NOT FOR PUBLICATION FILED DEC 6 2023 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
DAVID STREETER; KATJA STREETER, No. 23-35086
Plaintiffs-Appellants, D.C. No. 9:20-cv-00188-DLC
v. MEMORANDUM* USAA GENERAL INDEMNITY COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the District of Montana Dana L. Christensen, District Judge, Presiding
Argued and Submitted November 16, 2023 Seattle, Washington
Before: McKEOWN and GOULD, Circuit Judges, and BENNETT,** District Judge.
This is an insurance recovery case, resulting from two fires that occurred
within a period of twenty-four hours and were investigated by law enforcement as
potential arson. Plaintiffs-Appellants David and Katja Streeter—the owners of the
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Richard D. Bennett, United States Senior District Judge for the District of Maryland, sitting by designation. subject property—promptly made a fire loss claim with their insurer, Defendant-
Appellee USAA General Indemnity Company (“USAA GIC”). After USAA GIC
issued payments in the amount of $644,328.72, the Streeters filed suit in the United
States Court for the District of Montana, alleging claims for breach of contract,
violations of Montana’s Unfair Trade Practices Act, and declaratory judgment, and
seeking punitive damages, attorney fees, and costs. At the close of discovery,
USAA GIC moved for summary judgment based on the Streeters’ failure to
cooperate, and the district court ultimately entered summary judgment for USAA
GIC on those grounds. On appeal, the Streeters challenge the district court’s entry
of summary judgment and secondarily seek certification of a question to the
Montana Supreme Court regarding the enforcement of a contractual duty to
cooperate.
1. We review the district court’s grant of summary judgment de novo to
determine whether, viewing the evidence in the light most favorable to the
nonmoving party, there is no genuine issue of material fact and the movant is
entitled to judgment as a matter of law. Frudden v. Pilling, 877 F.3d 821, 828 (9th
Cir. 2017). Having done so, we conclude that summary judgment was properly
granted.
The duty to cooperate typically arises from the inclusion of a cooperation
clause in an insurance policy—such as the one included in the Streeters’ policy.
2 Because this cooperation can fairly be characterized as a duty, the failure to
comply can result in the loss of coverage under the policy. See, e.g., Tran v. State
Farm Fire & Cas. Co., 961 P.2d 358, 363 (Wash. 1998) (applying Washington
law).
As the Streeters filed this action in federal court on the basis of diversity of
citizenship, we apply the substantive law of Montana, the forum state. Med. Lab’y
Mgmt. Consultants v. Am. Broad. Cos., Inc., 306 F.3d 806, 812 (9th Cir. 2002).
The Montana Supreme Court has not specifically addressed the level of
cooperation required in an insurance contract. However, that court has held that an
insured’s failure to comply with the notice requirement of an insurance policy
precludes recovery under the policy if it causes prejudice to the insurer’s ability to
investigate the claim and participate in litigation. Steadele v. Colony Ins. Co., 260
P.3d 145, 150–51 (Mont. 2011); Contractors Bonding & Ins. Co. v. Sandrock, 321
F. Supp. 3d 1205, 1211–12 (D. Mont. 2018). Of import here, the United States
District Court for the District of Montana addressed the issue of noncooperation in
Seymour v. Safeco Insurance Company, an insurance diversity case in which the
insured failed to provide the insurer with a written estimate to support a request for
additional payment. No. CV 13-49-BU-DLC-RWA, 2014 U.S. Dist. LEXIS
190110 at *2–3 (D. Mont. 2014), adopted by, 2015 U.S. Dist. LEXIS 181837 (D.
Mont. May 13, 2015). In holding that this noncooperation “preclude[d] any
3 additional recovery under the [p]olicy” and thus the insured’s claim for breach of
contract failed, id. at *22–23, the court reasoned that “[a]n insured’s failure to
provide documents requested by the insurer or to submit to an examination under
oath impairs an insurer’s ability to conduct a legitimate claim investigation to
determine whether coverage exists.” Id. at *21.
Considering the Montana Supreme Court’s decisions in notice-prejudice
cases and Seymour, we affirm the district court’s entry of summary judgment in
this case. The district court correctly held that an insurer prevails on a
noncooperation defense under Montana law when the insurer establishes: (1) the
insured failed to cooperate in a material and substantial respect, (2) with an
insurer’s reasonable and material request, (3) thereby causing actual prejudice to
the insurer’s ability to evaluate and investigate a claim.1
Considering whether the Streeters failed to cooperate in a material and
substantial respect, the record shows that when the Streeters turned their phones
over to One Source for the data pull, they presented an authorization that set
parameters on the data that USAA GIC could access. After USAA GIC discovered
1 On appeal, the Streeters argue that enforcement of a cooperation clause requires a showing of notice—whether that means a showing of the insurer’s repeated requests for the insured’s compliance, deliberate conduct by the insured, and/or the insurer’s warning to enforce the clause. We decline to embrace such an unworkable, subjective standard, which, as USAA GIC correctly notes, is not part of the relevant policy language.
