Tweet v. Webster
| Decision Date | 08 August 1985 |
| Docket Number | No. CV-R-84-47-ECR.,CV-R-84-47-ECR. |
| Citation | 614 F. Supp. 1190 |
| Parties | John M. TWEET, Donna P. Tweet, Danniele Middleton and David Middleton, Plaintiffs, v. Raymond A. WEBSTER, California State Automobile Association, and Farmers Insurance Exchange, Defendants. |
| Court | U.S. District Court — District of Nevada |
G.C. Backus, Reno, Nev., for plaintiffs.
David R. Grundy, Hibbs, Roberts, Lemons & Grundy, Reno, Nev., for Farmers Ins. Exchange.
Bruce R. Laxalt, Beckley, Singleton, DeLanoy & Jemison, Reno, Nev., for California Auto. Ass'n and Raymond A. Webster.
Plaintiffs move this Court for reconsideration of its order (Document # 28) filed May 15, 1985, 610 F.Supp. 104, granting summary judgment in favor of defendant California State Automobile Association ("CSAA") and dismissing the complaint in the above-entitled matter. Plaintiffs' motion is made on the grounds that the Court's decision is contrary to state court holdings and to state law.
Defendant (CSAA) opposes plaintiffs' motion for reconsideration with respect to CSAA on the grounds that this Court correctly interpreted existing Nevada law and its unfair claims settlement practices statute, that unpublished lower state court holdings have no precedential value, that claims presented for the first time in a petition for rehearing cannot be considered, and that summary judgment in favor of CSAA was appropriate and supported by long-standing authority from the Nevada Supreme Court.
Plaintiffs have presented no new evidence in connection with their motion for reconsideration. The unpublished state district court decisions filed with the motion for reconsideration may not be considered by this Court as they have no precedential value here.
In reconsidering our previous order, we will take another look at the evidence already presented in connection with the motion for summary judgment, the applicable Nevada state law and its interpretation and, in particular, Nevada's unfair claims settlement practices statute. In addition, we will consider any modification in controlling state law enunciated before or during this reconsideration. See Walker v. Jim Dandy Co., 97 F.R.D. 505 (N.D.Ala. 1983); Yuclan Enterprises, Inc. v. Nakagawa, 583 F.Supp. 1574 (D.Hawaii 1984).
Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Ybarra v. Reno Thunderbird Mobile Home Village, 723 F.2d 675, 677 (9th Cir. 1984). Although the initial burden of showing no issue of material fact is on the proponent, Int. Un. of Bricklayers Etc. v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir.1985), the opponent must present some significant probative factual evidence tending to support his complaint. Compton v. Ide, 732 F.2d 1429, 1434 (9th Cir. 1984).
With respect to the complaint against CSAA, before us under diversity jurisdiction, we have found that Nevada law applies. The complaint arose out of an automobile accident in California between plaintiffs and a non-party alleged tortfeasor who was insured by defendant CSAA. Plaintiffs are residents of Nevada and negotiated their alleged claim against CSAA out of CSAA's Reno, Nevada district office. Therefore, any alleged tort of bad faith refusal to settle on the part of CSAA took place in Nevada, and this Court previously correctly interpreted Nevada's lex loci rule. See Mitrovich v. Pavlovich, 61 Nev. 62, 114 P.2d 1084 (1941) and progeny.
As discussed in our previous order, the issue in this case is whether the Nevada Insurance Code creates a private right of action in favor of third party claimants against insurers for bad faith refusal to settle a reasonably clear claim. Plaintiffs contend that the Nevada statutes and, in particular, NRS 686A.310 (), are identical to those of California as far as is relevant to this case, and should be interpreted by this Court as have those of California. Under its statutory scheme, California recognizes such a private right of action. Royal Globe Inc. Co. v. Superior Court, etc., 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329 (1979). Our conclusion remains that the Nevada statutes differ in significant ways and that it was not the intention of the Nevada legislature in enacting its statutes to create a private right of action. The discussion below will focus on these differences.
