Vindiola v. State Farm Mutual Automobile Insurance Company

Filing 11

ORDER GRANTING 8 DEFENDANT'S MOTION TO STAY. Signed by Judge Beth Labson Freeman on 9/13/2017. (blflc2S, COURT STAFF) (Filed on 9/13/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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MARIA TERESA VINDIOLA,
Plaintiff,

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ORDER GRANTING MOTION TO
STAY

v.

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Case No. 17-cv-03701-BLF

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

[Re: ECF 8]

Defendant.

United States District Court
Northern District of California

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Before the Court is Defendant State Farm Mutual Automobile Insurance Company’s

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(“Defendant”) motion to stay the action until completion of contractual arbitration. ECF 8

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(“Mot.”). The deadline for Plaintiff Maria Teresa Vindiola (“Plaintiff”) to file an opposition to the

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motion has passed, and she has not opposed. Pursuant to Civil Local Rule 7-1(b), the Court finds

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the matter suitable for submission without oral argument and hereby VACATES the motion

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hearing set for February 1, 2018.

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For the reasons set forth below, the Court GRANTS Defendant’s motion to stay.

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I.

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This action arises from an automobile accident between Plaintiff and an uninsured

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motorist, and Plaintiff’s subsequent uninsured motorist insurance claim under an insurance policy

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between Plaintiff and Defendant. Plaintiff sues Defendant, her insurer, for breach of insurance

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contract and breach of the implied covenant of good faith and fair dealing. ECF 1, Ex. 1

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(“Compl.”). Defendant removed this action to federal court from Santa Clara Superior Court on

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June 28, 2017. ECF 1. Defendant declined magistrate judge jurisdiction and the case was

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reassigned to this Court. ECF 6. An initial case management conference is scheduled for

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November 9, 2017.

BACKGROUND

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Plaintiff alleges that the underlying insurance policy in this dispute contained an arbitration

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provision that provided as follows: “[A] determination as to whether or not the insured was legally

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entitled to recover damages and the amount thereof shall be made by agreement between the

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insured and the insurer or, in the event of a reasonable bona fide disagreement, by arbitration.”

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Compl. ¶ 5. Plaintiff alleges that she made a timely claim for benefits under the policy, but states

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that Defendant made an “unreasonable low offer to settle” and caused a “delay to Arbitrate.” Id.

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¶ 8. Defendant now moves to stay this action until the completion of binding arbitration of the

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dispute. ECF 8.1

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II.

LEGAL STANDARD

Defendant spends the majority of its motion arguing that California Code of Civil

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United States District Court
Northern District of California

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Procedure § 1281.4 mandates a stay of proceedings in this federal case. See generally Mot.

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However, that provision explicitly relates to “an issue involved in an action or proceeding before a

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court of [California].” Cal. Code. Civ. P. § 1281.4. Moreover, section 1281.4 only appears to be

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applicable after a court has ordered arbitration or while a motion to compel arbitration is pending.

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Id. Here, arbitration seems to have already commenced and there is no motion to compel

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arbitration before the Court. As such, the Court does not address Defendant’s arguments under

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California arbitration law and instead considers whether a stay is warranted under its discretionary

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authority to issue a stay. 2
District courts have the “discretionary power to stay proceedings.” Lockyer v. Mirant

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Corp., 398 F.3d 1098, 1109 (9th Cir. 2005) (citing Landis v. No. American Co., 299 U.S. 248, 254

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(1936). This power is “incidental to the power inherent in every court to control the disposition of

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the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.”

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Defendant asserts that it attempted to stipulate to stay the action pending arbitration, but counsel
for plaintiff refused to stipulate to a stay. Mot. 3. However, Plaintiff has not timely filed an
opposition to Defendant’s motion to stay, so her arguments against a stay are not before the Court.
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The Court also does not address whether the Federal Arbitration Act is applicable here. 9 U.S.C.
§ 3. Based on the facts presently before the Court, the parties are in the midst of a parallel
arbitration initiated by Plaintiff for uninsured motorist benefits. Defendant has moved for a stay
pending the resolution of that arbitration, but has not moved the Court to compel arbitration in this
action.
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Landis, 299 U.S. at 254. The court may “find it is efficient for its own docket and the fairest

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course for the parties to enter a stay of an action before it, pending resolution of independent

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proceedings which bear upon the case.” Dependable Highway Exp., Inc. v. Navigators Ins. Co.,

