By David Shughart, Esq., Tracy Gromer, Esq. and Steve Guy, Esq.
PART 2
II. Drafting and Executing Independent Settlement Agreements.
Independent settlement agreements take many forms but fundamentally involve the transfer of the insured’s/indemnitee’s rights and claims against the indemnitor/insurer (and/or an insurance agent or broker) to the claimant along with a judgment (by default or stipulation and possibly following a hearing on damages or reasonableness) against the insured/indemnitee in exchange for a covenant not to execute on the judgment. There are many ways to structure these agreements, but certain provisions, like a recital of foundational facts and a covenant not to execute, are standard and fundamental.
A. Pre-Agreement Considerations and Strategies.
When a liability insurer breaches a duty, it may make sense for the litigating parties to settle independently rather than proceed with the underlying claim. It is relatively rare today for an insurer to refuse to defend in light of Damron and potential excess liability. Most insurers will choose the safer path of defending under a reservation of rights. And, when they have done so but are given notice of a proposed independent settlement, insurers may lift their reservation of rights if coverage defenses are not rock solid, especially where a strong liability defense exists so potential exposure on the underlying claim is minimal and/or defending is less costly than litigating difficult coverage defenses.
Before entering into independent settlement, plaintiffs’ lawyers should carefully weigh the merits of tort claims, the collectability of a potentially uninsured judgment, and the advantage to be gained by a stipulated or default judgment. These considerations must be balanced against the merits of the insurer’s, agent’s, and/or broker’s positions and the burdens of litigating (where required) the reasonableness of the settlement, coverage, bad faith, and/or agent/broker negligence. The stakes are potentially substantial for all players.
For that reason, plaintiffs’ lawyers should exercise due diligence in evaluating the merits of the claim(s) to be assigned. This can include gathering as much information as possible bearing on the insurer’s positions before entering into the agreement. Typically it is a good idea, where possible, to obtain (1) all emails and other correspondence from the insurer relating to coverage and defenses, (2) a certified74 copy of the applicable policy, including the declarations and all endorsements, (3) information regarding the underwriting of the policy, including applications, proposals, and agent/broker communications, and (4) where relevant, any information about the expectations of the insured regarding coverage, the procurement of the policy, and any evidence of the “dickered deal” as articulated by the Arizona Supreme Court.75 Since the insured defendant is typically eager to settle without personal liability, the insured should be motivated to help obtain and provide such documentation and information, which may be preserved in the form of a sworn declaration or affidavit. Issues may arise as to how thoroughly an insured has searched for and/or divulged such information, and there may be occasions where it makes sense to engage a neutral forensic or electronic discovery expert to find relevant documents. And, while sometimes an agent sides with the insured client and assists with this process, that is not always the case, especially where the coverage issue may be the agent’s fault. Care should be taken to avoid contacting the agent of an adverse insurer so as not to cross any ethical line. 76
B. Contents of Independent Settlement Agreements.
Any independent settlement agreement should include verifiable factual recitals of the underlying claim against the insured, the nature of the insurance controversy, the key terms of the insurance contract, and the conduct that freed the insured from the cooperation clause, i.e., the facts showing refusal to defend and/or indemnify, refusal to settle within policy limits, and/or other breach of the insurer’s duties. In the context of insurance agent/broker negligence, all relevant facts regarding the agent’s/broker’s duty and breach should be detailed. Factual recitals establishing underlying liability, causation, and damages should be included and can be of significant utility, triggering collateral estoppel principles absent any conflict of interest.77 The agreement should document any notice of the independent settlement provided to the insurer and the insurer’s opportunity to avoid execution of the agreement by, as the case may be, withdrawing its reservation of rights and defending unequivocally, acknowledging coverage, or, alternatively, agreeing to pay any later settlement or judgment without regard to the policy limits. Documentation confirming all of the above matters may be attached as exhibits or simply referenced.
All recitals should be factual and not self-serving opinions or conclusions that will immediately be seen as such. From the claimant’s perspective, having the insured warrant the accuracy of the factual predicates for the independent settlement may be helpful. Overreaching or plainly incorrect recitals might later be evidence to a reviewing court of collusion, particularly if the insured defendant previously disputed facts it later adopts in the agreement. Plain and accurate recitals of the relevant predicate facts are both sufficient and preferrable to conclusions and opinions regarding coverage or other issues, with the exception of the insured’s substantive understanding and/or expectations regarding coverage, if relevant.
