Yolanda Quihuis v. State Farm Mutual Automobile I
748 F.3d 911
9th Cir.2014Background
- Coxes owned the Jeep at the time of the accident per a Damron agreement, and a default judgment was entered against the Coxes and Bojorquezes for $350,000.
- Quihuises obtained assignment of rights under the Policy and agreed not to execute on the judgment; Dairyland participated in the Damron agreement, while State Farm refused to defend the Coxes.
- The Coxes and Bojorquezes stipulated liability and ownership facts determinative of both liability and coverage; Quihuises tried to pursue indemnification from State Farm in Arizona state court, which State Farm removed to federal court.
- The district court held that the default judgment did not preclude State Farm from litigating the ownership issue due to (1) conflict of interest and (2) only liability/damages issues being preclusive.
- The Ninth Circuit recognized unsettled Arizona law about collateral estoppel in Damron/default judgments and certified a question to the Arizona Supreme Court for decision, deferring ruling.
- Proceedings in the Ninth Circuit are stayed pending Arizona Supreme Court’s decision on whether to accept review and answer the certified question.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a Damron-default preclude coverage disputes as collateral estoppel? | Quihuises rely on Wood to bind insurer to ownership facts. | State Farm follows Morris; coverage issues may be relitigated. | Court defers to Arizona Supreme Court; does not decide. |
| Should Wood or Morris govern collateral estoppel in Damron contexts? | Wood governs; stipulations bind insurer if overlap with liability. | Morris governs; settlement should not manufacture coverage. | Court defers to Arizona Supreme Court; does not decide. |
| Is ownership of the Jeep at the time of the accident a genuine issue of material fact for coverage? | Ownership could be dispositive and is unsettled by the Damron stipulation. | Undisputed facts show ownership for liability and coverage purposes may be resolved. | Court indicates ownership issue unresolved for purposes of the certified question; defers. |
Key Cases Cited
- Morris, 741 P.2d 246 (Ariz. 1987) (insurer not bound by stipulations that manufacture coverage; conflict of interest)
- Wood, 98 P.3d 572 (Ariz. Ct. App. 2004) (collateral estoppel may bind insurer where coverage issues overlap liability when no conflicting interests)
- Vagnozzi, 675 P.2d 703 (Ariz. 1983) (restatement-based collateral estoppel principles; insurer can be bound where no conflict of interest)
- Chaney Bldg. Co. v. City of Tucson, 716 P.2d 28 (Ariz. 1986) (default/consent judgments generally do not support collateral estoppel unless actual litigation)
- Broad v. Mannesmann Anlagenbau AG, 196 F.3d 1075 (9th Cir. 1999) (context for interpreting Ninth Circuit treatment of state-law questions)