hansen v geico 20190415 reply brief

Transcript

1 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 1 of 23 No. - 35383 18 FOR THE NINTH CIRCUIT UNITED STATES COURT OF APPEALS LEIF HANSEN, on behalf of himself and all other similarly situated, s Appellant, Plaintiff - v. EMPLOYEES INSURANCE COMPANY, GOVERNMENT a Maryland corporation, - Appellee. Defendant _________________________________________________________________ United States District Court On Appeal From For the District of Oregon - cv - 01986 D.C. No. 3:17 MO - Honorable Michael W. Mosman ’ S REPLY BRIEF APPELLANT LEIF HANSE N Steven Olson Paul Conable Robert Koch Megan Houlihan Tonkon Torp LLP 888 SW Fifth Avenue , Suite 1600 - 2099 Portland, OR 97204 (503) 802 - Telephone: 2072 Attorneys for Plaintiff - Appellant

2 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 2 of 23 i TABLE OF CONTENTS No. Page ... INTRODUCTION ... ... 1 ... ... ... ... ... 2 ARGUMENT vers necessary diagnostic scans ... 2 GEICO’s insurance policy co I. The policy defines “loss” as repairing damage to a car ... 2 A. Necessary digital scans are part of repairing a modern car ... B. 7 C. Hansen sufficiently alleged that digital scans were 11 necessary to repair the collision damage to his vehicle ... II. Hansen’s reasonable expectation that GEICO pay for necessary digital scans does not contradict the express terms of the policy ... 14 III. If the Court finds that Hansen’s complaint failed to allege sufficient facts, then the Court should remand for an opportunity to amend ... ... ... 15 CONCLUSION ... ... ... ... 17 CERTIFICATE OF COMPLIANCE ... ... ... 18

3 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 3 of 23 ii TABLE OF AUTHORITIES Page(s) Cases , Alaska v. United States ... ... 201 F.3d 1154 (9th Cir. 2000) 1 6 ... urance Co. Anderson v. F armers Ins , ... ... 13 , 1 5 ... 71 P.3d 144 (Or. Ct. App. 2003) antic Corp. v. Twombly , Bell Atl ... ... ... 1 2 550 U.S. 544 (2007) tford Beveridge v. Har Co. , Accident & Indemnity ... ... 10 770 P.2d 943 (Or. Ct. App. 1989) ... urance Co. , Busch v. Ranger Ins , ... . 4 , 5 ... 9 610 P.2d 304 (Or. Ct. App. 1980) & Gell v. Hartmarx Corp. , Cooter ... ... ... 496 U.S. 384 (1990) 15 Farmers Ins urance Co. v. Munson , ... ... 1 3 930 P.2d 878 (Or. Ct. App. 1996) ... urance Co. , Gonzales v. Farmers Ins 8 ... ... 5 , 7 , 196 P.3d 1 (Or. 2008) ... Hoffman Constr uction Co. v. Fred S. James & Co. , 836 P.2d 703 (Or. 1992) ... ... ... 3 Holloway v. Republi c Indem Co. , nity , ... 147 P.3d 329 (Or. 2006) 3 ... 12 ... Lopez v. Smith , 203 F.3d 1122 (9th Cir. 2000) ... ... ... 15 , 16 SAIF Corp. v. Carlos Macias , - 418 P.3d 54 (Or. Ct. Ap p. 2018) ... ... ... 10 , 11

4 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 4 of 23 iii Shadbolt v. Farmers Ins Exch ange , urance ... 551 P.2d 478 (Or. 1976) 3 , 5 ... ... Sierra Club v. Morton , ... 1 3 ... 405 U.S. 727 (1972) ... , utomobile Insurance Co. Sonnier v. State Farm Mutual A ... ... ... 509 F.3d 673 (5th Cir. 2007) , 8 7 urance Co. v. McCormick & Baxter St. Paul Fire & Marine Ins , Creosoting Co. ... ... ... 3 923 P.2d 1200 (Or. 199 6) l Hosp ital Ass’n , iona Zeh v. Nat ... ... ... 10 377 P.2d 852 (Or. 1963) Statutes regon R S tatutes § 42.230 ... ... ... 7 evised O Other Authorities (10th ed. 2014) ... ... 4 Black’s Law Dictionary ... . R . Civ . P Fed 12 (b)(6) ... ... ... 15 , 16 . Fed R . Civ . P . . (c) ... ... ... . 1 6 12