The agreement should also make clear whether a stipulated final judgment will be entered and the amount of such judgment, whether the defendant must withdraw its answer and allow a default judgment to be entered, or whether the parties will submit the issue of damages to the trial court after a hearing. As noted, outside of a Damron scenario (where the insurer has refused to defend), the amount of any stipulated judgment is not binding on the insurer unless it is proven to be reasonable. Because the insured defendant is normally concerned only with the protection of a covenant not to execute, there is typically little negotiation over the amount of the judgment and any attempt to give the appearance of a negotiation would likely be futile.78
As demonstrated by Goettl, the agreement should make clear that nothing in the agreement, including the covenant not to execute, is intended to be a release of liability. A release would negate the indemnitee’s liability and the indemnitor’s obligation to indemnify and render the assignment worthless. A covenant not to execute on the judgment is used in place of a release to protect the insured from having to pay the judgment. The independent settlement should require the insured defendant (and any heirs or successors) to reasonably cooperate with the claimant in pursuing collection from the insurer/indemnitor or insurance agent/broker. Typically, a clause that requires the insured defendant to provide truthful testimony, affidavits, or declarations and to provide access to and/or the production of relevant documents is desirable. And, because attorney-client and/or work product privileges belong to the defendant insured, it may be advisable for the plaintiff to require an express waiver of any such privileges.
From the insured defendant’s perspective, the most important term is an ironclad covenant not to execute. In that regard, the agreement should state that each side has independently investigated the facts and law regarding the agreement with the assistance of counsel of their own choosing, and the insured defendant is not responsible for, and makes no guaranties regarding, the outcome of subsequent determinations regarding the reasonableness of the settlement, indemnification, insurance coverage, bad faith or negligence determinations. It should also specify that the covenant not to execute is severable and remains valid and enforceable notwithstanding any adverse determination regarding the validity of the agreement, the reasonableness of the settlement amount, insurance coverage, the liability of any indemnitor, agent or broker, etc.
The agreement may also specify that the resulting judgment cannot be recorded or otherwise used to perfect any lien on the insured defendant’s assets. And, while the judgment itself is a public record that cannot be hidden, some parties may want to avoid any publicity and may add a provision precluding disclosure or publicity beyond that reasonably necessary to the assignee’s legal efforts to pursue the assigned claims.
Because judgments must sometimes be disclosed for professional licensing, insurance applications, loans, employment, security clearances, etc., the agreement may also include a clause requiring the claimant/judgment creditor’s reasonable cooperation in explaining, when necessary, that the judgment cannot be collected from the insured/indemnitee. Finally, because only the claimant/assignee will benefit from pursuing the assigned claims, the defendant insured should seek defense and indemnification in the event the insured defendant is named in any claim arising out of the settlement.
C. Notice.
When notice of the independent settlement is required, failure to provide it can be fatal to the enforceability of the agreement. When an insurer is defending an insured under a reservation of rights as in Morris, the insured must give notice to the insurer prior to settling the underlying litigation and assigning claims against the insurer.79 As already noted, it may make sense, even if not required, to provide advance notice to an insurer who has refused to extend equal consideration to a settlement offer so as to avoid complications.
In Leflet, supra, the court examined sufficiency of notice that must be given to the target insurer(s) for a Morris-type settlement to hold up.80 Leflet held that mere threats of an independent settlement agreement at a mediation were insufficient notice to the insurers that were the target of the claims to be assigned, implying that the essential terms of the agreement needed to be provided. Thus, notice must advise the insurer that the parties intend to enter into an independent settlement. Leflet also made clear that notice must provide the target insurer with an option to “waive its reservation of rights and provide an unqualified defense.”81 Counsel should coordinate notice to the insurer(s) in a reasonable and timely manner to allow the insurer an opportunity to withdraw any reservation of rights and/or waive the policy limit. The notice should explain the factual basis for release from the cooperation clause allowing the independent settlement, outline the anticipated terms, and provide a reasonable deadline for the insurer to withdraw its reservation of rights or waive its policy limit.
III. Post-Settlement Considerations.
A. Judgment.
An independent settlement may call for withdrawal of the answer and a default judgment, a stipulation to liability and a specific judgment amount, or the parties may agree to have a hearing in the trial court to determine the claimant’s damages in light of stipulated liability. An insurer that has provided a defense has the right to intervene and present a defense at any damages hearing.
