Old Republic Ins. Co. v. Jensen, CV-N-02-0252-LRH(VPC).

• Decision Date: 05 August 2003
• Docket Number: No. CV-N-02-0252-LRH(VPC).,CV-N-02-0252-LRH(VPC).
• Citation: 276 F.Supp.2d 1097
• Parties: OLD REPUBLIC INSURANCE COMPANY, a Pennsylvania corporation Plaintiff, v. Kevin JENSEN, M.D., et al., Defendants.
• Court: U.S. District Court — District of Nevada

276 F.Supp.2d 1097

OLD REPUBLIC INSURANCE COMPANY, a Pennsylvania corporation Plaintiff, v. Kevin JENSEN, M.D., et al., Defendants.

No. CV-N-02-0252-LRH(VPC).

United States District Court, D. Nevada.

August 5, 2003.

ORDER

HICKS, District Judge.

I. INTRODUCTION

This action was brought by Old Republic Insurance Company (hereinafter "Plaintiff" or "Old Republic") for a declaration of its liability under a policy of insurance issued to Kevin Jensen ("Defendant Jensen")¹ to cover him for certain risks attendant to the operation of his private single-engine Piper Cherokee 235 aircraft. Pending before the Court is Plaintiff's Motion for Summary Judgment filed pursuant to Fed.R.Civ.P. 56(c). The Court, by its Order of June 3, 2003, set a hearing on the Plaintiff's motion for June 5, 2003. All parties appeared at that hearing, and the Court heard argument from Plaintiff's counsel as well as respective counsel for Defendant Jensen and Defendant Griffin. For the reasons set forth below, the Plaintiff's Motion for Summary Judgment (# 15) will be granted.

II. STATEMENT OF FACTS

The relevant facts of this case are not in dispute. Defendant Jensen purchased the aircraft on June 21, 2001. The June Purchase Agreement, signed by Defendant Jensen, states that "he or his authorized mechanics/agents have fully inspected the described aircraft, related airworthy paperwork, log books, etc." The Delivery and Acceptance statement, also signed by Kevin Jensen, confirms that Jensen or his mechanic personally inspected all of "the log books and related airworthy paperwork associated with [the] aircraft" and they found "the aircraft to be in airworthy condition." The airframe log reflects that Aviation Services Inc. in Reno, Nevada, performed the last annual inspection on the aircraft on July 13, 2000.

Subsequent to purchasing the aircraft, Defendant Jensen purchased aircraft insurance from Old Republic. Old Republic's policy of insurance, issued to Defendant Jensen, excludes coverage "if the Airworthiness Certificate of the aircraft is not in full force and effect" or "if the aircraft has not been subjected to appropriate airworthiness inspection(s) as required under current applicable Federal Air Regulations for the operations involved."

Shortly after Defendant Jensen purchased the aircraft, he noticed it was having engine trouble. On July 25, 2001, he took the aircraft to El Aero Services Inc. ("El Aero") in Carson City and made arrangements with an El Aero mechanic to have the engine inspected. Defendant Jensen signed an El Aero work order, which authorized the El Aero mechanic to complete whatever engine work he determined was necessary on the aircraft.

Although not essential to the Court's analysis, it should be noted that the parties dispute the contents of the discussion between Defendant Jensen and the El Aero mechanic over the scope of the work that was to be performed on the aircraft. Jensen claims to have given the mechanic and an El Aero secretary instructions to the effect that El Aero should "do everything necessary to make the aircraft safe." This, Defendant Jensen argues included an annual inspection. Both Jensen and the El Aero mechanic acknowledge discussing the annual inspection. However, the mechanic denies that Jensen instructed El Aero to perform an annual inspection on the aircraft.

The aircraft was at El Aero from July 25 to August 8, 2001. Defendant Jensen did not obtain or check the aircraft logbooks after the repairs were completed. The logbooks remained with El Aero employees, who expected Jensen to retake possession of them when he paid for the repairs. The July 25, 2001, work order, signed by Jensen, makes no mention of an annual inspection, nor anything other than the repairs to the rough-running engine. The completed work order and the invoice for work completed also contain no mention of an annual inspection. According to Jensen's statement, the work order and invoice were mailed to him on August 20, 2001, and he acknowledges they were received by his office on August 22 or 23, 2001.

