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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Jane Frutiger, et al., 

Plaintiffs, 

v. 

USAA General Indemnity Company, 

Defendant. 

No. CV-18-00547-PHX-JJT

ORDER 

At issue is Plaintiffs’ Motion to Amend Complaint (Doc. 52, Mot.), to which 

Defendant filed a Response (Doc. 60, Resp.) and Plaintiffs filed a Reply (Doc. 64, Reply). 

The Court finds these matters appropriate for decision without oral argument. See LRCiv 

7.2(f). For the reasons set forth below, the Court will grant in part and deny in part 

Plaintiffs’ Motion to Amend Complaint. 

I. BACKGROUND 

Plaintiff Frutiger rented a minivan for a trip with her sisters, Plaintiffs Jimenez and 

Decherd. (Compl. ¶ 25.) Frutiger owns a vehicle which she insures through a policy issued 

by Defendant USAA. (Compl. ¶ 8.) Frutiger alleges that the USAA website led her to 

believe that she and her sisters would all receive the full coverage of her existing policy 

while driving a rented vehicle. (Compl. ¶¶ 14–20.) Frutiger further alleges that a USAA 

customer service representative assured her that the policy would apply to her rental car. 

(Compl. ¶ 21.) 
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Plaintiffs were driving on the US 60 freeway when the rented minivan was struck 

by an oncoming vehicle. (Compl. ¶¶ 26–27.) All three Plaintiffs sustained serious injuries 

and were evacuated from a hospital in Globe to Chandler Regional Medical Center, where 

each of them underwent emergency surgery. (Compl. ¶¶ 30–32.) 

Upon finding that the driver of the oncoming vehicle had insufficient insurance 

limits for their medical costs, Plaintiffs submitted insurance claims to Defendant. All three 

Plaintiffs submitted claims for medical payments under Part B of Frutiger’s policy, as well 

as Part C for underinsured motorist (“UIM”) benefits. While Frutiger received the full 

policy limit of $110,000, Jimenez and Decherd each received only $10,000 under Part B 

for medical payments. Defendant denied Jimenez and Decherd’s claims for UIM coverage 

because it found that only Frutiger satisfied the definition of a “covered person” under Part 

C of her policy.1

 

Under Part C, a “covered person” is defined as “(1) You or any family member[;] 

(2) Any other person occupying your covered auto[; or] (3) Any person for damages that 

person is entitled to recover because of [bodily injury] to which this coverage applies 

sustained by a person described in 1 or 2 above.” (Compl. Ex. A.) Defined elsewhere in 

the policy, “family member” includes only “a person related to you by blood, marriage, or 

adoption who resides primarily in your household.” (Compl. Ex. A.) Jimenez and Decherd 

do not reside with Frutiger. (Compl. ¶ 39.) Further, Defendant determined that Jimenez and 

Decherd do not qualify as “[a]ny other person occupying” the covered auto because the 

rented minivan was not Frutiger’s “covered auto” under the meaning of the policy. (Compl. 

¶ 41.) 

Plaintiffs brought claims for breach of contract, breach of the covenant of good faith 

and fair dealing, first party insurance bad faith, promissory estoppel, and a fifth count 

labeled Declaratory Judgment Regarding Interpretation of Policy Language. (Compl.) 

 

1

 Plaintiffs allege that Jimenez and Decherd similarly did not satisfy the definition of “covered person” under Part B for medical payments, but that Defendant awarded them each $10,000 regardless. (Compl. ¶¶ 47–50.) 
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Plaintiffs now timely seek to amend their Complaint to include claims for estoppel, 

negligent misrepresentation, and negligent marketing.2

 (Mot. Ex. 4; Doc. 54 ¶¶ 176–81.) 

II. LEGAL STANDARD 

 A party may amend a pleading once as a matter of course within 21 days after 

serving it, or within 21 days of service of, inter alia, a Rule 12(b)(6) motion. Fed. R. Civ. 

P. 15(a). In all other circumstances, absent the opposing party’s written consent, a party 

must seek leave to amend from the court. Fed. R. Civ. P. 15(a)(2). Although the decision 

to grant or deny a motion to amend is within the trial court's discretion, “Rule 15(a) declares 

that leave to amend shall be freely given when justice so requires.” Foman v. Davis, 371 

U.S. 178, 182 (1962) (citation and internal quotation marks omitted). “In exercising its 

discretion with regard to the amendment of pleadings, a court must be guided by the 

underlying purpose of Rule 15—to facilitate a decision on the merits rather than on the 

pleadings or technicalities.” Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987) 

(citation and internal quotation marks omitted). 

