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Commerce and Industry Insurance Co. v. Snider

United States District Court, D. Arizona

April 27, 2016

Commerce and Industry Insurance Company, Plaintiff,
v.
Richard Snider, Defendant.

ORDER

Douglas L. Rayes United States District Judge

The parties have filed cross-motions for judgment on the pleadings. (Docs. 18, 21.) The motions are fully briefed, and neither party requested oral argument. For the reasons stated below, Plaintiff’s motion is granted and Defendant’s motion is denied.

BACKGROUND

The following facts are undisputed unless otherwise noted. On September 18, 2014, Plaintiff Commerce and Industry Insurance Company (“Commerce”) issued Defendant Richard Snider an Aircraft Insurance Policy (the “Policy”), effective from the date of issuance to September 18, 2015. The Policy insures Snider and his 2000 Lancair Super ES single-engine aircraft from bodily injury, property damage, physical damage, and includes Medical Expense Coverage. It contains an exclusion that provides: “This insurance policy does not apply . . . [w]hen the aircraft is in flight . . . if piloted by anyone other than . . . a pilot specified in Item 5.” (Doc. 18 at 4.) Item 5 requires that, “[w]hile the aircraft is in flight, it will be piloted only by the person(s) meeting the provisions of the ‘Pilots Endorsement.’” (Id.) The Pilots Endorsement designated Snider as a pilot and required that he obtain a “current and valid [Federal Aviation Administration (“FAA”)] Medical Certificate.” (Id.)[1]

On September 1, 2015, while flying from El Paso, Texas to Glendale, Arizona, Snider’s aircraft experienced engine failure and he was forced to make an emergency landing in Winkelman, Arizona. (Doc. 1, ¶ 11.) During the landing, the aircraft was damaged by the terrain and eventually caught fire. (Id., ¶ 12.) Snider alleges the damage to the aircraft exceeds $200, 000. The same day, Snider reported the accident to the FAA, which informed him that his medical certificate, which he had obtained in April 2010, had expired in April 2015. (Doc. 21 at 4.)

The next day, Snider underwent a physical and his medical certificate was reinstated. (Id.) Snider then submitted a claim with Commerce for physical damage to the aircraft and for minor injuries. However, Commerce denied the claim pursuant to the exclusion because it discovered Snider’s medical certificate was expired at the time of the incident.

On November 23, 2015, Commerce filed the instant action seeking a declaration of no coverage under the Policy due to Snider’s lack of a valid FAA medical certificate when the accident occurred. (Doc. 1.) In response, Snider filed counterclaims for breach of contract and breach of the covenant of good faith and fair dealing. (Doc. 11.) Both parties now move for judgment on the pleadings.[2]

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(c), a motion for judgment on the pleadings “is properly granted when, taking all the allegations in the non-moving party’s pleadings as true, the moving party is entitled to judgment as a matter of law.” Fajardo v. Cty. of L.A., 179 F.3d 698, 699 (9th Cir. 1999). Motions for judgment on the pleadings and motions to dismiss under Rule 12(b)(6) are “functionally identical, ” and therefore the same standard applies. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). As with Rule 12(b)(6) motions, the Court may not consider evidence outside the pleadings without converting the motion for judgment on the pleadings into a motion for summary judgment. Fed.R.Civ.P. 12(d).

ANALYSIS

Commerce argues that it is entitled to judgment on the pleadings because Snider did not possess a current and valid FAA medical certificate at the time of the accident, relying heavily on Security Insurance Company of Hartford v. Andersen, 763 P.2d 246 (Ariz. 1988), a case remarkably similar to the instant case. In Andersen, Security Insurance Company of Hartford (“Security”) issued a comprehensive aviation insurance policy to Don Andersen on September 9, 1981. Id. at 247. The policy provided that “coverage afforded by this policy shall not apply while the aircraft is operated in flight by other than the following pilots: As Endorsed.” Id. The “approved pilots endorsement” stated:

In consideration of the premium for which this policy is written, it is understood and agreed that the coverage afforded by this Policy shall apply only while the aircraft is operated in flight by the pilot(s) designated below and then only if the said pilot(s) is properly certificated and rated by the FAA as shown below, has the minimum flying experience, all as indicated below, and in addition holds a valid and current medical certificate of the appropriate class[.]

Id. at 248 (emphasis in original). Andersen was designated as the pilot in the policy. Id. The policy also contained an exclusion providing that “[t]his Policy does not apply and no coverage is afforded . . . [w]hile the aircraft is in flight . . . [i]f piloted by a person not properly certificated, rated, and qualified under the current applicable Federal Air Regulations[.]” Id. Federal Air Regulations required that no person may pilot an aircraft unless that person has obtained a current FAA medical certificate. Id. (citing 14 C.F.R. § 61.3(c)).

In October 1981, Andersen and two other men were killed when Andersen’s plane crashed. Id. It was undisputed that Andersen did not have a current medical certificate, and that his prior certificate expired on May 30, 1981. Id. Security denied coverage based on this fact, and brought an action seeking a declaration of no coverage. Id. The trial court entered summary judgment in favor of Security, and the court of appeals reversed, “holding that Security could not enforce its policy exclusion based on Andersen’s failure ...


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