NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 17 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
EMEKA NDIGWE, No. 15-56813
Plaintiff-Appellant, D.C. No. 2:15-cv-06758-FMO-AS
v.
ALLSTATE INDEMNITY COMPANY, MEMORANDUM*
ERRONEOUSLY SUED AS ALLSTATE
INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Fernando M. Olguin, District Judge
Argued and Submitted May 12, 2017
Submission Vacated June 20, 2017
Re-Submitted October 13, 2017
Pasadena, California
Before: CLIFTON and FRIEDLAND, Circuit Judges, and DONATO,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable James Donato, United States District Judge for the
Northern District of California, sitting by designation.
Plaintiff Emeka Ndigwe appeals the dismissal of his lawsuit against
Defendant Allstate Indemnity Company over uninsured motorist coverage for an
auto accident. At our request after oral argument, the district court clarified that
the case was dismissed as a sanction under Federal Rule of Civil Procedure 41(b).
We have jurisdiction under 28 U.S.C. § 1291, and affirm.
In the case’s original posture before us, the specific basis for the dismissal
was somewhat unclear. On October 22, 2015, the district court entered a first
dismissal order under Rule 12(b)(6), and ordered Ndigwe to file an amended
complaint by November 2, 2015. The court expressly cautioned Ndigwe “that
failure to timely file a First Amended Complaint may result in this action being
dismissed without prejudice for failure to prosecute and/or failure to comply with a
court order” under Rule 41(b). Ndigwe did not file an amended complaint or
advise the district court that he did not intend to amend. On November 9, 2015,
the district court entered a second and final order dismissing the case without
prejudice “for lack of prosecution and failure to comply with the orders of the
court.”
We asked the district court to clarify whether it intended to dismiss the
complaint as a sanction under Rule 41(b) or for failure to state a claim under Rule
12(b)(6). The district court responded with a “Clarification Order” confirming that
the action was dismissed as a sanction under Rule 41(b) for Ndigwe’s failure to
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comply with the order requiring amendment or to otherwise prosecute the case.
See Harris v. Mangum, 863 F.3d 1133, 1142 (9th Cir. 2017) (“When a district
court dismisses an action because the plaintiff has not filed an amended complaint
after being given leave to do so and has not notified the court of his intention not to
file an amended complaint, we may deem the dismissal to be for failure to comply
with a court order based on Federal Rule of Civil Procedure 41(b).” (citations
omitted)). The district court also confirmed that the final dismissal was without
prejudice.
We review for abuse of discretion the dismissal of an action for failure to
comply with the district court’s order requiring submission of an amended
complaint. Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th Cir. 1992). Ndigwe’s
failure to respond in any way to the district court’s amendment order warranted
dismissal. A plaintiff’s inaction in the face of the court’s “ultimatum -- either by
amending the complaint or by indicating to the court that it will not do so -- is
properly met with the sanction of a Rule 41(b) dismissal.” Edwards v. Marin Park,
Inc., 356 F.3d 1058, 1065 (9th Cir. 2004).
The specific factors applied to a Rule 41(b) dismissal point to the same
result. Before dismissing a case as a sanction, a district court should consider:
“(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need
to manage its docket; (3) the risk of prejudice to the other party; (4) the public
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policy favoring the disposition of cases on their merits; and (5) the availability of
less drastic sanctions.” Dreith v. Nu Image, Inc., 648 F.3d 779, 788 (9th Cir. 2011)
(internal quotation marks omitted). We may affirm when our independent review
of the record indicates that the district court did not abuse its discretion under these
factors, even though the court may not have made explicit findings at the time of
dismissal. Yourish v. Cal. Amplifier, 191 F.3d 983, 990 (9th Cir. 1999) (internal
citation omitted). While the district court’s final dismissal order did not address
the factors, its clarification order discussed them in detail, and we find nothing in
the record indicating that the district court abused its discretion.
Consequently, we find that the district court did not abuse its discretion in
dismissing Ndigwe’s case under Rule 41(b). We express no opinion about the
merits of his claims against Allstate or the district court’s analysis under Rule
12(b)(6).
AFFIRMED.
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FILED
No. 15-56813 Ndigwe v. Allstate Indemnity Co.
OCT 17 2017
CLIFTON, Circuit Judge, concurring: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I agree with the majority that the district court had the authority to dismiss
the action as a sanction under Rule 41(b). I therefore concur entirely in the result
and reasoning expressed in the majority’s disposition.
I write separately, however, to express my concern with the district court’s
underlying interpretation of California insurance law; namely, that Ndigwe failed
to allege uninsured motorist coverage under California Insurance Code section
11580.2(b) and the corresponding uninsured motorist provisions in his insurance
policy with Allstate. The application of California insurance law is ultimately a
question for the California courts, but in my individual view the district court’s
interpretation of the policy and of California law was not persuasive and should not
be taken for granted if and when the question arises again. In particular, I believe
that the definition of "uninsured vehicle" in section 11580.2(b) includes a motor
vehicle that has applicable insurance if the insurer either denies coverage or refuses
to admit coverage.