5 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 5 of 23 1 INTRODUCTION the intersection between car and modern This is a case about insurance Appellant Leif Hansen purchased insurance from Appellee technology . for a 2017 pickup truck Government Employees Insurance Company (GEICO) manufactured by General Motors. Like most modern cars, sensitive computer software and technology operate virtually all of the car’s major vehicle functions. any collision, a repair sho p As a result, General Motors recommends that, after s in order to identify and diagnose for conduct a scan of the car’s electronics system any damage that may be undetectable to the naked eye . repair Hansen suffered a collision to his rear bumper. GEICO refused to pay for diagnostic digital scans. Hansen sued under Oregon law for breach of contract and that scans , arguing breach of the implied covenant of good faith and fair dealing are part and parcel of collision repair for modern cars , including his 2017 General pickup truck granted GEICO’s motion to dismiss, ruling Motors . The district court known collision that, as a matter of law, the policy covers a car , but not damage to 1 scans that identify collision d amage . digital ER 28 – 30. 1 Hansen also sued on behalf of all other GEICO policyholders for whom GEICO has refused to pay for diagnostic scans after the collision of a modern car, which GEICO moved to strike. The district court never reached GEICO’s motion to strike, so Hansen’s class allegations are not before th e Court in this appeal .

6 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 6 of 23 2 On appeal, GEICO concedes that the insurance policy requires that GEICO hat car. GEICO also concedes “ [ t ] . Red Br. 27 pay to repair damage to Hansen’s ” Red Br. 20 n.7 (emphasis , scans are sometimes necessary to effectuate a repair r the omitted) policy, ER 15. , and that it sometimes pays for digital scans unde , no exclusion in the policy excludes digital scans. Critically Thus, under Oregon : the policy covers digital the insured law, the policy must be construed in favor of scans that are necessary to collision repair. And, at the motion to effectuate a dismiss stage, the district court had to accept as true Hansen’s allegation that scans were necessary to identify and thereby repair the full collision damage to his car. s complaint. This Court should reverse the district court’s dismissal of Hansen’ ARGUMENT GEICO’s insurance policy covers necessary diagnostic scans I. On appeal, GEICO makes three primary arguments, none of which has “loss” under its policy unambiguously merit. GEICO argues that: (1) paying for , ” (2) means “damage ing collision damage under the policy does not include repair scanning for latent damage, and (3) Hansen failed to allege that scans were necessary to identify latent collision damage to his vehicle. The policy defines “loss” as repairing damage to a car A. Hansen’s appeal turns on whether GEICO’s policy can be construed to cover diagnostic scans as part of a collision repair . Oregon courts interpret insurance

7 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 7 of 23 3 policies as a of law using a three - step process. See Holloway v. Republic matter rica At step one, courts look to Ame Indem. Co. of , 147 P.3d 329, 333 (Or. 2006). the express definitions in the policy and, if express definitions do not resolve a disputed term’s meaning, to the term’s plain meaning as established by common and pri or court decisions . I d. ; St. Paul Fire & Marine Ins. dictionary definitions , 923 P.2d 1200, 1210 , 1212 (Or. Co. v. McCormick & Baxter Creosoting Co. If the term remains susceptible to more than one interpretation, courts . then 1996) f the term “ proceed to step two, examining the context o in which it is used and in Hoffman Const r . Co. v. Fred S. James light of the other provisions of the policy.” , 836 P.2d 703, 70 & Co. (Or. 1992) ; see Holloway , 147 P.3d at 333 – 34 . Finally, 9 if wording and context do not resolve the ambiguity, then “ any reasonable doubt as to the intended meaning of such terms will be resolved against the insurance company and in favor of extending coverage to the insured.” Shadbolt v. Farmers , 147 P.3d at ; see Ins. Exch. 551 P.2d 478, 480 (Or. 1976) 334 . , Holloway the Court should construe GEICO’s policy to cover necessary Here, diagnostic scans. At step one, the policy promises to “pay for collision loss ” and defines loss as “direct or accidental loss of or damage to * * * an insured auto” or ER 51 – 52. But the policy does not otherwise define what other insured property. “loss of or damage to” means much less how that definition relates to digital scans , in the collision context . D ictionary definitions and Oregon case law do not resolve

