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denying motion for certification where "the necessary Alaska law is clear and predictable enough without further elucidation from the state's highest court"
Summary of this case from Blake v. Classic Alaska Trading/Big Ray's Alaska, Inc.Opinion
No. A04-111 CV (JWS), Re: Motions at Dockets 30, 37, 52, 54 and 69.
May 26, 2005
PRELIMINARY ORDER
I. MOTIONS PRESENTED
At docket 30, plaintiff American Equity Insurance Company ("American Equity") moves to dismiss defendants Gloria Steelman, David Steelman, Anna Steelman, Theresa Steelman, and Aaron Steelman's ("the Steelman defendants") counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) and to strike portions of the Steelman defendants' answer and prayer for relief pursuant to Rule 12(f). At docket 37, the Steelman defendants move to stay this matter pending resolution of Gloria Steelman, et al. v. Crazy Horse, Inc., et al., Anchorage Superior Court Case 3AN-02-8672 CI. At docket 52, plaintiff American Equity moves for summary judgment pursuant to Federal Rule of Civil Procedure 56. At docket 54, the Steelman defendants move for partial summary judgment regarding the meaning of "policy limits." At docket 69, the Steelman defendants request this court to certify five questions of law to the Alaska Supreme Court pursuant to Rule 407 of the Alaska Rules of Appellate procedure. All of the motions are opposed and fully briefed. Oral argument has been requested on all motions except the motion at docket 69.
II. NATURE OF THIS ORDER
In a minute order, the court set the motions for oral argument to be heard on June 7, 2005. This order sets out the court's preliminary conclusions respecting the motions presented. It is hoped that this preliminary order will assist the parties to focus and shorten their oral arguments. After hearing oral argument, the court may adopt some, all, or none of this preliminary order as its final order respecting the motions. This order does NOT authorize the filing of any additional papers by the parties.
III. BACKGROUND
This action arises out of injuries suffered by defendant Gloria Steelman as the result of an automobile accident on July 4, 2000. Ms. Steelman was a passenger in a vehicle that was struck by a vehicle driven by Albert Bowman, who was intoxicated at the time. Prior to the accident, Mr. Bowman was allegedly a patron of Crazy Horse, Inc. ("Crazy Horse"), an Alaskan corporation.
At the time of the accident, Crazy Horse held a commercial lines insurance policy issued by plaintiff American Equity, a corporation organized under the laws of the State of Arizona. The policy's Liquor Liability Coverage Part has an" Aggregate Limit" of $2,000,000 and a limit of $1,000,000 for "Each Common Cause." The policy also includes an endorsement limiting attorney's fees payable under the policy, which provides in pertinent part:
Doc 52, Exh. A at 57.
We will not pay that portion of any attorney's fees that is in excess of fees calculated by applying the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage.
Doc. 52, Exh. A at 2.
On July 2, 2002, the Steelman defendants filed a complaint against Crazy Horse in state court seeking to recover for Gloria Steelman's personal injuries. The Steelmans' complaint alleges claims of negligence, negligence per se, and "willful and/or wanton and/or reckless and/or grossly reckless and/or outrageous conduct and disregard of the consequences." In December 2003, American Equity extended a settlement offer to the Steelmans in the amount of the $1,000,000 common cause limit, prejudgment interest calculated on the facial limit, Rule 82 attorney's fees calculated on the combined amount of the $1,000,000 policy limit and prejudgment interest, and Alaska Civil Rule 79 costs. American Equity maintains that the offer represents the full policy limits. The Steelman defendants did not accept plaintiff's offer as set forth above, contesting American Equity's calculation of applicable policy limits and its calculation of attorney's fees.
Doc. 37, Exh. B at 139.
Doc. 37, Exh. A at 11-12.
On May 25, 2004, plaintiff American Equity filed the underlying complaint against the Steelman defendants in federal court, seeking declaratory relief under 28 U.S.C. § 2201. Pursuant to 28 U.S.C. § 2201(a), "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration." Plaintiff's complaint requests (1) entry of an order declaring that American Equity's endorsement limiting recovery of Rule 82 attorney's fees is valid; (2) entry of an order declaring that American Equity's $1,000,000 common cause policy limit is applicable to the Steelmans' claims in the state action; (3) entry of an order declaring that American Equity's calculation of policy limits was correct; (4) an award of costs and reasonable attorney's fees against the Steelmans; and (5) any other relief the court deems just and equitable. While plaintiff American Equity's complaint also names Crazy Horse as a defendant, the complaint states that American Equity "seeks no affirmative relief or award of costs or fees against Crazy Horse."
