Goldberger v. State Farm ( 2019 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
JOEL GOLDBERGER, et al., Plaintiffs/Appellants,
v.
STATE FARM FIRE AND CASUALTY COMPANY, Defendant/Appellee.
No. 1 CA-CV 18-0112
FILED 8-13-2019
Appeal from the Superior Court in Coconino County
No. S0300CV201700313
The Honorable Jacqueline Hatch, Judge, Retired
REVERSED AND REMANDED
COUNSEL
Hunter Humphrey & Yavitz PLC, Phoenix
By Randall S. Yavitz, Isabel M. Humphrey
Counsel for Plaintiffs/Appellants
Broening Oberg Woods & Wilson PC, Phoenix
By Robert T. Sullivan, John C. Quinn, Alicyn M. Freeman
Counsel for Defendant/Appellee
GOLDBERGER, et al. v. STATE FARM
Opinion of the Court
OPINION
Judge Michael J. Brown delivered the opinion of the Court, in which
Presiding Judge Diane M. Johnsen and Judge Jennifer M. Perkins joined.
B R O W N, Judge:
¶1 In this opinion we address whether the superior court
properly dismissed an insurance claim for property damage caused by feral
cats based on a domestic-animal exclusion in the insurance policy at issue.
Because the feral cats that caused the damage are not domestic animals
under all reasonable interpretations of the facts alleged in the complaint,
the court erred in granting the insurer’s motion to dismiss. We therefore
reverse and remand for further proceedings.
BACKGROUND
¶2 Joel and Kim Goldberger (“the Goldbergers”) own residential
rental property in Flagstaff, insured by State Farm Fire and Casualty
Company (“State Farm”) under a rental dwelling policy (“Policy”). The
Goldbergers filed a claim asserting their tenant “allowed” feral cats “to
access” the property and the cats then caused approximately $75,000 of
“accidental damage.” State Farm denied the claim, asserting “feral cats are
domestic animals and therefore the damage was not covered under the
Policy.”
¶3 The Goldbergers then filed this lawsuit, alleging breach of
contract and insurance bad faith. State Farm moved to dismiss the
complaint for failure to state a claim, arguing the Policy’s plain language
precluded coverage. State Farm based its denial of coverage on subsection
1.N of the Policy (“Exclusion”), which provides that accidental losses
caused by “birds, vermin, rodents, insects or domestic animals” are not
covered. The superior court granted the motion, reasoning in part: (1) a cat,
feral or not, is a domestic animal; (2) these feral cats were acting as if they
were domesticated; and (3) a reasonably intelligent consumer would
understand the Exclusion to unambiguously apply to damage caused by
feral cats. This timely appeal followed.
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Opinion of the Court
DISCUSSION
¶4 A party may move to dismiss a claim for “failure to state a
claim upon which relief can be granted.” Ariz. R. Civ. P. 12(b)(6). In
evaluating a claim’s sufficiency, we take as true “all well-pleaded factual
allegations and indulge all reasonable inferences from those facts,” but
need not accept conclusory statements. Coleman v. City of Mesa, 230 Ariz.
352, 356, ¶ 9 (2012). A court should dismiss a claim only if, under any
interpretation of the well-pleaded facts, the plaintiff would not be entitled
to relief. Id. at ¶ 8. Our review is de novo. Id. at 355, ¶ 7.
¶5 Several of State Farm’s arguments rely on the assumption that
these cats were peaceably living in the home with the tenant. The superior
court, at least in part, appeared to follow State Farm’s lead. A court
deciding a Rule 12(b)(6) motion, however, must “look only to the pleading
itself,” Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008),
including documents that “are central to the complaint,” Strategic Dev. &
Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 64, ¶ 14 (App.
2010), such as the Policy. Because we limit our review to the complaint and
the Policy, we proceed without characterizing the feral cats’ behavior or any
care the tenant may have afforded them beyond what the complaint
alleges—that the tenant “allowed [the cats] to access the property.” To the
extent State Farm’s arguments on appeal depend on facts not alleged in the
complaint, they necessarily fail.
