Court Opinion

ID: 3064587
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:25:45.269435+00
Date Added: 2024-06-11T10:11:09.404552
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

SCOTT MINKLER,                               No. 07-56689
                 Plaintiff-Appellant,           D.C. No.
                 v.                          CV-07-04374-
SAFECO   INSURANCE COMPANY,                     MMM
                                            Central District of
                Defendant-Appellee.
                                               California,
                                              Los Angeles

                                               ORDER

                      Filed April 8, 2009

      Before: Daniel M. Friedman,* Carlos T. Bea, and
              Sandra S. Ikuta, Circuit Judges.

                          COUNSEL

Jeffrey Isaac Ehrlich (argued), The Ehrlich Law Firm, Clare-
mont, California; Michael J. Bidart and Ricardo Echeverria,
Shernoff Bidart Darras & Echeverria, LLP, Claremont, Cali-
fornia; for appellant Scott Minkler.

Gregory H. Halliday (argued) and William D. Burger, Jr.,
Sedgwick, Detert, Moran & Arnold, LLP, Irvine, California;
for appellee Safeco Insurance Company of America.

  *The Honorable Daniel M. Friedman, Senior United States Circuit
Judge for the Federal Circuit, sitting by designation.

                              4153
4154           MINKLER v. SAFECO INSURANCE CO.
                           ORDER

PER CURIAM:

   We respectfully ask the California Supreme Court to exer-
cise its discretion to accept and decide the certified question
below pursuant to California Rule of Court 8.548.

I.   Statement of Facts and Procedural Background

   This is a liability insurance coverage dispute involving a
policy issued to a California homeowner. Scott Minkler
appeals the district court’s order granting Safeco Insurance
Company of America’s (“Safeco”) motion under Federal Rule
of Civil Procedure 12(b)(6) to dismiss Minkler’s causes of
action for breach of insurance contract, breach of the implied
covenant of good faith and fair dealing, recovery as a judg-
ment creditor pursuant to California Insurance Code Section
11580, and professional negligence. Minkler’s claims arise
out of Safeco’s failure to provide a defense to Betty Schwartz,
an insured under a Safeco homeowners insurance policy.
Betty Schwartz was a resident of California at all relevant
times.

   In 2003, Minkler sued Betty Schwartz and her son, David,
in California Superior Court. Minkler’s first amended com-
plaint alleged David, Minkler’s little league coach, had sexu-
ally molested him over a period of several years, beginning in
1987. Minkler asserted multiple causes of action against
David, including sexual battery, intentional infliction of emo-
tional distress, negligence, and negligence per se. Minkler
also asserted a single cause of action for negligent supervision
against Betty Schwartz: Minkler alleged David molested
Minkler in Betty’s home; Betty knew her son was molesting
Minkler; but Betty nonetheless failed to take reasonable steps
to stop her son from doing so.
                  MINKLER v. SAFECO INSURANCE CO.                     4155
  From August 26, 1988 to August 26, 1995, Betty Schwartz
held a series of homeowners insurance policies issued by
Safeco.1 The policies provide general liability coverage to
each insured up to a limit of $300,000 for each occurrence.
The policies define “an insured” to include both the policy-
holder and any relative resident of the policyholder’s house-
hold.

   The “Exclusions” sub-section of the liability coverage sec-
tion of the policy contains an intentional acts exclusion that
provides: “Personal Liability [coverage] . . . do[es] not apply
to bodily injury or property damage: (a) which is expected or
intended by an insured or which is the foreseeable result of an
act or omission intended by an insured . . . .” However, in the
“Conditions” sub-section, the policy also contains a
severability-of-interests clause that provides: “This insurance
applies separately to each insured. This condition will not
increase our limit of liability for any one occurrence.”

  David Schwartz, acting on behalf of himself and his
mother, tendered the defense of Minkler’s complaint to
Safeco. Citing the intentional acts exclusion, Safeco’s insur-
ance adjuster denied the tender as to both Schwartzes.

  Minkler then obtained a default judgment against Betty
Schwartz in the amount of $5,020,612.20. Subsequently,
Minkler entered into a settlement agreement with Betty. In
exchange for a covenant not to execute the judgment, Betty
assigned her claims against Safeco to Minkler.

  On May 15, 2007, Minkler filed this action against Safeco
and Safeco’s insurance adjuster, Patricia Orris, in California
superior court. By stipulation, Orris was dismissed from the
action. Safeco removed the case to the United States District
  1
    Only the 1993 version of the policy appears in the record. Neither party
contends the 1993 version differs in any material respect from any version
of the policy in effect at the time of the relevant occurrences.
4156             MINKLER v. SAFECO INSURANCE CO.
Court for the Central District of California on the basis of
diversity of citizenship.

   In federal court, Safeco filed a Rule 12(b)(6) motion to dis-
miss on the ground the intentional acts exclusion barred cov-
erage for Minkler’s claims against Betty. Minkler conceded
that, absent the severability clause, the intentional acts exclu-
sion would bar coverage for Minkler’s negligent supervision
claim against Betty Schwartz; David Schwartz was “an
insured” within the meaning of the policy, and Minkler’s bod-
ily injury resulted from David’s intentional acts. However,
Minkler contended the severability-of-interests clause
excepted Betty’s coverage from the exclusion either expressly
or under California rules for interpretation of ambiguity in
insurance contracts.

 The district court granted Safeco’s motion to dismiss and
Minkler timely appealed.

