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David M. Bell, David Bell & Associates, PLLC, Phoenix, AZ prevailed before the Arizona Supreme Court on a certified question of state law from the United States Court of Appeals for the Ninth Circuit. In an underlying personal injury case, a couple sold a car two weeks before an accident but stipulated that they owned and negligently entrusted the car to another defendant who was involved in the accident with the plaintiff. In a settlement and in exchange for that stipulation, the couple received a covenant not to execute a resulting default judgment. In the coverage action that followed, the plaintiff contended that, pursuant to the Restatement (Second) Judgments § 58, the default judgment in the tort action precluded David’s client, the insurer of the car, from relitigating the issue of whether the couple owned and entrusted the car, because those facts were necessary for the judgment against the insured couple. The insurer argued that it was not bound by any stipulations of facts necessary to prove coverage, even if those facts were also necessary to support the tort judgment. The Arizona Supreme Court found that a default judgment in the personal injury action was not “actual litigation” of the ownership issue for the purposes of § 58 and, therefore, the insurer was not precluded from litigating ownership in the coverage action. The stipulation would bind an insurer to the existence and extent of its insured’s liability but would not preclude the insurer from litigating its identified basis for contesting coverage, irrespective of any fault or damages assessed against the insured. Congratulations, David! 

Do you have a triumph to share? Send a brief summary and a recent photograph to David Fuqua at dfuqua@fc-lawyers.com


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