A. Interpretation of the Exclusion
¶6 We review de novo the interpretation of an insurance policy.
Teufel v. Am. Family Mut. Ins. Co., 244 Ariz. 383, 385, ¶ 10 (2018). A policy
term is ambiguous if it is susceptible to two or more reasonable
interpretations that conflict. Id. We examine policy language “from the
viewpoint of one not trained in law or in the insurance business.” Sparks v.
Republic Nat’l Life Ins. Co., 132 Ariz. 529, 534 (1982). But “even if a policy is
apparently ambiguous, a decision to require coverage follows [only] after
consideration of ‘legislative goals, social policy, and examination of the
transaction as a whole.’” Emp’rs Mut. Cas. Co. v. DGG & CAR, Inc., 218 Ariz.
262, 264, ¶ 9 (2008) (citation omitted); see also Teufel, 244 Ariz. at 386, ¶ 17
(noting a court may consider common meanings and an insured’s
reasonable expectations when resolving an apparent ambiguity). At the
end of our inquiry, we must construe any remaining ambiguity against the
insurer, “particularly when the ambiguity involves an exclusionary clause.”
Teufel, 244 Ariz. at 385, ¶ 10.
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GOLDBERGER, et al. v. STATE FARM
Opinion of the Court
¶7 The Goldbergers argue the superior court erred in dismissing
their complaint because the phrase “domestic animals” is reasonably
susceptible to differing interpretations and therefore must be construed
against State Farm. According to State Farm, the Exclusion is susceptible to
only one reasonable interpretation; alternatively, it contends that any
ambiguity remaining after considering the Policy’s overall purpose must be
resolved in its favor.
¶8 Although the Policy does not define “domestic animals,” the
parties offer multiple definitions. The Goldbergers contend the term could
reasonably refer to either (1) animals belonging to a broader class of animals
that have been domesticated at some point in history (the “species-based
definition”) or (2) animals that are, in fact, kept by a person for any of
various purposes, including as pets (the “individualized definition”). State
Farm argued for the species-based definition in the superior court, which
appeared to agree with that definition. In its appellate briefing, State Farm
supplied a third definition, asserting the phrase can only reasonably refer
to “dogs [and] cats, as well as a broader class of animals reasonably
expected to be found in or around a dwelling.” And at oral argument, State
Farm asserted that regardless of the outer limits of what “domestic
animals” means, it includes all dogs and cats.
¶9 State Farm first points to a federal case interpreting the same
policy language in the context of property damage allegedly caused by
“feral” cats. Bjugan v. State Farm Fire & Cas. Co., 969 F. Supp. 2d 1283 (D.
Or. 2013), aff’d sub nom. Bjugan v. State Farm Fire & Cas. Ins. Co., 644 Fed.
Appx. 789 (9th Cir. 2016). Despite a surface-level similarity, the case is
distinguishable. Bjugan was decided on summary judgment, and
“involve[d] a renter who maintained . . . ninety-five cats and two dogs in a
rental house and the manner in which the animals were maintained resulted
in physical damage to the house.” 969 F. Supp. 2d at 1284–85 (emphasis
added). The fact that the cats were being “maintained” by the renter, who
actually “acknowledge[d] she knew there were cats doing damage” and
“tried to prevent that whenever she was aware of it occurring,” id. at 1288,
means the cats were so obviously domestic animals that the court’s
additional plain-meaning analysis is of limited utility. Put differently, the
cats in Bjugan would be domestic animals under both the individualized
and species-based definitions proposed here.1
1 The only other case we are aware of that found the term “domestic
animals” unambiguous is Smith v. State Farm Fire & Cas. Co., 381 So. 2d 913
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Opinion of the Court
¶10 Instead, at least initially, we conclude “domestic animals” as
used in the Exclusion is ambiguous because it has at least two conflicting
interpretations, both reasonable. Under the species-based definition, the
animal’s species is dispositive, meaning its current habitat and whether a
human cares for it are irrelevant. Under the individualized definition, the
opposite is true. We resolve this ambiguity by examining the “transaction
as a whole,” including the Policy’s language and purpose, public policy
considerations, the parties’ intent, and the insured’s reasonable
expectations.2 Teufel, 244 Ariz. at 386, ¶ 17; State Farm Mut. Auto. Ins. Co. v.
