Reitz et al v. Progressive Direct Insurance Company et al

Filing 49

ORDER signed by Judge Garland E. Burrell, Jr. on 10/20/15 ORDERING that Progrssive's 33 Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART. (Benson, A)

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UNITED STATES DISTRICT COURT

5

EASTERN DISTRICT OF CALIFORNIA

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MISTY DAWN REITZ; AND
NICHOLAS IVEY,

No. 2:14-cv-1614-GEB-EFB

Plaintiffs,

9

ORDER DENYING IN PART AND
GRANTING IN PART DEFENDANT’S
SUMMARY JUDGMENT MOTION, AND
GRANTING IN PART AND DENYING IN
PART DEFENDANT’S REQUEST FOR AN
ORDER TREATING SPECIFICIED FACTS
AS ESTABLISHED

v.

10

PROGRESSIVE DIRECT
INSURANCE COMPANY, an Ohio
Corporation registered to
do business in the State of
California; and DOES I
through CC, inclusive,

11
12
13
14

Defendants.

15
16

Defendant

17

Progressive

(“Progressive”)

19

(“Rule”)

20

between Progressive and Plaintiffs Misty Dawn Reitz (“Reitz”) and

21

Nicholas Ivey (“Ivey”) on their breach of contract claim and

22

breach of the implied covenant of good faith and fair dealing

23

claim. (Def.’s Mot. for Summ. J. (“Mot.”) 11:12–16, 12:12–13, ECF

24

No.

25

specifying

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entitled to damages over the liability limit specified in the

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28

33.)

for

summary

Progressive
for

under

the

Federal

judgment

seeks

purpose

in

of

in

the

trial

1

Rule

Company1

Insurance

18

56

moves

Choice

this

of

Civil

insurance

alternative
that

Procedure
dispute

“an

Plaintiffs

order

are

Since Defendant states in the motion that it is erroneously sued as
“Progressive Direct Insurance Company,” it is referred to herein as
“Progressive Choice Insurance Company.” (Mot. 2.)

1

not

1

insurance

2

concerns

3

concerning the alleged theft of their insured 2006 Ford Mustang

4

(the “Mustang”).

agreement.”
whether

5

I.

6

(Mot.

Plaintiffs

3:27–28.)
made

The

material

insurance

dispute

misrepresentations

LEGAL STANDARD: SUMMARY JUDGMENT

9

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 has the burden
of establishing the absence of a genuine
dispute of material fact.

10

City of Pomona v. SQM North Am. Corp., 750 F.3d 1036, 1049 (9th

11

Cir. 2014) (quoting Fed. R. Civ. P. 56(a)) (citing Celotex Corp.

12

v. Catrett, 477 U.S. 317, 323 (1986)). “A fact is ‘material’

13

when . . . it could affect the outcome of the case.” Thrifty Oil

14

Co. v. Bank of Am. Nat’l Trust & Sav. Ass’n, 322 F.3d 1039, 1046

15

(9th Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477

16

U.S.

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‘genuine[]’ . . . if the evidence is such that a reasonable jury

18

could return a verdict for the nonmoving party.” Anderson, 477

19

U.S. at 248.

7
8

20

242,

248

(1986)).

A

“dispute

about

a

material

24

A party asserting that a fact cannot be or is
genuinely disputed must support the assertion
by . . . citing to particular parts of
materials
in
the
record . . .
or . . .
showing that the materials cited do not
establish the absence or presence of a
genuine dispute, or that an adverse party
cannot produce admissible evidence to support
the fact.

25

Fed. R. Civ. P. 56(c)(1)(A)–(B).

26

Further, Local Rule 260(b) prescribes:

27

Any party opposing a motion for summary
judgment . . . shall reproduce the itemized
facts in the [moving party’s] Statement of
2

21
22
23

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fact

is

1

Undisputed Facts and admit those facts that
are undisputed and deny those that are
disputed, including with each denial a
citation to the particular portions of any
pleading,
affidavit,
deposition,
interrogatory answer, admission, or other
document relied upon in support of that
denial.

