Young v. Allstate Ins. Co.
| Decision Date | 09 July 2003 |
| Docket Number | No. CV-00-1607-PHX-JAT.,CV-00-1607-PHX-JAT. |
| Citation | 296 F.Supp.2d 1111 |
| Parties | Sabrina YOUNG and Lorenzo Young, wife and husband, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, a foreign corporation, Defendant. |
| Court | U.S. District Court — District of Arizona |
Gynn W. Gilcrease, Jr., Law Offices of Gynn W. Gilcrease, Jr., Richard Anthony Dillenburg, Richard A. Dillenburg PC, Tempe, AZ, for Plaintiffs.
Floyd P. Bienstock, Karl Michael Tilleman, Jeffrey W. Nunes, Steptoe & Johnson LLP, Phoenix, AZ, for Defendant.
Calvin C. Thur, Thur & O'Sullivan PC, Scottsdale, AZ, Eugene R. Anderson, Anderson Kill & Olick PC, New York City, for Intervenor-Plaintiff.
Pending before the Court are two dispositive motions: (1) Plaintiffs' Motion for Partial Summary Judgment Re: Bad Faith (Doc. # 93); and (2) Defendant's Cross-Motion for Summary Judgment (Doc. # 144). For the reasons set forth below, the Court will deny Plaintiffs' Motion and grant Defendant's Motion in part.
Plaintiffs Sabrina Young and Lorenzo Young purchased an automobile insurance policy from Defendant Allstate Insurance Company that included uninsured motorist ("UM") coverage. While insured under the policy, Ms. Young was involved in an automobile accident with an uninsured motorist, Brian Beystrum, on February 11, 1999. Ms. Young was stopped at a traffic signal when Mr. Beystrum hit the back of Ms. Young's Isuzu Rodeo with his Volkswagen Rabbit.1 They did not call the police or any emergency services at the scene of the accident and did not go to the emergency room or seek medical attention immediately.
Ms. Young notified Defendant of the accident and informed it that she intended to see a doctor. Four days after the accident, Ms. Young sought medical attention for the first time and was prescribed muscle relaxers and anti-inflammatories. Over the next two and a half months, Ms. Young received medical treatment from three doctors and two physical therapists for injuries allegedly suffered in the accident. Defendant offered to have Ms. Young undergo an independent medical examination, but she did not have one.
Defendant contacted both individuals shortly after being notified of the claim and discussed the accident with them in separate telephonic interviews.2 Defendant also inspected and took photographs of Ms. Young's vehicle and prepared an inspection report.3 Defendant arranged for an inspection of Mr. Beystrum's vehicle, but an inspection never occurred before Mr. Beystrum sold the vehicle.
In mid-July 1999, Defendant offered Ms. Young $4,683.48 after evaluating her claim.4 Ms. Young rejected the offer and hired an attorney, Diane Landrith, who filed a complaint in state court on July 30, 1999 seeking contract and bad faith tort damages. The lawsuit was dismissed without prejudice because the parties' policy provided for binding arbitration.
The parties agreed to arbitration and conducted limited discovery. Prior to arbitration, Ms. Landrith demanded the policy limit of $25,000.00 but reduced this amount to $20,000.00. Defendant increased its offer to $5,300.00, but Ms. Landrith did not communicate the offer to Ms. Young. Pursuant to the policy, the parties proceeded to arbitration where Ms. Young was awarded $9,000.00. The parties then agreed upon an appropriate release and Defendant paid the award. Plaintiffs then filed this bad faith action.
A court must grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the nonmoving party, "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(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Jesinger v. Nev. Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir. 1994). Substantive law determines which facts are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see Jesinger, 24 F.3d at 1130. In addition, the dispute must be genuine, that is, "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Finally, district courts in the Ninth Circuit must consider even inadmissible evidence at the summary judgment stage unless a party has moved to strike the evidence or has otherwise objected to it. See Pfingston v. Ronan Eng'g Co. 284 F.3d 999, 1003 (9th Cir.2002); Scharf v. U.S. Attorney Gen., 597 F.2d 1240, 1243 (9th Cir.1979).
A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex, 477 U.S. at 323-24, 106 S.Ct. 2548. Summary judgment is appropriate against a party who "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. 2548; see Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.1994). The moving party need not disprove matters on which the opponent has the burden of proof at trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Furthermore, the party opposing summary judgment "may not rest upon the mere allegations or denials of [the party's] pleadings, but ... must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); see Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir.1995); Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.1989); see also Rule 1.10(l)(1), Rules of Practice of the United States District Court for the District of Arizona ("Any party opposing a motion for summary judgment must ... set[] forth the specific facts, which the opposing party asserts, including those facts which establish a genuine issue of material fact precluding summary judgment in favor of the moving party.").
There is no issue for trial unless there is sufficient evidence favoring the nonmoving party; if the evidence is merely colorable or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505. However, because "[c]redibility determinations, the weighing of evidence, and the drawing of inferences from the facts are jury functions, not those of a judge, . . . [t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor" at the summary judgment stage. Id. at 255, 106 S.Ct. 2505 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)); see Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995); Sec. & Exch. Comm'n v. Koracorp Indus., Inc., 575 F.2d 692, 698 (9th Cir.1978) (). Finally, summary judgment is not appropriate if a party's knowledge or state of mind is at issue because the resolution of such issues is a jury function. See Braxton-Secret v. A. H. Robins Co., 769 F.2d 528, 531 (9th Cir.1985) (); Mendocino Env't Ctr. v. Mendocino County, 192 F.3d 1283, 1302 (9th Cir.1999) (); Consol. Elec. Co. v. United States, 355 F.2d 437, 438 (9th Cir.1966) ().
In Arizona, insurance contracts include an implied covenant of good faith and fair dealing that requires the parties to refrain from any conduct that would impair the benefits or rights expected from the contractual relationship. See Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565, 570 (1986). To establish bad faith on the part of the insurer, "`a plaintiff must show the absence of a reasonable basis for denying benefits of the policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.'" Deese v. State Farm Mut. Auto. Ins. Co., 172 Ariz. 504, 838 P.2d 1265, 1267-68 (1992) (quoting Noble v. Nat'l Life Ins. Co., 128 Ariz. 188, 624 P.2d 866, 868 (1981)). The first inquiry involves an objective analysis that focuses on whether the insurer acted unreasonably, while the second involves a subjective analysis as to "whether the insurer knew that its conduct was unreasonable or acted with such reckless disregard that such knowledge could be imputed to it." Id. at 507, 838 P.2d 1265 (emphasis in original).
In March 2000, an en banc panel of the Arizona Supreme Court clarified Arizona law regarding first-party bad faith insurance tort claims in Zilisch v. State Farm Mutual Automobile Insurance Co., 196 Ariz. 234, 995 P.2d 276 (2000). The Supreme Court granted review of the court of appeals' decision and issued its opinion in part "to sort out the relationships among (1) the absence of a reasonable basis for denying a claim, (2) fair debatability, (3) who gets to decide (judge or jury), and (4) evidence of improper claims practices." Zilisch, 995 P.2d 276. In addition, the Supreme Court was troubled by the court of appeals' holding "that as long as the amount the insurer ultimately offers to its insurers is fairly debatable, nothing else it does in investigating the claim,...
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