Doc. 1.
Doc. 1 at 8.
Id.
The Steelman defendants previously moved the court to abstain from exercising jurisdiction over this matter, or in the alternative, to stay this action pending resolution of the state court action. The court denied the Steelman defendants' motion by order dated November 19, 2004.
Doc. 8.
Doc. 24.
The above-referenced motions are all ripe for the court's review. The court's discussion herein focuses primarily on the Steelman defendants' motion to stay and the parties' cross-motions for summary judgment. The court's jurisdiction is predicated on diversity of citizenship under 28 U.S.C. § 1332.
IV. STANDARDS OF REVIEW
A motion to dismiss for failure to state a claim made pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims in the complaint. In reviewing a Rule 12(b)(6) motion to dismiss, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party." The court is not required to accept every conclusion asserted in the complaint as true; rather, the court "will examine whether conclusory allegations follow from the description of facts as alleged by the plaintiff." A claim should only be dismissed if "it appears beyond doubt that a plaintiff can prove no set of facts in support of his claim which would entitle him to relief." A dismissal for failure to state a claim can be based on either "the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."
Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997).
Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir. 1992) (quoting Brian Clewer, Inc. v. Pan American World Airways, Inc., 674 F. Supp. 782, 785 (C.D. Cal. 1986)).
Vignolo, 120 F.3d at 1077.
Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990).
Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment should be granted if there is no genuine dispute as to material facts and if the moving party is entitled to judgment as a matter of law. The moving party has the burden of showing that there is no genuine dispute as to material fact. The moving party need not present evidence; it need only point out the lack of any genuine dispute as to material fact. Once the moving party has met this burden, the nonmoving party must set forth evidence of specific facts showing the existence of a genuine issue for trial. All evidence presented by the non-movant must be believed for purposes of summary judgment, and all justifiable inferences must be drawn in favor of the non-movant. However, the nonmoving party may not rest upon mere allegations or denials, but must show that there is sufficient evidence supporting the claimed factual dispute to require a fact-finder to resolve the parties' differing versions of the truth at trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Id. at 323-25.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).
Id. at 255.
Id. at 248-49.
V. DISCUSSION
A. Motion to Stay
At docket 37, the Steelman defendants move the court to stay this action pending resolution of the state court action, or more specifically, "pending necessary factual determinations, including the amount of the judgment, in order to fully calculate full policy limits." Plaintiff American Equity opposes defendants' motion to stay on the grounds that "the issues of policy limits and the determination of appropriate attorney's fees payable thereunder, can, and should, be adjudicated now in this action, independent of whatever judgment may ultimately be entered in the underlying state tort litigation."
Doc. 59 at 7.
Doc. 56 at 7.
The court ruled on this issue in its previous order denying defendants' motion to abstain, or, in the alternative, to stay. In its order dated November 19, 2004, the court indicated that the issue to be resolved before the state court is the tort liability of Crazy Horse to the Steelman defendants, while the "narrow issue presented by American Equity's complaint is the facial limit of the Crazy Horse's insurance policy." The court specifically found that "the underlying state action presents no factual questions crucial to the determination of the facial limits of the policy."
Doc. 24 at 5.
Doc. 24 at 7.
The Steelman defendants raise only one new argument in support of the underlying motion to stay. Defendants argue that Crazy Horse is an "offender" under AS 09.60.070, and that if the jury finds Crazy Horse "to be civilly liable as accessories and/or principals to DWI and/or assault, then the Steelman defendants would be entitled to enhanced attorney fees under AS 09.60.070," and American Equity would be bound to pay that portion of AS 09.60.070 attorney's fees equal to full Rule 82 attorney's fees.
Doc. 37 at 14.
