Madrigal v. Allstate Ins. Co.

Decision Date19 May 2016
Docket NumberCase No. CV 14–4242 SS
Parties Carlos MADRIGAL, et al., Plaintiffs, v. ALLSTATE INSURANCE COMPANY, et al., Defendants.
CourtU.S. District Court — Central District of California

Arash Homampour, Farzad Yassini, Homampour Law Firm PLC, Sherman Oaks, CA, Warren Jay Binder, Binder & Associates, Pasadena, CA, for Plaintiffs.

Theona Zhordania, Sheppard Mullin Richter and Hampton LLP, Los Angeles, CA, Peter H. Klee, Sheppard Mullin Richter and Hampton LLP, San Diego, CA, for Defendants.




On April 21, 2014, Plaintiffs Carlos Madrigal ("Madrigal"), Richard Tang and Anna Tang (the "Tangs") (collectively, "Plaintiffs") filed suit in state court against Defendant Allstate Indemnity Company ("Allstate")1 alleging claims arising from Allstate's failure to accept a settlement demand. Allstate removed the action to federal court on June 2, 2014 on the basis of diversity jurisdiction. On September 30, 2015, the Court granted Allstate's Motion for Summary Judgment in part, dismissing all of Plaintiffs' claims except: (1) Madrigal and the Tangs' respective claims for breach of the implied covenant of good faith and fair dealing; (2) the Tangs' claims for intentional and negligent misrepresentation;2 and (3) the Tangs' prayer for punitive damages. (Dkt. No. 145 at 59–60).

The Court held several pretrial hearings. The Court denied all of Plaintiff's motions in limine, but granted three of Allstate's motions in limine. (Dkt. 167, 176). Regarding jury instructions, the Court rejected several of Plaintiff's proposed instructions, but adopted the majority of Allstate's proposed jury instructions, including the more recent versions of the CACI instructions proposed by Allstate. However, the Court also modified or declined to include certain instructions over Allstate's objection, as discussed more fully below. (Dkt. Nos. 171, 184, 205, 207, 208). A jury trial commenced on November 12, 2015.

On November 20, 2015, at the close of Plaintiffs' evidence, Allstate orally moved for Judgment as a Matter of Law under Rule 50(a) on Plaintiffs' respective bad faith claims, the Tangs' promissory fraud and negligent misrepresentation claims, and the Tangs' prayer for punitive damages.

The Court granted Allstate's Rule 50(a) motion as to the negligent misrepresentation claim. (Dkt. 207). The Court took the remainder of the Rule 50(a) motion under submission. (Dkt. No. 209). On November 23, 2015, before the Parties began closing arguments, the Court denied the remainder of Allstate's Rule 50(a) motion.3

On November 24, 2015, the jury found Allstate liable on Madrigal and the Tangs' respective bad faith claims. (Dkt. No. 262 at 2). The jury awarded Madrigal the amount of the underlying excess judgment (a number stipulated to by the Parties), plus interest and costs "to be determined by the Court." (Id. ). The jury awarded Anna Tang and Richard Tang $50,000.00 each for the emotional distress caused by Allstate's breach of the implied covenant. (Id. ). However, the jury also found that Allstate was not liable on the Tangs' promissory fraud claim and that the Tangs were not entitled to punitive damages. (Id. at 3–4).

On December 21, 2015, Allstate filed a Motion for Judgment as a Matter of Law under Rule 50(b) on Plaintiffs' bad faith claims, ("JMOL Motion," Dkt. No. 281), including the declaration of Peter H. Klee. ("Klee JMOL Decl.," Dkt. No. 281–1). Plaintiffs filed an Opposition on January 12, 2016, ("JMOL Opp.," Dkt. No. 285), including the declaration of Arash Homampour. ("Homampour Decl.," Dkt. No. 285–1). On January 26, 2016, Allstate filed a Reply, ("JMOL Reply," Dkt. No. 288), including a second declaration of Peter H. Klee. ("Klee JMOL Decl. II," Dkt. No. 288–1).

Also on December 21, 2015, Allstate filed a Motion for a New Trial, ("New Tr. Motion," Dkt. No. 282), including the declaration of Peter H. Klee. ("Klee New Tr. Decl.," Dkt. No. 282–1). On January 12, 2016, Plaintiffs filed an Opposition, ("New Tr. Opp.," Dkt. No. 286), including the declaration of Arash Homampour. ("Homampour Decl.," Dkt. No. 285–1).4 On January 26, 2016, Allstate filed a Reply. ("New Tr. Reply," Dkt. No. 287).

On February 8 and on May 6, 2016 the Court held hearings on Allstate's Motions. For the reasons stated below, Allstate's Motion for Judgment as a Matter of Law is DENIED. Allstate's Motion for New Trial is also DENIED.


On July 13, 2009, Richard Tang had a motor vehicle accident with Carlos Madrigal, which rendered Madrigal paraplegic.5 (Trial Transcript ("Tr.") 11/12/15 PM at 28 (Stipulated Fact No. 2)). At the time of the accident, Mr. Tang and his wife Anna Tang were insured by Allstate with a bodily injury coverage limit of $100,000 per claimant. (Id. (Stipulated Fact No. 1); Tang, Tr. 11/20/15 PM at 40:5–12).6 Madrigal was uninsured. (Varela, Tr. 11/16/15 at 140:11–3).7 Madrigal pursued a claim against Mr. Tang for his injuries. (Tr. 11/12/15 PM at 28 (Stipulated Fact No. 5)).

