Watts v. Allstate Indemnity Company et al

Filing 255

ORDER signed by Senior Judge Lawrence K. Karlton on 5/11/11 GRANTING 201 Motion for Summary Judgment in its entirety. CASE CLOSED. (Donati, J)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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ROBERT WATTS, on behalf
of himself individually and
all others similarly situated,

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NO. CIV. S-08-1877 LKK/GGH
Plaintiff,

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v.
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O R D E R

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ALLSTATE INDEMNITY CO.,
an Illinois corporation, et al.,

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Defendants.

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/

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Plaintiff brings a class-action lawsuit against Allstate

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Indemnity Company (“Allstate”) for five causes of action: Breach

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of Contract, Bad Faith, Breach of Implied Covenant of Good Faith

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and Fair Dealing, Fraud/Misrepresentation, and Unfair Competition.1

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Plaintiff has not yet moved for class certification. The claims

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arise

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inspection, replacement, and/or repair after cars covered by

from

Allstate’s

alleged

practices

regarding

seatbelt

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1

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The court previously dismissed plaintiff’s RICO claim. See
March 31, 2009 Order, ECF No. 66.
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Allstate’s insurance policies are involved collisions. Defendant

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Allstate has moved for Summary Judgment on all claims or partial

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summary judgment of plaintiff’s Second Amended Complaint (“SAC”).

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Plaintiff

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defendant’s motion is GRANTED.

opposes

the

motion.

For

the

reasons

stated

below,

I. Factual Background

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Plaintiff Robert Watts purchased a car insurance policy from

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defendant Allstate Indemnity Company (“Allstate”) in 2004. Depo.

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of Robert Watts (“Watts Depo”) 19:7-14, Ex. B of Defs.’ Mot. for.

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Summary J., ECF No. 202-2. The policy provides that “Allstate will

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pay for direct and accidental loss to [plaintiff’s] insured auto

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. . . from a collision.” Allstate Auto Insurance Policy (“Policy”)

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18, Pl.’s Ex. A, ECF No. 211-1. The Policy further provides that

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“any person making claim must give [Allstate] written proof of

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loss. It must include all details reasonably required by us. We

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have the right to inspect the damaged property. We may require any

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person making claim to file with us a sworn proof of loss. . .” Id.

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at

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specifies:

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22.

The

Policy

also

contains

an

Appraisal

Clause,

which

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Both [plaintiff] and Allstate have a right to demand an
appraisal of the loss. Each will appoint and pay for a
qualified appraiser. Other appraisal expenses will be
shared equally. The two appraisers, or a judge of a court
of record, will choose an umpire. Each appraiser will state
the actual cash value and the amount of loss. If they
disagree, they'll submit their differences to the umpire.
A written decision by any two of these three persons will
determine the amount of the loss.”

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Id. at 21. Finally, the policy states that “no one may sue

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[Allstate] under this coverage unless there is full compliance with

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all the policy terms.” Id. at 22.

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On March 29, 2006, plaintiff’s 2005 Honda Civic was involved

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in a collision while it was being driven by plaintiff’s wife.

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Second Amended Complaint (“SAC”) ¶ 39. During the accident, both

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the driver and the front-seat passenger were restrained by their

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seat belts. As a result of the accident, the front seat passenger

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suffered a fractured rib, and the driver suffered from serious neck

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injuries. Pl.’s Opp’n 2, ECF No. 238. At the time of the collision,

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plaintiff was insured under the car insurance policy issued by

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Allstate. Id. Following the accident, plaintiff arranged for the

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vehicle towed to Artistic Collision, a garage of plaintiff’s own

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choosing, and not part of Allstate’s direct repair programs. Watts

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Depo 31:15. On March 30, 2006, Artistic Collision Shop Manager

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Bryan Welsh prepared a “visible damage quote.” Depo. of Bryan Welsh

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(“Welsh Depo”) 14:11-14. Ex. C of Defs.’ Mot. for. Summary J., ECF

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No. 202-4.2 The visible damage quote did not include any amount for

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inspection, repair, or replacement of the seatbelts. Mr. Welsh

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testified that did not recall inspecting the seatbelts. Id. at 17.

