Unpublished Disposition, 914 F.2d 263 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 914 F.2d 263 (9th Cir. 1989)

Carmela PIERZCHALSKI, wife, Florian A. Pierzchalski,husband, Plaintiffs-Appellants,v.NORTHBROOK PROPERTY AND CASUALTY COMPANY, an Illinoiscorporation, Defendant-Appellee.

No. 89-15862.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 13, 1990.Decided Sept. 5, 1990.

Before: WALLACE, ALARCON and WIGGINS, Circuit Judges.


Carmela and Florian Pierzchalski (the Pierzchalskis) appeal from a grant of summary judgment in favor of Northbrook Property and Casualty Company (Northbrook). The district court found that Ariz.Rev.Stat. Sec. 20-259.01 did not apply to the insurance policy that Northbrook issued to Applied Biochemists, Mr. Pierzchalski's employer, because it was not delivered or issued for delivery in Arizona. The district court thus concluded that no additional coverage resulted from Northbrook's failure to make a written offer of underinsured motorist coverage equalling the policy's total amount of liability coverage. On appeal, the Pierzchalskis claim that (1) section 20-259.01 was meant to apply to all policies covering vehicles registered and principally garaged in Arizona and (2) if delivery of the policy in Arizona is required, Northbrook's delivery of Arizona proof-of-insurance cards to Applied Biochemists satisfied this requirement. The Pierzchalskis also move for certification of the question of the scope of section 20-259.01 to the Arizona Supreme Court.


Arizona law requires insurers to make a written offer of uninsured and underinsured motorist coverage in limits equal to the amount of liability coverage. Ariz.Rev.Stat. Sec. 20-259.01, as in effect at the time Applied Biochemists purchased its policy, provides:

Sec. 20-259.01. Motor vehicle liability policy; uninsurance required; underinsurance optional; definitions; subrogation

A. No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by a law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state, with respect to any motor vehicle registered or principally garaged in this state, unless coverage is provided in the policy or supplemental to the policy, in limits for bodily injury or death prescribed in subsections B and C of this section........

C. Every insurer writing automobile liability or motor vehicle liability policies, as provided in subsection A of this section shall also make available to the named insured thereunder and shall be written notice offer the insured and at the request of the insured shall include within the policy underinsurance motorist coverage which extends to and covers all persons insured under the policy, in limits not less than the liability limits for bodily injury or death contained within the policy.

Ariz.Rev.Stat.Ann. Sec. 20-259.01 (effective until Nov. 13, 1986), quoted in Stuart v. Insurance Co. of N. Am., 152 Ariz. 78, 730 P.2d 255, 258-59 (Ct.App.1986) (emphasis added). If an insurer sells a policy that falls within the ambit of the statute and fails to make the required written offer, uninsured or underinsured motorist coverage is treated as accepted. See, e.g., Millers Nat'l Ins. Co. v. Taylor Freeman Ins. Agency, 161 Ariz. 490, 779 P.2d 365, 367-68, 370 (Ct.App.1989) (affirming a damage award based on section 20-259.01 although the insured had declined an oral offer of underinsured motorist coverage), review denied, 1989 Ariz.LEXIS 175 [*1] (Sept. 26, 1989).

Applied Biochemists is a Wisconsin corporation that manufactures and distributes pool and spa chemicals. In June 1986, officers of Applied Biochemists met with a Wisconsin insurance agent, Paul Price, to purchase a Northbrook policy. It was Applied Biochemists' practice to carry the minimum uninsured and underinsured motorist coverage; in Arizona, Applied Biochemists carried limits of $15,000 per person and $30,000 per accident. Price orally informed the Applied Biochemists representatives that uninsured and underinsured motorist coverages were available in limits greater than these required minimums, but Applied Biochemists declined to purchase such coverage. Applied Biochemists purchased a policy covering fifty-four vehicles located in thirteen states. One of these vehicles was a 1985 Plymouth Voyager van, provided for the use of Florian Pierzchalski, an employee of Applied Biochemists.