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498 F.3d 1059, 1066 (9th Cir. 2007) (quoting Levya v. Certified Grocers of Cal., Ltd., 593 F.2d

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863-864 (9th Cir. 1979)).
In determining whether to grant a stay, “the competing interests which will be affected by

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the granting or refusal to grant a stay must be weighed.” CMAX, Inc. v. Hall, 300 F.2d 265, 268

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(9th Cir. 1962) (citing Landis, 299 U.S. at 254-55). “Among these competing interests are [1] the

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possible damage which may result from the granting of a stay, [2] the hardship or inequity which a

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party may suffer in being required to go forward, and [3] the orderly course of justice measured in

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United States District Court
Northern District of California

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terms of the simplifying or complicating of issues, proof, and questions of law which could be

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expected to result from a stay.” Id. In addition, the “proponent of a stay bears the burden of

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establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997) (citing Landis, 299 U.S. at

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255). If there is “even a fair possibility” of harm to the opposing party, the moving party “must

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make out a clear case of hardship or inequity in being required to go forward.” Landis, 299 U.S.

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at 255.

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III.

DISCUSSION

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Defendant argues that Plaintiff’s claims against it arise from a dispute over whether she is

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entitled to uninsured motorist benefits, and if so, how much. Mot. 3. Indeed, as explained above,

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Plaintiff alleges in her complaint that the uninsured motorist claim is subject to binding arbitration,

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and that Plaintiff initiated the contractual arbitration process. Compl. ¶¶ 5, 8. Therefore, the Court

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considers whether a stay is appropriate given the impact that the underlying arbitration will have

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on Plaintiff’s breach of contract and breach of implied covenant of good faith claims against

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Defendant.

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The Court finds that judicial efficiency weighs in favor of granting a stay in this action.

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The resolution of the arbitration regarding Plaintiff’s uninsured motorist claim will surely impact

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this action against Defendant which involves how Defendant handled the uninsured motorist

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claim. See Thomas v. State Farm Mut. Auto. Ins. Co., No. C15-00509 CRB, 2015 WL 1544244, at
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*1 (N.D. Cal. Apr. 2, 2015) (citing Morello v. Amco Ins. Co., No. 11–6623, 2012 WL 19493 87, at

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*2 (N.D.Cal. May 29, 2012). All of the allegations in Plaintiff’s complaint stem from Defendant’s

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failure to pay Plaintiff’s claim for uninsured motorist benefits under the insurance policy. See, e.g.,

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Compl. ¶¶ 8, 9, 11, 15. Thus, the ultimate outcome of arbitration, which will determine whether

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Plaintiff is entitled to such benefits, will have a significant impact on the instant case. An arbitral

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award in favor of Plaintiff would strengthen her case against Defendant, whereas Defendant’s

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position would be strengthened if an arbitrator determines that Plaintiff is not owed benefits under

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the policy. See Luu v. Allstate Ins. Co., No. 5:11-CV-01523 EJD, 2011 WL 3360040, at *2 (N.D.

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Cal. Aug. 2, 2011). Therefore, it is undoubtedly more efficient for this Court and for the litigants

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to stay this action pending resolution of the ongoing arbitration proceedings which will bear upon

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United States District Court
Northern District of California

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the case. See Dependable Highway Exp., 498 F.3d at 1066 (9th Cir. 2007).

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The Court also notes that Plaintiff has failed to respond to the motion to stay and thus does

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not articulate any prejudice or hardship that would result from the stay. Under the considerations

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in Landis, the Court therefore finds that a temporary stay is appropriate. 299 U.S. at 255.

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However, the Court notes that it has very little information on the status of the arbitration.

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Plaintiff allegedly demanded arbitration from an accident that occurred in March 2014. Compl.

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¶ 6. Neither party has detailed the status of the arbitration, Defendant notes only that “arbitration

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has yet to take place.” Mot. 2. As such, Plaintiff may move to lift the stay upon a showing that the

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arbitration process will be significantly delayed.

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For the foregoing reasons, Defendant’s motion to stay the action until completion of

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binding contractual arbitration is GRANTED. The case is hereby STAYED until the arbitration of

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Plaintiff’s uninsured motorist claim is completed. Either party may apply for relief from the stay

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upon notice that the arbitration provided for in the insurance policy has concluded.

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Dated: September 13, 2017
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BETH LABSON FREEMAN
United States District Judge

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