Lincoln General Ins. Co. v. Access Claims Adm'Rs

• Decision Date: 22 January 2009
• Docket Number: No. CIV. S-07-1015 LKK/EFB.,CIV. S-07-1015 LKK/EFB.
• Citation: 596 F.Supp.2d 1351
• Court: U.S. District Court — Eastern District of California
• Parties: LINCOLN GENERAL INSURANCE COMPANY, Plaintiff, v. ACCESS CLAIMS ADMINISTRATORS, INC., and Does 1 through 75, inclusive, et al., Defendants.

596 F.Supp.2d 1351

LINCOLN GENERAL INSURANCE COMPANY, Plaintiff, v. ACCESS CLAIMS ADMINISTRATORS, INC., and Does 1 through 75, inclusive, et al., Defendants.

No. CIV. S-07-1015 LKK/EFB.

United States District Court, E.D. California.

January 22, 2009.

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Brian Paul Worthington, Norman A. Ryan, Ryan Mercaldo & Worthington LLP, San Diego, CA, Frederick W. Bode III, Steven W. Zoffer, Dickie, McCamey & Chilcote, P.C., Pittsburgh, PA, for Plaintiff.

Benjamin T. Erwin, Brian J. Levy, Jessica F. Pardi, Lewis E. Hassett, Morrison Manning & Martin LLP, Atlanta, GA, Mona Hanna, Michelman & Robinson, LLP, Santa Ana, CA, Robert Edmund Davies, Rebecca Ann Weinstein-Hamilton, Caulfield, Davies & Donahue, Sacramento, CA, Barbara J. Mandell, Jeffrey Dean Farrow, Marc R. Jacobs, Michelman and Robinson LLP, Encino, CA, for Defendants.

ORDER

LAWRENCE K. KARLTON, Senior District Judge.

This is an action brought by an insurance company, Lincoln General Insurance Company ("Lincoln"), against its corporate claims administrator, Access Claims Administrators ("Access"), over the alleged mishandling of a claim arising from an automobile accident. Pending before the court is defendant's motion for summary judgment. The court resolves the motion upon the papers and after oral argument.

I. FACTS¹

Lincoln brought suit against Access, a claim administrator. Compl. ¶¶ 1-2. Lincoln is an insurance company that writes automobile policies in California and various other states. Defendant's Statement of Undisputed Facts ("Def.'s SUF") ¶ 1. Pursuant to a Claims Service Agreement between the parties, Access administered claims for Lincoln's California nonstandard insurance program. Def.'s SUF ¶ 2. Access, in its capacity as a claims administrator, provided a number of services for Lincoln, including investigating liability and negotiating claims through settlement or final disposition and issuing all claim payments with funds provided by Lincoln; preparing and filing all reports; and coordinating, directing and managing litigation activity. Access' Deposition Exhibit 1 In Support of Defendant's Motion for Summary Judgment ("Claims Service Agreement") at 1-2. In the present action, Lincoln alleges that Access mishandled a claim that arose out of an automobile accident and a subsequent third-party personal injury claim, which Lincoln eventually settled. The complaint alleges three causes of action: (1) breach of contract, (2) breach of good faith and fair dealing, and (3) fraud/intentional deceit.²

A. The Dias Claim

On March 4, 2003, Manuel Coleman and his two daughters, Shyan and Lanisha, were injured in an automobile accident with David and Diana Dias ("the Diases"). Def.'s SUF ¶ 5. As a result of the accident, Diana Dias was rendered a paraplegic, Lanisha Coleman suffered neck and back injuries and Shyan Coleman sustained a head injury. Def.'s SUF ¶ 7. At the time, Coleman was insured under a Lincoln policy (the "policy"). Def.'s SUF ¶ 3. The policy had bodily injury limits of $15,000 per person and $30,000 per accident. Def.'s SUF ¶ 4. Coleman denied liability for the accident because he was rear-ended by a hit-and-run vehicle. Def.'s SUF ¶ 8. Coleman's daughters and the Diases filed claims under the policy. Def.'s SUF ¶ 9. Pursuant to the Claims Service Agreement between Access and Lincoln, Access was to handle the defense of the Diases's lawsuit. Claims Service Agreement at 1, ¶ 4.

In January 2004, Access adjustor Tracy Eggers ("Eggers") was handling the Dias' claim on behalf of Access. Def.'s SUF ¶ 15. Eggers's notes indicate that he concluded that Coleman was 100 percent at fault for the accident. Deposition of Tracy Eggers ("Eggers Depo.") at 70:5-72:25. Eggers set the bodily-injury reserves for David and Diana Dias at the maximum policy limit of $15,000 per person and $30,000 per accident. Id. at 32:15-17. Although Eggers does not know the reason, an unknown employee of Access reduced the reserves Eggers had set for the Diases to a lower number. Id. at 89:10-90:22.