8 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 8 of 23 4 the ambiguity. (10th ed. 2014) defines “loss” in the Black’s Law Dictionary * * insurance context as “[t]he amount of financial detriment caused by * an ” , insured property’s damage, for which the insurer becomes liable and defines “damage” as “monetary co mpensation for loss or injury to a person or property.” include any cost associated with a collision , including Both definitions conceivably s to determine the full scope of harm caused the cost of diagnostic scan necessary . Oregon courts have held that , in the insurance context, the by the collision also to ” insured property can extend beyond “ phrase “loss of or damage only ‘physical’ damage” include the cost of inspecting the property in connection with a n to Or. Busch v. Ranger Ins. Co. , 61 0 P.2d 304, 307 ( Ct. App. 1980). accident claim. Step one does not resolve the interpretive inquiry. GEICO’s policy limits “loss” to the cost of At step two, the context of repairing or replacing a vehicle after a collision. The policy’s limitation of liability ction sets GEICO’s liability for “loss” at “the prevailing competitive price to se he c onditions section repair or replace the property.” ER 53. Additionally, t clarifies that “loss” is fully paid if GEICO either “pay[s] for the loss” or “repair[s] e[s] the damaged or stolen property.” E R 54. With Hansen’s collision, or replac GEICO agreed to pay the cost to repair his truck, making “repair” the operative term in the policy.

9 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 9 of 23 5 The Court should interpret epair” to include necessary diagnostic scans in “ r The policy does not define “repair,” but . connection with a vehicle collision broadly to mean “the restoration of the Oregon courts have defined the word vehicle to its condition prior to the collision.” Gonzales v. Farmers Ins. Co. , 196 In Gonzales , the Oregon Supreme Court held that, “ if an P.3d 1, 6 (Or. 2 008). repair ’ does not or cannot result in a comp lete restoration of the attempted ‘ s preloss condition, the vehicle is not repair[ed] .’ ” Id. (alteration in vehicle’ ‘ As relevant here, ne cessary diagnostic scans are the only way to identify original). . and diagnose any latent damage to a car’s electronics systems ¶¶ 12 – 13, ER 77 . GEICO’s refusal to pay for them renders a repair shop unable to restore 16 thus P.2d at 307 (interpreting a collision condition. See Busch , 61 - the car to its pre 0 accident damage to include inspecting for damage because “[i]t would policy for be beyond reason to say that all of the risks against which they were insured were ually observable destruction of only those which produced open and obvious or vis In addition, no provision in the policy excludes diagnostic scans. To the parts”). , it must extent any ambiguity remains about the coverage of diagnostic scans be in favor of extending coverage to Hansen . Shadbol t , resolved 551 P.2d at 480. Consequently, a s a matter of law, GEICO’s promise to repair Hansen’s car includes coverage for diagnostic scans that are necessary to identify and diagnose any latent damage from his collision. GEICO impliedly concedes as much. See

