Borandi v. United Statesa Cas. Ins. Co.

• Decision Date: 29 December 2014
• Docket Number: Case No. 2:13-CV-141 TS
• Parties: CHRISTY BORANDI and TODD BORANDI, Plaintiffs, v. USAA CASUALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Utah

CHRISTY BORANDI and TODD BORANDI, Plaintiffs, v. USAA CASUALTY INSURANCE COMPANY, Defendant.

Case No. 2:13-CV-141 TS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

December 29, 2014

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

District Judge Ted Stewart

This matter is before the Court on Defendant USAA Casualty Insurance Company's ("USAA") Motion for Summary Judgment. For the reasons discussed below, the Court will grant the Motion in part and deny it in part.

I. BACKGROUND

USAA issued a contract for automobile insurance to Plaintiffs. On or about August 15, 2007, Plaintiff Christy Borandi ("Mrs. Borandi") was involved in a motor vehicle accident with a third-party driver, Shawn Smith ("Smith"). Plaintiff Todd Borandi ("Mr. Borandi") was not present in the vehicle at the time of the accident.

Plaintiffs settled with Smith and his liability insurer for the applicable limits of $100,000.¹ Plaintiffs later asserted a claim against USAA for underinsured motorist coverage, resulting in the instant action.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."² In considering whether a genuine dispute of material fact exists, the Court determines whether a reasonable jury could return a verdict for the nonmoving party in the face of all the evidence presented.³ The Court is required to construe all facts and reasonable inferences in the light most favorable to the nonmoving party.⁴

III. DISCUSSION

Plaintiffs assert claims for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, loss of consortium, intentional infliction of emotional distress, and bad faith. Defendant seeks summary judgment on all claims.

A. BREACH OF FIDUCIARY DUTY

Plaintiffs bring a claim for breach of fiduciary duty. The Utah Supreme Court has held that "[b]ecause a first-party insurance claim is purely contractual, an insurer owes no fiduciary duties to its insured when it denies . . . benefits as it does under a third-party insurance claim."⁵ Based upon this authority, Defendant argues that summary judgment is appropriate on Plaintiffs' breach of fiduciary duty claims. The Court agrees.

In an effort to avoid summary judgment on this claim, Plaintiffs cite to cases that are either outside the insurance context or deal with third-party claims, as opposed to first-party claims. These cases are inapposite. The Utah Supreme Court has consistently treated first-party and third-party claims differently, recognizing a fiduciary duty in one but not the other.

Plaintiffs also cite to Beck v. Farmers Insurance Exchange.⁶ Beck similarly held "that in a first-party relationship between an insurer and its insured, the duties and obligations are contractual rather than fiduciary. Without more, a breach of those implied or express duties can give rise to a cause of action in contract, not in tort."⁷ The court in Beck did "recognize that in some cases the acts constituting a breach of contract may also result in breaches that are independent of the contract and may give rise to causes of action in tort."⁸ The court provided examples of intentional and outrageous conduct by an insurer or fraudulent conduct. However, in this case, Plaintiffs do not allege conduct that is independent of their contract claim. Further, as will be discussed below, there is no evidence to support a claim based on alleged intentional or outrageous conduct. Therefore, the Court will grant Defendant summary judgment on this claim.

Further, even if Plaintiffs could assert a breach of fiduciary duty claim, the facts of this case do not support such a claim. "In Utah, a fiduciary or confidential relationship will be found 'when one party, having gained the trust and confidence of another, exercises extraordinaryinfluence over the other party.'"⁹ Mrs. Borandi has provided an affidavit stating that she placed trust in USAA and that she relied upon USAA to treat her honestly and fairly.¹⁰ While Mrs. Borandi stated that she placed trust in USAA, there is no evidence that USAA, having gained Mrs. Borandi's trust and confidence, exercised extraordinary influence over Mrs. Borandi. Therefore, even if Plaintiffs could assert a claim for breach of fiduciary duty, there are no facts to support that claim.

B. LOSS OF CONSORTIUM

Mr. Borandi brings a claim for loss of consortium. Defendant argues that Mr. Borandi's claim for loss of consortium should be brought against Smith and that his claim is not covered by Plaintiffs' policy with Defendant. The Court agrees that Mr. Borandi's claim is not covered by the policy. Therefore, the Court finds that summary judgment is appropriate.