Allstate first learned of Madrigal's claim in July 2009, through Mr. Tang's attorneys, Dobbin Lo and Associates ("Dobbin Lo"). (Varela, Tr. 11/16/15 at 98:5–9). On July 27, 2009, Madrigal's attorney Kyle Madison wrote to Allstate to state that he was representing Madrigal, and to learn the policy limits. (Madison, Tr. 11/17/15 PM at 56:2–8; see also Tr. Exh. 210). Allstate assigned adjuster Teresa Varela to Madrigal's claim on July 30, 2009. (Tr. 11/12/15 PM at 28 (Stipulated Fact No. 3); Varela, Tr. 11/16/15 at 97:20–21).

On August 4, 2009, Varela wrote to Madison asking him to provide Allstate with information about Madrigal's claim and to have Madrigal sign the enclosed medical and wage authorization forms. (Id. at 99:14–17 & 100:7–11). Varela's August 4, 2009 letter identified "RICHARD TANG" as Allstate's insured, (Tr. Exh. 214), as did follow up letters from Allstate dated August 21, 2009 and September 24, 2009. (Tr. Exhs. 217 & 121). Madison never provided the requested medical and wage authorizations. (Varela, Tr. 11/16/15 at 101:5–15; Madison, Tr. 11/17/15 PM at 59:3–5 & 11/18/15 AM at 106:6–9).

Varela testified that her initial contacts with the Tangs were through Dobbin Lo. (Varela, Tr. 11/16/15 at 107:22–108:5). On August 21, 2009, Varela wrote to Dobbin Lo asking for authorization to obtain a recorded statement from Mr. Tang, which was granted. (Id. at 109:4–110:3; see also Tr. Exh. 217). The statement was made through an interpreter in the presence of Dobbin Lo on August 26, 2009. (Varela, Tr. 11/13/15 PM at 67:21–23 & 11/16/15 at 110:4–10). According to Varela, Mr. Tang stated that he made a right turn from the lane next to the curb and was not at fault. (Id. at 110:14–111:2). Mr. Tang told Varela that at the time of the accident, he was on his way to his wife's restaurant, where he worked, to pick up a list of food items to purchase for the restaurant. (Id. at 111:7–12).

Varela testified that after hearing Mr. Tang's version of the accident, she was concerned that Mrs. Tang could potentially be held liable because she was the registered owner of the vehicle that Mr. Tang was driving and because at the time of the accident, Mr. Tang was possibly acting within the "course and scope" of his employment.

(Id. at 111:9–112:11). On August 28, 2009, Varela asked Dobbin Lo if the Tangs would allow her to disclose their policy limits to Madrigal's attorney, which they authorized on September 2, 2009. (Id. at 137:5–9; see also Tr. Exh. 220). At the end of September 2009, Varela obtained permission from Dobbin Lo to speak with the Tangs directly. (Varela, Tr. 11/17/15 PM at 31:19–23).

Varela and Madison first spoke on September 2, 2009. (Varela, Tr. 11/16/15 at 139:21–140:4). During the telephone call, Madison told Varela that he would gather Madrigal's medical bills and records and send them to her instead of providing a medical documents authorization. (Id. at 140:5–10). Madison told her that Madrigal was uninsured, which Varela memorialized in a notation in the case file stating "PER KYLE [MADISON] AT ATTY OFFICE (09/02/09 FILE NOTE BY ADJ–RTV), NO INSURANCE ... PROP 213."8 (Id. at 140:11–3 & 141:14–17; see also Tr. Exh. 11 (ellipses in original)).

On September 24, 2009, Allstate received a copy of a medical bill from Madison reflecting medical expenses related to the treatment of his paraplegic condition of $34,398. (Varela, Tr. 11/16/15 at 151:16–22, 152:3–8 & 155:3–6; see also Tr. Exh. 234). On the same date, Varela wrote to Madison asking for the names of two witnesses who Madison claimed had seen the accident. (Varela, Tr. 11/16/15 at 150:8–14; see also Tr. Exh. 121). Varela states that Madison did not disclose those names in response to the letter. (Varela, Tr. 11/16/15 at 151:12–15). On September 28, 2009, Varela wrote to Madison again asking for additional medical records. (Id. at 153:7–15; see also Tr. Exh. 236). On September 29, 2009, Madison sent Varela thirty-five pages of medical records that covered the first few weeks of Madrigal's initial hospital stay after the accident. (Varela, Tr. 11/16/15 at 155:12–24 & 157:3–10; see also Tr. Exh. 34). Varela testified that without a medical authorization from Madrigal, beyond the single bill and the thirty-five pages of medical records that Madison had voluntarily provided, there was no other medical information that Allstate could obtain. (Varela, Tr. 11/16/15 at 163:7–17).

In November 2009, Varela wrote to Madison asking him again to send the witness information that she had previously requested and any other information that he might have to help her further investigate liability. (Varela, Tr. 11/16/15 at 164:22–165:8; see also Tr. Exh. 148). Varela sent Madison another letter requesting the same information on December 11, 2009. (Varela, Tr. 11/16/15 at 165:21–166:8; see also Tr. Exh. 149)....

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