Morales v. Allstate Northbrook Indem. Co.

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GUADALUPE MORALES, Plaintiff, v. ALLSTATE NORTHBROOK INDEMNITY COMPANY, et al., Defendants.

No. 5:20-cv-02577-ODW (SHKx)

United States District Court, C.D. California

August 25, 2022

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [22]

OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff Guadalupe Morales initiated this bad faith action against her insurer, Defendant Allstate Northbrook Indemnity Company after Allstate delayed paying Morales's underinsured motorist claim. Allstate moves for summary judgment on Morales's sole cause of action for breach of the implied covenant of good faith and fair dealing, or alternatively for partial summary judgment on Morales's request for punitive damages. (Mot. Summ. J. (“Motion” or “Mot.”), ECF No. 22.) Allstate contends that a “genuine dispute” regarding the value of Morales's insurance claim bars a finding of insurer bad faith and no evidence supports punitive damages. (Id. at 7.) For the reasons discussed below, the Court GRANTS Allstate's Motion.^[1]

II. BACKGROUND

Allstate issued Morales an automobile insurance policy (the “Policy”) that included policy limits of $100,000 for underinsured motorist (“UIM”) coverage. (Allstate Statement of Undisputed Facts (“SUF”) 1, ECF No. 22-2.) The Policy provided that, in the event Morales and Allstate disagreed on Morales's entitlement to damages or on the amount of damages, either party could submit a written request for arbitration and the disagreement would be settled by a neutral arbitrator. (Id.)

On July 12, 2017, while covered under the Policy, Morales was involved in a car accident in which she was not at fault. (SUF 2; Decl. Matt Long (“Long Decl.”) ¶ 8.i, ECF No. 22-4.) Morales's airbag deployed and struck her in the face, and she suffered injuries to her neck, back, and abdomen. (Morales Statement of Genuine Issues (“SGI”)^[2] & Additional Material Facts (“AMF”)^[3] 17, 19, ECF No. 23-1.)

On December 8, 2017, Morales notified Allstate that the insurance company for the at-fault driver had tendered its policy limit of $15,000, and she asked Allstate to refer the “matter to counsel for Underinsured Motorist proceedings.” (AMF 23.) On January 10, 2018, Allstate informed Morales it had opened a UIM claim, would begin reviewing the claim, and, per the Policy, would initiate arbitration if the parties were unable to reach an agreement. (See AMF 24-25; Long Decl. ¶ 3, Ex. 3 (“Corresp.”) 300, ECF No. 22-7.)

In April and May 2018, Morales sought medical care from an otolaryngologist (an ear-nose-throat doctor, or “ENT”) for ringing in the ears (“tinnitus”) and a loss of taste and smell (“hyposmia”). (AMF 22, 26; see Long Decl. Ex. 16 (“Goufman Records”), ECF No. 22-7.) Morales's ENT, Dr. Goufman, opined that these conditions were possibly permanent. (AMF 26.) On July 27, 2018, Morales sent Allstate a demand letter, informing Allstate that as a consequence of the accident she suffered from permanent persistent tinnitus and near total hyposmia. (SUF 3.) Morales demanded Allstate pay the $85,000 policy limit or submit the matter to arbitration by August 27, 2018. (SUF 3.)

Allstate reviewed the demand letter and Morales's claim, and determined that, in light of Morales's claims for permanent sensory loss, it needed to further investigate to complete its evaluation. (SUF 4; Long Decl. ¶¶ 8.gg, hh.) Allstate notified Morales's counsel that Allstate could not accept or reject the demand at that time and requested a medical records release authorization and an extension of time to investigate. (SUF 4-5; Long Decl. ¶¶ 8.hh, mm, pp.) Morales's counsel refused the extension and responded that Allstate had all the records it needed. (Long Decl. ¶ 8.pp.) Allstate did not receive a medical records release from Morales. (SUF 5.)

By September 2018, the parties were proceeding with the UIM arbitration. (SUF 6.) In November 2018, in connection with this arbitration, Allstate served subpoenas on Morales's medical providers to obtain her medical records. (AMF 30.) In January 2019, Allstate deposed Morales. (SUF 7.) By March 2019, Allstate had retained an orthopedic medical expert, Dr. Kaplan, and an ENT medical expert, Dr. Djalilian, to provide opinions on Morales's orthopedic and otolaryngological injuries, respectively. (See SUF 8-11; Long Decl. ¶ 16.) In April 2019, the parties began negotiating an arbitration date, and, on August 12, 2019, they mutually agreed to arbitrate on February 21, 2020. (AMF 45, 49; see Corresp. 388-92.)

