Contreras v. Am. Family Mut. Ins. Co.
| Decision Date | 29 September 2015 |
| Docket Number | Case No. 2:12–cv–00249–RFB–VCF |
| Citation | 135 F.Supp.3d 1208 |
| Parties | Iris Contreras, et al., Plaintiffs, v. American Family Mutual Insurance Company, et al., Defendants. American Family Mutual Insurance Company, Third-party Plaintiff, v. Copart, Inc., Third-party Defendant. |
| Court | U.S. District Court — District of Nevada |
Willi H. Siepmann, Kurt C Faux, The Faux Law Group, Henderson, NV, Ingrid M. Patin, Baker Law Offices, Las Vegas, NV, for Plaintiff.
Thomas E. Winner, Christina R. Schwab, Susan M. Sherrod, Atkin Winner Sherrod, Douglas M. Rowan, Wilson Elser Moskowitz Edelman & Dicker LLP, Las Vegas, NV, for Defendants.
Thomas E. Winner, Susan M. Sherrod, Atkin Winner Sherrod, Las Vegas, NV, for Third-party Plaintiff.
Lewis W. Brandon, Jr., Moran & Associates, Las Vegas, NV, for Defendants. Justin Smerber, Moran Law Firm, LLC, Las Vegas, NV, for Third-party Defendant.
Third-Party Defendant Copart's Motion for Summary Judgment (ECF No. 48)
Third-Party Plaintiff American Family's Counter-Motion for Summary Judgment (ECF No. 55)
Defendant American Family's Motion for Summary Judgment on Plaintiffs' Claims (ECF No. 56)
This matter is before the Court on three Motions for Summary Judgment, one filed by Third–Party Defendant Copart, Inc. ("Copart"), ECF No. 48, and the other two by Defendant/Third–Party Plaintiff American Family Mutual Insurance Company ("American Family"), ECF Nos. 55 and 56. This case arises from an automobile accident in 2006 in which Plaintiffs Iris Contreras, Walter M. Deleon, and Walter O. Deleon sustained injuries due to an alleged tire failure that caused the vehicle in which they were riding to swerve across the road and roll over several times. During ensuing litigation between Plaintiffs, American Family, and the car and tire manufacturers, the allegedly defective tire was lost. Plaintiffs brought this suit against American Family claiming that it was responsible for the loss of the tire and that this loss resulted in the dismissal of Plaintiffs' claim against the manufacturers. American Family impleaded Copart as a Third–Party Defendant, claiming that Copart was the party responsible for the loss of the tire. For the reasons set forth below, all three Motions for Summary Judgment are granted in part and denied in part.
The Court finds the following facts to be undisputed for the purposes of these motions. These facts are based on the parties' statements of undisputed facts and, where specifically noted, the exhibits submitted by the parties.
On November 6, 2006, Plaintiffs suffered injuries as a result of an automobile accident in California when the right rear tire of the vehicle in which they were riding failed due to an alleged latent defect. As a result of the tire's failure, Plaintiff Walter O. Deleon (the driver of the car) lost control of the car, which caused it to go off the road and flip over several times. Following the accident, American Family (Contreras's insurer) paid Contreras and Walter M. Deleon the limits for bodily injury on Contreras's policy, compensated Contreras for the value of her car, and took possession of and title to the car. Within a few days after the accident, American Family had the vehicle transported to a Copart salvage yard in Colton, California.
American Family and Copart entered into a contract on June 6, 2007. Percentage Incentive Program Agreement, Third–Party Def.'s Mot. Summ. J. Ex. A ("Copart Contract"). In their contract, the parties agreed that "Copart will sell at auction to the highest bidder, all of [American Family's] salvage and recovered theft vehicles." Id. § C.
Section 2.18 of the contract is titled "Safeguard Program." It states as follows:
The Safeguard Program is Copart's program for any Vehicle that is the subject of litigation ... or some other matter where it is imperative that the Vehicle not be sold, auctioned, or otherwise disposed of for a period of time. The Safeguard Program is designed with the sole intent of preventing the sale of certain Vehicles. Either [American Family] or Copart may assign a Vehicle to the Safeguard Program.... Vehicles for which Safeguard Program confirmation numbers have been issued by Copart and received by [American Family] shall require a written release ... from the Safeguard Program, in addition to proper title documents, to authorize Copart to sell the vehicle. Copart assumes no responsibility for any damages and does not act as an evidence holding facility.
