Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-15638/USCOURTS-ca9-13-15638-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LILLIAN GRADILLAS; CHRIS

GRADILLAS; ASSIGNEES OF

KENNETH NWADIKI, JR., DBA

America Bus Line,

Plaintiffs-Appellees,

v.

LINCOLN GENERAL INSURANCE

COMPANY,

Defendant-Appellant.

No. 13-15638

D.C. No.

3:12-cv-03697-CRB

ORDER

CERTIFYING

QUESTION TO THE

SUPREME COURT

OF

CALIFORNIA

Filed July 6, 2015

Before: Michael Daly Hawkins and Paul J. Watford,

Circuit Judges, and Jed S. Rakoff,* Senior District Judge.

* The Honorable Jed. S. Rakoff, Senior United States District Judge for

the Southern District of New York, sitting by designation.

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2 GRADILLAS V. LINCOLN GEN. INS. CO.

SUMMARY**

Certification to the California Supreme Court 

The panel certified to the Supreme Court of California the

following question:

When determining whether an injury arises

out of the “use” of a vehicle for purposes of

determining coverage under an automobile

insurance policy and an insurance company’s

duty to defend, is the appropriate test whether

the vehicle was a “predominating

cause/substantial factor” or whether there was

a “minimal causal connection” between the

vehicle and the injury?

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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GRADILLAS V. LINCOLN GEN. INS. CO. 3

ORDER

We respectfully request that the Supreme Court of

California exercise its discretion to decide the certified

question set forth in Part II of this order.

I

Caption and Counsel

A. The caption of the case is:

No. 13-15638

LILLIAN GRADILLAS; CHRIS GRADILLAS;

ASSIGNEES OF KENNETH NWADIKI, JR., DBA

America Bus Line,

Plaintiffs-Appellees,

v.

LINCOLN GENERAL INSURANCE COMPANY,

Defendant-Appellant.

B. The names and addresses of counsel for the parties are:

For Plaintiffs-Appellees:

Paul D. Fogel and Dennis Peter Maio, Reed Smith LLP,

101 Second Street, Suite 1800, San Francisco, CA 94105,

and Scott A. Brown and David M. Poore, Brown Poore

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4 GRADILLAS V. LINCOLN GEN. INS. CO.

LLP, 1350 Treat Boulevard, Suite 745, Walnut Creek, CA

94597

For Defendant-Appellant:

Edward F. Ruberry, Ellen D. Jenkins, and David Allen,

Ruberry, Stalmack & Garvey LLC, 500 W. Madison

Street, Suite 2300, Chicago, IL 60661, and George D.

Yaron and Henry M. Su, Yaron & Associates, 1300 Clay

Street, Suite 800, Oakland, CA 94612

C. Designation of party to be deemed petitioner: DefendantAppellant

II

Question Certified

Pursuant to Rule 8.548 of the California Rules of Court,

a panel of the United States Court of Appeals for the Ninth

Circuit, before which this appeal is pending, requests that the

Supreme Court of California answer the question presented

below. This court will accept the California Supreme Court’s

decision on this question. Our phrasing of the question is not

intended to restrict the California Supreme Court’s

consideration of the case. The question certified is as

follows.

When determining whether an injury arises out of the

“use” of a vehicle for purposes of determining coverage

under an automobile insurance policy and an insurance

company’s duty to defend, is the appropriate test whether the

vehicle was a “predominating cause/substantial factor” or

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GRADILLAS V. LINCOLN GEN. INS. CO. 5

whether there was a “minimal causal connection” between the

vehicle and the injury?

III

Statement of Facts

On January 27, 2008, Lillian Gradillas, her then-husband

Chris Gradillas (“the Gradillases”), and other paid passengers

on a party bus operated by American Bus Lines (“ABL”) and

owned by Kenneth Nwadike (“Nwadike”) were transported

to a night club. Each passenger had a wristband intended to

provide admission to the night club, but the bouncer refused

to allow Lillian and one other woman inside because they

lacked proper identification.