On September 1, 2001, Kevin Jensen and his wife Lois Jensen embarked on a flight around the surrounding area of Carson City, Nevada. While on final approach to the Carson City Airport, the aircraft rapidly lost altitude and crashed short of the runway. The cause of the accident could not be determined by the subsequent accident investigation. Defendant Jensen speculates, however, that shortly before crashing he either switched to the wrong fuel tank (presumably an empty one) or a problem developed in a fuel line or other part of the fuel system.

As a result of the accident, Kevin Jensen and his wife Lois Jensen were both seriously injured and the aircraft was destroyed. The accident site was located in the backyard of a residence belonging to Robert Griffin, also a Defendant in this action. Defendant Griffin has suffered severe and life-altering injuries and his property suffered damage as a result of the accident. Defendant Griffin is seeking compensation for his injuries in an action brought by him against Kevin Jensen in the First Judicial District Court of the State of Nevada.

It is undisputed that the annual airworthiness inspection was not performed before the accident, and the last prior annual inspection was performed on the aircraft in July 2000. Thus, for purposes of the federal regulations and the Old Republic policy — the aircraft was not airworthy at the time of the crash. Plaintiff, therefore, relying on the exclusionary clause in its policy declined to provide insurance coverage or defend Jensen following the accident.

III. STANDARD OF REVIEW

A motion for summary judgment is a procedure that terminates, without a trial, actions in which "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A summary judgment motion may be made in reliance on the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any." Id.

The movant is entitled to summary judgment if the nonmoving party, who bears the burden of persuasion, fails to designate "`specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed. R.Civ.P. 56(e)). Thus, to preclude a grant of summary judgment, the nonmoving party must set forth "`specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indust. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)(quoting Fed.R.Civ.P. 56). The substantive law defines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All justifiable inferences must be viewed in the light most favorable to the nonmoving party. County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir.2001) (citing Zenith Radio Corp., 475 U.S. at 587, 106 S.Ct. 1348).

Although the nonmoving party has the burden of persuasion, the party moving for summary judgment bears the initial burden of showing the absence of a genuine issue of material fact. Metro Indust., Inc. v. Sammi Corp., 82 F.3d 839, 847 (9th Cir.1996). That burden is met by showing an absence of evidence to support the nonmoving party's case. Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548. The burden then shifts to the nonmoving party to set forth specific facts demonstrating that there is a genuine issue for trial. Liberty Lobby, Inc., 477 U.S. at 250, 106 S.Ct. 2505. In meeting this burden, the nonmoving party must go "beyond the pleadings and by its own evidence present specific facts showing that there is a genuine issue for trial." Far Out Prods. v. Oskar, 247 F.3d 986, 997 (9th Cir.2001) (citing Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.1996)) (quotations omitted).

IV. DISCUSSION OF POLICY COVERAGE

The basic question in need of determination in this action is the Plaintiff's liability, if any, under the policy it issued to Kevin Jensen. Naturally, as jurisdiction is invoked upon diversity of citizenship in this case, this Court is bound to apply the substantive law of the state in which it sits. Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Strassberg v. New England Mutual Life Ins. Co., 575 F.2d 1262 (9th Cir.1978). Thus, Nevada law controls.

The Plaintiff argues that the policy issued to Defendant Jensen does not afford coverage for the accident. Specifically, Plaintiff argues that Jensen was operating the aircraft without the appropriate airworthiness inspection and certification, thereby excluding coverage under an express provision of its aviation policy.

The Defendants respond by arguing that the aviation policy should afford coverage for the accident regardless of the exclusionary clause. In support of this response, the Defendants individually or mutually make the following arguments: (1) there must be a causal link between the claimed non-compliance with the policy provision and the accident itself; (2) Nevada Revised Statute 687B.110 acts as an anti-technicality statute and is applicable to this case; (3) the insurance policy was not part of the contract and Defendant Jensen did not have notice of the exclusion; and (4) additional discovery is needed to determine if there is a material issue of fact.

1. Policy in Effect

As noted above, Old Republic's aviation policy issued to Defendant Jensen contained a clause excluding coverage "if the Airworthiness Certificate of the aircraft is not in full force and effect" or "if the aircraft has not been subjected to appropriate airworthiness inspection(s) as required under current applicable Federal Air Regulations for the operations involved."² There is no dispute that the aircraft did not have its airworthiness certificate or annual inspection at the time of the accident. According to Plaint...