T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on and i s notpr e c e de nt * e xc e pta s pr ovi de d by 9th C i r . R . 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T X L SPECI A LTY I N SU RA N CE C OMP AN Y P l ai nt i ff

- A pp el l ee , v. PR OG RE SS I VE CASUALTY I NS UR AN C E C OMP AN Y D e f

e n d a n t - A p p e lla n t, a nd DA R R E L L E . B OWMAN, P AT R OL H E L I C O P T E R S , I N C .; e t al . D efen d an t s. N o. 10- 35057 D . C. N o . CV - 0 8 - 7 3 - BU - RFC- J CL ME MOR AN DU M *

X L SPECI A LTY I N SU RA N CE C OMP AN Y P la in tif

f - A p p e lla n t, v. N o. 10- 35066 D . C. N o . CV - 0 8 - 7 3 - BU - RFC- J CL



# FI LED JAN 20 2 011 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALST he H onor abl e D a vi d A l a n E z r a , U ni t e d S t a t e s D i s tr i c tJ udge f orthe ** D i s tr i c tof

H a w a i i , s i tt i ng by de s i gna t i on. 2 PR OG RE SS I VE CASUALTY I N S U R A N C E C O M P A N Y , e t al . D efen d an t- A p p el l ees.

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe D i s tr i c tof

M ont a na R i c ha r d F . C e bul l , C hi e f D i s tr i c tC ourtJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d D e c e m be r7, 2010

S e a tt l e , W a s hi ngt on B e f o r e : O’ S C AN NL AI N an d T AL L MAN, C i r c u i tJ u d g e s , a n d E Z R A, D i stri ct ** Judg e. T hi s c a s e a r i s e s outof af a t a l a c c i de ntbe tw e e n apa s s e nge rve hi c l e a nd a fuel truck, ow ned and op er at ed by P atrol H el i copt er s, Inc. (“ P atrol ”) and i nsured by P rogres si ve C as ual ty I nsurance Co m pany (“ P rogres si ve”) . T he truck w as en rout e t o ref

uel a hel i copt erow ned b y P atrol and i nsured by X L S peci al ty I nsurance C o m p a n y ( “X L ” ) . X L b r o u g h t ad e c la r a to ry ju d g m e n t a c tio n in d is tr ic t c o u rt to d e te rm in e w h e th e rits p o lic y c o v e r e d P a tr o l’s liab ility o n th e u n d e r ly in g a c c id e n t. P r o g r e s s iv e a n d P a tr o l f ile d c o u n te r c la im s s e e k in g c o v e r a g e u n d e rX L ’s p o lic y .3

A l l p a rt i e s mo v e d f

o rs u mma ry j u d g me n tb e f o r e M a g i s tr a t e J u d g e J e r e mi a h C. L y nc h. T h e m a g i s tr a t e j u d g e f

o u n d th a tXL ’ s p o l i c y c o v e r e d th e a c c i d e n ta n d XL w as n o tp rej u d i ced b y an y l at e n o t i ce g i v en b y P atro l . T h e m ag i strat e j u d g e al so d e te rm in e d , h o w e v e r , th a t P r o g r e s s iv e ’s c o u n te r c la im s e e k in g c o v e r a g e w a s , in e f f e c t , one f ore qui t abl e c ontr i but i on unde rM ont a nal a w a nd tha tthe “ s e l e c t i ve te n d e rru le ” b a rr e d P r o g r e s s iv e f r o m s e e k in g e q u itab le c o n tr ib u tio n f r o m X L . C h ief D istrict C o u rt Ju d g e R ich ar d F . C eb u ll ad o p ted th e m ag istrate ju d g e’s F i nd i ng s and R ec om m endat i on s. A l l part i es appeal ed. W e have j uri sdi ct i on un der 2 8 U .S .C . § 1 2 9 1 a n d w e a f f irm . T he M ont a naS upr e m e C ourtha s a dopt e d as pe c i f i c t e s tt o de t e rm i ne w hether apo l i cyprov i des c ov er age w hen the i nsurance c on tra ctst at es that c o v e r a g e “a r is e s o u t o f

” th e o w n e r s h ip , m a in te n a n c e o ru s e o f a n in s tru m e n ta lity . S pe c i f i c a l l y , ac ourts houl d c ons i de rw he the rthe i nj ury “ or i gi na t e [ s ] f r om , or g r o w [ s ] o u t o f