2
3
4
5
6
7
8
9

If

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25
26

nonmovant

does

not

“specifically . . .

[controvert duly supported] facts identified in the [movant’s]
statement of undisputed facts,” the nonmovant “is deemed to have
admitted the validity of the facts contained in the [movant’s]
statement.” Beard v. Banks, 548 U.S. 521, 527 (2006).

10
11

the

“Because a district court has no independent duty ‘to
scour the record in search of a genuine issue of triable fact,’
and may ‘rely on the nonmoving party to identify with reasonable
particularity
judgment,’ . . .

the
the

evidence
district

that

precludes

court . . .

[is]

summary
under

no

obligation to undertake a cumbersome review of the record on the
[nonmoving party’s] behalf.” Simmons v. Navajo Cnty., Ariz., 609
F.3d 1011, 1017 (9th Cir. 2010) (quoting Keenan v. Allan, 91 F.3d
1275, 1279 (9th Cir. 1996)). However, the district court “may
consider

other

materials

in

the

record.”

Fed.

R.

Civ.

P.

56(c)(3).
Further, “at this stage of the litigation, the judge
does not . . . . make credibility determinations with respect to
statements

made

in

affidavits,

answers

to

interrogatories,

admissions, or depositions. These determinations are within the
province of the factfinder at trial.” T.W. Elec. Serv., Inc. v.
Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).

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3

1

II.

UNCONTROVERTED FACTS

2

The following facts concern the motion and are either

3

undisputed or are “deemed” uncontroverted since they have not

4

been controverted with specific facts as required by Local Rule

5

260(b).

6

“In June 2009, Plaintiffs purchased a California Motor

7

Vehicle Insurance Policy [(the ‘Policy’)] from Progressive [for

8

the Mustang], the terms of which included . . . fire and theft

9

protection . . . .”

(Pls.’

Resp.

to

Def.’s

Statement

of

10

Undisputed Material Facts (“UMF”) No. 2, ECF No. 46-1.) “The

11

Policy also provided that Progressive ‘may deny coverage for an

12

accident or loss if [the insured] has concealed or misrepresented

13

any

14

conduct, in connection with the presentation or settlement of a

15

claim.’” (UMF No. 7 (emphasis removed).)

material

fact

or

circumstance,

or

engaged

in

fraudulent

16

“Plaintiffs reported the alleged theft of the Mustang

17

to Progressive on the morning of December 3, 2009.” (UMF No. 8.)

18

Claims specialist Tara Flaherty handled their claim. (Flaherty

19

Decl. ¶ 1.)

20

The night before, on December 2, 2009, at 11:45–50 PM,

21

(Ex. 9 at 1098), “the King County Fire Department recovered [the

22

Mustang] . . . after responding to a report of vehicle fire.”

23

(UMF No. 11.)

24

Progressive conducted an investigation of the claim,

25

part of which includes an interview of Ivey on December 3, 2009

26

(the “December 3 interview”), (see UMF No. 23), and an interview

27

of Reitz on December 4, 2009 (the “December 4 interview”). (See

28

UMF

No.

24.)

Progressive

again
4

interviewed

each

Plaintiff

on

1

December 22, 2009 (the “December 22 interview”). (See UMF No.

2

25.) And on March 22, 2010, Progressive conducted an examination

3

of each Plaintiff under oath (“EUO”). (Flaherty Decl. ¶ 37.)

4

“On May 18, 2010,
of

the

. . . Flaherty[] completed a final

5

summary

6

coverage

7

presentation[,] . . . ‘together with the timing of the events on

8

the

9

transpondered key,[2] the complete burn [of the Mustang] with no

10

stripping of the car, the cell phone activity, domestic tensions

11

that

12

brother]’s refusal to cooperate in Progressive’s investigation.’”