Wilson, 162 Ariz. 251, 257–58 (1989).
¶11 “We start with the policy’s language.” Teufel, 244 Ariz. at 387,
¶ 18 (assigning common meaning after finding the policy language
ambiguous). Broadly stated, an “animal” is “any living creature (besides
plants) other than a human being.” See, e.g., Animal, Black’s Law Dictionary
(10th ed. 2014). And the adjective “domestic” means “[o]f, relating to, or
involving the family or the household.” See, e.g., Domestic, Black’s Law
Dictionary (10th ed. 2014). Used together, the two words presumably refer
to animals that relate to or involve the family or the household—pets and
other animals kept in or around a household—as some dictionaries
confirm. See, e.g., Domestic Animal, Cambridge Advanced Learner’s
Dictionary (4th ed. 2013) (“[A]n animal that is not wild and is kept as a pet
or to produce food.”); Domestic, New Oxford American Dictionary (3d ed.
2010) (“(of an animal) tame and kept by humans . . . .”).
¶12 Other dictionaries, however, suggest the compound term
“domestic animals” broadly refers to animal species that, as a matter of
common knowledge, have long lived peaceably with humans. Domestic
Animal, Webster’s Third New International Dictionary (unabridged ed.
(La. Ct. App. 1980). But Smith involved a cow kept by the insured that fell
into the insured’s swimming pool, id. at 913, and so it is an even clearer case
than Bjugan. Thus, neither case is persuasive here.
2 Neither party has identified, nor has our research revealed, any
legislative goals that would assist us in interpreting the meaning of
“domestic animals.” And no statute or binding legal precedent purports to
define the phrase “domestic animals” in the specific context of insurance.
See First Am. Title Ins. Co. v. Johnson Bank, 239 Ariz. 348, 352, ¶ 20 (2016)
(finding the statutory definition of “title insurance” not helpful in
interpreting valuation date for covered loss). In addition, “no other
evidence establishes any particular meaning mutually intended by the
contracting parties.” Id. at 351, ¶ 13.
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GOLDBERGER, et al. v. STATE FARM
Opinion of the Court
1993) (“[A]ny of various animals (as the horse, ox, sheep) which have been
domesticated by man so as to live and breed in a tame condition . . . .”);
Domestic Animal, Black’s Law Dictionary (10th ed. 2014). And other
definitions are inherently ambiguous as to whether an animal’s
classification occurs on a species or individual level. See, e.g., Domestic, The
American Heritage Dictionary (5th ed. 2011) (referring to animals that are
“[t]ame or domesticated”).
¶13 Although the dictionaries variously adopt individualized or
species-based definitions, the weight of them lean toward an
individualized definition. When construing an insurance policy, we should
be cautious in embracing a definition from legal dictionaries that may
define the term “domestic animals” in a technical legal sense, cf. New Prime
Inc. v. Oliveira, 139 S. Ct. 532, 539–40 (2019), which would conflict with the
principle that we interpret policy language from the perspective of one
“untrained in law or business,” Teufel, 244 Ariz. at 385, ¶ 10. Indeed, that
Black’s definition also refers the reader to the Latin term of art “domitae
naturae” is at least some evidence that this might be true. Domestic Animal,
Black’s Law Dictionary (10th ed. 2014). On this score, other courts have
noted that a static species-based approach, under which no animal
belonging to a species once domesticated may ever be considered wild
again, might be correct scientifically, but is not so easily squared with
common understandings. See Butler v. City of Palos Verdes Estates, 37 Cal.
