Smith v. Liberty Mut. Fire Ins. Co.

495 F.Supp.3d 1019

Justin SMITH, Plaintiff,

v.LIBERTY MUTUAL FIRE INSURANCE COMPANY, Cheryl A. Van Dusen, Cheryl Sloan, and John Doe Agents and Adjusters, Defendants.

No. CIV 18-0739 RB/JFR

United States District Court, D. New Mexico.

Filed October 20, 2020

Carlos A. Obrey-Espinoza, Gallagher, Casados & Mann, George Anthony Bleus, Bleus & Associates, LLC, Albuquerque, NM, for Plaintiff.

Christopher J. Tebo, Jane Elliott, Ray | Pena | McChristian, PC, Albuquerque, NM, for Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT C. BRACK, SENIOR U.S. DISTRICT JUDGE

Justin Smith was involved in an accident with a hit-and-run driver. Mr. Smith's mother had contracted with Liberty Mutual Fire Insurance Company (Liberty) for automobile insurance, and Mr. Smith was a Class I insured under that policy at the time of the accident. Mr. Smith submitted a claim for all benefits available to him under the policy. He alleges that Liberty and two of its agents, Cheryl VanDusen and Cheryl Sloan (the Individual Defendants), failed to promptly investigate the accident and frivolously refused to pay his claim brought under the uninsured motorist provisions of the policy.

Having considered the parties’ summary judgment motions, the record, and the applicable law, the Court grants summary judgment in favor of and dismisses all claims against the Individual Defendants; grants summary judgment to Liberty and dismisses Count III (fraud); and grants summary judgment in part in favor of Mr. Smith against Liberty on Count I (breach of contract).

I. Statement of Facts

On July 20, 2013, in Albuquerque, New Mexico, a hit-and-run driver (Matthew Chalan) unlawfully ran a red light and struck Mr. Smith's vehicle. (See Doc. 2-29 (1st Am. Compl.) ¶¶ 14–15 & n.1.) Mr. Smith's mother, Vicki Smith, had entered an automobile insurance policy with Liberty, which was valid and in effect on July 20, 2013. (See id. ¶¶ 8–9, 24; Doc. 115-A.) As a relative and resident of Vicki's household, Mr. Smith was a rated driver and a "Class I" insured under the policy. (Docs. 113-4 at 172:15–22; 115-A at 3.) The policy provided coverage for property damage, medical payments, and uninsured motorist claims involving Mr. Smith. (See 1st Am. Compl. ¶¶ 24–25; Docs. 115-A at 2; 122-15–16.)

Mr. Smith reported the accident to Liberty, and Liberty responded in writing. (See Doc. 113-1 at 52:16–53:1.) On July 24, 2013, Liberty employee Aaron Hansen emailed Vicki Smith to inform her that the "vehicle [was] repairable" and ask where she wanted it to be repaired. (Doc. 122-8.) Vicki called Liberty on August 5, 2013, to extend the term of the rental car and to check on the status of her vehicle, which was at the appraiser. (Doc. 122-9.) The appraiser informed Liberty that the vehicle was "less than $900 away from becoming a [total loss] ...." (Id. ) Liberty employee Jillian Reed told Vicki about the amount of the appraisal but "did not mention that it was only $900 away" from becoming a total loss. (Id. ) The appraiser's repair estimate total was $12,636.63, less a $500 deductible, for a total loss of $12,136.63. (See Doc. 133-13 at 2.) Mr. Smith later testified that the vehicle was totaled, never repaired, and he was never informed that Liberty intended to repair it. (Doc. 128-3 at 62:1–19.) On February 4, 2020, counsel for Liberty sent Mr. Bleus a letter to explain that Liberty "identified an overpayment associated with the applicable deductible" and issued a $250 check to Vicki Smith, as her deductible should have been $250, rather than $500. (See Docs. 133-11; 133-12.)

By August 28, 2013, the Claim File shows that Liberty was aware Mr. Smith claimed serious personal injuries as a result of the accident. (Docs. 122-10 at 132:6–21; 117-16.) In August and September 2013, Mr. Smith's medical providers sent medical records to Liberty. (See Doc. 122-10 at 144:14–19, 163:7–13.) Scott Vos, Liberty's Federal Rule of Civil Procedure 30(b)(6) witness, stated that he would have expected an injury adjuster to be assigned to Mr. Smith's case by at least August 28, 2013, but that did not happen. (Id. at 132:23–133:2, 163:7–13.) Mr. Vos testified that this omission was a mistake and not in conformity with Liberty's "policies, procedures, and guidelines for proper claim handling." (Id. at 133:3–11.)

