Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00880/USCOURTS-azd-2_12-cv-00880-0/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 

Margo Hanks, 

Plaintiff, 

v. 

American Family Mutual Insurance 

Company, 

Defendant. 

No. CV-12-00880-PHX-DGC

ORDER 

 On February 20, 2008, Plaintiff Margo Hanks filed a motion for partial summary 

judgment. Doc. 29. She argues that Arizona’s “reasonable expectations” doctrine 

precludes Defendant American Family Mutual Insurance Company from arguing that a 

particular contractual provision, Endorsement 584C, excludes the replacement costs of 

undamaged but non-matching roof tiles from Plaintiff’s insurance policy. Defendant 

filed a response (Doc. 38) and Plaintiff filed a reply (Doc. 49). The Court will deny 

Plaintiff’s motion.1

I. Factual Background. 

Plaintiff owns property insured by Defendant and located at 16219 North 35th 

Avenue in Phoenix, Arizona. Doc. 30 ¶ 1. On October 5, 2010, the property was 

damaged in a severe wind and hail storm. Id. ¶ 5. In response to the damage, Plaintiff 

 

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 The request for oral argument is denied because the issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b); 

Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 

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initiated an insurance claim. Id. On March 4, 2011, Defendant’s adjuster provided an 

estimate that included the cost of 90 replacement tiles. Id. ¶ 15. The replacement cash 

value before adjustments for recoverable depreciation and the deductible was quoted at 

$3,894.07. Id. ¶ 16. Plaintiff obtained a separate estimate from a third-party firm, 

Skipton & Associates. Id. ¶ 17. Skipton determined that the tiles broken by the hail 

storm were no longer manufactured and are no longer available. Id. ¶ 18. Because 

matching replacement tiles were not available, the firm quoted the damage at $51,949.50, 

or the price necessary to replace the entire roof. 

II. Legal Standard. 

 A party seeking summary judgment “bears the initial responsibility of informing 

the district court of the basis for its motion, and identifying those portions of [the record] 

which it believes demonstrate the absence of a genuine issue of material fact.” Celotex 

Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the 

evidence, viewed in the light most favorable to the nonmoving party, shows “that there is 

no genuine dispute as to any material fact and the movant is entitled to judgment as a 

matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is also appropriate against a 

party who “fails to make a showing sufficient to establish the existence of an element 

essential to that party’s case, and on which that party will bear the burden of proof at 

trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome 

of the suit will preclude the entry of summary judgment, and the disputed evidence must 

be “such that a reasonable jury could return a verdict for the nonmoving party.” 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 

III. Analysis. 

 Plaintiff believes her policy entitles her to the replacement cost of the entire roof. 

Defendant argues that it has no obligation to pay to replace undamaged roof tiles simply 

to ensure they match the replacement tiles. Defendant asserts that this interpretation of 

the policy was made explicit in Endorsement 584C, which it claims was added to 

Plaintiff’s policy in 2010. Plaintiff argues that Arizona’s reasonable expectations 

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doctrine should make Endorsement 584C unenforceable. 

 In Gordinier v. Aetna Casualty & Surety Co., 742 P.2d 277, 283-84 (1987), the 

Arizona Supreme Court explained the reasonable expectations doctrine for insurance 

claims. Gordinier held that “Arizona courts will not enforce even unambiguous 

boilerplate terms in standardized insurance contracts in a limited variety of situations[.]” 

742 P.2d at 283. Plaintiff argues that first and second situations listed in Gordinier apply 

to Endorsement 584C: 

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. 

742 P.2d at 283 (internal citations and quotations omitted). 

 Endorsement 584C reads as follows: 

The following condition is added: 

Matching of Undamaged Property. We will not pay to repair or replace undamaged property due to mismatch between undamaged material and new material used to repair 

or replace damaged material because of: 

 a. textures, dimensional differences; 

 b. color, fading, oxidation, weathering differences; 

 c. wear and tear, marring, scratching, 

 deterioration; or 

 d. obsolescence or discontinuation 

We do not cover the loss in value to any property due to mismatch between undamaged material and new material 

used to repair or replace damaged material. 

Doc. 39-1 at 8. 

 Plaintiff argues that this language falls within the first situation identified in 

Gordinier because it cannot be understood by a reasonably intelligent consumer. 

Plaintiff maintains that the title “endorsement” is misleading because the section is 

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actually an exclusion, and she asserts that the location of the endorsement on the last of 

four pages of amendments makes it less likely that to be read or understood by the 

average insured. 

 Plaintiff also argues that the second Gordinier situation applies because she was 

never apprised of what she believes is a significant change to her policy that “emasculates 

apparent coverage.” She argues that she consistently paid the premiums for replacement 

cost value insurance, and that failure to replace the whole roof would rob that coverage of 

much of its effect and upset her reasonable expectations. 

 Defendant responds that the language of the endorsement is clear and could be 

understood by a reasonably intelligent consumer. Defendant further contends that it 

mailed a letter to Plaintiff advising her of the endorsement and its intended effect. 

Finally, Defendant argues that the insurance policy did not include replacement costs for 

materials not directly damaged even before the addition of Endorsement 584C. 

 The Court will deny summary judgment because these arguments implicate 

several genuine issues of material fact. Plaintiff claims that the endorsement is confusing 

because it is found at the end of a 26-page policy under the heading “Additional 

Protections/Endorsement.” The Court concludes, however, that a reasonable juror could 

find that the endorsement “is not lengthy, complex, confusing, or buried in the policy,” 

and that its language could be understood by a reasonably intelligent consumer. Doc. 38 

at 7-8 (citing White v. American Family Mut. Ins. Co., 65 P.3d 449, 456 (App. 2003)). In 

addition, although Plaintiff claims she did not receive the endorsement, Defendant has 

provided an affidavit stating that notice of the policy change was mailed to all of 

Defendant’s Arizona insureds. Doc. 39 ¶¶ 20-25. Defendant also plausibly asserts that 

Endorsement 584C did not actually change the scope of Plaintiff’s insurance policy. 

These issues of fact preclude summary judgment. 

 

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 IT IS ORDERED that Plaintiff’s motion for partial summary judgment (Doc. 29) 

is denied. 

 Dated this 23rd day of May, 2013. 

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