Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_18-cv-00006/USCOURTS-azd-2_18-cv-00006-7/pdf.json

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

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Jacob Benson, et al.,

Plaintiffs,

v. 

Casa De Capri Enterprises LLC, et al.,

Defendants.

No. CV-18-00006-PHX-DWL

ORDER 

INTRODUCTION

Jacob Benson is a disabled vulnerable adult who received skilled nursing care at a 

now-defunct facility called Casa de Capri Enterprises LLC (“Capri”). In December 2012, 

Benson and other family members (together, “Plaintiffs”) brought a negligence action 

against Capri in Arizona state court. 

At the time, Capri had a “claims paid” insurance policy issued by Defendant 

Continuing Care Risk Retention Group, Inc. (“CCRRG”). Under this unusual type of 

policy, the insurer is only responsible for indemnifying the insured against claims that 

become payable while the policy remains in effect. In contrast, under an “occurrence” 

policy or a “claims made” policy (which are more common), the insurer becomes 

responsible for indemnification so long as the liability-generating event occurred (or was 

disclosed to the insurer) during the policy term.

CCRRG initially assumed the defense of Plaintiffs’ lawsuit against Capri pursuant 

to Capri’s insurance policy. However, after Capri became insolvent, stopped paying its 

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premiums, declared bankruptcy, and cancelled the policy, CCRRG withdrew the defense. 

Years later, after the bankruptcy stay was lifted, Plaintiffs obtained a $1.5 million judgment 

against Capri and then initiated this garnishment action against CCRRG. 

In February 2023, after years of complicated litigation, the Court issued a lengthy

order resolving the parties’ cross-motions for summary judgment, holding that CCRRG

had no duty under the relevant insurance policies to indemnify Capri for the judgment. 

(Doc. 149.) However, in a footnote, the Court noted that it was unclear whether the 

summary judgment ruling was sufficient to fully dispose of the case, given that Plaintiffs 

had asserted during oral argument that they “also seek to recover under the theory that 

CCRRG breached its duty to defend Capri in the underlying lawsuit.” (Id. at 15 n.4.) 

Accordingly, the Court ordered the parties to submit supplemental briefing on “whether 

Plaintiffs may separately pursue relief in this garnishment action under a breach-of-theduty-to-defend theory.” (Id. at 41.) 

Now pending before the Court are the parties’ supplemental briefs. (Docs. 156, 

157.) For the following reasons, the Court concludes that Plaintiffs adequately disclosed 

their intention to pursue relief under a breach-of-the-duty-to-defend theory. To the extent 

the parties attempted, in their supplemental briefs, to go beyond the disclosure issue and 

address the merits of Plaintiffs’ alternative theory, that briefing is undeveloped and 

premature. Accordingly, and in an effort to ensure that the issues are presented in a 

procedurally appropriate format, the Court will authorize the parties to file a second round 

of summary judgment motions. 

BACKGROUND

I. Relevant Facts

The background details of this case are set forth in the February 2023 summary 

judgment order. (Doc. 149.) An abbreviated summary is provided below to set the stage 

for the disputed disclosure issue. 

On December 10, 2012, Plaintiffs filed suit in Maricopa County Superior Court 

against Capri, alleging abuse and neglect of a vulnerable adult and negligence. (Doc. 65 

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¶ 1.) At the time the lawsuit was served, Capri was insured under a “professional liability 

insurance policy” issued by CCRRG. (Doc. 65 ¶ 3.) The policy (the “2012 Policy”) 

provided coverage from January 1, 2012 to January 1, 2013 and had a policy limit of $1 

million. (Doc. 56-1 at 36.) Capri renewed its policy with CCRRG the following year (the 

“2013 Policy”). (Doc. 65 ¶ 4.) The 2013 Policy provided coverage from January 1, 2013 

to January 1, 2014. (Doc. 13-1 at 5.) 