Alaska's crime victims' statute, AS 09.60.070(a), "provides that a person who has been injured may recover from the tortfeasor full reasonable attorney's fees in a civil action if the injury resulted from an attempt on the part of the offender to commit a serious criminal offense." Under this statute, "serious criminal offense" includes assault in any degree and driving while intoxicated. The plain language of the statute does not provide for accomplice or accessory liability, nor do the Steelman defendants provide any legal authority for their construction of AS 09.60.070 as allowing for accomplice or accessory liability.
Fleegel v. Estate of Boyles, 61 P.3d 1267, 1276 (Alaska 2003).
See AS 09.60.070(c)(4) and (14).
In their reply brief, the Steelman defendants acknowledge that,
It is true that the Federal Court could presently make all policy determinations in this declaratory judgment action, and not stay the matter, even without having the benefit of factual determinations. However, if the Court decides that the Steelmans are correct in their analysis of AS 09.60.070, the Steelmans will still have to obtain a judgment in the State Court or through some other mechanism . . . as an appropriate number on which to calculate attorneys' fees.
Doc. 59 at 2.
As is discussed more fully below, the court does not agree with the Steelman defendants' analysis of AS 09.60.070. Moreover, there is no evidence before the court that the Steelmans have made any claims under AS 09.60.070 in the state court action.
Because the state court action presents no factual questions crucial to the determination of the facial limits of the policy, and the calculation of attorney's fees thereunder, and the Steelman defendants have not presented any legal authority to show that the court's prior ruling denying the motion to abstain, or in the alternative, to stay was in error, defendants' motion to stay at docket 37 probably should be denied.
B. Cross-Motions for Summary Judgment
Plaintiff American Equity moves for summary adjudication of its claims for declaratory relief and for summary dismissal of all three of the Steelman defendants' counterclaims. The Steelman defendants oppose plaintiff's motion and move the court to grant summary judgment to defendants on the meaning of "policy limits." Defendants request the court to hold that "policy limits" includes the aggregate limit of $2,000,000 and enhanced attorney's fees under AS 09.60.070 on projected verdicts and judgments in the state court action. Plaintiff's Claims for Relief
Doc. 52 at 5.
Doc. 54 at 49.
The court considers each of plaintiff's requests for declaratory relief in turn. Plaintiff American Equity first requests entry of an order "declaring that American Equity's endorsement limiting recovery of Rule 82 attorney's fees is valid."
Doc. 1 at 8.
The endorsement at issue ("Endorsement A120") provides in pertinent part:
Alaska Changes — Attorneys Fees
All coverage parts included in this policy are modified by the following:
In any suit in Alaska in which we have a right or a duty to defend an insured in addition to the limits of liability, our obligation under the applicable coverage to pay attorneys fees taxable as costs against the insured is limited as follows:
Alaska Rule of Civil Procedure 82 provides that if you are held liable, some or all of the attorney fees of the person making a claim against you must be paid by you. The amount that must be paid by you is determined by Alaska Rule of Civil Procedure 82. We provide coverage for attorney fees for which you are liable under Alaska Rule of Civil Procedure 82 subject to the following limitation:
We will not pay that portion of any attorney's fees that is in excess of fees calculated by the applying the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage.
This limitation means the potential costs that may be awarded against you as attorney fees may not be covered in full. You will have to pay any attorney fees not covered directly.
Doc. 37, Exh. B at 27 (emphasis and italics in original).
Pursuant to 3 AAC 26.510, "[a] policy under which an insurer has a right or duty to provide a defense for an insured must provide coverage for the payment of attorney fees taxable as costs against the insured under Alaska Rule of Civil Procedure 82." Alaska regulation further provides that an insurer seeking to limit coverage for Rule 82 attorney's fees awards against its insured is required to include a "policyholder notice" that either (1) conforms with the Division of Insurance Attorney Fees Coverage Notice A, dated March 29, 1996, or (2) be approved in writing by the director of the Division of Insurance upon a determination that the proposed notice is substantially equivalent to Notice A. Here, it is undisputed that Endorsement A120 both complies with Notice A and was approved in writing by the director of the Division of Insurance, effective November 1, 1998.
See Doc. 52, Exh. B at 3.
See Doc. 52, Exh. C.
