Gov't Emps. Ins. Co. v. Ritchey
| Decision Date | 16 May 2023 |
| Docket Number | CIVIL 22-00074-SOM-KJM |
| Parties | GOVERNMENT EMPLOYEES INSURANCE COMPANY, Plaintiff, v. MARY RITCHEY, ALEXANDRA MCPHERSON, AND ROBERT MCPHERSON, Defendants. |
| Court | U.S. District Court — District of Hawaii |
ORDER GRANTING GEICO'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS MARY RITCHEY AND ALEXANDRA MCPHERSON'S MOTION FOR SUMMARY JUDGMENT
Government Employees Insurance Company (“GEICO”) seeks a judicial declaration that it owes no duty to insureds Mary Ritchey (“Ritchey”), Alexandra McPherson (“Alexandra”), and Robert McPherson (“Robert”) in connection with an automobile collision. The question before this court is whether an exclusion in an umbrella policy violates public policy and is therefore unenforceable. Answering this question of first impression requires predicting how the state's highest court would rule on the issue. The Hawaii Supreme Court's decisions in insurance policy exclusion cases indicate that an exclusion should be invalidated on public policy grounds only if there is a statute setting mandatory requirements for the type of insurance policy at issue and a public policy deriving from that statute that the exclusion contravenes. Both sides in this case acknowledge that there is no state statute setting mandatory requirements for umbrella policies. There is thus no public policy deriving from a statute that an umbrella policy's exclusion can contravene. Accordingly, the court rules that the resident relative exclusion in the umbrella policy before this court is not contrary to public policy and is fully enforceable.
In 2017, GEICO issued Personal Umbrella Policy No. P6295178 (“the Policy”) to Robert and Ritchey.[1] See ECF No. 43, PageID # 259. The Policy was effective from December 4, 2017, to December 4, 2018. See id. The Policy also covered Alexandra, who is Ritchey and Robert's daughter and was, during the coverage period, a resident in their home and a minor in their care and custody. See ECF No. 43, PagelD # 259-60.
On October 13, 2018, a car allegedly ran a stop sign and crashed into the vehicle Robert was driving. See ECF No. 43, PagelD # 256-57. Robert's vehicle was covered by the Policy. See id. Alexandra was a passenger in the car during the collision. See id. According to Alexandra and Ritchey, Alexandra sustained extremely serious injuries. See id.; ECF No. 43-1, PagelD # 270.
Following the collision, Ritchey and Robert submitted claims to GEICO under their personal automobile policy, seeking coverage for Alexandra's injuries. See ECF No. 46-2, PagelD # 386. GEICO issued them $300,000 in liability coverage benefits and $600,000 in underinsured motorist (“UIM”) benefits. ECF No. 46-2, PagelD # 386-87.
Additionally, Robert and Ritchey sought coverage under the umbrella policy pursuant to the Personal Umbrella Liability Insurance Agreement. See ECF No. 43-4, PagelD # 276. In Part II of that agreement, GEICO commits to “pay damages on behalf of an insured arising out of an occurrence, subject to the terms and conditions of this policy.”[2] Id. GEICO denied Robert and Ritchey's claim on the ground that the Policy provided coverage for damages an insured had to pay to others, but not for any injury to Alexandra, who was an insured under the Policy. See ECF No. 43-7, PageID # 286. The agreement states unambiguously that GEICO does “not cover damages resulting from . . . [p]ersonal injury to any insured.” See ECF No. 43-5, PageID # 282; ECF No. 43-7, PageID # 285.
In October 2021, Ritchey filed a First Amended Complaint in state court, on her own behalf and on behalf of Alexandra.[3] See ECF No. 43, PageID # 254. The complaint asserts tort claims against a number of people and entities, including Robert. See id.
On February 23, 2022, GEICO initiated this federal action requesting a declaratory judgment against Ritchey, Alexandra, and Robert. See ECF No. 1. GEICO seeks a declaration from this court that the exclusion it relied on to deny liability coverage to Robert under the umbrella policy is enforceable. See ECF No. 33. GEICO filed this in response to assertions by Ritchey and Alexandra that the exclusion is void as contrary to public policy. See ECF No. 33, PageID # 158.