, o rf lo w [ s ] f r o m ” th e in s u r e d e n tity . W e n de ll v . S ta te Fa rm Mu t. A uto. I ns . C o. , 97 4 P . 2d 62 3, 63 9 (M on t . 19 99 ). A cc ordi ng t o the W e n de ll c o u rt, thi s t es ti s s at i sf

i ed i f the i nsured i nstrum enti s “ a pri m e a cc es sory , w i tho utw hi ch the i nj ury - pr oduc i ng i nc i de ntorthe s e ve r i ty of the i nj ur i e s w oul d notha ve occurre d. ” I

d. In ad o p t i n g th i s t est , th e co u rt“ al i g n [ed ] [i t sel f] w i th th o se4

j uri sdi ct i on s a do pt i ng an expansi ve . . . i nt erpret at i on of the [a ri si ng ou tof] ph ra se . ” I

d. H e r e , X L ’ s pol i c y pr ovi de d c ove r a ge f ora ny a c c i de nt“ a r i s i ng outof the ow ne r s hi p, m a i nt e na nc e orus e of the a i r c r a f

t . ” T he f ue l truc k i nvol ve d i n the a c c i de ntw a s e n r out e t o r e f ue l the he l i c opt e r . A l though noti nvol ve d i n the acci d en ti t sel f, th e h el i co p t er w as “ a p ri m e accesso ry, w i th o u tw h i ch th e i n j u ryp r o d u c in g in c id e n t” w o u ld n o t h a v e o c c u rr e d . I d. T he i nj uri es there fore o r ig in a te d f

r o m , g r e w o u t o f

, a n d f lo w e d f r o m th e m a in te n a n c e o f th e a ir c r a f

t. See id. W e c on se qu ent l y hol d thatthe di stri ctcourtdi d n oterr i n d et erm i ni ng that th e r e w a s c o v e r a g e u n d e rth e X L p o lic y p e rM o n ta n ala w . C f . G eorges on v. Fi de l i t y & G uar . I

ns . C o. , 48 F . S upp. 2d 1262, 1267 ( D . M ont . 1998) ( f i ndi ng coverage under a ut i l i ty truck’ s “ ar i si ng ou tof” i nsurance pol i cyw hen ano ther ve hi c l e hi tthe truc k a nd hooke d ac abl e t o w hi c h both the truc k a nd the unde r l y i ng c la im a n t w o rk in g o n ate le p h o n e p o ll w e r e a tta c h e d ) ; Fi r e I ns . E x c h. v . T i bi , 5 1 F. S upp. 2d 1065 ( D . M ont . 1995) ( f i ndi ng c ove r a ge unde rave hi c l e ’ s “ a r i s i ng out of” i nsurance pol i cyw hen a fi re arm di sc harged w hi l e unl oadi ng the vehi cl e) . T he di stri ctcourtal so approp ri at el y det erm i ned thatX L w as no tprej ud i ce d by l a t e not i c e . M ont a naha s a dopt e d a“ no pr e j udi c e ” rul e , w hi c h s t a t e s tha ti n the ab s e n c e o f

“s o m e s h o w in g o f

m a te r ia l p r e

ju d ic e to th e u n d e r in s u r a n c e c a rr ie r , aA l though Sor e ns on d eal tw i th u n d eri n su ran ce co v erag e an d th e i n st an tcase 1 deal s w i th thi rd party l i abi l i ty i nsurance, w e a gree w i th the di stri ctcourtthat M on t ana c ou rt s w ou l d app l y the Sor e ns on te s t h e r e . Se e I n r e Ki rkland , 915 F . 2d 1 2 3 6 , 1 2 3 9 ( 9 th C ir . 1 9 9 0 ) ( “[ A ] f e d e r a l c o u rt m u s t p r e d ic t h o w th e h ig h e s t s ta te c ourtw oul d de c i de the i s s ue us i ng i nt e rm e di a t e appe l l a t e c ourtde c i s i ons , de c i s i ons fr om other j uri sdi ct i on s, st atut es , tre at i se s, and res t at em ent s a s gui dance. ”) . 5 c la im f o ru n d e r in s u r e d m o to r is t c o v e r a g e m a y n o t b e p r e c lu d e d o n ate c h n ic a lity .” Sor e ns on v . Farm e rs I

ns . E x c h. , 9 2 7 P .2 d 1 0 0 2 , 1 0 0 4 ( M o n t. 1 9 9 6 ) ; see a l so L ee v. G r e at D i v i de I ns . C o. , 1 8 2 P .3 d 4 1 , 4 5 ( M o n t. 2 0 0 8 ) ; A ugus t i ne v . Si m ons on , 940 P . 2d 11 6, 11 9– 20 (M on t . 19 97 ). 1 X L w a s g iv e n n o tic e o f th e a c c id e n t f

o u rm o n th s b e f

o r e th e u n d e r ly in g s u it w e n t to tr ia l. X L h a s n o t, h o w e v e r , d e m o n s tr a te d it s u f f e r e d a n y p r e

ju d ic e . I ts arg u m en tth ati tco u l d h av e co n v i n ced th e u n d erl yi n g cl ai m an t s t o sett l e fo r l ess tha n P r ogr e s s i ve ’ s pol i c y l i m i tof one m i l l i on dol l a r s i s w i thoutm e r i t ; a s i s the co n t en t i o n th ati tw as d en i ed a m ean i n g fu l o p p o rtu n i ty t o p art i ci p at e i n th e d efen se a t th e u n d e r ly in g tr ia l. T h is is e s p e c ia lly s o in lig h t o f th e f a c t th a t it d e c lin e d to part i ci pat e i n the defense and al so re ce i ved a si gn i fi cantam ou ntof pre- tri al d is c o v e ry f

r o m P r o g r e s s iv e a n d P a tr o l. C f . L ee , 18 2 P . 3d at45 (f

i nd i ng prej ud i ce ba s e d on a n i ns ur e r s s how i ng tha tthe “ m os ts i gni f i c a nti nf orm a t i on c onc e rni ng th is c la im a n d s u it w a s o m itte d f r o m . . . [ th e ] n o tic e ” ) .6

