Mid-Century Insurance Company v. Carpenter

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 8, 2024
• Docket: 23-2599
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 8 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

MID-CENTURY INSURANCE No. 23-2599 COMPANY,

Plaintiff-Appellee, D.C. No. 6:21-cv-1754-MK

v. MEMORANDUM* KURT CARPENTER, Personal Representative of the Estate of Kelsey Beaber; HOLLY BEABER-CARPENTER, as guardian ad litem for A.A.,

Defendants-Appellants.

Appeal from the United States District Court for the District of Oregon Michael McShane, District Judge, Presiding

Argued and Submitted October 25, 2024 Portland, Oregon

Before: LEE, VANDYKE, and H.A. THOMAS, Circuit Judges.

Kurt Carpenter (“Carpenter”) appeals the district court’s order granting

summary judgment to Mid-Century Insurance Company (“Mid-Century”). This

court reviews de novo a district court’s decision granting summary judgment. See

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Csutoras v. Paradise High Sch., 12 F.4th 960, 965 (9th Cir. 2021). We have

jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

In 2020, Kelsey Beaber was involved in a car accident with a vehicle owned

by Car Care and driven by Lukeus West, a customer of Car Care with a private auto

insurance policy. The vehicle West was driving was covered by a commercial auto

liability insurance issued by Mid-Century. The Mid-Century policy covered

permissive users, but it had an exclusion for customers of the named insured (Car

Care) who had their own auto liability insurance policies, provided those policies

met or exceeded the minimum limits set by the Oregon Financial Responsibility

Laws (“FRL”). This meant that West was excluded from coverage under the terms

of the Mid-Century policy, since his auto liability insurance provided bodily injury

liability limits of $25,000 per person—the minimum limit of the FRL. Or. Rev. Stat.

§ 806.080; 806.070.

But Oregon law requires that every motor vehicle liability policy issued in

Oregon—including Mid-Century’s—must provide at least the minimum coverage

required by the FRL. See Or. Rev. Stat. § 806.080(1). Mid-Century and Carpenter,

the personal representative of the Estate of Kelsey Beaber, dispute whether the

unlawful exclusion in Mid-Century’s policy should be reformed by operation of law

to bring it into compliance with the FRL, or whether the exclusion should be

regarded as void in its entirety.

2 23-2599 The district court did not err in concluding that, because Mid-Century’s

commercial auto liability policy unambiguously excluded permissive user coverage

for the customers of its named insurer who had their own insurance, the policy must

be reformed to provide permissive user coverage in the minimum amount required

by the Oregon FRL. In analyzing this issue, the views of the Oregon Supreme Court

are binding with respect to Oregon law. See, e.g., Wainwright v. Goode, 464 U.S.

78, 84 (1983) (“[T]he views of the state’s highest court with respect to state law are

binding on the federal courts.”).

The Oregon Supreme Court’s decision in Collins v. Farmers Ins. Co., 822

P.2d 1146 (1991), controls this case. The court there explained that an unambiguous

exclusion in a motor vehicle liability insurance policy that violates the FRL is

unenforceable only “to the extent” that it eliminates the coverage required by the

FRL. Id. at 1147. Such an exclusion thus remains fully enforceable with respect to

coverage that is not required by the FRL. See, e.g., Safeco Ins. Co. v. Am. Hardware

Mut. Ins. Co., 9 P.2d 749, 754–55 (2000). Based on controlling precedent, the

district court properly granted summary judgment in favor of Mid-Century and

determined that the policy should be reformed by operation of law to include the

minimum limits required by the FRL.

Carpenter argues that Collins does not control this case because, unlike the

policy at issue here, the policy at issue in Collins also contained a provision stating

3 23-2599 that policy terms that conflicted with Oregon law were amended to conform to such

laws. But this argument was already considered and rejected by the Oregon Supreme

Court. See Farmers Ins. Co. v. Mowry, 261 P.3d 1, n.2 (2011) (“[T]he policy in

Collins included a provision that ‘[p]olicy terms which conflict with laws of Oregon

are hereby amended to conform to such laws.’ The court, however, noted that that

provision is merely an embodiment of ORS 742.038(2).”) (citation omitted).

Carpenter also argues that the Mid-Century policy is ambiguous, and it

therefore falls within Oregon precedent that allows for the wholesale voiding of

ambiguous policies. See N. Pac. Ins. Co. v. Hamilton, 22 P.3d 739, 743–44 (2001);

Wright v. State Farm Mut. Auto. Ins. Co., 22 P.3d 744, 751–52 (2001). But the

exclusion in the Mid-Century policy is not ambiguous akin to the policies at issue in

Hamilton and Wright. Carpenter cites the policy’s reference to “minimum limits

specified by the Oregon financial responsibility law” as an example of the alleged

ambiguity. But that language is immediately followed by an explanation of what the

minimum limit is depending on whether the policy’s coverage cap is one lump sum

for the accident, or whether the coverage is split up by bodily injury and property

damage. “[A]n ordinary purchaser of insurance would … be able to determine” what

the language of the policy means, and therefore Oregon’s ambiguity precedents do

not apply. Hamilton, 22 P.3d at 743–44.

The district court’s judgment is AFFIRMED.

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