Lillian and the other woman were left outside in the rain

until the bus driver, Gustavo Rosales, invited them to wait

aboard the bus, which they agreed to do. With Rosales, the

two women, and Rosales’s relative on the bus, Rosales drove

to an empty, dark parking lot across the street from the club

and parked. The other woman then sat down on a couch and

pretended to sleep, at which point Rosales approached Lillian

and, with the assistance of his relative, proceeded to grope

her. The other woman then woke up and went to the

bathroom on the bus; once she was inside, Rosales’s relative

blocked the door. “With the friend gone and [the relative]

guarding the friend, [Rosales] climbed on top of Lillian . . .

and then he raped her.” The Gradillases reported the rape to

the police, and Gustavo later pled guilty to felony sexual

assault.

Lincoln General Insurance Company (“Lincoln”) had

issued a business auto policy of insurance (the “BA Policy”)

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6 GRADILLAS V. LINCOLN GEN. INS. CO.

and a separate commercial general liability policy (the “CGL

Policy”) to Nwadike dba ABL. The BA Policy required

Lincoln to pay “all sums an ‘Insured’ legally must pay as

damages because of ‘bodily injury’. . . to which this

Insurance applies, caused by an ‘accident’ and resulting from

the ownership, maintenance or use of a covered ‘auto.’” In

the months following the assault, Lincoln sent Nwadike three

letters discussing the policy’s coverage and Lincoln’s duty to

defend. Initially, Lincoln denied coverage under the BA

Policy, but agreed, subject to a reservation of rights, to defend

Nwadike under the CGL Policy. In its second letter, Lincoln

again denied coverage under the BA Policy and reiterated that

the company would defend under the CGL Policy subject to

a reservation of rights. In its third letter, Lincoln denied

coverage under the CGL Policy and withdrew its defense.

On September 11, 2009, the Gradillases filed suit in the

Superior Court for the County of San Francisco, seeking to

recover damages for the injuries they incurred from Nwadike,

ABL, Lincoln, and others. In August 2011, the Gradillases

settled their claim with Nwadike, and Nwadike stipulated to

the entry of judgment against him. The judgment awarded

$2,000,000 to Lillian and $500,000 to Chris. In addition, the

Gradillases entered into a covenant with Nwadike in which

they agreed not to execute the judgment and Nwadike

assigned his rights against Lincoln to the Gradillases. On

September 17, 2012, the state trial court entered the stipulated

judgment upon a finding of “good cause to support the

amount” of damages.

Before the judgment in the underlying state court action

was entered, the Gradillases filed this lawsuit to enforce the

stipulated judgment against Lincoln and others. The case was

removed to the Northern District of California and the

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GRADILLAS V. LINCOLN GEN. INS. CO. 7

Gradillases moved for partial summary judgment, which the

district court granted, ruling that the stipulated judgment was

reasonable and Lincoln had breached its duty to defend

because the bus was a temporary substitute and the injuries

resulted from the “use of” the bus.

Although Lincoln argues on appeal that the injury was

outside the scope of the policy’s coverage because it was not

an “accident” and the bus was not a qualifying substitute

vehicle, we do not reach these arguments because Lincoln

failed to raise them below. See Abex Corp. v. Ski’s Enters.,

Inc., 748 F.2d 513, 516 (9th Cir. 1984) (citing Rothman v.

Hosp. Serv. of S. Cal., 510 F.2d 956, 960 (9th Cir. 1975)). 

Although application of this rule is discretionary, Singleton

v. Wulff, 428 U.S. 106, 121 (1976), Lincoln’s failure to

present the “accident” and “covered auto” arguments below

deprived the Gradillases of the opportunity to develop the

relevant factual record. See In re Mercury Interactive Corp.

Sec. Litig., 618 F.3d 988, 992 (9th Cir. 2010) (discretion to

reach waived issues “when the issue presented is purely one

of law and either does not depend on the factual record

developed below, or the pertinent record has been fully

developed.”) (citation and internal quotation marks omitted).

Therefore, the only question remaining – which is

dispositive as to the merits of this appeal – is whether the

injuries arose from the use of the party bus such that Lincoln

had a duty to defend. We note that Lincoln also disputes

whether the amount of the settlement was reasonable, an issue

that we will address pending the California Supreme Court’s

disposition of the certified question.

