Privratsky v. Liberty Mut. Fire Ins. Co.

637 F.Supp.3d 1077

Shawn D. PRIVRATSKY, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant.

Case No. 21-cv-00390-DKW-KJM

United States District Court, D. Hawai'i

Signed October 27, 2022

Daniel K. Reising, Pro Hac Vice, Fucile & Reising LLP, Portland, OR, Tred R. Eyerly, Damon Key Leong Kupchak Hastert, Honolulu, HI, for Plaintiff.

Dara Sayuri Nakagawa, Nadine Y. Ando, Fukunaga Matayoshi Ching & Kon-Herrera, LLP, Honolulu, HI, Edmund K. Saffery, Forest Benjamin Jenkins, Janice T. Futa, Jason M. Tani, Goodsill Anderson Quinn & Stifel LLP, Honolulu, HI, for Defendant.

ORDER (1) GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, AND (2) DENYING DEFENDANT'S COUNTER-MOTION FOR PARTIAL SUMMARY JUDGMENT

Derrick K. Watson, United States District Judge

INTRODUCTION

This case involves an insurance dispute over damage to Plaintiff Shawn D. Privratsky's home and personal property caused by what Plaintiff believes was a lightning strike. The alleged cost of the repair work for this damage, at least at one point, was "as much as $325,000." Such costs, however, are not the subject of the instant motion and counter-motion for partial summary judgment. Instead, these motions quarrel over what has been described as an "extensively damaged" or "inoperable" gate operator that Privratsky contends has been wrongfully retained or converted by Defendant Liberty Mutual Fire Insurance Company. In other words, the lawyers in this action have elected to expend their own and their clients' presumably finite resources on what can best be described as a piece of burned out metal with likely little to no economic value.

Incredulous that they would do so, the Court inquired of counsel at the hearing on the pending cross-motions. Surely, the incentive beyond economic value must be driving the bus. Liberty's counsel, however, offered no explanation, armed only with the hollow excuse that counsel had just replaced Liberty's prior counsel days before the hearing. Privratsky's counsel fared little better, offering answers of no import. For instance, the supposed current evidentiary value of the gate operator, one offered explanation, is contradicted by the fact that both sides have now had nearly three years to examine the gate operator¹ and counsel confirmed that Privratsky's expert can already opine that the operator was not damaged in the manner offered by Liberty. As interesting, success with his pending motion will not return the operator to Privratsky's possession, even if further evidentiary review was needed. Additionally, Privratsky does not need to succeed on his claim for conversion, the subject of the pending motions and a second offered explanation, in order to establish any part of his bad faith claim, as counsel suggests.

Whatever the reason for the instant motions, having reviewed the briefing and evidence on the same, and as more fully discussed below, the Court agrees that Liberty has wrongfully converted Privratsky's gate operator and, thus, Privratsky is entitled to summary judgment with respect to his claim of conversion.² As a result, Privratsky's motion for partial summary judgment, Dkt. No. 55, is GRANTED, and Liberty's counter-motion for partial summary judgment, Dkt. No. 65, is DENIED.

STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 56(a), a party is entitled to 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." The moving party is entitled to judgment as a matter of law when the non-moving party fails to make a sufficient showing on an essential element of a claim in the case on which the non-moving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In contrast, when the moving party bears the burden of proof, "it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted . . . ." Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992). This means that the movant "must establish beyond controversy every essential element" of its claim. See S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 888 (9th Cir. 2003) (quotation omitted). In assessing a motion for summary judgment, all facts are construed in the light most favorable to the non-moving party. Genzler v. Longanbach, 410 F.3d 630, 636 (9th Cir. 2005).

RELEVANT PROCEDURAL BACKGROUND

Privratsky initiated this lawsuit with the filing of a Complaint against Liberty on September 16, 2021. Dkt. No. 1. Therein, Privratsky alleges that, on December 26, 2019, his home was struck by lightning that caused an electrical surge, resulting in "significant" damage to the home and personal property. Id. at ¶ 12. He further alleges that, after submitting an insurance claim to Liberty and Liberty "initially" agreeing to reimburse him, Liberty did not reimburse him for "most" of the damage. Id. at ¶¶ 15-16. The Complaint brings three causes of action for: (1) declaratory judgment that Privratsky's losses were covered by the insurance policy issued to him by Liberty; (2) bad faith; and (3) conversion of Privratsky's personal property, namely, his damaged gate operator.

