Anpac v. Brittney Gardineer ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMERICAN NATIONAL PROPERTY No. 20-15826
AND CASUALTY COMPANY,
Plaintiff/Counter-Defendant/ D.C. No.
Appellee, 2:18-cv-01548-
RFB-BNW
v.
BRITTNEY L. GARDINEER, OPINION
Defendant/Counter-Claimant/
Appellant.
Appeal from the United States District Court
for the District of Nevada
Richard F. Boulware II, District Judge, Presiding
Argued and Submitted May 11, 2021
San Francisco, California
Filed February 11, 2022
Before: J. Clifford Wallace and Daniel P. Collins, Circuit
Judges, and Jed S. Rakoff, * District Judge.
Opinion by Judge Collins
*
The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
2 ANPAC V. GARDINEER
SUMMARY **
Insurance Law
The panel affirmed the district court’s summary
judgment in favor of American National Property and
Casualty Company (“ANPAC”) in a diversity insurance
coverage action arising under Nevada law.
The appellant, Brittney Gardineer, was involved in an
automobile accident, and she sued the other driver, Lynette
Hill (“Hill”), and the vehicle owner, Dennis Hill. Dennis
Hill had both a primary insurance policy and an umbrella
policy with ANPAC. After Dennis’s death, the parties
reached a settlement wherein ANPAC paid Gardineer the
policy limit of Dennis’s automobile insurance policy, and
Gardineer reserved the right to assert that ANPAC had a duty
to indemnify Hill under Dennis’s umbrellas policy for Hill’s
liability. ANPAC filed this action seeking a declaration that
it had no duty to indemnify Hill under the umbrella policy.
The panel held that Dennis Hill’s umbrella policy, by its
plain and unambiguous terms, did not provide coverage for
Lynette Hill’s liability arising from her use of Dennis’s
vehicle. The panel first considered the terms of the
“Coverage” section in Dennis’s umbrella policy, and held
that it extended coverage to Hill’s liability for damages only
if Hill is an “insured” within the meaning of the policy. The
term “insured” meant Dennis, his wife, and any “relative” –
defined as a related person living in the household. Because
it was undisputed that Hill did not reside in Dennis’s
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
ANPAC V. GARDINEER 3
household, Hill was not a “relative” and not an “insured”
under the policy.
Hill alleged that coverage for her liability arose under
“Exclusion 29” of the umbrella policy. The panel rejected
Gardineer’s argument that Exclusion 29 created an
ambiguity as to whether Hill’s liability was covered under
Dennis’s umbrella policy. The panel held that Gardineer’s
construction of Exclusion 29 was not based on a reasonable
reading of the text. This conclusion was reinforced by a
substantial body of caselaw from other jurisdictions that, in
the panel’s view, the Nevada Supreme Court would likely
follow. Under the panel’s reading of the plain language of
the policy, Exclusion 29’s exception did not expand the
policy’s coverage beyond its underlying coverage terms.
Because those terms did not extend coverage to Hill’s
liability, it followed that Dennis’s umbrella policy did not
require ANPAC to indemnify Hill for her liability from the
accident with Gardineer.
COUNSEL
Matthew H. Friedman (argued) and Christopher B. Phillips,
Ford & Friedman, Henderson, Nevada; Brice J. Crafton,
Deaver & Crafton, Las Vegas, Nevada; for Defendant/
Counter-Claimant/Appellant.
W. Randolph Patton (argued), Thorndal Armstrong Delk
Balkenbush & Eisinger, Las Vegas, Nevada, for
Plaintiff/Counter-Defendant/Appellee.
4 ANPAC V. GARDINEER
OPINION
COLLINS, Circuit Judge:
In this insurance-coverage dispute arising under Nevada
law, we are asked to decide whether an exception to an
exclusion from coverage can be construed as expanding the
terms of the policy’s otherwise-applicable coverage. Courts
in other jurisdictions have generally rejected such an
approach to construing policy exclusions, and we predict
that the Nevada Supreme Court would follow a similar rule.
Based on that understanding, and on our reading of the
policy terms at issue here, we conclude that the district court
correctly granted summary judgment in favor of the insurer
in this case. We therefore affirm its judgment.