The Steelman defendants argue that while Endorsement A120 provides policyholders notice of and restricts American Equity's obligation as to Rule 82 attorney's fees, it does not "impact American Equity's contractual obligation to pay AS 09.60.070 attorney's fees/costs." Defendants base their argument on language in the policy's Liquor Liability Coverage Part, which states that "[w]e will pay, with respect to any claim we investigate or settle, or any `suit' against an insured we defend . . . [a]ll costs taxed against the insured in the `suit.'" As indicated above, this language is modified by the language in Endorsement A120, which applies to all "coverage parts included in this policy" and limits American Equity's "obligation under the applicable coverage to pay attorneys' fees taxable as costs against the insured" to only those fees "calculated by applying the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage."
Doc. 62 at 7.
Doc. 37, Exh. B at 101.
Doc. 52, Exh. A at 2.
Moreover, the Steelman defendants' argument regarding American Equity's potential liability for attorney's fees under AS 09.60.070 is irrelevant to the narrow issue before the court, namely whether American Equity's endorsement limiting recovery of Civil Rule 82 attorney's fees is valid. Because Endorsement A120 complies with Notice A and was approved by the director of the Division of Insurance, thereby satisfying both of the alternative requirements of 3 AAC 26.550(b), it appears that the court should find that American Equity's endorsement limiting recovery of Rule 82 attorney's fees is valid. If so, plaintiff would be entitled to summary judgment in its favor on its first claim for relief.
Second, plaintiff requests entry of an order "declaring that American Equity's $1,000,000.00 common cause policy limit is applicable to the claims of the State Action plaintiffs." The Steelman defendants, on the other hand, request the court to hold that the $2,000,000 aggregate limit applies to their claims against Crazy Horse.
Doc. 1 at 8.
Under Alaska case law, the court interprets insurance policies in accordance with the following principles:
To the extent that there are no relevant unresolved or controversial facts, the construction of an insurance contract is a matter for the court. A policy's meaning is determined by examining the language of the disputed policy provisions, the language of other provisions in the policy, relevant extrinsic evidence, and case law interpreting similar provisions. An insurance policy may be considered a contract of adhesion and as such should be construed so as to provide the coverage which a layman would reasonably have expected, given his lay interpretation of the policy language. We therefore resolve ambiguities in the meaning of insurance contracts against the insurer.
Great Divide Ins. Co. v. Carpenter ex rel. Reed, 79 P.3d 599, 606 (Alaska 2003) (citing Fejes v. Alaska Ins. Co., 984 P.2d 519, 522 (Alaska 1999)) (citations omitted).
Several policy provisions are pertinent to the court's determination of which policy limit applies. The policy's Liquor Liability Coverage Form states in pertinent part, "We will pay those sums that the insured becomes legally obligated to pay as damages because of `injury' to which this insurance applies if liability for such `injury' is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage." "Injury" is defined under the policy as "all damages, including damages because of `bodily injury' and `property damage,' and including damages for care, loss of services or loss of support."
Doc. 52, Exh. A at 76.
Doc. 52, Exh. A at 80.
Section III of the Liquor Liability Coverage Form, which sets forth the limits of insurance, further provides:
1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of:
a. Insureds;
b. Claims made or "suits" brought; or
c. Persons or organizations making claims or bringing "suits".
2. The Aggregate Limit is the most we will pay for all "injury" as the result of the selling, serving or furnishing of alcoholic beverages.
3. Subject to the Aggregate Limit, the Each Common Cause Limit is the most we will pay for all "injury" sustained by one or more persons or organizations as the result of the selling, serving or furnishing of any alcoholic beverage to any one person.
The Limits of Insurance of this Coverage Part apply separately to each consecutive annual period . . .
Doc. 52, Exh. A at 78.
The stated limit for "Each Common Cause" is $1,000,000, and the "Aggregate Limit" is $2,000,000.
Doc. 52, Exh. A at 57.
Plaintiff American Equity argues that "by the plain, unambiguous terms of Section III of the Liquor Liability Coverage Form, the $1 million Each Common Cause Limit, which is specified as the policy limit for `all injury sustained by one or more persons or organizations as the result of the selling, serving or furnishing of any alcoholic beverage to any one person,' is the applicable coverage limit." Plaintiff further argues that "the language `any alcoholic beverage' clearly encompasses service of any number of alcoholic beverages."
