Satamian v. Great Divide Ins. Co

545 P.3d 918

Garbis SATAMIAN, Plaintiff/Appellant,

v.GREAT DIVIDE INSURANCE CO., et al., Defendants/Appellees.

No. CV-23-0085-PR

Supreme Court of Arizona.

Filed April 9, 2024

Appeal from the Superior Court in Maricopa County, The Honorable Katherine Coo- per, Judge, No. CV2021-010306. AFFIRMED

Memorandum Decision of the Court of Appeals, Division One, No. 1 CA-CV 22-0375, Filed February 28, 2023. VACATED

Brian Blankenship, Charles L. Finlayson (argued), Claggett & Sykes Law Firm, Las Vegas, NV; and Lawrence Moon, Poli, Moon, and Zane, PLLC, Phoenix, Attorneys for Garbis Satamian

Bennett Evan Cooper, Timothy M. Strong, James T. Lawson, Dickinson Wright PLLC, Phoenix, Attorneys for Great Divide Insurance Company

Ryan Sandstrom (argued), Taylor Barlow, Copper Canyon Law LLC, Mesa, Attorneys for Risk Placement Services

Gregory B. Iannelli, Matthew J. Stanford, Bryan Cave Leighton Paisner LLP, Phoenix, Attorneys for Farm Bureau Property and Casualty Insurance Company

JUSTICE LOPEZ authored the Opinion of the Court, in which CHIEF JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, JUSTICES BOLICK, BEENE, MONTGOMERY and KING joined.

JUSTICE LOPEZ, Opinion of the Court:

¶1 We consider when the statute of limitations commences for claims of negligent procurement of insurance and promissory estoppel. We hold that these claims accrue when an insured incurs its own litigation costs for defense against a claim due to an insurer’s negligent failure to obtain insurance coverage.

BACKGROUND

¶2 In March 2015, Sayed Mohammed ("Mohammed")—owner of A.C. Watercraft Rental, LLC ("A.C. Watercraft")—contacted Farm Bureau Property and Casualty Insurance Company ("Farm Bureau") to purchase liability insurance. Mohammed sought liability insurance for all business-owned watercraft. Farm Bureau connected Mohammed with Great Divide Insurance Company ("Great Divide") for the issuance of such a policy.

¶3 On March 26, 2015, Great Divide issued the policy, listed Risk Placement Services ("RPS") as the agent of record, and provided Mohammed with the policy schedule ("Policy Schedule") listing the specific vehicle-identification numbers ("VINs") for the watercraft covered by the policy. Based on his negotiations with Farm Bureau, Mohammed believed the Policy Schedule covered all the watercraft in A.C. Watercraft’s inventory. However, notably absent from the Policy Schedule was a Yamaha watercraft—VIN YAMA2958J506—which later was involved in a tragic accident resulting in Stephanie Satamian’s death on June 13, 2015.

¶4 On January 7, 2016, anticipating a lawsuit by the Satamian family, Mohammed filed a claim with Great Divide on behalf of A.C. Watercraft for defense and indemnification. On January 25, 2016, Great Divide denied coverage by letter because, "[t]he jet ski that was involved in the accident … is not listed on the [Policy] Schedule." Great Divide’s denial letter further provided:

We reserve the right to review any lawsuits or amendments to this claim to make a separate determination as to whether either a defense, or indemnity, might be provided by Great Divide. It is possible that we might provide a defense and/or indemnity for an amended claim or a lawsuit. Our decision on coverage is based only on the facts as presented to us to date and should not be construed as applicable to a lawsuit or an amendment to this claim. Our right to have notice of either situation is reserved, as are the notice conditions of the policy.

On May 3, 2017, Stephanie Satamian’s father—Garbis Satamian ("Satamian")—filed suit against A.C. Watercraft. A.C. Watercraft hired counsel and incurred litigation costs to defend against Satamian’s suit.

¶5 Later, A.C. Watercraft re-tendered its claim, and Great Divide once again denied coverage.¹ A.C. Watercraft continued to pro- vide and bear the cost of its own defense in the Satamian lawsuit, serving document requests on Great Divide during the litigation. In February 2020, pursuant to subpoena, Great Divide provided A.C. Watercraft with a portion of its claim file, which apparently confirmed that Farm Bureau and RPS were aware of the subject jet ski but failed to include it in the Policy Schedule of covered watercraft. Ultimately, in December 2020, A.C. Watercraft and Satamian reached a settlement agreement which stipulated to a judgment in Satamian’s favor and assigned A.C. Watercraft’s insurance coverage claims against Great Divide, RPS, Farm Bureau, and any other pertinent parties to Satamian.

¶6 On June 28, 2021, Satamian exercised this assignment against A.C. Watercraft’s insurers and sued Great Divide, Farm Bureau, and RPS (collectively "Defendants") for various claims in both Nevada and Arizona. As relevant here, Satamian alleged claims for negligent procurement of insurance, predicated on RPS and Farm Bureau’s failure to include the jet ski at issue in the Policy Schedule, and promissory estoppel, based on Defendants’ assertions that A.C. Watercraft’s entire inventory of jet skis would be covered by the policy.