I
On September 18, 2013, while driving her Honda CRV
in Clark County, Nevada, Brittney Gardineer was involved
in an accident with a Ford Explorer driven by Lynette Hill,
who is now known as Landon Hill (“Hill’’). The Ford
Explorer was owned by Hill’s father-in-law, Dennis Hill
(“Dennis”), and Hill was driving it with his permission. In
August 2015, Gardineer filed suit in Nevada state court
against Hill and Dennis for damages arising from the
accident. Although Dennis had not been driving the
Explorer, he was sued on a theory of negligent entrustment.
At the time of the accident, Dennis had both a primary
automobile insurance policy and an umbrella policy with
American National Property and Casualty Company
ANPAC V. GARDINEER 5
(“ANPAC”). 1 Dennis died in November 2017 while
Gardineer’s lawsuit was still pending, but after his death, the
parties settled that lawsuit in June 2018. Specifically, in
exchange for dismissal with prejudice of the lawsuit against
Hill and Dennis’s Estate, ANPAC agreed to pay to Gardineer
the policy limit ($250,000) of Dennis’s automobile
insurance policy. Under the terms of the settlement,
however, Gardineer expressly reserved the right to assert
that ANPAC had a “duty to indemnify” Hill, under Dennis’s
umbrella policy, for Hill’s liability arising from the
accident. 2 The settlement contemplated that ANPAC would
file a declaratory relief action against Gardineer in federal
court to resolve the disputed issue of Hill’s coverage under
Dennis’s umbrella policy. If ANPAC succeeded in
defeating coverage for Hill’s liability under the umbrella
policy, then Gardineer would receive nothing further. If
Gardineer established coverage, then the parties would either
agree to, or arbitrate, the amount of additional damages that
Gardineer should receive, consistent with the coverage
thereby established and within an “agreed cap on damages”
set forth in the settlement.
Invoking diversity jurisdiction under 28 U.S.C.
§ 1332(a)(1), ANPAC filed this lawsuit against Gardineer in
the district court in August 2018, asserting a single claim
seeking a declaration that ANPAC had no duty under
Dennis’s umbrella policy to indemnify Hill for any liability
1
An “umbrella policy” generally refers to an “insurance policy
covering losses that exceed the basic or usual limits of liability provided
by other policies.” See Insurance Policy, BLACK’S LAW DICTIONARY
(11th ed. 2019).
2
The settlement agreement did not reserve any right for Gardineer
to assert any further claims under the umbrella policy with respect to
Dennis’s liability for the accident.
6 ANPAC V. GARDINEER
arising from the accident. See 28 U.S.C. § 2201. Gardineer
answered and asserted a converse claim for declaratory relief
against ANPAC. After conducting discovery, ANPAC and
Gardineer filed cross-motions for summary judgment in
2019. The district court held that ANPAC had no duty to
indemnify Hill under Dennis’s umbrella policy, and the
court therefore granted ANPAC’s motion for summary
judgment and denied Gardineer’s. Gardineer timely
appealed.
II
Gardineer and ANPAC agree that the scope of coverage
afforded under the terms of Dennis’s umbrella policy raises
a question of Nevada law that we review de novo. Trishan
Air, Inc. v. Federal Ins. Co., 635 F.3d 422, 426 (9th Cir.
2011). Under Nevada law, the threshold question in
construing an insurance policy is whether the relevant
language of the policy is ambiguous or unambiguous. “If a
provision in an insurance contract is unambiguous, a court
will interpret and enforce it according to the plain and
ordinary meaning of its terms.” Powell v. Liberty Mut. Fire
Ins. Co., 252 P.3d 668, 672 (Nev. 2011). But if the relevant
language is ambiguous, then “it will be construed against the
insurer, because the insurer was the drafter of the policy.”
Fourth St. Place, LLC v. Travelers Indem. Co., 270 P.3d
1235, 1239 (Nev. 2011). In deciding whether such an
ambiguity exists, the court’s task is to determine whether the
terms used in the policy, when considered in “their plain,
ordinary and popular sense,” create “multiple reasonable
expectations of coverage as drafted.” Century Sur. Co. v.
Casino W., Inc., 329 P.3d 614, 616 (Nev. 2014) (en banc)
(simplified) (emphasis added). As with all questions of
insurance-policy construction, the court must consider the
relevant language in the context of the “policy as a whole”
ANPAC V. GARDINEER 7
and should avoid any interpretation that would “lead to an
absurd or unreasonable result.” Id.Here, we conclude that Dennis’s umbrella policy, by its
plain and unambiguous terms, does not provide coverage for
Hill’s liability arising from her use of Dennis’s vehicle.