13

(UMF No. 22; Flaherty Decl. ¶ 1.)

based

night

of

became

claim . . .

and

on

inconsistencies

factual

the

alleged

apparent

14

made

theft,

during . . .

III.

a

determination
in

[evidence

[the]

the

to

[claim’s]

involving]

EUO’s,

deny

and

the

[Ivey’s

BREACH OF CONTRACT

15

Progressive argues its motion on Plaintiffs’ breach of

16

contract claim should be granted because it “properly determined

17

that material misrepresentations by Plaintiffs voided coverage”

18

under the Policy’s fraud and concealment provision.3 (Mot. 13:20–

19

22.)

20

because of “numerous inconsistencies in [Plaintiffs’] accounts of

21

the

22

loss . . .

Specifically,

evening

Progressive

before

[that

contends

[Plaintiffs]

have]

led

it

reported

Progressive

denied

the
to

coverage

[Mustang’s]

conclude

that

23
24
25
26
27
28

2

There was only one key. (UMF No. 9.)
Progressive also cites California Insurance Code section 2071, which
provides in pertinent part: “This entire policy shall be void if, whether
before or after a loss, the insured has willfully concealed or misrepresented
any material fact . . . .” Cal. Ins. Code § 2071. “By statute . . ., insurance
policies providing fire insurance on California property must include the
standard form provisions contained in [section] 2071 or provisions that are
their substantial equivalent.” H. Walter Croskey, et al. California Practice
Guide: Insurance Litigation § 6:254 (Rutter Grp. 2015).
3

5

1

[Plaintiffs] had made material misrepresentations in connection

2

with their claim.” (Mot. 9:5–7.)

3
4

The following statements are undisputed or are “deemed”
uncontroverted.4

5

Progressive asserts Reitz and Ivey gave inconsistent

6

statements about when they came home on December 2, 2009, the

7

night

8

Progressive

9

following communication is recorded: Flaherty asked Ivey, “when

10

you . . . came home, you said it was around 8:30 [PM]. . . .

11

[W]as [Reitz] home at the time?” Ivey responded that Reitz was

12

not home. (Ex. 3 at 1663; see UMF No. 23.) In his December 22

13

interview, Ivey stated he was in school “somewhere between 8:30

14

[PM] and 9:30 [PM],” and he believed he went straight home from

15

school. (Ex. 20 at 1737; see UMF No. 26.) “At his EUO, Ivey

16

stated that he arrived home sometime after 8:00 [PM] and that

17

Reitz was home when he arrived.” (UMF No. 27.)

of

the

Mustang’s

cites

Ivey’s

loss.

(Mot.

December

3

9:10–22.)
interview,

Specifically,
in

which

the

18

In the December 4 interview, Reitz “stated that she got

19

home at approximately 8:30 [PM], and Ivey arrived sometime after

20

10:00 [PM], when she was already in bed.” (UMF No. 24.) In her

21

December 22 interview, Reitz stated: “Ivey arrived home after she

22

did, at 9:00 or 9:15 [PM], that she did not go to sleep until

23
24
25
26
27
28

4

Plaintiffs make numerous objections to Progressive’s evidence. However,
a ruling on all objections is unnecessary since some of the objections concern
matters immaterial to the motion. See Burrell v. Cnty. of Santa Clara, No. 11CV-04569-LHK, 2013 WL 2156374, at *2 (N.D. Cal. May 17, 2013) (declining to
reach evidentiary objections to evidence not relied upon in deciding summary
judgment motion). Further, Progressive has requested judicial notice of three
state court documents. This request is denied since Progressive has not shown
that the referenced documents are relevant to decision on its motion. See
Monica Food Not Bombs v. City of Santa Monica, 450 F.3d 1022, 1025 n.2 (9th
Cir. 2006) (“We decline to take judicial notice of the . . . [documents], as
they are not relevant to the resolution of this appeal.”).