Rptr. 3d 199, 206 (App. 2005); see also Gallick v. Barto, 828 F. Supp. 1168, 1170
n.2 (M.D. Penn. 1993).
¶14 We also consider it relevant that the Exclusion applies to
“domestic animals,” not “domesticated animals.” Modern usage draws a
distinction between “domestic animals”—a term referring to a single
animal’s present status—and “domesticated animals”—a term referring to
historical facts about the species generally. See Brian A. Garner, Garner’s
Modern American Usage 268 (2d ed. 2003) (“A domestic animal is a pet . . . that
lives with the family. A domesticated animal is a formerly wild animal that
has long been bred for human use . . . .”); see also Hogan v. Gridelli, 879 P.2d
896, 898 (Or. Ct. App. 1994) (recognizing the distinction between
“domestic” and “domesticated” and concluding that “domesticated” refers
to species that “have been adapted to live with humans or for human use”).
Had State Farm intended the Exclusion to apply to all species of animals
domesticated at some point in history, it could have easily said so.
¶15 We find additional confirmation that the individualized
definition has the better claim to common meaning given that the
legislature has so defined the phrase in two different contexts. See Ariz.
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Opinion of the Court
Rev. Stat. (“A.R.S.”) §§ 11-251(47) (defining “domestic animal” as one “kept
as a pet and not primarily for economic purposes”); 12-558.02(C) (defining
“domestic animal” as “a dog, a cat or another animal that is domesticated
and kept as a household pet”). Although addressing other circumstances,
these statutes are further evidence that the individualized definition is more
logical.
¶16 The other words in the Exclusion (“birds, vermin, rodents,
insects”) do not lead us to a different conclusion. Although we often
interpret doubtful words by referring to accompanying words, Estate of
Braden ex rel. Gabaldon v. State, 228 Ariz. 323, 326, ¶ 8 (2011), the other words
of the Exclusion are so different in kind from the term “domestic animals”
that they shed little light on its most reasonable interpretation. Each of
them names an animal, or group of animals, that a homeowner normally
seeks to exclude from the home, but—under any definition—“domestic
animals” are just the opposite. For this reason, the canon ejusdem generis is
also not helpful here. See id. At most, each preceding word in the Exclusion
could refer to a wide category of animals, a usage that might favor a species-
based definition. But, then again, whether a particular animal is “vermin”
would appear to call for an individual determination in most cases. See
Christ Episcopal Church of Bastrop v. Church Ins. Co., 731 So. 2d 1071, 1074 (La.
Ct. App. 1999) (“In each case, the courts determined that whether a
particular creature is clearly or unambiguously vermin is a case-by-case
inquiry turning upon the generally understood meaning of the term.”
(collecting cases)); Vermin, The American Heritage Dictionary (5th ed. 2011)
(“Various small animals . . . that are destructive, annoying, or injurious to
health.”).
¶17 The Policy’s purpose and how its provisions work together as
a whole lend further support to the conclusion that the individualized
definition of “domestic animals” is the most reasonable one. See Nichols v.
State Farm Fire & Cas. Co., 175 Ariz. 354, 357 (App. 1993) (“A contract of
insurance . . . is not a collection of separate unrelated parts; each part must
be read and interpreted in connection with all other parts.”).
¶18 The Goldbergers argue that under State Farm’s definition, the
Exclusion would swallow the Policy’s apparent general coverage of
damages caused by animals. According to State Farm, though, the
Exclusion—just like the other exclusions in the Policy—is designed to
exclude from coverage damages that an insured can easily detect and
prevent. State Farm’s proffered purpose comports with the purpose of
insurance generally but does not support its argument here.
