Jacob Benson v. Casa De Capri Enterprises ( 2022 )


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  •                            NOT FOR PUBLICATION                           FILED
    UNITED STATES COURT OF APPEALS                        FEB 2 2022
    MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    JACOB BENSON, an individual; JOSEPH             No.    19-16686
    BENSON; DEBORAH BENSON, husband
    and wife; K. B., a minor, by and through        D.C. No. 2:18-cv-00006-DWL
    Jacob Benson, guardian ad litem,
    Plaintiffs-Appellants,          MEMORANDUM*
    v.
    CASA DE CAPRI ENTERPRISES, LLC, an
    Arizona limited liability company;
    UNKNOWN PARTIES, named as John Does
    1-20; ABC Corporations I-X; XYZ
    Partnerships I-X,
    Defendants-Appellees,
    CONTINUING CARE RISK RETENTION
    GROUP, INC., Garnishee,
    Real-party-in-interest-
    Appellee.
    Appeal from the United States District Court
    for the District of Arizona
    Dominic Lanza, District Judge, Presiding
    Argued and Submitted October 5, 2020
    Submission Withdrawn November 23, 2020
    Resubmitted January 31, 2022
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by Ninth Circuit Rule 36-3.
    Pasadena, California
    Before: KLEINFELD, HURWITZ, and BRESS, Circuit Judges.
    Appellants (“the Bensons”), appeal a district court order granting a motion by
    Continuing Care Risk Retention Group (“CCRRG”) to compel arbitration, and
    dismissing the action without prejudice. We have jurisdiction under 
    9 U.S.C. § 16
    and 
    28 U.S.C. § 1291
    . Reviewing de novo, Shroyer v. New Cingular Wireless Servs.,
    Inc., 
    498 F.3d 976
    , 981 (9th Cir. 2007), we reverse.
    After the Bensons obtained a $1.5 million judgment against Casa de Capri
    Enterprises, CCRRG’s insured, the Bensons sought a writ of garnishment against
    CCRRG. The district court determined that because the Bensons were seeking to
    avail themselves of the benefits of Casa de Capri’s insurance policy with CCRRG,
    they were also bound by the policy’s arbitration clause under Arizona’s doctrine of
    direct benefits estoppel.
    After oral argument, we certified two unresolved questions of Arizona law to
    the Arizona Supreme Court:
    1) In a garnishment action by a judgment creditor against the judgment
    debtor’s insurer claiming that coverage is owed under an insurance
    policy, where the judgment creditor is not proceeding on an
    assignment of rights, can the insurer invoke the doctrine of direct
    benefits estoppel to bind the judgment creditor to the terms of the
    insurance contract?
    2) If yes, does direct benefits estoppel also bind the judgment creditor
    to the arbitration clause contained in the insurance policy?
    2
    Benson v. Casa de Capri Enterps., LLC, 
    980 F.3d 1328
    , 1333 (9th Cir. 2020).
    The Arizona Supreme Court granted our request for certification. On January
    20, 2022, it issued a decision holding that “[t]he common law doctrine of direct
    benefits estoppel cannot be invoked in a garnishment action to bind the judgment
    creditor to the terms of the contract because applying the doctrine in this context
    would contravene Arizona’s statutory garnishment scheme.” Benson v. Casa de
    Capri Enterps., LLC, --- P.3d ---, 
    2022 WL 176288
    , at *1 (Ariz. Jan. 20, 2022). The
    court reasoned that garnishment proceedings in Arizona must “adhere to prescribed
    statutory procedures,” which “include[] the statutory requirement that the trial
    court—not an arbitrator—resolve all factual and legal issues.”           
    Id. at *3
    .
    Accordingly, “[a]llowing the arbitration clause to control in a garnishment
    proceeding would undermine the legislature’s intent that the trial court decide the
    issues of law and fact.” 
    Id.
     Based on its answer to this question, the court declined
    to reach the second certified question. 
    Id. at *4
    .
    The Arizona Supreme Court’s decision confirms that the district court erred
    in granting CCRRG’s motion to compel arbitration under the doctrine of direct
    benefits estoppel. We therefore reverse the district court’s judgment and remand for
    proceedings consistent with this decision.1
    1
    CCRRG alternatively argues that the Liability Risk Retention Act of 1986 (LLRA)
    preempts state law governing the operation of risk retention groups, and apparently
    3
    REVERSED AND REMANDED.
    by extension precludes Arizona from limiting arbitration provisions in insurance
    policies provided by a risk retention group. The district court did not address this
    argument and the Bensons argue that CCRRG did not adequately raise it below. We
    leave these matters to the district court in the first instance, with the benefit of the
    Arizona Supreme Court’s new guidance.
    4
    

Document Info

Docket Number: 19-16686

Filed Date: 2/2/2022

Precedential Status: Non-Precedential

Modified Date: 2/2/2022