On November 13, 1986, the Pierzchalskis were involved in a serious automobile accident while driving the Voyager van. The accident was caused by the negligence of the driver of the other vehicle. Mrs. Pierzchalski's alleged damages exceeded the other driver's policy limit of $50,000. Northbrook offered to pay up to the $15,000 underinsured motorist policy limit.

The Pierzchalskis filed suit for a declaratory judgment in Arizona state court seeking a judicial determination that, because Northbrook failed to make the written offer of underinsured motorist coverage to Applied Biochemists required by section 20-259.01, the policy's underinsured motorist coverage is equal to the liability coverage of $1,000,000. Northbrook removed the case to federal district court. On September 23, 1988, the Pierzchalskis moved for summary judgment; on October 2, 1988, Northbrook filed a cross-motion for summary judgment. On June 19, 1989, the district court granted summary judgment for Northbrook, concluding that section 20-259.01 does not apply to the Applied Biochemists policy. The Pierzchalskis timely appealed.


A. The "Delivered or Issued for Delivery" Requirement

Pursuant to its express terms, section 20-259.01 applies only to policies "delivered or issued for delivery in [Arizona], with respect to any motor vehicle registered or principally garaged in [Arizona]." Ariz.Rev.Stat.Ann. Sec. 20-259.01. The Pierzchalskis argue that these are not independent requirements; they claim that the "registered or principally garaged" clause was added to define the "delivered or issued for delivery" language. Thus, conclude the Pierzchalskis, the statute applies to all insurance policies issued to cover vehicles registered or principally garaged in Arizona.

" [Section] 20-259.01 is remedial, and should be construed liberally to carry out the legislature's intent." Bartning v. State Farm Fire & Cas. Co., 162 Ariz. 344, 783 P.2d 790, 793 (1989) (en banc). This rule, however, is tempered by the rule that "not every construction denying coverage violates the purpose of the statute." Stuart, 730 P.2d at 257.

In finding that section 20-259.01 encompasses only policies both delivered or issued to be delivered in Arizona and covering vehicles registered and principally garaged in Arizona, the district court reasoned:

Plaintiffs' interpretation of the statutory language seems contrary to the statute's punctuation and syntax. This Court concludes that the Arizona Legislature has chosen to apply the mandatory provisions of A.R.S. Sec. 20-259.01 to all vehicles registered or principally garaged in Arizona, but only when the policy insuring those vehicles is "delivered or issued for delivery" in Arizona.

The district court's analysis is persuasive. It is a well-established principle that no clause in a statute should be rendered superfluous or insignificant by judicial construction. See State v. Superior Court, 113 Ariz. 248, 550 P.2d 626, 627 (1976). By applying section 20-259.01 to all Arizona vehicles, the Pierzchalskis' construction would nullify the "delivered or issued to be delivered" language and would thus violate this principle.

Moreover, Arizona courts have consistently emphasized the "delivered or issued to be delivered" language without reference to the "registered or principally garaged" language. In holding that section 20-259.01 was inapplicable to a self-insurer, the Arizona Court of Appeals quoted the following passage from a Pennsylvania case "identical in all material respects" to the case before it:

" [Appellants] have not alleged the existence of any liability policy of insurance. This precludes any cause of action under the Uninsured Motorist Liability Act since that Act applies only when a liability policy of insurance is delivered or issued for delivery."

Mountain States Tel. & Tel. Co. v. Aetna Cas. & Surety Co., 116 Ariz. 225, 568 P.2d 1123, 1125 (Ct.App.1977) (quoting Johnson v. Yellow Cab Co. of Philadelphia, 456 Pa. 256, 317 A.2d 245, 247 (1974), overruled on other grounds, Modesta v. Southwestern Pa. Transp. Auth., 503 Pa. 437, 469 A.2d 1019 (1983)) (emphasis omitted). In describing the Arizona statute, the Arizona Court of Appeals stated: "We note that [section 20-259.01(A) ] requires that motor vehicle liability policies delivered or issued for delivery in this state must provide uninsured motorist coverage...." McClellan v. Sentry Indem. Co., 140 Ariz. 558, 683 P.2d 757, 759 (Ct.App.1984). Finally, in declining to apply the statute to a Texas truck, the Arizona Court of Appeals treated the statute as involving two separate requirements: "it is undisputed that the GEICO policy was issued for delivery and delivered in Texas with respect to Diehl's Mazda truck, which was registered in Texas and principally garaged in Texas." Government Employees Ins. Co. v. Fenton, 50 Ariz.Adv.Rept. 89, 91, 1989 Ariz.App. LEXIS 359 [*1], [*5], No. 2 CA-SA 89-0149 (Ct.App. December 21, 1989).