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Plaintiff then presented a claim to Allstate for repairs to

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the vehicles. On March 31, 2006, Allstate adjuster Elio Lencioni

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prepared an estimate for the repair. Mr. Lencioni’s estimate did

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Plaintiff disputes that Mr. Welsh prepared the visual
inspection report. However, upon a review of the record, the court
concludes that Mr. Welsh did prepare the quote: “Q: Then, back to
Exhibit 1, which is the visible damage quote you prepared, that was
prepared on March 30th, 2006; correct? A: Correct.” Decl. of Bryan
Welsh (“Welsh Depo”) 14:11-14. Ex. C of Defs.’ Mot. for. Summary
J., ECF No. 202-4.
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not include any amount for inspection or repair of plaintiff’s

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seatbelts, although Lenocioni testified that it would have been his

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custom and practice to inspect the seatbelt for “fraying, twisting,

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any deformation, any stitching that was coming loose,” to “pull

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[the seatbelt] hard to see if it locks,” to see if it goes back to

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where it is supposed to go. And then to insert it in the buckle

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make sure that it inserts in the buckle and it releases from the

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buckle, . . . as it’s supposed to.” Depo. of Elio Lencioni 148,

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Def.’s Ex. D. Mr. Lencioni stated that several circumstances would

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prompt him to conduct the type of inspection describe above,

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including any time there was “significant front-end damage” to the

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vehicle, and “if it’s a significant impact of any kind.” Id. at

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143-144. Mr. Lencioni clarified that “a significant impact would

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be. . . a hard hit,” and stated that if he saw that kind of impact,

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he “would look at the seatbelts.” Id. at 144:12-18.

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Artistic Collision then repaired the car in accordance with

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Mr. Lencioni’s estimate. Artistic Collision did not replace the

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vehicle’s seatbelts. Allstate then paid Artistic Collision for the

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repairs. Welsh Depo 24.

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At some point in between the time of the accident and

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September 18, 2007, plaintiff reviewed the owner’s manual issued

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by Honda for his vehicle. Watts Depo 75:13. In the owner’s manual,

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plaintiff read that seatbelts should be replaced in all vehicles

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involved in serious collisions. Watts Depo 83:6. On September 18,

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2007, plaintiff sent a letter to Allstate that stated, among other

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things, “we have several concerns that we believe need further
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repair. . . this was a major frontal impact. The damage to the car

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exceeded $6500 and both driver and passenger sustained injuries.

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The airbags did not deploy and we are requesting that the airbag

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sensors be inspected to ensure that they are operating correctly.

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We are also requesting that the seatbelt tensioners be replaced.”

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Watts Depo 66:8-13, Ex. 27 (“September 18 Letter”).

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In response, Allstate adjuster Tina Parker directed plaintiff

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to contact Artistic Collision or the Bureau of Automotive Repairs.

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Plaintiff filed his complaint in this action on February 29,

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2008. On April 30, 2008 Allstate demanded an appraisal of the loss

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pursuant to the Appraisal Clause in the Policy. Martin Decl. Ex A

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2, Ex. 1.

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In May, 2008, plaintiff took his vehicle to the Elk Grove

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Honda dealership to have the seatbelts replaced based on the

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recommendation in the Honda Owner’s Manual. Watts Depo. 84:1-7. Mr.

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Watts did not ask the dealership to inspect the seatbelts before

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replacing them. Id. at 84. Plaintiff paid the Honda dealership

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$1029 to replace the seatbelts, and was not reimbursed for the cost

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by Allstate.

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In addition to the specific facts surrounding plaintiff’s

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collision

and

his

claim

to

Allstate,

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Allstate had a general scheme or policy to “increase profitability

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by refusing to replace, repair, or inspect seatbelts in it’s

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policyholders’ vehicles that were damaged and made unsafe in

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automobile collisions.” SAC 5:1-2.

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////
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plaintiff

alleges

that

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II. Standard for Summary Judgment

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Summary judgment is appropriate when there exists no genuine

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issue as to any material fact. Such circumstances entitle the

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moving party to judgment as a matter of law. Fed. R. Civ. P. 56(c);

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see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970);

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Secor Ltd. v. Cetus Corp., 51 F.3d 848, 853 (9th Cir. 1995). Under

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summary judgment practice, the moving party

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always bears the initial responsibility of informing the
district court of the basis for its motion, and
identifying
those
portions
of
“the
pleadings,
depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any,” which it
believes demonstrate the absence of a genuine issue of
material fact.

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Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.

13

R. Civ. P. 56(c)).

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10

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If the moving party meets its initial responsibility, the

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burden then shifts to the opposing party to establish the existence

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of a genuine issue of material fact. Matsushita Elec. Indus. Co.

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v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986); see also First

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Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89

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(1968); Secor Ltd., 51 F.3d at 853. In doing so, the opposing party

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may not rely upon the denials of its pleadings, but must tender

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evidence of specific facts in the form of affidavits and/or other

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admissible materials in support of its contention that the dispute

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exists. Fed. R. Civ. P. 56(e); see also First Nat’l Bank, 391 U.S.

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at 289. In evaluating the evidence, the court draws all reasonable

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inferences from the facts before it in favor of the opposing party.

