                                                                              FILED
                           NOT FOR PUBLICATION                                MAR 28 2012

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                           FOR THE NINTH CIRCUIT


AMERICAN FAMILY INSURANCE                        No. 10-17326
COMPANY,
                                                 D.C. No. 2:09-cv-00360-DGC
              Plaintiff-Counterdefendant
              - Appellee,
                                                 MEMORANDUM*
  v.

MILO BERGESON et al.,

              Defendants-Counterclaimants
              - Appellants.


                   Appeal from the United States District Court
                            for the District of Arizona
                   David G. Campbell, District Judge, Presiding

                           Submitted March 14, 2012**
                            San Francisco, California

Before: CALLAHAN and BEA, Circuit Judges, and BENNETT, District Judge.***



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
        ***
             The Honorable Mark W. Bennett, District Judge for the U.S. District
Court for the Northern District of Iowa, sitting by designation.
      Appellee American Family Insurance Company (“American Family”)

sought a declaration against appellants Milo Bergeson and David and Joan

Levengood (“the Levengoods”) that American Family did not have a duty to

defend or indemnify the Levengoods in an underlying wrongful death suit brought

by Bergeson, after his ex-wife Lynn Bergeson died from carbon monoxide

intoxication in the condominium she leased from the Levengoods when an

improperly wired ceiling fan ignited the insulation above her unit. Bergeson and

the Levengoods (collectively, “appellants”) appeal the district court’s grant of

summary judgment in favor of American Family, in which the court concluded that

because American Family’s policy did not cover the Levengoods’ liability,

American Family had no duty to defend or indemnify them. We have jurisdiction

pursuant to 28 U.S.C. § 1291.

      We review de novo the district court’s grant of summary judgment. Sullivan

v. Oracle Corp., 662 F.3d 1265, 1270 (9th Cir. 2011). Under Arizona law, “an

insurer typically owes a duty to indemnify the insured against liabilities covered by

the policy and a duty to defend the insured against any claim ‘potentially covered

by the policy.’” Pueblo Santa Fe Townhomes Owners’ Ass’n v. Transcon. Ins.

Co., 178 P.3d 485, 491 (Ariz. Ct. App. 2008) (quoting United Servs. Auto. Ass’n v.

Morris, 741 P.2d 246, 250 (Ariz. 1987)). The allegations in the complaint against


                                          2
the insured, as well as any facts known to the insurer, determine whether a

particular claim against an insured triggers coverage under an insurance policy.

See Regal Homes, Inc. v. CNA Ins., 171 P.3d 610, 615 (Ariz. Ct. App. 2007); N.

Ins. Co. of N.Y. v. Morgan, 918 P.2d 1051, 1053 (Ariz. Ct. App. 1995).

      The policy here, purchased by the Levengoods’ homeowners’ association,

provided liability coverage to “[e]ach individual unit-owner of the insured

condominium, but only for liability arising out of the ownership, maintenance or

repair of that portion of the premises which is not reserved for that unit-owner’s

exclusive use or occupancy.” We apply a broad reading of the phrase “arising out

of,” which, under Arizona law, does not demand proximate cause but only “some

causal relation or connection.” See Salerno v. Atl. Mut. Ins. Co., 6 P.3d 758, 762

(Ariz. Ct. App. 2000).

      Although appellants urge that the Levengoods’ liability arose out of their

negligence as fractional owners of the ceiling (property not reserved for their

exclusive use or occupancy), there is no causal relation or connection between the

Levengoods’ liability and their ownership, maintenance, or repair of the ceiling.

The fire that caused Lynn Bergeson’s death occurred in the insulation in the

ceiling, but every negligent act alleged against the Levengoods related to their

ownership, maintenance, or repair of property that was reserved for their exclusive


                                          3
use. Bergeson alleged that the Levengoods failed to notify the homeowners’

association of the fan’s installation; failed to obtain an electrical permit and an

inspection, which would have revealed the absence of a junction box;1 failed to

ascertain whether Lynn Bergeson properly installed the ceiling fan; and allowed

Lynn Bergeson to install the fan, when they knew or should have known that she

could not do it properly. These allegations involve the ceiling fan itself, the

electrical fixture into which it was connected, or the electrical wire powering it, all

of which were, pursuant to the homeowners’ declarations and Arizona

condominium statutes, reserved for the Levengoods’ exclusive use.

      Thus, we agree with the district court that American Family’s policy did not

cover the Levengoods’ liability to Bergeson and, therefore, that American Family

had no duty to defend or indemnify the Levengoods.

      Finally, we briefly mention two additional arguments that are not included in

the appellants’ opening brief and, therefore, are waived. See Smith v. Marsh, 194

F.3d 1045, 1052 (9th Cir. 1999). In a letter submitted pursuant to Federal Rule of

Appellate Procedure 28(j), appellants contend, for the first time, that, under


      1
        Appellants maintain, but do not explain how, the presence of a junction
box would have prevented the improper installation of the ceiling fan. In fact, their
expert, when asked in his deposition whether “the lack of a junction box here ha[d]
anything to do with the cause of this fire,” responded, “I don’t see anything in the
evidence that indicates that to be the case.”
                                           4
Associated Aviation Underwriters v. Wood, 98 P.3d 572 (Ariz. Ct. App. 2004), the

stipulated judgment in the state wrongful death case precludes American Family

from litigating coverage here. Even if appellants had not waived this argument,

Associated Aviation Underwriters prohibits insurers only from relitigating liability

under the guise of litigating coverage in a declaratory judgment, which is not the

case here. See Ariz. Prop. & Cas. Ins. Guar. Fund v. Martin, 113 P.3d 701, 704

(Ariz. Ct. App. 2005). Additionally, appellants, in their reply brief, raise the new

argument that the electrical wire powering the fan was not reserved for the

Levengoods’ exclusive use. Again, even if not waived, this contention would fail

because, pursuant to the homeowners’ declarations, the electrical wire was

reserved for the Levengoods’ exclusive use.

      AFFIRMED.




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