II.    The Certified Question

  We certify the following issue to the California Supreme
Court:

       Where a contract of liability insurance covering mul-
       tiple insureds contains a severability-of-interests
       clause in the “Conditions” section of the policy, does
       an exclusion barring coverage for injuries arising out
       of the intentional acts of “an insured” bar coverage
       for claims that one insured negligently failed to pre-
       vent the intentional acts of another insured?

If the California Supreme Court decides the certified question,
we will accept and rely on the Court’s decision in any further
proceedings in this court.

III.    Explanation of the Importance of the Certified Question

  The answer to the certified question will determine the out-
come of Minkler’s appeal of the district court’s order granting
Safeco’s motion for summary judgment.
               MINKLER v. SAFECO INSURANCE CO.             4157
   The certified question is also one of considerable impor-
tance to insureds and insurers alike. Many homeowners and
other insurance policies covering multiple insureds contain
severability provisions similar to the clause at issue in this
case. Because of the ubiquity of such clauses, the issue is a
recurrent one and courts have reached different answers. See
W. Am. Ins. Co. v. AV & S, 145 F.3d 1224, 1227-29 (10th Cir.
1998) (collecting cases). Compare, e.g., Taryn E.F. by Grune-
wald v. Joshua M.C., 505 N.W.2d 418, 420-22 (Wis. 1993)
(holding that a policy exclusion applicable to “any insured”
unambiguously barred coverage despite inclusion of sever-
ability clause), with Worcester Mut. Ins. Co. v. Marnell, 496
N.E.2d 158, 161 (Mass. 1986) (holding that the term “any
insured” was ambiguous in light of a severability clause and,
construing the contract against the insurer, finding coverage).

   The California Supreme Court has never addressed this
issue of exceptional importance. See generally Safeco Ins. Co.
of Am. v. Robert S., 26 Cal. 4th 758, 772 (2001) (Baxter, J.,
concurring and dissenting) (“Little California authority con-
siders the effect of severability clauses on exclusionary provi-
sions.”).

   In his concurring opinion in Robert S., Justice Baxter
wrote: “[I]f the policy contains language stating the severabil-
ity of the insurer’s obligation, exclusionary clauses apply sep-
arately to each insured, even when language internal to the
clauses themselves might suggest otherwise.” Id. (emphasis in
original). However, the full court held that the policy exclu-
sion in the case was void as against public policy and did not
have occasion to address the effect of the contract’s severabil-
ity clause.

  Two California Court of Appeal decisions—California
Casualty Insurance Co. v. Northland Insurance Co., 48 Cal.
App. 4th 1682, 1697 (4th Dist. 1996) and Bjork v. State Farm
Fire & Casualty Co., 157 Cal. App. 4th 1, 8-11 (1st Dist.
2007)—have addressed the effect of a severability clause on
4158           MINKLER v. SAFECO INSURANCE CO.
policy exclusions, but Northland’s statement on the issue is
dicta, and both the Northland and Bjork courts expressly lim-
ited their holdings to the unique facts of each case.

   Because the California Supreme Court has not addressed
this issue, and because of the split of authority in other juris-
dictions, we respectfully request that the California Supreme
Court answer the certified question. If the Court, in its discre-
tion, chooses to address the certified question, we will accept
and rely on the Court’s decision of the certified question in
any further proceedings in this court.

IV.    Administrative Information

  The caption of the case is:

No.    07-56689

SCOTT MINKLER, Plaintiff-Appellant
v.

SAFECO INSURANCE COMPANY OF AMERICA, a
Washington corporation, Defendant-Appellee

  Counsel for the parties are as follows:

  For Plaintiff-Appellant: Michael J. Bidart, Ricardo
Echeverria, SHERNOFF BIDART DARRAS & ECHEVER-
RIA, LLP, 600 S. Indian Hill Blvd., Claremont, California
91711; Jeffrey Isaac Ehrlich, THE EHRLICH LAW FIRM,
411 Harvard Ave., Claremont, California

  For Defendant-Appellee: Gregory H. Halliday, William D.
Burger, SEDGWICK, DETERT, MORAN, & ARNOLD,
LLP, 3 Park Plaza, 17th Floor, Irvine, CA 92614-8540

   If the California Supreme Court grants the request, Scott
Minkler should be deemed the petitioner, as he is the appel-
lant before our court.
               MINKLER v. SAFECO INSURANCE CO.              4159
V.   Conclusion

  We recognize that the California Supreme Court has a
heavy caseload and we do not make our request lightly. If the
Court accepts the certified question, we will be grateful for its
assistance.

   All further proceedings in this case in this court are stayed
pending final action by the California Supreme Court. The
case is withdrawn from submission until further order of this
court. This court retains jurisdiction over further proceedings
after the California Supreme Court renders a decision or
declines to answer the certified question. The parties shall
notify the Clerk of this court within one week after the Cali-
fornia Supreme Court accepts or rejects certification. If the
California Supreme Court accepts the certified question, the
parties shall file a joint status report to our court every six
months after the date of acceptance or more frequently if cir-
cumstances warrant, and again within one week when the Cal-
ifornia Supreme Court renders an opinion.

   In accordance with California Rule of Court 8.548, the
Clerk of the Court is hereby directed to transmit forthwith to
the California Supreme Court, under official seal of the Ninth
Circuit, the original and ten copies of this order, along with
all relevant briefs and excerpts of record. The Clerk shall also
file certificates of service with the parties to this appeal.
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