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8 GRADILLAS V. LINCOLN GEN. INS. CO.

IV

Explanation of Our Request

We seek the California Supreme Court’s determination as

to the proper test to apply in determining whether an injury

arises out of the “use” of an automobile for purposes of

determining the coverage of an automobile insurance policy

and an insurer’s duty to defend an insured. We ask for this

assistance because the test to be applied in the context of this

case will have a significant impact on these and similarlysituated parties, and there is insufficient guidance in the

relevant statutes and case law to allow us to resolve this

question.

Although a series of California Court of Appeal decisions,

Safeco Ins. Co. of Am. v. Parks, 170 Cal. App. 4th 992, 1012

(2009); R.A. Stuchbery & Others Syndicate 1096 v. Redland

Ins. Co., 154 Cal. App. 4th 796, 802 (2007); State Farm Mut.

Auto. Ins. Co. v. Grisham, 122 Cal. App. 4th 563, 566–67

(2004); Cal. Auto. Ins. Co. v. Hogan, 112 Cal. App. 4th 1292,

1297 (2003); Am. Nat’l Prop. & Cas. Co. v. Julie R., 76 Cal.

App. 4th 134, 140 (1999); Rowe v. Farmers Ins. Exch., 7 Cal.

App. 4th 964, 971–72 (1992); Peters v. Firemen’s Ins. Co.,

67 Cal. App. 4th 808, 812–13 (1998); Farmers Ins. Exch. v.

Reed, 200 Cal. App. 3d 1230, 1233 (1988), has adopted or

recognized the “predominating cause/substantial factor” test,

we note that these decisions are in potential conflict with the

California Supreme Court’s instruction that the “vehicle need

not be, in the legal sense, a proximate cause of the injury

. . . .” State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d

123, 127 n.7 (1973). We also note that a handful of

California Court of Appeal decisions have either employed

the test in Partridge or noted that the test is not a settled

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GRADILLAS V. LINCOLN GEN. INS. CO. 9

question, Prince v. United Nat’l Ins. Co., 142 Cal. App. 4th

233, 244–45 (2006); Kramer v. State Farm Fire & Cas. Co.,

76 Cal. App. 4th 332, 336–37 (1999);Interinsurance Exch. v.

Flores, 45 Cal. App. 4th 661, 668–69 (1996); Nat’l Am. Ins.

Co. v. Ins. Co. of N. Am., 74 Cal. App. 3d 565, 571 (1977).

As we read California law, we do not know whether the

district court in this case was required to apply the

“substantial factor” test or a “minimal causal connection”

test. We submit that this question is worthy of a decision by

the California Supreme Court, and that this case presents a

suitable vehicle for the California Supreme Court to address

this question. See Cal. Rules of Court 8.548(a). The answer

given by the California Supreme Court will dispose of this

appeal currently pending before the Ninth Circuit.

V

Accompanying Materials

The clerk of this court is hereby directed to file in the

California Supreme Court, under official seal of the United

States Court of Appeals for the Ninth Circuit, copies of all

relevant briefs and excerpts of record, and an original and ten

copies of the request with a certification of service on the

parties, pursuant to California Rules of Court 8.548(c), (d).

Further proceedings before us are stayed pending the

California Supreme Court’s decision regarding certification,

and in the event the California Supreme Court accepts

certification, pending our receipt of the answer to the question

certified. Submission of this case is withdrawn.

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10 GRADILLAS V. LINCOLN GEN. INS. CO.

After the California Supreme Court makes its

determination whether to accept certification of this question,

the parties shall file a joint report informing this court of the

decision. If the California Supreme Court accepts the

certified question, the parties shall file a joint status report to

our court every six months after the date of acceptance.

If the California Supreme Court denies the request for

certification, this case will be automatically resubmitted upon

notice of that denial. If the California Supreme Court accepts

the certified question, the case will be automatically

resubmitted upon receipt of the California Supreme Court’s

answer to the certified question.

SO ORDERED.

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