10 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 10 of 23 6 R unnecessary scans from ed Br. 14 (arguing only that the policy “excludes (emphasis added) Hansen alleged that scans ). And, as pertinent here, coverage” were necessary in light of the sensitive computer softw are and technology that his vehicle’s ma jor functions . ER 77 ¶¶ 12 – operate 22. At the motion to dismiss - stage, the district court was required to accept this well pleaded allegation as true and should have denied GEICO’s motion to dismiss. GEICO the district court did not err in dismissin g Hansen’s argues that to ” a vehicle and that, complaint because its policy defines “loss” as “damage “[b]ecause the Policy’s definition is undisputably ambiguous, it controls.” Red Br. 13. According to GEICO, “Hansen does not argue that the Policy’s definition of loss’ is ambiguous or is otherwise defective.” Red Br. 12. ‘ misunderstands Hansen’s argument. Yes, the policy defines GEICO – 52. But the collision “loss” as “loss of or damage to” a covered vehicle. ER 51 damage policy does not define “ to .” B ecause dictionaries and Oregon loss of or case law plausibly includes any cost define loss and damage in a way that associated with a collision, including diagnostic test , the Court must proceed to s step two to examine the context of the terms in the policy. At step two, the the terms to repairing or replacing a vehicle after policy’s other provisions narrow a collision. ER 53 54. With Hansen’s collision, GEICO agreed to pay the cost to – repair his truck, making “repair” the operative term in the policy. GEICO

11 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 11 of 23 7 ultimately Red Br. 27 (“Hansen needed to allege a ‘loss’ concedes as much. See * * that Geico did not pay to repair or replace.”). * car B. Necessary digital scans are part of repairing a modern are not part of repairing a vehicle after GEICO next argues that digital scans by the insured. Red Br. 15; “where no unrepaired damage is identified” a collision Red Br. 17, 22 – see GEICO’s position ignores the reality of modern cars. A 23. ollision damage a modern car’s electronics systems in ways un detectable to c can , and digital scans are the only way to identify that damage – the naked eye . ER 77 78 ¶¶ 12 – 13 , 16 – 18, 22. Undoubtedly for that reason, GEICO conceded below that it sometimes pays for digital scans to identify, diagnose, and repair collision GEICO damage under the policy. ER 15. , however, that an insured first maintains identify that damage. GEICO does not explain how an insured can logically must in light of the near invisibility of damage to computer code or realistically do so . GEICO promised in the and system to repair any damage to the car , and s policy - collision like kind Oregon law equates repairing a car with restoring the car to pre . , 196 P.3d at 7. and quality GEICO cannot insert a limitation or Gonzales into the policy Or. Rev. Stat. that it omitted in drafting the policy. See condition 42.230. § the Fifth Circuit GEICO cites case of Sonnier v. State Farm Mutual Automobile Insurance Co. , 509 F.3d 673 (5th Cir. 2007), to support its argument

12 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 12 of 23 8 that damage must be visible to invoke coverage under its to the insured in order – policy. Sonnier is inapposite . In Sonnier , the Fifth Circuit held 20. Red Br. 17 that, under similar car insurance terms, repairing a vehicle after a collision did not extensive inspection of the car’s seatbelt systems — require the insurer to pay for the seatbelt s — absent including physical, electronic, and road testing of visible 509 F.3d But damage to a seatbelt is both damage to a seatbelt. at 674 n.1, 676. ftware malfunctions are undetectable to the vehicle so visible and tangible, whereas A software naked eye present itself to the insured only when , . malfunction may an air bag fail s to deploy, a blind - spot detector fail for example, to identify a car s in the next lane, or a lane departure warning system fail s to alert a dozing driver - See – 39, 72. GEICO cannot require ER 36 who drifts across the center lane. drivers to endure these additional harms before agreeing to identify and fix latent . collision damage addition, in Sonnier , the Fifth Circ uit had interpreted Louisiana law to In as “the cost of restoring the vehicle to substantially the same physical define repair 509 F.3d (citation omitted) . Oregon law, condition as before the accident.” at 676 y however, defines repair obligations more broadl he Oregon Supreme Court . T rejected such a narrow interpretation in holding that “repair” requires restoring a car to “like kind and quality” as before the collision. Gonzales , 196 P.3d at 7.

