AAA Nevada Ins. Co. v. Chau

• Court: U.S. District Court — District of Nevada
• Writing for the Court: GLORIA M. NAVARRO
• Citation: AAA Nevada Ins. Co. v. Chau, 808 F.Supp.2d 1282 (D. Nev. 2010)
• Decision Date: 15 July 2010
• Docket Number: Case No.: 08–cv–00827–GMN–LRL.
• Parties: AAA NEVADA INSURANCE COMPANY, Plaintiff, v. Vinh CHAU; Lang Chau; Does 1–20; and Roes 1–20, inclusive, Defendants.

808 F.Supp.2d 1282

AAA NEVADA INSURANCE COMPANY, Plaintiff,

v.Vinh CHAU; Lang Chau; Does 1–20; and Roes 1–20, inclusive, Defendants.

Case No.: 08–cv–00827–GMN–LRL.

United States District Court, D. Nevada.

July 15, 2010.

Nathan Reinmiller, Nathan Severson, Alverson Taylor Mortensen & Sanders, Las Vegas, NV, for Plaintiff.

Joel F. Hansen, Hansen Rasmussen, Las Vegas, NV, for Defendants.

ORDER

GLORIA M. NAVARRO, District Judge.

INTRODUCTION

Before this Court is Plaintiff's Motion for Summary Judgment (Motion, # 57). This motion was reinstated for consideration on this Court's order vacating a previous order, which had improperly concluded that the Court was without jurisdiction. The Court also permitted Interveners to respond to Plaintiff's Motion for Summary Judgment, which they did so in a timely manner. (Response, # 82). Plaintiff then filed a timely Reply (Reply, # 92).

The Court has considered the arguments and pleadings filed by all parties.

IT IS HEREBY ORDERED THAT Plaintiff's Motion for Summary Judgment (# 57) is GRANTED.

BACKGROUND

Defendant Vinh Chau (“Defendant”) was insured by Plaintiff AAA Nevada Insurance Company (“AAA”) when he was in a car accident with Benjamin Buenaventura, resulting in Buenaventura's death. Defendant's policy with AAA included bodily injury liability limits of $100,000 per person and $300,000 per accident. Defendant reported the accident to AAA on November 21, 2006. On December 18, 2006, Kristine Jansen of Christensen Law Office wrote to AAA that she represented Clara Buenaventura and Benjamin Buenaventura in a claim for wrongful death against Defendant as a result of the accident. In that letter, counsel for the Buenaventuras stated that her client would settle for the policy limits, provided (1) AAA paid within two weeks and (2) provided proof that those are the only policy limits available to provide compensation for his client. In that correspondence, the Buenaventura's counsel did not identify all heirs of decedent or lienholders, nor provide a release. AAA spent the next two weeks attempting to contact Jansen to follow up with its questions on these two matters and respond to the offer. It went to the extent of physically visiting his offices, writing a check for the amount, but was unable to get in touch with Jansen.

In the months that followed, AAA continued to attempt to settle the offer with Jansen. Finally in April 2007, Christensen Law Office wrote to AAA that its client was no longer willing to settle for the policy limits and alleged that AAA had failed to respond to the policy limits demand. In September 2007, the parties attempting to intervene in this case filed a wrongful death action against Defendant. They seek a judgment of $999,997.00.

AAA filed the present complaint in June 2008 for declaratory relief regarding the insurance policy. (# 1). In April 2009, Benjamin Buenaventura, Jr., Mark Francis Buenaventura, Fides Palapar, Mary Christine Pangilinan, Laura Buenaventura, Maria Buenaventura, Rosalind Bacus, and Clara Deleon Buenaventura (collectively “the Buenaventuras” or “Interveners”) moved to intervene. (# 33). Through a series of motions and orders, this request was granted on April 30, 2010. The Court also considered AAA's Motion for Summary Judgment (# 28) and granted it, but reversed and/or vacated its prior order granting AAA's motion to file its summary judgment motion under seal (# 28). Accordingly, this Court directed AAA to refile its motion for summary judgment with the confidential portions redacted. (# 54). AAA did so, filing the present motion for summary judgment under consideration (# 57).

DISCUSSION

A. Rule 56 Legal Standard

The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the material facts before the court. Northwest Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir.1994). Summary judgment is proper if the evidence shows that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995). As summary judgment allows a court to dispose of factually unsupported claims, the court construes the evidence in the light most favorable to the nonmoving party. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir.1996).