Doc. 67 at 15-16.
Doc. 67 at 14.
The Steelman defendants, on the other hand, interpret the phrase "any alcoholic beverage" in the "Each Common Cause Limit" to mean "any one alcoholic beverage." Defendants further allege that "for each drink the Crazy Horse provided to Albert Bowman past his visible point of intoxication, the Crazy Horse committed a separate offense under AS 04.16.030, and had a separate exposure" to liability subject to the aggregate limit of $2,000,000.
Doc. 62 at 13.
Doc. 62 at 13.
While the parties clearly disagree as to the interpretation of the phrase "any alcoholic beverage," the court does not find the phrase ambiguous. "An ambiguity exists only where the contract as a whole and all the extrinsic evidence support two different interpretations, both of which are reasonable." After reviewing the contract as a whole, the court finds only one interpretation reasonable. While the policy does not define "any alcoholic beverage," in ordinary usage "any" is commonly defined to mean "one or more" and is "used as a function word to indicate a positive but undetermined number or amount." Construing the term "any alcoholic beverage" to mean "any one alcoholic beverage" or "each alcoholic beverage" is not only counter to the ordinary usage of the word "any," it would render the policy virtually unenforceable as recovery under the policy would require a determination of what injury resulted from "any one" or "each" alcoholic beverage.
C.P. v. Allstate Insurance Co., 996 P.2d 1216, 1222 n. 38 (Alaska 2000) ("An ambiguity does not exist, however, merely because the parties disagree as to the interpretation of a term.")
Id.
Webster's Third New International Dictionary 97 (1981).
Furthermore, the "Each Common Cause Limit" in which the phrase "any alcoholic beverage" appears must be considered in the context of the contract as a whole. The court first notes that in other coverage parts of the policy, the limits of liability apply on the basis of each occurrence, rather than on the basis of each common cause. For example, the policy's Commercial General Liability Coverage Part sets forth a "General Aggregate Limit" of $2,000,000 and an "Each Occurrence Limit" of $1,000,000. The policy defines "occurrence" as meaning "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
Doc. 52, Exh. A at 56.
Doc. 52, Exh. A at 73.
In the Liquor Liability Coverage Part, the limits of liability apply on the basis of "Each Common Cause." The "Each Common Cause Limit" is the maximum American Equity will pay for all damages sustained by one or more persons "as the result of the selling, serving or furnishing of any alcoholic beverage to any one person." The policy does not define "Each Common Cause." However, unlike the "Each Occurrence Limit" which focuses on each accident, the focus of the "Each Common Cause Limit" is on the underlying circumstances or "common cause" which resulted in the claim for damages, which is the selling, furnishing, or serving of any alcohol to any one person. Considering the phrase "any alcoholic beverage" in the context of the "Each Common Cause Limit" and the contract as a whole, the only reasonable interpretation is that "any alcoholic beverage" refers to the service of alcohol, period, regardless of the quantity or kind of alcoholic beverage. Construing the contract as a whole, it would have been unreasonable for a layperson to expect coverage of $1,000,000 for injury resulting from each service of one alcoholic beverage.
For the reasons stated above, it appears that the court should find that the $1,000,000 "Each Common Cause Limit" applies to all of the Steelman defendants' claims against Crazy Horse in the state court action. Plaintiff is likely entitled to summary judgment on its second claim for relief.
Third, plaintiff requests entry of an order "declaring that American Equity's calculation of policy limits was correct." The Steelman defendants contest plaintiff's calculation of policy limits, and request the court to hold that "policy limits" includes the aggregate limit of $2,000,000 and enhanced attorney's fees under AS 09.60.070 on projected verdicts and judgments.
Doc. 1 at 8.
Doc. 54 at 49.
It is well established under Alaska law that "policy limits are what an insurance company would have to pay under its policy if it went to trial and received an adverse verdict." "In determining what constitutes the maximum limits of insurance coverage, i.e., policy limits, it is necessary for the court to review the contractual obligations undertaken by the insurer in the insurance policy in question in light of the applicable statutes, regulations and court opinions which have addressed this issue."
