Am. Nat'l Prop. v. Gardineer
| Decision Date | 11 February 2022 |
| Docket Number | No. 20-15826,20-15826 |
| Citation | 25 F.4th 1111 |
| Parties | AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Plaintiff/Counter-Defendant/Appellee, v. Brittney L. GARDINEER, Defendant/Counter-Claimant/Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Matthew H. Friedman (argued) and Christopher B. Phillips, Ford & Friedman, Henderson, Nevada; Brice J. Crafton, Deaver & Crafton, Las Vegas, Nevada; for Defendant/Counter-Claimant/Appellant.
W. Randolph Patton (argued), Thorndal Armstrong Delk Balkenbush & Eisinger, Las Vegas, Nevada, for Plaintiff/Counter-Defendant/Appellee.
Before: J. Clifford Wallace and Daniel P. Collins, Circuit Judges, and Jed S. Rakoff,** District Judge.
In this insurance-coverage dispute arising under Nevada law, we are asked to decide whether an exception to an exclusion from coverage can be construed as expanding the terms of the policy's otherwise-applicable coverage. Courts in other jurisdictions have generally rejected such an approach to construing policy exclusions, and we predict that the Nevada Supreme Court would follow a similar rule. Based on that understanding, and on our reading of the policy terms at issue here, we conclude that the district court correctly granted summary judgment in favor of the insurer in this case. We therefore affirm its judgment.
On September 18, 2013, while driving her Honda CRV in Clark County, Nevada, Brittney Gardineer was involved in an accident with a Ford Explorer driven by Lynette Hill, who is now known as Landon Hill ("Hill’’). The Ford Explorer was owned by Hill's father-in-law, Dennis Hill ("Dennis"), and Hill was driving it with his permission. In August 2015, Gardineer filed suit in Nevada state court against Hill and Dennis for damages arising from the accident. Although Dennis had not been driving the Explorer, he was sued on a theory of negligent entrustment.
At the time of the accident, Dennis had both a primary automobile insurance policy and an umbrella policy with American National Property and Casualty Company ("ANPAC").1 Dennis died in November 2017 while Gardineer's lawsuit was still pending, but after his death, the parties settled that lawsuit in June 2018. Specifically, in exchange for dismissal with prejudice of the lawsuit against Hill and Dennis's Estate, ANPAC agreed to pay to Gardineer the policy limit ($250,000) of Dennis's automobile insurance policy. Under the terms of the settlement, however, Gardineer expressly reserved the right to assert that ANPAC had a "duty to indemnify" Hill, under Dennis's umbrella policy, for Hill's liability arising from the accident.2 The settlement contemplated that ANPAC would file a declaratory relief action against Gardineer in federal court to resolve the disputed issue of Hill's coverage under Dennis's umbrella policy. If ANPAC succeeded in defeating coverage for Hill's liability under the umbrella policy, then Gardineer would receive nothing further. If Gardineer established coverage, then the parties would either agree to, or arbitrate, the amount of additional damages that Gardineer should receive, consistent with the coverage thereby established and within an "agreed cap on damages" set forth in the settlement.
Invoking diversity jurisdiction under 28 U.S.C. § 1332(a)(1), ANPAC filed this lawsuit against Gardineer in the district court in August 2018, asserting a single claim seeking a declaration that ANPAC had no duty under Dennis's umbrella policy to indemnify Hill for any liability arising from the accident. See 28 U.S.C. § 2201. Gardineer answered and asserted a converse claim for declaratory relief against ANPAC. After conducting discovery, ANPAC and Gardineer filed cross-motions for summary judgment in 2019. The district court held that ANPAC had no duty to indemnify Hill under Dennis's umbrella policy, and the court therefore granted ANPAC's motion for summary judgment and denied Gardineer's. Gardineer timely appealed.
