Fanucci v. Allstate Insurance Company

• Decision Date: 30 June 2009
• Docket Number: No. C-08-2151 EMC.,C-08-2151 EMC.
• Citation: 638 F.Supp.2d 1125
• Parties: Michelle FANUCCI, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of California

638 F.Supp.2d 1125

Michelle FANUCCI, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.

No. C-08-2151 EMC.

United States District Court, N.D. California.

June 30, 2009.

COPYRIGHT MATERIAL OMITTED

Ashlei Melissa Vargas, George Schieffelin Trevor, Bruce Lee Simon, Pearson Simon, Warshaw Penny LLP, San Francisco, CA, for Plaintiff.

Michael A. Barnes, Sonnenschein Nath & Rosenthal, Walnut Creek, CA, Sonia Renee Martin, Sonnenschein Nath & Rosenthal, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OR PARTIAL SUMMARY JUDGMENT

(Docket No. 48)

EDWARD M. CHEN, United States Magistrate Judge.

Plaintiff Michelle Fanucci has filed suit against Defendant Allstate Insurance Company, asserting claims for breach of contract, negligence, and negligent misrepresentation.¹ Currently pending before the Court is Allstate's motion for summary judgment or partial summary judgment. Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS in part and DENIES in part the motion.

I. FACTUAL & PROCEDURAL BACKGROUND

In January 1997, Ms. Fanucci—at the time, only thirteen years old—was hit by a car driven by an underinsured motorist. Because the motorist was underinsured (i.e., Ms. Fanucci's damages exceeded the motorist's auto policy), her parents submitted an uninsured motorist ("UIM") claim to Allstate to make up the difference. Allstate contends that the Fanuccis only had UIM coverage under the auto policy they had with Allstate; in other words, Allstate only had to pay up to the auto policy limit. Ms. Fanucci asserts that the Fanuccis' umbrella policy was supposed to provide for excess UIM coverage—that is, Allstate had to pay up to auto policy limit, plus the umbrella policy limit. Resolution of this dispute turns on what took place when the Fanuccis purchased the auto and umbrella policies from Allstate.

It is undisputed that the Fanuccis obtained the auto policy, which included UIM coverage, back in 1987. The parties dispute, however, when the Fanuccis obtained the umbrella policy. Ms. Fanucci contends that her parents obtained—or at least tried to obtain—the umbrella policy at the same time that they obtained the auto policy, i.e., back in 1987. See Robert Fanucci Depo. at 55-58, 61. Allstate's position is that there was no umbrella policy in place until 1993.² See Sisson Decl. ¶ 4; Robert Fanucci Depo., Ex. A (umbrella insurance application). In the end, the parties' dispute as to when the umbrella policy was obtained is not dispositive, at least for purposes of the pending motion, because both parties agree that, at the time of Ms. Fanucci's accident in January 1997, the umbrella policy was in place.

As to the umbrella policy that was in place at the time of the accident, the parties agree that, by its terms, it did not provide for coverage above the UIM limits. The policy covered only third-party claims for liability, not first-party claims for UIM coverage. See Davis Decl., Ex. A (declarations page and umbrella policy). In spite of this fact, Ms. Fanucci claims that Allstate is liable up to the coverage limit of the umbrella policy in excess of her UIM claim because Allstate's agent, Mr. Baldwin, made representations on which her father, Robert Fanucci, relied. More specifically, Ms. Fanucci asserts that, back in 1987, Mr. Baldwin represented to her father that the umbrella policy would provide not only coverage with respect to third-party claims for liability but also UIM coverage.³ Allstate disputes this.

Ms. Fanucci's accident took place in January 1997. It appears that, soon after the accident, Ms. Fanucci's father contacted Mr. Baldwin, and Mr. Baldwin "indicated that nothing further needed to be done at that time under [the Fanuccis'] insurance policy." Robert Fanucci Depo., Ex. C (letter, dated 2/11/1998, from Robert Fanucci to Mr. Baldwin). Robert Fanucci contacted Mr. Baldwin again in February 1998. In a letter dated February 1, 1998, Mr. Fanucci noted:

At this time, we are not aware of the amount of insurance that the driver of the vehicle may have. In the event that Michelle's injuries exceed the policy limits of the driver's insurance, it is my understanding that the uninsured motorist provisions of our automobile insurance would be applicable to cover any deficiency.

Robert Fanucci Depo., Ex. C (letter, dated 2/11/1998, from Robert Fanucci to Mr. Baldwin).

