NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

 FOR THE NINTH CIRCUIT

KEVIN PERRY, a single individual;

CATHERINE RENEE HOLGUIN, a

single individual; NANCY A. SMITH, a

single individual; FARMERS

INSURANCE COMPANY OF

ARIZONA, an Arizona Corporation, 

Plaintiffs-Appellants,

 v.

PEAK PROPERTY AND CASUALTY

INSURANCE CORPORATION, a

Wisconsin corporation; UNKNOWN

PARTIES, named as ABC Business

Entities I-X and Does I-X, 

Defendants-Appellees.

No. 17-15012

D.C. No. 4:16-cv-00555-DCB

MEMORANDUM*

Appeal from the United States District Court

for the District of Arizona

David C. Bury, District Judge, Presiding

Argued and Submitted August 14, 2018

San Francisco, California

FILED

JAN 04 2019

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

* This disposition is not appropriate for publication and is not precedent

except as provided by Ninth Circuit Rule 36-3.
Before: SCHROEDER, SILER,

** and MURGUIA, Circuit Judges. 

Plaintiff Renee Holguin caused a five-car accident in Phoenix, Arizona in

January 2013. She and her husband at the time, Kevin Perry (collectively, the

“Holguin-Perrys”), contacted defendant Peak Insurance, but the company refused

coverage, citing a policy cancellation notice it mailed the Holguin-Perrys on

January 19, 2013–three days before the accident. 

The Holguin-Perrys and other injured parties sued Peak Insurance in federal

court, seeking a declaratory judgment that the insurance policy was in effect on the

date of the accident, and alleging claims for breach of contract and bad faith. The

district court granted Peak Insurance’s motion for judgment on the pleadings,

ruling that the policy was cancelled on January 19, 2013. Plaintiffs appeal. For the

reasons explained below, we reverse. 

Under Arizona law, an insurer’s notice of policy cancellation must “clearly

and unequivocally” inform the insured in no uncertain terms of the company’s

intent to cancel. Norman v. State Farm Mut. Auto. Ins. Co., 33 P.3d 530, 535

(Ariz. Ct. App. 2001). This express intent “[must] be apparent to the ordinary

person.” Id. at 536 (original brackets) (quoting Elkins v. State Farm Mutual Auto.

** The Honorable Eugene E. Siler, United States Circuit Judge for the

U.S. Court of Appeals for the Sixth Circuit, sitting by designation.

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Ins. Co., 475 S.E.2d 504, 506 (W. Va. 1996)). Whether a cancellation notice meets

Norman’s standard is a context-specific inquiry: courts focus on the “language and

the circumstances in which [the notice was] issued to determine whether any

disqualifying ambiguity has been created.” Id. at 537.

Here, Peak Insurance’s intent to cancel the policy was not clear and

unequivocal. The cancellation notice, written on January 18, declared that the

Holguin-Perrys were “driving without insurance,” but also stated that coverage was

conditional. A $286.37 payment had to be received by January 19. The date that

Peak Insurance mailed the notice further confused the issue since according to the

cancellation notice, it was mailed on January 19, making it impossible for the

Holguin-Perrys to accept the apparent invitation to pay the minimum balance by

January 19. The notice itself was therefore facially ambiguous. 

Interpreting this notification as soliciting payment upon receiving the

cancellation notice, the Holguin-Perrys phoned Peak Insurance on January 23,

2013, when they received that notice, and immediately paid $294.37. This amount

was $8.00 more than the minimum required payment. Neither party explains what

the additional $8.00 represented. Because Peak Insurance’s earlier installment

notice had warned that late payments “may incur an additional fee,” the Holguin3
Perrys may have assumed the additional $8.00 was a late fee. Peak Insurance

accepted this late payment. 

Peak Insurance’s conduct could have led an “ordinary person” in the

Holguin-Perrys’ shoes to believe that Peak Insurance did not cancel the policy and

that there was no lapse in coverage. See id. at 536 (“inclusion of a reference to an

amount due would lead an ordinary person to believe that payment of that sum

would keep the policy in force and avoid cancellation.”) (citing Elkins, 475 S.E.2d

at 507). For these reasons, we conclude that under Arizona law, neither Peak

Insurance’s cancellation notice, nor any subsequent conduct, “clearly and

unequivocally” advised the Holguin-Perrys that a payment on January 23, 2013,

would not preserve coverage. See id. at 535. The district court erred when it

concluded otherwise. 

Defendants’ pending motion to strike a portion of the reply brief is Denied. 

The judgment in favor of defendants is REVERSED and the case is

REMANDED for further proceedings. 

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