Vignola v. Gilman
| Decision Date | 13 April 2012 |
| Docket Number | 2:10-CV-02099-PMP-GWF |
| Parties | LOUIS VIGNOLA, individually; TAMARA HARLESS, as Special Administrator for the Estate of NANCY MARIE OUELLET; LOUIS VIGNOLA as Guardian ad Litem for CAROLYN VIGNOLA, a minor; and LOUIS VIGNOLA as Guardian ad Litem for GABRIEL VIGNOLA, a minor, Plaintiffs, v. CHARLES ALFRED GILMAN, JR.; AUTO-OWNERS INSURANCE COMPANY; MUTUAL OF ENUMCLAW INSURANCE COMPANY; DOES I-X AND ROE CORPORATIONS XI-XX, inclusive, Defendants. |
| Court | U.S. District Court — District of Nevada |
Presently before the Court is Defendant Auto-Owners Insurance Company's Motion to Determine Applicable Law (Doc. #61), filed on January 3, 2012. Plaintiffs did not file a timely opposition. On January 30, 2012, the Court granted Defendant's Motion (Doc. #64), thereby applying Colorado law to Plaintiffs' claims.
On February 8, 2012, Plaintiffs filed a Motion for Reconsideration (Doc. #67) of the Court's Order on the Motion to Determine Applicable Law. On February 27, 2012, Defendant filed an Opposition (Doc. #72). On March 7, 2012, Plaintiffs filed a Reply (Doc. #78). On March 14, 2012, the Court granted Plaintiffs' Motion for Reconsideration (Doc. #81). Plaintiffs then filed an Opposition (Doc. #86) to Defendant's Motion to DetermineApplicable Law on March 28, 2012. On April 6, 2012, Defendant filed a Reply (Doc. #88).
On or about May 24, 2010, Nancy Marie Ouellet ("Ouellet") applied for, negotiated, and purchased a motorcycle insurance policy from Defendant Auto-Owners Insurance Company ("Auto-Owners"), a Michigan corporation with its principal place of business in Michigan, which is licensed to do business in Colorado. (Def.'s Mot. to Determine Applicable Law ("Mot. to Det.") (Doc. #61), Ex. A ¶ 2-4, Ex. A-1.) Auto-Owners is not licensed to do business in Nevada, nor does Auto-Owners underwrite insurance in Nevada. (Mot. to Det., Ex. A ¶ 4.) Ouellet purchased the insurance policy through an independent insurance agency, Don Bates Insurance, located in Colorado. (Id. ¶ 2, 5, Ex. A-1.) At the time she obtained the policy, Ouellet resided in Colorado. (Mot. to Det., Ex. A ¶ 5, Ex. A-1.) The policy was negotiated, purchased, executed, and issued in Colorado. (Mot. to Det., Ex. A ¶ 6.) The policy provided under-insured motorist benefits of $500,000 per person/per occurrence. (Mot. to Det., Ex. A-2.) Ouellet's motorcycle was licensed in Colorado. (Mot. to Det., Ex. A-3.)
On June 22, 2010, Ouellet was traveling on US 93 in Nevada when Defendant Charles Gilman's ("Gilman") automobile struck her motorcycle. (Id.) Ouellet resided in Colorado at the time of the accident, and none of the Plaintiffs ever resided in Nevada. (Mot. to Det., Ex. A ¶ 14, Ex. A-3.) As a result of the accident, Ouellet suffered serious injuries and died. (Mot. to Det., Ex. A-3.) Don Bates Insurance filed an Automobile Loss Notice with Auto-Owners on Ouellet's behalf on July 7, 2010. (Mot. to Det., Ex. A-4.) The Notice listed Plaintiff Louis Vignola ("Vignola") as the policy "Contact" at a Colorado address. (Id.) From July 7, 2010 to August 19, 2010, Auto-Owners's Colorado office communicated with Vignola regarding the claim. (Mot. to Det., Ex. A ¶¶ 11-13; Pls.' Opp'n to Mot. to Det. ("Opp'n") (Doc. #86), Exs. 5-7.) Vignola and Ouellet's two children (collectively "Plaintiffs") hired counsel in Nevada, and on August 9, 2010, Plaintiffs'counsel instructed Auto-Owners to direct all communications to Plaintiffs' counsel in Las Vegas, Nevada. (Opp'n, Exs. 5-6.)
