Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_20-cv-00396/USCOURTS-azd-2_20-cv-00396-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Samuel Saks, et al.,

Plaintiffs,

v. 

Government Employees Insurance 

Company,

Defendant.

No. CV-20-00396-PHX-DLR

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, the 

1 GEICO’s request for oral argument is denied because the issues are adequately 

briefed and oral argument will not help the Court resolve the motion. See Fed. R. Civ. P. 

78(b); LRCiv. 7.2(f); Lake at Las Vegas Investors Grp., Inc. v. Pac. Malibu Dev., 933 F.2d 

724, 729 (9th Cir. 1991). 

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Umbrella 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 underinsured 

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motorist 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 partially 

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bolded, 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 

failing to reasonably inform him of the coverage that was and was not included in the Auto 

and Umbrella Policies, thereby causing Plaintiffs to unknowingly forego the UM/UIM 

coverage they sought to possess. (Doc. 1-3 at 10.) However, GEICO disclosed within the 

Umbrella Policy agreement—which Plaintiff Samuel Saks had a duty to read—the absence 

of UM/UIM coverage in the policy. Further, the Court is unfamiliar with any Arizona law, 

2 Plaintiffs, in their response, cite to three excerpts of GEICO form letters 

accompanying the Umbrella Policy paperwork to suggest that Plaintiff Samuel Saks had 

an objectively reasonable expectation that the GEICO Umbrella Policy provided UM/UIM 

coverage. The first excerpt reads, “Your GEICO Personal Umbrella Policy is designed to 

protect you against possible liabilities that might exceed the limits of your primary GEICO 

policy or another policy. In addition, your GEICO Personal Umbrella Policy covers you 

for some things that may not be covered by any other insurance you might have.” (Doc. 8 

at 5.) The second excerpt reads, “Enclosed you will find renewal papers for your GEICO 

Personal Umbrella Policy. You can feel comfortable knowing that you and your loved ones 

have continued protection from the catastrophic legal defense costs or losses that could 

easily result from an unexpected claim.” (Id. at 6.) Finally, the third excerpt reads, “Think 

of a Personal Umbrella Policy like a safety net for everyday life. It protects your assets in 

the event of a significant incident.” (Id.) Nothing in these excerpts indicates that the 

Umbrella Policy provides any UM/UIM coverage. Rather, the excerpts generally 

emphasize that the Umbrella Policy expands liability coverage and covers “legal defense 

costs” rather than first-party UM/UIM claims. 

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and Plaintiffs direct the Court to none, which imposes a personal duty on an insurer, itself, 

to inform policyholders of the coverages and relevant exclusions. Rather, Arizona has 

imposed on individual insurance agents a duty to uphold a certain standard of care. Darner 

Motor Sales, Inc. v. Univ. Underwriters Ins. Co., 682 P.2d 388, 403 (Ariz. 1984). Plaintiffs 

make no allegations against an individual insurance agent, and GEICO cannot be held 

liable for professional negligence without the participation of such agents. Consequently, 

Plaintiffs fail to state a claim against GEICO for professional negligence. 

IT IS ORDERED that GEICO’s motion to dismiss (Doc. 7) is GRANTED. The 

Clerk of Court is directed to terminate this case.

Dated this 26th day of March, 2020.

Douglas L. Rayes

United States District Judge

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