6

1

10:00 [PM].” (UMF No. 25.) She also stated: “I remember [Ivey]

2

was home at . . . 9:00-ish or 9:45-ish.” (Ex. 19 at 1695.) “In

3

her EUO, Reitz stated that she was up and awake when . . . Ivey

4

arrived home between 8:00 [PM] and 9:00 [PM].” (UMF No. 28.)

5

Progressive

also

cites

inconsistent

statements

from

6

Ivey about when he last saw the Mustang. (Mot. 9:24–28, 10:1–2.)

7

“On

8

theft, Ivey told Progressive he last saw the Mustang between 9:30

9

and 9:45 [PM], when he went to retrieve cigarettes from the

10

vehicle.” (UMF No. 29.) “Ivey told police that he last saw the

11

Mustang

12

Affidavit of [Vehicle] Theft, Ivey said he last saw the Mustang

13

at 10:30 [PM].” (UMF No. 31.)

December 3,

at

14

2009,

10:00

the

[PM].”

day

(UMF

Ivey

No.

allegedly

30.)

“In

discovered

his

the

[California]

“In his December 22, 2009 statement, Ivey claimed he

15

last saw the Mustang . . .

when he parked it upon arriving home

16

sometime after 8:00 [PM]. In his EUO, Ivey stated that he did not

17

remember going out to retrieve cigarettes from the Mustang on the

18

evening of the alleged theft, and did not think that he did.”

19

(UMF No. 32.)5

20

Progressive further cites inconsistent statements Reitz

21

made about whether, on December 2, 2009, she heard the Mustang on

22

the

23

interview, “Reitz stated that she heard Ivey return home on the

24

night

25

exhaust.” (UMF No. 33.) In her EUO, the examiner asked Reitz:

26

“[D]o you remember hearing the engine that night?” (Ex. 34 at

night

of

of

its

loss.

December 2,

(Mot.

2009,

10:3–12.)

because

the

In

her

Mustang

December

has

a

22

loud

27
5

28

Plaintiffs object to the cited evidence in number 32 as “compound.” (UMF
11:20–28.) This objection is overruled.

7

1

1835.)

2

that. . . . But then, I don’t want it to lead to where [Ivey]

3

didn’t drive the car home . . . .” (Id. at 1835.) “In his EUO,

4

Ivey said that, although the Mustang had an aftermarket exhaust,

5

it was not especially loud.” (UMF No. 34.)

She

6

responded:

Progressive

“I

don’t

also

even

argues

know.

Plaintiffs

I

can’t

made

even

say

inconsistent

7

statements about who discovered the loss on December 3, 2009.

8

(Mot. 10:13–20.) In the December 3 interview, “Ivey said that he

9

discovered the loss when he went outside that morning to smoke.

10

At the time, Reitz was inside getting ready for work, and Ivey

11

went back inside to advise her of the loss.” (UMF No. 36.)

12

In the December 4 interview, “Reitz said she did not

13

remember who discovered the loss, but thought she noticed the

14

Mustang was missing when she looked outside and saw it was not

15

parked in its usual place.” (UMF No. 37.) In her December 22

16

interview, Reitz said, “[Ivey] went out to his car to get the

17

cigarettes and the car was gone.” (Ex. 19 at 1699.)

18
19

Progressive

also

cites

inconsistencies

involving

Plaintiffs’ text messages on the night of the Mustang’s loss.

20

Plaintiffs object to Progressive’s use of Plaintiffs’

21

text

messages,

22

13:18–23;

23

“[b]etween 8:54 [PM] and 12:26 [AM], there were 17 text messages

24

between

25

Progressive argues this evidence should be considered because

26

“Flaherty . . . has demonstrated her competency to testify about

27

the contents of the claim file.” (Def.’s Reply to Opp’n (“Reply”)

28

6:2–4.) Although Flaherty has shown she has personal knowledge of

UMF

Rietz

arguing
No.

and

this

39.)