B. The Diases' Demand Letter

Lincoln alleges that on October 8, 2003 the Dias' attorney, Gary Dolinski, sent a letter to Eggers asking whether Coleman's daughters were making a claim for injuries as a result of the car accident with the Diases. Lincoln's Deposition Exhibit 8 In Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgement. Dolinski wrote Eggers on several subsequent occasions, following up on the issues raised in the October 8 letter and complaining that no one had responded to him. Lincoln's Deposition Exhibits 9, 10, 11 In Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgement; Deposition of Gary Dolinski ("Dolinksi Depo.") at 15-21.

On January 20, 2004, Dolinski prepared a time-limited joint demand for the full $30,000 policy limits for both Diana Dias and David Dias. Def.'s SUF ¶ 10. The demand letter included a ten-day deadline requiring a response by January 30, 2004. Def.'s SUF ¶ 11. Access did not respond to the January 20 demand letter prior to close of business on January 30, 2004. Access' Deposition Exhibits 138A, 139 In Support of Defendant's Motion for Summary Judgment; Dolinski Depo. at 28:12-15. On January 30, 2004, Dolinksi's firm faxed two letters to Access discussing the time-limited settlement demand ("the January 30 Letters"). Access' Deposition Ex. 138A, 139. The first letter was faxed in the afternoon, stating:

It is now 5:00 p.m. E.S.T., your time on the East Coast ... Access General and Lincoln General had (sic.) Until today at 5:00 p.m., P.S.T., our time here in California ... Absent timely acceptance of the policy limits demand today, Lincoln General will be responsible for the entire verdict that my clients are awarded in this case ... Again, this demand expires TODAY AT 5:00 P.M. WEST COAST TIME. Unless it is timely accepted as instructed in my letter of January 20, the demand will not be renewed again.

Access' Deposition Ex. 138A (emphasis in original). The second letter was faxed after 5:00 P.M. Pacific Standard Time on the same day. The second letter stated, "We are writing now to confirm that since you did not accept the demand, the demand has expired. If your understanding is other than above, please so advise me, immediately." Access' Deposition Ex. 139.

Eggers has testified that although he was ill during part of January 2004, he came to work for portions of each workday for that month to keep abreast of claim-related mail. Def.'s SUF ¶ 16. Eggers testified that he did not receive the demand letter or follow-up correspondence. Eggers Depo. at 96:10-98:15. According to Lincoln, a fax confirmation shows successful transmission of both the demand letter to Access on January 20, 2004 and the first of two letters sent on January 30, 2004. Access' Deposition Ex. 139 at D00479-480. Access, however, has tendered evidence that Dolinski had no personal knowledge of the delivery of the demand letter or January 30, 2004 letters and could not testify that the letters were accurately faxed. Dolinski Depo. at 22:13-22, 29:18-24, 57:21-58:13.

To buttress its contention that Access received the letters, Lincoln offers evidence that the demand letter and the January 30, 2004 letters were produced by Access when Lincoln demanded Access' claims file for the Dias claim and the subsequent Dias lawsuit. Declaration of Brian P. Worthington, In Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgement ("Worthington Decl.") ¶¶ 9-10. Access adjustor Sally Walsh also saw the January 20 Demand Letter and the January 30 letters in Access' claims file for the Dias claim sometime before the settlement of the Dias lawsuit. Deposition of Sally Walsh ("Walsh Depo.") at 13:9-18:15. Finally, Lincoln notes that on February 10, 2004, Eggers wrote Dolinksi stating, "I apologize for any delay in evaluating documents submitting by your office. I have been out of the office with a series of illnesses ... I expect to be able to address your faxes and calls by the end of the week." Lincoln's Deposition Exhibit 15 In Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgement.

C. Access's Communications With the Diases's Counsel

The Diases took the position that Lincoln, through Access, "opened" the $30,000 limit on the policy by failing to respond to the demand letter.³ Def.'s SUF ¶ 19. On February 11, 2004, a lawyer in Dolinski's firm, Joseph Carcione, wrote to Access that, "Because no one at [Access] replied to Mr. Dolinski's policy limits demand in a timely manner, California law provides that Lincoln General will be responsible for whatever the verdict is that my clients are awarded in this case." Lincoln's Deposition Exhibit 17 In Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgement. Eggers testified to having received this letter. Eggers Depo. at 101:14-102:3. Even though Eggers received this letter, he has no recollection of corresponding or attempting to contact Dolinski or Carcione before May 20, 2004. Id. at 101:14-104:15. Moreover, Eggers never told Dolinski that Access had not received the January 20 Demand Letter. Dolsinki Depo. at 29:7-17.

Eggers wrote to Carcione on May 20, 2004 requesting documentation of the Dias' injuries. Eggers Depo. at 104:20-23. In that letter, Eggers did not ask Carcione to clarify what he was referring to in his February 11, 2004 letter when he stated that no one at Access had timely replied to Dolinski's Demand Letter. Id. at 104:24-107:6. Access has been unable to produce or locate a copy of this May 20, 2004 letter. Worthington Decl. ¶ 11.

Eggers wrote Dolinski's firm another letter on July 8, 2004 seeking the "status as to demand packages for [Dolinski's] clients." Lincoln's Deposition Ex. 16 In Support of Pl.'s Opp'n to Def.'s Mot. for Summ. J. This letter does not mention that Access had never...