                    NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.




                                   IN THE
            ARIZONA COURT OF APPEALS
                               DIVISION ONE


                           JANET LAUFER, et al.,
                             Plaintiffs/Appellants,

                                       v.

                     MICHAEL J. AUDITORE, et al.,
                           Defendants/Appellees.
                   _________________________________
                         JANET LAUFER, et al.,
                           Plaintiffs/Appellants,

                                       v.

            STARR INDEMNITY & LIABILITY COMPANY,
                       Defendant/Appellee.

                            No. 1 CA-CV 16-0288
                                1 CA-CV 16-0463
                                  (Consolidated)
                              FILED 10-3-2017


          Appeal from the Superior Court in Maricopa County
                         No. CV2014-094388
                             CV2016-001755
             The Honorable Robert H. Oberbillig, Judge

                                 AFFIRMED
                                 COUNSEL

Schneider & Onofry, PC, Phoenix
By Charles D. Onofry, Luane Rosen
Counsel for Plaintiffs/Appellants

Manning & Kass, Ellrod, Ramirez, Trester, LLP, Phoenix
By Robert B. Zelms, Debora L. Verdier
Counsel for Defendants/Appellees Auditore, et al.

Sanders & Parks, PC, Phoenix
By Mark G. Worischeck, Shanks Leonhardt
Counsel for Defendant/Appellee Starr Indemnity & Liability Co.



                      MEMORANDUM DECISION

Judge Diane M. Johnsen delivered the decision of the Court, in which
Presiding Judge Lawrence F. Winthrop and Judge Maria Elena Cruz joined.


J O H N S E N, Judge:

¶1           Janet Laufer and her family appeal the superior court's grant
of summary judgment in favor of Starr Indemnity & Liability Company and
Michael J. Auditore and his company, Auditore & Associates, LLC. For the
reasons explained below, we affirm.

             FACTS AND PROCEDURAL BACKGROUND

¶2             Jack Laufer worked for Sprayfoam Southwest, LLC and was
a minority owner of the company. He died in a two-car accident on his way
to work one day in his company truck. His family made a claim against the
other driver, whose insurer paid them the $15,000 limits of the driver's
liability policy.

¶3             At the time of the accident, Sprayfoam was insured under a
commercial auto insurance policy from Diamond State Insurance
Company, which included uninsured and underinsured motorist
coverages of $1 million. Sprayfoam also held a $5 million excess liability
policy from Starr. Sprayfoam's insurance agent, Auditore, arranged both
policies for the company.




                                      2
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

¶4            The Laufers made claims on both the Diamond primary
policy and the Starr excess policy. In response, Diamond declined to tender
the $1 million policy limits, arguing Mr. Laufer would not have perished if
he had been wearing a seatbelt, and so bore some fault. The Laufers
ultimately accepted $850,000 under the auto policy. Starr, the excess carrier,
denied the Laufers' claim, asserting that its policy expressly excluded
underinsured motorist coverage.

¶5              The Laufers sued Starr and Auditore. They alleged Starr
breached a contract and the covenant of good faith and fair dealing and, in
a claim titled "Doctrine of Reasonable Expectation," the Laufers alleged they
reasonably expected the Starr policy would cover underinsured motorist
claims. They also alleged Auditore negligently failed to advise them and
Sprayfoam concerning the excess policy.

¶6            After lengthy summary judgment proceedings, the superior
court entered judgment for the defendants and awarded $125,000 in
attorney's fees to Starr under Arizona Revised Statutes ("A.R.S.") section 12-
341.01 (2017).1 We have jurisdiction over the Laufers' timely appeal
pursuant to A.R.S. § 12-2101(A)(1) (2017).

                               DISCUSSION

A.     Summary Judgment in Favor of Starr.

¶7           We review de novo the grant of a motion for summary
judgment. Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 199,
¶ 15 (App. 2007). Summary judgment is appropriate when "there is no
genuine dispute as to any material fact and the moving party is entitled to
judgment as a matter of law." Ariz. R. Civ. P. 56(a).

       1.     The binder as a contract.

¶8           On appeal, the Laufers no longer dispute that Starr's excess
policy expressly excluded underinsured motorist coverage.2 They argue,

1     Absent material revision after the relevant date, we cite a statute's
current version.

2      Under a heading titled "Exclusions," the policy stated, "This
insurance shall not apply to: . . . 'Ultimate Net Loss' arising out of or
resulting from any first party physical damage coverage; no-fault law;
personal injury protection or auto medical payments coverage; or
uninsured or underinsured motorist law."


