McDaniel v. GEICO Gen. Ins. Co.

• Decision Date: 24 September 2014
• Docket Number: Case No. 1:12–CV–2028 AWI JLT.
• Citation: 55 F.Supp.3d 1244
• Court: U.S. District Court — Eastern District of California
• Parties: Amy J. McDANIEL, Plaintiff v. GEICO GENERAL INSURANCE COMPANY, and Does 1–100 inclusive, Defendants.

55 F.Supp.3d 1244

Amy J. McDANIEL, Plaintiff

v.GEICO GENERAL INSURANCE COMPANY, and Does 1–100 inclusive, Defendants.

Case No. 1:12–CV–2028 AWI JLT.

United States District Court, E.D. California.

Signed Sept. 24, 2014.

Steve W. Nichols, Thomas A. Brill, Law Offices of Young & Nichols, Bakersfield, CA, for Plaintiff.

Charles D. May, Gene B. Sharaga, Tharpe & Howell, LLP, Sherman Oaks, CA, Mark W. Hansen, Law Office of Mark W. Hansen, San Diego, CA, for Defendants.

ORDER ON CROSS–MOTIONS FOR SUMMARY JUDGMENT

ANTHONY W. ISHII, Senior District Judge.

This is an insurance dispute between Plaintiff Amy McDaniel (“McDaniel”) and GEICO General Insurance Co. (“GEICO”). McDaniel is the assignee of a bad faith failure to settle claim against GEICO. Both parties bring cross-motions for summary judgment. For the reasons that follow, GEICO's motion will be denied and McDaniel's motion will be granted.

FACTAUL BACKGROUND¹

In 2008, Edward Murotani (“Murotani”) was diagnosed with diabetes

. See PUF 1. On June 11, 2008, Murotani purchased an automobile insurance policy (“the Policy”) for his Nissan Altima from GEICO. SeeJUF 1. The Policy was in effect on October 25, 2008, and provided bodily injury liability limits of $100,000 per person and $200,000 per occurrence. JUF 2.

On October 25, 2008, Murotani was driving his Altima when he became confused and light-headed. See PUF 2. Murotani continued to drive even though he knew he was likely having a diabetic episode.² See id. Murotani had prior episodes of low blood sugar, so he recognized those feelings. See PUF 4. Eventually, Murotani drove his Altima onto the wrong side of a divided highway against the flow of on-coming traffic, and came to a stop after hitting a sign post. JUF 3; see PUF 5. At one point, Murotani hit something and his car began to smoke. PUF 6. Murotani eventually was helped out of his smoking car. See id. Murotani essentially admitted in his deposition that the accident was his fault since his car ended up on the wrong side of the road after he continued driving when he knew he was having a diabetic episode. See PUF 7. A fire started in Murotani's Altima, and created a large smoke field that obscured on-coming drivers' views of the accident scene. JUF 4. McDaniel's husband, Steven McDaniel, had stopped and gotten out of his vehicle to try to put out the fire. JUF 5. As Steven McDaniel tried to put the flames out from Murotani's car, another driver went into the smoke and crashed into Murotani's car, which caused Murotani's car to fatally push into Steven McDaniel. See PUF 8.

On January 23, 2009, a liability claim file was opened by GEICO to handle the claims relating to Murotani's October 25, 2008, accident. See JUF 6.

On March 3, 2009, McDaniel filed a wrongful death suit against Murotani and others in Kern County Superior Court. JUF 7. On April 22, 2009, GEICO referred the handling of the lawsuit to attorney Michael Griott (“Griott”), who was a GEICO employee.³ See JUF 8; Griott Dec. ¶ 2. The GEICO claims person assigned to handle the McDaniel wrongful death lawsuit against Murotani was Aldin Buenaventura (“Buenaventura”), and the claim was given a claim number. See JUF 9. GEICO provided a defense to Murotani through Griott. JUF 10.

On March 4, 2009, Buenaventura made a log entry that discussed information and facts known about the October 25 accident and a plan for future action. See Plaintiff's Ex. 4; PUF 9. In relevant part, the log entry states: “insureds losing control of his vehicle appear to be clear liability,” and “I will place the insured on notice of the potential excess exposure of bodily injury.” PUF's 9, 10.

On March 5, 2009, GEICO advised Murotani that every effort to settle all claims within policy limits would be made. See PUF 11.

On May 6, 2009, Loyd Asuncion (a co-defendant in McDaniel's wrongful death suit) served special interrogatories on McDaniel.⁴ See PUF 13. In many instances, Asuncion's interrogatories sought the same information as that sought by Murotani in his special interrogatories to McDaniel. See id.

On May 19, 2009, Griott provided GEICO with the liability information necessary to determine fault. PUF 15. The report discusses Murotani's previous diabetic episodes while driving, establishing Murotani's knowledge of the danger. See id. Griott advised the GEICO claims department that Murotani caused the series of collisions when Murotani suffered a diabetic episode, that the collisions culminated in the death of Steven McDaniel, and that this was a “case for settlement.” See id.

