NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JAN 07 2011
MOLLY C. DWYER, CLERK
U .S. C O U R T OF APPE ALS
PHILIP RUDOLPH JOHNSON, No. 10-15263
Plaintiff - Appellant, D.C. No. 3:09-cv-02125-SC
v.
MEMORANDUM *
AMERICAN CASUALTY COMPANY
OF READING, PA, a Pennsylvania
corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the Northern District of California
Samuel Conti, District Judge, Presiding
Argued and Submitted December 9, 2010
San Francisco, California
Before: SCHROEDER, THOMAS, and GOULD, Circuit Judges.
Philip Rudolph Johnson (“Johnson”) appeals the district court’s grant of
summary judgment in favor of American Casualty Company of Reading, PA,
(“American Casualty”) in his diversity action alleging breach of contract, bad faith,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
estoppel, and waiver. We have jurisdiction pursuant to 28 U.S.C. § 1291. Because
the facts are known to the parties, we repeat them only as necessary to explain our
decision. We reverse.
The district court awarded summary judgment on Johnson’s breach of
contract claim upon a determination that John Ryan (“Ryan”) did not qualify as an
insured under the policy because V&C Construction (“V&C”) did not own the
2002 GMC Sierra (“GMC”) at the time of the accident and did not give Ryan
permission to drive the truck. Under Nevada law, “‘[o]wner’ means a person who
holds the legal title of a vehicle and whose name appears on the certificate of title .
. . .” Nev. Rev. Stat. Ann. § 482.085. Where parties transferring a vehicle agree
that the conditional vendee will obtain insurance on the vehicle, the conditional
vendee may not recover under an insurance policy secured in the name of the
original owner. See Bly v. Mid-Century Ins., Co., 101 Nev. 216 (1985). Claudia
Van Winkle (“Claudia”) testified that, because she paid off the remaining debt
owed on the vehicle before it was due, she received undated title to the GMC early
but that the parties had agreed that V&C would keep legal title and continue to
insure the vehicle until September 2005. Her name did not appear on the
certificate of title at the time of the accident, and V&C maintained insurance on the
vehicle under the V&C policy. However, Ray Van Winkle (“Ray”) testified that
2
he took actions that he believed would result in Claudia’s insuring the vehicle in
her name. The matter is not simple, and we can see how the district court may
have viewed it otherwise, but we conclude that there is a genuine issue of material
fact as to whether V&C maintained an ownership interest in the vehicle sufficient
for insurance purposes at the time of the accident.
There is also a genuine issue of material fact as to whether Ryan had
permission from V&C to drive the GMC at the time of the accident. Both Nevada
and California require that insurance coverage be extended to drivers who have
express or implied permission to drive a vehicle from a policy’s named insured.
See Nev. Rev. Stat. Ann. § 485.3091(1)(b) (stating that a liability policy must
“[i]nsure the person named therein and any other person, as insured, using any
such motor vehicle with the express or implied permission of the named insured . .
. .”); Cal. Ins. Code § 11580.1(b)(4) (similar). “[I]t is almost universally held . . .
that where the named insured grants his permittee broad and unfettered dominion
over his insured automobile, he also impliedly authorizes his permittee to allow a
third person to use it, and thus to render him an additional insured.” State Farm
Mut. Auto. Ins. Co. v. Williamson, 331 F.2d 517, 519–20 (9th Cir. 1964) (citation
and internal quotation marks omitted). Because Ray testified that V&C never
restricted Claudia’s use of the GMC, a jury could reasonably find that Ryan,
3
driving with Claudia’s express permission, enjoyed V&C’s implied permission to
use the vehicle. Cf. Nelson v. Planet Ins. Co., 111 Nev. 1373 (1995) (holding that
insurance did not extend to third party driver where explicit permission of rental
company or short-term lessee was required by the rental agreement). Again, the
matter is not simple, but we conclude that the genuine factual issue on permission,
together with the genuine factual issue on ownership, precluded the summary
judgment on the breach of contract claim.
