Drago v. Sykes et al

Filing 73

ORDER AND REASONS granting in part and denying in part 66 Motion for Partial Summary Judgment. Signed by Judge Kurt D. Engelhardt on 5/2/2014. (caa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

DAVID A. DRAGO

CIVIL ACTION

VERSUS

NO. 13-563

QIANA S. SYKES, ET AL

SECTION “N” (1)

ORDER AND REASONS
Before the Court is a Motion for Partial Summary Judgment Regarding Plaintiff’s Claim
of Misrepresentation (Rec. Doc. 66), filed by defendant State Farm Mutual Automobile
Insurance Company (“State Farm”). Opposition and reply memoranda are filed at Rec. Docs. 67
and 72.
I. BACKGROUND:
This case arises out of a car accident on September 26, 2011, in which the plaintiff
rear-ended a vehicle driven by Qiana Sykes in the Crescent City Connection toll plaza.
Plaintiff’s insurer, State Farm Mutual Automobile Insurance Company (“State Farm”), settled
without litigation the personal injury and property damage claims filed by Ms. Sykes. One year
after the accident, on September 25, 2012, plaintiff filed suit in the Civil District Court, Parish of
Orleans, against Sykes, her insurer (Geico Indemnity Company), and State Farm, alleging that
Sykes was at fault for the accident and that State Farm owes him underinsured motorist (“UM”)

coverage. (Rec. Doc. 4-3). On December 7, 2012, the plaintiff filed a motion to dismiss Sykes
and Geico after settling with Geico for policy limits of $30,000. (Rec. Docs. 4-5 at 7, 4-6).
Upon receiving notice of the dismissal, in March 2013, State Farm removed the case to this
Court on the basis of diversity.
In addition to seeking payment of UM benefits from State Farm, the plaintiff has sought
statutory penalties1 against State Farm on two grounds: (1) an alleged misrepresentation by a
State Farm representative regarding plaintiff’s right to make a claim under his UM policy; and
(2) State Farm’s failure to tender UM benefits in response to medical records provided to State
Farm after suit was filed. See Rec. Docs. 14-5 at 8 of 9, 14-6. The Court has already dismissed
the latter of these two claims on partial summary judgment. See Rec. Doc. 34. State Farm now
moves to dismiss the former.
II. LAW AND ANALYSIS:
“The Court shall grant 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.” Fed.
R. Civ. P. 56(a). “[T]he burden on the moving party may be discharged by ‘showing’ — that is,
pointing out to the district court — that there is an absence of evidence to support the nonmoving
party’s case.” Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 234 (5th Cir. 2010)
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

Once the moving party has

carried this burden, the nonmoving party “must do more than simply show that there is some
metaphysical doubt as to the material facts.” Id. (quoting Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986)). “[T]he nonmoving party must come forward with

1

See La. Rev. Stat. §§ 22:1892 and 22:1973.
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specific facts showing that there is a genuine issue for trial.” Id. (quoting Matsushita, 475 U.S.
at 587). “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that party.” Id. (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249 (1986)).

Although the Court must draw in favor of the nonmoving party all

reasonable inferences that may be drawn from the evidence submitted, “a party cannot defeat
summary judgment with conclusory allegations, unsubstantiated assertions, or ‘only a scintilla of
evidence.’ ” Turner v. Baylor Richardson Medical Center, 476 F.3d 337, 343 (5th Cir. 2007)
(quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994)); Bellard v. Gautreaux,
675 F.3d 454, 460 (5th Cir. 2012). If the nonmoving party cannot produce admissible evidence
sufficient to establish an essential element as to which the nonmoving party would bear the
burden at trial, entry of summary judgment is mandated. Celotex Corp., 477 U.S. at 322-23.
State Farm moves for dismissal of the misrepresentation claim based on two grounds: (1)
the misrepresentation established by plaintiff's evidence does not relate to a "coverage issue,"
and thus cannot support a claim for statutory penalties; and (2) alternatively, plaintiff is limited
to the $5,000 statutory penalty because plaintiff cannot establish that he sustained any general or
special damages as a result of the alleged misrepresentation.
A.

Does the Plaintiff's Evidence Establish a Misrepresentation Relating to a
"Coverage Issue"?