A
We begin by considering the terms of the “Coverage”
section of Dennis’s umbrella policy. Using bolded language
to refer to terms defined elsewhere in the policy, that
coverage section provides, in relevant part, as follows:
We will pay damages for which an insured
becomes legally liable because of bodily
injury, and property damage resulting from
a loss:
a. in excess of the retained limit;
b. for losses to which your primary
insurance applies.
We will pay damages for which an insured
becomes legally liable because of personal
injury resulting from a loss with no retained
limit requirement.
Our coverage is no broader than the primary
insurance except for our limit of liability.
The policy elsewhere defines the terms “we” and “our”
as “the company providing this insurance,” i.e., ANPAC,
and the first two sentences of this coverage section state what
“damages” liability ANPAC “will pay.” The third sentence,
8 ANPAC V. GARDINEER
by contrast, is framed as a limitation on the “coverage”
described in the prior two sentences (or, perhaps, elsewhere
in the policy), and that sentence is thus not itself an
additional grant of coverage. Notably, in describing the
coverage granted, the first two sentences each use the
identical phrase “damages for which an insured becomes
legally liable” (emphasis added), which each sentence then
combines with certain respective additional limitations.
Accordingly, by its plain terms, this coverage section only
provides coverage for certain damages for which an
“insured” becomes liable. This section therefore extends
coverage to Hill’s liability for damages only if Hill is an
“insured” within the meaning of the policy.
As relevant here, the policy defines “insured” as “you or
a relative,” and “you” and “your” mean “the named insured
shown in the Declarations” as well as that named insured’s
“spouse if living in the same household.” The only named
insured listed in the policy’s “Declarations” is Dennis, and
he had a wife who lived in the same household with him.
Accordingly, the term “insured” under the policy means
Dennis, his wife, and any “relative.” In turn, the policy
defines a “relative” as “a person living in your household and
related to you by blood, marriage, or adoption, including a
ward or foster child.” Because it is undisputed that Hill did
not reside in Dennis and his wife’s household, Hill does not
qualify as a “relative” under the policy and is therefore not
an “insured” under the policy. Gardineer does not contest
this point on appeal.
Because Hill is not an “insured,” the unambiguous
language of the coverage section of Dennis’s umbrella
policy does not extend coverage to Hill’s liability arising
from the accident with Gardineer.
ANPAC V. GARDINEER 9
B
Gardineer nonetheless contends that coverage for Hill’s
liability arises under a different provision of the umbrella
policy. Specifically, she relies on the following express
exclusion (“Exclusion 29”) contained within the policy:
We do not provide coverage for:
...
any loss arising out of the entrustment by any
insured to any person with regard to the
ownership, maintenance, use, loading, or
unloading of any vehicle or aircraft.
This exclusion does not apply if coverage is
provided by primary insurance described in
the Declarations. Our coverage is no
broader than the primary insurance, except
for our limit of liability.
Gardineer argues that, by expressly stating that the
exclusion’s denial of coverage “does not apply if” (as here)
“coverage is provided by primary insurance” (emphasis
added), Exclusion 29 can be read to say that such “primary
insurance” provides the benchmark for determining the
umbrella policy’s coverage—subject only to the
modification (noted in the next sentence) that the umbrella
policy’s higher “limit of liability” applies. And because all
parties agree that Hill’s liability for the accident was covered
by the relevant “primary insurance,” i.e., Dennis’s
automobile policy, Gardineer asserts that, under this reading,
Hill’s liability would be covered by the umbrella policy. The
resulting ambiguity, Gardineer contends, should be resolved
10 ANPAC V. GARDINEER
against ANPAC and gives rise to a reasonable expectation
of coverage. We reject this argument.
1
Exclusion 29 states that certain losses are not covered by
the umbrella policy, even if they would otherwise fall within
the terms of that policy’s coverage clause. However,
Exclusion 29 then states that the “exclusion” it sets forth
“does not apply” if relevant “coverage” is provided by
“primary insurance described in the Declarations.” Here,
there is no dispute that relevant “coverage is provided by
primary insurance described in the Declarations” 3 and that
the exception to Exclusion 29 therefore applies.
Accordingly, the exclusion for any “loss arising out of the
entrustment by [Dennis] to any person with regard to the
ownership, maintenance, use, loading, or unloading of any
vehicle”—which arguably might otherwise have applied to
losses resulting from Hill’s use of Dennis’s car with his
permission—therefore does not apply. Because the
exclusion is thus inoperative, “‘coverage is revived’” or “re-
establish[ed]” in accordance with the otherwise applicable
coverage terms of the umbrella policy. See Zurich Am. Ins.