13 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 13 of 23 9 Likewise Busch , the Oregon Court of Appeals held that an insurance , in inspect for policy’s coverage for damage to an airplane included coverage to . 610 P.2d at 307. The court reasoned that, in the context of such intricate, damage - visible damage, e risks against non “[i]t would be beyond reason to say that all of th which they were insured were only those which produced open and obvious or Id . visually observable destruction of parts GEICO attempts to distinguish .” an Busch by arguing that the inspection in that case was necessary to obtain ness certification Hansen still can use his airworthi to fly the airplane, whereas digital scans. Red Br. 2 4 truck without the In doing so, GEICO ignores the dual . holdings in : (1) that a lack of airworthy certification could constitute Busch icy, (2) that “loss of or damage to” insured property damage under the pol and extend s beyond “only ‘physical’ damage” to include the cost of inspecting the a damage claim. 610 P.2d at 307. The second holding property in connection with controls here. to minimize the Indeed, GEICO attempts threat posed by foregoing digital scans in modern cars by asserting that H ansen’s position, “[t]aken to its logical conclusion, * * * is that a small paint scratch cannot be ‘completely’ ‘repaired’ Of cou rse that is not his position. A small paint without a scan.” Red Br. 31 n.11. scratch does not damage a car’s electronics systems and thereby run the risk of

14 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 14 of 23 10 malfunctioning the car’s airbag system, blind - departure - spot detector, or lane – warning system. A collision, on the other hand, doe 18. 78 ¶¶ 12 s. ER 77 – as discussed in Hansen’s opening brief, analogous case law in the Moreover, medical insurance context confirms that, under Oregon law, diagnostic tests are see part 21 ; and Zeh v. Nat’l parcel of restorative care and treatment. Blue Br. 20 – , 377 P.2d 852 (Or. 1963); Beveridge v. Hartford Acc Hosp. Ass’ & n ident nification , 770 P.2d 943 (Or. Ct. App. 1989) ; SAIF Corp. v. Carlos - Indem Co. , 418 P.3d 54 (Or. Ct. App. 2018). Macias Oregon law limits coverage for restorative GEICO argues that In response, “identified damage or injury.” Red Br. 20. Not so. In Zeh , the care only to an court held “medical care” or “treatment” included “not only what the that physician or surgeon views as treatment, that is, things done in an effort to reliev e or cure a physical disease or infirmity, but also all of the things performed by a doctor or a surgeon on the body of the patient or in preparation in the diagnosis of at 857 ( in that case The diagnostic test 377 P.2d for cure.” emphasis added). it brought the plaintiff mental relief, gave him constituted care simply because “ hope, and constituted a program to which he yielded full allegiance and faith. ” Id. at 858. Beveridge , the court held that a diagnostic test to explore for a possible In ne was considered part of overall care because it had been “preceded or w condition ” of some kind. 770 P.2d at 944 – 45. And in followed by therapeutic measures

15 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 15 of 23 11 SAIF Corp. v. Carlos , the court held that diagnostic tests constituted - Macias identified a covered condition “because covered care regard less of whether they they were necessary to determine the extent of [the] claimant’s disability.” 418 Here, Hansen’s car suffered a collision injury, and a digital scan is but P.3d at 804. ermining and treating the extent of that injury. one repair measure of det a patient identify a broken bone Oregon courts do not require In short, that ray. E xploratory medical tests to rule out or before that patient can receive an x - confirm possible health conditions are . Similarly, part of parcel of medical care that are necessary to rule out or confirm possible damage diagnostic digital scans to a car’s electronics systems are part and parcel of post collision vehicle repair. - Hansen C. alleged that digital scans were necessary to sufficiently repair collision damage to his vehicle the GEICO further In addition to the legal challenges discussed above, challenges the sufficiency of Hansen’s factual allegations. First, GEICO argues that Hansen failed to sufficiently allege that dig ital scans were necessary to repair 16 , 24 the collision damage to his vehicle. Red Br. at . GEICO is mistaken. In his d that GEICO violated the terms of its policy complaint, Hansen specifically allege were nec essary to restore by failing to pay for diagnostic scans that his truck to pre loss condition. ER 75 ¶ 3 , 77 ¶ 12, 79 ¶ 26 . - t oral argument, Hansen And, a emphasized the necessity of digital scans. See ER 9 (“When a manufacturer says