The underinsured motorist coverage portion of Plaintiffs' policy states, "We will pay compensatory damages which a covered person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of [bodily injury] sustained by a covered person and caused by an auto accident."¹¹

Defendant represents that the policy defines "bodily injury" as "bodily harm, sickness, disease or death." Defendant has failed to provide the Court with the provision of the policy thatincludes this definition. However, Plaintiffs do not appear to dispute that this definition is included in the policy.

This Court has previously held that the term "bodily injury" did not cover a husband's loss of consortium claim under a similar policy provision.¹² The Court stated,

Neither the Cannons nor State Farm argue that Mr. Cannon was involved in any way in the collision. Further, neither party disputes that Mr. Cannon's claim to State Farm is for loss of consortium. The language of the policy states "[w]e will pay compensatory damages for bodily injury" and when read together with the definition as provided in the definition section of the policy would read "we will pay compensatory damages for bodily injury [meaning] bodily injury to a person and sickness, disease, or death that results from it." According to the definitions provided by the policy, Mr. Cannon did not have a bodily injury and thus did not suffer sickness, disease, or death resulting from his loss of consortium. Thus, Mr. Cannon did not suffer a bodily injury as defined in the policy and thus is not entitled to compensatory damages.¹³

The Court relied, in part, on the Utah Supreme Court's discussion of loss of consortium claims in Progressive Casualty Insurance Co. v. Ewart.¹⁴ Though addressing a separate issue, the Utah Supreme Court's discussion of "bodily injury" is helpful. The court found that "'[b]odily injury' should not be construed broadly enough to encompass a loss of consortium claim as the Ewarts would have us conclude."¹⁵ The court noted that the term "'bodily' is commonly understood to refer to, simply, the 'body,' and Mrs. Ewart's loss of consortium claim in no way involves a bodily injury to her."¹⁶

Plaintiffs argue that Mr. Borandi is a "covered person" under the policy and, therefore, should be permitted to assert a loss of consortium claim. However, whether Mr. Borandi is a "covered person" under the policy does not answer the question of whether his loss of consortium claim is a claim covered by the underinsured motorist coverage provision of that policy. Based upon the case law discussed above, the Court finds that it is not. Therefore, summary judgment is appropriate on this claim.

C. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

The Utah Supreme Court has "recognized that an insured can sue an insurer for intentional infliction of emotional distress for refusing to pay benefits under the contract in appropriate cases."¹⁷ "In order to demonstrate the intentional infliction of emotional distress, a plaintiff must show: (1) intentional or reckless conduct (2) which is 'of such a nature as to be considered outrageous and intolerable in that [it] offend[s] against the generally accepted standards of decency and morality.'"¹⁸ "To be considered outrageous, the conduct must evoke outrage or revulsion; it must be more than unreasonable, unkind, or unfair."¹⁹ "If the trial court determines that a defendant's conduct was not outrageous as a matter of law, then the plaintiff's claim fails, and a court may properly grant the defendant summary judgment on an intentional infliction of emotional distress claim."²⁰

The evidence in this case does not rise to the level to support an intentional infliction of emotional distress claim. While the evidence may support a finding that USAA's conduct was unreasonable, unkind, or unfair, there is no evidence that Defendant engaged in conduct that would evoke outrage or revulsion. Therefore, summary judgment is appropriate on this claim.

D. BAD FAITH

Defendant argues that Plaintiffs cannot bring a separate tort claim for bad faith. For the same reasons set forth above with respect to Plaintiffs' breach of fiduciary duty claim, the Court agrees. Plaintiffs' claims sound in contract, not tort. Therefore, to the extent that Plaintiffs seek to assert a bad faith tort claim, it will be dismissed. However, this does not fully resolve Plaintiffs' claim.

"Bad faith is merely the inverse of the implied covenant of good faith and fair dealing that inheres in all insurance contracts."²¹ Therefore, to the extent that Plaintiffs assert a bad faith claim, it will be considered in relation to their claim for breach of the implied covenant of good faith and fair dealing.

E. BREACH OF CONTRACT AND BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

"In Utah, a plaintiff may sue on a contract for: (1) breach of the contract's express terms; and/or (2) breach of the covenant of good faith and fair dealing, which is an implied duty that inheres in every contractual relationship."²² The parties focus their discussion on Plaintiffs' breach of the covenant of good faith and fair...