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Opinion of the Court
¶19 In some sense, all “[i]nsurance policies are purchased ‘as
protection against calamity.’” Transamerica Ins. v. Meere, 143 Ariz. 351, 355
(1984) (citation omitted). The idea is that an “insured seeks the safety of
insurance against risks that are outside his control and the insurer agrees to
cover for a premium based on actuarial calculations of the random
occurrence (risk) of such events in a given population.” Id. at 355–56. This
concept is central to the definition of insurance itself and to the origin of
property insurance. See A.R.S. § 20-103(A); 10A Couch on Insurance § 148:1
(“Historically, property insurance grew out of the insurance against the risk
of fire which became available for ships, buildings, and some commercial
property at a time when most of the structures in use were made wholly or
primarily of wood.”).
¶20 The Policy’s basic coverage provisions insure the
Goldbergers’ dwelling, structures attached to the dwelling, certain
construction materials, carpeting, outdoor antennas, a limited amount of
personal property on the premises, and miscellaneous additional
coverages, including loss of rents. The Policy promises coverage for
accidental direct physical loss to the real and personal property unless a
provision of “Section I – Losses Not Insured” applies. As the name
suggests, Section I enumerates certain types of losses the Policy does not
cover, including those caused by “birds, vermin, rodents, insects or
domestic animals.” Because no other provision excepts animal-caused
damage from the promised coverage, the clear inference is that all
accidental animal damage is covered unless the Exclusion applies. Cf. Estate
of Tovrea v. Nolan, 173 Ariz. 568, 573 (App. 1992) (“[T]he statement of one
exception implicitly denies the existence of other unstated exceptions.”).
¶21 What this means is that the Policy would not, for example,
exclude coverage for exotic pets unless “domestic animals” is construed to
have an individualized definition. While not common, one can imagine an
insured keeping a nontraditional animal such as a snake, cougar, monkey,
or even a bear in the home or in an associated structure. See, e.g., Lakeshore
Hills, Inc. v. Adcox, 413 N.E.2d 548, 549 (Ill. App. Ct. 1980) (describing a
defendant who kept a pet “12-year-old, 575-pound Canadian black bear”
on his property); Turudic v. Stephens, 31 P.3d 465, 472 (Or. Ct. App. 2001)
(finding that keeping cougars as “family pets” was a permissible
“residential use” under restrictive covenants governing the property).
When such a pet behaves badly, under the species-based definition, an
insurer would have to cover the resulting damage because the pet belongs
to a species that has never been domesticated, and no other exception
applies. Under an individualized definition, though, the Exclusion would
preclude coverage in each instance because the pet animal is “domestic,”
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Opinion of the Court
given that the insured exercises care and control over it. Adopting the
species-based definition would therefore create a nonsensical outcome
resulting in coverage even though the insured was in the best position to
prevent damage. Thus, the individualized definition yields the most
reasonable construction because it encourages the insured to prevent
damage by controlling an animal that he or she willingly brings into the
home.
¶22 If, as State Farm now asserts, the general purpose of the Policy
is to provide coverage for accidental losses and the specific purpose of the
Exclusion is to except from coverage damages that an insured can easily
detect and prevent, then in the abstract, it is difficult to see how excluding
damage caused to the dwelling by feral animals—living in the wild with no
owner or keeper—would serve that purpose. There is nothing predictable
about when such an animal, lacking an owner or keeper and living in
nature, might damage a dwelling. And a homeowner has little, if any,
meaningful ability to control such animals should they happen to wander
onto the property. Of course, if a homeowner endeavors to keep such an
animal, then he or she is charged with responsibility for it. At oral
argument, however, State Farm asserted that a species-based definition of
the Exclusion would exclude coverage for damages to a dwelling caused by
a wild horse, but allow coverage when the damages are caused by a skunk
an owner keeps as a pet (assuming a skunk is neither vermin nor a rodent).
This result conflicts with the purposes of the Exclusion—to exclude
coverage of damages for which the insured has some degree of control but
cover damages caused by risks outside the insured’s control. Only an
individualized definition can properly serve those purposes.