Tucker v. United Services Auto. Ass'n, 827 P.2d 440, 441 n. 3 (Alaska 1992).
Schultz v. Travelers Indemnity Co., 754 P.2d 265, 267 (Alaska 1988).
To determine the maximum limits of American Equity's coverage, the court looks first to the policy language itself. Under the terms of the policy, American Equity is bound to pay the applicable policy limit, all costs taxed against the insured in the suit as modified by Endorsement A120, prejudgment interest awarded against the insured on that part of the judgment American Equity pays, and Rule 79 costs. The policy further provides that if American Equity makes an offer to pay the applicable limit of insurance, the insurer "will not pay any prejudgment interest based on that period of time after the offer."
Maloney v. Progressive Speciality Ins. Co., 99 P.3d 565, 568 (Alaska 2004).
Doc. 52, Exh. A at 77.
On December 23, 20003, plaintiff extended a settlement offer to the Steelman defendants in the following amount:
Doc. 37, Exh. A at 12.
The Steelman defendants argue that if the jury in the state court action finds Crazy Horse "to be civilly liable as accessories and/or principals to DWI and/or assault, then the Steelman defendants would be entitled to enhanced attorney fees under AS 09.60.070," and American Equity would be bound to pay that portion of AS 09.60.070 attorney's fees equal to full Rule 82 attorney's fees. Defendants do not cite, nor has the court's research produced, any authority to support holding Crazy Horse liable as a principal for assault or driving while intoxicated under AS 09.60.070. Furthermore, the plain language of AS 09.60.070 does not provide for accomplice liability, nor for liability under a dram shop theory.
Doc. 24 at 7.
However, even assuming that claims under AS 09.60.070 were raised in the state court action and that Crazy Horse could be found liable as an offender on an accomplice theory of liability, it seems clear that plaintiff American Equity would still only be liable for the attorney's fees that would be awarded to the plaintiff under Alaska Civil Rule 82(b)(1). Alaska State 09.06.070(b) specifically provides:
AS 09.60.070(b).
If a judgment for attorney fees is entered against an offender in a civil action brought under this section, and a contract of insurance requires an insurer to pay the attorney fees, the insurer shall be liable only for the attorney fees that would be awarded to the plaintiff under Alaska Rule of Civil Procedure 82(b)(1).
As discussed above, through Endorsement A120, plaintiff American Equity properly limited its coverage for attorney's fees under Rule 82 to only those fees calculated by applying the Rule 82 schedule for contested cases to the applicable facial limit.
Moreover, as previously indicated, there is no evidence that at the time American Equity made its policy limits offer any claims under AS 09.60.070 were pending against its insured, Crazy Horse, or that any such claims are currently pending. Alaska law does not require "insurers to calculate their maximum liability for fees by speculating about the course of future litigation." Rather, Alaska case law requires an insurer to base a policy limits offer "on a present-tense — albeit hypothetical — evaluation of the current situation." Under this approach, it appears that American Equity was correct in calculating its maximum potential liability by assuming that the case went to trial and received an adverse verdict as of the date of its offer.
Maloney v. Progressive Specialty Ins. Co., 99 P.3d 565, 568 (Alaska 2004).
Id.
Id.
For the reasons stated above, the court's preliminary conclusion is that plaintiff American Equity's calculation of policy limits was correct. Plaintiff likely is entitled to summary judgment on its third claim for relief.
Steelman Defendants' Counterclaims
By incorporation of the arguments set forth in its motion to dismiss at docket 30, plaintiff American Equity also moves for summary adjudication of the Steelman defendants' three counterclaims on the grounds that the material facts are not in dispute and plaintiff is entitled to judgment as a matter of law. Plaintiff specifically argues that all three of defendants' counterclaims fail to state a claim upon which relief can be granted because the Steelman defendants are not parties to the contract between American Equity and its insured, Crazy Horse, and, thus, lack standing to assert or enforce any contractual rights or duties under the insurance contract. The Steelman defendants suggest that they have standing because of the issues involved and as thirdparty beneficiaries.
Doc. 52 at 1, n. 1.
Doc. 30 at 5.
