Seana Barber v. Encompass Indemnity Company

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT NOV 10 2011
MOLLY C. DWYER, CLERK
U.S . CO U RT OF AP PE A LS
JASON BARBER, husband; and SEANA No. 10-16710
BARBER, wife,
D.C. No. 4:09-cv-00050-RCC
Plaintiffs - Appellants,
v. MEMORANDUM *
ENCOMPASS INDEMNITY
COMPANY, an Illinois insurance
company,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Arizona
Raner C. Collins, District Judge, Presiding
Aruged and Submitted October 24, 2011
San Francisco, California
Before: GRABER and IKUTA, Circuit Judges, and KAPLAN,** Senior District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Lewis A. Kaplan, Senior United States District Judge for
the Southern District of New Yorµ, sitting by designation.
In this diversity action involving insurance coverage for liability arising
from an automobile accident, Plaintiffs Jason and Seana Barber appeal the trial
court's grant of summary judgment in favor of Defendant Encompass Indemnity
Company. Applying Arizona law, Goldberg v. Pac. Indem. Co., 627 F.3d 752, 755
(9th Cir. 2010), and reviewing de novo, Ferguson ex rel. McLeod v. Coregis Ins.
Co., 527 F.3d 930, 932 (9th Cir. 2008) (per curiam), we affirm.
The district court correctly concluded that the accident at issue--in which
the insured vehicle's involvement was limited to its presence on a towed flat-bed
trailer--fell outside the general coverage definitions of Defendant's insurance
policy. That conclusion is correct both under the minimum liability requirements
of Arizona automobile insurance law and under the text of the policy itself. Under
Arizona law, þfor coverage to exist, an insured must be using the car pursuant to
the 'inherent nature' of the vehicle,þ because the þ'arising out of the use . . . of a
car' language implies that the . . . injury occurs as a result of the operation of the
car.þ Benevides v. Ariz. Prop. & Cas. Ins. Guar. Fund, 911 P.2d 616, 619 (Ariz.
Ct. App. 1995) (first ellipsis in original). Here, the trailer might as well have been
carrying a load of refrigerators or some other heavy cargo; to the extent that the
weight or size of the cargo had a role in causing the accident, nothing about that
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weight or size was specific to the þinherent natureþ of an automobile as a means of
transport.
Westfield Insurance Co. v. Aetna Life & Casualty Co., 739 P.2d 218, 222
(Ariz. Ct. App. 1987), is not to the contrary. That case involved insurance
coverage of an actively controlled, towed automobile. Here, only the flat-bed
trailer was being towed and actively controlled, while the insured vehicle was
nothing more than passive cargo. Westfield does not decide how to treat such a
situation. Indeed, our outcome today is consistent with the general rule announced
in Westfield; that decision's reliance on þutilization . . . in the manner intended or
contemplated by the insuredþ requires utilization specific to the inherent nature of
an automobile. Id. (internal quotation marµs omitted).
Because the accident at issue was not within the general coverage definitions
of the insurance policy, Plaintiffs' other arguments necessarily fail.
AFFIRMED.
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FILED
Barber v. Encompass Indem. Co., No. 10-16710 NOV 10 2011
MOLLY C. DWYER, CLERK
IKUTA, Circuit Judge, dissenting: U.S . CO U RT OF AP PE A LS
There is no need to guess how an Arizona court would resolve this case,
because a state court opinion is directly on point: Westfield Ins. Co. v. Aetna Life &
Cas. Co., 739 P.2d 218 (Ariz. Ct. App. 1987). In that case, the Arizona Court of
Appeals held that a car being towed by a tow trucµ was in 'use' within the terms
of the towed car's insurance policy. Id. at 222. Broadly construing the concept of
'using' an insured car, Westfield held that the tow trucµ driver was 'using' the car
because he was (1) 'operating the tow trucµ on the road for the purpose of
transporting' the insured car, and (2) 'actively controlling the movement of both
the tow trucµ and [the insured car].' Id.
Westfield is on all fours with this case. Here, a driver was (1) operating a
trucµ and flatbed trailer for the purpose of transporting the insured car, and
(2) actively controlling the movement of both his trucµ and the insured car. Under
Westfield, the insured car here was in 'use' when it was being towed and therefore
within the insurance policy's omnibus coverage provision. That should be the end
of the inquiry.
Yet the majority purports to distinguish Westfield on the ground that the
towed car in Westfield was 'actively controlled,' whereas here, only the 'flat-bed
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trailer [carrying the car] was . . . actively controlled.' Maj. op. at 3. According to
the majority, Westfield's reasoning extends only to cars towed by a traditional tow
trucµ because towing a car with a flat-bed trailer maµes the insured car merely
'passive cargo.' Id. But nothing in Westfield suggests that its reasoning is so
limited. In fact, Westfield does not even mention how the insured car was being
towed. 739 P.2d at 219. Under the reasoning in Westfield, it maµes no difference
whether the tow trucµ driver wraps chains around an axle or puts all four wheels on
a flat bed--it is the tow trucµ driver that is actively controlling the vehicle.
Nor does any other Arizona opinion justify the majority's weaµ efforts to
distinguish Westfield. The majority's reliance on Benevides v. Arizona Property &
Casualty Insurance Guaranty Fund, 911 P.2d 616 (Ariz. Ct. App. 1995), is entirely
misplaced. Benevides involved a parµed car blasting music so loudly that an
angered bystander shot the car's occupants. Id. at 617. Not surprisingly, the
Arizona Court of Appeals held that the car was not in 'use' for purposes of its
insurance policy because its function as a 'mobile boom box' was not pursuant to
the 'inherent nature' of the car. Id. at 619 (quoting Hawµeye-Security Ins. Co. v.
Gilbert, 866 P.2d 976, 979 (Idaho Ct.App.1994)). But Arizona courts have been
clear that the 'inherent nature' of a car includes more than just driving or
transportation. A car's flashing lights may serve as safety warnings for persons
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worµing outside the car, see Tobel v. Traveler's Ins. Co., 988 P.2d 148, 154 (Ariz.
Ct. App. 1999) (holding that the car was in 'use'), just as loading and unloading a
car is equally a 'use' within its 'inherent nature,' see Mission Ins. Co. v. Aid Ins.
Servs., 585 P.2d 240, 242 (Ariz. 1978) (same). Clearly, the 'inherent nature' of a
car also includes being towed, or else the majority's narrow interpretation of 'use'
would overrule Westfield itself. Indeed, contrary to the majority's suggestion, Maj.
op. at 3, the parties here clearly 'intended or contemplated' that an antique show
car would be towed: the insurance policy notes at least three times that the insured
car may be 'trailered from one location to another.'
Our duty as a federal court sitting in a diversity action is to apply the
substantive law of the forum state. Goldberg v. Pac. Indem. Co., 627 F.3d 752,
755 (9th Cir. 2010). That job is seemingly easy here, where an Arizona court has
already spoµen directly on a substantially identical issue. But the majority ignores
the guidance, finding distinction where none can be found and creating uncertainty
when there should have been absolute clarity. I respectfully dissent.
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