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Matsushita, 475 U.S. at 587-88 (citing United States v. Diebold,
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1

Inc., 369 U.S. 654, 655 (1962) (per curiam)); County of Tuolumme

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v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).

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Nevertheless, it is the opposing party’s obligation to produce a

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factual predicate as a basis for such inferences. See Richards v.

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Nielsen Freight Lines, 810 F.2d 898, 902 (9th Cir. 1987). The

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opposing party “must do more than simply show that there is some

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metaphysical doubt as to the material facts . . . . Where the

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record taken as a whole could not lead a rational trier of fact to

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find for the nonmoving party, there is no ‘genuine issue for

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trial.’”

Matsushita, 475 U.S. at 586-87 (citations omitted).
III. Analysis

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In

essence,

plaintiff’s

claim

is

that

Allstate’s

auto

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insurance policy obligates Allstate to replace seatbelts that were

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in use during a serious collision, whenever the vehicle’s owner’s

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manual

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Allstate’s

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circumstances constitutes breach of contract, insurance bad faith,

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fraud, and unfair competition.

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A. Breach of Contract

recommends

such

failure

to

replacement.
pay

to

Plaintiff

replace

argues

seatbelts

in

that
such

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Plaintiff alleges that there existed a valid contract between

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plaintiff and Allstate, that plaintiff performed all of his duties

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under the contract, that defendant breached its duty to pay to

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return plaintiff’s insured vehicle to its pre-accident condition

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by not paying for the cost of inspecting and replacing the

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seatbelts, and that plaintiff suffered damages in the amount of

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$1029 due to defendant’s breach.
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Plaintiff must show that the four elements of a breach of

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contract claim are met, namely: “(1) the contract, (2) plaintiff's

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performance or excuse for nonperformance, (3) defendant's breach,

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and (4) the resulting damages to plaintiff.” Reichert v. General

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Ins. Co., 68 Cal. 2d 822, 830 (Cal. 1968). Defendant does not

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dispute that the auto insurance policy purchased by plaintiff in

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2004 was a valid contract between the parties. Thus, the court

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analyzes whether the defendant is entitled to summary judgment

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based on the three remaining elements of the breach of contract

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claim.

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i. Whether Plaintiff performed his obligations or was excused from

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doing so.

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Under the policy, plaintiff was obligated to pay premiums and

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to notify Allstate of claims for loss to the insured auto. The

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policy required plaintiff to provide written proof of loss along

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with his claim. There is no dispute that plaintiff paid his

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premiums. Defendant argues that plaintiff never made a claim for

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seatbelt inspection or replacement. Plaintiff contends that his

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initial claim following the accident served as notice of his claim

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for seatbelt inspection and repair, and that he made another claim

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on September 18, 2007, when “subsequently, upon discovering that

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the seatbelts were not replaced, Plaintiff sent a letter to

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Allstate requesting that the seatbelt tensioners in his vehicle be

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replaced.” Pl.’s Opp’n 7:6-8. Defendant does not dispute that the

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initial communication regarding the accident, which resulted in the

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preparation of a Visual Damage Quote by Artistic Collision and a
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cost estimate by Allstate adjuster Lencioni, was a “claim” under

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the policy. Rather, defendant argues that the initial claim did not

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create an obligation to pay for replacement of the seatbelts since

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the seatbelts were not damaged in the accident.

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Defendants deny that the September 18 letter to Allstate

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constituted a claim to have the seatbelts replaced. That letter

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stated, in relevant part, “Finally, this was a major frontal

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impact. The damage to the car exceeded $6,500, and both driver and

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passenger sustained injuries. . . We are also requesting that the

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seatbelt tensioners be replaced.” September 18 Letter, Ex. H to

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Pl.’s Ex. A. Decl. of Wendy York. Allstate construed the letter not

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as a claim, but as a complaint about the work done by Artistic

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Collision. Depo. Of Tina Parker, Def.’s Ex. F 122.

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employee Tina Parker then sent plaintiff a letter recommending that

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he contact Artistic Collision or the Bureau of Automotive Repairs.

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Def.’s Ex. F, A0336 (“Tina Parker letter”). Plaintiff argues that

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Tina Parker’s letter constituted a denial of a claim to have the

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seatbelt tensioners replaced.

Allstate

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Under California law, a “notice of claim means any written or

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oral notification to an insurer or its agent that reasonably

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apprises the insurer that the claimant wishes to make a claim

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against a policy or bond issued by the insurer and that a condition

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giving rise to the insurer's obligations under that policy or bond

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may have arisen.” Cal. Code Regs. tit 10 § 2695.2. The court finds

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that both instances meet this definition of claim. As noted above,

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however, the Policy required plaintiff to give written proof of
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1

loss to Allstate, along with his claim. Policy 22. Plaintiff did

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not submit any proof of loss related to the seatbelts, before or

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after

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notifications of his claim to Allstate in March 2006 and September

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2007 did not necessarily create an obligation on the part of

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Allstate to pay for the replacement of the seatbelts.

