Ballesteros v. American Standard Insurance

SUPREME COURT OF ARIZONA
En Banc

LUIS BALLESTEROS and ALMA ) Arizona Supreme Court
BALLESTEROS, husband and wife; ) No. CV-10-0026-PR
GUADALUPE PORTILLO; GERARDO )
PORTILLO; RICARDO PORTILLO; ) Court of Appeals
MANUEL PORTILLO; RUBEN PORTILLO; ) Division Two
GUADALUPE PORTILLO JR.; and ) No. 2 CA-CV 09-0123
PATRICIA YERENA, )
) Pima County
Plaintiffs/Appellees, ) Superior Court
) No. C20050987
v. )
)
AMERICAN STANDARD INSURANCE )
COMPANY OF WISCONSIN, a foreign ) O P I N I O N
corporation doing business in )
the state of Arizona as AMERICAN )
FAMILY INSURANCE COMPANY; )
AMERICAN FAMILY MUTUAL INSURANCE )
COMPANY, a foreign corporation )
doing business in the state of )
Arizona; SHIRLEE KOPIN; and )
SHAWN D. MORRIS, )
)
Defendants/Appellants. )
_________________________________ )

Appeal from the Superior Court in Pima County
The Honorable John E. Davis, III, Judge
The Honorable Stephen C. Villarreal, Judge

REVERSED AND REMANDED
________________________________________________________________

Opinion of the Court of Appeals, Division Two
223 Ariz. 269, 222 P.3d 292 (2009)

VACATED
________________________________________________________________

LAW OFFICE OF ELLIOT GLICKSMAN, P.L.L.C. Tucson
By Elliot A. Glicksman

And
GABROY, ROLLMAN, & BOSSE, P.C. Tucson
By John Gabroy
Richard A. Brown
Attorneys for Luis Ballesteros, Alma Ballesteros,
Guadalupe Portillo, Gerardo Portillo, Ricardo Portillo,
Manuel Portillo, Ruben Portillo, Guadalupe Portillo Jr.,
and Patricia Yerena

LEWIS AND ROCA, L.L.P. Phoenix
By Steven J. Hulsman
Brenden J. Griffin
Lawrence A. Kasten
Attorneys for American Standard Insurance Company
of Wisconsin, American Family Insurance Company,
American Family Mutual Insurance Company,
Shirlee Kopin, and Shawn D. Morris

MODRALL, SPERLING, ROEHL, HARRIS, & SISK, P.A. Albuquerque, NM
By Brian K. Nichols
Attorney for Amicus Curiae Progressive Casualty
Insurance Company

EHMANN DECIANCIO, P.L.L.C. Tempe
By Joel DeCiancio
Christopher Robbins
Attorneys for Amici Curiae National Association
of Mutual Insurance Companies and Property
Casualty Insurers

THE HASSETT LAW FIRM, P.L.C. Phoenix
By Myles P. Hassett
Lucas N. Frank
Attorneys for Amicus Curiae Independent Insurance
Agents and Brokers of Arizona

TERRY GODDARD, ARIZONA ATTORNEY GENERAL Phoenix
By Lynette J. Evans, Assistant Attorney General
Attorneys for Amicus Curiae Christina Urias, Director,
State of Arizona Department of Insurance

LAW OFFICES OF DAVID L. ABNEY Phoenix
By David L. Abney
Attorneys for Amici Curiae Arizona Trial Lawyers
Association and Arizona Association for Justice

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BROENING, OBERG, WOODS, & WILSON, P.C. Phoenix
By James R. Broening
Robert T. Sullivan
Brian W. Purcell
Attorneys for Amicus Curiae Farmers Insurance
Company of Arizona
________________________________________________________________

B E R C H, Chief Justice

¶1 Arizona Revised Statutes (A.R.S.) section 20-259.01

(Supp. 2009)1 requires insurers to offer uninsured motorist (UM)

and underinsured motorist (UIM) coverage to their insureds by

giving them a “written notice.” The issue in this case is

whether the insurer may satisfy this statutory requirement by

providing an Insurance Department-approved English-language form

to a Spanish-speaking insured.

I. FACTUAL AND PROCEDURAL BACKGROUND2

¶2 Luis Ballesteros purchased an automobile insurance

policy from American Standard Insurance Company of Wisconsin.

