NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS AUG 26 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

SEBERAINO JIMENEZ, No. 20-15910

Plaintiff-Appellant, D.C. No. 2:15-cv-01187-ROS

v.

MEMORANDUM*

PROGRESSIVE PREFERRED

INSURANCE COMPANY,

Defendant-Appellee.

Appeal from the United States District Court for the District of Arizona Roslyn O. Silver, District Judge, Presiding

Submitted July 9, 2021** Portland, Oregon

Before: O’SCANNLAIN, PAEZ, and BENNETT, Circuit Judges.

Plaintiff-Appellant Seberaino Jimenez appeals the district court’s grant of

summary judgment in favor of Progressive Preferred Insurance Company

(“Progressive”) on his breach of contract, bad faith, and consumer fraud causes of

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). action. Jimenez also contends he is entitled to attorneys’ fees, and Progressive

contends it is entitled to its appellate attorneys’ fees. Because the parties are familiar

with the facts, we do not recount them here, except as necessary to provide content

to our ruling. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

1. The district court correctly held that Jimenez failed to satisfy the condition

precedent at issue. Reviewing de novo, L.F. v. Lake Wash. Sch. Dist. #414, 947 F.3d

621, 625 (9th Cir. 2020), we hold that the language of the policy is clear that because

Jimenez failed to pay for any of the expenses for the medical services he received

prior to filing suit, he failed to meet the condition precedent.

It is undisputed that the contract contains a condition precedent provision.

Under Arizona law,1 “parties are at liberty to agree upon a condition precedent upon

which their liability shall depend.” Angle v. Marco Builders, Inc., 626 P.2d 126, 129

(Ariz. 1981) (citation omitted). Jimenez contends that the condition precedent does

not apply to him because his complaint is not “ask[ing] for ‘expenses for medical

services,’” but rather “an award of compensatory and punitive damages.” But

Jimenez clearly is seeking relief based on Progressive’s alleged non-payment of the

expenses he claims he incurred for his medical treatment.

Jimenez also argues that the condition precedent is inapplicable because

1 The policy provided that “[a]ny disputes as to the coverages provided or the provisions of this policy shall be governed by Arizona law.”

2 Progressive did not claim the medical services he received were unreasonable or

unnecessary and objected only to the allegedly unreasonable or unnecessary

expenses for those services. We disagree. When the terms of a contract are “clear

and unambiguous, a court must give effect to the contract as written.” Grosvenor

Holdings, L.C. v. Figueroa, 218 P.3d 1045, 1050 (Ariz. Ct. App. 2009) (citation

omitted); Smith v. Melson, Inc., 659 P.2d 1264, 1266 (Ariz. 1983) (in banc) (“If the

intention of the parties is clear from [the language of the contract], there is no

ambiguity.”).

The provision at issue provides:

The insured person may not sue us for expenses for medical services we deem to be unreasonable or unnecessary unless the insured person paid the entire disputed amount to the medical service provider or the medical service provider has initiated collection activity against the insured person for the unreasonable or unnecessary expenses.

(emphasis omitted). The language in the contract is clear. The insured can’t sue the

insurer for certain types of expenses until he has paid the entire disputed amount or

the provider has initiated collection activity “for the unreasonable or unnecessary

expenses.” There is nothing in the phrasing that suggests that the condition applies

only if the insurer deems the services unreasonable, as opposed to deeming the

expenses themselves “unreasonable or unnecessary.” “Unreasonable or

unnecessary” modifies expenses the first time it is used in the provision, just like it

modifies expenses the second time it is used in the provision. Thus, Jimenez needed

3 to pay for the expenses he sought to recover from Progressive prior to suing

Progressive. We agree with the district court that “[to] interpret the . . . provision as

governing unreasonable or unnecessary medical services would be to rewrite the

contract.”

Jimenez contends, however, that the “last antecedent rule” supports his

construction. “The last antecedent rule . . . requires that a qualifying phrase be

applied to the word or phrase immediately preceding as long as there is no contrary

intent indicated.” Phoenix Control Sys., Inc. v. Ins. Co. of N. Am., 796 P.2d 463,

466 (Ariz. 1990) (in banc). “The last antecedent rule is not inflexible and it will not

be applied where the context or clear meaning of a word or phrase requires

otherwise.” Id. While the two words immediately preceding the qualifying phrase

are “medical services,” the four words immediately preceding are “expenses for

medical services.” Both are, of course, phrases, and applying the rule to the phrase

“expenses for medical services” is most appropriate here.

Because Jimenez failed to pay for any of the expenses for the medical services

he received prior to filing suit, he failed to meet the condition precedent, and the

district court correctly granted summary judgment in favor of Progressive.

2. Though this holding alone mandates affirmance as to the breach of contract

claim, the district court also correctly determined that Progressive did not breach its

contract with Jimenez. Jimenez was charged $6,719.00 for the medical services he

4 received as a result of his accident. He demanded payment from Progressive of the

maximum policy amount—$5,000.00. Progressive sent Jimenez a check for

$3,455.09, explaining that it had agreements with the treating medical providers that

contractually obligated the providers to accept reduced rates (here $3,455.09).

Progressive contends that the $3,455.09 covered all Jimenez’s expenses, and there

is no evidence that any medical provider has contended it is owed more than its share

of the $3,455.09.

Under Arizona law, an insured incurs expenses for medical treatment when

he becomes legally liable for that amount. See Samsel v. Allstate Ins., 59 P.3d 281,

286 (Ariz. 2002) (in banc); Coconino Cnty. v. Fund Adm’rs. Ass’n, 719 P.2d 693,

696 (Ariz. Ct. App. 1986) (“Incur is generally accepted to mean to become liable for

. . . .”) (quotation marks and citation omitted)).

Jimenez only incurred the expenses for which he was liable, which, here, by

virtue of the third-party contracts, was the $3,455.09 that Progressive tendered to

Jimenez. Thus, Progressive did not breach the contract.

3. We affirm the district court’s dismissal of Jimenez’s bad faith claim.

“There are two elements to the tort of bad faith: (1) that the insurer acted

unreasonably toward its insured, and (2) that the insurer acted knowing that it was

acting unreasonably or acted with such reckless disregard that such knowledge may

be imputed to it.” Miel v. State Farm Mut. Auto. Ins., 912 P.2d 1333, 1339 (Ariz.

5 Ct. App. 1995). Because Progressive acted reasonably, it did not act in bad faith.

4. We affirm the district court’s dismissal of Jimenez’s consumer fraud claim

because the district court correctly found that Progressive made no false promises or

representations to Jimenez.

5. Progressive seeks to recover its reasonable attorneys’ fees on appeal. We

deny Progressive’s request for attorney’s fees without prejudice to Progressive filing

a motion to recover its fees and costs pursuant to Federal Rule of Appellate

Procedure 39(d) and Ninth Circuit Rule 39-1.

AFFIRMED

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