ALORICA INC v. STARR SURPLUS LINES INSURANCE COMPANY (2021)

United States Court of Appeals, Ninth Circuit.2021-04-09No. No. 20-55458

Summary · law.co

Holding. The court affirmed the district court's grant of summary judgment to Starr, holding that Express Scripts' letter rejecting Alorica's demand for payment does not constitute a 'claim' under the insurance policy because a refusal of a demand is not itself a demand.

Alorica sought coverage under its insurance policy with Starr Surplus Lines by arguing that a letter from Express Scripts constituted a 'claim' triggering coverage obligations. The letter, dated September 25, 2018, rejected Alorica's demand for $4.8 million in connection with alleged computer fraud and offered to pay only $56,791 while expressing willingness to cooperate in an investigation. The district court granted summary judgment for Starr, finding the letter did not qualify as a claim under the policy's definition.

The court affirmed, holding that the policy defines a claim as a written demand for monetary or non-monetary relief, and that Express Scripts' letter fell outside this definition. A rejection or refusal of a demand is fundamentally different from a demand itself; the letter made no request of Alorica but instead declined to pay the full amount sought. Although Alorica argued the refusal constituted an implicit request to forgive a debt, the court rejected this characterization, noting that Express Scripts denied owing the money in the first place and that Alorica made no subsequent collection efforts.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Definition of 'claim' under insurance policy
Whether rejection of monetary demand constitutes a claim
Interpretation of Express Scripts' letter as demand versus refusal

Procedural posture

The district court granted summary judgment in favor of Starr Surplus Lines Insurance Company, and Alorica appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

Alorica, Inc. argues that a letter from Express Scripts to Alorica dated September 25, 2018, constitutes a “claim” against Alorica under the terms of Aloricas insurance policy with Starr Surplus Lines Insurance Company. The district court rejected that argument and granted summary judgment to Starr. We affirm.

In relevant part, the policy defines a “claim” as a “written demand for monetary or non-monetary relief.” Express Scripts’ letter does not fall within that definition. The letter rejects Aloricas demand for $4.8 million. A refusal to accept a demand is not itself a demand; it is only a refusal. Express Scripts’ letter does not ask Alorica to do anything at all. Quite the opposite: The letter declares Express Scripts’ unconditional willingness to “cooperate reasonably in any investigation” into the underlying computer fraud, and to pay Alorica $56,791, with no consideration from Alorica expected or requested.

Alorica characterizes Express Scripts’ refusal to pay as a request that Alorica forgive a debt, and argues that Express Scripts’ letter therefore constitutes a “demand for monetary relief.” But the letter could be characterized as a request to forgive a debt only if Express Scripts in fact owed a debt in the first place. Express Scripts denies that it owes Alorica $4.8 million, and indeed Alorica has made no further effort to collect this money.

In each of the cases on which Alorica relies, a “demand” or “claim” arose when someone asked the insured party for money or to work for free. See, e.g., Westrec Marina Mgmt., Inc. v. Arrowood Indem. Co., 163 Cal.App.4th 1387, 78 Cal. Rptr. 3d 264, 268 (2008) (“The attorneys request for compensation while threatening litigation was a ‘demand[.]’ ”); Phoenix Ins. Co. v. Sukut Constr. Co., 136 Cal.App.3d 673, 186 Cal. Rptr. 513, 514 (1982) (“Sukut asked Malter to work without pay to correct the problem with the lien.”); Presidio Wealth Mgmt., LLC v. Columbia Cas. Co., 2014 WL 1341696, at *1 (N.D. Cal. Apr. 3, 2014) (holding that investors’ “demand[ ] that Presidio return their funds ․ constituted a claim”). Alorica cites no case in which the refusal of anothers demand, without more, has been held to constitute a demand. Accordingly, we agree with the district court that Express Scripts’ letter was not a “claim” under the insurance policy with Starr.

AFFIRMED.

FOOTNOTES

. As we affirm based on the meaning of “claim,” we do not address the parties’ arguments regarding whether there was a “security failure” or Starrs alternative grounds for affirmance.