 However, the policy in favor of allowing amendments is subject to limitations. After 

a defendant files a responsive pleading, leave to amend is not appropriate if the 

“amendment would cause prejudice to the opposing party, is sought in bad faith, is futile, 

or creates undue delay.” Madeja v. Olympic Packers, 310 F.3d 628, 636 (9th Cir. 2002) 

(citation and internal quotation marks omitted). “Futility alone can justify the denial of a 

motion for leave to amend.” Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2003). 

 “A proposed amended complaint is futile if it would be immediately subject to 

dismissal. Thus, the proper test to be applied when determining the legal sufficiency of a 

proposed amendment is identical to the one used when considering the sufficiency of a 

pleading challenged under Rule 12(b)(6).” Nordyke v. King, 644 F.3d 776, 788 n.12 (9th 

Cir. 2011) (quotations and citations omitted), aff’d on reh’g en banc on other grounds, 681 

 

2

 While the Court’s Scheduling Order (Doc. 36) set the deadline for Motions to 

Amend for June 29, 2018, the Court later granted several stipulated extensions for time to file an amended complaint. (Doc. 51.) Thus, Plaintiffs’ Motion to Amend is timely and Rule 16 is not at issue here. 
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F.3d 1041 (9th Cir. 2012). To survive a Rule 12(b)(6) motion, a complaint must allege 

“enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 570 (2007). A dismissal for failure to state a claim can be based 

on either (1) the lack of a cognizable legal theory or (2) insufficient facts to support a 

cognizable legal claim. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 

1990). 

III. ANALYSIS 

 Defendant does not argue that Plaintiff’s proposed amendments would cause 

prejudice or undue delay, nor that they are sought in bad faith. Its only argument is that the 

addition of Plaintiff’s new counts would be futile. Defendant argues that all three proposed 

claims for estoppel, negligent misrepresentation, and negligent marketing “are futile 

because they fail to state a claim under Arizona law.” (Resp. at 1.) Further, Defendant 

argues that the proposed claims are futile because they are “duplicative of Plaintiffs’ 

existing theory of recovery.” (Resp. at 1.) 

 First, the Court addresses Plaintiffs’ argument that the allegedly duplicative nature 

of a proposed claim does not render that claim “futile” under the meaning of Rule 15(a)(2). 

(Reply at 3.) Despite Plaintiffs’ characterization of this argument as an “afterthought,” and 

their insistence that amendment may be futile only where it fails to state a claim under Rule 

12(b)(6), the Ninth Circuit has found that a proposed amendment may fail the test set forth 

by Rule 15(a)(2) when it is duplicative of an existing claim. Clark v. Woodford, 36 Fed. 

App’x 240, 241 (9th Cir. 2002) (“[Plaintiff’s] proposed amendments . . . were either 

duplicative of existing claims or failed to provide the specific factual allegations necessary 

to state a claim . . . [t]he district court did not abuse its discretion in denying the 

amendments as futile”); Bonin v. Calderon, 59 F.3d 815, 846 (9th Cir. 1995) (“[Plaintiff’s] 

proposed amendments are either duplicative of existing claims or patently frivolous, or 

both . . . [a]mending the petition to include them would be futile.”). Thus, the Court will 

address all of Defendant’s arguments that Plaintiffs’ proposed amendments are either 

duplicative or otherwise futile. 
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A. Estoppel Claim 

Defendant asserts that the addition of Plaintiffs’ proposed Count 6 for estoppel is 

duplicative of Plaintiffs’ existing Count 4 promissory estoppel claim. (Resp. at 5.) While 

Defendant may be correct that Plaintiffs’ new estoppel claim is based on the same factual 

underpinnings as their promissory estoppel claim, Defendant fails to acknowledge that 

equitable estoppel and promissory estoppel may be simultaneously alleged. In Waugh v. 

Lennard, the Arizona Supreme Court laid out a scenario where both torts may be plausible. 