On September 2, 2022, Privratsky filed a motion for partial summary judgment limited to his claim of conversion ("motion"). Dkt. No. 55. Privratsky argues that he is entitled to judgment on this claim because Liberty has refused to return his gate operator despite multiple demands from him to do so. Id. at 7. On September 23, 2022, Liberty filed a joint counter-motion for partial summary judgment ("counter-motion") with respect to the conversion claim and a response to the motion. Dkt. No. 65. Liberty argues that it is entitled to judgment on the conversion claim because Privratsky consented to Liberty's possession of the gate operator, Liberty was warranted in assuming ownership of the operator, Liberty did not illegally use or abuse the operator, and Liberty did not wrongfully detain the operator. Id. at 7-11. On September 30, 2022, Privratsky filed a joint response to the counter-motion and reply in support of the motion. Dkt. No. 71. On October 7, 2022, Liberty filed a reply in support of the counter-motion. Dkt. No. 77. The parties have also filed concise statements of fact. Dkt. Nos. 56, 66, 72.

This Order now follows.

DISCUSSION

I. Motions for Partial Summary Judgment

The motion and counter-motion present two distinct, but interconnected questions: one legal and one factual. First, legally, the parties dispute the standard for a conversion claim under Hawai'i law. Second, factually, the parties disagree with respect to whom the undisputed facts support summary judgment on the claim. Because the legal question will guide the factual outcome, the Court begins with the former.

The parties' legal dispute concerns the nature of a conversion claim in Hawai'i. The State courts of Hawai'i have stated the following with respect to conversion: "Conversion encompasses the following acts: '(1) [a] taking from the owner without his consent; (2) an unwarranted assumption of ownership; (3) an illegal use or abuse of the chattel; and (4) a wrongful detention after demand.' " Freddy Nobriga Enters., Inc. v. Dep't of Haw. Home Lands, 295 P.3d 993, 999 (Haw. Ct. App. 2013) (quoting Tsuru v. Bayer, 25 Haw. 693, 696 (1920)).

The parties disagree over whether the above-mentioned acts must each be proven to establish conversion—Liberty's position—or whether any one, if proven, will suffice—Privratsky's position. Having reviewed the parties' arguments and the cases to which they cite, the Court agrees with Privratsky that, in Hawai'i, any one of the four acts, if proven, will establish a claim for conversion. The principal reason is that decisions from Hawai'i's State courts clearly reveal that proving each of the acts is simply unnecessary.

For example, in Nobriga, the trial court awarded summary judgment to the defendant because the plaintiff "failed to meet the essential elements" of conversion. 295 P.3d at 999. The Intermediate Court of Appeals reversed, concluding that the "evidence presented established a prima facie case that [the defendant] committed acts (1) and (2) of this definition by rounding up and selling [plaintiff's] cattle without his consent." Id. In other words, because the evidence established the first two acts of conversion, summary judgment in favor of the defendant was inappropriate. It would have been legally impossible for the Intermediate Court of Appeals to reach this determination if the plaintiff had been required to establish acts (3) and (4) as well—the position Liberty espouses here.

Similarly, in Tsuru, the Hawai'i Supreme Court explained as follows: "the general rule recognized by all the authorities is that where the original taking is lawful and there has been no illegal assumption of ownership or illegal user[,] a demand and refusal must be shown as evidence of a disposition to convert to the holder's own use or to divest the true owner of his property." 25 Haw. at 695-696. In other words, when none of the first three acts have occurred, a claim for conversion can still exist solely by the occurrence of the fourth act. Equally, the Hawai'i Supreme Court also explained that "where the taking itself is wrongful or there is an illegal assumption of ownership or an illegal user[,] a demand and refusal need not be provided." Id. at 696 (emphasis added). In other words, when the fourth act has not occurred, any one of the three other acts will suffice.

In reaching this finding, the Court acknowledges that, in this District, courts have stated that a claim of conversion involves four elements, suggesting that all four acts of conversion must be alleged to state such a claim. However, it is evident from those cases that none involved the court being asked to specifically find, as is the case here, whether the claim required each of the acts to be alleged or only...