Pimal Property Incorporated v. Capital Insurance Group
2:11-cv-02323
D. Ariz.Feb 27, 2012Background
- Plaintiff owns Sendero Ridge apartments in Mesa, AZ insured under policy 6-BOP-2-1576507.
- Policy issued by Defendants; CCIC is owner of the CIG service mark but it’s unclear which issued the Policy.
- hailstorm on Oct 5, 2010 caused substantial property damage; Plaintiff engaged S&A to assist with the claim.
- Defendants employed ATI and Kowalski to inspect; Henry, a general adjuster, appeared to work for CCIC/CIG/Eagle West.
- Plaintiff alleges bad faith, breach of contract, alter ego, and joint venture/aiding-and-abetting theories; CCIC moved to dismiss under Rule 12(b)(6).
- Court will deny the motion to dismiss; privity issues addressed, and derivative liability theories considered
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract requires privity between parties | Pimal asserts CCIC is in privity via service-mark/claims role | CCIC lacks privity since Eagle West issued the Policy | Breach of contract claim dismissed for lack of privity |
| Bad faith liability against CCIC without privity | CCIC liable through joint venture with Eagle West | Bad faith requires privity or direct duty | Bad faith claim survives under Sparks joint-venture theory |
| Alter ego liability of CCIC for CIG,Eagle West | Unity of control shown; piercing corporate form appropriate | Alter ego requires more concrete showing | Alter ego claim not dismissed; discovery allowed |
| Aiding and abetting in bad faith against CCIC | CCIC substantially assisted Eagle West in denying claim | No substantial assistance shown | Aiding-and-abetting claim survives against CCIC |
Key Cases Cited
- Samsel v. Allstate Ins. Co., 19 P.3d 621 (Ariz. App. 2001) (privity not explicit requirement for all bad-faith claims in Arizona)
- Stratton v. Inspiration Consol. Copper Co., 683 P.2d 327 (Ariz. App. 1984) (principles on privity and contract claims)
- Sparks v. Republic Nat’l Life Ins. Co., 647 P.2d 1127 (Ariz. 1982) (joint venture creates common duty of good faith)
- Gatecliff v. Great Republic Life Ins. Co., 821 P.2d 725 (Ariz. 1991) (alter ego factors include unity of control and injustice)
- Wells Fargo Bank v. Ariz. Laborers, Teamsters, and Cement Masons, 38 P.3d 12 (Ariz. 2002) (test for substantial assistance in aiding and abetting torts)