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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Nancy Bono, 

Plaintiff, 

vs.

State Farm Mutual Automobile 

Insurance Company, a foreign

corporation,

Defendant. 

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No. CV 15-548-TUC-CKJ (LAB)

ORDER

On December 22, 2016, Magistrate Judge Leslie A. Bowman issued a Report and

Recommendation (Doc. 31) in which she recommended the Motion for Summary Judgment

(Doc. 23) filed by Plaintiff Nancy Bono (“Bono”) be denied and the Motion for Summary

Judgment (Doc. 25) filed by State Farm Mutual Automobile Insurance Company (“State

Farm”) be granted. Bono has filed an objection (Doc. 32) and State Farm has filed a

response (Doc. 33). Bono has requested oral argument. The Court finds it would not be

assisted by oral argument and declines to set this matter for hearing.

Standard of Review

The standard of review that is applied to a magistrate judge’s report and

recommendation is dependent upon whether a party files objections – the Court need not

review portions of a report to which a party does not object. Thomas v. Arn, 474 U.S. 140,

150, 106 S. Ct. 466, 472-73, 88 L.Ed.2d 435 (1985). However, the Court must “determine

de novo any part of the magistrate judge’s disposition that has been properly objected to.

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The district judge may accept, reject, or modify the recommended disposition; receive further

evidence; or return the matter to the magistrate judge with instruction.” Fed. R. Civ. P.

72(b)(3); see also 288 U.S.C. § 636(b)(1) (“A judge of the court shall make a de novo

determination of those portions of the report or specified proposed findings or

recommendations to which objection is made.”).

Report and Recommendation – Background and Standard of Review: Summary Judgment

The parties stipulated to the facts summarized in the Report and Recommendation

(“R&R”). See also Stipulated Statement of Facts RE Motions for Summary Judgment (Doc.

24). The Court adopts the facts stated by the magistrate judge.

Additionally, the Court adopts that portion of the R&R that states the standard of

review when the Court considers a motion for summary judgment.

Statutory Definition

Bono objects to the magistrate judge’s conclusion that the applicable Arizona statutes

defines Underinsured Motorist (“UIM”) “coverage, in pertinent part, as ‘coverage for a

person’ for ‘bodily injury . . . resulting from the accident’ where ‘total damages’ exceed the

liability limits. It does not explicitly state whether bodily injury must be suffered by the

covered person. ‘[T]he statute’s language is subject to different interpretations . . . . ” (Doc.

31 at 5) (citations omitted). Bono asserts there is no need to analyze the legislative intent,

as the magistrate judge did, because the statute is clear and unambiguous. Indeed, Bono

asserts the statute only requires an injury and damages and the “broad language does not

contain exceptions.” Taylor v. Travelers Indem. Co. of Am., 198 Ariz. 310, 314, 9 P.3d 1049,

1053 (2000). 

However, the Court agrees with the magistrate judge’s reliance on Lowing v. Allstate

Ins. Co., 176 Ariz. 101, 859 P.2d 724 (1993). Lowing stated that “[e]xceptions to coverage

are not generally permitted unless expressly allowed by statute.” 176 Ariz. At 106. As

pointed out by the magistrate judge, “the Lowing court did not limit itself to analyzing the

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language of the statute.” (R&R , p. 6). The Lowing court recognized that the statute defines

UIM “coverage for a person” for “bodily injury . . . resulting from the accident” where “total

damages” exceed the liability limits. 176 Ariz. At 103-04 (citation omitted). However, as

stated by the magistrate judge, the statute “does not explicitly state whether the bodily injury

must be suffered by the covered person. (R&R, p. 5). The Court agrees with the magistrate

judge that the language of the statute is not clear and unambiguous and, therefore,

interpretation is not limited to the language of the statute.

Further, “every provision of a statute must be read in conjunction with the other

provisions, giving meaning, if possible, to ‘each word, clause or sentence, considered in the

light of the entire act itself and the purpose for which it was enacted into law.’” Doty-Perez

v. Doty-Perez, 241 P3d 372, 376-77, 388 P.3d 9, 13-14 (App. 2016) (citation omitted). In

other words, the definition of UIM coverage, as stated in A.R.S. § 20-259.01(G), must be

read in conjunction with A.R.S. § 20-259.01(B), which requires UIM to extend to and cover

all persons insured under a policy. While § 20-259.01(G) does not include exceptions, the

reading of §§ 20-259.01(B) and (G) together arguably does limit the coverage. It is not clear

if § 20-259.01(B) is intended to limit the coverage for bodily injury to a covered person.

Indeed, it is arguably § 20-259.01(B) that covers the parameters of the coverage while § 20-

259.01(G) simply provides a definition. The Court agrees with the magistrate judge,

therefore, that the statute is subject to different interpretations.