16 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 16 of 23 12 part of repairing to pre - and p ost - repair scans, that - loss condition is conducting pre loss condition.”). is part of repairing a car to pre - contends that to be Hansen’s allegations are too conclusory Next, GEICO . GEICO again is mistaken. 31 entitled to a presumption of truth. Red Br. 29 – define “conclusory allegatio ns” as “naked assertion[s] * * * without some C ourts , 550 further factual enhancement.” U.S. 544, 5 57 Bell Atl. Corp. v. Twombly Hansen alleged that diagnostic digital scans necessary to repair . Here, (2007) are modern car because scans are the only way to identify the collision damage to his after a collision ; he further alleged latent damage to the car’s electronics systems he knows this from his personal experience as an owner of auto repair shops , that he position statement of his truck’s manufacturer, from t and from the position of other car manufacturers and a prominent autom o tive repair industry statements – – ¶ ER 77 1 2 78 18. Hansen alleged facts sufficient to survive a association. ¶ motion to dismiss. d , GEICO Thir in the alternative that the necessity of digital scans to argues repair his post collision damage is a question of law rather than fact. Red Br. 29 – - . an insurance GEICO is incorrect. To be sure, the interpretation of terms in 30 tion of law. Holloway , 147 P.3d at 333. But once a court has policy is a ques construed the text of policy, the jury, as the trier of fact, must resolve “disputed a issues of material fact as to whether the particular circumstances or historical facts

17 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 17 of 23 13 fall within the cou s content .” rt’s ‘matter of law’ determination of the policy’ Here, , 930 P.2d 878, 882 ( Or. Ct. App. 1996) . . Farmers Ins. Co. of Or v. Munson as a matter of law, GEICO’s promise to “repair” collision damage includes necessary digital scans. The of scans to repair the damage to Hansen’s necessity vehicle is a disputed material fact that a jury must resolve. GEICO argues that Hansen failed to allege the damages element of Finally, breach - of - contract claim. Red Br. 27 . his GEICO is wrong. As alleged, the digital scans would have cost approximately $100 per scan, which GEICO refused – 78 ¶¶ 14, 19. Deprivation of money to which one is entitled is a to pay. ER 77 Sierra Club v. Morton in fact. E.g. quintessential injury - , 405 U.S. 727, 733 - , er Oregon law, an insurer’s refusal to pay for a service (1972). And, und a damaging repudiation of the contract , constitutes whether or not the insured then chooses to pay for the service. , Anderson v. Farmers Ins. Co. , 71 P.3d 144, E.g. 149 (Or. Ct. App. 2003). In sum, Hansen sufficiently alleged that digital scans were necessary to repair the collision damage to his vehicle. At the motion to dismiss stage, the district court was required to accept Hansen’s factual allegations as true.

18 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 18 of 23 14 II. at GEICO pay for necessary digital Hansen’s reasonable expectation th scans does not contradict the express terms of the policy As discussed in his opening brief, Hansen sufficiently alleged that GEICO’s refusal to pay for digital scans breached the implied covenant of good faith and fair 29. dealing The district court dismissed the claim under Oregon law . Blue Br. 25 – of - for the same reason that it dismissed Hansen’s breach - contract claim: the court ruled that, as a matter of law, the policy does not cover diagnostic scans, so good faith expectation that GEICO pay for scans would Hansen’s alleged 29. GEICO – contradict the express terms of the policy. ER 28 essentially concedes that Hansen’s claim on good faith and fair dealing rises and falls with his - of - contract claim for that r eason . See breach Red Br. 27 – 29 . A s discussed above in Part I includes coverage for necessary diagnostic scans . As a , GEICO’s policy , Hansen’s expectation that GEICO pay for scans does not contradict result those the policy’s express terms. GEICO also argues , even if payment for diagnostic scans would not that any contradict the policy’s express terms, “Hansen has not plausibly alleged objectively reasonable expectation was not met.” GEICO is Red Br. at 28. Hansen’ “complaint itself at the motion incorrect. As found by the district court, s to dismiss stage adequately states that it’s the reasonable expectations of the parties this kind of case to get this kind of diagnostic tool. in – 29. And Hansen’s ” ER 28