Ivey’s

evidence

Specifically,

cell

phone.”

8

lacks

foundation.

Flaherty

(Flaherty

declares

Decl.

(UMF
that

¶ 36.)

1

Plaintiffs’ claim file, (see Flaherty Decl. ¶¶ 1–4), Progressive

2

has not shown that she has personal knowledge of the cell tower

3

records

4

declaration, and which include the text messaging evidence. See

5

Orr v. Bank of Am., NT & SA, 285 F.3d 764, 778 (9th Cir. 2002)

6

(“The

7

authenticated because Orr introduced the letter by attaching it

8

to [the affiant]’s affidavit [but the affiant] lacks personal

9

knowledge

10

from

Plaintiffs’

district

of

court

the

carriers

properly

letter.”).

that

found

are

that

Therefore,

attached

Exhibit

Q

Plaintiffs’

to

was

her

not

foundation

objection to this text messaging evidence is sustained.

11

Progressive also relies on the following uncontroverted

12

facts in number 41: “Although Reitz initially said that she was

13

half asleep in bed when Ivey got home, she later testified that

14

she called Progressive two times to make sure her payment went

15

through and made a telephone payment on the car after he came

16

home.” (UMF No. 41.) Plaintiffs make a hearsay objection to this

17

evidence which is overruled because Plaintiffs have not shown

18

this

19

(opposing party’s statements are admissible as non-hearsay when

20

“offered against an opposing party”).

evidence

21

is

hearsay.

Plaintiffs

argue

See

that

Fed.

R.

Evid.

notwithstanding
has

not

the

shown

referenced

22

inconsistencies,

23

‘inconsistencies’ amount to justification for refusing to . . .

24

indemnif[y Plaintiffs] under the [P]olicy.” (Pls.’ Opp’n to Mot.

25

(“Opp’n”) 3:16–18, ECF No. 46.)

26

“Progressive

801(d)(2)(A)

that

these

An insurer may deny coverage under a policy’s fraud and

27

concealment

28

concerns

a

provision,
material

if

an

insured’s

matter

and
9

(2)

misrepresentation
was

“knowingly

(1)
and

1

intentionally made with knowledge of its falsity and with intent

2

of defrauding the insurer.” Cummings v. Fire Ins. Exch., 202 Cal.

3

App.

4

omitted).

3d

1407,

5

1416–17

(1988)

(emphasis

removed)

(citations

An insured’s misrepresentation relates to a material

6

matter

if

it

“concerns

a

subject

7

insure[r]’s

and

8

attach

9

“[M]ateriality is a mixed question of law and fact that can be

10

decided as a matter of law if reasonable minds could not disagree

11

on the materiality of the misrepresentations.” Id.

investigation,

importance

to

the

reasonably
a

if

fact

relevant

reasonable

to

the

insurer
Id.

misrepresented.”

would
1417.

at

12

“[W]hether a false statement was made knowingly and

13

with the intent to deceive the insurer is usually a question of

14

fact but may be decided as a matter of law where the insured

15

admits that he made knowingly false statements with the intent

16

that the insurer rely upon them.” Ram v. Infinity Select Ins.,

17

807 F. Supp. 2d 843, 853 (N.D. Cal. 2011) (citations omitted).

18

Further,

19

implied when the misrepresentation is material and the insured

20

willfully makes it with knowledge of its falsity.” Cummings, 202

21

Cal. App. 3d at 1418.

22

Progressive

“the

intent

defraud

argues

that

is

necessarily

Plaintiffs’

affected the timing of the alleged theft, which had to have

25

occurred

26

14:20–22.)

28

implausibly

since

inconsistent

24

an

matters

insurer

statements

within

material

the

23

27

involve

to

small

“[their

window

of

statements]

time.”

(Mot.