The Pierzchalskis produce no case that states that a policy is delivered or issued for delivery in Arizona whenever it covers an Arizona vehicle. Thus, we conclude that the statute applies only to policies that are delivered or issued for delivery in Arizona and that cover vehicles registered or principally garaged in Arizona.

B. The Requirement Applied to the Applied Biochemists Policy

The Pierzchalskis contend that, even if the statute contains an independent delivery requirement, the undisputed facts show that the Applied Biochemists policy was "delivered or issued for delivery" in Arizona. " ' "A policy of insurance is delivered to insured when it is deposited in the mails, duly directed to insured at his proper address...." ' " Republic Nat'l Life Ins. Co. v. Merkley, 59 Ariz. 125, 124 P.2d 313, 314 (1942) (quoting Jackson v. New York Life Ins. Co., 7 F.2d 31 (9th Cir. 1925) (quoting 32 C.J. 1127)). The Pierzchalskis concede that the policy was delivered to the insured, Applied Biochemists, at its address in Wisconsin. The policy was issued in Illinois.

Nevertheless, the Pierzchalskis argue that the policy was issued for delivery in Arizona because Northbrook issued insurance identification cards for the subject vehicle. They point to the statutory definition of "policy":

"Policy" means contract of or agreement for or effecting insurance, or the certificate thereof, by whatever name called, and includes all clauses, riders, endorsements and papers attached thereto and a part thereof.

Ariz.Rev.Stat. Sec. 20-1102. The Pierzchalskis argue that this definition encompasses insurance identification cards, which are recognized by Arizona law as a means of proving liability insurance coverage. Id. Sec. 28-1253(A) (6). Northbrook delivered insurance identification cards to Applied Biochemists for use in the vehicles covered under the policy, including the Pierzchalskis' vehicle.1 

We are not persuaded that the Arizona legislature intended to equate delivery of insurance identification cards with delivery of an insurance policy. Insurance identification cards are not the "contract of or agreement for or effecting insurance" required by statute. Nor are insurance identification cards certificates of insurance, for the legislature has distinguished between the two. See Ariz.Rev.Stat. Sec. 28-1253(A) (2), (6) (listing certificates of insurance and insurance identification cards as alternate means of demonstrating coverage). Finally, it is not relevant that Northbrook is licensed to sell insurance in Arizona, knew that the Pierzchalskis' vehicle would be driven in Arizona, or charged premiums based on Arizona risks. None of these facts satisfies the "delivered or issued for delivery" requirement of section 20-259.01. Thus, the statute does not apply to the policy issued to Applied Biochemists.

Asserting that the Arizona courts have yet to rule on the issues they raise, the Pierzchalskis request that the panel certify the question of Sec. 20-259.01's scope of the Arizona Supreme Court. " [P]articularly compelling reasons must be shown when certification is requested for the first time on appeal by a movant who lost on the issue below. Ordinarily such a movant should not be allowed a second chance at victory when, as here, the district court employed a reasonable interpretation of state law." In re McLinn, 744 F.2d 677, 681 (9th Cir. 1984).

The district court's interpretation of Sec. 20-259.01 was reasonable. It is not surprising that Arizona courts have not ruled on the precise contentions presented by the Pierzchalskis; their arguments apply a novel and unusual construction to Sec. 20-259.01's plain language. Because the language used by the Arizona legislature clearly mandates the result in this case, we deny the Pierzchalskis' motion.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3


Northbrook notes, and the Pierzchalskis do not dispute, that Northbrook delivered the insurance identification cards to Applied Biochemists' home office in Wisconsin. Appellee's Brief at 28. The Pierzchalskis argue that the cards were nonetheless "issued for delivery" in Arizona