Amerco v. National Union Fire Insurance

FILED
NOT FOR PUBLICATION
JUN 06 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMERCO, No. 14-16041

Plaintiff - Appellant, D.C. No. 2:13-cv-02588-PGR

v.
MEMORANDUM*
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA,

Defendant - Appellee.

Appeal from the United States District Court
for the District of Arizona
Paul G. Rosenblatt, Senior District Judge, Presiding

Argued and Submitted May 10, 2016
San Francisco, California

Before: FARRIS, O’SCANNLAIN, and CHRISTEN, Circuit Judges.

This is an insurance coverage dispute. Five plaintiffs filed five shareholder

derivative lawsuits against AMERCO and its directors and officers in Nevada state

court, and the state court consolidated the cases. AMERCO sought coverage for

costs associated with the consolidated action under its directors and officers

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
liability policy (“D & O policy”). Its insurer, National Union Fire Insurance

Company of Pittsburgh, PA (“NUF”), denied coverage because one of the

plaintiffs in the consolidated action, Paul Shoen, was an “Insured” under the D &

O policy. AMERCO sued for breach of the insurance contract. The district court

granted NUF’s motion to dismiss. We have jurisdiction under 28 U.S.C. § 1291,

and we affirm.1

1. The district court properly dismissed AMERCO’s complaint because

AMERCO did not allege that the non-Shoen plaintiffs instigated and continued

their claims totally independent of Paul Shoen, an Insured under the policy. The

“Insured v. Insured” exclusion in the D & O policy barred coverage for security

holders’ claims except when “such security holder’s claim is instigated and

continued totally independent of” any Insured. See Biltmore Assocs., LLC v. Twin

City Fire Ins. Co., 572 F.3d 663, 666 (9th Cir. 2009) (interpreting a similar

exclusion under Arizona law and explaining that “the [shareholder derivative suit]

exception to the exclusion only applies if the claims are ‘instigated and continued

totally independent of’ the corporation”). Under Arizona law, the “insurer has the

burden of proving that a policy exclusion is applicable,” but “the insured carries

1
The parties agree that Arizona law governs the substantive questions
raised here.

2
the burden of proving that his claim falls within an exception to that exclusionary

clause.” Hudnell v. Allstate Ins. Co., 945 P.2d 363, 365 (Ariz. Ct. App. 1997).

Here, AMERCO stated in its complaint that the five plaintiffs in the

consolidated action were security holders, but it did not allege that the non-Shoen

plaintiffs filed or maintained their claims independent of Paul Shoen. In fact,

AMERCO conceded in its complaint (and in its briefing to our court) that Shoen

participated in the underlying lawsuit. AMERCO therefore failed to carry its

burden under Hudnell of alleging that the non-Shoen claims fell within the

exception to the “Insured v. Insured” exclusion, see 945 P.2d at 365, and we affirm

the district court’s dismissal of AMERCO’s complaint on that ground, see Ashcroft

v. Iqbal, 556 U.S. 662, 677–78 (2009).

2. The district court properly declined to take judicial notice of twenty-five

exhibits NUF filed with its motion to dismiss. See Fed. R. Evid. 201.

AFFIRMED.