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Goldberger v. State Farm Fire and Casualty Co.

Court of Appeals of Arizona, First Division

August 13, 2019

JOEL GOLDBERGER, et al., Plaintiffs/Appellants,

          Appeal from the Superior Court in Coconino County No. S0300CV201700313 The Honorable Jacqueline Hatch, Judge, Retired

          Hunter Humphrey & Yavitz PLC, Phoenix By Randall S. Yavitz, Isabel M. Humphrey Counsel for Plaintiffs/Appellants

          Broening Oberg Woods & Wilson PC, Phoenix By Robert T. Sullivan, John C. Quinn, Alicyn M. Freeman Counsel for Defendant/Appellee

          Judge Michael J. Brown delivered the opinion of the Court, in which Presiding Judge Diane M. Johnsen and Judge Jennifer M. Perkins joined.


          BROWN, JUDGE

         ¶1 In this opinion we address whether the superior court properly dismissed an insurance claim for property damage caused by feral cats based on a domestic-animal exclusion in the insurance policy at issue. Because the feral cats that caused the damage are not domestic animals under all reasonable interpretations of the facts alleged in the complaint, the court erred in granting the insurer's motion to dismiss. We therefore reverse and remand for further proceedings.


         ¶2 Joel and Kim Goldberger ("the Goldbergers") own residential rental property in Flagstaff, insured by State Farm Fire and Casualty Company ("State Farm") under a rental dwelling policy ("Policy"). The Goldbergers filed a claim asserting their tenant "allowed" feral cats "to access" the property and the cats then caused approximately $75,000 of "accidental damage." State Farm denied the claim, asserting "feral cats are domestic animals and therefore the damage was not covered under the Policy."

         ¶3 The Goldbergers then filed this lawsuit, alleging breach of contract and insurance bad faith. State Farm moved to dismiss the complaint for failure to state a claim, arguing the Policy's plain language precluded coverage. State Farm based its denial of coverage on subsection 1.N of the Policy ("Exclusion"), which provides that accidental losses caused by "birds, vermin, rodents, insects or domestic animals" are not covered. The superior court granted the motion, reasoning in part: (1) a cat, feral or not, is a domestic animal; (2) these feral cats were acting as if they were domesticated; and (3) a reasonably intelligent consumer would understand the Exclusion to unambiguously apply to damage caused by feral cats. This timely appeal followed.


         ¶4 A party may move to dismiss a claim for "failure to state a claim upon which relief can be granted." Ariz. R. Civ. P. 12(b)(6). In evaluating a claim's sufficiency, we take as true "all well-pleaded factual allegations and indulge all reasonable inferences from those facts," but need not accept conclusory statements. Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 9 (2012). A court should dismiss a claim only if, under any interpretation of the well-pleaded facts, the plaintiff would not be entitled to relief. Id. at ¶ 8. Our review is de novo. Id. at 355, ¶ 7.

         ¶5 Several of State Farm's arguments rely on the assumption that these cats were peaceably living in the home with the tenant. The superior court, at least in part, appeared to follow State Farm's lead. A court deciding a Rule 12(b)(6) motion, however, must "look only to the pleading itself," Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008), including documents that "are central to the complaint," Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 64, ¶ 14 (App. 2010), such as the Policy. Because we limit our review to the complaint and the Policy, we proceed without characterizing the feral cats' behavior or any care the tenant may have afforded them beyond what the complaint alleges-that the tenant "allowed [the cats] to access the property." To the extent State Farm's arguments on appeal depend on facts not alleged in the complaint, they necessarily fail.

         A. Interpretation of the Exclusion

         ¶6 We review de novo the interpretation of an insurance policy. Teufel v. Am. Family Mut. Ins. Co.,244 Ariz. 383, 385, ¶ 10 (2018). A policy term is ambiguous if it is susceptible to two or more reasonable interpretations that conflict. Id. We examine policy language "from the viewpoint of one not trained in law or in the insurance business." Sparks v. Republic Nat'l Life Ins. Co.,132 Ariz. 529, 534 (1982). But "even if a policy is apparently ambiguous, a decision to require coverage follows [only] after consideration of 'legislative goals, social policy, and examination of the transaction as a whole.'" Emp'rs Mut. Cas. Co. v. DGG & CAR, Inc.,218 Ariz. 262, 264, ¶ 9 (2008) (citation omitted); see also Teufel, 244 Ariz. at 386, ΒΆ 17 (noting a court may consider common meanings and an insured's reasonable expectations when resolving an apparent ...

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