On July 1, 2009, McDaniel provided verified answers in response to Loyd Asuncion's interrogatories. See Plaintiff's Ex. 15; see also PUF 30. McDaniel served a copy of these responses on all counsel, including Griott. See PUF 31; McDaniel Ex. 15. As part of her responses, McDaniel indicated that Steven McDaniel's income was between $60,000 and $75,000 per year. See PUF 32. McDaniel also responded that she had been married to Steven McDaniel for 30 years.See Plaintiff's Ex. 15; see also PUF 33.

On August 7, 2009, McDaniel's attorney Steve Nichols (“Nichols”) wrote a letter to Griott in which he demanded settlement for the Policy's $100,000 limit, and set a deadline of 15 days from the date of the letter for acceptance. See JUF 11. The demand letter mistakenly referred to GEICO's insured as having run over Steven McDaniel, and was incorrect in that regard. Id.

On August 10, 2009, Nichols hand delivered the August 7 letter to Griott while they were both in attendance at a deposition. See Griott Dec. ¶ 4. Nichols agreed in a conversation with Griott to extend the deadline for acceptance of plaintiff's $100,000 settlement demand to a new date of 10 days following McDaniel's service of responses to discovery that had previously been served by Murotani. JUF 12. As of August 10, 2009, the only pending discovery that had previously been served by Murotani upon McDaniel was a set of special interrogatories. JUF 13.

On August 11, 2009, an e-mail from Griott's law firm was sent to Buenaventura informing him of the August 7 policy limits demand letter. See GEICO Ex. 4. The e-mail indicated that a copy of the policy limits letter would be faxed to Buenaventura. See id.

On August 12, 2009, Buenaventura spoke with Nichols's assistant about the error in the August 7 letter. DUF 13.A.

On August 13, 2009, Nichols sent a corrected letter to Griott indicating that McDaniel was demanding the policy limits, but correctly referring to Murotani as the one who was driving the wrong way on the freeway. JUF 14. This letter indicated that a response was due “within 15 days of the date of this letter.” See PUF 29.

On August 27, 2009 at a deposition, Nichols hand-delivered McDaniel's interrogatory responses to Griott. JUF 15; Griott Dec. ¶ 8. The interrogatory responses did not include a “Verification” signed under oath by McDaniel. JUF 16. The interrogatory responses included a sheet of paper that said, “Verification to Follow.” JUF 17. Griott summarized the interrogatory responses as indicating that Steven McDaniel had been married for 30 years, was making about $60,000 per year, was in excellent health, and was not under the care of any doctors at the time of death. See Plaintiff's Ex. 16.

On September 1, 2009, Griott's assistant, Lynda Page, sent an e-mail with an attached letter from Griott to Buenaventura. See JUF 18. The e-mail described the attachment as “our depo summaries of Edward Murotani and Co–Defendant, Lloyd Asuncion.” See DUF 18.C. In the attached letter, Griott provided summaries of the recent depositions of Murotani and Lloyd Asuncion and stated at the end of the letter that he had received McDaniel's discovery responses and that the responses to the insurance policy limit demand of $100,000 was due on September 11, 2009. See JUF 18; see also PUF 34.⁵ In bold and underlined text, the letter states that the time to respond to McDaniel's demand would run as of September 11, 2009. See PUF 34. Griott had not noticed that the interrogatory responses served by Nichols did not contain a verification under oath signed by McDaniel. DUF 18.A. Griott's letter also states that, “We will be held in liability on this matter. This case has a minimal value of at least $500,000.” PUF 35. Buenaventura had already had a phone conversation with Griott in which Griott had briefly summarized key points of two recent depositions. DUF 18.D. Buenaventura declares that, as a result of the phone conversation, Buenaventura did not read any portion of Griott's September 1 letter, including the statements at the very end about Griott's receipt of discovery responses from McDaniel or Griott's belief that the deadline for accepting the policy limits demand would run on September 11, 2009.See id.; Buenaventura Dec. ¶ 16. Buenaventura did not realize that any interrogatory answers had been received, whether verified or unverified, and therefore was not aware that a 10–day deadline for acceptance of McDaniel's $100,000 offer had begun to run. DUF 18.E. Buenaventura noted on his September 4, 2009, log entry that McDaniel's attorney had granted an extension of the policy limits offer “until 10 days following responses to discovery,” and that “the discovery responses are overdue.” DUF 18.F.

On September 9, 2009, Buenaventura had a phone call with Nichols on the topic of settlement. DUF 18.G. After the call, Buenaventura continued to believe that McDaniel's discovery responses were overdue and that the policy limits offer was still open. See id. Buenaventura noted in his case log: “I received call from P-atty Office; *[spoke with] Steve Nichols*; P-atty admits sending wrong demand letter to our office. I explained that we are looking to determine the total amount exposures for this loss. Our office has not been presented with any responses to our requests to produce documentation. Once we have the information we will then be able to process and evaluate all claim. P-atty [understands].” Id. Buenaventura's reference to ...