Because the merits of Ndigwe’s claim rest on conflicting interpretations of
the uninsured motorist provisions in his insurance policy, it is helpful to first
briefly summarize the background California law governing the interpretation of
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insurance policies. As relevant here, there are two principles that courts must
follow when interpreting insurance policies under California law.
First, legitimate uncertainties regarding insurance coverage must be
interpreted in favor of the insured. Specifically, “[California] generally resolve[s]
ambiguities in favor of coverage. Similarly, [California] generally interpret[s] the
coverage clauses of insurance policies broadly, in order to protect the objectively
reasonable expectations of the insured.” Montrose Chem. Corp. v. Admiral Ins.
Co., 10 Cal. 4th 645, 667 (1995) (citations and internal quotation marks omitted).
This principle of interpretation is based on dual principles of contract law and
fairness. Because the insurance company ordinarily drafts its policies, and because
the insured party ordinarily has little to no opportunity to bargain for modifications
of the policy language, policy language must be construed against the drafting
insurance company. Id.
Second, insurance policies must be interpreted in accordance with their plain
and common meaning. Under this principle, “the policy should be read as a
layman would read it and not as it might be analyzed by an attorney or an
insurance expert.” Delgado v. Heritage Life Ins. Co., 157 Cal. App. 3d 262, 271
(Cal. Ct. App. 1984) (citation and internal quotation marks omitted). “[I]f
semantically permissible, the contract will be given such construction as will fairly
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achieve its object of providing indemnity for the loss to which the insurance
relates.” Id. (citations and internal quotation marks omitted).
Turning now to the specific policy provision at issue here, Ndigwe’s policy
provides coverage for injuries caused by car accidents involving an “uninsured
auto.” The policy defines “uninsured auto” to include any “motor vehicle for
which the insurer denies coverage.” This definition is based on the “uninsured
motor vehicle” definitions in section 11580.2(b), which are incorporated by
reference into all insurance policies in California. See Cal. Cas. Indemn. Exch. v.
Hoskin, 82 Cal. App. 3d 789, 794 (Cal. Ct. App. 1978) (“Section 11580.2 becomes
a part of every insurance policy as if it were written into its provisions.”).
As relevant here, section 11580.2(b) defines an “uninsured motor vehicle” to
include (1) any motor vehicle for which there is no liability insurance applicable at
the time of the accident, as well as (2) any motor vehicle for which there is liability
insurance applicable at the time of the accident but the insurance company later
denies coverage thereunder. See Cal. Ins. Code § 11580.2(b) (“As used in this
section, ‘uninsured motor vehicle’ means a motor vehicle with respect to the
ownership, maintenance or use of which there is no bodily injury liability
insurance . . . applicable at the time of the accident, or there is the applicable
insurance . . . but the company writing the insurance . . . denies coverage
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thereunder.”). To apply the relevant provisions of the statute, we can understand
section 11580.2(b) to ask three questions to determine if there is uninsured
motorist coverage: (1) whether the tortfeasor had liability insurance; (2) whether
the insurance was applicable at the time of the accident; and (3) if the insurance
was applicable at the time of the accident, whether the tortfeasor’s insurance
company later denied coverage under the policy.
In determining that Ndigwe failed to plausibly allege uninsured motorist
coverage, the district court held that, under section 11580.2(b), there can be no
such coverage when, as here, the tortfeasor had insurance at the time of the
accident, but its insurance company later denies coverage for a third-party claim
arising out of the accident. In doing so, the district court relied primarily on the
California Court of Appeal’s decisions in California Casualty Indemnity Exchange
v. Hoskin, 82 Cal. App. 3d 789, 797 (Cal. Ct. App. 1978), and Denny v. St. Paul
Guardian Insurance Co., 196 Cal. App. 3d 73, 77-78 (Cal. Ct. App. 1987), which
held that, for purposes of section 11580.2(b), there is no uninsured motorist
coverage when the insured party’s covered vehicle has no “applicable” insurance at
the time of the accident due to exclusions in that party’s insurance policy.
The district court’s reasoning, however, is not well supported by California
law.
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As discussed above, California law requires that we interpret the terms of
Ndigwe’s policy in accordance with their plain meaning, construing ambiguities in
favor of Ndigwe. In light of these interpretive principles, it appears that Ndigwe
did in fact allege uninsured motorist coverage here. To review, Ndigwe’s policy
defines an “uninsured auto” to include any “motor vehicle for which the insurer
denies coverage.” Similarly, section 11580.2(b) defines an “uninsured motor
vehicle” to include any motor vehicle for which “there is the applicable insurance .
. . but the company writing the insurance . . . denies coverage thereunder.” That
literally describes what allegedly happened here. Ndgiwe was rear-ended by
another driver. At the time of the accident, the other car was insured by Alliance
United Insurance Company (Alliance). Alliance, however, later denied coverage
for the accident, purportedly because its insured failed to cooperate in Alliance’s
investigation into the accident. As alleged, these facts are sufficient to trigger
uninsured motorist coverage under the terms of Ndigwe’s policy.