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ii. Whether Allstate breached its obligations under the policy by

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not paying for the cost of replacing the seatbelts.

he

had

them

replaced

by

Elk

Grove

Honda.

Plaintiff’s

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Allstate’s obligations with respect to plaintiff’s vehicle

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following the March 29 collision are encapsulated in the “Coverage

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DD” section of the Policy. Allstate is obligated to “pay for direct

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and accidental loss to [plaintiff’s] insured auto. . . from a

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collision with another object.” Policy 18. Allstate reserves the

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option of “pay[ing] for the loss in money,” or “repair[ing] or

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replac[ing] the damaged property." Policy 21 (emphasis added).

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Further, the Policy limits Allstate’s liability to “the actual cash

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value of the property or damaged part of the property at the time

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of loss.” Policy 22.

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In the SAC, plaintiff alleges that after the accident, the

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seatbelts were damaged: “the webbing of the seatbelts was elongated

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rendering the seatbelt ineffective in an subsequent condition,” SAC

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20:27-28, that plaintiff “sent a letter to Allstate requesting

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Allstate to replace the seat belts and tensioners in his vehicle,”

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SAC 15:26-28, and that “Allstate refused to provide coverage to

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replace the damaged, post-collision seat belts and tensioners in

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plaintiff’s vehicle, leaving the vehicle unsafe and not in its pre10

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accident condition.” SAC 21:3-6. Allstate’s conduct, according to

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plaintiff, was a breach of its obligations under the insurance

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policy purchased by plaintiff.

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In a prior order, this court denied defendant’s motion to

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dismiss, holding that because it alleged “actual damage to the

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seatbelt,”

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similar complaints that had been dismissed by the Fifth and Sixth

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Circuits. March 31 Order, ECF No. 66. In Sonnier v. State Farm Mut.

9

Auto

Ins.

plaintiff’s

Co.,

509

complaint

F.3d

673

could

(5th

be

Cir.

distinguished

2007),

for

from

example,

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plaintiffs had alleged that the insurance company had a duty to

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inspect the seatbelts after an accident. The court held there that

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“[i]f there were actually something wrong with the seatbelts, it

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would be arguable that State Farm would have to pay for the tests

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necessary to determine just what that was and how to fix it as part

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of the costs of repairing the seatbelt.” Id. at 674, 676. But since

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the plaintiffs in that case did not allege that there was anything

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wrong with the seatbelts, the Fifth Circuit upheld the dismissal

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of plaintiff’s breach of contract claim. This court concluded that

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the Sonnier reasoning did not apply in the instate case because

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plaintiff had alleged actual damage to the seatbelts. Thus, the

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court denied defendant’s motion to dismiss the breach of contract

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claim. Order 14, March 31, 2010, ECF No. 66.

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Now, however, plaintiff is confronted with evidence that,

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following the accident, the “seatbelt assemblies were in superb

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condition.” Decl. of Daniel Davee in Supp. Def.’s Mot. for Summ.

26

Judgment (“Davee Decl.”) 4:15-16, Def.’s Ex I. Defendant’s expert,
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1

a specialist in “automotive restraint performance as it relates to

2

seat belt assemblies and supplemental occupant restraint systems,”

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id. at 2, inspected each component of the seatbelts that were in

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use plaintiff’s car at the time of the accident. Mr. Davee stated

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that “the subject seat belt web (driver and passenger) is not

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elongated or permanently distorted. Any minor change in web length.

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. . will have negligible effect in the effectiveness of the

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seatbelt assembly. . .” Id. at 6. Mr. Davee further testified that

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“the

anchors

were

not

deformed

and

would

not

affect

the

10

effectiveness of the seat belt assembly in any way,” that, with

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respect to the retractor locking mechanism, “inertia sensing, web

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sensing, and tilt lock features all function without issue,” and

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that “the effectiveness of the seat belt tensioners to mitigate

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injury in a subsequent accident was unchanged since they were found

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operational and fully functional.” Id. 7-9.3

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Plaintiff cites two pieces of evidence in an attempt to rebut

17

defendant’s

expert

testimony.