Defendants' first counterclaim alleges that the Steelman defendants "are entitled to payment of full policy limits, plus additional bad faith relief." Defendants further allege that because American Equity failed "to consummate and fund a true policy limits settlement," plaintiff is bound to indemnify the Crazy Horse defendants for any excess verdicts and judgments at trial, as well as any bad faith exposure. Defendants' second counterclaim alleges that American Equity "is bound to indemnify the Crazy Horse defendants for at least $2,000,000.00 under the aggregate limit, to the extent multiple drinks were served to Mr. Bowman in violation of Alaska law." Defendants' third counterclaim alleges that American Equity is bound to pay and tender full policy limits, including "an aggregate sum of $2,000,000 and/or a minimum of $1,000,000, plus appropriate attorney's fees under AS 09.60.070." Defendants again allege that due to American Equity's bad faith conduct and its failure to fund and consummate a "true policy limits" settlement, American Equity is bound to fully indemnify the named insureds as to any adverse excess verdicts and judgments, and is also subject to additional bad faith exposure.
Doc. 28 at 14.
Doc. 28 at 15.
Doc. 28 at 17.
Doc. 28 at 16.
Doc. 28 at 16-17.
It is the court's preliminary view that American Equity is entitled to summary judgment in its favor on all three of the Steelman defendants' counterclaims for the following reasons: First, to the extent that defendants seek to bring bad faith claims against plaintiff, plaintiff is entitled to judgment as a matter of law because it is well settled under Alaska law that "an injured claimant may not sue an insurer for breach of the duty of good faith and fair dealing." Second, to the extent that the Steelman defendants seek declaratory relief requiring American Equity to indemnify Crazy Horse as to any excess verdicts and judgments, plaintiff is entitled to judgment as a matter of law because the Steelman defendants lack privity of contract or standing to bring a direct action against the liability insurer of the insured. Third, to the extent that the Steelman defendants seek declaratory relief stating that the $2,000,000 aggregate limit applies to their claims and that American Equity is liable for full attorney's fees under AS 09.60.070, American Equity would be entitled to judgment as a matter of law in light of the court's preliminary rulings herein granting plaintiff's claims for declaratory relief.
O.K. Lumber Co., Inc. v. Providence Washington Ins. Co., 759 P.2d 523, 526 (Alaska 1988).
Evron v. Gilo, 777 P.2d 182,187 (Alaska 1989).
D. Motion To Certify Questions
The motion at docket 69 asks this court to certify five questions to the Alaska Supreme Court for determination. The five questions are set out in the Steelman defendants' papers and need not be repeated verbatim here. Suffice it to say that the questions are all related to the Steelman defendants contentions respecting either their interpretation of AS 09.60.070 or their attempt to bring third-party bad faith claims against American Equity.
Rule 407 of the Alaska Rules of Appellate Procedure does authorize the Alaska Supreme Court to answer questions of Alaska law certified to it by another court. However, certification should not be routinely granted, but, rather, is appropriate where the state law question is a "close" one and a policy of importance to the State of Alaska is involved. Based on the discussion above, it appears to the court that the certified questions of law do not present close questions in need of clarification by the Alaska Supreme Court. Rather, the necessary Alaska law is clear and predictable enough without further elucidation from the state's highest court. It should be added that this court's experience in certifying questions to the Alaska court shows that the process entails substantial delay. Even when the Alaska court ultimately decides not to answer a certified question — always an option for that court, because Rule 407 is entirely discretionary — a delay of well over a year may be expected. Taking into account the general lack of need to certify the questions and the delay that any certification would introduce, it appears that this court should deny the motion at docket 69.
Alaska Airlines, Inc. v. United Airlines, Inc., 902 F.2d 1400, 1402, n. 1 (9th Cir. 1990).
V. CONCLUSION
For the reasons stated above, it is the court's preliminary view that the Steelman defendants' motion to stay at docket 37 should be DENIED, American Equity's motion at docket 52 for summary judgment on its claims for declaratory relief and for dismissal of the Steelman defendants' counterclaims should be GRANTED, the Steelman defendants' motion for partial summary judgment at docket 54 should be DENIED, and the Steelman defendants' motion to certify questions at docket 69 should be DENIED. If the preceding preliminary ruling on the motion at docket 52 is adopted as a final decision, the motion at docket 30 will be DENIED as moot.