It is not at all surprising that Ndigwe had a reasonable expectation that the
uninsured motorist coverage that he paid for would cover his situation. Ndigwe
had insurance, he was in an accident that wasn’t his fault, he suffered damages, the
driver responsible for the accident did not cover Ndigwe’s damages with insurance,
for a reason that wasn’t Ndigwe’s fault, either, and yet it was Ndigwe who was left
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holding the bag.
Ndigwe’s interpretation is consistent with that of Robert C. Clifford’s
California Uninsured Motorist Law, a “leading treatise on [California] insurance
law.” Farmers Ins. Exch. v. Kim, 2013 WL 1261746, at *3 (Cal. Ct. App. 2013)
(unpublished). As relevant here, the treatise provides the following analysis
regarding uninsured motorist claims arising out of a coverage dispute between the
tortfeasor and his insurance company:
In Ins[urance] Code § 11580.2(b), the definition of “uninsured vehicle”
includes a motor vehicle that has applicable insurance if the insurer
either denies coverage or refuses to admit coverage except conditionally
or with reservation. The purpose of this definition is to give the injured
party a right to proceed under an uninsured motorist provision if there is
a coverage dispute between the tortfeasor and his or her insurer. . . . If
the adverse driver’s liability insurer maintains that its policy does not
furnish coverage for the accident, the “insured” vehicle is an “uninsured”
motor vehicle.
1 Clifford, Cal. Uninsured Motorist Law § 6.70 (2017).
In the same section, the treatise provides that when the tortfeasor’s insurance
company denies coverage for failure to cooperate in the investigation of the
accident, the tortfeasor becomes an uninsured motorist for purposes of section
11580.2(b):
A common situation involving the denial of coverage by the tortfeasor’s
insurer is when the tortfeasor breaches the cooperation clause of the
policy and refuses to assist in his defense. . . . Clearly, if the insurer
denies coverage because of the breach of the cooperation clause, the
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vehicles becomes “uninsured.”
Id. That is exactly the situation here.
The precedents on which the district court relied, Hoskin and Denny, do not
speak to this situation. As another federal district court in California has observed,
Hoskin did not discuss the specific provision in section 11580.2(b) at issue in this
case: that is, whether the tortfeasor’s insurance company “denie[d] coverage.”
Safeco Ins. Co. of America v. Nadalsky, 2013 WL 12114613, at *3 (C.D. Cal. Feb.
4, 2013) (unpublished). Rather, Hoskin and Denny instead interpreted the
provision in section 11580.2(b) that addresses whether the tortfeasor had insurance
“applicable at the time of the accident.”
In interpreting this provision, Hoskin and Denny held only that “the question
whether a liability policy is ‘applicable’ at the time of the accident is resolved
without regard to policy exclusions precluding payment to an injured insured.”
Farmers Ins. Exch. v. Allen, 2005 WL 668821, at *6 (Cal. Ct. App. 2005)
(unpublished). For example, in Hoskin, the insured claimant (a mother) was
denied uninsured motorist coverage for injuries sustained in a car accident while
she was a passenger in her car that was being driven by her son. Hoskin, 82 Cal.
App. 3d at 791-92. Similarly, in Denny, the insured claimant was denied uninsured
motorist coverage for injuries sustained in a car accident while she was a passenger
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in a substitute vehicle that she was using as her own car at the time. Denny, 196
Cal. App. 3d at 75. In both cases, the court held that the claimants could not
establish uninsured motorist coverage for their injuries because there were specific
policy exclusions in the claimants’ own respective policies that precluded coverage
for any injuries to the named insured or members of their household. Hoskin, 82
Cal. App. 3d at 793, 797-98; Denny, 196 Cal. App. 3d at 75, 78. In rejecting
coverage, Hoskins and Denny were aimed at enforcing specific policy exclusions in
the claimants’ own policies: namely, by prohibiting claimants from “attempt[ing]
to utilize exclusions within the liability sections of an insured’s own automobile
policy to trigger the insured’s uninsured motorist coverage.” Allen, 2005 WL
668821, at *5.
That was not the situation here, however. Unlike the claimants in Hoskin
and Denny, Ndigwe was not attempting to side-step his own policy exclusions by
instead seeking coverage under the uninsured motorist provisions in his policy.
See Hoskin, 82 Cal. App. 3d at 797 (rejecting claim for uninsured motorist
coverage “where a car is insured under the general terms of a policy” but the policy
is found “inapplicable to the specific claim created by the accident”). Rather,
Ndigwe sought uninsured motorist coverage because the car that rear-ended him
was insured at the time of the accident, but Alliance later denied coverage through
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no fault of Ndigwe’s. Hoskin and Denny simply do not apply to these facts, and I
do not believe that it was correct to extend Hoskin and Denny in the manner done
so by the district court.
That does not change the outcome of this case, because the dismissal of
Ndigwe’s complaint is affirmed based on the failure to respond to the dismissal
without prejudice without either an amended complaint or a notice to the district
court that Ndigwe elected to stand on his prior filing. But our affirmance of the
ultimate dismissal should not be understood to affirm the insurance law reasoning
behind the initial dismissal. I, for one, conclude that Ndigwe should have received
benefits under the uninsured motorist coverage.
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