Perkins v. Allstate Ins. Co.
| Decision Date | 17 June 1999 |
| Docket Number | No. CV 98-9629 AHM.,CV 98-9629 AHM. |
| Citation | 63 F.Supp.2d 1164 |
| Court | U.S. District Court — Central District of California |
| Parties | Gloria PERKINS, Plaintiff, v. ALLSTATE INSURANCE CO., et al., Defendants. |
Girardi Keese, Los Angeles, CA, for Plaintiff.
Lewis, D'Amato, Brisbois & Bisgaard LLP, Richard B. Wolf, Elise D. Klein, Raquel Vidal, Los Angeles, CA, for Defendants.
ORDER DENYING THE ALLSTATE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
This is an action seeking insurance coverage for injuries Plaintiff sustained in an automobile accident. On October 22, 1998, Plaintiff filed her complaint in Los Angeles County Superior Court against Defendants Allstate Insurance Co., Allstate Indemnity Co. (collectively referred to as "Allstate"), Rex L. Barnett and Karen Bonneau. The complaint alleges two causes of action: (1) Breach of Contract (insofar as Allstate failed to defend its insured); and (2) Breach of the Implied Covenant of Good Faith and Fair Dealing (based upon Allstate's alleged wrongful refusal to settle and defend the underlying action against its insured).
This matter is currently before the Court on Allstate's motion for summary judgment. The Court has reviewed the papers submitted, the file in this case and oral argument of counsel. Good cause appearing therefor, the Court denies Allstate's motion.
On December 1, 1998, Allstate removed this case on diversity grounds, arguing that the California citizenship of Defendants Barnett and Bonneau should be disregarded because Plaintiff cannot establish liability against either of them. On December 11, 1998, Allstate filed a motion to dismiss Barnett and Bonneau. Because Allstate failed to comply with Local Rule 7.4.1's meet and confer requirement, the Court struck that motion by order filed December 23, 1998. Thereafter, Plaintiff voluntarily dismissed Barnett and Bonneau on January 26, 1999.
The parties do not dispute any of the facts in this case.
In 1992, Plaintiff and Homer Battle married. Since 1993, Plaintiff has consistently resided at the couple's Glen Creek, Cerritos, residence, while Battle has intermittently spent time in prison. Each time Battle was released from prison, he returned to reside at the Cerritos residence. During his prison stays, he continued to receive mail at that residence.
Battle had an automobile indemnity insurance policy with Allstate prior to 1994. Plaintiff was added to the policy on October 27, 1994.
On December 24, 1994, Battle was serving a perjury sentence at Tehachapi State Prison. Battle previously had given Williams, a close friend of Plaintiff, permission to drive his car. On December 24, 1994, while Williams was driving Plaintiff to visit Battle in prison, they were involved in a serious accident. After the accident, Plaintiff submitted to Allstate, and Allstate paid, a claim to recover the value of the car. Plaintiff did not, however, submit to Allstate a claim for medical benefits.
On December 18, 1995, Plaintiff brought an action against Williams and Battle. On April 18, 1996, Plaintiff's counsel sent Allstate a letter informing it of her action against Williams and making a policy limit settlement demand ($15,000 general damages and $5,000 in medical). On May 9, 1996, Allstate replied to the letter, stating that, although Williams would be considered an "insured" under Battle's policy because he was driving with Battle's permission, Plaintiff was precluded from recovering under the policy's "resident relative exclusion" because she shared a residence with Battle. (The policy terms are detailed below.)
On January 24, 1997, Plaintiff's counsel sent a letter to Williams, informing him that default had been entered against him, requesting that he forward the summons and complaint to Battle's insurance company, Allstate, and informing him that failure to file an answer would result in Plaintiff's seeking a default judgment against him. That letter included Plaintiff's statement of damages seeking $200,000 in special damages and $1 million in general damages. Williams never contacted Allstate. (The parties do not indicate whether Williams responded to Plaintiff personally.)
Also on January 24, 1997, Plaintiff's counsel again sent to Allstate the summons and complaint Plaintiff had filed against Williams. That letter further informed Allstate that Plaintiff had served Williams with a statement of damages and that she would be seeking a default judgment if she did not receive a response to the complaint.
Neither Williams nor Allstate responded to Plaintiff's January 24, 1997 letters. On August 13, 1997, the state court held a prove-up hearing on the default and entered judgment against Williams for $1,043,963.19 plus interest. Plaintiff served a Notice of Entry of Judgment on Williams on September 4, 1997.
On December 15, 1997, Williams assigned Plaintiff all of his rights against Allstate. Plaintiff brings this action both based upon these assigned rights (which Allstate does not challenge here) and California Insurance Code section 11580.
Battle's automobile indemnity policy with Allstate provided in pertinent part:
"Allstate will pay all damages an insured person is legally obligated to pay because of:
1. bodily injury, sustained by any person, and
2. damage to, or destruction of, property.
Under these coverages, your policy protects an insured person from liability from claims for accidents arising out of the ownership, maintenance or use ... of an insured auto.
We will defend an insured person sued as the result of a covered auto accident even if the suit is groundless or false...."
The policy defines "insured persons" in pertinent part as:
The policy defines "resident" in pertinent part as "a person who physically resides in your household with the intention of continuing residence there."
The policy defines "you" and "your" as "the policyholder named on the declarations page and that policyholder's resident spouse."
The policy's "resident relative" exclusion section provides that "Allstate will not pay for any damages an insured person is legally obligated to pay because of ... bodily injury to you or any resident of your household related to you by blood, marriage or adoption whenever the ultimate benefits of this coverage would accrue directly or indirectly to you or any resident of your household related to you by blood, marriage, or adoption." (Emphasis added.)
Fed.R.Civ.P. 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." Fed.R.Civ.P. 56(d) permits the entry of partial summary judgment. The Supreme Court clarified the standard for summary judgment in three important cases. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The moving party bears the initial burden of demonstrating the absence of a "genuine issue of material fact for trial." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. 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. If the moving party seeks summary adjudication with respect to a claim or defense upon which it bears the burden of proof at trial, its burden must be satisfied by affirmative admissible evidence. Houghton v. South, 965 F.2d 1532, 1536-37 (9th Cir.1992). By contrast, when the nonmoving 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.
When the moving party meets its burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. Rule 56(e). Summary judgment will be entered against the non-moving party if that party does not present such specific facts. Id.
In assessing whether the non-moving party has raised a genuine issue, its admissible evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson, 477 U.S. at 255, 106 S.Ct. 2505 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). But the non-moving party must come forward with more than "the mere existence of a scintilla of evidence." Id. at 252, 106 S.Ct. 2505. As the Court explained in Matsushita:
When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts .... Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no "genuine issue for trial."
475 U.S. at 586-87, 106 S.Ct. 1348. The evidence relied upon must be admissible under the rules governing the admission of evidence generally. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542 (9th Cir.1989).
Plaintiff's Breach of Contract claim in essence alleges a cause of action belonging to Williams. It is that Allstate breached the insurance contract with Battle by failing to defend Williams, a permissive driver of Battle's auto, in Plaintiff's action against Williams. Via...
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