The 2012 and 2013 Policies are “claims paid” policies. (Doc. 132 ¶ 1.) In the 

“Coverages” section of each policy, under the subheading “Insuring Agreement,” CCRRG 

agreed to pay “amounts within the policy limits for ‘Damages,’ [and] ‘Cost of Defense’ 

. . . on behalf of a ‘Member’ who becomes legally obligated to ‘Pay’ ‘Damages’ and ‘Cost 

of Defense’ during the time they are a CCRRG ‘Member.’” (Doc. 13-1 at 13, emphasis 

added.) In the subscription agreement, CCRRG elaborated that “[t]he terms and conditions 

of this type of coverage differ significantly from a typical occurrence or claims made 

indemnification insurance policy. In essence, . . . CCRRG has no responsibility for any 

portion of a claim not actually paid during the contract period. Under the Claims Paid 

policy losses are only covered by the Company if the insured is a Member of CCRRG when 

the payment is made . . . .” (Id. at 58.) 

Before the 2013 renewal, CCRRG offered Capri two renewal options: (1) to 

continue with the existing “claims paid” policy for $256,169.32; or (2) to switch to a 

“claims made” policy for $292,345.45. (Doc. 132 ¶ 17.) Capri chose the less expensive 

“claims paid” option. (Id.) 

On December 28, 2012, Capri was served in the Arizona state court lawsuit. (Doc. 

65 ¶ 2.) It is undisputed that Capri timely reported the lawsuit to CCRRG, as it was required 

to do under the 2012 Policy. (Id. ¶ 20.) It is also undisputed that CCRRG accepted Capri’s 

tender under the 2012 Policy and appointed defense counsel to defend the lawsuit without

a written reservation of rights. (Id. ¶¶ 21, 23.) 

Regarding CCRRG’s duty to defend, the 2012 Policy states: “Our right and duty to 

defend ends when we have exhausted the applicable limit of insurance by the payment of 

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‘Cost of Defense’. . . under this Policy or, when this policy is cancelled or not renewed for 

any reason, provided however, in the event CCRRG is paying ‘Cost of Defense’. . . 

CCRRG shall continue to pay ‘Cost of Defense’. . . for all such ‘Claims’ for a period of 

time not to exceed thirty (30) days to enable such former ‘Member’ to assume its own legal 

defense.” (Doc. 56-1 at 2.) The relevant language in the 2013 Policy is identical. (Doc. 

13-1 at 13.) 

After CCRRG began providing a defense of the lawsuit, Capri defaulted on its 

obligation to pay certain deductibles. (Doc. 65 ¶ 24.) As a result, Magnolia,

1

through 

Bates, sent Capri a letter on July 15, 2013 informing Capri of its “seriously delinquent” 

status “in meeting its insurance deductible payment obligations.” (Doc. 56-6 at 1-2.) The 

letter stated that CCRRG’s board of directors could terminate Capri’s membership for the 

outstanding delinquencies, in which case “Capri’s right to continued coverage of existing 

open claims . . . may be at risk if the outstanding default in payment is not cured to the 

satisfaction of the [board].” (Id. at 1.) 

On July 19, 2013, CCRRG and Capri agreed to a payment plan concerning the 

outstanding deductible obligation. (Doc. 65 ¶ 25.) However, less than one month into that 

plan, Capri again defaulted. (Id.) As a result, CCRRG again threatened action against 

Capri. (Id.) 

On August 13, 2013, CCRRG issued a notice of intent to cancel the 2013 Policy, 

which stated that the Policy would be cancelled if Capri did not pay $22,270.03 by August 

27, 2013. (Doc. 56-8 at 1; Doc. 65 ¶ 26.) 

On August 19, 2013, Capri filed for bankruptcy. (Doc. 65 ¶ 27.) Afterward, 

Plaintiffs’ lawsuit against Capri was stayed. (Doc. 1-1 at 54-55, 58-59, 62.) 

By August 22, 2013, CCRRG received notice of the bankruptcy. (Doc. 65 ¶ 33.) 

That same day, the bankruptcy court authorized a debtor in possession loan for Capri “to 

immediately pay the . . . monthly premium for liability insurance of approximately 

1 Magnolia LTC Management Services (“Magnolia”) served as the program manager 

for CCRRG; Robert “Bob” Bates was Magnolia’s president and CCRRG’s corporate 

secretary. (Doc. 65 ¶ 13.)