However, Progressive has not shown the absence of a
genuine

issue

of

material

fact
10

on

the

issue

of

whether

any

1

statement

2

falsity and with intent of defrauding [Progressive].” Cummings,

3

202 Cal. App. 3d at 1417. Therefore, Progressive’s motion on

4

Plaintiffs’ breach of contract claim is denied.

a

Plaintiff

5

made

IV.

was

made

“with

knowledge

of

its

BAD FAITH CLAIM

6

Progressive argues it is entitled to summary judgment

7

on Plaintiffs’ breach of the implied covenant of good faith and

8

fair

9

existed

dealing
as

(“bad
to

faith”)

coverage.”

claim,
(Mot.

because

genuine

dispute

Progressive

16:3–6.)

“a

further

10

argues, inter alia, “the factual inconsistencies in Plaintiffs’

11

narrative of the events on the night of the loss . . . [and] the

12

[North

13

report,” which it obtained on the coverage issue, establish a

14

genuine

15

Progressive’s

16

reasonable

17

(Mot. 16:4–6, 17:14–15.)

18
19
20

American

Technical

dispute

and

as

to

and

its

investigative
thorough

Forensic

liability
record

Services

under

the

shows

investigation

of

it

(“]NATS[”)]

Policy,
“conducted

Plaintiffs’

and
a

claim.”

Plaintiffs counter that Progressive did not “fully and
fairly investigate[] [Plaintiffs’] claim[].” (Opp’n 6:7–23.)
Further,

Plaintiffs

make

numerous

objections

to

21

evidence involved with Progressive’s investigation. Specifically,

22

Plaintiffs

23

Flaherty’s Declaration, where she discusses the steps taken to

24

investigate

25

(citing Flaherty Decl. ¶ 5).) This objection is overruled since

26

Progressive has shown Flaherty handled Plaintiffs’ claim and that

27

she has personal knowledge of the referenced investigative steps.

28

(Flaherty Decl. ¶¶ 1–4.)

object

on

foundation

Plaintiffs’

claim.

grounds

(UMF

11

to

paragraph

7:17–24;

see

UMF

five

No.

of

18

1

Plaintiffs further object to the admissibility of the

2

NATS

3

foundation, unqualified opinion testimony, and hearsay. (UMF 8:7–

4

8;

5

demonstrated her competency to testify about the contents of the

6

claim file.” (Def.’s Reply to Opp’n (“Reply”) 6:2–4.) It further

7

responds that “the underlying statements [in the claim file] are

8

not hearsay because they are offered to show their effect upon

9

Progressive’s investigation and evaluation of Plaintiffs’ claim.”

10

report,

UMF

No.

on

the

19.)

following

Progressive

grounds:

responds

compound,

lacks

“Flaherty . . .

has

(Reply 5:28, 6:1–2.)

11

Plaintiffs’

compound

objection

is

overruled.

12

Plaintiffs’ foundation objection is also overruled since Flaherty

13

declares “Progressive obtained a report from [NATS],” and the

14

NATS report is addressed to Flaherty and Progressive. (Flaherty

15

Decl. ¶ 30; Ex. 27 at 1331.)

16

Further,

the

offers

since

19

opinions expressed therein. See Fed. R. Evid. 801(c) (stating the

20

rule concerns evidence offered “to prove the truth of the matter

21

asserted in the statement”). Nor have Plaintiffs shown that what

22

they

23

constitutes a meritorious objection in light of how Progressive

24

asserts

25

hearsay and unqualified opinion testimony objections to the NATS

26

report are overruled.

considered

that

opinions

evidence.

