Andrew v. Century Sur. Co.

• Decision Date: 29 April 2014
• Docket Number: Case No. 2:12-cv-00978-APG-PAL
• Parties: DANA ANDREW, as Legal Guardian of RYAN T. PRETNER, and RYAN PRETNER, individually, Plaintiffs, v. CENTURY SURETY COMPANY, a foreign corporation; and DOES 1-10, inclusive, Defendants.
• Court: U.S. District Court — District of Nevada

DANA ANDREW, as Legal Guardian of RYAN T. PRETNER,and RYAN PRETNER, individually, Plaintiffs, v. CENTURY SURETY COMPANY, a foreign corporation;and DOES 1-10, inclusive, Defendants.

Case No. 2:12-cv-00978-APG-PAL

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

DATED: April 29, 2014

Order Granting and Denying In Part

Plaintiffs' and Defendant's Motions forReconsideration

Pending before the Court are the parties' respective motions for reconsideration (ECF## 127, 132) of this Court's Order denying their cross-motions for summary judgment (ECF #123). For the reasons discussed below, the Court grants reconsideration and enters the following Order.

I. Background and Procedural History

The background and procedural posture of this case are set forth in detail in this Court's October 10, 2013 Order, and are incorporated herein by reference. The following is relevant to the parties' cross-motions for reconsideration.

On January 12, 2009, plaintiff Ryan Pretner was riding his bicycle on the eastbound shoulder of St. Rose Parkway in Las Vegas, Nevada.¹ Michael Vasquez was driving his truck when the truck's side-view mirror struck Pretner's head, resulting in a catastrophic brain injury.

At the time of the accident, Vasquez was covered under two insurance policies, one issued by defendant Century Surety Company ("Century") and the other issued by ProgressiveInsurance (not a party to this litigation). The Century policy insured Vasquez's business, Blue Streak Auto Detailing ("Garage Policy"). (ECF#14-2 at 2). Following the accident, Vasquez told the police tiiat "he had just gotten off work," and that he "was on Ins way to his Uncle's home coming from his house." (ECF#14-1 at 9 & 18). Shortly after the accident, Vasquez reported the claim to Progressive Insurance. On January 13, 2009, Vasquez confirmed in a recorded statement that he was off work and "just going to run errands." (ECF#23-1 at 7). On June 12, 2009, Vasquez signed an affidavit in which he stated that he "was driving from home...and going to [his] aunt and uncle's house...for the purpose of a visit." (Vasquez Declaration at ¶10; ECF#25-1 at 3). Vasquez did not notify Century about the accident until March 26, 2009 because he believed that the accident did not occur while he was driving on Blue Streak business. (Vasquez Declaration at ¶11). When Century's adjuster called Vasquez to discuss the accident, Vasquez apparently confirmed to the adjuster that Vasquez was not on Blue Streak business at the time of the accident. (ECG#24-1 at 19).

On May 26, 2009, Plaintiffs demanded that Century settle for its policy limits in exchange for a complete release. (ECF#14-9). On June 5, 2009, Century denied coverage because Vasquez was not driving his truck in the course of his business at the time of the accident. (ECF#14-10 at 3). Thus, Century rejected Plaintiffs' demand. (ECF#14-11).

On January 7, 2011, Plaintiffs filed in state court the underlying lawsuit entitled Lee Pretner and Dana Andrew as Legal Guardians of Ryan T. Pretner v. Michael Vasquez and Blue Streak Auto Detailing, LLC, Clark County Case No. A-11-632845-C ("Underlying Lawsuit"). (ECF#14-12). In their Complaint, Plaintiffs alleged that: (1) Vasquez was an agent and/or employee of Blue Streak; (2) at the time of the accident he was driving his truck in the course and scope of his employment with Blue Streak; and (3) Vasquez was negligent in operating the truck, causing injury to Pretner. (Id. at 3-5). Plaintiffs' counsel forwarded a copy of the Complaint to Century. (ECF#14-13). Subsequently, Century informed Blue Streak and Vasquez that after a "complete review" of the Complaint, Century was again denying coverage based on the policereports and Vasquez's consistent statements that he was not operating the truck in connection with the business. (ECF#14-20).

Blue Streak and Vasquez failed to answer the Underlying Lawsuit, so defaults were entered against them. (ECF#23-1 at 51). Plaintiffs sent Century copies of the defaults. (ECF#14-22). Century responded that its policy did not cover the loss. (ECF#14-23).

On October 20, 2011, Vasquez and Blue Streak entered into a settlement agreement ("Settlement Agreement") under which Progressive Insurance paid Plaintiffs the $100,000 policy limit under its policy. Plaintiffs agreed not to execute upon any judgment entered against Vasquez and Blue Streak, and Vasquez and Blue Streak assigned to Plaintiffs their rights against Century under the Garage Policy. (ECF#14-25).

