NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 25 2018
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PROBUILDERS SPECIALTY                           No.    16-16952
INSURANCE COMPANY, RRG, a
Washington DC corporation,                      D.C. No. 1:15-cv-01811-JLT

                Plaintiff-Appellant,
                                                MEMORANDUM*

 v.

YARBROUGH PLASTERING, INC., a
California corporation; RICKY LEE
YARBROUGH, an individual,

                Defendants-Appellees.

 and

DIBUDUO & DEFENDIS INSURANCE
BROKERS, LLC, a California limited
liability company,

                Counter-defendant,


PROBUILDERS SPECIALTY                           No.    16-17141
INSURANCE COMPANY, RRG, a
Washington DC corporation,                      D.C. No. 1:15-cv-01811-JLT

       Plaintiff-counter-
       defendant-Appellant,

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
and

DIBUDUO & DEFENDIS INSURANCE
BROKERS, LLC, a California limited
liability company,

               Counter-defendant,

 v.

YARBROUGH PLASTERING, INC., a
California corporation and RICKY LEE
YARBROUGH, an individual,

      Defendants-counter-
      claimants-Appellees.

                  Appeal from the United States District Court
                      for the Eastern District of California
                Jennifer L. Thurston, Magistrate Judge, Presiding

                      Argued and Submitted June 11, 2018
                           San Francisco, California

Before: SILER,** PAEZ, and IKUTA, Circuit Judges.

      ProBuilders Specialty Insurance Company appeals the district court’s grant

of summary judgment in favor of Yarbrough Plastering, Inc., and its owner, Ricky

Lee Yarbrough. Beginning in 2003, ProBuilders issued five insurance policies to

Yarbrough, a drywall and stucco contractor. The policies covered, among other



      **
            The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.

                                        2                                  16-16952
things, claims for indemnity made against Yarbrough. The policies also required

that Yarbrough pay a separate deductible for “each and every claim . . . irrespective

of the number of claims which may be joined in any one suit.”

      During the policy periods, Lenox Homes hired Yarbrough to perform stucco

and drywall work on several large residential developments in Bakersfield,

California. Lenox paid Yarbrough at least $6,000 for its work on each home.

Eventually, 636 homeowners filed three separate lawsuits against Lenox in state

court, alleging a litany of construction defects, including defects in the stucco

work. By way of three cross-complaints for indemnity, Lenox impleaded its

subcontractors, including Yarbrough.

      Yarbrough tendered the cross-complaints to ProBuilders, which eventually

settled the claims against Yarbrough for $1.4 million—about $2,000 per home.

ProBuilders then filed this declaratory judgment action, seeking reimbursement of

the entire settlement amount from Yarbrough. ProBuilders alleges that, under the

“per-claim” deductible policies, Yarbrough owes a separate deductible for each of

the 636 homes at issue in the three homeowners’ suits. Because the $2,000 per-

home settlement falls below the deductible—either $4,000 or $10,000, depending

on the applicable policy—ProBuilders says Yarbrough is obligated to reimburse it

for the entire $1.4 million settlement.




                                           3                                    16-16952
      We agree with Yarbrough and the district court that only three deductibles

are due—one corresponding to each of ProBuilders’ cross-complaints for

indemnity. The policies specify that a separate deductible is due for each claim

and contemplate that multiple claims can be joined in a suit. However, the policies

do not specify whether, when an indemnity claim is made against the insured, the

operative “claim” is the homeowner's claim against the general contractor or the

general contractor's claim against the subcontractor. Both constructions are

reasonable and are supported by the policy language. The policies are therefore

ambiguous on this point. See In re K F Dairies, Inc. & Affiliates, 224 F.3d 922,

926 (9th Cir. 2000) (citing Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut.

Ins. Co., 855 P.2d 1263, 1271 (Cal. 1993)).

      When confronted with an ambiguous policy provision, courts applying

California law must resolve the ambiguity “by looking to the expectations of a

reasonable insured”; if ambiguity still remains, courts then construe the policy

against the insurer. See id. (citing Bay Cities, 855 P.2d at 1276 (Kennard, J.

concurring); AIU Ins. Co. v. Superior Ct. of Santa Clara Cty., 799 P.2d 1253, 1264

(Cal. 1990)). Here, the district court correctly concluded that, in the specific

scenario where Yarbrough was sued only by Lenox for indemnity, it was not

unreasonable for Yarbrough to believe that only three deductibles would be due.

Although the homeowners made 636 claims against Lenox, Lenox made only three


                                          4                                        16-16952
claims against Yarbrough. Nor is it of any consequence, as ProBuilders suggests,

that Yarbrough would be obligated to pay 636 deductibles if the homeowners had

sued Yarbrough directly. Under California law, “[t]he proper question is whether

the provision or word is ambiguous in the context of this policy and the

circumstances of this case.” E.M.M.I. Inc. v. Zurich Am. Ins. Co., 84 P.3d 385, 389

(Cal. 2004) (citation and brackets omitted); see also Clarendon Am. Ins. Co. v. N.

Am. Capacity Ins. Co., 112 Cal. Rptr. 3d 339, 353 (Ct. App. 2010).

      AFFIRMED.




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