Harvieux v. Progressive N. Ins. Co.

• Decision Date: 03 July 2018
• Docket Number: 28159
• Citation: 915 N.W.2d 697
• Parties: Nicole M. HARVIEUX, Plaintiff and Appellant, v. PROGRESSIVE NORTHERN INSURANCE COMPANY, Defendant and Appellee.
• Court: South Dakota Supreme Court

915 N.W.2d 697

Nicole M. HARVIEUX, Plaintiff and Appellant,

v.PROGRESSIVE NORTHERN INSURANCE COMPANY, Defendant and Appellee.

28159

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS MARCH 19, 2018

OPINION FILED July 3, 2018

Rehearing Denied August 13, 2018

ROBIN L. ZEPHIER of Abourezk, Zephier & LaFleur, P.C., JAMES L. JEFFRIES, Rapid City, South Dakota, Attorneys for plaintiff and appellant.

MARK J. ARNDT of May & Johnson, P.C., Sioux Falls, South Dakota, Attorneys for defendant and appellee.

JENSEN, Justice

[¶ 1.] Nicole Harvieux filed an action under her uninsured motorist insurance coverage (UM) with Progressive Northern Insurance Company for injuries she sustained in a car accident. Harvieux also filed claims of bad faith and barratry against Progressive. The UM claim was bifurcated from the other claims and resulted in a jury verdict of $16,296.75. Following the jury verdict, the circuit court granted Progressive’s renewed motion for summary judgment on the claims for bad faith and barratry. Harvieux appeals. We affirm.

Background

[¶ 2.] On November 29, 2007, Harvieux’s vehicle was struck from behind by an uninsured motorist. No injuries were reported at the scene of the accident, but Harvieux later drove herself to an emergency room after experiencing neck pain. She was diagnosed with neck strain and discharged. Two weeks later, a doctor again diagnosed Harvieux with neck strain and referred her for physical therapy. Harvieux filed a first-party claim under the medical payments coverage provision (MPC) and UM provisions of her automobile insurance policy.

[¶ 3.] Following the accident, Harvieux intermittently sought additional treatment for neck pain, including physical therapy and pain injections. An MRI taken in 2011 showed Harvieux suffered a minimal disc bulge, but the neurologist conducting the MRI did not render an opinion whether the bulge was related to the 2007 car accident. Progressive paid Harvieux’s medical bills up to the $5,000 maximum under the MPC.

[¶ 4.] In May of 2011, Progressive offered to pay Harvieux $9,000 under the UM coverage (in addition to the $5,000 Progressive already paid under the MPC), in exchange for a complete release of her claims. The adjustor for Progressive believed that Harvieux’s attorney verbally accepted the offer. Progressive then sent a letter to Harvieux’s attorney to confirm the settlement. The letter included a $9,000 check and a settlement release providing for a release of all claims by Harvieux against Progressive. Harvieux then hired new counsel, who informed Progressive that Harvieux would not accept the $9,000 settlement offer. Harvieux did not sign the release or negotiate the check. Harvieux instead demanded the $100,000 policy limits under the UM coverage. Progressive declined. Harvieux then sued Progressive for her injuries under the UM coverage and for bad faith.

[¶ 5.] On March 5, 2014, after deposing Harvieux, Progressive moved to enforce the $9,000 as a binding oral settlement agreement between the parties. In response, Harvieux moved to amend her complaint to add a claim for barratry and additional claims of bad faith against Progressive. She alleged that the motion to enforce the settlement was frivolous and filed in bad faith. On April 29, 2014, the circuit court denied Progressive’s motion to enforce the settlement and granted Harvieux’s motion to amend her complaint.

[¶ 6.] In May of 2015, the circuit court granted Harvieux’s motion to bifurcate her UM claim from her claims of bad faith and barratry. A jury trial was held on the UM claim in August of 2016. Harvieux claimed lost wages of over $250,000 due to her discharge from the South Dakota National Guard. She claimed her discharge was based in part upon her inability to perform an annual Army Physical Fitness Test. However, evidence showed that Harvieux was able to take and pass the test 11 months after her accident and score over 90%. The jury awarded Harvieux $8,296.75 in medical bills, $2,000 for pain and suffering, and $6,000 for lost wages. After deducting the $5,000 previously paid by Progressive under the MPC and adding prejudgment interest on the past medical bills and lost wages, the circuit court entered a judgment of $16,724.79 on Harvieux’s UM claim. On November 30, 2016, Harvieux filed an application for taxation of costs. The circuit court entered an order denying the application.

[¶ 7.] Following the jury trial on the UM claim, Progressive renewed its motion for summary judgment on Harvieux’s claims of bad faith and barratry. Harvieux filed a motion to defer ruling on Progressive’s motion for summary judgment to conduct further discovery. The circuit court granted Progressive’s motion for summary judgment on the bad faith and barratry claims and denied Harvieux’s motion to defer ruling.

[¶ 8.] Harvieux appeals the circuit court’s rulings, asserting three issues for our review:

1. Whether the circuit court erred in granting Progressive’s motion for summary judgment as to Harvieux’s claims of bad faith.