¶7 RPS moved to dismiss Satamian’s claims under Arizona Rule of Civil Procedure 12(b)(6) on statute of limitations grounds. The trial court granted RPS’s motion, finding that A.C. Watercraft learned of the negligent procurement of insurance on January 25, 2016, when Great Divide denied coverage, and that it "sustained injury in May 2017, when [A.C. Watercraft] incurred attorneys’ fees and costs defending itself." Applying the two-year statute of limitations for the negligent procurement claim (A.R.S. § 12-542) and the three-year limitations period for the promissory estoppel claim (A.R.S. § 12-543), the trial court ruled that both claims were time-barred because each accrued no later than May 2017. Specifically, the negligent procurement of insurance claim was time-barred by May 2019, and the promissory estoppel claim by May 2020.

¶8 Satamian appealed the trial court’s dismissal on two grounds: (1) the discovery rule tolled the statute of limitations; and (2) the claims could not have accrued until his underlying action against A.C. Watercraft was final and non-appealable. Satamian v. Great Divide Ins., No. 1 CA-CV 22-0375, 2023 WL 2250419, at *2 ¶¶ 13, 17 (Ariz. App. Feb. 28, 2023) (mem. decision). The court of appeals rejected Satamian’s arguments, holding that A.C. Watercraft knew or should have known of its injury by May 2017 when it incurred legal costs and had sufficient notice to investigate whether RPS had caused the injury. Id. ¶ 16. The court also analogized Satamian’s claims to a bad faith denial-of-coverage claim, reasoning that Satamian’s claims began to accrue when Great Divide denied coverage. Id. at *3 ¶ 21. The court affirmed, holding that both claims were time-barred. Id. ¶ 22.

¶9 Satamian sought review in this Court. We granted review to clarify the proper accrual standard for negligent procurement of insurance and promissory estoppel, and the applicability of the discovery rule—issues of statewide importance. We have jurisdiction under article 6, section 5(3) of the Arizona Constitution.

DISCUSSION

[1, 2] ¶10 We review the dismissal of a complaint under Rule 12(b)(6) de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355 ¶ 7, 284 P.3d 863, 866 (2012). In evaluating a motion to dismiss, "courts must assume the truth of all well-pleaded factual allegations and indulge all reasonable inferences from those facts." Id. at 356 ¶ 9, 284 P.3d at 870. "[M]ere conclusory statements," however, "are insufficient." Id.

[3–6] ¶11 We also review de novo questions of law regarding a statute of limitations, including "when a particular cause of action accrues." Cook v. Town of Pinetop-Lakeside, 232 Ariz. 173, 175 ¶ 10, 303 P.3d 67, 69 (App. 2013) (quoting Montano v. Browning, 202 Ariz. 544, 546 ¶ 4, 48 P.3d 494, 496 (App. 2002)). Generally, "a cause of action accrues, and the statute of limitations commences, when one party is able to sue another." Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 588, 898 P.2d 964, 966 (1995). The ability to sue arises when the act underlying the legal action occurs, "even though the plaintiff may be unaware of the facts underlying his or her claim." Id. If "it appears on the face of the complaint that an action may be barred by limitations, the burden is on the plaintiff to establish that the statute has been tolled." Bailey v. Superior Court, 143 Ariz. 494, 498, 694 P.2d 324, 328 (App. 1985).

I.

A.

¶12 We begin with Satamian’s argument that the discovery rule tolled the statute of limitations on the negligent procurement and promissory estoppel claims until February 2020, when A.C. Watercraft obtained Great Divide’s claim file and confirmed RPS’s failure to include the jet ski at issue on the Policy Schedule. Satamian concedes that the Policy Schedule lists RPS as the "agent," but contends that this mere reference to RPS was insufficient to determine RPS’s role in the coverage omission. We are unpersuaded.

[7, 8] ¶13 The discovery rule provides that a statute of limitations is tolled until "the plaintiff knows or with reasonable diligence should know the facts underlying the cause." Doe v. Roe, 191 Ariz. 313, 322 ¶ 29, 955 P.2d 951, 960 (1998). A plaintiff, however, "need not know all the facts underlying a cause of action to trigger accrual." Walk v. Ring, 202 Ariz. 310, 316 ¶ 22, 44 P.3d 990, 996 (2002) (quoting Doe, 191 Ariz. at 323 ¶ 32, 955 P.2d at 961). The ability "to identify that a wrong occurred and caused injury" is sufficient. Doe, 191 Ariz. at 323 ¶ 32, 955 P.2d at 961. To be sure, "it is not enough that a plaintiff comprehends a ‘what’; there must also be reason to connect the ‘what’ to a particular ‘who’ in such a way that a reasonable person would be on notice to investigate whether the injury might result from fault." Walk, 202 Ariz. at 316 ¶ 22, 44 P.3d at 996; accord Lawhon v. L.B.J. Institutional Supply, Inc., 159 Ariz. 179, 183, 765 P.2d 1003, 1007 (App. 1988) ("The cause of action does not accrue until the plaintiff knows...