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$30,000.” (Doc. 65-13 at 3 ¶ 7.) 

On September 6, 2013, CCRRG rescinded its previously issued notice of intent to 

cancel. (Doc. 64 ¶ 35; Doc. 56-13.) 

On September 20, 2013, the bankruptcy court approved the sale of Capri’s assets to 

an unrelated party. (Doc. 65 ¶ 36.) 

On September 25, 2013, Capri stopped payment on a pair of premium checks it had 

previously sent to CCRRG, which CCRRG had not yet deposited in light of the bankruptcy 

proceeding. (Doc. 65 ¶ 37.) 

On October 18, 2013, Capri’s agent sent an email to CCRRG requesting the 

cancellation of the 2013 Policy “effective 8/1/13.” (Doc. 56-14 at 1-2.)2

Capri had the option to purchase an “Extended Reporting Period” upon cancellation 

of the 2013 Policy, which would have had the effect of maintaining indemnity coverage 

for existing claims that had not yet been paid. (Doc. 132 ¶ 24.) The premium for the 

Extended Reporting Period would have been “300% of the premium charged for the 

annualized 2013 Policy, or approximately $599,328.90.” (Id. ¶ 26.) It is undisputed that 

Capri declined to purchase the Extended Reporting Period, although the parties previously 

disputed Capri’s reasons for doing so.

On November 19, 2013, CCRRG (via Magnolia) sent a letter to Capri confirming 

that the 2013 Policy had been terminated as of August 1, 2013. (Doc. 65-19.) This letter 

further provided:

This is a courtesy reminder that [Capri] elected to cancel its membership in 

the Continuing Care Risk Retention Group (CCRRG), which membership 

was terminated on August 1, 2013 and, . . . as a result of that cessation of 

membership, the obligation of CCRRG to make any payments under the 

above policy for indemnity ended as of that day. Moreover, the obligation 

2 CCRRG did not accept the initial cancellation request because one of the reasons 

for the request that Capri provided in an accompanying form, i.e., “Facility Sold,” was 

inaccurate. (Doc. 56-14 at 1 [“Unfortunately, I cannot accept the Loss Policy Release as it 

stands. The signature dates reference 08/01/2013 and the reason for cancellation references 

both Requested by the Insured and Facility Sold. To the best of our knowledge the facility 

did not sell until sometime in October.”].) In response, Capri’s agent initially wrote: “What 

do you . . . want as the reason?” (Id.) On October 22, 2013, Capri’s agent submitted a 

revised cancellation request, again to be “effective 8/1/13,” which identified the sole reason 

for the cancellation request as “requested by insured.” (Doc. 56-15.) 

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of CCRRG to pay for the defense of the above claim ended thirty (30) days 

after the cessation of membership, or on August 31, 2013. 

(Id. at 1.) 

On August 14, 2014, defense counsel withdrew from representing Capri in 

Plaintiffs’ lawsuit. (Doc. 65 ¶ 47; Doc 1-1 at 65-66.) 

In March 2015, Plaintiffs tendered a policy limits settlement demand to CCRRG, 

which was rejected. (Doc. 65 ¶¶ 48-49.) Plaintiffs then sought and obtained relief from 

the bankruptcy stay “in order to proceed to judgment against Capri”; the resulting order 

from the bankruptcy court stated that Plaintiffs could not “seek to enforce any such 

judgment against the estate.” (Doc. 65 ¶ 49; Doc. 56-20 at 2.) 

Plaintiffs ultimately prevailed in their lawsuit against Capri.3 (Doc. 65 ¶ 50.) On 

November 29, 2017, the superior court entered a final judgment in Plaintiffs’ favor in the 

amount of $1,501,069.90. (Id.) 

On December 18, 2017, Plaintiffs applied for a writ of garnishment against CCRRG. 

