                            NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                         FILED
                            FOR THE NINTH CIRCUIT                           JAN 07 2011

                                                                        MOLLY C. DWYER, CLERK
                                                                         U .S. C O U R T OF APPE ALS

PHILIP RUDOLPH JOHNSON,                          No. 10-15263

              Plaintiff - Appellant,             D.C. No. 3:09-cv-02125-SC

  v.
                                                 MEMORANDUM *
AMERICAN CASUALTY COMPANY
OF READING, PA, a Pennsylvania
corporation,

              Defendant - Appellee.



                    Appeal from the United States District Court
                       for the Northern District of California
                      Samuel Conti, District Judge, Presiding

                     Argued and Submitted December 9, 2010
                            San Francisco, California

Before: SCHROEDER, THOMAS, and GOULD, Circuit Judges.

       Philip Rudolph Johnson (“Johnson”) appeals the district court’s grant of

summary judgment in favor of American Casualty Company of Reading, PA,

(“American Casualty”) in his diversity action alleging breach of contract, bad faith,



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
estoppel, and waiver. We have jurisdiction pursuant to 28 U.S.C. § 1291. Because

the facts are known to the parties, we repeat them only as necessary to explain our

decision. We reverse.

      The district court awarded summary judgment on Johnson’s breach of

contract claim upon a determination that John Ryan (“Ryan”) did not qualify as an

insured under the policy because V&C Construction (“V&C”) did not own the

2002 GMC Sierra (“GMC”) at the time of the accident and did not give Ryan

permission to drive the truck. Under Nevada law, “‘[o]wner’ means a person who

holds the legal title of a vehicle and whose name appears on the certificate of title .

. . .” Nev. Rev. Stat. Ann. § 482.085. Where parties transferring a vehicle agree

that the conditional vendee will obtain insurance on the vehicle, the conditional

vendee may not recover under an insurance policy secured in the name of the

original owner. See Bly v. Mid-Century Ins., Co., 101 Nev. 216 (1985). Claudia

Van Winkle (“Claudia”) testified that, because she paid off the remaining debt

owed on the vehicle before it was due, she received undated title to the GMC early

but that the parties had agreed that V&C would keep legal title and continue to

insure the vehicle until September 2005. Her name did not appear on the

certificate of title at the time of the accident, and V&C maintained insurance on the

vehicle under the V&C policy. However, Ray Van Winkle (“Ray”) testified that


                                           2
he took actions that he believed would result in Claudia’s insuring the vehicle in

her name. The matter is not simple, and we can see how the district court may

have viewed it otherwise, but we conclude that there is a genuine issue of material

fact as to whether V&C maintained an ownership interest in the vehicle sufficient

for insurance purposes at the time of the accident.

      There is also a genuine issue of material fact as to whether Ryan had

permission from V&C to drive the GMC at the time of the accident. Both Nevada

and California require that insurance coverage be extended to drivers who have

express or implied permission to drive a vehicle from a policy’s named insured.

See Nev. Rev. Stat. Ann. § 485.3091(1)(b) (stating that a liability policy must

“[i]nsure the person named therein and any other person, as insured, using any

such motor vehicle with the express or implied permission of the named insured . .

. .”); Cal. Ins. Code § 11580.1(b)(4) (similar). “[I]t is almost universally held . . .

that where the named insured grants his permittee broad and unfettered dominion

over his insured automobile, he also impliedly authorizes his permittee to allow a

third person to use it, and thus to render him an additional insured.” State Farm

Mut. Auto. Ins. Co. v. Williamson, 331 F.2d 517, 519–20 (9th Cir. 1964) (citation

and internal quotation marks omitted). Because Ray testified that V&C never

restricted Claudia’s use of the GMC, a jury could reasonably find that Ryan,


                                            3
driving with Claudia’s express permission, enjoyed V&C’s implied permission to

use the vehicle. Cf. Nelson v. Planet Ins. Co., 111 Nev. 1373 (1995) (holding that

insurance did not extend to third party driver where explicit permission of rental

company or short-term lessee was required by the rental agreement). Again, the

matter is not simple, but we conclude that the genuine factual issue on permission,

together with the genuine factual issue on ownership, precluded the summary

judgment on the breach of contract claim.