B. Reasonableness.
The party seeking to enforce a judgment stemming from an independent settlement agreement has the burden of establishing that the judgment reflects a reasonable settlement amount.82 A reasonable settlement amount is “what a reasonably prudent person in the insureds’ position would have settled for on the merits of the claimant’s case.”83 In Himes, the Court of Appeals further explained:
The “reasonably prudent person” referenced in this test means a person who has a stake in the outcome. It means a person who is making decisions as though the money that pays the settlement comes from his or her own pocket. This is not a test of what a reasonably prudent person would settle the case for with someone else’s funds.It is what a “reasonably prudent person” would pay from his or her own resources, assuming they are sufficient, “on the merits” of the case. 84
Himes identified the following factors applicable to determining the reasonableness of the settlement: (1) the plaintiff’s damage; (2) the merits of plaintiff’s liability theory; (3) the merits of the defense; (4) the defendant’s relative risks; (5) the costs, expenses and risks of continued litigation of the merits;(6) any evidence of fraud or collusion; (7) the extent of the plaintiff’s investigation and preparation of the case; and (8) the interests of any parties not being released.85
Shortly after Himes, in Parking Concepts, Inc. v. Tenney, Arizona’s Supreme Court held the trial court should apply the same standard used for good faith settlement determinations:
… when evaluating a Morris settlement for reasonableness, the superior court should apply the same criteria that must be applied by the insurer under its implied contractual covenant of good faith and fair dealing in evaluating a settlement proposal in the absence of a reservation of rights. These include “the facts bearing on the liability and damages aspects of claimant’s case, as well as the risks of going to trial.” [citation omitted.] The insurer is also contractually required to consider, even when the merits of the claimant’s case are fairly debatable, the financial risk that an adverse judgment in excess of policy limits may have on the insured.86
Tenney listed the following factors considered in a good faith settlement determination: (1) the strength of the claimant’s case on liability and damages; (2) whether the insurer attempted to induce its insured to contribute to a settlement; (3) whether the insurer failed to properly investigate the circumstances of the claim in order to ascertain the evidence against its insured; (4) whether the insurer rejected the advice of its attorneys or other agents; 5) whether the insurer failed to inform its insured of a compromise offer; (6) the amount of financial risk to which each party would be exposed in the event of a refusal to settle; (7) whether the insured was at fault in inducing the insurer’s rejection of the compromise offer by misleading the insurer about the facts; and (8) any other factors tending to establish or eliminate bad faith on the part of the insurer.87 Accordingly, the trial court has discretion to consider virtually any factor relevant to an insured defendant under the circumstances presented.
C. Reasonableness Hearings.
The mechanism for determining a reasonable settlement amount for an independent settlement is a reasonableness hearing, which is distinct from a damages hearing that occurs in the default judgment context, or where the parties stipulate to a damages hearing.88 Where the independent settlement calls for a hearing to determine damages, the resulting judgment must then be tested for reasonableness just as a stipulated judgment amount is tested.89 An insurer that has provided the insured with a defense generally has the right to intervene under Ariz. R. Civ. Proc., Rule 24 and participate in a damages hearing and a reasonableness hearing.90 The trial court also has discretion, and is encouraged, to combine any damages hearing with a reasonableness hearing, but will need to make separate determinations of damages for the underlying claim and the reasonableness of the damages judgment as a settlement amount under Morris.91 It is not uncommon for insurers to intervene and then seek a stay of the reasonableness hearing pending a coverage determination, arguing judicial economy.92
“[T]he primary purpose of a reasonableness hearing is to attempt to recreate the same result that would have occurred if there were an arm’s length negotiation on the merits of the case between interested parties.”93 At a reasonableness hearing, the court determines “what a reasonably prudent person in the insureds’ position would have settled for on the merits of the claimants’ case.”94 As already noted, the court is to consider “the facts bearing on the liability and damages aspects of the claimant’s case, as well as the risks of going to trial,” including the financial risk that an adverse judgment in excess of policy limits may have on the insured.95 The claimant assignee does not have to prove the defendant would have lost the underlying case, but bears the burden of establishing the reasonableness of the settlement in light of the merits of the underlying claim and the risks of going to trial.96
While the trial court has some discretion regarding the scope of the reasonableness hearing, it is not a trial of the underlying claim. The Arizona Supreme Court has specifically stated that permitting an insurer “to relitigate all aspects of the liability case, including liability and amount of damages[,] … would destroy the purpose served by allowing insureds to enter into Damron agreements because claimants would never settle with insureds if they never could receive any benefit.”97
The court should typically consider only evidence that existed and was known to the defendant at the time of the settlement, and not after-acquired evidence, because the court is charged with recreating a genuine arm’s-length negotiation that would have occurred at the time the case settled.98 This can raise interesting evidentiary issues when an insurer seeks to conduct discovery or introduce evidence unknown to the parties when they settled. From the plaintiff’s perspective, there is a strong relevance argument against discovery or use of evidence that was not available and known to the defendant when the defendant settled. Insurers may have a due process argument for discovery in circumstances arguably involving “the swift resolution of a complex action, a lack of discovery, and the failure to interview witnesses.”99 Any such discovery should be relevant to defendant’s due diligence prior to settlement, and not used as an attempt to litigate the underlying claim.