211 P.2d 806 (Ariz. 1949). In that case, a debtor provided his creditor with promissory 

notes and a promise that if the creditor waited until the debtor’s death to pursue collection, 

the notes would not be barred by the statute of limitations for such claims. Id. at 807. After 

this proved to be untrue and the creditor’s claim on the promissory notes was denied by 

debtor’s estate, the court found that the creditor could bring both a claim for promissory 

estoppel as well as equitable estoppel. Id. at 812–13. 

 While equitable estoppel is the proper remedy when a party relies on a statement 

that the speaker knows to be untrue in the present, and promissory estoppel “rests on a 

promise to do something in the future,” both may be cognizable in a case like Waugh. Id.

at 812. Because the creditor relied on the debtor’s statement both as a present statement of 

fact that he had effectively terminated the statute of limitations in exchange for her 

agreement not to pursue repayment until his death, and as a promise to do something in the 

future—namely, to have his estate repay her at such time—the creditor was entitled to 

claims under both forms of estoppel. 

 It appears that Plaintiffs may be similarly situated to allege both equitable and 

promissory estoppel. But in order to do so, Plaintiffs must make clear in their proposed 

Amended Complaint that they allege both types of estoppel. As it stands now, Plaintiffs 

have merely labeled Count 6 as “estoppel,” without specifying whether it is equitable 

estoppel or something else. And under Count 6, Plaintiffs have made no allegations that 

differ from Count 4. While both claims may be premised on the same underlying facts, 

Plaintiffs must plausibly allege wrongs cognizable under both torts. To do so requires more 
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than a conclusory restatement of the facts already listed in Plaintiff’s Complaint, without 

specificity regarding the alleged tort. See Holgate v. Baldwin, 425 F.3d 671, 676 (9th Cir. 

2005) (finding that Plaintiff’s Complaint must give Defendant “fair notice of what 

[Plaintiff’s] claim is and the grounds upon which it is based.”). Because Plaintiffs may be 

able to amend their Complaint to remedy this error and make clear the specific legal theory 

that supports Count 6, the Court will grant them the opportunity to do so. See Lopez v. 

Smith, 203 F.3d 1122, 1127–30 (9th Cir. 2000). 

 The Court also notes that, should Plaintiffs choose to amend their Complaint to 

reflect a claim for equitable estoppel, such amendment would not be duplicative of their 

recitation of the reasonable expectations doctrine. Defendant argues that “[t]he reasonable 

expectations doctrine—not the theory of estoppel—is the proper vehicle in Arizona for an 

insured or potential insured seeking coverage based on the actions or inactions of an insurer 

in communicating coverage.” (Resp. at 5–6.) But, as Plaintiffs point out, the reasonable 

expectations doctrine “itself is not a claim, but merely a theory to prove a claim.” (Mot. at 

10.) 

 As the Arizona Supreme Court has discussed, the reasonable expectations doctrine 

at times requires that certain boilerplate provisions in insurance contracts and policies not 

be enforced where the provisions are difficult to comprehend and contradict the reasonable 

expectations of the insured. See Gordinier v. Aetna Cas. & Sur. Co., 742 P.2d 277 (Ariz. 

1987); Darner Motor Sales, Inc. v. Univ. Underwriters Ins. Co., 682 P.2d 388 (Ariz. 1984). 

But in these cases, the plaintiffs sued under tort law and their causes of action were merely 

influenced by the newly outlined reasonable expectations doctrine. Indeed, in Darner, the 

plaintiffs sued for estoppel and the court “recognize[d] equitable estoppel as a device to 

prevent enforcement of these boiler-plate terms,” explaining that “estoppel may apply 

where, from the nature of the transaction, the fact finder is able to determine that the insured 

acted reasonably in not reading the particular provision of the policy.” 682 P.2d at 395–96. 

 Amendment of Plaintiffs’ Complaint to include Count 6 for equitable estoppel 

would not be duplicative of either Count 4’s promissory estoppel or the Complaint’s 
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general discussion of the reasonable expectations doctrine. But, as it stands now, Plaintiffs’ 

proposed Amended Complaint fails to state a claim for equitable estoppel. The Court grants 

leave for Plaintiffs to amend Count 6 of their Amended Complaint to reflect such a claim, 

should they wish to do so. 