By April 2019, Allstate's orthopedist, Dr. Kaplan, had examined Morales and reported “findings consistent with mild tendinitis, left shoulder, and status post left knee contusion” as well as “whiplash injury,” but no “significant abnormalities.” (SUF 8.) Also by April 2019, Allstate's ENT, Dr. Djalilian, had reviewed Morales's medical records and other relevant documents and prepared a Medical Record Review (“MRR”), in which he opined that “there [wa]s no evidence that the incident in question caused hyposmia” and suggested that Morales was possibly “exaggerating” her tinnitus. (SUF 9; AMF 36.) At the time Dr. Djalilian prepared his MRR, he did not have the records of Dr. Goufman, Morales's ENT. (AMF 37.) In June 2019, Dr. Djalilian also performed an independent medical examination (“IME”) and opined in his IME report that Morales “did not have a permanent loss of smell, loss of taste, or tinnitus as a result of the accident.” (SUF 11; AMF 50-52.)

By late July 2019, Allstate had received all the medical expert reports-Dr. Kaplan's orthopedic reports and Dr. Djalilian's MRR and IME reports. (SUF 12; AMF 41, 53; Long Decl. ¶¶ 17, 19-20, 23.) By January 2020, Allstate completed its evaluation and valued Morales's UIM claim at $29,361. (SUF 12; AMF 55-56; Long Decl. ¶ 26, Ex. 2 (“Claim File”) at 220-23 (entry 1/9/2020 at 4:50 p.m.), ECF No. 22-7.) After offsetting the $15,000 paid by the at-fault driver's insurer, Allstate offered Morales $14,361. (SUF 12; Long Decl. ¶¶ 26-28.) Morales did not accept this offer. (SUF 12.)

Accordingly, arbitration proceeded as scheduled in February 2020. (SUF 13.) In March 2020, with mixed findings regarding Morales's injuries, the arbitrator awarded Morales the policy limits of $85,000. (SUF 14; Long Decl. Ex. 12, ECF No. 22-7.) Allstate promptly paid the award in full. (SUF 15.)

In June 2020, Morales initiated this bad faith action against Allstate. (See Compl., ECF No. 1-1.) Allstate now moves for summary judgment. The Motion is fully briefed. (Opp'n, ECF No. 23; Reply, ECF No. 24.)

III. LEGAL STANDARD

A court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The burden of establishing the absence of a genuine issue of material fact lies with the moving party, see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986), and the court must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party, Scott v. Harris, 550 U.S. 372, 378 (2007); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). A disputed fact is “material” where the resolution of that fact might affect the outcome of the suit under the governing law, and the dispute is “genuine” where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Once the moving party satisfies its initial burden, the nonmoving party cannot simply rest on the pleadings or argue that any disagreement or “metaphysical doubt” about a material issue of fact precludes summary judgment. See Celotex, 477 U.S. at 322-23; Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987). A “non-moving party must show that there are ‘genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.'” Cal. Architectural, 818 F.2d at 1468 (quoting Anderson, 477 U.S. at 250).

A genuine issue requires evidence, not speculation or guesswork. Guidroz-Brault v. Mo. Pac. R.R. Co., 254 F.3d 825, 829 (9th Cir. 2001). Testimony that is conclusory, speculative, or “uncorroborated and self-serving” is insufficient to raise genuine issues of fact and defeat summary judgment. Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002); Thornhill Publ'g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Although the Court may not weigh conflicting evidence or make credibility determinations, there must be more than a mere scintilla of contradictory evidence to survive summary judgment. Addisu, 198 F.3d at 1134.

IV. EVIDENTIARY OBJECTIONS

Allstate objects to certain items of Morales's evidence. (See Obj. Pl. Evid., ECF No. 24-2.) Specifically, Allstate objects-on numerous grounds-to the expert report of Hugh Black, Morales's claims-handling expert (“Black Report”), and the deposition testimony of Dr. Marc Kayem, Morales's ENT expert (“Kayem Deposition” or “Kayem Dep.”). (See id. at 2-28; Decl. Arik Shafir (“Shafir Decl.”), Exs. 25, 26, ECF Nos. 23-2, 23-3.) Allstate also objects to some of Morales's AMFs and associated evidence on hearsay and relevance grounds. (Obj. Pl. Evid. 1-2.)

The Court SUSTAINS Allstate's objection to the Black Report because Black offers improper and conclusory opinions on ultimate issues. Moreover, to the extent Dr. Kayem offers improper opinions on ultimate issues, the Court SUSTAINS Allstate's objection to the Kayem Deposition.

Otherwise the Court finds it “unnecessary and impractical . . . to methodically scrutinize...