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                   LAUFER, et al. v. AUDITORE, et al.
                        Decision of the Court

however, that Starr was obligated to provide such coverage because the
binder Starr issued to them through its broker represented that the excess
policy would "follow [the] form" of the Diamond auto policy, which did
include underinsured motorist coverage.

¶9             The binder was a four-page document directed to Auditore &
Associates that began, "We are pleased to confirm that coverage has been
bound . . . in accordance with terms, conditions, and limitations provided
by the carrier for you and your insured to review." The binder proceeded
to specify three underlying insurance policies (general liability, automobile
liability and worker's compensation) and their limits of liability, then
identified the Starr policy as "Excess Liability Policy Form XS-100 (10/08)
and Attachments." Under the heading "Forms and Endorsements," the
binder next stated:

      FOLLOWED    POLICY:    EXCEPT     FOR   THOSE
      ENDORSEMENTS LISTED BELOW IT IS INTENDED THAT
      THE POLICY OF THE CURRENT POLICY YEAR WILL
      FOLLOW THE TERMS AND CONDITIONS OF THE
      POLICY ISSUED BY THE FIRST UNDERLYING
      INSURANCE CARRIER AS INDICATED ABOVE.

      For a complete description of the coverage, please review the
      Policy's Terms, Restrictions & Limitations. Please note that
      the Policy is amended by any endorsements listed below.

Directly below that legend, under a heading labeled "Attachments," were
listed seven policy forms, including the excess policy Starr ultimately
issued to Sprayfoam. The binder identified it by number: "Excess Liability
Policy Form XS 100 10 08." Finally, the binder stated:

      TERMS AND CONDITIONS:

      This binder contains a broad outline of coverage and does not
      include all the terms, conditions and exclusions of the policy
      (or policies) that may be issued to you. The policy (or policies)
      contain the full and complete agreement with regard to
      coverage. Please review the policy (or policies) thoroughly
      with your broker upon receipt and notify us promptly in
      writing if you have any questions. In the event of any
      inconsistency between the binder [and] the policy, the policy
      language shall control unless the parties agree to an
      amendment.



                                     4
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

¶10           In general, a "follow-form" excess insurance policy follows the
same "form" of an underlying primary policy, meaning the terms and
conditions and exclusions of the primary policy. The excess policy Starr
issued to Sprayfoam followed the form of the third-party liability
component of the underlying automobile policy, but it did not follow the
form of the underinsured/uninsured motorist component of that policy (as
noted, although the underlying automobile policy included
underinsured/uninsured motorist coverage, the excess policy excluded
such coverages).

¶11           The Laufers argue that the binder's representation that the
excess policy would follow the form of the underlying policies renders
invalid or unenforceable the excess policy's express exclusion of
underinsured motorist coverage. But the binder specifically warned that it
did "not include all the terms, conditions and exclusions of the policy."
Further, it stated that "[i]n the event of any inconsistency between the
binder [and] the policy, the policy language shall control unless the parties
agree to an amendment."

¶12           Moreover, the binder twice listed by number (XS 100 10 08)
the form of the Starr excess policy and directed the reader to review the
"Policy's Terms, Restrictions & Limitations" to see "a complete description
of the coverage." Indeed, the binder's second reference to the number of the
excess policy form was in a list of seven items directly following the binder's
warning that "EXCEPT FOR THOSE ENDORSEMENTS LISTED BELOW IT
IS INTENDED THAT THE POLICY . . . WILL FOLLOW THE TERMS AND
CONDITIONS OF THE POLICY ISSUED BY THE FIRST UNDERLYING
INSURANCE CARRIER . . . ."

¶13           The Laufers contend that the presence of the Starr excess
policy form in the list of "endorsements" is of no moment because the
specified policy form was "the actual body of the policy," not an
"endorsement." While that is true, the point of the binder's warning was
that the excess policy would follow form "except for" certain items, and, as
relevant here, the specified excess policy form excepted underinsured
motorist coverage, even though such coverage was included in the
underlying primary policy. In this way, the binder's use of the term
"endorsements" to identify exceptions or amendments to the general
follow-form nature of the excess policy was not vague or inappropriate. See
Black's Law Dictionary (8th ed. 1999) 569 (defining "endorsement" as "[a]n
amendment to an insurance policy; a rider").




