Khatchatrian v. Continental Cas. Co.

• Decision Date: 18 April 2002
• Docket Number: No. 01CV8183.,01CV8183.
• Citation: 198 F.Supp.2d 1157
• Parties: Ashot KHATCHATRIAN, Plaintiff, v. CONTINENTAL CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Central District of California

198 F.Supp.2d 1157

Ashot KHATCHATRIAN, Plaintiff, v. CONTINENTAL CASUALTY COMPANY, Defendant.

No. 01CV8183.

United States District Court, C.D. California.

April 18, 2002.

Clint William Feddersen, Clint W. Feddersen Law Offices, Glendale, CA, for Plaintiff.

Robert F. Keehn, Joanna M. Todd, Galton & Helm, Los Angeles, CA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

MATZ, District Judge.

INTRODUCTION

This matter is before the Court on cross motions for summary judgment filed by Plaintiff Ashot Khatchatrian (alternatively, "Plaintiff" or "Khatchatrian") and Defendant Continental Casualty Company (alternatively, "Defendant" or "CNA"). Both Plaintiff and Defendant seek summary judgment on each of Plaintiff's three causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing and negligence. In addition, Defendant seeks summary adjudication that Plaintiff, even if ultimately the prevailing party, is not entitled to recover punitive damages as pled in the Complaint. Because the Court finds summary judgment for Defendant is warranted, Defendant's motion is GRANTED. As such, Plaintiff's cross motion is DENIED.

FACTS

The material facts are not in dispute. Plaintiff is the sole named beneficiary on an accidental death and dismemberment policy issued by Defendant to Evengy Varioushkine. (Defendant's Response to Plaintiff's Statement of Material Facts ("Def.'s Response") ¶¶ 2, 3). The policy became effective August 1, 1999. (Def.'s Response ¶ 2). The policy provides accidental death benefits in the amount of $251,000 when "a covered Injury results in loss of life of an Insured Person within 365 days after the date of the accident." (Plaintiff's Statement of Genuine Issues ("Pl.'s SGI") ¶ 2; Trottier Decl., Ex. 1 at 2). Under the policy, "injury" is defined as "bodily injury caused by an accident which occurs while the Insured Person is covered under the policy and that results, directly and independently of all other causes, in loss covered by the policy." (Id.) (emphasis added). The policy provides several exclusions, most significantly an exclusion of coverage "for any loss caused by or resulting from ... sickness and disease..." (Pl.'s SGI ¶ 4; Trottier Decl., Ex. 1 at 3) (emphasis added).

Mr. Varioushkine died on April 2, 2001, while covered under the policy. (Pl.'s SGI ¶ 5; Def.'s Response ¶ 5). The death certificate, signed by A. Kazanchian, M.D., states that the immediate cause of death was "intracranial hemorrhage" due to "uncontrolled hypertension" due to "renal cancer." (Pl.'s SGI ¶ 5; Trottier Decl., Ex. 3).¹ In addition, the death certificate states that "Metastasis to Spine, Spinal Cord" was a significant condition contributing to death. (Id.). In his Death Report, dated April 3, 2001, Dr. Kazanchian noted that the patient suffered from "severe uncontrolled hypertension" and was on multiple medications for blood pressure control. (Pl.'s SGI ¶ 29; Trottier Decl., Ex. 13 at 59). Dr. Kazanchian also stated that, "Despite all efforts the patient had intracranial hemorrhage secondary to very high and uncontrolled BP and brain metastases and he was pronounced dead on April 02, 2001." (Id.)

On or about May 16, 2001, Defendant received Plaintiff's claim for accidental death benefits under the policy. (Pl.'s SGI ¶ 8; Trottier Decl., Ex. 2).² After reviewing the file, Defendant wrote Plaintiff on June 4, 2001 requesting a copy of the death certificate, ambulance report, police report and either an emergency room report or statement from the physician describing the injury. (Pl.'s SGI ¶ 9; Trottier Decl., Ex. 4). That same day, Defendant also wrote to Dr. Kazanchian requesting specific information on the insured's death. (Pl.'s SGI ¶ 10). On or about June 22, 2001, Dr. Kazanchian responded to Defendant's letter. (Pl.'s SGI ¶ 11; Trottier Decl., Ex. 6). In pertinent part, Dr. Kazanchian wrote that, "Although Mr. Varioushkine had renal cancer with status post nephrectomy and high blood pressure per my professional opinion the death of my patient was an accident." (Id.). Thereafter, on June 28, 2001, Defendant again wrote Dr. Kazanchian requesting that he explain why he concluded the death of Mr. Varioushkine was an accident. (Pl.'s SGI ¶ 12; Trottier Decl., Ex. 7). On June 29, 2001, Dr. Kazanchian responded that his diagnosis of the injury was "intracranial hemorrhage" or "cerebro-vascular accident." (Pl.'s SGI ¶ 13; Trottier Decl., Ex. 8). Accordingly, he concluded that the insured's death should be considered "accidental" because the cause of the death was a "cerebro-vascular accident." (Id.).

