United States District Court, D. Arizona
Murray Snow Chief United States District Judge.
before the Court are Lexington Insurance Company's Motion
for Summary Judgment (Doc. 171), AIG Claims
Incorporated's Motion for Summary Judgment (Doc. 178),
Wells Fargo Insurance Services USA's Motion for Summary
Judgment (Doc. 226), and William Hall and Infini PLC's
Cross Motion for Summary Judgment (Doc. 210), and Motion to
Strike (Doc. 250).
Dr. William Hall, provides cosmetic procedures and surgeries
through his company, Infini, PLC (collectively,
“Infini”). Since at least 2011, Lexington
Insurance Company (“Lexington”) has provided
coverage insurance to Dr. Hall for the medical procedures he
performs in his practice. To obtain insurance coverage,
Infini worked with an insurance broker, Wells Fargo Insurance
Services USA (“Wells Fargo”). Lexington uses an
independent third-party to adjust its claims, AIG Claims
Incorporated (“AIG Claims”), and has an
underwriter Smith Bell & Thompson (“SBT”).
24, 2014, Wells Fargo sent a renewal application to Infini.
(Doc. 228-4 at 4). Several weeks later, on September 4, 2014,
Infini returned the application. In the application, Infini
crossed out certain kinds of liposuction-specifically
liposelection and lipodissolve-because Infini did not perform
those procedures. (Doc. 228-4 at 22). On the same page, the
application noted that Infini performed large quantities of
“local anesthesia lipo.” (Id.). CRC
Services and Wells Fargo relayed this handwritten application
to SBT, Lexington's underwriter. (Doc. 171, Ex. 30). On
September 29, SBT sent CRC Services an email that stated
“Attached you will find a renewal quote. The premium
increase is due to the significant increase in
exposures.” (Doc. 173-33 at 2). But the coverage that
SBT produced for CRC and Wells Fargo did not ultimately
contain coverage for liposuction. (“2014-2015
Policy”) (Doc. 171 Ex. 11). In the communications
between CRC, Wells Fargo and SBT, the parties all referred to
the policy as a “renewal.” (Doc. 172, Ex. 33)
(“Attached you'll find the renewal quote.”).
And the 2014-2015 Policy from Lexington specifically stated
that it was a renewal policy. (Doc. 173, Ex. 34).
October 1, 2014, when filling out additional forms related to
the application to renew coverage for Dr. Hall, a
representative of Wells Fargo Insurance Services noted that
she was “aware of [a] circumstance accident or loss . .
. which may result in a claim under the insurance
coverage.” (Doc. 173-12 at 51). This document
specifically noted that there had been a records request to
Infini from a lawyer. (Id.).
Infini was corresponding with Wells Fargo about its policy
renewal, Dr. Hall performed a liposuction procedure on Donna
Willis. After this procedure, Ms. Willis was hospitalized and
required additional surgeries. (Doc. 211-1 at 3). In
September 2014, Dr. Hall received two requests for medical
records from Ms. Willis-first from her husband, and then from
a lawyer on her behalf. (Doc. 211-1 at 4). He was also
notified that Ms. Willis had been hospitalized about a week
after her liposuction procedure. (Doc. 211-1 at 3).
January 29, 2015, counsel for Ms. Willis requested the
contact information of Infini's insurance carrier. (Doc.
228-1 at 17). Infini forwarded this to Wells Fargo and
Lexington. (Id. at 16). Ms. Willis later filed suit
against Dr. Hall and Infini in Maricopa County Superior
Court. (Doc. 228-1 at 2). But in May 2015, Lexington informed
Infini that the new insurance policy did not cover injuries
caused by liposuction, and it would not defend any claim
brought by Ms. Willis. Dr. Hall and Infini filed a
third-party complaint in this suit arguing that Lexington
wrongfully denied coverage for the Medical Incident. It is on
that complaint that the various parties bring their motions
for summary judgment.
purpose of summary judgment is “to isolate and dispose
of factually unsupported claims.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986). Summary judgment is appropriate if the
evidence, viewed in the light most favorable to the nonmoving
party, shows “that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as
a matter of law.” Fed.R.Civ.P. 56(c). Only disputes
over facts that might affect the outcome of the suit will
preclude the entry of summary judgment, and the disputed
evidence must be “such that a reasonable jury could
return a verdict for the nonmoving party.”