Because Ballesteros’s primary language is Spanish, a Spanish-

speaking member of the insurance agent’s staff helped

Ballesteros complete the application. The agent then gave

Ballesteros an English-language form, approved by the Arizona

1
 Ballesteros purchased his policy in 2001. Because the
version of § 20-259.01 at that time did not materially differ
from the current statute, we cite the current version.
2
We view the facts in the light most favorable to American
Standard, the party against whom partial summary judgment was
entered. Tarron v. Bowen Mach. & Fabricating, Inc., 225 Ariz.
147, 151 ¶ 16, 235 P.3d 1030, 1034 (2010).

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Department of Insurance (DOI), on which to select or reject

UM/UIM coverage. Ballesteros signed the form, indicating on it

that he declined such coverage.

¶3 Several months later, Ballesteros’s mother-in-law, an

insured under the policy, died in a collision with an uninsured

driver. Ballesteros made a claim for UM coverage, which was

denied. He sued for breach of contract, claiming that because

American Standard failed to comply with A.R.S. § 20-259.01, UM

coverage should be included in his policy by operation of law.3

See Ins. Co. of N. Am. v. Superior Court (Villagrana), 166 Ariz.

82, 85-86, 800 P.2d 585, 588-89 (1990) (holding that the

“appropriate remedy” for failure to make the statutorily

required offer of UM coverage “is to make such coverage part of

the contract by operation of law”).

¶4 The trial court granted partial summary judgment to

Ballesteros, concluding that American Standard violated § 20-

259.01 by not offering him UM/UIM coverage on a Spanish-language

form. The court reasoned that the English DOI-approved UM/UIM

selection form was not “reasonably calculated to bring to

[Ballesteros’s] attention that which was being offered” and

that, to satisfy § 20-259.01, the written offer of UM/UIM

3
Ballesteros also alleged several non-contractual claims
such as bad faith, consumer fraud, breach of fiduciary duty,
negligence, and negligent misrepresentation, which have not been
resolved and are not at issue in this appeal.
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coverage to a Spanish-speaking insured must be in Spanish.

¶5 The court of appeals reversed the partial summary

judgment in favor of Ballesteros, but held that American

Standard was not entitled to judgment on its cross-motion for

summary judgment on the contract claim. Ballesteros v. Am.

Standard Ins. Co., 223 Ariz. 269, 271-72 ¶ 2, 222 P.3d 292, 294-

95 (App. 2009). The court concluded that the use of a DOI-

approved UM/UIM selection form did not allow American Standard

to sail into a “safe harbor” that automatically satisfied § 20-

259.01. Id. at 277-78 ¶ 26, 222 P.3d at 300-01. It determined

that although American Standard was not statutorily required to

provide Ballesteros a Spanish-language form, factual questions

remained as to whether American Standard made Ballesteros

sufficiently aware of the offer of UM/UIM coverage through other

communications. Id. at 278-79 ¶¶ 28-31, 222 P.3d at 301-02.

¶6 We granted review of Ballesteros’s petition to

determine whether an insurer must provide a Spanish-language

form to a Spanish speaker to comply with § 20-259.01. We also

granted review of American Standard’s cross-petition to

determine whether, by using a DOI-approved UM/UIM selection

form, American Standard complied with the statute. See A.R.S.

§ 12-120.24 (2003); see also Ariz. Const. art. 6, § 5, cl. 3

(conferring jurisdiction).

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 II. DISCUSSION

¶7 Section 20-259.01(A) requires insurance companies to

offer UM coverage. It provides, in relevant part, as follows:

Every insurer writing automobile liability or
motor vehicle liability policies shall make available
to the named insured thereunder and by written notice
offer the insured and at the request of the insured
shall include within the policy uninsured motorist
coverage which extends to and covers all persons
insured under the policy, in limits not less than the
liability limits for bodily injury or death contained
within the policy. The selection of limits or
rejection of coverage by a named insured or applicant
on a form approved by the director is valid for all
insureds under the policy.

Section (B) imposes the same requirements for UIM coverage.

A.R.S. § 20-259.01(B). We interpret statutes de novo, Steven H.

v. Ariz. Dep’t of Econ. Sec., 218 Ariz. 566, 570 ¶ 14, 190 P.3d

180, 184 (2008), attempting “to give effect to the intent of the

legislature,” In re Estate of Winn, 214 Ariz. 149, 151 ¶ 8, 150

P.3d 236, 238 (2007). We also review summary judgment rulings

de novo. Espinoza v. Schulenberg, 212 Ariz. 215, 216-17 ¶ 6,

129 P.3d 937, 938-39 (2006).

¶8 In 1965, the legislature first required that all

automobile insurance policies include minimum levels of UM

coverage. 1965 Ariz. Sess. Laws, ch. 34, § 1 (1st Reg. Sess.).