(Doc. 1-2 at 233-35.) In their application, Plaintiffs asserted that “[CCRRG] owes [Capri] 

money which was not earned by [Capri] for personal services” and “[CCRRG] is holding 

money for [Capri] which is not exempt from collection.” (Id. at 234-35.) CCRRG 

answered that “[it] was not holding personal property or money belonging to [Capri].” 

(Doc. 29 at 3.)

II. Relevant Procedural History 

On January 2, 2018, CCRRG removed the garnishment action to federal court. 

(Doc. 1.)

On January 9, 2018, CCRRG moved to dismiss, or, alternatively, to stay litigation 

and compel arbitration. (Doc. 13.) On August 17, 2018, Judge Logan issued an order 

3 The case did not proceed to trial. In 2016, Plaintiffs filed several motions for entry 

of default, as well as a motion for default judgment, but these motions were denied because 

Capri had already filed an answer. (Doc. 1-2 at 189-90.) Later, in July 2017, Plaintiffs 

moved for summary judgment. (Id. at 16-22.) On September 28, 2017, after Capri failed 

to respond, the court granted Plaintiffs’ summary judgment motion. (Id. at 214-16.) 

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denying CCRRG’s motion.4 (Doc. 27.)

On March 2, 2019, Plaintiffs moved for summary judgment. (Doc. 55.) 

On April 18, 2019, CCRRG filed a renewed motion to compel arbitration. (Doc. 

63.) 

On July 30, 2019, the Court granted CCRRG’s renewed motion to compel 

arbitration, denied Plaintiffs’ motion for summary judgment as moot, and dismissed the 

case without prejudice. (Doc. 88.) 

Plaintiffs appealed the order compelling arbitration. (Doc. 93.) In November 2020, 

after full briefing and oral argument, the Ninth Circuit certified two questions of law to the 

Arizona Supreme Court. Benson v. Casa de Capri Enters., LLC, 980 F.3d 1328, 1333 (9th 

Cir. 2020) (“We therefore certify the following questions to the Arizona Supreme Court:

1) In a garnishment action by a judgment creditor against the judgment debtor’s insurer 

claiming that coverage is owed under an insurance policy, where the judgment creditor is 

not proceeding on an assignment of rights, can the insurer invoke the doctrine of direct 

benefits estoppel to bind the judgment creditor to the terms of the insurance contract? 2) 

If yes, does direct benefits estoppel also bind the judgment creditor to the arbitration clause 

contained in the insurance policy?”). 

In January 2022, the Arizona Supreme Court resolved the first question in Plaintiffs’ 

favor, holding that “the doctrine of direct benefits estoppel can[not] be applied in an 

Arizona garnishment proceeding.” Benson v. Casa de Capri Enters., LLC, 502 P.3d 461, 

465 (Ariz. 2022). Based on this ruling, the Ninth Circuit issued an amended memorandum 

decision in March 2022 concluding that “the district court erred in granting CCRRG’s 

motion to compel arbitration under the doctrine of direct benefits estoppel.” Benson v. 

Casa de Capri Enters., LLC, 2022 WL 822126, *1 (9th Cir. 2022). In a footnote, the Ninth 

Circuit added: “CCRRG alternatively argues that the [LRRA] preempts state law governing 

the operation of risk retention groups, and apparently by extension precludes Arizona from 

4 This case was originally assigned to Judge Logan and was transferred to the 

undersigned on October 31, 2018. (Doc. 35.)

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limiting arbitration provisions in insurance policies provided by a risk retention group. The

district court did not address this argument and [Plaintiffs] argue that CCRRG did not 

adequately raise it below. We leave these matters to the district court in the first instance.” 

Id. at *2 n.1.

On June 7, 2022, after reviewing post-remand briefing from the parties (Docs. 112, 

113), the Court permitted CCRRG to file its own motion for summary judgment. (Doc. 

115.) The parties also filed a joint request to further brief the LRRA preemption issue on 

an accelerated basis (Doc. 117), which the Court granted (Doc. 118). The parties then filed 

additional briefs on LRRA preemption. (Docs. 119, 120, 123.) 

On July 21, 2022, CCRRG filed its motion for summary judgment (Doc. 125). 