4 a discrepancy between the Verizon cell phone records and the extracted data, the
insurer requested an expanded scope, including an examination any and all
indicators of factory resets, data hiding or similar. The Streeters authorized USAA
GIC to review communications and voicemail but did not authorize USAA GIC to
examine indicators of factory resets, data hidings, or the like. And before USAA
GIC received additional extraction reports based on the expanded scope, the
Streeters revoked the right for One Source to share any information from the data
pulls with USAA GIC entirely. While the Streeters participated in interviews and
provided some of the requested materials,2 the Streeters refused to cooperate when
USAA GIC requested more information to determine whether the Streeters’
statements aligned with the evidence. The undisputed record clearly reflects that
the Streeters failed to substantially cooperate with USAA GIC during its
investigation.
“An insured’s breach of a cooperation clause releases the insurer from its
2 In an attempt to show cooperation, the Streeters argue that they “temporarily suspended” authorization until USAA GIC met their demands, and further that their cooperation with other requests is sufficient to establish cooperation. Both arguments are unpersuasive.
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NOT FOR PUBLICATION FILED DEC 6 2023 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
DAVID STREETER; KATJA STREETER, No. 23-35086
Plaintiffs-Appellants, D.C. No. 9:20-cv-00188-DLC
v. MEMORANDUM* USAA GENERAL INDEMNITY COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the District of Montana Dana L. Christensen, District Judge, Presiding
Argued and Submitted November 16, 2023 Seattle, Washington
Before: McKEOWN and GOULD, Circuit Judges, and BENNETT,** District Judge.
This is an insurance recovery case, resulting from two fires that occurred
within a period of twenty-four hours and were investigated by law enforcement as
potential arson. Plaintiffs-Appellants David and Katja Streeter—the owners of the
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Richard D. Bennett, United States Senior District Judge for the District of Maryland, sitting by designation. subject property—promptly made a fire loss claim with their insurer, Defendant-
Appellee USAA General Indemnity Company (“USAA GIC”). After USAA GIC
issued payments in the amount of $644,328.72, the Streeters filed suit in the United
States Court for the District of Montana, alleging claims for breach of contract,
violations of Montana’s Unfair Trade Practices Act, and declaratory judgment, and
seeking punitive damages, attorney fees, and costs. At the close of discovery,
USAA GIC moved for summary judgment based on the Streeters’ failure to
cooperate, and the district court ultimately entered summary judgment for USAA
GIC on those grounds. On appeal, the Streeters challenge the district court’s entry
of summary judgment and secondarily seek certification of a question to the
Montana Supreme Court regarding the enforcement of a contractual duty to
cooperate.
1. We review the district court’s grant of summary judgment de novo to
determine whether, viewing the evidence in the light most favorable to the
nonmoving party, there is no genuine issue of material fact and the movant is
entitled to judgment as a matter of law. Frudden v. Pilling, 877 F.3d 821, 828 (9th
Cir. 2017). Having done so, we conclude that summary judgment was properly
granted.
The duty to cooperate typically arises from the inclusion of a cooperation
clause in an insurance policy—such as the one included in the Streeters’ policy.
2 Because this cooperation can fairly be characterized as a duty, the failure to
comply can result in the loss of coverage under the policy. See, e.g., Tran v. State
Farm Fire & Cas. Co., 961 P.2d 358, 363 (Wash. 1998) (applying Washington
law).
As the Streeters filed this action in federal court on the basis of diversity of
citizenship, we apply the substantive law of Montana, the forum state. Med. Lab’y
Mgmt. Consultants v. Am. Broad. Cos., Inc., 306 F.3d 806, 812 (9th Cir. 2002).
The Montana Supreme Court has not specifically addressed the level of
cooperation required in an insurance contract. However, that court has held that an
insured’s failure to comply with the notice requirement of an insurance policy
precludes recovery under the policy if it causes prejudice to the insurer’s ability to
investigate the claim and participate in litigation. Steadele v. Colony Ins. Co., 260
P.3d 145, 150–51 (Mont. 2011); Contractors Bonding & Ins. Co. v. Sandrock, 321
F. Supp. 3d 1205, 1211–12 (D. Mont. 2018). Of import here, the United States
District Court for the District of Montana addressed the issue of noncooperation in
Seymour v. Safeco Insurance Company, an insurance diversity case in which the
insured failed to provide the insurer with a written estimate to support a request for
additional payment. No. CV 13-49-BU-DLC-RWA, 2014 U.S. Dist. LEXIS
190110 at *2–3 (D. Mont. 2014), adopted by, 2015 U.S. Dist. LEXIS 181837 (D.