T he di s tr i c tc ourtw a s a l s o c orr e c ti n de t e rm i ni ng tha tP r ogr e s s i ve c oul d not r e c ove rf r om P a tr ol . F i r s t , P r ogr e s s i ve ’ s c ount e r c l a i m w a s , i n e f f e c t , one f or e qui t abl e c ontr i but i on. M ont a nac ourt s “ l ook[ ] t o the gr a va m e n of the a c t i on ra ther than rel yi ng on the l abel gi ven t o the cl ai m by the pl ai nt i ff . ” N . Mont . H

os p. v . Kni ght , 81 1 P . 2d 12 76 , 12 78 (M on t . 19 91 ). E qu i t abl e c on tri bu t i on “ perm i t s an i nsurer , w hi ch has pai d a cl ai m , t o see k con tri bu t i on di re ct l y f rom other i nsurer s w ho ar e l i abl e f

or the sa m e l oss. . . . [I ] ti s app l i ed i n tho se ca se s w here an i nsure[ r] di sc harges a c om m on ob l i gat i on of another i nsure[ r] . ” C as . I nde m . E x c h. I ns . C o. v . L i be r t y N at ’ l Fi r e I ns . C o. , 9 0 2 F . S u p p . 1 2 3 5 , 1 2 3 7 , 1 2 3 8 & n .3 ( D . M o n t. 1 9 9 5 ) ; s e e al

s o Mut . of

E num c law I

ns . C o. v . U

SF I ns . C o. , 191 P . 3d 866, 872 ( W a s h . 2 0 0 8 ) ( “I n th e c o n te x t o f in s u r a n c e la w , c o n tr ib u tio n a llo w s a n in s u r e rto re cover fr om another i nsurerw here bo th are i nd ependent l y obl i gat ed t o i nd em ni fy or defend the sa m e l oss. ”) . G i ven thatP rogres si ve’ s c l ai m w as on e f or equi t abl e c on tri bu t i on , i tw as ba rr e d by the “ s e l e c t i ve t e nde rrul e . ” T hi s rul e s t a t e s tha tf ortw o i ns ur e r s t o ha ve ac o m m o n o b lig a tio n “th e in s u r e d , o rs o m e o n e o n th e in s u r e d ’s b e h a lf , [ m u s t] t ender[] the defense of an act i on po t ent i al l y w i thi n the po l i cycoverage. ” C a s. I n de m. , 9 0 2 F . S u p p . a t 1 2 3 8 . I n o th e rw o r d s , “th e o b lig a tio n o f a n in s u r e rto pr ovi de ade f

e ns e i s ‘ tr i gge r e d’ w he n the i ns ur e d, ors om e one a tthe di r e c t i on of7

the i nsured, t enders the defense [. ] ” I d. a t 1 2 3 9 ( c ita tio n o m itte d ) ; see a l so Mut. of E num c law , 1 9 1 P .3 d a t 8 7 3 ( d e f in in g th e s e le c tiv e te n d e rru le a s th e “ru le [ th a t] s ta te s th a t w h e r e a n in s u r e d h a s n o t te n d e r e d ac la im to a n in s u r e r , th a t in s u r e ris e xc us e d f

r om i t s duty t o c ontr i but e t o as e tt l e m e ntof the c l a i m ” ( c i t i ng C a s. I n de m. , 90 2 F . S up p. at12 39 )) . T here i s i nsuffi ci entevi dence here t o d em on stra t e thatthe cl ai m had b ee n t e nde r e d f

r om P a tr ol t o X L . A tm os t , P a tr ol s e nti nf orm a l e m a i l s t o X L r e que s t i ng ade t e rm i na t i on of

w he the rc ove r a ge e xi s t e d unde rthe X L pol i c y . T hi s doe s not r i s e t o the l e ve l of

a n a f f i rm a t i ve r e que s tf

ora s s i s t a nc e , e s pe c i a l l y be c aus e P a tr ol h a d a lr e a d y te n d e r e d th e c la im to P r o g r e s s iv e m o r e th a n ay e a re a r lie r . W e the r e f or e hol d tha tthe di s tr i c tc ourtdi d note rri n r e a c hi ng thi s c onc l us i on. A FFI R M ED .