In evaluating the appropriateness of summary judgment, three steps are necessary: (1) determining whether a fact is material; (2) determining whether there is a genuine issue for the trier of fact, as determined by the documents submitted to the court; and (3) considering that evidence in light of the appropriate standard of proof. Id. As to materiality, only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes which are irrelevant or unnecessary will not be considered. Id. Where there is a complete failure of proof concerning an essential element of the nonmoving party's case, all other facts are rendered immaterial, and the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Summary judgment is not a disfavored procedural shortcut, but an integral part of the federal rules as a whole. Id.

The Ninth Circuit recently addressed the propriety of multiple motions for summary judgment. See Hoffman v. Tonnemacher, 593 F.3d 908, 911 (9th Cir.2010). The court stated, “we now hold explicitly that district courts have discretion to entertain successive motions for summary judgment....” Id. As noted by the court, Federal Rule of Civil Procedure 56 does not limit the number of motions that may be filed. Additionally, “the possibility of summary judgment remains on the table even after the district court has denied a summary judgment motion because that order is ‘subject to reconsideration by the court at any time’ ” Id. (quoting Dessar v. Bank of Am. Nat'l Trust & Sav. Ass'n, 353 F.2d 468, 470 (9th Cir.1965)); cf. City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir.2001) (“As long as a district court has jurisdiction over the case, then it possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient.” (quoting Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir.1981))). It is therefore within the Court's discretion to consider this renewed motion for summary judgment.

B. Analysis

Plaintiff seeks declaratory relief as to the applicability of the policy limits in this case. Plaintiff argues that the policy terms are unambiguous and limit recovery to $100,000 for this claim. Further, Plaintiff argues that it did not breach its duty to settle and did not act in bad faith by failing to settle within the arbitrary time set by Interveners' counsel. Interveners do not dispute the actual policy limits, but argue that there disputed material issues of genuine fact as to AAA's potential bad faith. Accordingly, due to AAA's correct and undisputed treatment of the policy limits, it is this Court's holding that AAA's policy with the Chau's is limited by the policy to $100,000.00. This only goes to their contractual liability, however, as the issue of bad faith could give rise to other damages.

1. Bad Faith

Insurers have a special relationship with its insureds that arises under the implied covenant of good faith and fair dealing. Allstate Insurance Co. v. Miller, 212 P.3d 318, 324 (Nev.2009). This duty does not arise out of contract, but rather the covenant is imposed on insurers by the law. U.S. Fidelity & Guaranty Co. v. Peterson, 91 Nev. 617, 620, 540 P.2d 1070 (1975). “A violation of the covenant gives rise to a bad-faith tort claim.” Miller, 212 P.3d at 324. Bad faith is “an actual or implied awareness of the absence of a reasonable basis for denying benefits of the [insurance] policy.” Id. (quoting Am. Excess Ins. Co. v. MGM Grand Hotels, Inc., 102 Nev. 601, 605, 729 P.2d 1352 (1986)).

As recently discussed in Miller, there are duties that stem from the covenant of good faith and fair dealing, which when violated, give rise to claim of bad faith. Id. In particular, there are two general duties that insurers have to their insureds: the duty to defend and the duty to indemnify. Id. These duties then give rise to other duties. The discussion in Miller on this point is instructive:

The duty to defend contains two potentially conflicting rights: the insurer's right to control settlement discussions and its right to control litigation against the insured. 14 Couch on Insurance 3d §§ 200:1, 203:1 (2005). Each of these contractual rights creates additional duties for the insurer. The right to control settlement discussions creates the duty of good faith and fair dealing during negotiations. See Couch, supra, at § 203:1 (stating that the insurer's right to control settlement negotiations may create a conflict of interest between the insurer and the insured, and therefore, the insurer must act in good faith and give the insured's interests equal consideration with its own). The right to control litigation creates the duty to defend the insured from lawsuits within the insurance policy's coverage. Couch, supra, at § 200:1.

Miller, 212 P.3d at 324–25. Accordingly, an insurance company's duty to defend, and potential duties that arise under this general duty, “attach [ ] upon notice of a demand against its insured.” See id. at 325. It ends once the duty has been discharged. Id. at 326.

Another duty, which is the object of much of Plaintiffs' memorandum, is the duty to equally consider its insured's interests. This stems from the “special relationship between the insured and the insurer, which is similar to a...