On July 5, 2001, Plaintiff's attorney wrote Defendant and demanded that benefits be paid under the policy. (Pl.'s SGI ¶ 14; Trottier Decl., Ex. 9). Thereafter, on or about July 27, 2001, after receiving the insured's medical records, Defendant referred the matter to its Los Angeles counsel for review. (Pl.'s SGI ¶ 15; Trottier Decl. ¶ 12).³ Defendant's counsel reviewed the matter and interviewed Dr. Kazanchian under oath. (Pl.'s SGI ¶ 17; Todd Decl. ¶ 12). Dr. Kazanchian explained that the insured had undergone surgery for renal cancer prior to his death and that one kidney had been removed. (Pl.'s SGI ¶ 18; Todd Decl., Ex. 12 at 7-8). After the surgery, Dr. Kazanchian saw the insured on March 12, 2001 and March 23, 2001 for follow-up. (Pl.'s SGI ¶ 19). During those visits, Dr. Kazanchian prescribed two medications, Norvasc and Lopressor, for the purpose of controlling the insured's high blood pressure and hypertension. (Pl.'s SGI ¶ 19). According to the doctor, people with one kidney, such as the insured, are prone to developing high blood pressure. (Pl.'s SGI ¶ 21).

On the day of the insured's death, Dr. Kazanchian noticed blood spots on Mr. Varioushkine's upper lip, a sign of very high blood pressure. (Pl.'s SGI ¶ 20). Dr. Kazanchian further testified that the insured's stroke was likely due to the bursting of a blood vessel that occurs due to high blood pressure. (Pl.'s SGI ¶¶ 22, 23; Todd Decl., Ex. 12 at 18). When questioned about his prior letter to the defendant in which he stated that it was his opinion that the insured's death was an "accident," Dr. Kazanchian stated that his use of the term "accident" was based simply on his conclusion that the insured's stroke was "unexpected." (Pl.'s SGI ¶ 25; Todd Decl., Ex. 12 at 21).

Based on Dr. Kazanchian's testimony and the terms of the policy, Defendant concluded Mr. Varioushkine's death was not "accidental" so as to be covered under the policy. (Pl.'s SGI ¶¶ 26, 27; Trottier Decl., Ex. 11). For that reason, on September 6, 2001, Defendant informed Plaintiff's attorney that it was denying the claim for benefits. (Id.). Thereafter, on September 12, 2001, Plaintiff filed suit against the defendant in Los Angeles Superior Court. On September 20, 2001, the action was removed to this Court based on diversity jurisdiction.

Plaintiff asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing and negligence. The gravamen of those claims is that Defendant breached the terms of the policy by refusing to pay accidental death benefits and that such refusal violated the implied covenant of good faith and fair dealing because Defendant failed to investigate Plaintiff's claim thoroughly and prolonged the claims settlement process for several months. (Complaint ¶¶ 13, 18, 21). Similarly, Plaintiff's negligence claim alleges that Defendant was under a duty to investigate Plaintiff's claim thoroughly and in a timely manner and that Defendant's conduct breached that duty. (Complaint ¶ 25). On these motions, both Plaintiff and Defendant seek summary judgment as to each cause of action.

MOTION STANDARD

Federal Rule of Civil Procedure 56(c) provides for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The moving party bears the initial burden of demonstrating the absence of a "genuine issue of material fact for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it could affect the outcome of the suit under the governing substantive law. Id. at 248, 106 S.Ct. 2505. The burden then shifts to the nonmoving party to establish, beyond the pleadings, that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

"When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transportation Brokerage Co., Inc. v. Darden Restaurants, Inc., 213 F.3d 474, 480 (9th Cir.2000) (citations omitted). In contrast, when the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out the absence of evidence from the non-moving party. The moving party need not disprove the other party's case. See Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Thus, "[s]ummary judgment for a defendant is appropriate when the plaintiff `fails to make a showing sufficient to establish the existence of an element essential to [his] case, and on which [he] will bear the burden of proof at trial.'" Cleveland v. Policy Management Sys. Corp., 526 U.S. 795, 806, 119 S.Ct. 1597, 1603, 143 L.Ed.2d 966 (1999) (citing Celotex, 477 U.S. at 322, 106 S.Ct. 2548).

When the moving party meets its burden, the "adverse party may not rest upon the mere allegations or denials of...