See

Pl.’s

Response

to

Def.s’

18

Statement of Undisputed Facts ¶44. The first citation is to

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excerpts from plaintiff’s wife’s deposition. In that deposition,

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Geanina Watts stated “[a]fter I had been in the accident, I

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remember one time [the seatbelt] it got stuck on me. . . it was

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3

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25
26

Plaintiff objects to Mr. Davee’s testimony as after-acquired
evidence, saying that the conclusions from an inspection of the
plaintiff’s seatbelts that took place more than three years after
the claim is irrelevant to whether Allstate acted in good faith in
response to plaintiff’s claim. Pl.’s Evidentiary Objections 14, ECF
No. 240-1. The after-acquired nature of Mr. Davee’s conclusions,
however, do not diminish their relevance to plaintiff’s Breach of
Contract claim.
12

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constant speed and it just got stuck so I had to unlatch it because

2

it was very tight on me. So I was wondering if that was normal, and

3

so I remember a few times it was very loose and not go back. So I

4

wanted to know if that was normal.” G. Watts Deposition 25, Ex. H

5

to

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plaintiff’s expert James Mathis, in which Mr. Mathis simply cites

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Mrs. Watts’ testimony that the seatbelts were damaged. Based on

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this testimony by Mrs. Watts, Mr. Mathis concluded: “Following the

9

collision, the seatbelts in Plaintiff’s vehicle were damaged.”

10

Decl. of James Mathis in Supp. of Pl.’s Opp’n to Summ. J. ¶ 61

11

(citing the G. Watts deposition). Mr. Mathis is a former Allstate

12

employee whose relevant expertise consist of having been trained

13

to use Allstate’s internal computer programs for processing claims.

14

Mr. Mathis does not claim to have technical expertise, nor does he

15

claim to have inspected the seatbelts. Mr. Mathis’ declaration does

16

not effectively rebut defendant’s expert’s conclusion that the

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seatbelts were not damaged in the accident.

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subjective concerns do not raise a triable issue.

Pl.’s

Ex

C.

The

second

citation

is

to

a

declaration

by

Finally, Mrs. Watts'

19

Having concluded that there remains no genuine issue as to

20

whether the seatbelts were damaged in the accident, the court turns

21

to whether the defendant breached its obligations by failing to pay

22

to have the seatbelts replaced even if they were undamaged.

23

Plaintiff argues that Allstate was obligated to adhere to the

24

recommendations in the owner’s manual when determining the cost of

25

“loss”

26

recommendations required replacement of the seatbelts following an

to

the

automobile,

and

13

that

in

this

case,

those

1

accident. Pl.’s Opp’n 11. Plaintiff argues that the cost of

2

replacing the seatbelts was part of the “loss” to the insured auto

3

resulting from the accident, for which defendant is required to

4

pay, even if the seat belts were not actually damaged in the

5

accident. Plaintiff points to the owner’s manual for his vehicle,

6

which states: “If a seatbelt is worn during a crash, it must be

7

replaced by the dealer. A belt that has been worn during a crash

8

may not provide the same level of protection in a subsequent

9

crash.” Pl.’s Opp’n 12. Plaintiff urges the court to construe the

10

contract as requiring Allstate to follow the owner’s manual rather

11

than the vehicle service and repair manual, which, in the case of

12

plaintiff’s car, apparently do not recommend seatbelt replacement.

13

Indeed, such an obligation may be present if the Policy is

14

ambiguous, and if the court concludes that Allstate believed that,

15

at

16

understanding was that Allstate would adhere to vehicle owner’s

17

manual recommendations when paying to restore a vehicle to its pre-

18

accident condition. “An insurance policy provision is ambiguous

19

when it is susceptible of two or more reasonable constructions. If

20

ambiguity exists, however, the courts must construe the provisions

21

in the way the insurer believed the insured understood them at the

22

time the policy was purchased.” Ameron Internat. Corp. v. Insurance

23

Co. of State of Pennsylvania, 50 Cal. 4th 1370, 1378 (Cal.

24

2010)(internal citations ommitted).

the

time

the

policy

was

purchased,

the

policyholder’s

25

Plaintiff argues that statements by Allstate’s senior training

26

specialist, Thomas Perrett, as well as portions of the training
14

1

materials for auto adjusters, are evidence that Allstate believed

2

that

3

recommendations when determining how to restore an insured car to

4

it’s pre-loss condition. In his deposition, Mr. Parrett testified

5

that

6

manufacturer’s

7

repairs in order to ensure that the car is restored to its “pre-

8

accident condition.” Depo. of Thomas Perrett (“Perret Depo.”)

9

83:14-19. In their opposition brief and at oral argument, plaintiff

10

characterized Mr. Perrett’s testimony as establishing that Allstate

11

adjusters are “instructed to refer to the vehicle owner’s manuals

12

to

13

inspection and replacement of seatbelts following a collision.”

14

Upon review of the deposition transcript, however, the court finds

15

that no such conclusion is warranted. Mr. Parrett did testify that

16

I-CAR, the training program used by Allstate, trains auto adjusters

17

to follow the vehicle manufacturer’s recommendations regarding

18

replacement of seatbelts. Perrett Depo. 91:24-91:3. He testified

19

that the “I-CAR recommendation is to follow the vehicle maker’s

20

recommendations,” id. 82:7-8, in order “to ensure that the car is

21

restored

22

testimony standing alone is ambiguous as to which manual is being

23

referenced.

