Murphy v. Allstate Ins. Co.

• Decision Date: 02 September 1997
• Docket Number: No. 94-16129,94-16129
• Parties: NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. Eugene MURPHY; Tamiyo Murphy, Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY, et al., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1073

122 F.3d 1073

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

Eugene MURPHY; Tamiyo Murphy, Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY, et al., Defendant-Appellant.

No. 94-16129.

United States Court of Appeals, Ninth Circuit.

Argued and submitted July 14, 1997.

Decided Sept. 2, 1997.

Appeal from the United States District Court for the District of Nevada Mary Johnson Lowe, Senior Judge, Presiding

Before: HALL, WIGGINS, Circuit Judges and SHADUR, District Judge ^**.

MEMORANDUM ^*

Joseph Murphy was killed in an automobile accident in Las Vegas, Nevada. His parents ("the Murphys") sued Allstate Insurance Company after Allstate refused to pay them under their personal umbrella policy. Following a bench trial, the district court entered judgment of almost $400,000 plus interest in favor of the Murphys. Allstate appeals.

I. Section 687B.145(2)

Allstate contends that Nev.Rev.Stat. § 687B.145(2)'s "must offer" requirement does not apply to the Murphys' personal umbrella policy. As it read in 1989, § 687.145(2) provided:

Insurance companies doing business in this state must offer uninsured motorist coverage equal to the limits of bodily injury coverage sold to the policyholder. Uninsured motorist coverage must include a provision which enables the insured to recover up to the limits of his own coverage any amount of damage for bodily injury from his insurer which he is legally entitled to recover from the owner or operator of the other vehicle to the extent that these damages exceed the limits of the bodily injury coverage carried by that owner or operator.

The Nevada Supreme Court has never decided whether this provision's must-offer requirement applies to personal umbrella policies. "Where the state's highest court has not decided an issue, the task of the federal courts is to predict how the state high court would resolve it." DeSoto v. Yellow Freight Systems, Inc., 557 F.2d 655, 658 (9th Cir.1992) (quoting Dimidowich v. Bell & Howell, 803 F.2d 1473, 1482 (9th Cir.1986)).

We are guided in this inquiry by the Nevada Supreme Court's recent decision in Delmue v. Allstate Ins. Co., 936 P.2d 326 (Nev.1997). Delmue held that the must-offer requirement contained in the current version of § 687.145(2) applies to personal umbrella policies. Id. at 329.

While we may not agree with Delmue 's reasoning, its holding provides clear guidance as to how the Nevada Supreme Court would decide the present case. Although the language of the former § 687.145(2) is slightly different, it is almost inconceivable that these differences in language would cause the Nevada Supreme Court to reach a different result. Relying on Delmue, we hold that the must-offer requirement of the former § 687.145(2) applies to the Murphys' personal umbrella policy with Allstate. Thus, the district court correctly concluded that uninsured/underinsured motorist coverage must be read into the Murphys' personal umbrella policy because Allstate failed to offer such coverage when the policy was issued.

II. The "Required Underlying Insurance" Offset

Similarly, we are not persuaded that the Nevada Supreme Court would give Allstate an $85,000 offset as a result of the Murphys' decision to carry lower uninsured/underinsured motorist coverage under their automobile insurance policy. If we were able to write on a blank slate, Allstate's argument that the Murphys should be held to the implications of their choice to purchase lower coverage limits of $15,000/$30,000 in their automobile liability policy has considerable force. See, e.g., Washam v. Chancellor, 507 So.2d 806 (La.1987). While not specifically mentioning uninsured/underinsured motorist coverage, Allstate's policy provided that the Murphys had to maintain bodily injury coverage in their automobile liability policy of $100,000. Nevada law required Allstate to offer uninsured/underinsured motorist coverage in an amount equal to the bodily injury coverage in the Murphys' automobile policy. Allstate did so, but the Murphys decided to forego the additional $85,000 in uninsured/underinsured motorist coverage. We are inclined to agree with Allstate that the Murphys should face the consequences of that choice.

However, we must predict how the Nevada Supreme Court would resolve this issue. The Nevada Supreme Court has gone to great lengths to hold in favor of the insureds in this type of uninsured/underinsured motorist cases, invoking in each case the rule that the uninsured motorist statute must be strictly construed in favor of the insured. See Delmue, 936 P.2d at 328; Ippolito v. Liberty Mut. Ins. Co., 705 P.2d 134, 136 (Nev.1985). We believe that the Nevada Supreme Court would note that the "Required Underlying Insurance" provision of the Murphys' umbrella policy does not specifically require $100,000 in underlying uninsured/underinsured motorist coverage. Accordingly, we predict that the Nevada Supreme Court would hold in favor of the Murphys on this issue.

III. Challenges to the District Court's Factual Findings

Allstate argues that there was insufficient evidence to support the...