Benson v. Casa De Capri Enterprises LLC

District Court, D. Arizona·Decided June 7, 2022·No. 2:18-cv-00006·Unknown

Opinion

WO

Jacob Benson, et al., No. CV-18-00006-PHX-DWL

Plaintiffs, ORDER

v.

Casa De Capri Enterprises LLC, et al.,

Defendants. This order addresses the parties’ statements regarding post-remand proceedings (Docs. 112, 113), as well as Plaintiffs’ motion for attorneys’ fees on appeal (Doc. 109). Jacob Benson is a disabled vulnerable adult who received skilled nursing care at a now-defunct facility called Casa de Capri Enterprises, Inc. (“Capri”). In December 2012, Benson and other family members (together, “Plaintiffs”) brought a negligence action against Capri in Maricopa County Superior Court. (Doc. 1-1 at 5-15.) At the time, Capri had a “Claims Paid & Reported Liability” insurance policy, which was issued by Defendant Continuing Care Risk Retention Group, Inc. (“CCRRG”). (Doc. 56-1.) Pursuant to this policy, CCRRG assumed Capri’s defense of the lawsuit. (Doc. 56 ¶¶ 20-21.) In 2013, Capri experienced financial difficulties. (Id. ¶¶ 24-44.) These difficulties caused Capri to default on its payment obligations to CCRRG, then file for bankruptcy, and eventually cancel its insurance policy. (Id.) Afterward, CCRRG withdrew its defense of Plaintiffs’ lawsuit. (Id. ¶¶ 45-47.) In November 2017, after the bankruptcy stay was lifted, Plaintiffs obtained a judgment of just more than $1.5 million against Capri. (Doc. 1-2 at 231-32.) Plaintiffs’ judgment against Capri forms the backdrop for this lawsuit, which is procedurally complex (to put it mildly). In December 2017, Plaintiffs served a writ of garnishment on CCRRG. (Doc. 1 ¶ 2; Doc. 1-2 at 233-35, 238-39.) In response, CCRRG removed the action to federal court1 and then moved to compel arbitration. (Docs. 1, 13.) Although the district judge to whom the case was originally assigned denied CCRRG’s motion (Doc. 27), CCRRG filed a renewed motion to compel arbitration after the case was reassigned to the undersigned judge (Docs. 35, 63) and the Court eventually granted that motion, holding that even though Plaintiffs were non-signatories to the insurance policy between Capri and CCRRG, they were bound by the arbitration clause in that policy under Arizona’s doctrine of direct benefits estoppel. (Doc. 88.) Based on this ruling, the Court also denied, as moot, four other motions that were pending at the time, including Plaintiffs’ motion for summary judgment on the core disputed issue in this case—whether Plaintiffs’ negligence claim against Capri is covered by Capri’s CCRRG insurance policy, and by extension whether Plaintiffs may recover from CCRRG via the law of garnishment.2 Plaintiffs appealed the order compelling arbitration to the Ninth Circuit, which in turn certified a question of law to the Arizona Supreme Court. In January 2022, the Arizona Supreme Court resolved that question in Plaintiffs’ favor, holding that “the doctrine of direct benefits estoppel can[not] be applied in an Arizona garnishment proceeding.” Benson v. Casa de Capri Enterprises, LLC, 502 P.3d 461, 465 (Ariz. 2022). Based on this ruling, the Ninth Circuit issued an amended memorandum decision in March 2022 concluding that “the district court erred in granting CCRRG’s motion to compel arbitration under the doctrine of direct benefits estoppel.” Benson v. Casa de Capri Enterprises, LLC, 2022 WL 822126, *1 (9th Cir. 2022). In a footnote, the Ninth Circuit also stated the

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