¶23 Caselaw also supports an individualized approach. In
Farmers Insurance Exchange v. Loesche, 17 Ariz. App. 421 (1972), the insured
died while driving a “one-half ton” truck furnished to him by his employer
“for the exclusive purpose of transporting himself between” his employer’s
pay telephones to make collections. Id. at 422. His insurer denied coverage
because the truck was a “commercial vehicle” and the policy did not apply
to death sustained by a person driving a commercial vehicle in the course
of his occupation. Id. at 423. The insured’s estate argued that because the
term “commercial vehicle” was not defined, it was ambiguous and had to
be construed in favor of coverage. Id. We disagreed, explaining that “most
courts analyze the character of the use of the vehicle taken into
consideration with the form of the car in determining whether there is
liability.” Id. (collecting cases). “[T]he mere fact that a certain vehicle can
be used for personal purposes,” we elaborated, “is not conclusive in
determining whether a vehicle is ‘commercial.’ It is the character of the use
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Opinion of the Court
that is crucial.” Id. at 424. Applying this “common-sense reading,” we
found that this individualized definition left no ambiguity in the undefined
term. Id. at 423–24. That same “common-sense reading” resolves the
apparent ambiguity at issue in this case.
¶24 Outside the insurance context, other courts have recognized
that animals living and breeding in the wild do not fall within the common
understanding of “domestic animals.” See Butler, 37 Cal. Rptr. 3d at 205–06.
In Butler, a group of citizens sued the city for maintaining “a program to
manage the size of a feral peafowl population that inhabited parklands and
canyon property owned by the municipality.” Id. at 201. The peafowl in
question had been brought to the city by its former mayor, who
“maintained them in a pen behind his home.” Id. After the mayor’s death,
the birds were released into the wild. Id. The court recognized that “while
the peafowl originally brought to Palos Verdes Estates may have been
domesticated, their progeny [were] not,” because decades later no one
provided the birds with food, protected them from their enemies, or
facilitated their reproduction. Id. at 205. The court specifically rejected, as
reflecting a technical as opposed to ordinary understanding, the
proposition State Farm offers here—that the offspring of a domesticated
animal can never again be considered wild. Id. at 205–06.
¶25 And the reverse is also true: though an animal belongs to a
species never before domesticated, individual members of that species may
become “domestic.” See E.A. Stephens & Co. v. Albers, 256 P. 15, 18 (Colo.
1927). The plaintiff in Albers sought replevin of a silver fox’s pelt. Id. at 15.
The fox was “of the second generation born in captivity” on the plaintiff’s
ranch, its left ear marked with a tattoo for identification. Id. When the fox
escaped from its pen, the plaintiff pursued it until nightfall, but the fox was
eventually killed by a local rancher. Id. The rancher gave the pelt to a
trapper, who sold it to the defendant. Id. at 15–16. The defendant argued
that because foxes are wild animals, the plaintiff’s title to the fox ended
when it escaped its pen and was killed. Id. at 16. Responding that this fox
was a domestic animal, plaintiff contended her ownership continued even
after the fox’s escape. Id. The court rejected the defendant’s argument that
“whether an animal be wild or domestic must be determined from the
species, not from the individual.” Id. at 16. Instead, applying “general
principles in the light of custom, existing facts, and common knowledge,”
it affirmed judgment for the plaintiff because the fox “was held in captivity,
semidomesticated, escaped by accident, fled against the will of his owner,
and pursuit was abandoned by compulsion.” Id. at 18. In other words, even
though the fox would not be a “domestic animal” under a species-based
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Opinion of the Court
approach, the court considered it “domestic” under an individualized
approach.
¶26 Public policy considerations also militate in favor of an
individualized definition because that approach provides greater certainty
to insureds about the coverages they buy, whereas the indeterminate nature
of a species-based definition necessarily leaves them to speculate about
coverage. Whether a particular species is “domestic” necessarily depends
on little more than common knowledge, a criterion that may be useful in
the most obvious of cases, but not among fringe cases. The extent of a
species’ domestication is often a question of degree, a subject on which
reasonable minds can differ. Definitions that purport to encompass all
animals that are tame or capable of being tamed fare no better in this regard.
