Grain Dealers Mutual Insurance Company, an Indiana company, Plaintiff,
Donnetta S. Sharbono, surviving wife/on behalf of herself and the surviving children of deceased and as the surviving parent of Christopher B. Sharbono; et al., Defendants. Donnetta S. Sharbono, surviving wife/on behalf of herself and the surviving children of deceased and as the surviving parent of Christopher B. Sharbono, Counterclaimants,
Grain Dealers Mutual insurance Company, an Indiana company, Counterdefendant. Maria Kubal, et al., Counterclaimants,
Grain Dealers Mutual Insurance Company, an Indiana company, Counterdefendant.
G. MURRAY SNOW, District Judge.
Pending before the Court is Plaintiff's Motion for Summary Judgment in this declaratory judgment action. For the following reasons, Plaintiff's motion (Doc. 52) is granted.
Plaintiff Grain Dealers Mutual Insurance Company ("Grain Dealers"), seeks a declaratory judgment limiting their liability on a commercial liability policy held by Defendant Hugo Flores (d/b/a Heber Tire & Oil Express, f/k/a the Heber Tire Shop) ("Flores"). (Doc. 52 at 2.) The liability arises from an auto accident that occurred on November 5, 2009. (Doc. 52 at 3.) On that day Gary Sharbono and Christopher Sharbono were driving westbound in a Ford pickup on Interstate 8 near Winterhaven, California, just west of Yuma, Arizona. (Doc. 1 ¶ 18.) At the same time, Andrew Kubal was driving a Volvo tractor trailer eastbound on Interstate 8. ( Id. ) A wrongful death lawsuit by the Kubal Defendants alleges that a Michelin tire on the front driver's side of the Ford pickup truck failed. (Doc. 61 at 5.) The tire was allegedly purchased from Flores' Heber Tire Shop. ( Id. ) The tire failure is alleged to have caused a loss of control of the pickup truck and a head-on collision between it and the on-coming Volvo tractor trailer. ( Id. ) No one survived the collision. (Doc. 53 ¶ 13.)
Defendant Flores, who allegedly sold the Michelin tire to the Sharbonos, was insured at all relevant times by a Grain Dealers commercial liability insurance policy. (Doc. 53 ¶ 1; Doc. 1-1.) The policy limits were for $500, 000 for "any one occurrence, " subject to a $1, 000, 000 "Products-Completed Operations Aggregate Limit" and a $1, 000, 000 "General Aggregate Limit." (Doc. 1-1 at 51, 62.) There is no dispute that the policy defined "occurrence" as "an accident, " "including continuous or repeated exposure to substantially the same general harmful conditions." (Doc 1-1 at 66.) A dispute apparently arose during settlement discussions between Grain Dealers and Defendants as to the proceeds available from the Flores insurance policy. (Doc 59 at 2.) Grain Dealers claim that the policy limit is $500, 000 because there was only one "occurrence" under the policy. (Doc. 1 at 6.) Kubal Defendants claim the term "occurrence" is ambiguous and therefore should be construed against the issuer, Grain Dealers, and also that there was more than one occurrence, due to multiple acts of negligence that led to the injury. (Doc. 61 at 10.) Both Grain Dealers and the Kubal Defendants move for declaratory judgment. (Doc. 52; Doc. 23 at 9.)
I. LEGAL STANDARD
Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "A fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002) (quoting Anderson, 477 U.S. at 248). Thus, the nonmoving party must show that the genuine factual issues "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.'" Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) (quoting Anderson, 477 U.S. at 250).
No party contests that Arizona law applies to this case. Interpretation of an insurance policy is a question of law, and is often an appropriate issue for the Court to resolve on cross-motions for summary judgment. See Keggi v. Northbrook Prop. & Cas. Ins. Co., 199 Ariz. 43, 46, 13 P.3d 785, 788 (Ct. App. 2000); Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir. 1998). Arizona law directs courts to construe an insurance contract "according to [its] plain and ordinary meaning." Keggi, 199 Ariz. at 46, 13 P.3d 785; see Aztar Corp. v. U.S. Fire Ins. Co., 223 Ariz. 463, 469, 224 P.3d 960, 966 (Ct. App. 2010). "If a clause may be susceptible to different constructions... [the Court] will first attempt to discern the meaning of the clause by examining the purpose of the exclusion in question, the public policy considerations involved and the transaction as a whole." Keggi, 199 Ariz. at 46, 13 P.3d 785 (internal quotations omitted). "Generally, the insured bears the burden to establish coverage under an insuring clause, and the insurer bears the burden to establish the applicability of any exclusion." Id. Only when an insurance contract is actually ambiguous will a court employ other canons of construction, such as construing the ambiguity against the insurer, see Thomas v. Liberty Mutual Insurance Co., 173 Ariz. 322, 325, 842 P.2d 1335, 1338 (Ct. App. 1992), or favoring the protection of the interests of injured victims, see American Family Mutual Insurance Co. v. White, 204 Ariz. 500, 505, 65 P.3d 449, 454 (Ct. App. 2003).
The term under dispute in the present action, "occurrence, " has been defined in the Flores policy as "an accident, " "including continuous or repeated exposure to substantially the same general harmful conditions." (Doc 1-1 at 66.)
The word accident, ' as used in insurance policies, is generally defined as an undesigned, sudden, and unexpected event, usually of an afflictive or unfortunate character, and often accompanied by a manifestation of force.' The usual understanding of the word clearly implies a misfortune with concomitant damage to a victim, and not the negligence which eventually results in that misfortune.'
GRE Ins. Grp. v. Green, 194 Ariz. 251, 253, 980 P.2d 963, 965 (Ct. App. 1999) (quoting Century Mut. Ins. Co. v. S. Ariz. Aviation, Inc., 8 Ariz.App. 384, 386, 446 P.2d 490, 492 (1968)).
Nevertheless, the Kubal Defendants argue, based on Arizona Property & Casualty Insurance Guaranty Fund v. Helme, 153 Ariz. 129, 735 P.2d 451 (1987), that multiple acts which cause a single injury constitute multiple "occurrences." Helme involved the injury of a patient after one doctor failed to look at spinal x-rays when treating him and another doctor failed to review the x-rays before performing surgery on him. Id. at 131-36, 735 P.2d at 453-58. The medical malpractice policy at issue indemnified insureds separately up to the limit for "each occurrence" in which an insured became legally obligated to pay damages because of professional negligence. See id at 134, 735 P.2d at 456. The Helme court determined that the number of causative acts, not the number of injuries caused, determined the number of occurrences and thus concluded that "[m]ultiple acts causing a single injury will constitute multiple occurrences." Id. at 135, 735 P.2d at 457. Helme ...