Hauff v. Petterson
| Decision Date | 22 July 2010 |
| Docket Number | No. 1:09–cv–00639 PJK–DJS.,1:09–cv–00639 PJK–DJS. |
| Citation | 755 F.Supp.2d 1138 |
| Parties | David HAUFF, Plaintiff,v.Morgan PETTERSON and Safeco Insurance Company of America, Defendants. |
| Court | U.S. District Court — District of New Mexico |
OPINION TEXT STARTS HERE
Houston Ross, Albuquerque, NM, for Plaintiff.Robert A. Corchine and Steven J. Leibel, Dines & Gross, P.C., Albuquerque, NM, Russell R. Yager and Manuel G. Berrelez, Vinson & Elkins L.L.P., Dallas, TX, and Jennifer B. Poppe and Christopher V. Popov, Vinson & Elkins L.L.P., Austin, TX, for Defendants.
THIS MATTER comes on for consideration of Defendant Safeco Insurance Company of America's Motion for Partial Summary Judgment, filed May 26, 2010 (Doc. 45) and Defendant Morgan Petterson's Motion for Summary Judgment, filed May 28, 2010 (Doc. 47). Plaintiff David Hauff sought payment from Safeco under an insurance policy. After the parties did not settle, Mr. Hauff brought various bad faith claims against Safeco and its adjuster, Ms. Petterson. The Defendants' motions are well-taken and should be granted.
This background is drawn from Safeco's “statement of material facts that are beyond genuine dispute,” supplemented by Mr. Hauff's Memoranda in Opposition, while omitting extraneous detail, party arguments, and facts not supported by the record. Doc. 45 at 3–8; Docs. 51–52 (Plaintiff's Memoranda in Opposition); see also Docs. 65–66 (Defendants' Reply Briefs). “All material facts set forth in the statement of the movant [are] admitted unless specifically controverted.” D.N.M.L.R.-Civ. 56.1(b). Under Federal Rule of Civil Procedure 56, the following undisputed facts are stated as favorably to Mr. Hauff as the record permits.
An uninsured driver injured Mr. Hauff in June 2005. Doc. 16, Ex. A at ¶¶ 5–7. He filed a claim for damages under his own uninsured motorist insurance policy from Safeco. Id. at ¶¶ 4, 9. Mr. Hauff's counsel, Houston Ross, represented him as he negotiated with Safeco to settle this claim. Doc. 45, Ex. B at ¶ 3 & Ex. 1 at 1. Ms. Petterson was the Safeco adjuster responsible for Mr. Hauff's claim. Doc. 45, Ex. B at ¶ 2. Both Ms. Petterson and Mr. Ross “agreed and negotiated based on the fact that the plaintiff made an essentially full recovery in three months.” Doc. 51 at 8. Mr. Ross and Ms. Petterson's written communications reveal the following. Doc. 45, Ex. B at ¶¶ 3–4 & Ex. 1.
Ms. Petterson first received a settlement demand from Mr. Ross on October 11, 2005. Doc. 45, Ex. 1 at 5–9; see Doc. 45 at 3 & n. 2. That demand sought the policy limits of $75,000 and listed three elements of damages: medical bills, lost wages, and general damages. Doc. 45, Ex. 1 at 5–6. It included a demand that Safeco pay Mr. Hauff's gross, pre-tax wages of $5,755.59 for the twenty-seven days that he did not work. Id. Ms. Petterson was in contact with Mr. Ross before the demand and acknowledged the demand on November 1, 2005. Id. at 1–4, 11.
On December 7, 2005, fifty-seven days after receiving Mr. Hauff's initial demand and fifteen days after resolving with Mr. Ross the total of Mr. Hauff's medical bills, Ms. Petterson offered to settle Mr. Hauff's claim for $18,434.19. Doc. 45 at 4 & Ex. 1 at 16. The next day, Ms. Petterson increased the initial offer by $500 for Mr. Hauff's general damages, for a total of $18,934.19. Doc. 45, Ex. 1 at 20. Ms. Petterson wrote that the offer was “negotiable.” Id.
Ms. Petterson had followed Safeco's practice of offering to pay an estimate of after-tax, “net” wages. Doc. 45 at 5. Ms. Petterson estimated Mr. Hauff's marginal rate at twenty percent and offered him $4,604.47, which was eighty percent of Mr. Hauff's pre-tax, gross wages. Doc. 45, Ex. 1 at 16; Ex. 2 at 14.
The parties' initial settlement position differed by $56,065.81, as follows:
CategoryMr. HauffSafecoDifferenceMedical Bills$12,816.47$12,829.72($ 13.25)Lost Wages$ 5,755.59$ 4,604.47$ 1,151.12General Damages$56,427.94$ 6,500.00$49,927.94Less MedPay Benefits$ 0.00($ 5,000.00)$ 5,000.00Total$75,000.00$18,934.19$56,065.81
From December 8, 2005, through February 17, 2006, the parties exchanged seventeen demands and offers. Id. at 4; Doc. 45, Ex. 1; see also Doc. 45, Ex. C. The longest period between offers was eighteen days (between Mr. Hauff's demand of $59,350 on January 23, 2006 and Safeco's counteroffer of $20,950 on February 10, 2006). Doc. 45 at 4. This eighteen-day period resulted from Ms. Petterson's decision to re-review “the entire package of medical records” and “round-table” with other adjusters to determine the reason for the difference in the parties' valuations. Doc. 45, Ex. 1 at 33.