27
28
12

upon

hearsay

evaluating Plaintiffs’ claim, rather than for the truth of the

unqualified

effect

not

18

it

its

is

Progressive

are

for

report

17

contend

it

NATS

in

Progressive

the

Therefore,

NATS

in

report

Plaintiffs’

1

The

NATS

report

“noted

that

the

Mustang

was

2

electronically protected by an OEM[6] transponder-based antitheft

3

system and concludes there was no evidence of engine tampering,

4

that

5

assembly had not been compromised or otherwise defeated, and that

6

nothing other than a properly cut mechanical key had been used to

7

rotate the ignition lock core.” (UMF No. 19.)

the

Mustang’s

ignition

lock/column

Jock/starter

switch

8

“[T]o establish a breach of the implied covenant of

9

good faith and fair dealing under California law, a plaintiff

10

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

11

(2)

12

without proper cause.” Guebara v. Allstate Ins. Co., 237 F.3d

13

987, 992 (9th Cir. 2001).

the

reason

for

withholding

benefits

was

unreasonable

or

14

Moreover, “a court can conclude as a matter of law that

15

an insurer’s denial of a claim is not unreasonable, so long as

16

there existed a genuine issue as to the insurer’s liability.”

17

Lunsford v. Am. Guarantee & Liab. Ins. Co., 18 F.3d 653, 656 (9th

18

Cir. 1994) (citation omitted). Further, “an insurer denying or

19

delaying the payment of policy benefits due to the existence of a

20

genuine dispute with its insured as to the existence of coverage

21

liability or the amount of the insured’s coverage claim is not

22

liable in bad faith even though it might be liable for breach of

23

contract.” Wilson v. 21st Century Ins. Co., 42 Cal. 4th 713, 723

24

(2007) (citation omitted)). “A genuine dispute exists only where

25

the

26

reasonable grounds.” Id. In addition, “[t]he genuine dispute rule

insurer’s

position

is

maintained

in

good

faith

and

27
6

28

“OEM” likely means “Original Equipment Manufacturer,” but Progressive
has not defined this term.

13

on

1

does not relieve an insurer from its obligation to thoroughly and

2

fairly investigate, process and evaluate the insured’s claim.”

3

Id.

4

Plaintiffs also argue that Progressive’s investigation

5

was deficient because Progressive did not “attempt to determine

6

if the Mustang had been towed or hauled away on a flatbed truck,

7

which

8

‘inconsistencies’ Progressive relied upon to deny the claim.”

9

(Opp’n 5:17–23.) However, Flaherty declares: “[I]t did not make

10

sense that a thief would steal the Mustang (presumably by having

11

it towed . . . away), only to set fire to it within a very short

12

time and without stripping it of valuable parts.” (Flaherty Decl.

13

¶ 42.)

would

have

offered

a

harmless

explanation

for

the

14

Progressive has shown that its denial of Plaintiffs’

15

claim was not unreasonable since “there existed a genuine issue

16

as to [its] liability,” Lunsford, 18 F.3d at 656, and therefore,

17

Progressive’s summary judgment motion on Plaintiffs’ bad faith

18

claim is granted.

19
20

V.
Progressive

DAMAGES ISSUES

requests

“an

order

specifying

for

the

21

purpose of trial that Plaintiffs are not entitled to damages over

22

the liability limit specified in the [Policy].” (Mot. 3:27–28.)

23

Rule 56(g) authorizes, but does not require, the order requested

24

by Progressive as follows: “If the court does not grant all the

25

relief requested by the motion, it may enter an order stating any

26

material fact—including an item of damages or other relief—that

27

is not genuinely in dispute and treating the fact as established

28

in the case.” Fed. R. Civ. P. 56(g).
14

1

Progressive

argues:

“There

is

no

evidence

that

2

[portions of] the damages [Plaintiffs seek in their Complaint]

3

were contemplated by the parties at the time of contracting,” and

4

hence

5

Concerning this, Plaintiffs allege as follows in their Complaint:

6

Reitz and Ivey suffered damages, contemplated
by the Policy, in that they were unable to
replace the Mustang, they were accused of and
prosecuted for criminal activity, they were
subjected to arrest and detention, they lost
past
and
future
income,
and
lost
the
bargained for peace and security of knowledge
that their financial losses covered by the
Policy would be indemnified by Progressive,
all to their damages in the sum of nine
million, nine hundred fifty thousand dollars
($9,950,000.00) or according to proof.

such

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

damages

are

not

recoverable.