19 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 19 of 23 15 complaint alleges precisely ected GEICO to pay for that he reasonably exp 12 and that GEICO refused to do so 78 ¶ ¶ – – 18, 83 ¶¶ 47 – . ER 77 diagnostic scans see 48 , 71 P.3d at 149 (an insurer’s refusal to pay for a service ; Anderson considered an injury regardless of whether the insured incurs the expense). If the Court finds that Hansen’s complaint failed to allege sufficient III. Court should remand for an opportunity to amend facts, then t he sufficiently alleged that digital scans As discussed above in Part I.C, Hansen ge to his vehicle . If this Court were necessary to repair the collision dama agrees on Hansen’s legal argument, but disagrees that Hansen sufficiently alleged facts around the nature and necessity of digital scans with respect to repairing collision damage, then Hansen requests that the Court rever se and remand to provide an to amend his complaint. opportunity for Hansen The district court dismissed Hansen’s complaint with prejudice for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). ER 30. Before dismissing a case under 1 2(b)(6), “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the Lopez v. pleading could not possibly be cured by the allegation of other facts.” a , 203 F 2000) (citation omitted) . Smith .3d 1122, 1127 (9th Cir. In addition, district court abuses its discretion when it bases “its ruling on an erroneous view of the law.” Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 405 (1990).

20 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 20 of 23 16 Here, t ruled that amendme nt could not cure any he district court effectively the complaint not for lack deficiency in Hansen’s complaint. The court dismissed of sufficient factual allegations, but because the court ’s legal interpretation of of ER 28. The district court abused its GEICO’s obligations under the contract. See its discretion by making that determination based on erroneous view of GEICO’s And, because of obligations under the policy, as discussed above in Parts I and II. that erroneous legal interpretation, any attempt by Hansen to seek leave to amend would have been futile. cites Alaska v. United States , 201 F.3d 1154 (9th Cir. 2000), to GEICO argue that Hansen waived his right to amend by failing to move to amend before In Alaska he ld that the the district court. Red Br. 31. GEICO is wrong. , this Court a government could not seek to amend its answer to complaint on appeal from judgment on the pleadings under Federal Rule of Civil Procedure 12(c) where it See had intentionally adopted its answer as a strategic litigating position. 201 F.3d at 1163. Rule 12(c) places no duty on a district court to grant leave to amend. By contrast, the district court in this case dismissed Hansen’s complaint under Rule 12(b)(6). In doing so, the court had a duty to grant Hansen leave to amend if doing ld have cured any deficiencies in the complaint. See Lopez , 203 F.3d at so cou Amending would do so if this Court agrees with Hansen’s legal 1127. interpretation of the policy but finds that he failed to allege sufficient facts.

21 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 21 of 23 17 CONCLUSION he Court should reverse the district court’s order For these reasons, t dismissing Hansen’s claims with prejudice and remand for further proceedings. Respectfully Submitted, TONKON TORP LLP s/ Robert Koch : By Steven Olson Paul Conable Robert Koch Megan Houlihan Attorneys for Appellant Leif Hansen 15 th day of April , 201 9 . DATED this

22 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 22 of 23 18 CERTIFICATE OF COMPL IANCE Pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule 32 - 1 , I Appellant Leif Hansen ’ s Reply Brief is proportionately spaced, has a certify that , and contains 4 , 006 words. typeface of 14 points or more By s/ Robert Koch Steven Olson Paul Conable Robert Koch Megan Houlihan Attorneys for Appellant Leif Hansen

23 Case: 18-35383, 04/15/2019, ID: 11264542, DktEntry: 39, Page 23 of 23 CERTIFICATE OF FILING AND SERVICE hereby certify that I electronically filed the foregoing with the Clerk of the I Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system April 15 , 201 9 . on I certify that all p articipants in the case are registered CM/ECF users and that service will be accomplish ed by the appellate CM/ECF system. TONKON TORP LLP By: Robert Koch s/ Steven Olson Paul Conable Robert Koch Megan Houlihan Attorneys for Appellant Leif Hansen 039599/00001/9936557v1

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