FILED
NOT FOR PUBLICATION DEC 22 2009
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
SCOTTSDALE INSURANCE No. 08-17244
COMPANY, an Ohio corporation,
D.C. No. CV-04-00118-SMM
Plaintiff - Appellant,
v. MEMORANDUM *
MARKET FINDERS INSURANCE
CORPORATION, a Kentucky corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Arizona
Stephen M. McNamee, District Judge, Presiding
Argued and Submitted December 10, 2009
San Francisco, California
Before: TASHIMA, GRABER, and BYBEE, Circuit Judges.
Plaintiff Scottsdale Insurance Co. appeals the entry of summary judgment in
favor of Defendant Market Finders Insurance Corp. in this diversity action. On de
novo review, LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1130 (9th Cir.
2009), we affirm in part, reverse in part, and remand.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
1. The district court properly granted summary judgment to Defendant on
the claim that Defendant breached the duty of good faith and fair dealing. Plaintiff
neither alleged, nor introduced evidence of, any bad faith on Defendant’s part.
See Deese v. State Farm Mut. Auto. Ins. Co., 838 P.2d 1265, 1268 (Ariz. 1992)
(describing the legal requirements for a breach of the duty of good faith and fair
dealing).
2. The district court erred by granting summary judgment to Defendant on
the claim that Defendant breached its obligation to underwrite the insurance policy
with reasonable care. Defendant had a duty to underwrite the insurance policy
with reasonable care arising from the parties’ agency agreement. See Robertson v.
Sixpence Inns of Am., Inc., 789 P.2d 1040, 1044 (Ariz. 1990) ("The existence of a
duty is a question of law to be determined by the court."); Restatement (Third) of
Agency § 8.08 (2005) (describing the duty of reasonable care arising in an agency
relationship); cf. Webb v. Gittlen, 174 P.3d 275, 279 (Ariz. 2008) ("[I]nsurance
agents . . . owe only a duty of ‘reasonable care, skill, and diligence’ in dealing with
clients."). Evidence in the record supports Plaintiff’s theory that Defendant
breached that duty by, for instance, failing to follow up to determine whether Dr.
Dinius had other tail coverage, whether he committed acts that could result in later
claims after the previous claims-made insurance policy ended, and whether he
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should be enrolled in the Indiana Compensation Fund. We cannot say that,
drawing all inferences in favor of Plaintiff, a reasonable juror would necessarily
conclude that Defendant underwrote the insurance policy with reasonable care.
See Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th Cir. 2008).
3. The district court erred by granting summary judgment to Defendant on
the issues of causation and damages. Considerable evidence does support
Defendant’s theory that the failure to enroll Dr. Dinius in the Indiana
Compensation Fund may not have caused damage to Plaintiff. But, drawing all
inferences in favor of Plaintiff, we cannot say that a reasonable juror could not
conclude that the failure damaged Plaintiff in some measure. Id. In particular, we
note that, had Dr. Dinius been enrolled in the Fund, a reasonable juror could
conclude that the Fund would have contributed some amount toward the
settlement, particularly because Dr. Dinius was the physician in charge of
anesthesiology on the date in question. Whether, and to what extent, the failure to
enroll Dr. Dinius caused Plaintiff economic injury are questions for the jury.
4. The district court correctly applied the six-year statute of limitations to
Plaintiff’s claims, because those claims arose out of its contractual relationship
with Defendant. See Ariz. Rev. Stat. § 12-548 (stating the six-year statute of
limitations for actions arising from a contract); Woodward v. Chirco Constr. Co.,
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687 P.2d 1269, 1271 (Ariz. 1984) (holding that, where "the cause of action based
on the implied [term] was based on the contract," the six-year limitation applies);
cf. Barmat v. John & Jane Doe Partners A-D, 747 P.2d 1218, 1221-22 (Ariz. 1987)
(holding that, for purposes of a statute concerning attorney fees, the relevant
inquiry about the nature of a claim is whether the legal duty would exist "but for"
the contract).
AFFIRMED in part, REVERSED in part, and REMANDED. The
parties shall bear their own costs on appeal.
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