Gardineer and ANPAC agree that the scope of coverage afforded under the terms of Dennis's umbrella policy raises a question of Nevada law that we review de novo. Trishan Air, Inc. v. Federal Ins. Co. , 635 F.3d 422, 426 (9th Cir. 2011). Under Nevada law, the threshold question in construing an insurance policy is whether the relevant language of the policy is ambiguous or unambiguous. "If a provision in an insurance contract is unambiguous, a court will interpret and enforce it according to the plain and ordinary meaning of its terms." Powell v. Liberty Mut. Fire Ins. Co. , 127 Nev. 156, 252 P.3d 668, 672 (2011). But if the relevant language is ambiguous, then "it will be construed against the insurer, because the insurer was the drafter of the policy." Fourth St. Place, LLC v. Travelers Indem. Co. , 127 Nev. 957, 270 P.3d 1235, 1239 (2011). In deciding whether such an ambiguity exists, the court's task is to determine whether the terms used in the policy, when considered in "their plain, ordinary and popular sense," create "multiple reasonable expectations of coverage as drafted." Century Sur. Co. v. Casino W., Inc. , 130 Nev. 395, 329 P.3d 614, 616 (2014) (en banc) (simplified) (emphasis added). As with all questions of insurance-policy construction, the court must consider the relevant language in the context of the "policy as a whole" and should avoid any interpretation that would "lead to an absurd or unreasonable result." Id.
Here, we conclude that Dennis's umbrella policy, by its plain and unambiguous terms, does not provide coverage for Hill's liability arising from her use of Dennis's vehicle.
We begin by considering the terms of the "Coverage" section of Dennis's umbrella policy. Using bolded language to refer to terms defined elsewhere in the policy, that coverage section provides, in relevant part, as follows:
The policy elsewhere defines the terms "we" and "our" as "the company providing this insurance," i.e. , ANPAC, and the first two sentences of this coverage section state what "damages" liability ANPAC "will pay." The third sentence, by contrast, is framed as a limitation on the "coverage" described in the prior two sentences (or, perhaps, elsewhere in the policy), and that sentence is thus not itself an additional grant of coverage. Notably, in describing the coverage granted, the first two sentences each use the identical phrase "damages for which an insured becomes legally liable" (emphasis added), which each sentence then combines with certain respective additional limitations. Accordingly, by its plain terms, this coverage section only provides coverage for certain damages for which an "insured" becomes liable. This section therefore extends coverage to Hill's liability for damages only if Hill is an "insured" within the meaning of the policy.
As relevant here, the policy defines "insured" as "you or a relative ," and "you" and "your" mean "the named insured shown in the Declarations " as well as that named insured's "spouse if living in the same household." The only named insured listed in the policy's "Declarations" is Dennis, and he had a wife who lived in the same household with him. Accordingly, the term "insured" under the policy means Dennis, his wife, and any "relative." In turn, the policy defines a "relative" as "a person living in your household and related to you by blood, marriage, or adoption, including a ward or foster child." Because it is undisputed that Hill did not reside in Dennis and his wife's household, Hill does not qualify as a "relative" under the policy and is therefore not an "insured" under the policy. Gardineer does not contest this point on appeal.
Because Hill is not an "insured," the unambiguous language of the coverage section of Dennis's umbrella policy does not extend coverage to Hill's liability arising from the accident with Gardineer.
Gardineer nonetheless contends that coverage for Hill's liability arises under a different provision of the umbrella policy. Specifically, she relies on the following express exclusion ("Exclusion 29") contained within the policy:
Gardineer argues that, by expressly stating that the exclusion's denial of coverage "does not apply if" (as here) "coverage is provided by primary insurance " (emphasis added), Exclusion 29 can be read to say that such "primary insurance" provides the benchmark for determining the umbrella policy's coverage—subject only to the modification (noted in the next sentence) that the umbrella policy's higher "limit of liability" applies. And because all parties agree that Hill's liability for the accident was covered by the relevant "primary insurance," i.e. , Dennis's automobile policy, Gardineer asserts that, under this reading, Hill's liability would be covered by the umbrella policy. The resulting ambiguity, Gardineer contends, should be resolved against ANPAC and gives rise to a reasonable expectation of coverage. We reject this argument.
Exclusion 29 states that certain losses are not covered by the umbrella policy, even if they would otherwise fall within the terms of that policy's coverage clause. However, Exclusion...
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