24

manufacturer repair or service manuals, or to the owner’s manuals.

25

Mr. Parret testified, however, that he had never “provided training

26

to the Allstate auto adjusters in an format. . . that references

it

he

was

obligated

trains

determine

to

to

Allstate’s

auto

recommendations

the

its

proper

defer

the

adjusters

when

procedures

pre-accident

to

to

estimating

to

follow

condition.”

Id.

owner’s

follow
auto

in

manual

vehicle

collision

regards

83:16-19.

to

This

Either Allstate trains its adjusters to refer to

15

1

the policyholder’s owner’s manual as a resource as to what repairs

2

should be made.” Id. 91:16-20.

3

Plaintiff also directs the court to exhibits purported to be

4

portions of Allstate’s training materials. Exhibit P to Wendy

5

York’s declaration, Pl.’s Ex A, appears to be a page from “Day

6

Seven” of a “Vehicle Loss Technical Skills Workshop.” It directs

7

its readers “to locate more specific information on the seat belt

8

in question [by] consult[ing] the service or owner’s manual for

9

that model.”4

Exhibit S, purported to be a copy of “ATRL: Auto

10

Technical

Reference

Library,”

however,

states

“the

following

11

information is provided to serve as general guidelines to follow

12

when evaluating seatbelts for reuse after being used during a

13

collision. When available, refer to the manufacturers service

14

manual for specific information about the vehicle model being

15

evaluated.” Exhibit S to Decl. York, Pl.’s Ex A.5 The court finds

16

that the evidence provided by plaintiff does not establish that

17

Allstate’s own interpretation of its policy was that Allstate was

18

obligated to adhere to the Honda owner’s manual when determining

19
20

4

To consult the owner's manual for additional information is
hardly the equivalent of being bound by that manual.

21
5

22
23
24
25
26

As is the case for much of plaintiff’s evidence, neither
Exhibit P or S is properly cited in plaintiff’s opposition brief.
Additionally,
neither
document
appears
to
be
properly
authenticated. Ms. York stated in her declaration that Exhibit P
is “a true and correct copy of relevant portions of Allstate’s
training
material
that
reference
owner’s
manufacturer’s
recommendations,” something that Ms. York does not, as plaintiff’s
attorney, have personal knowledge of. The court did not find any
declaration by plaintiff that the exhibits were produced by
defendant in discovery
16

1

how to return plaintiff’s vehicle to its pre-accident condition.

2

This conclusion is in accord with Levy v. State Farm Mut.

3

Auto. Ins. Co., 150 Cal.App.4th 1(2007). In that case, the Court

4

of Appeal affirmed a lower court holding that the auto insurance

5

contract at issue “did not purport to obligate State Farm to follow

6

any particular industry standard, but required State Farm only to

7

‘restore the vehicle to its pre-loss condition.’” In Levy, the

8

“complaint does not allege in what manner [plaintiff’s] car after

9

repair differed from its pre-accident condition.” In this case,

10

although plaintiff did allege that the seatbelts were actually

11

damaged in the accident, as already discussed, the plaintiffs have

12

failed to show that there is a genuine issue as to whether the

13

seatbelts were damaged. The Levy court rejected the plaintiffs’

14

attempt “to establish a link between the cited industry standards

15

and the policy’s promise to restore the vehicle to preaccident

16

condition.” Id. at 5.6

17

From all that appears, plaintiff’s insurance policy did not

18

require

Allstate

to

replace

plaintiff’s

undamaged

seatbelts

19

following the collision, and the court cannot construe the Policy

20

to require Allstate to adhere to the recommendations of the owner’s

21

manual, when there is no evidence that Allstate intended to bind

22

itself to do so.

23
24
25
26

6

District courts are not bound by decisions of state
intermediate courts, Dimidowich v. Bell & Howell, 803 F.2d 1473
(9th Cir. 1986), but they are not free to disregard them in the
absence of other authority. West v. American Tel. & Tel. Co., 311
U.S. 223 (1940).
17

1

The court finds no issue of material fact as to whether

2

Allstate breached its obligations to plaintiff under the Policy.

3

Accordingly, defendant’s motion for summary judgment on the breach

4

of contract claim is GRANTED.

5

B. Bad Faith and Breach of the Covenant of Good Faith and Fair

6

Dealing

7

Plaintiff’s second and third causes of action are duplicative

8

of one another. Under California law, the “insurance bad faith,”

9

cause of action is simply a cause of action for breach of the

10

covenant of good faith and fair dealing in the insurance context.

