Von Miravite Salvador v. Geico Gen. Ins. Co.

Vivian Von Miravite Salvador, Plaintiff, v. GEICO General Insurance Company, Does I through X andRoe Corporations I through X, inclusive, Defendants.

Case No. 2:20-cv-00798-RFB-BNW

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

October 5, 2020

Order re [15] and [16]

Before the Court is a motion to stay discovery (ECF No. 15) by defendant GEICO General Insurance Company ("GEICO"). GEICO asks this Court to stay discovery until the district judge resolves its motion to dismiss. Plaintiff Vivian Von Miravite Salvador opposes the request. The Court finds that GEICO has failed to establish that its motion to dismiss is potentially dispositive. Further, after a preliminary peek at GEICO's motion, the Court is not convinced that Ms. Salvador will be unable to construct a claim for relief or that discovery would be a waste of effort. On these independent bases, and the considerations of Fed. R. Civ. P. 1, the Court will deny GEICO's motion and discovery will begin.

I. Background.

A. Ms. Salvador's allegations.

In 2015, Ms. Salvador was involved in a car accident with a "negligent third party." ECF No. 10 at 3. She alleges that as a result of this accident, her vehicle was totaled and she sustained permanent and disabling injuries. Id. The negligent third party was insured by Farmers Insurance Group with a policy limit for bodily injury up to $25,000. Id. at 4. Although Ms. Salvador received a payout from the negligent third party's insurer, she alleges that her damages exceed the amount tended by the policy limits. Id.

Ms. Salvador herself was insured under a policy with GEICO that included uninsured/underinsured motorist ("UIM") coverage in the amount of $100,000. Id. She submitted a settlement demand to GEICO containing records of medical expenses that are allegedly connected to her accident along with the estimated cost of a procedure recommended by a neurosurgeon. Id. Following Ms. Salvador's demand, GEICO offered to pay her $15,210.37 under the policy, but Ms. Salvador did not accept the offer because she alleges that her damages far exceed this amount. Id. at 5. Because Ms. Salvador believes she is owed the full $100,000 under her UIM policy, she initiated the underlying breach of contract claim. Id. at 9.

In addition to her breach of contract claim, Ms. Salvador also filed extra-contractual claims stemming from alleged misconduct by GEICO. Id. at 5-8. Overall, Ms. Salvador alleges that GEICO unreasonably handled her claim and tried to settle her claim "in an untimely manner without fully and fairly evaluating the facts and information." Id. at 5. Ms. Salvador further alleges misconduct in GEICO ignoring her already incurred medical costs and surgical recommendation, failing to employ the proper medical experts and allowing unqualified employees to evaluate medical information, failing to show up for a recorded statement, misdating correspondence, subjecting her to prolonged questioning during her examination under oath due to unprepared counsel, subjecting her to multiple recorded statements, forcing her to wait an unreasonable amount of time for determination of her claim, and failing to properly respond to her inquiries. Id. at 8.

B. Procedural history.

Ms. Salvador initially filed her complaint against GEICO in the Eighth Judicial District Court. GEICO then removed the case to this Court on May 4, 2020. ECF No. 1.

Ms. Salvador filed the operative first amended complaint on May 22, 2020. ECF No. 10. In the complaint, she asserts four causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) unjust enrichment; and (4) violation of the Nevada Unfair Claims Practices Act.¹ Id. at 9-15.

GEICO filed a motion to dismiss or, in the alternative, to sever/bifurcate Ms. Salvador's claims for bad faith on May 11, 2020. ECF Nos. 7 and 8. Ms. Salvador timely opposed both motions. ECF Nos. 11 and 12.

On June 1, 2020, GEICO filed a motion to stay extra-contractual discovery pending resolution of its motion to dismiss. ECF No. 15. The following day, the parties filed a joint stipulated discovery plan and scheduling order. ECF No. 16. Ms. Salvador timely responded to the motion to stay and GEICO timely replied. ECF Nos. 19 and 20.

II. Discussion.

"The Federal Rules of Civil Procedure do not provide for automatic or blanket stays of discovery when a potentially dispositive motion is pending." Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 600-01 (D. Nev. 2011) (citation omitted). But trial courts enjoy broad authority to manage discovery, and this authority encompasses the ability to issue a discovery stay. See, e.g., Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988). Still, the trial court's broad authority must be balanced against Rule 1's expectation that the Federal Rules of Civil Procedure be construed "to secure the just, speedy, and inexpensive determination of every action and proceeding." See Fed. R. Civ. P. 1.

