Gemini Insurance Company v. North American Capacity Insurance Company, 3:14-cv-00121

Olsen Construction performed repair work on residential units at The Pointe at Third Creek in 2002–2003 under subcontract from Valentine Construction; Gemini insured Olsen for overlapping earlier periods and North American issued a CGL policy effective Feb 15, 2005–Feb 15, 2006.
The HOA sued Valentine in 2010 over the repairs; Valentine impleaded Olsen in 2012. Gemini defended Olsen and later tendered defense to North American; North American declined in January 2013.
Gemini sued North American (state court, then removed) seeking declaratory relief and equitable contribution for defense and settlement costs, arguing North American had a duty to defend under its policy.
North American moved for summary judgment, arguing the policy’s designated work exclusion (excluding work performed for homeowners associations/new construction/remodeling) barred coverage because the repairs were for an HOA and thus outside the policy.
The court granted Gemini’s motion for partial summary judgment and denied North American’s motion, finding a potential for coverage and that the designated work exclusion was ambiguous as to timing; North American’s motion for reconsideration was denied.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether North American had a duty to defend Olsen in the underlying suit	Gemini: the complaint raises a potential for coverage under the CGL policy; exclusions do not clearly preclude coverage	North American: designated work exclusion excludes HOA work, so no coverage or duty to defend	Court: duty to defend exists because there is a potential for coverage and insurer failed to show exclusion precluded all possibility of coverage
Ambiguity of the designated work exclusion as to timing	Gemini: exclusion ambiguous; a reasonable insured could read it to apply only to work during the policy period	North American: exclusion unambiguous — excludes work performed for HOAs regardless of when performed	Court: exclusion ambiguous as to temporal scope; ambiguities construed for insured, so doubt favors duty to defend
Whether the court erred by relying on out-of-circuit authority or conducting its own research	Gemini: court may rely on its research and nonbinding examples to illustrate law	North American: court should not have cited non-briefed, nonbinding cases	Court: judicial research is permissible; cited cases were illustrative and not binding; error not shown
Whether reconsideration was warranted	Gemini: oppose reconsideration; prior ruling stands	North American: raises additional authority and argues ambiguity ruling was wrong	Court: denied — no new evidence, clear error, or change in law; arguments could have been raised earlier

United Nat’l Ins. Co. v. Frontier Ins. Co., 99 P.3d 1153 (Nev. 2004) (insurer owes duty to defend when complaint shows potential for coverage)
Nat’l Union Fire Ins. Co. v. Reno’s Exec. Air, 682 P.2d 1380 (Nev. 1984) (coverage limitations must be clearly and distinctly communicated)
Farmers Ins. Exch. v. Neal, 64 P.3d 472 (Nev. 2003) (ambiguities in insurance policies are resolved for the insured)
Anthem Elecs., Inc. v. Pac. Emps. Ins. Co., 302 F.3d 1049 (9th Cir. 2002) (insurer bears heavy burden to show insured’s complaint cannot possibly be covered)
Montrose Chem. Corp. v. Superior Court of L.A. Cnty., 861 P.2d 1153 (Cal. 1993) (discussion of insurer’s burden to deny defense based on exclusions)
Carroll v. Nakatani, 342 F.3d 934 (9th Cir. 2003) (Rule 59(e) motion cannot raise arguments that could have been presented earlier)
School Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255 (9th Cir. 1993) (standards for reconsideration)