Genesis Insurance Co. v. Magma Design Automation, Inc., 705 F. App'x 505

Background

Magma Design Automation faced patent-related litigation and provided information to its insurer Genesis and to Executive Risk Indemnity, Inc. (ERII) about those matters.
This appeal concerns whether the information Magma provided to ERII constituted a written “notice of circumstances” under ERII’s 2003–04 Policy, which would trigger that policy.
In a prior Ninth Circuit decision (Genesis I), the court held that the information Magma provided to Genesis was not a sufficient “notice of circumstances.”
ERII treated its 2004–06 policy as exhausted after records adjustment; National Union (first-layer excess insurer) was then asked to cover Genesis’s $5 million settlement payment.
The district court granted partial summary judgment for Genesis and Magma, finding ERII’s 2003–04 policy was not triggered, awarding Genesis recovery from National Union, and awarding prejudgment interest calculated from July 21, 2008, at the contract rate.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Magma’s communications to ERII constituted a written “notice of circumstances” under the 2003–04 Policy	Magma/National Union argued the additional phone call to ERII showing potential D&O exposure completed notice and triggered the policy	Genesis/Magma argued the prior Ninth Circuit ruling applied and the phone call was not a written notice of circumstances	The court held the law-of-the-case applied and, in any event, the phone call did not satisfy the policy’s written notice requirement; no notice was given
Whether ERII properly adjusted its records and treated the 2004–06 policy as exhausted, making National Union the primary payer	National Union argued ERII’s 2003–04 policy should have remained effective, so National Union would not be primary	Genesis argued ERII was not given required notice and thus could adjust records to show exhaustion of the 2004–06 policy, making National Union liable	The court held ERII could adjust its records; ERII’s 2004–06 policy was exhausted and National Union was liable for the first layer excess coverage
Proper accrual date for prejudgment interest	National Union argued a later accrual date was appropriate because liability was determined later	Genesis argued accrual should be when the damage amount became certain — the $5M settlement date	The court held accrual occurred July 21, 2008, when Genesis paid the $5M settlement (amount became certain)
Correct prejudgment interest rate	National Union contended a different (non-contract) rate should apply	Genesis argued equitable subrogation yields contractual rights, so California contract rate applies (10% per annum)	The court held contract prejudgment interest rate (10% per Cal. Civ. Code § 3289(b)) applies because Genesis’s subrogated right is contractual

Key Cases Cited

United States v. Lummi Nation, 763 F.3d 1180 (9th Cir. 2014) (describing law-of-the-case doctrine)
Genesis Ins. Co. v. Magma Design Automation, Inc., 386 F. App’x 728 (9th Cir. 2010) (prior panel holding Magma’s communications did not constitute notice of circumstances)
Evanston Ins. Co. v. OEA, Inc., 566 F.3d 915 (9th Cir. 2009) (explaining accrual for prejudgment interest when amount becomes certain)
Fireman’s Fund Ins. Co. v. Md. Cas. Co., 26 Cal. Rptr. 2d 762 (Cal. Ct. App. 1994) (discussing equitable subrogation in insurance context)

AFFIRMED.