Anderson, 477 U.S. at 248.
party seeking summary judgment always bears the initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a
genuine issue of material fact.” Celotex, 477
U.S. at 323. Parties opposing summary judgment are required
to “cit[e] to particular parts of materials in the
record” establishing a genuine dispute or “show
that the materials cited do not establish the absence ... of
a genuine dispute.” Fed.R.Civ.P. 56(c)(1).
summary judgment stage, Plaintiff Infini's evidence is
“to be believed, and all justifiable inferences are to
be drawn in [his] favor.” See Anderson, 477
U.S. at 255 (1986). Disputed facts are “viewed in the
light most favorable to” Infini, the non-moving party.
See Scott v. Harris, 550 U.S. 372, 380 (2007).
Lexington Insurance Company's Motion for Summary
Arizona, the interpretation of an insurance contract is a
question of law. Liristis v. Am. Family Mut. Ins.
Co., 61 P.3d 22, 25 (Ariz.Ct.App. 2002). Insurance
policies are “read as a whole, so as to give a
reasonable and harmonious effect to all of its
provisions.” Charbonneau v. Blue Cross of
Washington and Alaska, 634 P.2d 972, 975 (Ariz.Ct.App.
1981). Insurance contracts are interpreted “according
to their plain and ordinary meaning.” Keggi v.
Northbrook Prop. & Cas. Ins. Co., 13 P.3d 785, 788
(Ariz.Ct.App. 2000). When the insurance policy language is
unambiguous, “the court does not create ambiguity to
find coverage.” American Family Mut. Ins. Co. v.
White, 65 P.3d 449, 452 (Ariz.Ct.App. 2003). The insured
party bears the burden of establishing coverage, while the
insurer bears the burden of establishing that a policy
exclusion is applicable. Keggi, 13 P.3d at 788.
moves for summary judgment on six of Infini's claims: (1)
breach of contract, (2) bad faith, (3) negligence, (4) breach
of fiduciary duty, (5) declaratory relief; and (6) fraud.
Whether the Medical Incident is covered under the 2013-2014
Motion for Summary Judgment, Lexington argues that Infini did
not provide adequate notice of the Medical Incident to
Lexington under the terms of the 2013-2014 Policy, and so it
does not have to indemnify Infini. The 2013-2014 Policy
outlines Infini's duties if a claim, suit, or medical
If during the policy period, [Infini] shall become aware of
any medical incident which may reasonably be expected to give
rise to a claim being made against any Insured, [Infini] must
notify [Lexington] in writing as soon as practicable. To the
extent possible, notice should include:
a) How, when, and where the medical incident took place;
b) The named and addresses of any injured persons and
c) The nature and location of any injury or damage arising
out of the medical incident.
Any claim arising out of such medical incident which is
subsequently made against any Insured and reported to us,
shall be considered first made at the time such notice was
given to us.
(Doc. 173 Ex. 11).
October 1, 2014, when filling out a form related to the
renewal of coverage for Infini, a representative of Wells
Fargo Insurance Services noted that she was “aware of
[a] circumstance accident or loss . . . which may result in a
claim under the insurance coverage.” (Doc. 173-12 at
51). This document also specifically noted that a record
request had been made by a lawyer. (Id.).
information, however, does not constitute notice under the
2013-2014 Policy. It lacks the relevant facts that might be
used by Lexington to process the potential claim- information
that the 2013-2014 Policy says that notice should provide.
The information is also addressed to Lexington's
underwriter, SBT, which is not charged with processing claims
that are made under Lexington's insurance policy.
Lexington offers no evidence to suggest that SBT was its
agent for purposes of receiving claims or that Infini had a
right to believe that it was. Further, the application does
not say “how when and where the medical incident took
place, ” the identity of the injured person, or the
damages that resulted from the medical incident. In similar
situations, many courts have rejected the argument that
information in a renewal application could provide sufficient
notice under an older policy. See Am. Cas. Co. of
Reading, v. Continisio, 17 F.3d 62, 69 (3d Cir. 1994);
FDIC v. St Paul Fire & Marine Ins. Co., 993 F.2d
155, 160 (8th Cir. 1993) (“Notice that would cause one
to investigate a renewal for insurance must surely be
different than notice to investigate potential