Courts in this district have formulated three requirements that, if met, can merit a stay of discovery. Kor Media Grp., LLC v. Green, 294 F.R.D. 579, 581 (D. Nev. 2013). A motion to stay discovery may be granted when: (1) the pending motion is potentially dispositive; (2) the potentially dispositive motion can be decided without additional discovery; and (3) the court has taken a "preliminary peek" at the merits of the potentially dispositive motion and is convinced that the plaintiff will be unable to state a claim for relief. Id. The party seeking the stay bears the "heavy" burden of establishing why discovery should be denied. Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 601 (D. Nev. 2011).

A. Potentially dispositive motions to dismiss.

GEICO argues that it meets the first of three Kor Media requirements. It asserts that because its pending motion (ECF No. 7) is primarily brought under Rule 12(b)(6), the motion is potentially dispositive of all the extra-contractual causes of action. ECF No. 15 at 5. GEICOacknowledges that its motion is not dispositive of Ms. Salvador's entire case, but it asserts that in order to stay discovery, the motion is only required to be "dispositive on the issue[s] on which discovery is sought." ECF No. 20 at 4. Thus, GEICO contends, Ms. Salvador's breach of contract claim is not relevant to whether its motion to dismiss the extra-contractual claims is potentially dispositive. Id.

Ms. Salvador disagrees. She asserts that because her contractual claims were not targeted in GEICO's pending motion to dismiss, the motion is not dispositive. ECF No. 19 at 8. Rather, Ms. Salvador contends, the claims are "intertwined" and incapable of being bifurcated because staying the extra-contractual claims would "prolong the discovery process and waste judicial resources" by creating two distinct discovery phases. Id.

Here, the Court finds that GEICO fails the first of the three Kor Media requirements because it has not established that the extra-contractual claims are the only issues on which Ms. Salvador seeks discovery. In order to meet the first requirement, "the pending motion must be potentially dispositive of the entire case or at least dispositive on the issue on which discovery is sought." Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 602 (D. Nev. 2011). Ms. Salvador, however, seeks discovery "related to the issues of bad faith and breach of contract." ECF No. 19 at 14 (emphasis added). Further, this Court has previously found that breach of contract claims and extra-contractual bad faith claims are "intertwined" for purposes of discovery. See, e.g., Aiello v. Geico Gen. Ins. Co., 379 F. Supp. 3d 1123, 1129 (D. Nev. 2019) (declining to stay discovery on extra-contractual claims because the claims were "intertwined" with the plaintiff's breach of contract claim).

Additionally, the parties stipulated in their proposed discovery plan and scheduling order—still pending before the Court until resolution of the underlying motion—that they wished to conduct discovery "not only relating [to] the underlying vehicle collision and injuries stemming therefrom, but also relating to the allegations of bad faith and unfair claims practices." ECF No. 16 at 2. This stipulation demonstrates the interrelated nature of the claims because this discovery would not only pertain to the extra-contractual claims, but to the breach of contract claim as well.

B. Need for additional discovery.

GEICO argues that its motion to dismiss can be resolved without discovery. ECF No. 15 at 6. According to GEICO, the "purpose of 12(b)(6) is to enable defendants to challenge the legal sufficiency of a complaint without subjecting themselves to discovery." ECF No. 20 at 5. Thus, GEICO asserts, because the motion is based on Rule 12(b)(6), the "Court's analysis is based on the pleadings and the Court can and will render a decision regarding [the motion] without any further discovery." ECF No. 15 at 6.

Ms. Salvador, on the other hand, argues that because she outlines—in her opposition to the motion to stay discovery—additional discovery topics she intends to explore, the underlying motion to stay cannot be decided without additional discovery. ECF No. 19 at 9. Although Ms. Salvador maintains that she has alleged sufficient facts to overcome GEICO's motion to dismiss, she asserts that additional discovery is "expected to bolster and add further support to the already-available information." Id.

Here, the Court finds that the district judge will not require additional discovery to resolve GEICO's motion to dismiss because the motion was brought under Rule 12(b)(6). To resolve a Rule 12(b)(6) motion, "the court asks only whether the pleadings are sufficient to establish a claim," not whether the plaintiff will be able to "find evidence to support the pleadings." Tracy v. U.S., 243 F.R.D. 662, 664 (D. Nev. 2007) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)). Therefore, GEICO has established the second Kor...