D. Fraud or Collusion.
Independent settlement agreements and related judgments will not be enforced if they are the result of fraud or collusion between the claimant and the insured. It is somewhat standard for insurers to assert “fraud and collusion” as a defense to enforcement of an independent settlement and judgment, since that is often the last line of defense in case the claimant assignee succeeds in proving coverage and breach by the insurer. However, proving “fraud and collusion” to set aside a judgment in this context is difficult.100
In Paynter, the court distinguished cases in which the insurer proved “fraud and collusion:”
State Farm has cited several cases in which the courts have, on grounds of fraud, refused to enforce a judgment against an insurer. Those cases, however, involved conduct of a very different nature than that presented here. Generally they involved collusion by the plaintiff and the insured with respect to the institution of the lawsuit in an effort to defraud the insurance company. Thus, for example in Venditti v. Mucciaroni, 54 Ohio App. 513, 8 N.E.2d 460 (1936), the plaintiff and the defendant fraudulently procured the insurance policy and arranged a sham accident as part of an elaborate scheme to defraud the insurer. In Renschler v. Pizano, 329 P. 249, 198 A. 33 (1938), the insured first assisted the plaintiff in amending a complaint in order to invoke coverage under the insurance policy, and then failed to give the insurance company notice of the amended complaint. In Bertinelli v.Galoni, 331 Pa. 73, 200 A. 58 (1938), an insurance company was permitted to attack a judgment against its insured when it learned that the insured was the plaintiff’s father and chief witness and would enjoy a benefit from plaintiff’s recovery. In State Farm Mutual Automobile Insurance Co. v. Shelton, 368 S.W.2d 734 (Ky. App. 1963), the court permitted collateral attack by the insurer on the ground that the complaint had, through collusion of the defendant insured, misrepresented the identity of the driver of the automobile.101
As the cases cited in Paynter demonstrate, there needs to be actual fraud or lack of a genuine arm’s length settlement.102 An insurer’s belief that the stipulated judgment is excessive does not render it fraudulent or collusive.
There is a compelling argument that what a court has found to be a “reasonable settlement” is, by definition, devoid of fraud or collusion. Therefore, while the issue of fraud or collusion is theoretically discreet from the reasonableness of the independent settlement amount, the safer course for an insurance company is to raise any fraud or collusion defense at any reasonableness hearing rather than waiting for the ensuing coverage litigation.103 Likewise, it may be advisable for the claimant to request either a court hearing to determine damages under the independent settlement agreement, or a reasonableness hearing on the stipulated judgment amount at an early date, because, again, the trial court’s determination after hearing the evidence is more likely to withstand subsequent scrutiny than the parties’ self-interested stipulation.
E. Coverage Litigation and Judgment Collection.
Various procedures exist for collecting a judgment entered pursuant to an independent settlement. The most common procedures for collecting on the judgment include as garnishment proceeding under A.R.S. §12-1572 et seq. and/or a declaratory relief action under either A.R.S. §12-1831, et. seq. or 28 U.S.C. § 2201 et seq.