Johnson also alleges that American Casualty breached its obligation of good
faith and fair dealing by refusing to defend and indemnify Ryan. Both California
and Nevada law provide causes of action for breach of an implied covenant of
good faith where benefits owed under an insurance policy are unreasonably
withheld. See Love v. Fire Ins. Exchange, 221 Cal. App. 3d 1136, 1151 (1990)
(“[T]here are at least two separate requirements to establish breach of the implied
covenant: (1) benefits due under the policy must have been withheld; and (2) the
reason for withholding benefits must have been unreasonable or without proper
cause.”); U.S. Fidelity & Guar. Co. v. Peterson, 91 Nev. 617, 620 (1975) (“Where
an insurer fails to deal fairly and in good faith with its insured by refusing without
proper cause to compensate its insured for a loss covered by the policy[,] such
conduct may give rise to a cause of action in tort for breach of an implied covenant
4
of good faith and fair dealing.”). Because a reasonable jury could find that Ryan
was an “insured” under the policy, a reasonable jury could also find that American
Casualty breached its obligation of good faith and fair dealing by refusing to
defend and indemnify him, making summary judgment on this claim improper.
Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact . . . .”). Because the
summary judgment on the breach of contract claim must be reversed, and in light
of the other evidence presented by appellant, we also conclude that the bad faith
versus good faith issue is subject to trial.
In the alternative, Johnson asserts a claim of estoppel, based on the
contention that Claudia relied upon the representations of American Casualty’s
agent that the GMC remained insured under the V&C policy. Under California
law, which the parties agree governs this claim, “misrepresentation as to coverage
under a policy or issuance of a policy different in coverage from that represented to
the insured estops the insurer from reliance on the coverage as stated in the issued
policy.” Hartford Fire Ins. Co. v. Spartan Realty Int’l, Inc., 196 Cal. App. 3d
1320, 1325 (1987). “[T]he insured claiming estoppel must establish detrimental
reliance on the insurer’s conduct.” Id. at 1326. Based on the record, a jury could
find that American Casualty’s agent knew or should have known that ownership
5
had legally transferred to Claudia when she told Claudia that the vehicle was still
covered by V&C’s policy. Ray testified that he told American Casualty’s agent
that he had transferred title to Claudia, and Claudia gave testimony about her
conversations with the agent in which she indicated that ownership had transferred.
A reasonable jury could find the agent’s statement that the vehicle was still insured
under V&C’s policy to be a representation on which Claudia could reasonably rely,
and indeed a misrepresentation in that the insurer’s agent did not communicate that
the ownership change would cause a significant reduction in the scope of the
policy’s coverage. A reasonable jury could also find that Claudia detrimentally
relied on that misrepresentation and that American Casualty is consequently
estopped from denying that Claudia and her permittees are covered as “insureds”
under the policy. See Fanucci v. Allstate Ins. Co., 638 F. Supp. 2d 1125, 1144–46
(N.D. Cal. 2009) (finding summary judgment improper where the insurance agent
stated, contrary to the written terms of the policy, that a particular policy would
satisfy insured’s specified needs).
There is also a genuine issue of material fact bearing upon waiver, as a
reasonable jury could find that American Casualty’s agent knew that ownership of
the GMC had changed when she confirmed to Claudia that the vehicle was still
insured under the V&C policy. See Vigoren v. Transnational Ins. Co., 86 Nev.
6
810, 812 (1970) (“[An insurance company] may not rely upon the change of
beneficial ownership of the car to defeat coverage if it had knowledge of the
conditional sale when it elected to reinstate the policy and receive a premium
therefor. Such knowledge and reinstatement of the policy in spite of it, is a waiver
of the right to rely upon the precise wording of the omnibus clause of that
policy.”).
For all of the above reasons, the summary judgment on all claims was error,
and we remand for further proceedings consistent with this disposition, believing
that a trial is required. Guided by proper jury instructions, a trier of fact should
resolve these ownership, permission, and other claim-related issues.
REVERSED AND REMANDED.
7