Mont. May 13, 2015). In holding that this noncooperation “preclude[d] any
3 additional recovery under the [p]olicy” and thus the insured’s claim for breach of
contract failed, id. at *22–23, the court reasoned that “[a]n insured’s failure to
provide documents requested by the insurer or to submit to an examination under
oath impairs an insurer’s ability to conduct a legitimate claim investigation to
determine whether coverage exists.” Id. at *21.
Considering the Montana Supreme Court’s decisions in notice-prejudice
cases and Seymour, we affirm the district court’s entry of summary judgment in
this case. The district court correctly held that an insurer prevails on a
noncooperation defense under Montana law when the insurer establishes: (1) the
insured failed to cooperate in a material and substantial respect, (2) with an
insurer’s reasonable and material request, (3) thereby causing actual prejudice to
the insurer’s ability to evaluate and investigate a claim.1
Considering whether the Streeters failed to cooperate in a material and
substantial respect, the record shows that when the Streeters turned their phones
over to One Source for the data pull, they presented an authorization that set
parameters on the data that USAA GIC could access. After USAA GIC discovered
1 On appeal, the Streeters argue that enforcement of a cooperation clause requires a showing of notice—whether that means a showing of the insurer’s repeated requests for the insured’s compliance, deliberate conduct by the insured, and/or the insurer’s warning to enforce the clause. We decline to embrace such an unworkable, subjective standard, which, as USAA GIC correctly notes, is not part of the relevant policy language.
4 a discrepancy between the Verizon cell phone records and the extracted data, the
insurer requested an expanded scope, including an examination any and all
indicators of factory resets, data hiding or similar. The Streeters authorized USAA
GIC to review communications and voicemail but did not authorize USAA GIC to
examine indicators of factory resets, data hidings, or the like. And before USAA
GIC received additional extraction reports based on the expanded scope, the
Streeters revoked the right for One Source to share any information from the data
pulls with USAA GIC entirely. While the Streeters participated in interviews and
provided some of the requested materials,2 the Streeters refused to cooperate when
USAA GIC requested more information to determine whether the Streeters’
statements aligned with the evidence. The undisputed record clearly reflects that
the Streeters failed to substantially cooperate with USAA GIC during its
investigation.
“An insured’s breach of a cooperation clause releases the insurer from its
2 In an attempt to show cooperation, the Streeters argue that they “temporarily suspended” authorization until USAA GIC met their demands, and further that their cooperation with other requests is sufficient to establish cooperation. Both arguments are unpersuasive. With respect to the Streeters’ first argument, placing conditions on cooperation would impede an insurer’s ability to conduct a legitimate claim investigation and is contrary to the terms of the policy and the purpose of cooperation clauses more generally. Turning to the Streeters’ second argument regarding evidence of their cooperation, state courts in other jurisdictions routinely reject the notion that initial or partial cooperation is sufficient. See, e.g., Pilgrim v. State Farm Fire & Cas. Ins. Co., 950 P.2d 479, 484 (Wash. Ct. App. 1997).
5 responsibilities if the insurer was actually prejudiced by the insured’s breach.”
Tran, 961 P.2d at 365. When “insurers are inhibited in their effort to process
claims due to uncooperativeness of the insured, they suffer prejudice” as a matter
of law. Id. at 365–66.
Here, the Streeters did not cooperate with USAA GIC’s request for
additional information, which impaired USAA GIC’s ability to investigate the
validity of the claim before issuing substantial payment—$644,328.72—to its
insured. Accordingly, the Streeters’ failure to cooperate caused actual prejudice to
USAA GIC’s ability to evaluate and investigate the claim.
At bottom, the district court correctly entered summary judgment for USAA
GIC, as the evidence in this case permits but one conclusion—that the Streeters
failed to cooperate with USAA GIC during its investigation, prejudicing the
insurer’s investigation into the set of fires giving rise to the Streeters’ claims. As
such, we AFFIRM the district court’s grant of summary judgment to
Defendant-Appellee USAA GIC.
2. We have “long looked with disfavor upon motions to certify that are filed
after the moving party has failed to avail itself of a prior opportunity to seek
certification.” Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1108 (9th Cir. 2013)
(citing Thompson v. Paul, 547 F.3d 1055, 1065 (9th Cir. 2008)). To overcome the
presumption against certification in such instances, “particularly compelling
6 reasons must be shown when certification is requested for the first time on appeal
by a movant who lost on the issue below.” In re Complaint of McLinn, 744 F.2d
677, 681 (9th Cir. 1984). The Streeters did not mention the possibility of
certification until after the district court entered judgment against them, and they
have not shown “particularly compelling reasons” to overcome the presumption
against certification. Accordingly, we decline to certify any question to the
Montana Supreme Court.
AFFIRMED.