UIM Supplemental Coverage - Bodily Injury

Bono objects to the magistrate judge’s inference that, because UIM coverage does not

provide protection if the tortfeasor merely damages property, UIM coverage is not required

where bodily injury is suffered by a non-insured, but where there is a pecuniary loss to the

insured. Bono asserts this inference is illogical because A.R.S. § 28-4009 requires different

liability coverage for bodily injury and property damage (i.e., liability vs. property damage

portions of policies). Bono asserts, “It does not follow from the fact UIM coverage does not

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apply to property damage, payable under the property-damage limit of the liability policy,

that wrongful-death damages, payable from the injury-liability limit of the liability policy,

would not be included in UIM coverage.” (Doc. 32 at 3).

The Court agrees with the magistrate judge that an inference can be made that

Arizona’s UIM coverage is designed to protect an insured’s bodily integrity, rather than a

pecuniary loss. See e.g. State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251, 255, 782

P.2d 727, 731 (1989) (UIM coverage is required for bodily injury or death; it does “not even

compensate the victim for the total loss (property as well as personal injury) suffered).

(1989). Although Bono argues this does not mean that coverage does not apply to property

damage, the Court finds there is no legislative intent to expand the coverage. Rather, the

Arizona statutes provide protection “for each person actually injured or killed and not for

each person with a damage claim.” Herring v. Lumbermen’s Mut. Cas. Co., 144 Ariz. 254,

256, 697 P.2d 337, 339 (1985); Bartning v. State Farm Fire & Casualty, 164 Ariz. 370, 793

P.2d 127 (App. 1990) (the gap in protection closed by the applicable statute “related to

injuries to the insured, and not injuries to third persons”). 

Express Terms of the Statute

The magistrate judge concluded the “statute does not clearly state whether the insured

must be the person who suffers the bodily injury.” (Doc. 31 at 9). Bono asserts that, because

a limitation of UIM coverage to the bodily injury sustained by an insured is not expressly

allowed by the statute, the magistrate judge should not have determined the statute did not

permit it. Indeed, exclusions and limitations that are not included in the statute are void.

Taylor, 198 Ariz. at 315, 9 P.3d at 1054. Specifically, Bono asserts the magistrate judge’s

reliance on the word generally in Lowing v. Allstate Insurance Co., 176 Ariz. 101, 104, 859

P.2d 724, 727 (1993) (“Exclusions and limitations on coverage are generally invalid unless

contemplated by the statute.”), fails to recognize that subsequent decisions do not qualify the

statement with “generally.” Bono asserts that, because the statute does not specifically

exclude this situation, it is permitted.

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Addressing whether students waiting for a school bus were covered by the applicable

UIM policy, the Court of Appeals of Arizona has cited to Lowing for the phrase including

“generally.” Chavez v. Arizona Sch. Risk Retention Trust, Inc., 227 Ariz. 327, 330, 258 P.3d

145, 148 (App. 2011). In Chavez, the court found the insurer’s interpretation of the policy’s

statement of coverage for the occupants of the bus (which included while getting in and out

of the bus) to preclude coverage for the waiting students. 

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While the Court does not disagree with Bono that Arizona courts have not repeated

“generally” in most subsequent cases discussing Lowing, the Court recognizes that no

Arizona court has held that “generally” does not still apply in some cases.1

 Rather, the fact

that no Arizona court has discussed the non-use of “generally” and/or overruled that portion

of Lowing in any subsequent case indicates the Arizona courts recognize that phrase

including “generally” may yet be presented to them in a future case. The Court agrees with

the magistrate judge’s conclusion that the “statute does not clearly state whether the insured

must be the person who suffers the bodily injury.” (Doc. 31 at 9). Further, Arizona law

continues to recognize that “[e]xclusions and limitations on coverage are generally invalid

unless contemplated by the statute.” 

Amended Statute

The magistrate judge concluded the amended UIM, rather than casting doubt on

Bartning arguably supports a conclusion that the amendment supports the continued validity

of the holding in Bartning. Bono argues, however, that not only does the principle of

legislative acquiescence not apply because Bartning was decided by the Court of Appeals

rather than the Supreme Court of Arizona, but the legislature has not “declined to reject the

relevant judicial interpretation.” Sw. Paint & Varnish Co. v. Arizona Dept. of Envtl. Quality,

194 Ariz. 22, 25, 976 P.2d 872, 875 (1999). The amended statute removed the portion

interpreted in Bartning – therefore, no Arizona opinion addresses the relevant question as

applied to the relevant statute.

However, the Court does not completely agree with Bono. Although the statute has

been amended and the principles discussed in Bartning do not offer precedential value, the

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Court finds Bartning may provide some persuasive value. See e.g. NASD Dispute

Resolution, Inc. v. Jud. Council of State of Cal., 488 F.3d 1065, 1069 (9th Cir. 2007) (noting

that a vacated district court opinion would “not be ripped from Federal Supplement 2d,” and

thus would “still be citable for its persuasive weight”); Benavides v. Jackson Natl. Life Ins.