Garnishments are often preferred because the Arizona statutes provide a streamlined, speedy process for determining whether the insurer may be garnished as a source of funds for the judgment owed by its insured. Arizona courts have long considered garnishment a proper civil action for a judgment creditor to determine insurance coverage under a policy issued to the judgment debtor.104 Garnishment can be added to the existing/underlying litigation or filed as a separate proceeding. An insurer cannot compel arbitration of the garnishment proceeding based on a policy arbitration clause, because the plaintiff/judgment creditor is not a party to the insurance contract.105 If a garnishment proceeding is removed to federal court based on diversity of citizenship,106 some of the benefit of a garnishment may be lost because the short time periods called for under Arizona’s statutory scheme are considered procedural and supplanted by the Federal Rules of Civil Procedure.107 The plaintiff/judgment creditor’s right to determine coverage in such proceedings is not lost, but the timeline may be extended by removal.108
The alternative is a separate action to pursue the assigned claims, which would be claims for declaratory judgment, bad faith, negligent insurance procurement, etc. in order to recover the underlying judgment entered on the independent settlement agreement as damages. Often the choice is made by the insurer filing a declaratory judgment action, which may occur even before the independent settlement is executed and/or the underlying judgment is entered.
IV. Conclusion.
Insurance coverage disputes are common and create an opportunity and often a need for independent settlement so the parties may resolve the coverage issue(s) and access what is usually the only available funding for the underlying claim and liability. Done properly, independent settlement is an efficient method of resolving both the underlying claim and liability coverage issues. Counsel for plaintiffs and defendants need a familiarity with the law and circumstances allowing an insured to enter into an independent settlement, the requirements that come with an independent settlement, such as notice and reasonableness, and the basics of negotiating, drafting, and following through on independent settlements. Hopefully this article has armed counsel with information to assist in navigating these issues.
Endnotes
74 An insurer can and should, on request, formally certify the policy it issued so that all parties are confident they are dealing with the same correct and complete version of the policy.
75 Darner Motor Sales, Inc. v. Universal
Underwriters Ins. Co., 140 Ariz. 383, 306 (1984).
76 Counsel should be cautious and likely avoid speaking with a present or former captive agent of an opposing carrier so as to avoid violation of E.R. 4.2 preventing ex parte communications with a person represented by counsel in the matter.
77 Quihuis v. State Farm Mut. Auto Ins.
Co., 253 Ariz. 536, 545 (2014).
78 See generally United Servs. Auto. Ass’n
v. Morris, 154 Ariz. 113 (1987).
79 Id.
80 Leflet, supra, 226 Ariz. at 302.
81 Id. (citing Parking Concepts Inc. v.
Tenney, 207 Ariz. 19, 22, 83 P.3d 19, 22 (2004)).
82 Morris, 154 Ariz. at 120 (“neither fact nor the amount of liability to the claimants is binding on the [insurer] unless the insured or claimant can show that the settlement was ‘reasonable and prudent’”).
83 Waddell v. Titan Ins. Co., 207 Ariz. 529, 534, ¶ 16 (App. 2004) (quoting United Servs. Auto. Ass’n v. Morris, 154 Ariz. 113, 121 (1987)).
84 Himes v. Safeway Ins. Co., 205 Ariz. 31,
39, ¶ 23 (2003).
85 Id. at 43, ¶15; see also Ass’d Aviation
Underwriters v. Wood, 209 Ariz. 137, 172, ¶¶ 113–14.
86 Parking Concepts, Inc. v. Tenney, 207 Ariz. 19, 24, 83 P.3d 19, 24 (2004) (citing Clearwater v. State Farm Mut. Auto. Ins. Co., 164 Ariz. 256, 260 (1990)).
87 Clearwater, 164 Ariz. at 259.
88 Waddell v. Titan Ins. Co., 207 Ariz.529 (App. 2004). In a default judgment proceeding under Ariz. R. Civ. Proc., Rule 55(b)(2), which requires an application and hearing, the court is to exercise its discretion to determine the amount of damages but should not just be “a one-sided presentation by the party seeking the default judgment.” Dungan v. Super. Ct. In and For Pinal Cnty., 20 Ariz. App. 289, 290 (1973).
89 Id., 207 Ariz. at 534-34, ¶20.
90 Id., 207 Ariz. at 535, ¶ 22.
91 Id., 207 Ariz. at 535, ¶ 23.
92 See H.B.H. v. State Farm, 170 Ariz. 324,
330 (App. 1991); Waddell, 207 Ariz. at 534, n. 3.