11

Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1009

12

(9th Cir. Cal. 2004). As plaintiff asserts, “to establish a breach

13

of the implied covenant of good faith and fair dealing, plaintiff

14

must show that (1) benefits due under the policy were withheld; and

15

(2) the reason for withholding the benefits was unreasonable or

16

without

17

Exchange, 221 Cal.App.3d 1136, 1150 (1990). As discussed above, no

18

policy

19

therefore entitled to summary judgment on plaintiff’s second and

20

third causes of action, and defendant’s motion is GRANTED.

21

C. Fraud and Misrepresentation

proper

benefits

cause.”

were

Pl.’s

Opp’n

withheld

in

17

this

(citing

case.

Love

v.

Defendants

Fire

are

22

Plaintiff’s fraud claim stems from allegations that Allstate

23

falsely represented to plaintiff and class members “it would

24

completely restore their post-collision Allstate-insured vehicles

25

to the vehicle’s pre-accident safe condition.” The representations

26

were allegedly false and known to be false because “Allstate
18

1

“implemented and exercised a corporate-wide policy to decline to

2

replace seatbelts that have been worn during a collision” during

3

the time that the representations were made SAC 24-25.

4

Defendant correctly states the elements of a fraud claim: “(a)

5

a misrepresentation, (b) knowledge of falsity, (c) intent to

6

defraud/to induce reliance, (d) justifiable reliance, and (e)

7

resulting damage.” Def.’s Mot. 18 (citing Nagy v. Nagy, 210 Cal.

8

App.3d 1262, 1268 (1989).

9

Plaintiff claims that Allstate’s representations that it would

10

restore insured vehicles to their pre-accident condition following

11

an accident were false. Plaintiff contends that at the time

12

Allstate was making such representations, it was implementing a

13

corporate-wide policy to refuse to test or replace seatbelts.

14

Plaintiff alleges that Allstate had no intention of honoring its

15

contractual responsibilities with regard to seatbelts. In general,

16

a breach of a promise, without more, is not fraud. “The basis for

17

a contract action is the parties' agreement; to succeed under the

18

consumer

19

agreement, but in all cases, an unfair or deceptive practice.

20

American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995). See also,

21

Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 399 (7th Cir.

22

2011)(“Greenberger alleges that GEICO

23

his car to its preloss condition and failed to disclose that it

24

regularly

25

breach-of-contract allegations dressed up in the language of fraud.

26

They cannot support statutory or common-law fraud claims.”). Here,

protection

breaches

law,

this

one

must

show

necessarily

an

never intended to restore

contractual

19

not

promise.

These

are

1

the court has found that Allstate did not, in fact, breach its

2

obligations under the contract. Allstate’s obligation to plaintiff

3

was to pay to have his car restored to its pre-accident condition.

4

Plaintiff has not shown that the condition of his car differed

5

before the accident and after it was repaired.

6

made no representations either to the general public as part of its

7

marketing campaign, or to policy holders under the terms of the

8

agreement

9

collision.

to

pay

to

replace

undamaged

Allstate simply

seatbelts

following

a

10

In this case, the court has previously held that proof that

11

“Allstate had an established and uniform policy of refusing to pay

12

for repairs to seatbelts,” could support an inference that Allstate

13

entered into contract with the intent of not performing its

14

obligations. March 31, 2009 Order 21, ECF No. 66. Therefore, the

15

court looks for evidence of an established and uniform policy by

16

Allstate of refusing to pay for repairs to seatbelts. Defendant has

17

submitted a declaration by Allstate Claims Project Manager, who

18

stated that Allstate’s “policy and practice is to pay for any

19

physical damage sustained by seatbelts in an insured vehicle as a

20

result of a covered collision. I estimate that Allstate has paid

21

to replace seatbelts on hundreds or thousands of first party auto

22

clams in California during the past five years.” Decl. of Robert

23

Howell ¶ 3, ECF No. 204. In his response to defendant’s statement

24

of undisputed facts, plaintiff disputes Mr. Howell’s statement, and

25

state that Allstate has paid for inspection or replacement of seat

26

belts in fewer than 1.1% of the 135,000 claims submitted in
20

1

California each year. To support this proposition, plaintiff cites

2

“Defendants’ Response to Special Interrogatories Number 2 and 3,”

3

but those documents do not appear in Plaintiff’s Index of Evidence

4

in Support of Plaintiff’s Opposition to Allstate’s Motion for

5

Summary Judgment. The court is "not required to comb through the

6

record to find some reason to deny a motion for summary judgment."

7

Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir.

8

2001).

9

In fact, in his opposition to defendant’s motion for summary

10

judgment, plaintiff does not cite any evidence of such a policy.

