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Morgan v. American Family Mutual Insurance Co.

April 22, 2009

JAY MORGAN, A MINOR CHILD, BY AND THROUGH HIS SPECIAL CONSERVATOR, JAMES CLARK; JAMES CLARK, ON BEHALF OF HIMSELF AND ON BEHALF OF ALL SURVIVING STATUTORY BENEFICIARIES OF GERI MORGAN, DECEASED; H GRADY JONES; GERI MORGAN; GERI MORGAN, PLAINTIFFS-APPELLEES,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, A FOREIGN CORPORATION, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the District of Arizona James A. Teilborg, District Judge, Presiding D.C. No. CV-06-01136-JAT.

FOR PUBLICATION

Argued and Submitted February 11, 2009-San Francisco, California.

CERTIFICATION OF QUESTION OF STATE LAW

Before: Ronald M. Gould, Jay S. Bybee, and Timothy M. Tymkovich,*fn1 Circuit Judges.

Order; Dissent by Judge Bybee.

ORDER

This diversity case is on appeal from the United States District Court for the District of Arizona. The certified question involves the interpretation and application of Arizona's doctrine of reasonable expectations to insurance contracts.

Plaintiff Jay Morgan (Morgan) was a passenger in an automobile driven by his father, John Morgan, when John Morgan caused a severe car accident. Morgan's mother, Geri Morgan, was also a passenger and was killed in the accident. Morgan's father was seriously injured and suffered permanent brain damage.

Morgan filed a claim with American Family Mutual Insurance Company under an umbrella personal liability insurance policy, seeking reimbursement for damages stemming from the wrongful death of his mother. American Family denied the claim pursuant to the Policy's "intra-insured suits" exclusion, which bars recovery against family members for their negligence. Morgan filed suit, seeking a declaration that the intra-insured suits exclusion is invalid under Arizona law. Morgan asserted that insurance policies must be construed to further the reasonable expectations of the policyholder, and no reasonable policyholder would believe that family members are excluded from liability for their negligence.

The district court granted summary judgment in favor of Morgan, though neither party presented evidence regarding John Morgan's expectations in acquiring the Policy. American Family now appeals.

Because the disposition of this appeal turns on an important and unsettled question of Arizona law, we submit this request to the Arizona Supreme Court to exercise its discretion to accept the following certified question in accordance with Arizona Supreme Court Rule 27 and Section 12-1861 of the Arizona Revised Statutes:

Can Arizona's doctrine of reasonable expectations operate to void a named-insured exclusion in an insurance policy (1) without evidence of the circumstances surrounding the acquisition and issuance of the policy, and (2) where the exclusion is contained among typical exclusions in the policy?

I. Background

The facts of this case are undisputed. Morgan's parents, John and Geri Morgan, purchased the Policy from American Family and are listed as "named insureds" on the declarations page. In the Policy, American Family agreed to "pay, up to our limit, compensatory damages for which an insured becomes legally liable for injury caused by an occurrence covered by this policy." The declarations page states that the limit of liability under the Policy is one million dollars for "each occurrence." Including the declarations page, the boilerplate "Insuring Agreement," two endorsements, and a "notice of information practices," the ...


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