On November 4, 2022, the Court denied CCRRG’s renewed motion to compel 

arbitration based on LRRA preemption. (Doc. 138.) 

On November 22, 2022, CCRRG appealed the Court’s denial of the renewed motion 

to compel arbitration. (Doc. 139.) 

On December 15, 2022, CCRRG filed a motion to stay proceedings pending its 

appeal of the November 4, 2022 order denying arbitration. (Doc. 141.) 

On January 9, 2023, the Court denied the stay request. (Doc. 144.)

On January 12, 2023, the Court issued a tentative ruling addressing the 

cross-motions for summary judgment. (Doc. 146.)

On January 24, 2023, the Court heard oral argument. (Doc. 147.) 

On February 6, 2023, the Court granted CCRRG’s motion for summary judgment 

and denied Plaintiffs’ motion. (Doc. 149.) The Court concluded that, for various reasons,

the policies did not require CCRRG to indemnify Capri for Plaintiffs’ judgment. As noted, 

the Court also ordered the parties to submit supplemental briefing on whether Plaintiffs 

had separately asserted a garnishment claim premised on the theory that CCRRG had

breached its duty to defend Capri in the underlying lawsuit. (Id. at 15 n.4, 41.) 

...

...

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DISCUSSION

I. The Parties’ Arguments

Plaintiffs contend that “from the outset of this case Plaintiffs have maintained that 

CCRRG is liable for the judgment entered against Capri due to its wrongful denial of 

coverage, including its breach of its duty to defend Capri. This theory of liability for the 

judgment was disclosed in all Mandatory Initial Discovery Responses served upon 

CCRRG in this matter as well as multiple filed pleadings.” (Doc. 157 at 1.) Elsewhere, 

Plaintiffs elaborate that their use of the word “coverage” in various disclosures was not 

“somehow limited to discussion of CCRRG’s duty to indemnify Capri for the default 

judgment” and instead was intended “more broadly to encompass the duty to defend.” (Id.

at 2.) Plaintiffs also note that several of their disclosures specifically “noted that CCRRG’s 

withdrawal of its defense was contrary to the ‘duty to defend’ clause of the 2012 Policy’s 

insuring clause.” (Id. at 3.) Finally, Plaintiffs contend that, on the merits, they will prevail 

on their duty-to-defend theory because “Arizona law has long held that an insurer that 

wrongfully refuses to defend its insured, does so at great risk and is bound by a judgment 

against its insured with respect to all matters which were litigated or could have been 

litigated in that action.” (Id. at 6-7.)

CCRRG disagrees. (Doc. 156.) CCRRG spends much of its brief arguing why, on 

the merits, any garnishment claim premised on a purported breach of the duty to defend 

will fail. (Id. at 2-5.) As for whether the claim is properly part of this case, CCRRG argues 

that Plaintiffs are “estopped from alleging damages for breach of the duty to defend at this 

stage in the litigation” because they previously denied that they were bringing any claims 

against CCRRG as assignees of Capri. (Id. at 5-6.) This is significant, according to 

CCRRG, because Plaintiffs can only advance the argument “that CCRRG breached its duty 

to defend Capri . . . as an assignee of Capri, not as a ‘judgment creditor’ in a ‘garnishment 

action.’” (Id. at 6-7, citing Ring v. State Farm Mut. Auto. Ins. Co., 708 P.2d 457 (Ariz. Ct. 

App. 1985).)

...

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II. Analysis

Acknowledging that the issue presents a fairly close call, the Court concludes that 

Plaintiffs adequately pleaded and disclosed their intention to pursue relief in this 

garnishment action under a breach-of-the-duty-to-defend theory. Thus, the February 2023 

summary judgment order (which concluded that Plaintiffs are not entitled to relief under 

their breach-of-the-duty-to-indemnify theory) does not dispose of the case.