2. Whether the circuit court erred in granting Progressive’s motion for summary judgment as to Harvieux’s claim of barratry.

3. Whether the circuit court erred in denying Harvieux’s application for taxation of costs.

Standard of Review

[¶ 9.] "We review a circuit court’s entry of summary judgment under the de novo standard of review." Wyman v. Bruckner, 2018 S.D. 17, ¶ 9, 908 N.W.2d 170, 174 (quoting Heitmann v. Am. Family Mut. Ins. Co. , 2016 S.D. 51, ¶ 8, 883 N.W.2d 506, 508 ). We will affirm a circuit court’s "grant of a motion for summary judgment when no genuine issues of material fact exist, and the legal questions have been correctly decided." Id. (quoting Estate of Lien v. Pete Lien & Sons, Inc. , 2007 S.D. 100, ¶ 9, 740 N.W.2d 115, 119 ).

[¶ 10.] "A circuit court’s refusal to grant additional discovery prior to awarding summary judgment is reviewed for abuse of discretion." Gores v. Miller , 2016 S.D. 9, ¶ 14, 875 N.W.2d 34, 39 (quoting Stern Oil Co. v. Border States Paving, Inc. , 2014 S.D. 28, ¶ 24, 848 N.W.2d 273, 281 ). A circuit court’s award or denial of costs and disbursements is also reviewed for an abuse of discretion. McLaren v. Sufficool , 2015 S.D. 19, ¶ 4, 862 N.W.2d 557, 558.

Analysis

1. Whether the circuit court erred in granting Progressive’s motion for summary judgment as to Harvieux’s claims of bad faith.

[¶ 11.] Harvieux claims Progressive initially acted in bad faith in valuing and discussing settlement of the UM claim. Harvieux argues the settlement offers constituted "lowball" offers that did not take into account Harvieux’s policy limits; medical treatment and expenses; potential lost wages; and mental, emotional, and financial stress. Harvieux also attacks what she characterizes as "systematic, institutional bad-faith conduct of Progressive." She asserts Progressive engages in unfair practices in order to force its insureds to accept unreasonable settlement offers. Harvieux argues that Progressive also acted in bad faith when it filed a frivolous motion to enforce the $9,000 settlement offer knowing that she had not accepted that offer. Finally, Harvieux claims that she should have been allowed to conduct further discovery before the circuit court heard the motion for summary judgment.

[¶ 12.] Progressive argues that there is no evidence to prove bad faith. Progressive claims that Harvieux’s damages were reasonably in dispute before and after her lawsuit was filed. Progressive points out that it offered $9,000 before Harvieux filed her lawsuit and that it offered $20,000 prior to trial. Progressive claims that Harvieux unreasonably refused to discuss any settlement below the $100,000 UM policy limits and that Progressive properly defended the UM claim thereafter. Progressive also asserts that it valued Harvieux’s claim correctly as the $16,000 jury verdict was nearly the same as Progressive’s offer and far below Harvieux’s demand. Finally, Progressive claims that it properly filed the motion to enforce the $9,000 settlement and that the motion was not relevant to the bad-faith claim under Dakota, Minnesota & Eastern Railroad Corp. v. Acuity , 2009 S.D. 69, ¶ 14, 771 N.W.2d 623, 628.

[¶ 13.] A claim of first-party bad faith is an intentional tort that "typically occurs when an insurance company consciously engages in wrongdoing during its processing or paying of policy benefits to its insured." Hein v. Acuity , 2007 S.D. 40, ¶ 10, 731 N.W.2d 231, 235. "In [bad faith] cases, the [insurer and the insured] are adversaries, and therefore, an insurer is permitted to challenge claims that are fairly debatable. However, a frivolous or unfounded refusal to comply with a duty under an insurance contract constitutes bad faith." Id. In order to be successful on a claim of bad faith, a plaintiff must prove: "(1) an absence of a reasonable basis for denial of policy benefits, and (2) the insurer’s knowledge of the lack of a reasonable basis for denial." Mordhorst v. Dakota Truck Underwriters & Risk Admin. Servs. , 2016 S.D. 70, ¶ 9, 886 N.W.2d 322, 324 (quoting Hein , 2007 S.D. 40, ¶ 18, 731 N.W.2d at 237 ).

[¶ 14.] The undisputed facts show that, shortly after the accident, Progressive determined there was no dispute concerning liability or UM coverage. Progressive began paying Harvieux’s medical bills under the MPC shortly after the accident but was unwilling to pay benefits under the UM coverage without a final release from Harvieux. The initial medical records available to Progressive show that Harvieux was diagnosed with neck strain from the accident. Harvieux began receiving physical therapy and later received injections to treat her pain. By July of 2008, Harvieux had exhausted her $5,000 MPC.

[¶ 15.] In September of 2008, Progressive offered to pay all of Harvieux’s outstanding medical bills, plus $3,000 for pain and suffering, in exchange for a final release.

Harvieux indicated she was unwilling to settle until she was back to her pre-accident condition. Harvieux...