Scott Minkler v. Safeco Insurance Company

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
The Honorable Daniel M. Friedman, Senior United States Circuit**
Judge for the Federal Circuit, sitting by designation.
1
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SCOTT MINKLER,
Plaintiff - Appellant,
v.
SAFECO INSURANCE COMPANY,
Defendant - Appellee.
No. 07-56689
D.C. No. CV-07-04374-MMM
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Margaret M. Morrow, District Judge, Presiding
Argued February 13, 2009
Resubmitted October 7, 2010
Pasadena, California
Before: BEA and IKUTA, Circuit Judges, and FRIEDMAN, Senior Circuit
Judge.**
FILED
OCT 07 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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Because the parties are familiar with the facts we repeat them here only as1
necessary to explain our decision.
2
Scott Minkler (“Minkler”) appeals the district court’s order that granted
Safeco Insurance Company of America’s (“Safeco”) Rule 12(b)(6) motion to
dismiss Minkler’s claims as an assignee of Betty Schwartz for: (1) breach of
contract; (2) breach of the implied covenant of good faith and fair dealing; (3)
recovery as a judgment creditor; and (4) professional negligence. We have
jurisdiction pursuant to 28 U.S.C. § 1291(a) and we reverse.1
In the underlying litigation, Minkler sued David Schwartz for sexual
molestation and asserted a negligent supervision claim against David’s mother,
Betty Schwartz. During the relevant period, David resided—and allegedly
molested children—in Betty’s home. David and Betty Schwartz are co-insureds
under a homeowners insurance policy issued by Safeco. The policy contains an
intentional acts exclusion that states the policy does not provide coverage for
injuries resulting from the intentional act of “an insured.” The policy also contains
a severability clause that states “this insurance applies separately to each insured.”
Safeco denied both Schwartzes a defense. Minkler obtained a default judgment
against Betty and an assignment of her rights against Safeco in exchange for a

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We vacated submission pending the California Supreme Court’s decision.2
The case is resubmitted as of the date of the filing of this memorandum disposition.
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covenant not to execute the judgment. Minkler then filed the instant action against
Safeco.
The district court dismissed Minkler’s claims based on its legal conclusion
that the severability clause did not make the intentional acts exclusion ambiguous
as to whether David’s intentional acts barred coverage for Betty’s negligence.
Because the intentional acts exclusion applied, Safeco could not be liable.
California law on this issue was not clear, so we certified the following
question to the California Supreme Court: “Where a contract of liability insurance
covering multiple insureds contains a severability-of-interests clause in the
‘Conditions’ section of the policy, does an exclusion barring coverage for injuries
arising out of the intentional acts of ‘an insured’ bar coverage for claims that one
insured negligently failed to prevent the intentional acts of another insured?”
Minkler v. Safeco Ins. Co., 561 F.3d 1033, 1035 (9th Cir. 2009).2
In an opinion filed on June 17, 2010, the California Supreme Court
answered this question “no.” Minkler v. Safeco Ins. Co. of Amer., 232 P.3d 612,
620 (Cal. 2010). The California Supreme Court held “in light of the severability
clause, Betty would reasonably have expected Safeco’s policies . . . to cover her

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separately for her independent acts and omissions causing . . . injury or damage, so
long as her conduct did not fall within the policies’ intentional acts exclusion, even
if the acts of another insured contributing to the same injury or damage were
intentional.” Id. (italics omitted). Thus Betty had “an objectively reasonable
expectation that the policies would cover her so long as her own conduct did not
fall within the intentional acts exclusion.” Id. at 626. Because Betty was only
negligent, her own conduct did not fall within the intentional acts exclusion, and
she was entitled to coverage. As Betty’s assignee, Minkler inherited Betty’s rights
under the insurance policy.
Therefore, the district court erred when it held that Safeco could not be
liable and granted Safeco’s Rule 12(b)(6) motion to dismiss. We reverse the
district court’s decision and remand for further proceedings.
REVERSED and REMANDED.

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