B. Negligence Claims 

 Next, Defendant argues that Plaintiffs’ proposed Count 7 for negligent 

misrepresentation and Count 8 for negligence/negligent marketing are each duplicative of 

other claims and fail to state a claim under Arizona law. The Court has already explained 

that the reasonable expectations doctrine is not a claim but a theory of contractual 

interpretation relevant to insurance agreements. Thus, the Court will not address 

Defendant’s arguments that both Counts 7 and 8 are duplicative of the reasonable 

expectations doctrine. (See Resp. at 8–9.) 

 Aside from believing the negligence claims to be duplicative, Defendant argues that 

both are futile because Arizona law does not recognize negligence claims against an 

insurer. (Resp. at 7.) But Defendant overstates the rule. Arizona courts have refused to 

recognize negligence claims where a plaintiff alleges that his or her claim was mishandled. 

See Miel v. State Farm Auto. Ins. Co., 912 P.2d 1333, 1340 (Ariz. Ct. App. 1995) (“If the 

company breaches its duty, its insured or the assignee may recover compensatory damages 

for breach of contract, or damages in tort if the insurer’s actions rise to the level of bad 

faith.”). But where, as here, the plaintiff claims that the insurer was negligent in 

characterizing the scope of his or her policy before any claim was filed, Arizona law 

recognizes a cause of action under negligence. 

 In fact, as Plaintiffs point out, the Arizona Supreme Court allowed a negligence 

claim to proceed in Darner where the plaintiff alleged that an agent of its insurance 

company negligently misrepresented the extent of the policy’s coverage. 682 P.2d at 390–

91. In reaching this conclusion, the court specifically noted that insurance agents are not 

exempt from negligence liability in this context. Id. at 403 (“Insurance agents cannot be 

considered as professional without assuming the responsibilities and duties generally 
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associated with such a status.”). In Miel, which Defendant cites in support of its argument, 

the holding of Darner was inapplicable because the alleged negligence at issue occurred in 

mishandling a claim, not in misrepresenting plaintiff’s coverage. Miel, 912 P.2d at 1340 

(“Darner dealt with a cause of action for an agent’s negligent misrepresentation about the 

scope of the insurance policy”). But Miel does not call Darner into question, thus 

recognizing the validity of a negligence claim in a context nearly identical to the dispute 

before the Court now. Plaintiffs’ proposed negligence claims are therefore not barred under 

Arizona law. 

 Defendant’s final argument deals only with Plaintiff’s proposed Count 8 for 

negligent marketing. The Court agrees with Defendant that, to its knowledge, no Arizona 

court has ever explicitly recognized a cause of action for negligent marketing against an 

insurer. (Resp. at 8.) But Plaintiffs’ Amended Complaint treats Count 8 more generally, 

titling it “Negligence/Negligent Marketing.” Thus, if Count 8 alleged negligence more 

broadly, it could survive. But Count 8 merely restates the allegations necessary for 

Plaintiffs’ negligent misrepresentation claim. As another way of claiming that Defendant 

and its agents negligently mischaracterized the coverage that Frutiger’s policy would 

provide, Count 8 is duplicative. The Court finds that this defect cannot be cured because 

Plaintiffs allege nothing that leads the Court to believe a cause of action for negligent 

marketing—if it exists under Arizona law—would be any different than one for negligent 

misrepresentation. Thus, the Court will deny Plaintiffs’ Motion to Amend as to Count 8. 

IT IS THEREFORE ORDERED granting in part and denying in part Plaintiffs’ 

Motion to Amend Complaint (Doc. 52). The Motion is granted as to Plaintiffs’ Count 7 for 

negligent misrepresentation and denied as to Count 6 for estoppel and Count 8 for negligent 

marketing. 

IT IS FUTHER ORDERED granting Plaintiffs leave to amend their proposed 

Count 6 for estoppel to state a claim under Arizona law, as outlined in this Order, should 

they wish to do so. Plaintiffs’ Second Amended Complaint is due by May 31, 2019. If they 

do file a Second Amended Complaint, Plaintiffs must also file a Notice of Filing Amended 
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Complaint and attach a copy of the proposed amended complaint as an exhibit, “which 

must indicate in what respect it differs from the pleading it amends, by bracketing or 

striking through the text to be deleted and underlining the text to be added.” 

 Dated this 23rd day of May, 2019. 

Honorable John J. Tuchi 

United States District Judge