93 Himes, 205 Ariz. at 38; Pueblo S.F. Townhomes Owners’ Ass’n v. Transcon, 218 Ariz. 13, 24, ¶ 49 (App. 2008).
94 Waddell, 207 Ariz. at 534 (quoting United Servs. Auto. Ass’n v. Morris, 154 Ariz. 113, 121 (1987)).
95 Morris, 154 Ariz. at 121; Waddell, 207 Ariz. at 534, (“We emphasize that liability and comparative fault are not, themselves, issues at such a reasonableness hearing. But considerations of liability and comparative fault may be relevant in determining the ultimate issue: the amount of a reasonable settlement under all the circumstances [citation omitted].”)
96 Associated Aviation Underwriters v. Wood, 209 Ariz. 137, 170–71, ¶ 107 (App. 2004) (quoting Morris, 154 Ariz. at 121).
97 United Servs. Auto. Ass’n v. Morris, 154 Ariz. 113, 120 (1987); see also Munzer v. Feola, 195 Ariz. 131, 137, ¶ 32 (App. 1999) (“Morris precludes an insurer from litigating the substantive merits of a claim, as opposed to litigating coverage questions, after an insured has properly entered into a Morris agreement. A claimant would have no reason to enter into an agreement that would allow the insurer to defend on the merits.”).
98 Himes v. Safeway Ins. Co., 205 Ariz. 31, 42–43, ¶ 37 (App. 2003) (“the pertinent principle to be applied in determining what factors to consider is whether the evidence is relevant in re-creating a genuine arm’s-length negotiation; the key test is whether the evidence would assist the reasonably prudent person, acting as though the person were dealing with sufficient funds from his or her own pocket, in determining what a reasonable settlement amount would have been”).
99 A Tumbling-T Ranches v. Flood Control Dist., 220 Ariz. 202, 212 ¶ 34 (App.
2009) (affirming settlement in part because it was not based upon “any
lack of discovery or investigation.”); Solorenzo v. Jensen, 250 Ariz. 348, 350, ¶ 9 (App. 2020) (“Generally, due process entitles a party to notice and an opportunity to be heard at a meaningful time and in a meaningful manner, as well as a chance to offer evidence and confront adverse witnesses.”); Wardius v. Oregon, 412 U.S. 470, 474 (1973) (“the Due Process Clause has little to say regarding the amount of discovery which the parties must be afforded,” but does require reciprocal discovery as an aspect of fundamental fairness).
100 See, State Farm Mut. Auto. Ins. Co. v. Paynter, 122 Ariz. 198, 201–02 (App. 1979).
101 Id.
102 Fid. Nat’l Title Ins. Co. v. Centerpoint Mech. Lien Claims, LLC, 238 Ariz. 135, 141 ¶ 29 (App. 2015) (agreement invalidated because insureds had controlling ownership interest in other party to the agreement).
103 Munzer v. Feola, 195 Ariz. 131, 135 (App. 1999) (holding that the tests to determine if an insurance company is bound by a judgment are whether settlement was product of fraud or collusion and whether the settlement was reasonable); Parking Concepts, Inc. v. Tenney, 207 Ariz. 19, 22 (2004) (distinguishing between fraud and collusion and reasonableness of the settlement amount).
104 Kepner v. W. Fire Ins. Co., 109 Ariz. 329, 332 (1973); Holt v. Utica Mut. Ins. Co., 157 Ariz. 477 (1988).
105 Benson v. Casa De Capri Enters., 252
Ariz. 303, 306 ¶¶ 11–12 (2022).
106 See generally, Labertew v. Langemeier,
846 F.3d 1028 (9th Cir. 2017).
107 Id. at 1033–34.
108 See generally Bank of California v. Opie, 663 F.2d 977 (9th Cir. 1981)
(affirming judgment in removed garnishment action by judgment creditor against garnishee insurer under professional liability insurance policy); Luehrs v. Utah Home Fire Ins. Co., 450 F.2d 452 (9th Cir. 1971) (affirming judgment of no coverage in favor of garnishee insurer in removed garnishment action); Keller v. Whelan, No. CV-15-2489-PHX-SMM, 2017 WL 6040005 (U.S. Dist. of Ariz. Feb. 27, 2017) (finding no coverage under garnishee insurer’s policy in removed garnishment action).