Court Opinion

ID: 2657629
Source: CourtListenerOpinion
Date Created: 2014-03-21 20:26:14.831896+00
Date Added: 2024-06-11T13:00:31.389179
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                MAR 21 2014

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

JOHN P. BOESEL, III,                             No. 12-15043

              Plaintiff - Appellant,             D.C. No. 2:10-cv-01039-TL

  v.
                                                 MEMORANDUM*
STATE FARM FIRE AND CASUALTY
INSURANCE COMPANY, a foreign
corporation,

              Defendant - Appellee.

                   Appeal from the United States District Court
                            for the District of Arizona
                   Tim Leonard, Senior District Judge, Presiding

                     Argued and Submitted February 12, 2014
                            San Francisco, California

Before: TALLMAN and RAWLINSON, Circuit Judges, and RICE, District
Judge.**

       John Boesel, III (Boesel) challenges the entry of summary judgment in favor

of State Farm Fire and Casualty Insurance Company (State Farm).

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
       **
             The Honorable Thomas O. Rice, United States District Judge for the
Eastern District of Washington, sitting by designation.
      1.     Boesel contends that State Farm breached the insurance policy contract

when it failed to pay him for losses he incurred in connection with the theft of certain

jade pieces. To determine whether a breach of contract has occurred, “[w]e interpret

an insurance policy according to its plain and ordinary meaning, examining it from

the viewpoint of an individual untrained in law or business . . . .” Desert Mountain

Props. Ltd. P’ship v. Liberty Mut. Fire Ins. Co., 236 P.3d 421, 427 (Ariz. Ct. App.

2010) (citation omitted).

      The insurance policy provides, in relevant part, that the “policy is void as to you

and any other insured, if you or any other insured under this policy has intentionally

concealed or misrepresented any material fact or circumstance relating to this

insurance, whether before or after a loss.” (Emphasis added). This language states a

concealment or misrepresentation exclusion. See Am. Pepper Supply Co. v. Fed. Ins.

Co., 93 P.3d 507, 508 & n.2 (Ariz. 2004) (en banc). The record reflects that Boesel

concealed the report from Elliot Glasser indicating that the two carvings had an

estimated value of only $30,000. Because this omission impeded State Farm’s ability

to ascertain the authenticity and value of the jade items, State Farm permissibly

invoked the concealment or misrepresentation exclusion to deny the claim. See id. at

511 (noting that an insurer proves a “concealment or misrepresentation exclusion is

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met . . . [by showing] that the insured has materially misrepresented its claim or

concealed evidence that would permit a fair resolution of its claim”).

      State Farm also denied the claim due to Boesel’s non-cooperation. The

insurance policy provides that after a loss, the insured must “prepare an inventory of

damaged or stolen personal property[;]. . . provide us with records and documents we

request and permit us to make copies; submit to and subscribe, while not in the

presence of any other insured: (a) statements; and (b) examinations under oath; and

produce employees, members of the insured’s household or others for examination

under oath to the extent it is within the insured’s power to do so . . . .” This language

requires the insured to cooperate with State Farm’s investigation of the loss. See

Clark Equip. Co. v. Ariz. Prop. & Cas. Ins. Guar. Fund, 943 P.2d 793, 801 & n.8

(Ariz. Ct. App. 1997). An insured’s breach of a cooperation provision relieves an

insurer of liability “if the insurer has been substantially prejudiced thereby. . . .” Id.

at 802 (citations omitted) (emphasis in the original).            The record evidence

demonstrated that Boesel did not attempt to identify the author of the Certificate of

Authenticity, and failed to provide State Farm with Edward Liu’s contact information.

These actions breached the duty to cooperate, and substantially prejudiced State

Farm’s ability to approximate the value of the claimed loss. See Warrilow v. Superior

Court, 689 P.2d 193, 196-98 (Ariz. Ct. App. 1984) (holding that insured violated a

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cooperation clause by failing to provide insurer with information that would aid the

insurer in ascertaining its liability).

       Boesel’s failure to comply with the misrepresentation and cooperation

provisions of the policy justified State Farm’s denial of coverage. Therefore, the

district court properly concluded that Boesel’s breach of contract claim fails. See Holt

v. Utica Mut. Ins. Co., 759 P.2d 623, 627 (Ariz. 1988) (en banc) (noting that “an

insured’s breach of policy conditions . . . [may] be a defense to an action on the

policy”).

       2.     We also reject Boesel’s bad faith claim. In Arizona, an insured alleging

breach of the duty of good faith must show both that: (a) the insurer acted

unreasonably in investigating, evaluating, or processing the claim and (b) either knew

or was conscious of the fact that it acted unreasonably. See Zilisch v. State Farm Mut.

Auto. Ins. Co., 995 P.2d 276, 280 (Ariz. 2000) (en banc). Boesel failed to create a

genuine issue of material fact that State Farm acted in bad faith.

       The district court acted within its discretion in excluding the expert report

proffered by Boesel. See Nationwide Transp. Fin. v. Cass Info. Sys., Inc., 523 F.3d

1051, 1058-60 (9th Cir. 2008) (noting that a district court may exclude expert

testimony that largely consists of legal conclusions). In addition, none of the conduct

identified by Boesel suggests that State Farm acted unreasonably under these facts.

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So long as there is a legitimate question of coverage, denial of a claim, without more,

does not give rise to a bad faith claim. See Desert Mountain Props., 236 P.3d at 442-

43. Accordingly, the district court properly entered summary judgment on Boesel’s

bad faith claim.

      3.     The district court properly rejected Boesel’s request for punitive

damages. In order to obtain punitive damages, Boesel must first show the commission

of an underlying tort. See Saucedo v. Salvation Army, 24 P.3d 1274, 1277 (Ariz. Ct.

App. 2001). Because Boesel’s underlying breach of contract and breach of the duty

of good faith and fair dealing claims fail, he has no basis upon which to seek an award

of punitive damages.

      4.     In its answering brief, State Farm requested an award of fees and costs.

However, Ninth Circuit Rule 39-1 requires that such requests be made by way of a

verified bill of costs and a separate request for attorney fees.

      AFFIRMED.

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