Admittedly, Plaintiffs’ application for a writ of garnishment is silent as to their 

theory of liability. (Doc. 1-2 at 234 [“Garnishee owes judgment debtor money which was 

not earned by judgment debtor for personal services.”]; id. [“Garnishee is holding money 

for judgment debtor which is not exempt from collection.”].) But this is unsurprising, as 

Plaintiffs simply provided the bare-bones details that are required by Arizona law.5 And 

once CCRRG removed the action to federal court, Plaintiffs’ garnishment application 

became, for better or worse, their operative pleading. Labertew v. Langemeier, 846 F.3d 

1028, 1032 (9th Cir. 2017) (“[T]he garnishment proceeding against the insurers is, for 

purposes of removal, a separate and independent civil action . . . .”); id. at 1033 (“[T]his is 

a new civil action in which the Labertews and McDermotts are seeking to obtain, for the 

first time, a judgment establishing the liability of the insurance companies.”). Upon 

removal, CCRRG could have asked the Court to require Plaintiffs to replead their claims. 

Id. at 1034 (“The rule that says what to do with a removed action is at Federal Rule of Civil 

Procedure 81(c) . . . . This means that the Arizona rules for garnishment proceedings were, 

upon removal, supplanted by the federal rules. The district court has discretion under Rule 

81(c)(2) to order repleading.”). But CCRRG never did so.6 Under these circumstances, it 

5 A.R.S. § 12-1572 (“The application [for a writ of garnishment] shall contain the 

following: 1. A statement that the applicant is a judgment creditor. 2. A statement that 

the applicant has good reason to believe . . . [t]hat the garnishee is indebted to the judgment 

debtor for monies that are not earnings. . . . 3. The amount of the outstanding balance due 

on the underlying judgment, together with interest, accrued attorney fees, including fees 

for the garnishment, if allowed by the judgment or contract and accrued allowable costs, 

on the date the application is made, and the rate at which interest accrues on that judgment, 

or if no judgment has been entered, the amount of money damages requested in the 

judgment creditor’s complaint. 4. The address of the garnishee.”). 

6

In fact, CCRRG actively opposed Plaintiffs’ attempt to replead their claims (Docs. 

40, 46), which ultimately led Plaintiffs to withdraw the request (Doc. 80). 

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cannot be said that Plaintiffs forfeited their ability to pursue relief under a duty-to-defend 

theory by failing to specifically assert that theory of liability in their pleading.

Instead, the analysis turns on whether Plaintiffs complied with other disclosure 

obligations related to their liability theories. Because this case was filed in January 2018, 

it was (and remains) subject to the Mandatory Initial Discovery Pilot Project (“MIDP”), 

which applies to most civil cases filed in the District of Arizona between May 1, 2017 and 

May 1, 2020. See D. Ariz. G.O. 17-08. Under the MIDP, the parties “are ordered to 

provide mandatory initial discovery responses before initiating any further discovery in 

this case. The responses are called for by the Court, not by discovery requests actually 

served by an opposing party.” Id. ¶ A.2. “Each party’s response must be based on the 

information then reasonably available to it,” and a “party is not excused from providing its 

response because it has not fully investigated the case.” Id. ¶ A.3. Additionally, “[t]he 

duty to provide mandatory initial discovery responses . . . is a continuing duty, and each 

party must serve supplemental responses when new or additional information is discovered 

or revealed.” Id. ¶ A.8. As relevant here, the information that is subject to mandatory 

disclosure under the MIDP includes, “[f]or each of your claims or defenses, . . . the facts 

relevant to it and the legal theories upon which it is based.” Id. ¶ B.4.

On November 2, 2018, Plaintiffs served their first set of MIDP disclosures. (Doc. 