                                      5
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

¶14           At a minimum, the express exclusion of underinsured
motorist coverage in the Starr excess policy form created an "inconsistency"
between the binder (as the Laufers construe the binder) and the policy. And
the binder plainly provided that in the event of an inconsistency, "the policy
language shall control." The same result follows from the principle that
once an insurer issues a formal written policy, the policy's terms control
over anything in the binder because the binder no longer has any effect.
Under A.R.S. § 20-1120(B) (2017), as relevant here, an insurance binder is
valid only until "issuance of the policy with respect to which it was given."
See Statewide Ins. Corp. v. Dewar, 143 Ariz. 553, 556 (1984) ("A binder is
simply a contract made in contemplation of the issuance of a later, formal
agreement of insurance."). Sprayfoam's wholesale insurance broker sent
the binder to Sprayfoam's agent, Auditore & Associates, on February 3,
2012, and forwarded the excess policy itself on May 9, 2012, roughly three
months before the accident that killed Mr. Laufer.

       2.     Breach of covenant          of    good    faith:   "Reasonable
              expectations."

¶15          Citing Gordinier v. Aetna Cas. & Sur. Co., 154 Ariz. 266 (1987),
and Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383,
391–94 (1984), the Laufers next argue the "doctrine of reasonable
expectations" barred Starr from denying their claim for underinsured
motorist coverage under the excess policy.

¶16            Gordinier held that "even unambiguous boilerplate terms in
standardized insurance contracts" will not be enforced "in a limited variety
of situations," including, as relevant here:

       2. Where the insured did not receive full and adequate notice
       of the term in question, and the provision is either unusual or
       unexpected, or one that emasculates apparent coverage;

       3. Where some activity which can be reasonably attributed to
       the insurer would create an objective impression of coverage
       in the mind of a reasonable insured;

       4. Where some activity reasonably attributable to the insurer
       has induced a particular insured reasonably to believe that he
       has coverage, although such coverage is expressly and
       unambiguously denied by the policy.

154 Ariz. at 272–73 (citations omitted); see Restatement (Second) of
Contracts § 211 (1981).


                                      6
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

¶17           The basis for the Laufers' "reasonable expectations" claim is
the binder, which they contend promised Sprayfoam that Starr's excess
policy would follow the form of the underlying policies, including the
Diamond automobile liability policy, which included underinsured
motorist coverage. The Laufers point to Auditore's testimony that he saw
nothing in the binder that led him to believe the excess policy did not
contain underinsured motorist coverage. They further cite testimony by
Rick Radobenko, Sprayfoam's CEO and majority owner, that he was
surprised when he found out after the fact that the excess policy would not
cover the accident.

¶18           As noted above, however, the binder did not promise that the
Starr policy would follow the form of the underlying policies in all respects.
The binder expressly put Sprayfoam on notice that there were exceptions
to "follow form," and told the company where to look to identify those
exceptions. It also specifically warned Sprayfoam that in the event of any
inconsistencies between the binder and the formal policy, the policy would
control. Accordingly, even if the underinsured motorist exclusion was
"unexpected" so far as Sprayfoam was concerned, the Laufers cannot show
that the company lacked "full and adequate notice" of it. Nor can the
Laufers show that any act by Starr or its broker created a reasonable
understanding that the excess policy would cover damages from
underinsured motorists. The Laufers point to no evidence that Starr or its
broker made any representation to Sprayfoam concerning underinsured
motorist coverage under the excess policy. Although Radobenko testified
he was surprised to learn after the accident that the Starr excess policy did
not cover the Laufers' claim, he had not talked to Auditore or Starr's broker
before the accident about excess coverage for an underinsured motorist
claim.

¶19          Instead, the Laufers argue simply that they were promised a
"follow-form" policy, which by their definition would have covered
everything the underlying automobile liability policy covered, including
damages caused by an underinsured or uninsured motorist. But the fact
that one provision of a policy generally extends coverage and another limits
the circumstances under which that coverage will be provided "does not
mean that the attempted limitation is contrary to the reasonable
expectations of the insured." Millar v. State Farm Fire & Cas. Co., 167 Ariz.
93, 97 (App. 1990). As Darner stated, "the reasonable expectation concept
must be limited by something more than the fervent hope usually
engendered by loss." 140 Ariz. at 390; see also State Farm Fire & Cas. Co. v.
Powers, 163 Ariz. 213, 216 (App. 1989) (under the "reasonable expectation"



                                      7
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

doctrine, "the expectations to be realized must be those that have been
induced by the making of a promise").