Bears can be taught to balance balls on their noses and certain elephants can
perch on a pedestal. State Farm’s attempt to furnish a limiting principle by
arguing that “domestic animals” includes those “animals reasonably
expected to be found in or around a dwelling” is equally unavailing. The
animals in this definition would change depending on geography; one
might not reasonably expect to see a bear around a dwelling in Phoenix, but
bears are not so rare in some Flagstaff neighborhoods. No language in the
Policy tells the insured that the scope of coverage could depend on such a
factor. In short, the species-based definition offers no meaningful limit on
the scope of the Exclusion, preventing consumers from knowing what they
purchased.
¶27 Based on the foregoing, we conclude that the term “domestic
animals” as used in the Policy is ultimately not ambiguous. Instead, the
term encompasses specific animals that are subject to the care, custody, and
control of a person.
¶28 The Goldbergers’ complaint alleges the cats that damaged
their dwelling were “feral” and were “allowed to access the property by
their tenant.” On this alone, we cannot say that the tenant, or anyone else,
was keeping the feral cats in such a manner that the Exclusion precludes
coverage. Resolving all reasonable inferences in the Goldbergers’ favor,
Cleckner v. Ariz. Dep’t of Health Services, 246 Ariz. 40, 42, ¶ 6 (App. 2019), we
must presume that the cats were feral, meaning they had no owner or
keeper and were living in nature. See, e.g., Feral, The American Heritage
Dictionary (5th ed. 2011) (“Existing in a wild or untamed state.”). And the
allegation that the tenant allowed the cats to access the property does not
show the tenant exercised sufficient care, custody, and control over the cats
so as to render them “domestic animals.” Therefore, because the facts
alleged in the complaint and the reasonable inferences drawn therefrom are
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Opinion of the Court
within the Policy’s coverage, the superior court erred in dismissing the
complaint.
¶29 During discovery, of course, additional facts may reveal that
the tenant was actually keeping or maintaining these cats like the tenant in
Bjugan. We need not explore all the possible purposes for which a domestic
animal may be kept. Suffice it to say that whether a particular animal falls
within the Exclusion would normally be a factual question, depending on
the purpose for which the animal is kept and the amount of care, custody,
or control a person exercises over the animal. Cf. Spirlong v. Browne, 236
Ariz. 146, 151, ¶ 17 n.4 (App. 2014) (collecting cases). Those or other facts
may ultimately bring this case outside the Policy’s coverage, see Teufel, 244
Ariz. at 389, ¶ 29, but they await factual development.
B. Reasonable Expectations of the Insured
¶30 The superior court also rejected the Goldbergers’ alternative
argument that even if the term “domestic animals” unambiguously
includes feral cats, that result would violate the objectively reasonable
expectations of the average insured. The reasonable expectations doctrine
applies only when unambiguous boilerplate terms in an insurance contract
result in a denial of coverage. See Gordinier v. Aetna Cas. & Sur. Co., 154 Ariz.
266, 272–73 (1987). Because we have rejected State Farm’s contention that
the Exclusion necessarily applies to all feral cats, we need not address the
merits of this alternative argument.
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Opinion of the Court
CONCLUSION
¶31 Because the Goldbergers have alleged facts that, if proven,
would entitle them to relief, we reverse the superior court’s order
dismissing their complaint and remand for further proceedings consistent
with this opinion. Both parties request attorneys’ fees incurred on appeal
under A.R.S. § 12-341.01(A). Because State Farm has not prevailed on
appeal, we deny its request. In our discretion, we deny the Goldbergers’
request for attorneys’ fees without prejudice to them requesting appellate
fees at the conclusion of the litigation in the superior court. As the
successful party on appeal, the Goldbergers are entitled to taxable costs
upon compliance with ARCAP 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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