Several years later, the legislature added the requirement that

insurers “make available” higher amounts of UM coverage. 1972

Ariz. Sess. Laws, ch. 157, § 1 (2d Reg. Sess.). In 1981, the

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legislature amended the statute to require insurers to include

minimum levels of UIM coverage and to both “make available” and

“by written notice offer” UM/UIM coverage in amounts equal to

the liability limits for bodily injury or death under the

policy. 1981 Ariz. Sess. Laws, ch. 224, § 1 (1st Reg. Sess.).

Just one year later, the legislature removed the requirement of

mandatory minimum UIM coverage, 1982 Ariz. Sess. Laws, ch. 298,

§ 1 (2d Reg. Sess.), and it eliminated mandatory minimum UM

coverage in 1993, 1993 Ariz. Sess. Laws, ch. 1, § 3 (5th Spec.

Sess.). Although the legislature eliminated mandatory UM/UIM

coverage, it nonetheless maintained the requirement that

insurers “make available” and “by written notice offer” both

types of coverage.

¶9 In 1992, the legislature also amended the statute to

provide that “[t]he selection of limits or rejection of [UM/UIM]

coverage by a named insured or applicant on a form approved by

the director [of the Department of Insurance] shall be valid for

all insureds under the policy.” 1992 Ariz. Sess. Laws, ch. 147,

§ 1 (1st Reg. Sess.); 1994 Ariz. Sess. Laws, ch. 304, § 1 (2d

Reg. Sess.).

A. Interpreting “make available” and “by written notice
offer”

¶10 This case requires us to determine what A.R.S. § 20-

259.01 means by requiring insurers to “make available” UM/UIM

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coverage and to offer such coverage “by written notice.”

¶11 In McCloe v. Utah Home Fire Insurance Co., 121 Ariz.

402, 404, 590 P.2d 941, 943 (App. 1978), the court of appeals

held that the 1972 version of the statute, which required

insurers to “make [UM coverage] available” to their insureds,

did not impose “an affirmative obligation upon insurers to give

their insureds actual personal knowledge of such an option.”

Thus, the only requirement imposed by the “make available”

language was that insurers be willing to provide such coverage.

In 1981, the legislature amended the statute to require that

insurers “by written notice offer” UM coverage, for the first

time imposing a requirement that insurers bring the availability

of such coverage to the insured’s attention. 1981 Ariz. Sess.

Laws, ch. 224, § 1 (1st Reg. Sess.).

¶12 The court of appeals interpreted the amended statute in

Giley v. Liberty Mutual Fire Insurance Co., 168 Ariz. 306, 812

P.2d 1124 (App. 1991). There, an insurer’s agent handed a UIM

offer form to the insured stating that the insured must sign it

to obtain coverage. Id. The customer signed the form,

unknowingly rejecting UIM coverage. Id. Although the “make

available” provision was not directly at issue in light of the

agent’s misleading conduct, and without citing any supporting

authority or the seemingly conflicting holding in McCloe, the

court held that the phrase “make available” obligates an insurer

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to “offer such coverage in a way reasonably calculated to bring

to the insured’s attention that which is being offered” and

found that a question of fact existed on that issue. Id. at

306-07, 812 P.2d at 1124-25.

¶13 Ballesteros cites Giley for the proposition that an

English form is not reasonably calculated to bring to a Spanish

speaker’s attention that UM/UIM coverage is being offered.

After Giley, however, this Court addressed the obligations

imposed by § 20-259.01 in Tallent v. National General Insurance

Co., 185 Ariz. 266, 915 P.2d 665 (1996). We held there that the

requirement to “offer” UM/UIM coverage under § 20-259.01 was

guided by general principles of contract law. Id. at 267-68,

915 P.2d at 666-67. We cited with approval the Second

Restatement of Contracts’ definition of an offer as “the

manifestation of willingness to enter into a bargain, so made as

to justify another person in understanding that his assent to

that bargain is invited and will conclude it.” Id. at 268, 915

P.2d at 667 (quoting Restatement (Second) of Contracts § 24).

Thus, whether an offer has been made does not depend on the

offeree’s understanding of the terms of the offer, but instead

on whether a reasonable person would understand that an offer

has been made and that, upon acceptance, the offeror would be

bound. Lopez v. Charles Schwab Co., 13 Cal. Rptr. 3d 544, 548

(Ct. App. 2004) (“[T]he pertinent inquiry is whether the

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individual to whom the communication was made had reason to

believe that it was intended as an offer.” (quoting Donovan v.