American Family and Copart's contract also contained an indemnification clause that reads in relevant part as follows:
Each party ... agrees to indemnify, defend, and hold harmless the other party ... from and against any and all losses, liabilities, damages, penalties, and claims and all related costs and expenses ... related to claims made by third parties against the Indemnified Party that arise out of (i) any dealing between the Indemnifying Party and third parties, (ii) any act or omission by the Indemnifying Party which is contrary to any term of this Agreement, and (iii) any negligent act by the Indemnifying Party.
Id. § 2.21. Finally, the contract contained a section entitled "Limitation of Liability," which states the following:
NEITHER PARTY HEREUNDER SHALL BE LIABLE TO THE OTHER UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE, OR INDIRECT DAMAGES OF ANY NATURE, FOR ANY REASON CLAIMED BY THE OTHER PARTY, EVEN IF THE NON–CLAIMING PARTY HAS BEEN WARNED OF THE POSSIBILITY OF SUCH DAMAGES. Copart's liability for damage to a vehicle in its possession shall be limited to the lesser of (1) the actual cost to repair the damage to such vehicle which is caused by Copart, or (2) the negative impact to the salvage value of such vehicle.
Around November 29, 2006, American Family requested that the vehicle be placed in the "Safeguard" program at the Copart salvage yard. Pursuant to the terms of the contract between American Family and Copart, vehicles placed in the Safeguard program shall not be sold, auctioned, or otherwise disposed of. Copart Contract § 2.18. Sometime prior to March 2007, American Family authorized that the allegedly defective tire be sent to EFI Global, Inc. ("EFI") for an analysis of the tire. EFI conducted a tire failure analysis and forensic engineering investigation of the tire, and generated a report dated March 13, 2007 in which it concluded that the tire failed due to a sudden loss of air pressure caused by a manufacturing defect in the tire. EFI sent the tire back to Copart on March 21, 2007. Copart received the tire at its Colton, California facility on March 24, 2007. On April 30, 2007, American Family informed Copart that the tire was being sent back and instructed Copart to place the tire inside the vehicle.
Based on the results of the analysis, Plaintiffs filed product liability complaints against the car manufacturer, tire manufacturer, and car distributor. American Family filed a subrogation claim against the car and tire manufacturers. These suits were consolidated in February 2009. During discovery in American Family's subrogation action, American Family requested that Copart produce the tire, but Copart could not find it. The tire was lost or destroyed while in the care and custody of Copart, resulting in the loss of a key piece of evidence in American Family's and Plaintiffs' claims against the manufacturers. American Family's subrogation action was subsequently dismissed. Judgment was also entered against Plaintiffs after they failed to respond to a pending motion for summary judgment filed against them.
Plaintiffs' Amended Complaint was filed on February 24, 2012. ECF No. 6. In their Amended Complaint, Plaintiffs allege that as a result of Defendants' failure to preserve evidence, their lawsuits were dismissed and they were unable to recover for their injuries. Plaintiffs state four causes of action against American Family and EFI: (1) negligence, (2) breach of the implied covenant of good faith and fair dealing, (3) breach of contract, and (4) breach of Nevada's Unfair Claims Practices Act, N.R.S. 686A.310
. Id. EFI filed an Answer and Third–Party Complaint against Copart on March 12, 2012. ECF No. 7. American Family filed a Motion to Dismiss the Amended Complaint on March 16, 2012, to which EFI joined on March 21, 2012. ECF Nos. 11, 12. On August 10, 2012, Copart filed a Motion to Dismiss EFI's claim against it. ECF No. 21. On January 24, 2013, the Court denied American Family's Motion to Dismiss and granted Copart's Motion to Dismiss. Order, ECF No. 29.
On March 1, 2013, American Family filed an Answer to the Amended Complaint and a Third–Party Complaint against Copart. ECF No. 30. In the Third–Party Complaint, American Family asserts that Copart was responsible for the loss or destruction of the tire and that any damage to Plaintiffs was the result of Copart's actions. American Family alleges six causes of action against Copart: (1) breach of contract, (2) negligent bailment, (3) express indemnity, (4) implied indemnity, (5) contribution, and (6) apportionment. Id. On March 11, 2014, the Court granted the parties' stipulation to dismiss Plaintiffs' claims against EFI. Order, ECF No. 52. Discovery closed on January 14, 2014, and the parties filed the dispositive motions now pending before the Court. This Order sets forth the Court's ruling on these motions.
Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a)
; accord Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In ruling on a motion for summary judgment, the court views all facts...
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