      Johnson also alleges that American Casualty breached its obligation of good

faith and fair dealing by refusing to defend and indemnify Ryan. Both California

and Nevada law provide causes of action for breach of an implied covenant of

good faith where benefits owed under an insurance policy are unreasonably

withheld. See Love v. Fire Ins. Exchange, 221 Cal. App. 3d 1136, 1151 (1990)

(“[T]here are at least two separate requirements to establish breach of the implied

covenant: (1) benefits due under the policy must have been withheld; and (2) the

reason for withholding benefits must have been unreasonable or without proper

cause.”); U.S. Fidelity & Guar. Co. v. Peterson, 91 Nev. 617, 620 (1975) (“Where

an insurer fails to deal fairly and in good faith with its insured by refusing without

proper cause to compensate its insured for a loss covered by the policy[,] such

conduct may give rise to a cause of action in tort for breach of an implied covenant


                                           4
of good faith and fair dealing.”). Because a reasonable jury could find that Ryan

was an “insured” under the policy, a reasonable jury could also find that American

Casualty breached its obligation of good faith and fair dealing by refusing to

defend and indemnify him, making summary judgment on this claim improper.

Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the movant

shows that there is no genuine dispute as to any material fact . . . .”). Because the

summary judgment on the breach of contract claim must be reversed, and in light

of the other evidence presented by appellant, we also conclude that the bad faith

versus good faith issue is subject to trial.

       In the alternative, Johnson asserts a claim of estoppel, based on the

contention that Claudia relied upon the representations of American Casualty’s

agent that the GMC remained insured under the V&C policy. Under California

law, which the parties agree governs this claim, “misrepresentation as to coverage

under a policy or issuance of a policy different in coverage from that represented to

the insured estops the insurer from reliance on the coverage as stated in the issued

policy.” Hartford Fire Ins. Co. v. Spartan Realty Int’l, Inc., 196 Cal. App. 3d

1320, 1325 (1987). “[T]he insured claiming estoppel must establish detrimental

reliance on the insurer’s conduct.” Id. at 1326. Based on the record, a jury could

find that American Casualty’s agent knew or should have known that ownership


                                               5
had legally transferred to Claudia when she told Claudia that the vehicle was still

covered by V&C’s policy. Ray testified that he told American Casualty’s agent

that he had transferred title to Claudia, and Claudia gave testimony about her

conversations with the agent in which she indicated that ownership had transferred.

A reasonable jury could find the agent’s statement that the vehicle was still insured

under V&C’s policy to be a representation on which Claudia could reasonably rely,

and indeed a misrepresentation in that the insurer’s agent did not communicate that

the ownership change would cause a significant reduction in the scope of the

policy’s coverage. A reasonable jury could also find that Claudia detrimentally

relied on that misrepresentation and that American Casualty is consequently

estopped from denying that Claudia and her permittees are covered as “insureds”

under the policy. See Fanucci v. Allstate Ins. Co., 638 F. Supp. 2d 1125, 1144–46

(N.D. Cal. 2009) (finding summary judgment improper where the insurance agent

stated, contrary to the written terms of the policy, that a particular policy would

satisfy insured’s specified needs).

      There is also a genuine issue of material fact bearing upon waiver, as a

reasonable jury could find that American Casualty’s agent knew that ownership of

the GMC had changed when she confirmed to Claudia that the vehicle was still

insured under the V&C policy. See Vigoren v. Transnational Ins. Co., 86 Nev.


                                           6
810, 812 (1970) (“[An insurance company] may not rely upon the change of

beneficial ownership of the car to defeat coverage if it had knowledge of the

conditional sale when it elected to reinstate the policy and receive a premium

therefor. Such knowledge and reinstatement of the policy in spite of it, is a waiver

of the right to rely upon the precise wording of the omnibus clause of that

policy.”).

      For all of the above reasons, the summary judgment on all claims was error,

and we remand for further proceedings consistent with this disposition, believing

that a trial is required. Guided by proper jury instructions, a trier of fact should

resolve these ownership, permission, and other claim-related issues.

      REVERSED AND REMANDED.




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