Plaintiffs sought entry of default judgment in the Underlying Lawsuit, requesting $12,496,084.52 in damages. (ECF#14-26). The Application claimed that "[a]t the time of the accident, Vasquez was in the course and scope of Iris employment with Blue Streak...." (Id. at 3). No opposition was filed to the Application, and no one appeared at the hearing to challenge it. (ECF#26-2). Following the hearing, the court entered default judgment ("Default Judgment") against Vasquez and Blue Streak, finding that:

1. On January 12, 2009, Ryan T. Pretner was riding his bicycle traveling eastbound on the paved shoulder of St. Rose Parkway. While riding his bicycle, defendant Vasquez negligently collided with Pretner violently throwing him from his bicycle to the ground resulting in serious, catastrophic and life altering injuries.

2. At the time of the accident, Vasquez was an employee and/or agent of defendant Blue Streak Auto Detailing, LLC. At the time of the accident, Vasquez was in the course and scope of his employment and/or agency of Blue Streak acting in furtherance of its business interests. Accordingly, defendant Blue Streak is legally liable for the injuries and damages sustained by Pretner caused by defendant Vasquez's negligence.

3. As a result of the negligence of the defendants, Pretner sustained catastrophic and life altering injuries. Among the injuries Pretner sustained was a severe traumatic brain injury. . . . .

(ECF#14-27 at 5). According to the Court Minutes, Plaintiffs' counsel "requested and the COURT ORDERED 40% contingency attorney fees in the amount of-$5,155,396.80 and costs in the amount of $6,295.99." (ECF#26-2). The total amount of the Default Judgment is $18,050,185.45 plus accruing interest. (Id. at 6).

On April 23, 2012, Plaintiffs, as assignees of Blue Streak and Vasquez, filed the instant lawsuit against Century in Nevada state court ("Bad Faidi Action"). (ECF#1 at 8). Century removed it to this Court. (ECF#1).

Meanwhile, Century filed a Motion for Leave to Intervene in the Underlying Lawsuit, seeking to set aside the Default Judgment. (ECF#26-3). Century argued that the Default Judgment was based on misrepresentations of fact, including that the accident took place while Vasquez was driving in the course and scope of his employment with Blue Streak. (ECF 26-4 at 4). On December 10, 2012, the state court heard and denied Century's Motion to Intervene. The court stated that:

I think [Century] stuck their head in the sand and said, ['Hey, we] determined we're not going to have coverage here because of what we believe the facts to be. So we're going to stand back and we're not going to defend. We're not going to intervene. We're not going to seek any reservation of rights or any declaratory relief. We're just going to let the baby fall forward and hopefully we won't have any involvement. Then oops. It's going into default. I know the lawsuit says course and scope of employment. Clear as day on page 3 of the facts alleged in the complaint. But that's okay. Now they're in default.[']

Just like I'm certain that Mr. Prince could guess that the insurance company was going to try and take a position of, [']you know what[?'] ['T]his wasn't course and scope. ['] I would fall out of my chair if the insurance company said [']even though the lawsuit was filed alleging course and scope, even diough it went into default, I never guessed they were actually assess [sic] tiiat position when they came in for judgment and put it in the order. [']

(ECF #60 at 33). The state court denied Century's Motion to Intervene because (1) it was untimely filed; (2) Century knew of the pendency of the action and had an opportunity to participate, but chose not to; and (3) the entry of Default Judgment was valid. (Id. at 47-48). Century did not appeal the denial of its Motion to Intervene.

In this Bad Faidi Action, the parties filed cross-motions for Summary Judgment, which the Court denied in its October 10, 2013 Order. (ECF#123.) The Court concluded that issue preclusion did not bind Century to the findings in the Underlying Lawsuit, that Rooker-Feldman was inapplicable to this case, diat the assignment in the Underlying Lawsuit was immaterial, and diat issues of material fact relating to Century's investigation supported denying its motion for summary judgment widi respect to the breach of contract and bad faith claims. (Id.)

Subsequently, Plaintiffs filed a Motion for Reconsideration or in the Alternative for Certification of a Question of Law to the Nevada Supreme Court. (ECF#127.) Plaintiffs move the Court to decide whether Century breached its duty to defend, and if so, to determine the extent of damages flowing from that breach, or certify the question to the Nevada Supreme Court. (Id. at 6.) Plaintiffs also ask the Court to specifically determine whether Century is bound to the default judgment in the Underlying Lawsuit. (Id.)

Century likewise filed a Motion for Clarification, or in the Alternative, Motion for Reconsideration. (ECF#132.) Century moves the Court to rule specifically on the breach of the duty to defend claim, the bad faith claim, and to determine the measure of damages, if any. (Id. at 2.)

ANALYSIS

1. Reconsideration is appropriate under Fed. R. Civ. P. 54(b).

Rule 54(b) provides that:

[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer dian all the parties does not end the action as to any of the claims or parties and

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