36.) In response to the query “For each of your claims or defenses, state the facts relevant 

to it and the legal theories upon which it is based,” Plaintiffs stated that “CCRRG’s denial 

of coverage and refusal to defend Capri was a breach of its contract with Capri for at least 

the following reasons.” (Doc. 157-3 at 8, 15-16, emphasis added.) Plaintiffs further argued 

that, under the Bankruptcy Clause, it was “undisputed that prior to the August 1, 2013 

policy cancellation, CCRRG was obligated to defend Capri against the allegations in the 

Benson Lawsuit.” (Id. at 16-17.) Based on that obligation and the Bankruptcy Clause,

Plaintiffs argued that “where, as in this case, an insured member’s insolvency caused the 

insured to cancel the policy, that cancellation cannot serve to ‘relieve’ CCRRG of its 

‘obligations’ under the policy, including the obligation to defend and indemnify the 

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insolvent or bankrupt insured.” (Id. emphasis added. See also id. at 17 [“CCRRG was 

admittedly obligated to defend Capri and did so until Capri’s insolvency resulted in its 

cancellation of the 2013 Policy. Applying the Bankruptcy clause in this context does not 

increase the insurer’s obligation where the insurer would have been obligated to provide 

coverage but for the insured’s insolvency or bankruptcy.”].) Elsewhere, under the heading 

“CCRRG’s Bad Faith and Liability for the Judgment,” Plaintiffs stated: “The courts in 

Arizona have held that liability insurers owe three duties to their insureds, two express and 

one implied. The express duties are the duties to defend and to indemnify.” (Id. at 25.) 

The Court concludes that these references were sufficient to satisfy Plaintiffs’ disclosure 

obligations under the MIDP in relation to their duty-to-defend theory.7

Notably, CCRRG’s supplemental brief does not address (let alone dispute) the 

adequacy of Plaintiffs’ MIDP disclosures in relation to the duty-to-defend theory. (Doc. 

156.) Instead, CCRRG focuses on the fact that Plaintiffs previously filed a “Motion to 

Allow Repleading and Joinder of Claims” (Doc. 40), which would have added a new claim 

for insurance bad faith premised on allegations that “Plaintiffs are assignees of Capri’s 

claims against CCRRG” and “CCRRG breached the duty of good faith and fair dealing 

. . . [when it] intentionally and without reasonable basis denied coverage for and withdrew 

its defense of Capri in the Underlying Lawsuit” (Doc. 40-1 at 9), only to later withdraw 

that motion in an effort “[t]o avoid any suggestion that Plaintiffs are ‘exploiting’ the 

CCRRG policy in question or otherwise seeking ‘direct benefits’ under such policy.” (Doc. 

80.) In CCRRG’s view, this episode should be viewed as estopping Plaintiffs from 

advancing any duty-to-defend claim now. (Doc. 156 at 5-6.) 

If the duty-to-defend references in the proposed (and then withdrawn) amended 

pleading had been Plaintiffs’ only references to a potential duty-to-defend theory, the 

disclosure analysis might be different. But as noted, Plaintiffs have now shown that they 

7 Although the Court expressed skepticism, in the February 2023 summary judgment 

order, about the adequacy of Plaintiffs’ disclosures related to the duty-to-defend theory 

(Doc. 149 at 15 n.4), Plaintiffs’ actual MIDP disclosures (Doc. 157-3) were not before the 

Court at that time. For the reasons discussed in this order, those disclosures are sufficient 

to address the perceived deficiencies.

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adequately disclosed this theory in their November 2, 2018 MIDP disclosures, which were 

provided to CCRRG several weeks before Plaintiffs filed the motion to allow repleading. 

To be clear, the Court expresses no opinion on whether Plaintiffs can actually 

prevail on a duty-to-defend theory in this garnishment action, in which they are suing in 

their capacity as judgment creditors of Capri (as opposed to as assignees of Capri). The 

ruling here is narrow and addresses only Plaintiffs’ compliance with their pleading and 

disclosure obligations. It would be procedurally inappropriate to go any further and reach 

the merits of the duty-to-defend claim (including CCRRG’s estoppel defense to the claim) 

at this time. Cf. Fed. R. Civ. P. 56(f) (a court may not grant summary judgment to a nonmovant, or on grounds not raised by a movant, without providing notice and a reasonable 

time to respond). Thus, the parties are authorized to file successive motions for summary 

judgment, which shall be limited to the duty-to-defend theory. 

Accordingly, 

IT IS ORDERED that the parties may file successive motions for summary 

judgment within 30 days of this order. 

Dated this 11th day of April, 2023.

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