Tyson & Mendes Arizona Partner Lynn Allen and associate Arman Nafisi obtained a significant appellate win in Arizona in September. In this case, the Arizona Court of Appeals affirmed summary judgment in favor of agent Manny DeMiguel on plaintiffs’ claims for damages resulting from DeMiguel’s alleged failure to procedure adequate underinsured motorist (“UIM”) coverage on plaintiffs’ vehicle.
Don McArthur is a part-owner of McArthur Sales Corporation (“MSC”) MSC entered into a contract to supply food products to a local big box store, and the contract required $1 million in liability coverage for any vehicles used to deliver products to the store. After consulting with DeMiguel, MSC purchases a business automobile policy that provided $1 million in bodily injury, property damage, uninsured motorist (“UM”), and UIM coverage for the truck (the “Business Auto Policy”). The Business Auto Policy did not name McArthur as an additional insured.
In 2011, McArthur obtained a new insurance policy through DeMiguel for a newly purchased motorcycle. The policy named McArthur and his wife, Mary, as insureds and identified the motorcycle as the insured vehicle. It provided $100,000/$300,000 bodily injury coverage, $100,000 property damage coverage, but only $15,000 per person / $30,000 per accident UM/UIM coverage (the “Motorcycle Policy”). During the application process, Mary declined to purchased additional UM/UIM coverage under the Motorcycle Policy even though DeMiguel specifically recommended she increase the UM/UIM limits.
McArthur was involved in a May 2012 accident and suffered serious injuries while riding the motorcycle in the course and scope of his MSC duties. McArthur received $100,000 from the other driver’s insurance and made UIM claims under the Business Auto Policy and Motorcycle Policy. American Family paid the $15,000 UIM policy limits on the Motorcycle Policy, but denied coverage under the Business Auto Policy, because the motorcycle was not an insured vehicle under the policy.
McArthur and MSC (“plaintiffs”) sued DeMiguel alleging he negligently failed to procure adequate UIM coverage for the motorcycle. DeMiguel moved for summary judgment, arguing plaintiffs could not establish causation under any of their liability theories, because the McArthurs never asked to add the motorcycle or McArthur to the Business Auto Policy, and the McArthurs specifically declined additional UM/UIM coverage for the Motorcycle Policy. The trial court granted summary judgment in DeMiguel’s favor and plaintiffs appealed.
On appeal, the Arizona Court of Appeals affirmed the trial court’s decision. The Court of Appeals held the undisputed facts showed no causal connection between DeMiguel’s conduct and McArthur’s damages. The Court of Appeals reasoned the gap in coverage was not caused by DeMiguel’s failure to offer increased coverage, but rather by the McArthurs’ decision to decline additional UM/UIM coverage under the Motorcycle Policy. Further, the fact the Business Auto Policy did not provide additional coverage was not caused by DeMiguel’s failure to adjust the terms of the policy, rather such coverage was never possible because American Family could not write the Business Auto Policy to include McArthur as a named insured or add the motorcycle as a covered vehicle.
The Court of Appeals rejected plaintiffs’ argument under Wilks v. Manobianco, 235 Ariz. 246 (App. 2014) that the mere signing of the UM/UIM Selection Form is not sufficient to defeat his claim. The Court of Appeals held Wilks was inapposite to the instant case, because unlike in Wilks, plaintiffs offered no evidence they ever requested $1 million in UIM coverage for the motorcycle, and their claim was premised on the insurance agent’s alleged failure to explain the need for more coverage even though they rejected the insurance agent’s (DeMiguel) advice to obtain additional UM/UIM coverage.