On February 27, 2023, the parties filed competing motions for summary judgment. See ECF Nos. 44, 45. GEICO argues that the language of the Personal Umbrella Liability Insurance Agreement makes plain that it provides no coverage for injuries to Alexandra. See ECF No. 45. According to GEICO, the relevant exclusion is not contrary to public policy and is thus enforceable. See id.
Ritchey and Alexandra argue that, at least as applied to the circumstances of this case, the combined effect of two sections of the Personal Umbrella Liability Insurance Agreement are in conflict with Hawaii's public policy. See ECF No. 44. They take issue with Part III, Section 10 of the Agreement (“We do not cover damages resulting from . . . [p]ersonal injury to any insured”) and Part I, Section 7 (). See ECF No. 43-4, PageID # 275-77. The combined effect of these provisions is that there is no coverage under the Policy for injuries sustained by a relative residing in the insureds' household or by a resident under the age of 21 who is being cared for by the insureds.[4] Ritchey and Alexandra contend that, at least when that exclusion results in a lack of coverage for injury to a minor, the exclusion is unenforceable as contrary to state public policy.[5]
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000).
Summary judgment is proper here, both sides having stipulated to material facts and having moved for summary judgment. The issue before the court on these motions is a question of law suitable for disposition through summary judgment.
The sole issue before the court is whether the resident relative exclusion in the Policy is contrary to public policy.
In this diversity action, the court looks to Hawaii law to resolve the legal issue. See Snead v. Metro. Prop. & Cas. Ins. Co., 237 F.3d 1080, 1090 (9th Cir. 2001). When interpreting state law, a federal court is bound by the decisions of the state's highest court. See Ariz. Elec. Power Co-op. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995). In the absence of an on-point decision by the state's highest court, federal courts attempt to predict how the state supreme court would decide the issue, using other decisions by the state's courts, decisions from other jurisdictions, statutes, treatises, and restatements as guidance. Id.; see also Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir. 2004) () (quotation marks and brackets omitted).
Ritchey and Alexandra urge the court to certify this question to the Hawaii Supreme Court. See ECF No. 44-1, PagelD # 296-97. It is certainly within the court's discretion to do so. See Louie v. United States, 776 F.2d 819, 824 (9th Cir. 1985) () (quotation marks omitted); Haw. Rev. Stat. § 602-5(a)(2); Haw. R. App. P. 13. But the court uses this power sparingly, so as not to abdicate its duty or overwhelm the state judiciary.
While the particular issue before this court has not been directly addressed by Hawaii's state appellate courts, it does not merit certification. The state courts, including the Hawaii Supreme Court, have heard and decided many cases involving public policy challenges to policy exclusions. Those decisions allow this court to predict how the Hawaii Supreme Court would address the issue. Accordingly, the court need not and does not certify this question to the Hawaii Supreme Court.
Under Hawaii law, insurers have a right to limit and set conditions on their liability, just as individuals do. See Dairy Rd. Partners v. Island Ins. Co., 92 Haw. 398, 411-12, 992 P.2d 93, 106-07 (2000). Such limits and conditions, however, become invalid if they contravene statutory inhibitions or public policy. See id.; see also Damon Key Leong Kupchak Hastert v. Westport Ins. Corp., 421 F.Supp.3d 946, 957 (D. Haw. 2019). The question before this court is whether a resident relative exclusion in an umbrella policy, at least as applied under the circumstances of this case, is within GEICO's right to impose or is unenforceable as an infringement of Hawaii's public policy.
Ritchey and Alexandra define “public policy” expansively as Hawaii courts have sometimes done. They contend that the term “ordinarily includes the notion of the general public good, as well as the policies enunciated by the jurisdiction's constitution, common or statutory laws, and judicial decisions.” See ECF No. 44-1, PageID # 291 (quoting Salviejo v. State Farm Fire & Cas. Co., 87 Haw. 430, 435, 958 P.2d 552, 557 (Haw. Ct. App. 1998)); see also 7 Steven Plitt, et al., Couch on Insurance § 101:15 (3d ed.) (2020). But at...
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