exclusively with RCM if

RCM complied with these requests. RCM got nothing in return for its

“acceptance” of its obligation to name BBI as an additional insured. For instance,

nothing in the Letter of Intent prevented BBI from “shopping” the RCM bid to

other subcontractors in a search for a lower price. Because the Letter of Intent is



      1
        There is no rule in the Ninth Circuit that the defendant must enter into a
contract if the plaintiff performs all acts set forth in a Letter of Intent.
Furthermore, there is no obligation to deal fairly or in good faith absent an existing
contract. See Hess v. Transamerica Occidental Life Ins. Co., 190 Cal. App. 3d
941, 945 (1987).

                                           2
not supported by consideration, it is not a “written contract” and therefore cannot

trigger coverage of BBI as an additional insured.

      2. The Subcontract between RCM and BBI, however, is a “written contract”

that required RCM to provide insurance to BBI by naming BBI as an additional

insured on the Lexington policy. Lexington argues that the Subcontract cannot

trigger additional insured coverage because “the policy language expressly requires

the written contract to have been executed before coverage under the Additional

Insured Endorsement is extended.” According to Lexington, the Subcontract

cannot be the basis for additional insured coverage because it was executed after

the date of Trahan’s injury.

      This argument is premised on a misreading of the relevant documents. First,

there is a “Contractual Liability” exclusion to RCM’s Commercial General

Liability coverage. This exclusion applies to injuries and property damage “for

which the insured is obligated to pay damages by reason of the assumption of

liability in a contract or agreement.” (emphasis added). This contractual liability

exclusion contains an exception for liability assumed in a contract that is an

“insured contract,” “provided the bodily injury or property damage occurs

subsequent to the execution of the contact or agreement.” The contractual

assumption of liability between BBI and RCM, as outlined in the indemnity clause



                                          3
in the Subcontract, is simply not applicable to this case: BBI’s claim against RCM

for contractual indemnity has been dismissed with prejudice and is not before this

panel. The present case arises from American’s contention that BBI is covered by

the Lexington policy as an additional insured. The contractual liability exclusion

is not relevant as to whether Lexington has a duty to defend and indemnify BBI as

an additional insured.

      Separate from the contractual liability exclusion, the Lexington policy has an

Additional Insured Endorsement that modifies the Commercial General Liability

Coverage section of the policy. The Additional Insured Endorsement includes as

an “insured” “the person or organization shown in the Schedule, but only with

respect to liability arising out of your ongoing operations performed for that

insured.” The Additional Insured Endorsement schedule names no particular entity

and instead extends blanket coverage “[w]here required by written contract.”

      The Subcontract between RCM and BBI included an insurance requirement,

which states: “Subcontractor [RCM] shall name Contractor [BBI] . . . as additional

insured[] under the General Liability policy.” This provision clearly satisfies the

“written contract” requirement of the Lexington Additional Insured Endorsement.

The more difficult question is whether the timing of the Subcontract precludes it

from triggering additional insured coverage in this case. The Subcontract had a



                                          4
“Subcontract Date” of November 2, 2006. Printed immediately below the

subcontract date is the first sentence of the Subcontract: “This Agreement is made

this day between BBI . . . and RCM” (emphasis added). The Subcontract was

actually signed by RCM on November 30, 2006 and by BBI on March 6, 2007.

RCM’s employee was injured on the job site on November 8, 2006, which falls

after the “Subcontract Date” of November 2, 2006, but before the Subcontract was

executed by the signatures of both parties.2

      That the Subcontract was executed after the employee’s accident does not

preclude it from extending additional insured coverage to BBI. Lexington drafted

both the insurance policy and the Additional Insured Endorsement. In the

contractual liability exclusion, Lexington included an exception to the exclusion

for liability assumed in an “insured contract,” “provided the bodily injury or

property damage occurs subsequent to the execution of the contact or agreement.”

Lexington thus knew how to require the execution of a contract before the event to

be insured for a provision to take effect; it wrote those words into the contractual

liability exclusion. Lexington’s Additional Insured Endorsement provides that an

entity becomes an insured if such insurance is “required by written contract.” In

light of the difference between the language used in the contractual liability


      2
       See Nielsen Construction Co. v. Int’l Iron Prods., 18 Cal. App. 4th 863,
869 (1993) (a contract is “executed” when all parties have signed it).

                                           5
exclusion and the Additional Insured Endorsement, there is no basis on which to

extend the requirement in the exclusion to the contractual liability exception that an

insured contract must be executed prior to the liability-producing event to the

Additional Insured Endorsement, which requires only a “written contract.”3

      While not “executed” until March 6, 2007 (the date of the last of the two

signatures), the Subcontract is dated November 2, 2006 and by its terms reflects an

agreement reached that day. Parties to a contract “may retroactively adopt prior

acts or fix retroactive dates of execution for a contract.” Du Frene v. Kaiser Steel

Corp., 231 Cal. App. 2d 452, 458 (1964). See also Grubb & Ellis Co. v. Bradley

Real Estate Trust, 909 F.2d 1050, 1054 (7th Cir. 1990) (“contractual terms may be

effective for a period before a contract is executed so long as such coverage is clear

from the face of the contract”). Had Lexington wanted to protect itself from the

contingency wherein a written contract to extend additional insured coverage was

executed after an accident, it easily could have used the same language from the

exception to the contractual liability exclusion in the additional insured

endorsement. Furthermore, this is not a case of retroactive insurance coverage,


      3
        If more were needed, I could cite the principle of documentary
interpretation expressio unius, applied by us in Silvers v. Sony Pictures
Entertainment, 402 F.3d 881, 885 (9th Cir. 2005) (en banc), as to the 1976
Copyright Act, but also applied generally to documents which are not statutes.
See, e.g., Hardware Mut. Ins. Co. v. Dunwoody.,194 F.2d 666, 668 (9th Cir. 1952)
(applying expressio unius to contract interpretation).

                                           6
since it is undisputed that RCM was covered by its insurance policy with Lexington

at the time of Trahan’s accident and that, by the terms of the Additional Insured

Endorsement, BBI, as an additional insured, merely steps into the same position as

an “insured” under RCM’s general commercial liability policy. RCM paid

whatever premiums Lexington charged for its policy (including the Additional

Insured Endorsement that extended coverage “where required by written contract”

and that did not incorporate the restriction used elsewhere in the policy that the

contract must be executed prior to the liability-producing event), and we must give

effect to the language of these documents.

      I would therefore reverse and remand on the basis that the Subcontract was a

written contract that gave rise to BBI’s coverage as an additional insured.




                                           7
