Foremost Ins. Co. Grand Rapids v. Jimmy Enriquez, 679 F. App'x 538

Background

Enriquez was involved in a motocross motorcycle accident that injured third parties; underlying plaintiffs sued Enriquez for negligent supervision and related personal injury claims.
Foremost Insurance issued a policy to Enriquez; the policy excluded coverage for injuries that arose out of recreational land motor vehicles, entrustment of such vehicles, and negligent supervision related to such vehicles.
Foremost defended Enriquez under a reservation of rights while disputing indemnity based on the recreational vehicle exclusion; Foremost later sought partial summary judgment on its duty to indemnify and brought unjust enrichment claims seeking reimbursement.
Enriquez argued a potential concurrent independent cause (e.g., fireworks or truck/trailer distraction) that might create coverage, and he asserted waiver/estoppel based on alleged inconsistent insurer statements.
The district court granted Foremost partial summary judgment on indemnity and denied Foremost reimbursement, but granted summary judgment to Enriquez on the duty to defend; Enriquez’s counterclaims for breach of contract and bad faith were denied for lack of coverage.

Issues

Issue	Enriquez's Argument	Foremost's Argument	Held
Duty to indemnify	Injury may have been caused by an independent concurrent act (fireworks or truck/trailer) creating coverage despite RV involvement	Injury arose out of recreational land motor vehicle use/entrustment/negligent supervision excluded by policy	No duty to indemnify; exclusion applies and Enriquez failed to produce non‑speculative evidence of a concurrent independent cause
Waiver / Estoppel	Foremost’s inconsistent statements (two instances) waived reservation of rights or estopped denial of coverage	Foremost consistently communicated reservation of rights; isolated statements insufficient for waiver; estoppel cannot create coverage	Waiver/estoppel rejected; insurer preserved rights and estoppel cannot create coverage that the policy does not provide
Duty to defend and reimbursement	Policy required defense only if claim potentially covered; Enriquez argued original complaint alleged negligent supervision (potentially covered) and extrinsic facts created coverage possibility; no reimbursement owed	Foremost knew police report mentioned recreational vehicle and argued no potential for coverage, so defense not owed or reimbursement appropriate	Duty to defend exists because complaint alleged negligent supervision and extrinsic facts raised a potential for coverage; Foremost not entitled to reimbursement of defense or settlement costs
Bad faith / breach of contract	Foremost breached contract and implied covenant by denying coverage and seeking reimbursement	No coverage under the policy, so no contract or bad faith liability	Claims for breach of contract and bad faith fail because there was no policy coverage

Key Cases Cited

Stanford Univ. Hosp. v. Fed. Ins. Co., 174 F.3d 1077 (9th Cir. 1999) (choice‑of‑law for insurance policy interpretation in diversity case)
Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) (summary judgment requires non‑speculative evidence of specific facts)
State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123 (Cal. 1973) (insurer liable if one of concurrent causes is covered)
Waller v. Truck Ins. Exch., Inc., 900 P.2d 619 (Cal. 1995) (standards for waiver of reservation of rights)
Blue Ridge Ins. Co. v. Jacobsen, 22 P.3d 313 (Cal. 2001) (prerequisites for insurer reimbursement of noncovered claims)
Scottsdale Ins. Co. v. MV Transp., 115 P.3d 460 (Cal. 2005) (duty to defend arises when claim is potentially covered and lasts until no potential for coverage)
Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 326 P.3d 253 (Cal. 2014) (insurer owes duty to defend potentially covered claims)
Kransco v. Am. Empire Surplus Lines Ins. Co., 2 P.3d 1 (Cal. 2000) (no bad faith liability without coverage)