Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00662/USCOURTS-azd-2_04-cv-00662-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

U-Haul International, Inc., et al, 

Plaintiffs, 

vs.

Lumbermens Mutual Casualty Company, 

Defendant/Counter-Claimant.

Lumbermens Mutual Casualty Company,

Defendant/Counter-Claimant,

vs.

U-Haul International, Inc., et al,

Counter-Defendants.

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No. CV 04-0662 PHX-DGC

ORDER

Pending before the Court is LMC’s Motion for Reconsideration of the Court’s August

25, 2006 Order. Dkt. #134. Also pending is the parties’ additional briefing on LMC’s earlier

Motion for Reconsideration/Motion for Clarification (Dkt. #132) as required by the Court’s

order of August 25, 2006. Dkt. #133. This order will address the outstanding issues raised

by these filings. 

I. LMC’s Motion for Reconsideration of the Court’s August 25, 2006 Order.

LMC’s motion correctly notes that the Court made an error. The Court’s order of

August 25, 2006, stated that paragraphs 1-6 of LMC’s previous motion for reconsideration

Case 2:04-cv-00662-DGC Document 138 Filed 10/13/06 Page 1 of 4
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 The Court will deny the requests for oral argument because the parties have submitted

memoranda thoroughly discussing the law and evidence and the Court concludes that oral

argument will not aid its decisional process. See Mahon v. Credit Bur. of Placer County,

Inc., 171 F.3d 1197, 1200 (9th Cir. 1999).

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(Dkt. #132) were untimely. Dkt. #133. In fact, LMC’s motion was not untimely in light of

the Court’s order of June 28, 2006. Dkt. #126. The Court accordingly will reconsider and

reverse its ruling that paragraphs 1-6 were untimely.

Even considering paragraphs 1-6 as timely, the Court concludes that LMC is not

entitled to reconsideration of the Court’s order of June 12, 2006. The Court sees no

inconsistency in that order. The order holds that the last sentence of the RU policies’

definition of Ultimate Net Loss precludes double payment of litigation expenses. The Court

did not accept LMC’s argument that the sentence precludes LAE from being counted when

determining the point at which the RU policies are exhausted and LMC’s obligation begins.

Dkt. #124 at 8. LMC’s argument for reconsideration and clarification contained in

paragraphs 1-6 of Dkt. #132 will therefore be denied on the merits.

II. The Parties’ Briefing on Remaining Issues.1

Pursuant to the Court’s order of August 25, 2006, the parties have provided additional

briefing on two issues: LMC’s claim that the RG and RX policies’ “products completed

aggregate limits” do not include LAE, and LMC’s argument that Plaintiffs are estopped from

claiming that LAE costs are included when determining the trigger point for the LMC

policies. The Court will address these issues separately.

A. Products Completed Aggregate Limit.

The insuring agreement of the RG policy requires Republic Western to pay “those

sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’

or ‘property damage’ to which the insurance applies.” Dkt. #135, Ex. 1, page 01525. The

“Limits of Insurance” endorsement in turn includes “all damages including legal fees, court

costs, interest and other allocated loss expenses arising out of the same occurrence[.]” Id.

at 01547 (emphasis added). These provisions apply to the RX policy because of the

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following form endorsement in that policy. Dkt. #135, Ex. 2, page 01510. These provisions

make clear that the RG and RX policies include LAE.

Both policies also contain a “Products Aggregate Endorsement.” Dkt. #135, Ex. 1

page 01548, Ex. 2 page 01511. These endorsements set Republic Western’s aggregate limit

of liability at $250,000 for the RG policy and $1,750,000 for the RX policy, and apply to “all

damages because of ‘bodily injury’ and ‘property damage[.]’” Id. Because the Products

Aggregate Endorsement does not expressly include defense costs or LAE, LMC argues that

it is narrower than the occurrence limits of the policies and must be read to exclude LAE.

The Court does not agree.

The insurance policies must be read as a whole. The Products Aggregate

Endorsement refers to the occurrence limits established elsewhere in the policies –

occurrence limits that expressly include “allocated loss expenses.” Id. at 01547. The plain

and ordinary meaning of the Products Aggregate Endorsement is that it places an aggregate

limit on Republic Western’s exposure for all occurrences. See Sparks v. Republic Nat. Life

Ins. Co., 647 P.2d 1127, 1132 (Ariz. 1982) (“Provisions of insurance policies are to be

construed in a manner according to their plain and ordinary meaning.”). The Court cannot

conclude that it alters the means of calculating Republic Western’s exposure under the

policies and the point at which the LMC excess policies are triggered. Indeed, LMC has

admitted in this litigation that the RG and RX policies are “defense within limits” policies.

Dkt. #110 at 4. The Court accordingly will grant partial summary judgment in favor of

Plaintiffs on LMC’s products completed aggregate limit argument.

 B. Estoppel.

LMC presents evidence that AON was U-Haul’s broker, that AON told LMC that the

underlying Republic Western policies were defense outside of limits policies, and that LMC

relied on these representations. Dkt. #136. Plaintiffs argue that LMC’s estoppel claim is

foreclosed by the Court’s “reasonable expectations” ruling and that LMC, in any event, did

not “justifiably” rely on AON’s representations because LMC, a sophisticated insurer, never

read the underlying Republic Western policies. Id.

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 The Court concluded in its prior order that the reasonable expectations doctrine was not

applicable here. Dkt. #124. That ruling did not resolve LMC’s estoppel claim.

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These arguments present factual issues that cannot be resolved by summary judgment.

Whether AON was U-Haul’s agent and made the representations in question, and whether

the circumstances made LMC’s reliance on those representations justifiable, are questions

of fact that must be resolved at trial. The Court cannot grant summary judgments for either

party on LMC’s estoppel claim.2

III. Where We Go From Here.

The Court has now dealt with all issues raised by the parties in their motions for

summary judgment (Dkt. ##110, 111), joint status report (Dkt. #131), and briefing on

motions for reconsideration (Dkt. ##132, 134, 135, 136). Two issues remain: (1) does LMC

prevail on its estoppel claim, and (2) what are the damages and other relief, if any, that

should be awarded in light of the Court’s rulings to date and the outcome of the estoppel

claim? These questions must be resolved at trial. The Court will schedule a final pretrial

conference by separate order.

IT IS ORDERED:

1. LMC’s Motion for Reconsideration of the Court’s August 25, 2006 Order (Dkt.

#134) is granted, but the relief sought in its previous motion for reconsideration is denied.

2. The Court will schedule a final pretrial conference by separate order. Trial will

be limited to the two issues identified above. 

DATED this 13th day of October, 2006.

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