Co. v. Ironshore Specialty Ins. Co., 497 P.3d 625, 629–30
(Nev. 2021) (emphasis added) (quoting E.I. du Pont de
Nemours v. Admiral Ins. Co., 711 A.2d 45, 53 (Del. Super.
1995)). As a result, for example, if Dennis had been found
liable for negligent entrustment in an amount that exceeded
the limits of his primary insurance, then coverage under the
3
The “Declarations” section of Dennis’s umbrella policy describes
the “primary insurance” as including his “automobile liability” policy.
ANPAC V. GARDINEER 11
umbrella policy for his liability would have been available. 4
But because Hill’s liability is not covered by the language of
the umbrella policy’s coverage section, see supra at 7–8, the
removal of the particular exclusion set forth in Exclusion 29
makes no difference vis-à-vis her liability.
Gardineer nonetheless argues that, under Exclusion 29,
the coverage that is restored when the exception to the
exclusion applies is not merely the coverage set forth in the
umbrella policy’s coverage section. According to
Gardineer, because Exclusion 29 says that its denial of
coverage does not apply “if coverage is provided by primary
insurance described in the Declarations,” the coverage that
then applies includes the referenced “coverage . . . provided
by primary insurance,” with the exception (as provided in
the last sentence of Exclusion 29) that the “limit of liability”
is “broader.” And because the exclusion for “any loss
arising out of the entrustment” by Dennis of his vehicle to
Hill does not apply, Gardineer argues that Exclusion 29
should be viewed as granting coverage for any such “loss”
arising from Dennis’s entrustment (including the losses
arising from Hill’s liability). In our view, Gardineer’s
construction of Exclusion 29 is not based on a reasonable
reading of its text.
The key phrase on which Gardineer relies—“if coverage
is provided by primary insurance described in the
Declarations”—refers to the condition that triggers the
exception to the exclusion; it does not describe what
coverage then applies under the umbrella policy as a
consequence of triggering that exception. Rather, under the
4
This point, however, is academic, because the parties’ settlement
agreement expressly extinguished any claim by Gardineer under the
umbrella policy regarding Dennis’s liability. See supra note 2.
12 ANPAC V. GARDINEER
unambiguous language of Exclusion 29, the specified
consequence of triggering the exception is that “[t]his
exclusion does not apply.” Because triggering the exception
renders Exclusion 29 inoperative, its effect is necessarily to
leave in place whatever coverage would have existed in the
absence of Exclusion 29. That is, because Exclusion 29
categorically bars coverage of the excluded losses—without
regard to whether they otherwise would or would not have
been covered—removing that bar does not, as Gardineer
would have it, create a converse categorical rule granting
coverage to all such claims. It simply removes that
categorical bar, thereby leaving coverage to be described
elsewhere in the policy. Here, that means the coverage
section of the umbrella policy and, as explained earlier, that
coverage does not extend to Hill’s liability.
2
This conclusion is reinforced by a substantial body of
caselaw from other jurisdictions that, in our view, the
Nevada Supreme Court would likely follow. See High
Country Paving, Inc. v. United Fire & Cas. Co., 14 F.4th
976, 978 (9th Cir. 2021) (“If the state’s highest appellate
court has not decided the question presented, then we must
predict how the state’s highest court would decide the
question.”).
Specifically, a number of courts have expressly rejected
similar arguments that an exception to an exclusion should
be understood as conferring coverage that might otherwise
conflict with the policy’s general coverage terms. As the
Supreme Court of Virginia has succinctly explained: “An
exception to an exclusion only has bearing on that
exclusion’s applicability—it is without force with respect to
other provisions of the policy. In other words, an exception
to an exclusion does not create coverage where none exists.”
ANPAC V. GARDINEER 13
PBM Nutritionals, LLC v. Lexington Ins. Co., 724 S.E.2d
707, 713 (Va. 2012) (citation omitted). Several other States
have reached similar conclusions. See, e.g., Progressive
Southeastern Ins. Co. v. Smith, 113 N.E.3d 229, 235 (Ind.