¶20           For the doctrine of reasonable expectations to apply, the
insured's "expectation of coverage must be objectively reasonable." Millar,
167 Ariz. at 97. In this context, the doctrine enforces the insured's
expectations only if those expectations "have been induced by the making
of a promise." Darner, 140 Ariz. at 390 (quoting 1 Corbin, Contracts § 1, at 2
(1963)). Here, the binder's representation that the excess policy would
"follow form" was specifically limited by the terms of the excess policy
itself. Under these circumstances, the insured had "no basis for believing
that any particular loss would be covered without first reading the relevant
policy provisions." Millar, 167 Ariz. at 97.

¶21            Application of the reasonable expectations doctrine also
requires proof that the insurer had reason to believe that the insured would
not have agreed to the provision if it had been aware of it. First American
Title Ins. Co. v. Action Acquisitions, LLC, 218 Ariz. 394, 400, ¶ 31 (2008)
("Under this doctrine, a contract term is not enforced if one party has reason
to believe that the other would not have assented to the contract if it had
known of that term."); State Farm Fire & Cas. Ins. Co. v. Grabowski, 214 Ariz.
188, 194, ¶ 21 (App. 2007). On summary judgment, the Laufers offered no
evidence to support the proposition that Sprayfoam would not have
accepted the excess policy's exclusion of underinsured motorist coverage if
it had been called to the company's attention. To this point, moreover,
Radobenko, Sprayfoam's CEO, testified the company would not have paid
for excess underinsured motorist coverage had it been offered.3

B.     Summary Judgment in Favor of Auditore.

¶22          The Laufers also argue the superior court erred by granting
summary judgment to Auditore and his company. They contend that as
Sprayfoam's insurance agent, Auditore and his company owed Mr. Laufer
a duty, which the Auditore defendants breached by failing to inform
Sprayfoam that the Starr excess policy did not contain underinsured
motorist coverage. According to the Laufers, "If the excess policy was not


3     According to the record, Starr does not offer excess underinsured
motorist coverage in Arizona. Its excess policies include underinsured and
uninsured motorist coverage only in states that require such coverage, and
Arizona does not require it. None of the excess policies Sprayfoam
purchased over the several years before Mr. Laufer's accident included
underinsured or uninsured motorist coverages.


                                      8
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

providing UM/UIM coverage, then Sprayfoam was entitled to know this
so it could make an informed decision which binds all insureds including
[Mr. Laufer]."

¶23             As the Laufers concede, however, Sprayfoam's decision about
what insurance to purchase binds all those who would be insured under
the company's policies, including Mr. Laufer. See A.R.S. § 20-259.01(B)
(2017) ("selection of limits or rejection of coverage by a named insured or
applicant . . . shall be valid for all insureds under the policy"). And, as the
company officer in charge of making decisions concerning its insurance
coverage, Radobenko testified that even if he had known that Starr's excess
policy did not include underinsured motorist coverage, he would not have
sought out a policy that did. Confronted with such testimony, the Laufers
failed to offer evidence to establish a genuine issue of fact on this issue, let
alone that any breach by the Auditore defendants caused them harm.

¶24           The Laufers rely on an affidavit in which Radobenko stated
that he had believed that the Starr excess policy would cover the Laufers'
loss and, more generally, that he "believed [the Starr policy] would cover .
. . [Sprayfoam's] owners and employees for their injuries if they were hurt
by other people who did not have insurance or did not have enough
insurance." They also point to deposition testimony by Radobenko and
Auditore that each man was surprised to learn after the fact that the excess
policy did not cover the accident. But neither the affidavit nor the
deposition testimony contradicts Radobenko's testimony that he would not
have purchased excess underinsured motorist coverage if it had been
offered.4 Moreover, during his deposition, Radobenko testified that his


4      Radobenko explained:

       We're from that, you know, generation that we're going to live
       forever anyway. We think that all the insurance we buy is
       overrated and not necessary.