RRL Corp., 27 P.3d 702, 709 (Cal. 2001))); Anderson v. Douglas &

Lomason Co., 540 N.W.2d 277, 286 (Iowa 1995) (“The test for an

offer is whether it induces a reasonable belief in the recipient

that he can, by accepting, bind the sender.” (quoting

Architectural Metal Sys., Inc. v. Consol. Sys., Inc., 58 F.3d

1227, 1229 (7th Cir. 1995))). As a result, we held that § 20-

259.01 “does not require the offer to contain an explanation” of

UM/UIM coverage. Tallent, 185 Ariz. at 267, 915 P.2d at 666.

¶14 The parties do not dispute that Ballesteros was offered

UM/UIM coverage on a form approved by the DOI. Ballesteros

claims only that he did not understand the form. Under contract

principles, however, the test is objective: Whether an offer

was made turns only on whether a reasonable person would

understand that a proposal of terms was made, not on

Ballesteros’s subjective understanding of the offer form. The

offeree need not understand the content of an offer in order to

bind the offeror. Therefore, the “written notice” provision of

§ 20-259.01 does not require translation of the offer into

Spanish so that a Spanish speaker understands the offer’s terms;

it requires only that the insurer make an offer that, if

accepted, would bind the insurer to provide the offered

coverage.

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¶15 This conclusion comports with the language of § 20-

259.01, which does not require a Spanish form. It is further

supported by the fact that the legislature has explicitly

required a Spanish translation in other statutes. See A.R.S. §§

6-631(B), 6-1257, 6-1411, 12-1596, 12-2406(C), 23-906(D), 25-

504(C), 31-229(B), 36-504(A), 44-1362(B), 49-542.03 (imposing a

Spanish requirement). That the legislature included this

requirement in some statutes, but not in § 20-259.01, indicates

that the omission of any such requirement in § 20-259.01 was

intentional. See Estate of McGill ex rel. McGill v. Albrecht,

203 Ariz. 525, 530-31, 57 P.3d 384, 389-90 (2002) (refusing to

read “gross negligence” into a statute because “[t]he

legislature surely knows how to require a showing of gross

negligence, having used that term in a great number of

statutes”).

¶16 Our conclusion is strengthened by the fact that § 20-

259.01 once briefly required forms in both Spanish and English.

1997 Ariz. Sess. Laws, ch. 125, § 1 (1st Reg. Sess.). That

requirement was removed just a year after it was enacted. 1998

Ariz. Sess. Laws, ch. 288, § 2 (2d Reg. Sess.). This history

confirms that the legislature did not intend to impose a

Spanish-translation requirement in the current statute. See

State v. Garza Rodriguez, 164 Ariz. 107, 111, 791 P.2d 633, 637

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(1990) (noting presumption that “by amending a statute, the

legislature intends to change the existing law”).

¶17 In sum, § 20-259.01 does not require that the UM/UIM

offer form be provided in Spanish. If the legislature desires

to add such a requirement, it may do so, see Tallent, 185 Ariz.

at 268, 915 P.2d at 667, but it is not our place to rewrite the

statute.

¶18 Ballesteros nonetheless argues that for an insurer to

truly “make available” UM/UIM coverage to a Spanish-speaking

insured, it must provide a form in Spanish that is “reasonably

calculated to bring [the offer] to the insured’s attention.”

Giley, 168 Ariz. at 306, 812 P.2d at 1124. Although we express

no opinion whether tort law may impose such a requirement in

certain circumstances, we conclude, as did the court of appeals,

that § 20-259.01 imposes no such obligation.

B. Use of a DOI-approved form

¶19 American Standard argues that, in amending § 20-259.01

in 1992 to permit the use of a DOI-approved form, the

legislature intended to provide a method for insurers to

demonstrate compliance with the statutory requirement to make a

written offer of UM/UIM coverage. It asserts that it complied

with § 20-259.01 by providing Ballesteros with a DOI-approved

selection form.

¶20 As noted, the legislature, through a series of

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amendments, modified § 20-259.01 to provide that “[t]he

selection of limits or rejection of [UM/UIM] coverage by a named

insured or applicant on a form approved by the [DOI] director

shall be valid for all insureds under the policy.” 1992 Ariz.