Ct. App. 2018) (“[A]n exception to an exclusion cannot
create coverage where none exists. Exclusion clauses do not
grant or enlarge coverage; rather, they are limitations on the
insuring clause.”) (citations and internal quotation marks
omitted); Amish Connection, Inc. v. State Farm Fire and
Cas. Co., 861 N.W.2d 230, 239 (Iowa 2015) (“[A]n
exception to an exclusion does not create coverage that
otherwise is lacking.”); Wadzinski v. Auto-Owners Ins. Co.,
818 N.W.2d 819, 825 (Wis. 2012) (“[A]n exception to an
exclusion cannot create coverage where the policy’s initial
grant of coverage does not provide that type of coverage.”);
see also Black & Veatch Corp. v. Aspen Ins. (UK) Ltd.,
882 F.3d 952, 958 (10th Cir. 2018) (explaining that, under
New York law, “[e]xceptions to the exclusions may
restore—but do not create—coverage”). 5
Moreover, as we have previously observed, “[w]here
Nevada law is lacking, its courts have looked to the law of
other jurisdictions, particularly California, for guidance.”
Mort v. United States, 86 F.3d 890, 893 (9th Cir. 1996). It
is therefore particularly noteworthy that California is among
the States that have applied the same rule. See, e.g., Hurley
5
Indeed, some courts have applied this rule even in the context of
exclusions whose exceptions (unlike this case) arguably used phrasing
that was more suggestive of coverage, such as “we will pay.” See, e.g.,
Erie Ins. Prop. & Cas. Co. v. Chaber, 801 S.E.2d 207, 215 (W. Va. 2017)
(although the policy exclusion contained an exception stating that, if
condition was met, “we [i.e., the insurer] will pay” for specified losses,
court applied rule that an exception to an exclusion “does not revive or
reinstate coverage for losses otherwise unambiguously excluded by the
policy”).
14 ANPAC V. GARDINEER
Constr. Co. v. State Farm Fire & Cas. Co., 12 Cal. Rptr. 2d
629, 633 (Ct. App. 1992) (“Ordinarily, an exception to a
policy exclusion does not create coverage not otherwise
available under the coverage clause.”); see also Sony
Comput. Ent. Am., Inc. v. Am. Home Assurance Co.,
532 F.3d 1007, 1017 (9th Cir. 2008) (explaining that, under
California law, exclusions “‘cannot expand the basic
coverage granted in the insuring agreement’” (quoting
Stanford Ranch, Inc. v. Md. Cas. Co., 89 F.3d 618, 627 (9th
Cir. 1996))). Indeed, in interpreting insurance policies,
California courts generally follow a two-step approach in
which exclusions to coverage are not considered unless the
court first concludes that there is coverage under the
coverage clauses of the policy. See, e.g., Waller v. Truck Ins.
Exch., Inc., 900 P.2d 619, 625 (Cal. 1995) (“Before even
considering exclusions, a court must examine the coverage
provisions to determine whether a claim falls within the
policy terms.”) (simplified); August Ent., Inc. v. Phila.
Indem. Ins. Co., 52 Cal. Rptr. 3d 908, 920 (Ct. App. 2007)
(same) (citing Waller, 900 P.2d at 625); see also K & L
Homes, Inc. v. Am. Fam. Mut. Ins. Co., 829 N.W.2d 724, 728
(N.D. 2013) (“[A]n exception may become applicable if, and
only if, there is an initial grant of coverage under the policy
and the relevant exclusion containing the exception operates
to preclude coverage.”).
Gardineer has not cited any case to us that would indicate
that the Nevada Supreme Court would not follow this line of
authority. On the contrary, that court’s recent description of
the effect of an exception to an exclusion as “re-
establish[ing] coverage” indicates that the Nevada Supreme
Court likewise understands that, when such an exception
applies, the original coverage set forth in the policy’s
coverage provisions comes back into effect. Zurich Am. Ins.
Co., 497 P.3d at 630 (emphasis added).
ANPAC V. GARDINEER 15
Accordingly, we reject Gardineer’s argument that
Exclusion 29 creates an ambiguity as to whether Hill’s
liability is covered under Dennis’s umbrella policy. Under
our reading of the plain language of that policy, as reinforced
by the above-cited caselaw, Exclusion 29’s exception does
not expand the policy’s coverage beyond its underlying
coverage terms. Because those terms do not extend coverage
to Hill’s liability, it follows that Dennis’s umbrella policy
does not require ANPAC to indemnify Hill for her liability
from the accident with Gardineer.
III
For the foregoing reasons, the district court correctly
granted summary judgment to ANPAC.
AFFIRMED.