(Mot.

21:23–24.)

(Compl. ¶ 19, ECF No. 1 (emphasis added).)
Progressive
Plaintiffs

and

asserts

that

Progressive,

under

“[t]he

the

Policy

relevant

between

limit

of

liability . . . for loss to a covered auto was ‘the actual cash
value of the stolen or damaged property at the time of loss
reduced by the applicable deductible.’” (UMF No. 5; see also UMF
No. 3 (discussing the Policy’s terms).)
Plaintiffs

counter

that

Progressive

“has

not

offered . . . evidence to support its contention that the parties
contemplated nothing more than casualty damages.” (Opp’n 7:6–9.)
“Contract damages are generally limited to those within
the contemplation of the parties when the contract was entered
into or at least reasonably foreseeable by them at the time;
consequential damages beyond the expectations of the parties are
not recoverable.” Erlich v. Menezes, 21 Cal. 4th 543, 558 (1999)
(citations omitted).
15

1

Plaintiffs have not shown the existence of a genuine

2

disputed

issue

3

damages beyond the Policy’s liability limit set forth in the

4

Policy,

5

Therefore, Progressive’s request for an order specifying that

6

Plaintiffs are not entitled to damages over the liability limit

7

specified in the Policy is granted. See Fed. R. Civ. P. 56(g)

8

(stating: “If the court does not grant all the relief requested

9

by the motion, it may . . . treat[] the fact as established in

10

the case”). Progressive also seeks an order specifying for the

11

purpose of trial that “Plaintiffs are not entitled to damages for

12

emotional distress or mental suffering because such damages were

13

not proximately caused by [P]rogressive’s alleged breach of its

14

contractual duties.” (Mot. 3:22–24.) Plaintiffs do not oppose

15

this portion of the motion, and the undisputed facts establish

16

that the Policy’s liability limit only provides for contractual

17

compensatory damages for the Mustang’s actual cash value (minus

18

the applicable deductible).

and

in

of

fact

light

on

of

whether

the

the

pled

parties

contemplated

contract-based

claim.7

19
7

20
21
22
23
24
25
26
27
28

In their Opposition Brief to Progressive’s previous motion to dismiss,
Plaintiffs admitted their Complaint “pleads a cause of action for breach of a
contractual promise to . . . investigate claims in good faith,” meaning
Plaintiffs based their bad faith claim in contract. (Pls.’ Opp’n to Def.’s
Mot. to Dismiss Pls.’ Compl. 5:4–14, ECF No. 4 (emphasis added).) However,
Plaintiffs also indicated in that Opposition Brief that they may also have
alleged a tort claim as follows: “There is no indicia in the complaint as to
the time the tort cause of action accrued because it is not clear when the
tort damages accrued.” (Id. at 6:21–23.) The Court subsequently dismissed
Plaintiffs’ tort-based bad faith claim on statute of limitations grounds, and
granted Plaintiffs leave to amend that claim,(Order Granting in Part and Den.
in Part Mot. to Dismiss, ECF No. 7), but Plaintiffs did not timely file a
successful amendment. Although Plaintiffs subsequently filed a First Amended
Complaint, that amended complaint was stricken since it only amended the
existing contract claim without having leave. (Order Granting Def.’s Mot. to
Strike Pls.’ First Am. Compl., ECF No. 23.) Plaintiffs admitted this by
stating: their “First Amended Complaint does not sound in tort in any manner
whatsoever. It is clearly and explicitly an action for breach of contract.”
(Pls.’ Opp’n to Def.’s Mot. to Strike First Am. Compl. 2:18–19, ECF No. 11.)

16

1

VI.

2

CONCLUSION

For the stated reasons, Progressive’s motion is DENIED

3

in part and GRANTED in part.

4

Dated:

October 20, 2015

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