       [Mr. Laufer] and Rob and I, we spend so much money on
       insurance that we have to do an enormous amount of
       business annually just to pay for insurance. And anything
       that would add to that cost, they would look at me like I'm an
       idiot. They would look at me and say, "Rick, you know,
       you're already spending a million dollars a year on insurance.
       We have to do $10 million a year just to pay for insurance, and
       you want to buy more?"



                                       9
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

belief that the excess policy would cover the Laufers was not based on
anything that Starr or Auditore had said or that he had read in the Starr
policy. Instead, he said he knew Sprayfoam had an excess policy and knew
that it might provide coverage.

¶25             Nevertheless, the Laufers argue that because Radobenko and
Auditore were close personal friends, the jury could conclude that on behalf
of Sprayfoam, and contrary to his deposition testimony, if Radobenko had
known before the fact that the Starr policy did not include underinsured
motorist coverage, he would have demanded another excess policy that
included such coverage. The Laufers point to Radobenko's question to
Auditore after learning after the accident that the excess policy excluded
underinsured motorist coverage: "well, can we get it?" But that speculation
flies in the face of Radobenko's testimony that he would not have purchased
the coverage and the undisputed testimony that for as long as Auditore
represented Sprayfoam, the excess policies the company purchased did not
include underinsured motorist coverage.

¶26            The Laufers' contention that Radobenko testified falsely at his
deposition in order to protect his friend Auditore from liability is
insufficient to prevent summary judgment. See Orme School v. Reeves, 166
Ariz. 301, 311 (1990) ("[I]t would effectively abrogate the summary
judgment rule to hold that the motion should be denied simply on the
speculation that some slight doubt . . . might blossom into a real controversy
in the midst of trial."); Comerica Bank v. Mahmoodi, 224 Ariz. 289, 292, ¶ 16
n.3 (App. 2010) ("A party opposing a motion for summary judgment is not
entitled to proceed to trial on the mere hope that the jury will disbelieve
uncontroverted testimony."); GM Dev. Corp. v. Community Am. Mortg. Corp.,
165 Ariz. 1, 5–6 (App. 1990) (after party moving for summary judgment
submits facts sufficient to show existence of no genuine issue of material
fact, party opposing motion must present "competent material" sufficient in
response).

¶27          Accordingly, because the Laufers failed to offer sufficient
evidence on summary judgment to create a genuine dispute of fact as to
whether Auditore's alleged breach harmed Sprayfoam and/or the Laufers,




                                     10
                    LAUFER, et al. v. AUDITORE, et al.
                         Decision of the Court

the superior court did not err in granting summary judgment in favor of
the Auditore defendants.5

C.     Attorney's Fees.

¶28           After prevailing on summary judgment, Starr filed a fee
application pursuant to A.R.S. § 12-341.01 (2017), seeking $251,302.50 in
fees. The superior court awarded Starr $125,000. We review the superior
court's award of attorney's fees under A.R.S. § 12-341.01 for an abuse of
discretion, and will uphold the court's award if it has "any reasonable
basis." State Farm Mut. Auto. Ins. Co. v. Arrington, 192 Ariz. 255, 261, ¶ 27
(App. 1998).

¶29            The Laufers do not contest the applicability of the fees statute,
but say only that Ms. Laufer is a widow and argue that the legal issues their
claims present are not simple. We decline to upset the superior court's
exercise of discretion in granting the award.




5      The superior court entered summary judgment for the Auditore
defendants on another ground, but we may affirm summary judgment on
any ground raised in the superior court. See ABCDW LLC v. Banning, 241
Ariz. 427, 433, ¶ 16 (App. 2016).




                                      11
                  LAUFER, et al. v. AUDITORE, et al.
                       Decision of the Court

                            CONCLUSION

¶30           For the foregoing reasons, we affirm the judgment of the
superior court.6 We grant Starr its costs, contingent on compliance with
Arizona Rule of Civil Appellate Procedure 21, but deny its request for
attorney's fees on appeal.




                       AMY M. WOOD • Clerk of the Court
                        FILED: AA




6       Both in the superior court and on appeal, the parties disputed
whether the Starr excess policy could be implicated when the underlying
auto insurer had not paid its policy limits and whether the Auditore
defendants owed a duty of care to Mr. Laufer. Because we have affirmed
the superior court's judgment on other grounds, we do not address those
issues.


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