In 1972, subdivision (h) was added to Cal. Ins.Code § 790.03, listing fifteen specific claims settlement procedures considered to be unfair practices when knowingly committed or performed "with such frequency as to indicate a general business practice." § 790.03(h)(5) lists as one of these practices:
(5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear. (emphasis added)
In 1979, a divided California Supreme Court held that the preservation of an insurer's "civil liability" in § 790.09, considered in conjunction with § 790.03(h)(5), created a private right of action in a third party claimant against an alleged tortfeasor's insurer for that insurer's failure to attempt in good faith to effectuate a prompt, fair settlement of a claim in which liability had become reasonably clear. Royal Globe Ins. Co. v. Superior Court, Etc., supra. See also Avila v. Travelers Ins. Co., 481 F.Supp. 431 (C.D.Cal.1979), aff'd, 651 F.2d 658 (1981) (discussing Royal Globe.)
Nevada law is different. Title 57, the Nevada Insurance Code, with 42 chapters, is a comprehensive plan by the State of Nevada to regulate the insurance industry. Chapter 679B sets forth the duties and powers of the insurance commissioner, which are, among other things, the power to enforce the provisions of the code (679B.120(3)), investigate fraudulent claims (679B.154-55), enjoin violators of the code and turn information of such violation over to the district attorney or attorney general for appropriate proceedings (679B.180) and hold hearings on matters within the scope of the code (679B.310). Appeal from the findings of the commissioner is available in state district court (679B.370). NRS 679B.310 et seq., in setting forth a comprehensive administrative hearing procedure to be followed in the event of violations of the code, has provisions for notice to and intervention by all those whose pecuniary interests might be affected by the commissioner's orders. Those with pecuniary interests may also appeal directly to the state courts.
NRS 679A.180 ("General Penalties") provides that, unless defined by state law as a felony, violations of the code are misdemeanors. 679A.180(2) states that:
Every penalty imposed by this code shall be in addition to any applicable suspension, revocation or denial of a license or certificate of authority.
However, nowhere in Title 57, NRS, is there a provision analogous to Cal.Ins.Code § 790.09. NRS 679A.180 contains no reference to the existence of "civil liability," the words which were the basis of the California court's decision holding that a private cause of action existed in favor of third parties against insurers who commit unfair claims settlement acts. Royal Globe, 592 P.2d at 332.
NRS 686A.310 was added to the Nevada Insurance Code in 1975, defining twelve specific activities considered to be unfair claims settlement practices when engaged in "with such frequency as to indicate a general business practice." The unfair claims activities listed in NRS 686A.310 are identical to those listed in Cal.Ins.Code § 790.03(h), with two exceptions: subdivision (5) has a different wording and subdivisions (13) through (15) of § 790.03(h) () are omitted from the Nevada statute. Subdivision (5) of NRS 686A.310, with which we are concerned in the present case, provides that one unfair claims settlement practice is:
(5) Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.
Unlike Cal.Ins.Code § 790.03(h)(5), NRS 686A.310(5) contains no mention of "good faith." Since Nevada's statute was passed three years after California's and both statutes appear to be patterned after the National Association of Insurance Commissioners' model legislation which contains language identical to California's, (See NAIC Model Unfair Trade Practices Act § 4(9)(f); Royal Globe 592 P.2d at 332; Cal.Ins.Code § 790.03(h)(5)), NRS 686A.310(5), it appears to this Court that the Nevada legislature intended to omit the good faith wording from this statute. Where plaintiffs' cause of action against CSAA is based on a non-existent statutory requirement that CSAA make a good faith attempt to settle, it fails.
Where the statutes do not specifically create a private cause of action, we must focus on legislative intent. Touche Ross & Co. v. Reddington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979), and progeny. Based on its statutes, the California court concluded that the California legi...
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