Saks v. Gov't Emps. Ins. Co.

• Decision Date: 26 March 2020
• Docket Number: No. CV-20-00396-PHX-DLR,CV-20-00396-PHX-DLR
• Parties: Samuel Saks, et al., Plaintiffs, v. Government Employees Insurance Company, Defendant.
• Court: U.S. District Court — District of Arizona

Samuel Saks, et al., Plaintiffs, v. Government Employees Insurance Company, Defendant.

No. CV-20-00396-PHX-DLR

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

March 26, 2020

ORDER

Before the Court is GEICO's motion to dismiss for failure to state a claim, which is fully briefed. (Docs. 7-9.) For the following reasons, the Court will grant GEICO's motion.¹

I. Background

On November 27, 2017, Herschel Saks ("Decedent") was in a fatal car crash with an underinsured motorist. (Doc. 1-3 at 6.) At the time of the accident, Decedent was driving a vehicle insured under his son's and daughter-in-law's GEICO auto policy ("Auto Policy"), and was listed as an "additional driver" thereunder. (Id. at 7.) Decedent was also an "insured" under the couple's personal umbrella policy ("Umbrella Policy"). The Auto Policy provided uninsured and underinsured motorist ("UM/UIM") coverage in the amount of $300,000 per person and $500,00 per incident but, contrary to Plaintiffs' belief, theUmbrella Policy explicitly excluded UM/UIM coverage from its $1,000,000 coverage. (Id. at 8.) On November 15, 2019, Plaintiffs, as Decedent's beneficiaries, filed a complaint in Maricopa County Superior Court, bringing claims against GEICO for breach of reasonable expectations and professional negligence. (Id. at 5-11.) GEICO removed the action to this Court on February 24, 2020 and moved to dismiss on March 2, 2020. (Id. at 30-34; Doc. 7.) The motion is now ripe.

II. Legal Standard

To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The task when ruling on a motion to dismiss "is to evaluate whether the claims alleged [plausibly] can be asserted as a matter of law." See Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When analyzing the sufficiency of a complaint, the well-pled factual allegations are taken as true and construed in the light most favorable to the plaintiff. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as factual allegations are not entitled to the assumption of truth, Iqbal, 556 U.S. at 680, and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2008).

III. Discussion

Plaintiffs assert that GEICO acted against Plaintiffs' reasonable expectations by failing to provide the $1,000,000 UM/UI motorist coverage that Plaintiffs believed they were entitled to by purchasing the Umbrella Policy. (Doc. 1-3 at 9.) It is undisputed that the Umbrella Policy's agreement, at all relevant times, unambiguously stated, "We do not cover damages resulting from: []Personal injury or property damage resulting from an uninsured or underinsured motorist claim unless a premium is shown for the uninsured or underinsured motorist coverage in the declarations." (Doc. 7-1 at 13) (emphasis in original.) It is also undisputed that no premium was shown for uninsured or underinsuredmotorist coverage in the declarations.

Nevertheless, an insurer may still be liable, even when the plaintiff's expectations are contrary to the unambiguous written language of the policy, under the following circumstances:

(1) Where the contract terms, although not ambiguous to the court, cannot be understood by the reasonably intelligent consumer who might check on his or her rights, the court will interpret them in light of the objective, reasonable expectations of the average insured;

(2) Where the insured did not receive full and adequate notice of the term in question, and the provision is either unusual or unexpected, or one that emasculates apparent coverage;

(3) Where some activity which can be reasonably attributed to the insurer would create an objective impression of coverage in the mind of a reasonable insured;

(4) Where some activity reasonably attributable to the insurer has induced a particular insured reasonably to believe that he has coverage, although such coverage is expressly and unambiguously denied in the policy.

Gordinier v. Aetna Cas. & Sur. Co., 742 P.2d 277, 283-84 (Ariz. 1987) (citations omitted). None of the Gordinier exceptions apply.

First, Plaintiffs have not provided a reason why the agreement's clear terms, expressly excluding coverage for damages "resulting from an uninsured or underinsured motorist claim unless a premium is shown for the uninsured or underinsured motorist coverage in the declarations," could not be understood by a reasonably intelligent consumer.

Second, the exclusion of UM/UIM coverage in this "personal umbrella liability insurance agreement" is not unusual or unexpected and does not emasculate apparent coverage. The provision is not unusual, because A.R.S. § 20-259.01(L) expressly authorizes insurers to forego providing UM/UIM coverage within umbrella policies. See Farmers Ins. Co. of Ariz. v. Voss, 935 P.2d 875, 876 (Ariz. Ct. App. 1996) ("When the term at issue is one specifically authorized by statute, it cannot be characterized as unusual."). The provision is not unexpected because the exclusion provision is partiallybolded, in a legible and ordinary-sized font, on page three of a concise six-page policy agreement. The provision also does not emasculate apparent coverage because the very title of the agreement—which Plaintiff Samuel Saks received and read—makes clear that the Umbrella Policy only covers the insured's liability to third persons.

Finally, addressing both the third and fourth exceptions simultaneously, Plaintiffs have alleged no activity that can be reasonably attributed to GEICO that would create an objective impression of coverage in the mind of a reasonable insured or lead an insured to reasonably believe that the Umbrella Policy included $1,000,000 UM/UIM coverage.² Rather, Plaintiffs concede in their complaint that GEICO, on multiple occasions, encouraged Plaintiff Samuel Saks to increase his family's UM/UIM coverage under the Auto Policy to $1,000,000 (Doc. 1-3 at 9), which runs contrary to the assertion that GEICO represented that the coverage Plaintiff Samuel Saks already possessed included $1,000,000 UM/UIM coverage. Based on the foregoing, Plaintiffs fail to state a claim against GEICO for breach of reasonable expectations.

Next, Plaintiffs allege GEICO breached its duty of care to Plaintiff Samuel Saks by...