Some three years later—on or about March 7, 2001—the Fanuccis had their lawyer, Peter Hinton of the Hinton & Alfert law firm, contact Mr. Baldwin once again. In the letter, Mr. Hinton noted that the Fanuccis had obtained "the $100,000 limits of liability coverage of Lucille Meyer, the driver who struck [Ms. Fanucci]." Hinton Depo., Ex. 1 (letter, dated 3/7/2001, from Mr. Hinton to Mr. Baldwin). However, the $100,000 did not fully compensate Ms. Fanucci for her injuries and damages and therefore the Fanuccis asked that "an underinsured claim be opened in this matter if that did not occur at the time of [Robert] Fanucci's prior contacts." Hinton Depo., Ex. 1 (letter, dated 3/7/2001, from Mr. Hinton to Mr. Baldwin). Implicitly acknowledging that the UIM claim had to be arbitrated as required by statute, see Cal. Ins.Code § 11580.2(f),⁴ Mr. Hinton concluded the letter by stating that he was hopeful that the dispute could be resolved without the need to go to arbitration. See Hinton Depo., Ex. 1 (letter, dated 3/7/2001, from Mr. Hinton to Mr. Baldwin).

Subsequently, on or about May 7, 2001, Allstate's counsel, Mark Goodman of the Haskell & Goodman law firm, sent a letter to Mr. Hinton. His letter stated in relevant part:

It is my understanding that your client, Michelle Fanucci, is making an underinsured motorist claim through her parents['] automobile insurance policy with Allstate. It is also my understanding that the Fanucci[s'] auto policy has limits of $250,000 [per person]/$500,000 [per incident].

In light of the fact that Ms. Fanucci has recently been paid the sum of $100,000 from [the underinsured motorist's] carrier, the policy limits in Ms. Fanucci's claim with Allstate have been reduced to $150,000.00. Hinton Depo., Ex. 1 (letter, dated 5/7/2001, from Mr. Goodman to Mr. Hinton).

It appears that, thereafter, the parties entered into a mediation in the attempt to settle their dispute. On or about January 16, 2002, Mr. Hinton (the Fanuccis' counsel) sent a letter to Mr. Goodman (Allstate's counsel), disputing a statement made by Allstate in its mediation brief— i.e., the statement that Ms. Fanucci had made a policy limits demand of $250,000. Mr. Hinton stated that this was not true— that the full policy limits under the Fanuccis' UIM coverage included the umbrella limit.

In addition to the specific underinsured motorist coverage in the auto policy of $250,000, the Fanucci[s'] have an excess policy which Allstate has acknowledged is applicable in the amount of $1,000,000. Therefore the "full policy limits available to [Ms. Fanucci] under the Fanucci[s'] underinsured motorist coverage" is $1,250,000 less the $100,000 received from the driver of [t]he offending vehicle, or a net of $1,150,000.

Hinton Depo., Ex. 1 (letter, dated 1/16/2002, from Mr. Hinton to Mr. Goodman). This was the first time that the Fanuccis expressly raised the assertion that the umbrella policy provided additional UIM coverage. But notably, that assertion said nothing about Mr. Baldwin's alleged representations in 1987; the Fanuccis made no claim of misrepresentation or estoppel.

At the mediation which took place the next day (i.e., on January 17, 2002), Allstate informed the Fanuccis that the umbrella policy provided for excess insurance for liability to third parties only. See Hovanec Depo., Ex. 4 (computer notes, dated 1/18/2002). Several months later, on or about March 5, 2002, Allstate's new counsel (also litigation counsel of record) provided the same information to the Fanuccis. Michael Barnes of the Sonnenschein law firm noted that Mr. Goodman would "continue to represent Allstate on issues relating to the underinsured's liability and damages" but that the Sonnenschein law firm would represent Allstate regarding the claim made pursuant to the umbrella policy. Hinton Depo., Ex. 1 (letter, dated 3/5/2002, from Mr. Barnes to Mr. Alfert). Mr. Barnes stated:

Allstate's umbrella policy contains no UM or UIM coverage. Indeed, it is a liability policy, not a first-party auto policy. This should be obvious from the contract's language, which is in your clients' possession. To my knowledge, there is no Allstate umbrella policy that affords UM or UIM coverage. If you would like to discuss the Fanuccis' umbrella policy, I would be happy to listen to your theories. The UIM arbitration is not the place for such a discussion, however, and efforts to obtain information about Allstate's coverage through the discovery process of the UIM proceeding will be resisted strenuously.

Hinton Depo., Ex. 1 (letter, dated 3/5/2002, from Mr. Barnes to Mr. Alfert).

The evidence of record does not reflect that Ms. Fanucci, her parents, or their counsel took issue with or ever responded to Mr. Barnes's letter. In fact, it was not until sometime in 2005—after the parties proceeded to arbitration for the UIM claim and the arbitrator had issued his decision on the claim—that the Fanuccis alerted Allstate for the first time that it was their position that there was UIM coverage under the umbrella policy because Mr. Baldwin, Allstate's agent, had represented that there was such coverage when they purchased the policy.

Meanwhile, the UIM arbitration proceeded. See Hovanec Depo., Ex. 7 (computer notes, dated 10/3/2002) (indicating that in or about October 2002 Allstate made the decision to move the case into arbitration); Hovanec Depo., Ex. 9 (computer notes, dated 8/17/2004) (noting that arbitrator was selected). Importantly, as Ms. Fanucci conceded...