NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
JAN 04 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
KEVIN PERRY, a single individual; No. 17-15012
CATHERINE RENEE HOLGUIN, a
single individual; NANCY A. SMITH, a D.C. No. 4:16-cv-00555-DCB
single individual; FARMERS
INSURANCE COMPANY OF
ARIZONA, an Arizona Corporation, MEMORANDUM*
Plaintiffs-Appellants,
v.
PEAK PROPERTY AND CASUALTY
INSURANCE CORPORATION, a
Wisconsin corporation; UNKNOWN
PARTIES, named as ABC Business
Entities I-X and Does I-X,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Arizona
David C. Bury, District Judge, Presiding
Argued and Submitted August 14, 2018
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: SCHROEDER, SILER,** and MURGUIA, Circuit Judges.
Plaintiff Renee Holguin caused a five-car accident in Phoenix, Arizona in
January 2013. She and her husband at the time, Kevin Perry (collectively, the
“Holguin-Perrys”), contacted defendant Peak Insurance, but the company refused
coverage, citing a policy cancellation notice it mailed the Holguin-Perrys on
January 19, 2013–three days before the accident.
The Holguin-Perrys and other injured parties sued Peak Insurance in federal
court, seeking a declaratory judgment that the insurance policy was in effect on the
date of the accident, and alleging claims for breach of contract and bad faith. The
district court granted Peak Insurance’s motion for judgment on the pleadings,
ruling that the policy was cancelled on January 19, 2013. Plaintiffs appeal. For the
reasons explained below, we reverse.
Under Arizona law, an insurer’s notice of policy cancellation must “clearly
and unequivocally” inform the insured in no uncertain terms of the company’s
intent to cancel. Norman v. State Farm Mut. Auto. Ins. Co., 33 P.3d 530, 535
(Ariz. Ct. App. 2001). This express intent “[must] be apparent to the ordinary
person.” Id. at 536 (original brackets) (quoting Elkins v. State Farm Mutual Auto.
**
The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
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Ins. Co., 475 S.E.2d 504, 506 (W. Va. 1996)). Whether a cancellation notice meets
Norman’s standard is a context-specific inquiry: courts focus on the “language and
the circumstances in which [the notice was] issued to determine whether any
disqualifying ambiguity has been created.” Id. at 537.
Here, Peak Insurance’s intent to cancel the policy was not clear and
unequivocal. The cancellation notice, written on January 18, declared that the
Holguin-Perrys were “driving without insurance,” but also stated that coverage was
conditional. A $286.37 payment had to be received by January 19. The date that
Peak Insurance mailed the notice further confused the issue since according to the
cancellation notice, it was mailed on January 19, making it impossible for the
Holguin-Perrys to accept the apparent invitation to pay the minimum balance by
January 19. The notice itself was therefore facially ambiguous.
Interpreting this notification as soliciting payment upon receiving the
cancellation notice, the Holguin-Perrys phoned Peak Insurance on January 23,
2013, when they received that notice, and immediately paid $294.37. This amount
was $8.00 more than the minimum required payment. Neither party explains what
the additional $8.00 represented. Because Peak Insurance’s earlier installment
notice had warned that late payments “may incur an additional fee,” the Holguin-
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Perrys may have assumed the additional $8.00 was a late fee. Peak Insurance
accepted this late payment.
Peak Insurance’s conduct could have led an “ordinary person” in the
Holguin-Perrys’ shoes to believe that Peak Insurance did not cancel the policy and
that there was no lapse in coverage. See id. at 536 (“inclusion of a reference to an
amount due would lead an ordinary person to believe that payment of that sum
would keep the policy in force and avoid cancellation.”) (citing Elkins, 475 S.E.2d
at 507). For these reasons, we conclude that under Arizona law, neither Peak
Insurance’s cancellation notice, nor any subsequent conduct, “clearly and
unequivocally” advised the Holguin-Perrys that a payment on January 23, 2013,
would not preserve coverage. See id. at 535. The district court erred when it
concluded otherwise.
Defendants’ pending motion to strike a portion of the reply brief is Denied.
The judgment in favor of defendants is REVERSED and the case is
REMANDED for further proceedings.
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