Sess. Laws, ch. 147, § 1 (2d Reg. Sess.); 1994 Ariz. Sess. Laws

ch. 304, § 1 (2d Reg. Sess.). The legislature adopted these

amendments to remedy the fact-intensive inquiry Giley engendered

regarding whether the insurer had offered UM/UIM coverage. See

Arizona State Senate, Minutes of Committee on Commerce and Labor

9, 40th Leg., 2d Reg. Sess. (Apr. 22, 1992) [hereinafter “Senate

Committee Minutes”] (noting that insurers are required to “make

available” UM/UIM coverage, but that “[t]he law does not specify

exactly how this should be made available”); Arizona State

Senate, Fact Sheet for H.B. 2062, 40th Leg., 2d Reg. Sess. (May

14, 1992) [hereinafter “Fact Sheet”] (to similar effect); see

also Hayes v. Cont’l Ins. Co., 178 Ariz. 264, 269-70, 872 P.2d

668, 673-74 (1994) (permitting reliance on non-legislators’

statements in circumstances providing “sufficient guarantees

that the statements reflect legislators’ views”). The remedy

chosen was to create a method by which insurers may demonstrate

compliance with § 20-259.01. Senate Committee Minutes 13-14

(observing that under the amendment “the signing of [the] paper

[is] ipso facto the end of the inquiry as to whether [UM/UIM

coverage] was meaningfully offered”); Fact Sheet (noting that

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the amendment provides “an acceptable procedure for the offering

of [UM/UIM] insurance”).

¶21 After passage of the 1992 amendment, if an insurer

provides and the insured signs a DOI-approved UM/UIM selection

form, the insurer has satisfied the statutory requirement to

“make available” and “by written notice offer” UM/UIM coverage.

Senate Committee Minutes 9 (“[T]he insurance agent can use a

form approved by the Director of the Department of Insurance to

satisfy [§ 20-259.01].”); Fact Sheet (noting that § 20-259.01

“is satisfied if the insured signs a form approved by the

Department of Insurance stating the amount of coverage

desired”).

¶22 While the 1992 amendment was designed to diminish fact

questions, Ballesteros’s reading of the statute would replace

one fact-intensive inquiry for another. Under Giley, the

factual determination concerned whether UM/UIM coverage was

sufficiently offered. Ballesteros’s approach would require

consideration of whether the language proficiency of the insured

is such that a Spanish form is required and whether the terms of

the offer were understood. Agents in the field, however, are

not necessarily equipped to determine a client’s language

proficiency or degree of understanding. Such a requirement may

lead in future cases to questions about an offeree’s general

understanding of the contract terms regardless of the language

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in which they are provided in a form. Although § 20-259.01 is

remedial in nature, Calvert v. Farmers Ins. Co. of Ariz., 144

Ariz. 291, 294, 697 P.2d 684, 687 (1985), we nonetheless

conclude, as we did in Tallent, that imposing a comprehension

requirement is “both unwarranted by the statute and unwise,” 185

Ariz. at 268, 915 P.2d at 667. We further recognize that the

legislature passed the 1992 amendments to protect insurers from

after-the-fact inquiries regarding the offer of coverage. To

read a language requirement into the statute under the guise of

effectuating the remedial purpose would thwart this legislative

goal.

¶23 Finally, Ballesteros’s approach offers no principled

distinction between Spanish speakers and others whose

proficiency in English may be limited. Ballesteros proposes

that DOI approval of a Spanish form demonstrates that use of

that form for Spanish-speaking customers is mandatory, while the

DOI’s failure to create forms in other languages means that

translation into those languages is not required. We find no

such import in the DOI sample Spanish form. The DOI Director

provides the Spanish form “as a matter of convenience for

insurers, rather than as a mandate for use.” Brief of the

Director of the Arizona Department of Insurance as Amicus

Curiae, at 6.

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¶24 In sum, because American Standard provided Ballesteros

a DOI-approved form, it satisfied § 20-259.01.

C. Attorney Fees

¶25 American Standard requested attorneys’ fees pursuant to

A.R.S. § 12-341.01(A). In the exercise of our discretion, we

deny that request.

III. CONCLUSION

¶26 For the reasons set forth, we vacate the opinion of the

court of appeals and remand this case to the superior court with

instructions to enter partial summary judgment in favor of

American Standard on Ballesteros’s contract claim.

__________________________________
Rebecca White Berch, Chief Justice

CONCURRING:

_____________________________________
Andrew D. Hurwitz, Vice Chief Justice

_____________________________________
W. Scott Bales, Justice

_____________________________________
A. John Pelander, Justice

_____________________________________
Peter B. Swann, Judge*

*Pursuant to Article 6, Section 3 of the Arizona Constitution,
the Honorable Peter B. Swann, Judge of the Arizona Court of
Appeals, Division One, was designated to sit on this matter.

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