Co., 820 F. Supp. 1284, 1289 (D. Colo. 1993) (“Their precedential value can be diminished

by an appellate court's vacation, but [[opinions] can never be erased and their reasoning may

continue to be followed.”). Moreover, the Court agrees with State Farm that the Arizona

Supreme Court has held that A.R.S. § 20-259.01 requires coverage for “victims” not persons

with derivative claims. Indeed, the Herring Court specifically stated that “[t]here is no

requirement that such a fund be available to each person with a derivative damage claim.”

144 Ariz. at 257. In fact, the Arizona Supreme Court has discussed that the legislature

intended such statutes to protect insured individuals:

“The Legislature intended the Financial Responsibility Act to protect the

general public against the individual, financially irresponsible motorist. On

the other hand the Uninsured Motorist law compels the carriers to provide

economic protection for the insured individual against the financially

irresponsible segment of the driving public. The former is for the public in

general and the latter for the individuals who have the foresight to protect

themselves against the public.” (emphasis added)

. . . . The insured and family members insured are covered not only when occupying

an insured vehicle, but also when in another automobile, when on foot, when on a

bicycle or when sitting on a porch.

Calvert v. Farmers Ins. Co. of Arizona, 144 Ariz. 291, 296, 697 P.2d 684, 689 (1985)

(citations and footnote omitted). These cases indicate the Arizona Supreme Court has

interpreted the financial responsibility statutes as requiring coverage for insureds, but not for

derivative claims . . . including those based on the bodily injury or death of third persons.

In light of this authority, Bartning does provide some persuasive value. 

Bono’s UIM Policy

Bono objects to the magistrate judge’s conclusion that “the Arizona legislature did not

intend for UIM coverage to apply to an insured’s claim for damages resulting from bodily

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injury or death of an uninsured third person. The language in Bono’s policy that excludes

this coverage is not contrary to the intent of the legislature.” (Doc. 31 at 9.) Bono asserts the

cited authority establishes that UIM insurance is remedial and that the UIM statute is to be

liberally construed to protect persons from underinsured motorists. Further, Bono asserts the

question is whether the statute allows the limitation, not whether the legislature intended to

provide the coverage.

The Court agrees with Bono that Arizona’s UIM statue is remedial and is to be

liberally construed to protect persons from underinsured motorists. The Court also agrees

that the question is whether the statute allows for the limitation. However, in Herring, the

Arizona Supreme Court made clear that the financial responsibility statutes do not include

derivative claims. 

Conclusion

Bono argues that A.R.S. § 20-259.01(G) does not expressly allow an insurer to limit

the coverage to bodily injury or death suffered by an insured. If an exclusion is not expressly

allowed in the statute, it is void. Lowing, 176 Ariz. at 107, 859 P.2d at 730. This statute is

remedial in nature and is to be liberally construed in favor of coverage. Taylor, 198 Ariz. at

314. 

While the statute does not clearly state whether an insurer may limit the coverage to

bodily injury or death suffered by an insured, Arizona case law requires a conclusion that the

statute does allow an insurer to so limit the coverage. Herring, 144 Ariz. at 257 (A.R.S. §

20-259.01 requires coverage for "victims" not persons with derivative claims; Bartning, 164

Ariz. at 372 (the language in the statute was not intended to give an insured the right to

recover damages for injuries to a third person); Campbell v. Farmers Ins. Co. of Arizona, 155

Ariz. 102, 745 P.2d 160 (App.1987) (rejecting argument that the term bodily injury included

injuries for loss of a family member; survivors’ injuries were not bodily injury caused by a

vehicle accident). Indeed, in Lowing, the Arizona Supreme Court recognized that the

purpose of the similar uninsured motorist statute is to “allow a prudent person to protect

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himself or herself against the universe of risks.” 176 Ariz. at 106. This is consistent with

the Arizona case law that limits coverage to insured persons; i.e., finding derivative claims

or claims based on the bodily injury or death of third persons are excluded from the statute

does not diminish the purpose of allowing persons to protect themselves (by purchasing

insurance) against the universe of risks.

Accordingly, after an independent review, IT IS ORDERED:

1. The Report and Recommendation (Doc. 31) is ADOPTED.

2. Bono’s Motion for Summary Judgment (Doc. 23) is DENIED.

3. State Farm’s Motion for Summary Judgment (Doc. 25) is GRANTED.

4. Summary Judgment is awarded in favor of State Farm Mutual Automobile

Insurance Company and against Nancy Bono.

5. The Clerk of Court shall enter judgment and shall then close its file in this

matter.

DATED this 22nd day of March, 2017.

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