American Family Insurance Comp v. Milo Bergeson , 472 F. App'x 604 ( 2012 )

FILED
NOT FOR PUBLICATION MAR 28 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMERICAN FAMILY INSURANCE No. 10-17326
COMPANY,
D.C. No. 2:09-cv-00360-DGC
Plaintiff-Counterdefendant
- Appellee,
MEMORANDUM*
v.
MILO BERGESON et al.,
Defendants-Counterclaimants
- Appellants.
Appeal from the United States District Court
for the District of Arizona
David G. Campbell, District Judge, Presiding
Submitted March 14, 2012**
San Francisco, California
Before: CALLAHAN and BEA, Circuit Judges, and BENNETT, District Judge.***
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Mark W. Bennett, District Judge for the U.S. District
Court for the Northern District of Iowa, sitting by designation.
Appellee American Family Insurance Company (“American Family”)
sought a declaration against appellants Milo Bergeson and David and Joan
Levengood (“the Levengoods”) that American Family did not have a duty to
defend or indemnify the Levengoods in an underlying wrongful death suit brought
by Bergeson, after his ex-wife Lynn Bergeson died from carbon monoxide
intoxication in the condominium she leased from the Levengoods when an
improperly wired ceiling fan ignited the insulation above her unit. Bergeson and
the Levengoods (collectively, “appellants”) appeal the district court’s grant of
summary judgment in favor of American Family, in which the court concluded that
because American Family’s policy did not cover the Levengoods’ liability,
American Family had no duty to defend or indemnify them. We have jurisdiction
pursuant to 28 U.S.C. § 1291.
We review de novo the district court’s grant of summary judgment. Sullivan
v. Oracle Corp., 662 F.3d 1265, 1270 (9th Cir. 2011). Under Arizona law, “an
insurer typically owes a duty to indemnify the insured against liabilities covered by
the policy and a duty to defend the insured against any claim ‘potentially covered
by the policy.’” Pueblo Santa Fe Townhomes Owners’ Ass’n v. Transcon. Ins.
Co., 178 P.3d 485, 491 (Ariz. Ct. App. 2008) (quoting United Servs. Auto. Ass’n v.
Morris, 741 P.2d 246, 250 (Ariz. 1987)). The allegations in the complaint against
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the insured, as well as any facts known to the insurer, determine whether a
particular claim against an insured triggers coverage under an insurance policy.
See Regal Homes, Inc. v. CNA Ins., 171 P.3d 610, 615 (Ariz. Ct. App. 2007); N.
Ins. Co. of N.Y. v. Morgan, 918 P.2d 1051, 1053 (Ariz. Ct. App. 1995).
The policy here, purchased by the Levengoods’ homeowners’ association,
provided liability coverage to “[e]ach individual unit-owner of the insured
condominium, but only for liability arising out of the ownership, maintenance or
repair of that portion of the premises which is not reserved for that unit-owner’s
exclusive use or occupancy.” We apply a broad reading of the phrase “arising out
of,” which, under Arizona law, does not demand proximate cause but only “some
causal relation or connection.” See Salerno v. Atl. Mut. Ins. Co., 6 P.3d 758, 762
(Ariz. Ct. App. 2000).
Although appellants urge that the Levengoods’ liability arose out of their
negligence as fractional owners of the ceiling (property not reserved for their
exclusive use or occupancy), there is no causal relation or connection between the
Levengoods’ liability and their ownership, maintenance, or repair of the ceiling.
The fire that caused Lynn Bergeson’s death occurred in the insulation in the
ceiling, but every negligent act alleged against the Levengoods related to their
ownership, maintenance, or repair of property that was reserved for their exclusive
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use. Bergeson alleged that the Levengoods failed to notify the homeowners’
association of the fan’s installation; failed to obtain an electrical permit and an
inspection, which would have revealed the absence of a junction box;1 failed to
ascertain whether Lynn Bergeson properly installed the ceiling fan; and allowed
Lynn Bergeson to install the fan, when they knew or should have known that she
could not do it properly. These allegations involve the ceiling fan itself, the
electrical fixture into which it was connected, or the electrical wire powering it, all
of which were, pursuant to the homeowners’ declarations and Arizona
condominium statutes, reserved for the Levengoods’ exclusive use.
Thus, we agree with the district court that American Family’s policy did not
cover the Levengoods’ liability to Bergeson and, therefore, that American Family
had no duty to defend or indemnify the Levengoods.
Finally, we briefly mention two additional arguments that are not included in
the appellants’ opening brief and, therefore, are waived. See Smith v. Marsh, 194
F.3d 1045, 1052 (9th Cir. 1999). In a letter submitted pursuant to Federal Rule of
Appellate Procedure 28(j), appellants contend, for the first time, that, under
1
Appellants maintain, but do not explain how, the presence of a junction
box would have prevented the improper installation of the ceiling fan. In fact, their
expert, when asked in his deposition whether “the lack of a junction box here ha[d]
anything to do with the cause of this fire,” responded, “I don’t see anything in the
evidence that indicates that to be the case.”
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Associated Aviation Underwriters v. Wood, 98 P.3d 572 (Ariz. Ct. App. 2004), the
stipulated judgment in the state wrongful death case precludes American Family
from litigating coverage here. Even if appellants had not waived this argument,
Associated Aviation Underwriters prohibits insurers only from relitigating liability
under the guise of litigating coverage in a declaratory judgment, which is not the
case here. See Ariz. Prop. & Cas. Ins. Guar. Fund v. Martin, 113 P.3d 701, 704
(Ariz. Ct. App. 2005). Additionally, appellants, in their reply brief, raise the new
argument that the electrical wire powering the fan was not reserved for the
Levengoods’ exclusive use. Again, even if not waived, this contention would fail
because, pursuant to the homeowners’ declarations, the electrical wire was
reserved for the Levengoods’ exclusive use.
AFFIRMED.
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