11

The only evidence cited in the “Fraud” section7 of plaintiff’s

12

opposition is a statement by an Allstate senior specialist and

13

trainer that “inspection of the seatbelt systems following a

14

collision would be covered in direct and accidental loss under the

15

policy.” Pl.’s Opp’n 22 (citing Perrett Depo., 231:5-11).

16

Further, the plaintiff in this case cannot prove any damages

17

from Allstate’s allegedly fraudulent statements. Plaintiff argues

18

that: “Allstate’s fraudulent marketing materials induced Mr. Watts

19

to obtain an insurance policy with Allstate. Through said marketing

20

materials, Mr. Watts believed that should his vehicle be involved

21

in an accident, his vehicle, including his seat belts, would be

22

inspected and restored to a pre-loss condition.” Pl.’s Opp’n 22:18-

23
7

24
25
26

This section of plaintiff’s brief is entitled “Plaintiff’s
Complaint Alleges Allstate’s Fraud and Misrepresentation with
Particularity.” Plaintiff misunderstands his burden, given the
procedural posture of the case. The court already held that
plaintiff’s fraud claim was pled with particularity; the question
now is one of evidence.
21

1

21. The evidence submitted by the parties shows that Mr. Watts’

2

vehicle was indeed restored to its pre-loss condition. As discussed

3

above, the seatbelts were undamaged.

4

Defendant’s motion for summary judgment of plaintiff’s claim

5

for fraud is GRANTED.

6

D. Unfair Competition

7

California’s Unfair Competition Law, (“UCL”, Cal. Bus. & Prof.

8

Code § 17200, proscribes “unlawful, unfair, or fraudulent business

9

acts.” This court’s previous order dismissed plaintiff’s UCL claim

10

insofar as it was based on unlawful acts, but allowed plaintiff’s

11

UCL claim to proceed on the basis of unfair acts and fraudulent

12

acts. March 31, 2009 Order 21-22.

13

i. Fraudulent Acts

14

For the reasons already discussed, the court concludes that

15

there is no genuine issue of material fact as to whether defendant

16

engaged in the fraudulent acts alleged by plaintiff. Accordingly,

17

the defendant’s motion for summary judgment is GRANTED with respect

18

to plaintiff’s UCL claim based on fraudulent acts.

19

ii. Unfair Acts

20

This court previously held that plaintiff stated a claim by

21

alleging that defendant “unreasonably exerted their considerable

22

influence to prevent third-party auto-repair shows from inspecting

23

and repairing the seat belts in plaintiff’s and class members’

24

post-collision Allstate-insured vehicles.” March 31, 2009 Order 23,

25

ECF No. 66. The court held that plaintiff’s allegations that

26

Allstate interfered with independent repair shop’s judgment and
22

1

placed

consumers

2

Defendants now argue that there is no evidence that Allstate

3

exerted such influence over third party repair shops or interfered

4

with those shops’ judgment. Def.’s Mot. Summ. J. 19. Plaintiff

5

cites the declaration of Ken Klein for evidence of Allstate’s

6

influence over third-party shops and interference with those shops’

7

judgment. Decl. of Klein, Pl.’s Ex. B. In that declaration, Mr.

8

Klein describes general practices in the auto insurance industry,

9

as well as some practices particular to Allstate. Mr. Klein

10

describes the process that Allstate uses “to control the collision

11

repair process.” For example, “if a shop does not accept Allstate’s

12

estimate, Allstate will do all they can to transfer the vehicle to

13

one of their preferred shops that will conduct the repairs per

14

Allstate’s estimate. If the vehicle is at a non-preferred shop, the

15

Allstate adjustor meets with the collision repair price and objects

16

to their price.” Plaintiff does not allege or present any evidence

17

that Allstate followed this policy in his case. Allstate never

18

tried to get plaintiff’s vehicle transferred to an Allstate-

19

preferred shop, and did not object to the estimate prepared by

20

Artistic Collision, Mr. Watts’ shop of choice. Mr. Klein stated

21

that

22

Collision, but that estimate was unrelated to the seatbelts.

23

Accordingly, the court finds that there is no genuine issue of

24

material fact as to whether defendant engaged in unfair competition

25

by exerting undue influence over and interfering in the independent

26

judgment of Artistic Collision with respect to the repair of

Allstate

at

denied

risk

a

was

not

fair

supplemental

23

as

a

estimate

matter

from

of

law.

Artistic

1

plaintiff’s car, and defendant’s motion for summary judgment on

2

that claim is GRANTED.
IV. Conclusion

3
4
5

For the foregoing reasons, Defendant’s motion for summary
judgment is GRANTED in its entirety.

6

IT IS SO ORDERED.

7

DATED:

May 11, 2011.

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