Plaintiffs filed a Complaint in the Eighth Judicial District Court of Clark County, Nevada on November 2, 2010. Plaintiffs alleges that Auto-Owners refused to settle Plaintiffs' claims and failed to reasonably and promptly evaluate their claims. (Id. ¶¶ 18-19.) Plaintiffs br ought suit against Auto-Owners for bad faith, unfair claims practices in violation of Nevada Revised Statutes § 686A.310, and contractual claims. (Opp'n at 3.) Auto-Owners removed the case to this Court on December 2, 2010. (Notice of Removal.)
Auto-Owners now seeks a determination of which state's law, Nevada or Colorado, applies to Plaintiffs' claims against Auto-Owners in this action. Auto-Owners identifies three conflicts of law between Nevada and Colorado. First, unlike in Nevada, there is no private right of action for violation of the Unfair Claims Practices Act in Colorado. Second, unlike in Nevada, in Colorado the insured must seek to recover first from the under-insured tortfeasor before the insured can bring suit against the insurer. Third, unlike in Nevada, Colorado law provides a statutory cap on non-economic damages in bad faith actions. Auto-Owners contends that the substantial relationship test applies to Plaintiffs' claims against Auto-Owners, and because Colorado has a substantial relationship to the claims against Auto-Owners, Colorado law should apply.
Plaintiffs respond that their bad faith and unfair claims practices claims are torts, and because these torts arise out of the accident that occurred in Nevada, the most significant relationship test from § 146 of the Second Restatement on Conflicts of Law applies. The general rule under § 146 is that the law of the state where the injury occurred applies unless another state has a more significant relationship to the claims. Plaintiffs argue Nevada is the place of injury and Colorado does not have a more significant relationship to the claims. Therefore, Plaintiffs argue, Nevada law should apply toPlaintiffs' claims of bad faith and unfair claims practices. But Plaintiffs distinguish between their bad faith and unfair claims practices claims and their contractual claims. Although Plaintiffs do not articulate the nature of their contractual claims, Plaintiffs concede that Colorado law would apply to Plaintiffs' contractual claims.
Auto-Owners reply that all of Plaintiffs' claims against Auto-Owners are contractual because they relate to Auto-Owners' alleged refusal to pay insurance benefits under the insurance contract and not to the causation of the accident. Additionally, Auto-Owners acknowledges that a bad faith refusal to pay insurance benefits can be considered a tort and thus the most significant relationship test would apply. But Auto-Owners concludes that even under the most significant relationship test, Colorado law applies.
Federal courts sitting in diversity apply the forum state's choice of law rules to determine applicable substantive law. Narayan v. EGL, Inc., 616 F.3d 895, 898 (9th Cir. 2010). In Nevada, the most significant relationship test, as set forth in § 145 of the Second Restatement of Conflicts of Law, governs tort actions. Section 145 provides:
Section 145 applies to tort actions "unless another, more specific section of the Second Restatement applies to the particular tort." Gen. Motors Corp. v. Eighth Judicial Dist. Court of State of Nev. ex rel. Cnty. of Clark, 134 P.3d 111, 116 (Nev. 2006). TheSecond Restatement specifically addresses personal injury actions, and thus the most significant relationship test, as set forth in § 146, applies to personal injury actions. Section 146 of the Second Restatement states:
In an action for personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.
The Second Restatement defines "personal injury" as "either physical harm or mental disturbance, such as fright and shock, resulting from physical harm or from threatened physical harm or other injury to oneself or to another." Restatement Second of Conflicts of Law § 146 cmt. b. Both § 145 and § 146 incorporate the following principles from § 6:
By contrast, the substantial relationship test governs contract claims in Nevada. Consol. Generator-Nevada, Inc. v. Cummins Engine Co., 971 P.2d 1251, 1253 (Nev. 1998). The Court should consider the following factors in determining which state has a substantial relationship to the contract:
971 P.2d at 1253-54 (citations omitted).
Here, Plaintiffs bring suit against Auto-Owners for bad faith, unfair claims practices in violation of Nevada Revised Statutes § 686A.310, and contractual claims. The parties agree that the substantial relationship test applies to...
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