Mr. Hauff's initial demand of $75,000 valued his general damages for pain and suffering, injuries, and emotional distress at $60,000, roughly 4.5 times his medical bills. Id. at 5–6. Mr. Hauff later reduced his demand for general damages by 28.6% to $40,295. Doc. 45 at 5; Doc. 45, Ex. 1 at 40.
Ms. Petterson's initial counter-offer of $18,934.19 valued Mr. Hauff's general damages at $6,500, roughly one-half of his medical bills. Doc. 45 at 5. Ms. Petterson increased Safeco's offer for general damages by 44.2% to $9,376 in its final offer of $21,810 on February 17, 2006. Id. Ms. Petterson explained her valuation on January 20, 2006: “Please understand that most of your client's symptoms resolved in a month['s] time and his elbow pain has resolved in 3 months time.” Id. at 6; Doc. 45, Ex. 1 at 29.
Ms. Petterson thought that mediation was the “best option” to resolve the dispute and repeatedly requested that Mr. Ross consent to mediation. Doc. 45 at 4. After five weeks, Mr. Ross agreed to mediate the dispute “only [i]f Safeco agree[d] to pay the entire costs” of the mediation. Id.; Doc. 45, Ex. 1 at 37. Safeco would agree to pay for mediation only if the mediation was successful. Doc. 45, Ex. 1 at 37.
Mr. Ross also refused to arbitrate the dispute under the non-binding arbitration option of the insurance policy. Doc. 45, Ex. 1 at 27. Instead, he proposed binding arbitration. Id. at 34; Doc. 51 at 3. Safeco rejected binding arbitration. Doc. 45, Ex. 1 at 34–35. Mr. Ross then broke off settlement discussions on February 23, 2006. Id. at 49.
The parties' final positions differed as follows:
CategoryMr. HauffSafecoDifferenceMedical Bills$12,829.72$12,829.72$ 0.00Lost Wages$ 5,755.59$ 4,604.47$ 1,151.12General Damages$40,294.69$ 9,375.81$30,918.88Less MedPay Benefits($ 5,000.00)($ 5,000.00)$ 0.00Total$53,880.00$21,810.00$32,070.00
Mr. Hauff filed this action in state court on September 18, 2006. Doc. 16, Ex. A. He sought payment under his policy for his damages, including the gross amount of his lost wages. Id. at ¶¶ 9–11, 14–18. He also alleged that Safeco acted in bad faith and violated its statutory duties in refusing to settle for the amount he demanded. Id. On June 11, 2009, Mr. Hauff moved to certify a multi-state class of uninsured or under-insured motorists who filed lost-wage claims against Safeco. Doc. 1, Ex. B at 1–2.
On June 30, 2009, Safeco removed this case to federal court under the Class Action Fairness Act, 28 U.S.C. §§ 1332(d)(2), 1453(b) (CAFA). Doc. 1. On October 29, 2009, this court denied Mr. Hauff's motion to remand the case to state court. Doc. 23 at 2. This court held that it had jurisdiction over this case under 28 U.S.C. § 1332(a)(1) & (d)(2). Id.
On September 11, 2009, Mr. Hauff moved for class certification under Federal Rule of Civil Procedure 23. Doc. 15. On December 11, 2009, this court denied class certification. Hauff v. Petterson, No. 1:09–cv–00639 PJK–DJS, 2009 WL 4782732 (D.N.M. Dec. 11, 2009) (Doc. 28). After additional discovery on Mr. Hauff's individual claims, the instant summary judgment motions were filed.
Safeco moves for summary judgment on whether it violated its common-law duty of good faith, the New Mexico Insurance Code, or the New Mexico Unfair Practices Act when it (1) negotiated to settle Mr. Hauff's claim, (2) offered to pay after-tax wages, and (3) valued Mr. Hauff's general damages. Doc. 45 at 1. Safeco also seeks summary judgment on whether its conduct justifies punitive damages. Id. Ms. Petterson seeks summary judgment on all claims against her, that is, whether her actions violated the Insurance Code, the Unfair Practices Act, or any contractual or common-law duty. Doc. 47 at 1–2. At trial, Mr. Hauff would bear the burden of proof on these issues.
Summary judgment eliminates factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). The court views “ ‘the evidence and draw[s] reasonable inferences therefrom in the light most favorable to the nonmoving party.’ ” Koch Indus., Inc. v. United States, 603 F.3d 816, 820–21 (10th Cir.2010) (citation omitted). At the same time, the court cannot decide any issues of credibility. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The movant bears the initial burden of demonstrating the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Trainor v. Apollo Metal Specialties, Inc., 318 F.3d 976, 979 (10th Cir.2002). If this burden is met, the non-movant cannot “rest on the pleadings ... but must set forth specific facts by reference to affidavits, deposition transcripts, or other exhibits to support the claim.” Serna v. Colo. Dep't of Corr., 455 F.3d 1146, 1151 (10th Cir.2006) (citation omitted). “Unsubstantiated allegations carry no probative weight.” Id. In order to avoid summary judgment, the nonmoving party must put...
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