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KnightBrook Insurance Co. v. Payless Car Rental System Inc.

United States Court of Appeals, Ninth Circuit

May 5, 2017

KnightBrook Insurance Company; Knight Management Insurance Services LLC, Plaintiffs-Counter-Defendants-Appellees,
v.
Payless Car Rental System Incorporated, Defendant-Appellant, PCR Venture of Phoenix LLC, Defendant-Counter-Claimant-Appellant.

          Argued and Submitted April 6, 2017 Pasadena, California

         On Appeal from the United States District Court for the District of Arizona D.C. No. 2:12-cv-01671-DGC David G. Campbell, District Judge, Presiding

          William F. Greaney (argued), Eric C. Bosset, Daniel E. Matro, and Philip J. Levitz, Covington & Burling LLP, Washington, D.C.; Arron Nesbitt, Taylor Anderson LLP, Denver, Colorado; for Defendants-Appellants.

          Gena L. Sluga (argued), Stephen M. Dichter, Jeffrey O. Hutchins, Douglas L. Christian, and Alison R. Christian, Christian Dichter & Sluga PC, Phoenix, Arizona, for Plaintiffs-Appellees.

          Before: MILAN D. SMITH, JR. and N. RANDY SMITH, Circuit Judges, and GARY FEINERMAN, District Judge. [*]

         ORDER CERTIFYING A QUESTION TO THE SUPREME COURT OF ARIZONA

         SUMMARY[**]

Certification to Arizona Supreme Court

         The panel certified the following questions of state law to the Arizona Supreme Court:

1. Whether Arizona equitable indemnity law incorporates § 78 of the Restatement (First) of Restitution; and if so,
2. Whether equitable indemnity under § 78 requires that the indemnity plaintiff's liability to the underlying plaintiff have been coextensive with the indemnity defendant's liability to the underlying plaintiff.

          ORDER

         KnightBrook Insurance Company and Knight Management Insurance Services, LLC (together, KnightBrook) sued PCR Venture of Phoenix, LLC, a franchisee of Payless Car Rental System, Inc. (together, Payless), for, among other things, equitable indemnification. After a bench trial, the district court awarded KnightBrook $970, 000; in so doing, the court applied §§ 76 and 78 of the Restatement (First) of Restitution. Having heard oral argument on Payless's appeal, we have concluded that the appeal's outcome turns on two questions of law: (1) whether Arizona equitable indemnity law incorporates § 78 of the Restatement; and, if so, (2) whether equitable indemnity under § 78 requires that the indemnity plaintiff's liability to the underlying plaintiff have been coextensive with the indemnity defendant's liability to the underlying plaintiff. Because these questions are governed by Arizona law but have not been definitively resolved by the Arizona judiciary, we respectfully certify them to the Supreme Court of Arizona pursuant to Arizona Revised Statutes § 12-1861 and Supreme Court of Arizona Rule 27.

          I. Factual Background

         KnightBrook insured Payless under a master policy that enabled Payless to sell supplemental liability insurance (SLI) to individuals who rented cars from Payless. In February 2010, Michael Bovre rented a car from Payless in Phoenix. Bovre did not purchase or pay for pay for SLI. However, he would later argue that he was entitled to SLI coverage because the Payless desk agent: (1) failed to notice that Bovre did not initial the line on the contract that expressly declined SLI; and (2) told Bovre that "liability ...


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