On September 3, 2013, Mr. Smith, through his attorney, George Bleus, sent a letter to Liberty to request a copy of the insurance policy and to inform Liberty that Mr. Smith intended to claim all benefits available to him through the policy. (See Doc. 122-14; see also Doc. 122-10 at 134:23–135:13.) Liberty "should have" sent the policy but did not. (See Doc. 122-10 at 136:12–20; see also Doc. 122-25.) There is also evidence that Liberty was on notice, no later than September 19, 2013, "that the accident involved an uninsured vehicle." (See Docs. 122-10 at 150:19–151:8; 122-20.) Again, Mr. Vos stated that because Liberty had notice of Mr. Smith's potential uninsured motorist bodily injury (UMBI) claim, he would have expected Liberty to assign a "UMBI adjuster" to the claim. (Doc. 122-10 at 111:12–112:2, 120:17–19.) But rather than a UMBI adjuster, Mr. Vos explained that Liberty assigned a "no-fault adjuster" to handle the medical expense coverage. (See id. at 111:12–112:2, 130:23–131:1.) Presumably, Mr. Vos refers here to Ms. VanDusen, who testified that as a senior no-fault claim adjuster, her responsibilities included paying medical bills (known as "MedPay claims") that Liberty received. (Doc. 113-3 at 71:17–19, 73:10–12.) Ms. VanDusen asserts that her role in Mr. Smith's "claim was fairly minimal": she made sure the MedPay claims were paid. (Id. at 73:9–12.) She testified that "there was one entry [in Mr. Smith's file] with [her] name on it, ... which ma[de her] role in this claim extremely minimal." (Id. at 169:9–12.)

On September 26, 2013, Liberty employee Janet Friday, "the claims representative assigned to [the] First Party Medical claim[,]" gave Mr. Bleus instructions on how to submit medical bills. (Doc. 122-21.) Mr. Smith sought chiropractic care after the accident and last received medical treatment for his injuries on October 22, 2013. (See Doc. 128-3 at 33:11–15, 40:21–23.) He ended treatment because he had no health insurance, but he testified that he lost wages and continues to experience pain from his injuries. (See id. at 35:18–37:22, 40:10–23.)

On December 11, 2013, an employee of Mr. Bleus's firm called Liberty to request information. (See Docs. 122-22; 122-24 at 150:23–151:9.) Ms. Sloan testified that because there was no UMBI adjuster assigned, this request would have been routed to Ms. VanDusen, who would have been tasked with providing the information. (Doc. 122-24 at 151:10–152:2.) Instead, Ms. VanDusen sent an email to Mr. Bleus's firm identifying Ms. Sloan as the liability adjuster.¹ (Doc. 136-1.) Ms. Sloan, who was at that time a third-party liability claims adjuster, handled claims only for claimant property damage.² (See Doc. 113-2 at 46:8–9, 49:7–11, 75:23–76:4.) Here the claimant was Mr. Chalan, the hit-and-run driver. (See id. at 104:1–6.) In July 2013, Ms. Sloan determined "that the claimant was majority at fault and ... closed the file." (Doc. 113-2 at 73:7–14; see also Doc. 122-6.) She testified that because Mr. Smith was not at fault, there was nothing else for her to handle. (Doc. 113-2 at 76:3–7.) Mr. Vos testified that Liberty should have, but did not, send a copy of the policy in response to the December 2013 phone call. (See Doc. 122-10 at 167:21–168:8.) There is evidence that Liberty sent "a Medical Payments Ledger to [Mr. Bleus] indicating that [Mr. Smith] had exhausted his Med Pay coverage." (See Doc. 117-23.)

In February and June 2014, Mr. Bleus sent demand letters to Liberty; the June letter was addressed to the attention of Ms. VanDusen. (Docs. 122-23; 122-25.) Liberty did not send a settlement offer in response to either letter.³ (See Doc. 122-10 at 119:9–120:6.) Mr. Vos testified that he "didn't expect to see an offer because [Mr. Smith's claim] hadn't been assigned to a [UMBI] adjuster" prior to the demand letter. (Id. at 117:25–118:3.) Mr. Vos reiterated, though, that the claim "should have been assigned to a[ UMBI] adjuster ...." (Id. at 118:5–8.) It is unclear exactly who should have assigned the claim to a UMBI adjuster. Ms. Sloan testified that if Ms. VanDusen, while handling the MedPay claims, thought that the claim should be escalated to a UMBI adjuster, she "would expect that [Ms. VanDusen] would do that." (Doc. 122-24 at 124:22–125:7.) Ms. Sloan cautioned, though, that she did not know how that would have been handled, as she is unfamiliar with the operating policies of that department. (Id. at 125:7–13, 132:5–13.) For his part, Mr. Vos referred to Liberty's failure to assign a UMBI adjuster as a mistake made multiple times, because the decision to assign a UMBI adjuster "would have been triggered on a number of occasions." (Doc. 122-10 at 177:11–16.)

Ms. Sloan stated that when Liberty later received notice of Mr. Smith's lawsuit, she "opened the exposures required to handle that suit and assigned it to a litigation adjuster." (Doc. 113-2 at 75:13–20; see also Doc. 122-10 at 114:20–23.) This presumably occurred around August 3, 2017, when Mr. Smith filed his original complaint in state court. See Smith v. VanDusen , D-202-CV-2017-05651, Compl. (N.M. 2d Jud. Dist. Ct., Aug. 3, 2017). Mr. Vos testified that after Mr. Smith filed the lawsuit, Liberty assigned a UMBI adjuster and sent a copy of the policy to Mr. Bleus. (See Doc. 122-10 at 115:22–25, 159:7–12.) He further stated that uninsured motorist "coverage should have been made available to [Mr. Smith] for this accident." (Id. at 171:16–17.)

On November 28, 2017, Liberty moved to dismiss the state lawsuit, arguing that because it had been more than four years since the accident, Mr. Smith's claims against Mr. Chalan (and, consequently, against Liberty) were barred by the three-year statute of limitations...