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Date: 06-08-2022

Case Style:

Jacob Benson v. Casa De Capri Enterprises, LLC

Case Number: cv-18-00006

Judge: Dominc W. Lanza

Court: United States District Court for the District of Arizona (Maricopa County)

Plaintiff's Attorney:

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Defendant's Attorney: Dustin Allan Christner

Description: Phoenix, Arizona personal injury lawyers represented Plaintiff who sued Defendant

Jacob Benson is a disabled vulnerable adult who received skilled nursing care at a now-defunct facility called Casa de Capri Enterprises, Inc. (“Capri”). In December 2012, Benson and other family members (together, “Plaintiffs”) brought a negligence action against Capri in Maricopa County Superior Court. (Doc. 1-1 at 5-15.) At the time, Capri had a “Claims Paid & Reported Liability” insurance policy, which was issued by Defendant Continuing Care Risk Retention Group, Inc. (“CCRRG”). (Doc. 56-1.) Pursuant to this policy, CCRRG assumed Capri's defense of the lawsuit. (Doc. 56 ¶¶ 20-21.)

In 2013, Capri experienced financial difficulties. (Id. ¶¶ 24-44.) These difficulties caused Capri to default on its payment obligations to CCRRG, then file for bankruptcy, and eventually cancel its insurance policy. (Id.) Afterward, CCRRG withdrew its defense of Plaintiffs' lawsuit. (Id. ¶¶ 45-47.) In November 2017, after the bankruptcy stay was


lifted, Plaintiffs obtained a judgment of just more than $1.5 million against Capri. (Doc. 1-2 at 231-32.)

Plaintiffs' judgment against Capri forms the backdrop for this lawsuit, which is procedurally complex (to put it mildly). In December 2017, Plaintiffs served a writ of garnishment on CCRRG. (Doc. 1 ¶ 2; Doc. 1-2 at 233-35, 238-39.) In response, CCRRG removed the action to federal court[1] and then moved to compel arbitration. (Docs. 1, 13.) Although the district judge to whom the case was originally assigned denied CCRRG's motion (Doc. 27), CCRRG filed a renewed motion to compel arbitration after the case was reassigned to the undersigned judge (Docs. 35, 63) and the Court eventually granted that motion, holding that even though Plaintiffs were non-signatories to the insurance policy between Capri and CCRRG, they were bound by the arbitration clause in that policy under Arizona's doctrine of direct benefits estoppel. (Doc. 88.) Based on this ruling, the Court also denied, as moot, four other motions that were pending at the time, including Plaintiffs' motion for summary judgment on the core disputed issue in this case-whether Plaintiffs' negligence claim against Capri is covered by Capri's CCRRG insurance policy, and by extension whether Plaintiffs may recover from CCRRG via the law of garnishment.[2]

Plaintiffs appealed the order compelling arbitration to the Ninth Circuit, which in turn certified a question of law to the Arizona Supreme Court. In January 2022, the Arizona Supreme Court resolved that question in Plaintiffs' favor, holding that “the doctrine of direct benefits estoppel can[not] be applied in an Arizona garnishment proceeding.” Benson v. Casa de Capri Enterprises, LLC, 502 P.3d 461, 465 (Ariz. 2022). Based on this ruling, the Ninth Circuit issued an amended memorandum decision in March 2022 concluding that “the district court erred in granting CCRRG's motion to compel arbitration under the doctrine of direct benefits estoppel.” Benson v. Casa de Capri Enterprises, LLC, 2022 WL 822126, *1 (9th Cir. 2022). In a footnote, the Ninth Circuit also stated the


following: “CRRG alternatively argues that the Liability Risk Retention Act of 1986 (LLRA) preempts state law governing the operation of risk retention groups, and apparently by extension precludes Arizona from limiting arbitration provisions in insurance policies provided by a risk retention group. The district court did not address this argument and [Plaintiffs] argue that CCRRG did not adequately raise it below. We leave these matters to the district court in the first instance, with the benefit of the Arizona Supreme Court's new guidance.” Id. at *2 n.1.

After the mandate issued, the Court solicited supplemental briefing from the parties about how to proceed. (Doc. 106.) The parties have now filed their briefs. (Docs. 112, 113.) Additionally, Plaintiffs have filed a motion for their attorneys' fees on appeal, which is also fully briefed. (Docs. 109, 110, 11.)...
Benson v. Casa De Capri Enters. (D. Ariz. 2022)

Accordingly, IT IS ORDERED that:

1. CCRRG's request to set a briefing schedule on the issue of arbitration-related preemption (Doc. 113 at 3) is denied. The Court will decide that issue in due course without the need for further briefing.

2. CCRRG's Rule 12(c) motion (Doc. 38) is denied.

3. CCRRG's motion to strike (Doc. 75) is denied as moot.

4. CCRRG's request to modify the scheduling order with respect to dispositive motions (Doc. 113 at 4-5) is granted. CCRRG may file a motion for summary judgment by July 7, 2022. Once that motion is fully briefed (and assuming the Court has not, in the interim, granted CCRRG's preemption-related arbitration request), the Court will resolve both sides' summary judgment motions.

5. NRRA's motion to file an amicus brief (Doc. 66) is granted. The Clerk of Court is directed to file the amicus brief that was lodged as an attachment to NRRA's motion (Doc. 66-1). Plaintiffs may file a response to that brief. The response is due on the same date as Plaintiffs' response to CCRRG's yet-to-be-filed summary judgment motion. No reply may be filed.

6. Plaintiffs' motion for attorneys' fees (Doc. 109) is denied.
Benson v. Casa De Capri Enters. (D. Ariz. 2022)

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