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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 2 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT JACOB BENSON, an individual; JOSEPH No.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for the District of Arizona Dominic Lanza, District Judge, Presiding Argued and Submitted October 5, 2020 Submission Withdrawn November 23, 2020 Resubmitted January 31, 2022 * This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit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. § 16and
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