The bad faith penalty statute provides in pertinent part:
A. An insurer, including but not limited to a foreign line and surplus line insurer,
owes to his insured a duty of good faith and fair dealing. The insurer has an
affirmative duty to adjust claims fairly and promptly and to make a reasonable effort
to settle claims with the insured or the claimant, or both. Any insurer who breaches
these duties shall be liable for any damages sustained as a result of the breach.
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B. Any one of the following acts, if knowingly committed or performed by an
insurer, constitutes a breach of the insurer's duties imposed in Subsection A of this
Section:
(1)

Misrepresenting pertinent facts or insurance policy provisions
relating to any coverages at issue.
*

*

*

*

La. Rev. Stat. § 22:1973(A) and (B). "A 'misrepresentation' occurs when an 'an insurer either
makes untrue statements to an insured concerning pertinent facts [of a policy] or fails to divulge
pertinent facts to the insured.' " Versai Management Corp. v. Clarendon America Ins., 597 F.3d
729, 740 (5th Cir. 2010) (quoting McGee v. Omni Ins. Co., 840 So. 2d 1248, 1256 (La. Ct. App.
3rd Cir. 2003)). "The terms of the statute require that the misrepresentations relate to a
'coverage issue' which would 'involve facts about the policy itself, such as the amount of
coverage, lapse or expiration of the policy, or exclusions from coverage.' " Id. (quoting Imperial
Trading Co. v. Travelers Prop. Cas. Co., No. 06–4262, 2009 WL 2356290, at *3 (E.D. La. July
27, 2009)).
Here, plaintiff testified in his deposition as follows:
Q.

.... Your allegations in your pleading say that a State Farm adjustor made a
misrepresentation in its handling of the claim to you. What was that
misrepresentation?

A.

She told me that I was at fault, and that you couldn't get paid nothing on
UM. So that's when I seeked out an attorney.

Q.

So the misrepresentation that you believe the State Farm agent made from the
beginning of the handling of the claim to your last direct involvement with the
agents was that they assessed fault, determined fault in a way that you disagreed
with; correct?

A.

(Witness nodded head in the affirmative.)

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Q.

Is that right?

A.

Yes.

Q.

Was there any other misrepresentation that you can report to me that you
personally know of from your dealings with State Farm?

A.

There wasn't many dealings. I only talked to her once or twice. I couldn't get
her back on the phone.

Q.

So the answer is, that's the only misrepresentation that you're aware of?

A.

Right.

Rec. Doc. 66-6 at 2-3 of 7.

From this, State Farm argues: "Based on the Plaintiff’s own

testimony, State Farm’s alleged misrepresentation relates solely to the liability of the Plaintiff in
causing the accident and does not relate to any issue of coverage." Rec. Doc. 66-1 at 7-8. In so
arguing, State Farm relies heavily on Strong v. Farm Bureau Ins. Co., 743 So. 2d 949, 953 (La.
Ct. App. 2nd Cir. 1999). However, the Court finds the facts in Strong to be materially different.
There, the sole representation at issue was the following statement, contained in a letter sent by a
claims representative to the plaintiff: "Our records indicate that our insured had already
pre-empted the intersection on a green turn arrow at which time she was in the process of
turning, the green arrow disappeared giving you the green light on your side." Id. Given that
the statement related solely to facts about the accident, the Strong court found that, while the
representative had "arguably misrepresented a pertinent fact about liability..., she never
misrepresented a fact about coverage." Id. Here, however, the alleged statement is not limited
to facts about the accident. According to the plaintiff's deposition testimony, the representative

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stated that Drago "was at fault" and that he "couldn't get paid nothing on UM." Rec. Doc. 66-6
at 2 of 7 (emphasis in original). Drawing all reasonable inferences in the plaintiff's favor, as the
Court must,2 the Court finds that a reasonable jury could conclude from his testimony that the
representative's statements were not restricted to facts about liability for the accident, but also
included a representation about the coverage at issue, i.e., that he "couldn't get paid nothing on
UM." Accordingly, the Court finds that State Farm has failed to establish that it is entitled to
judgment as a matter of law dismissing this claim.
B.

Can Plaintiff Establish that He Sustained Any General or Special
Damages as a Result of the Alleged Misrepresentation, or Is He Limited
to the $5,000 Statutory Penalty?

The penalty provision of the bad faith statute provides:
C. In addition to any general or special damages to which a claimant is entitled for
breach of the imposed duty, the claimant may be awarded penalties assessed against
the insurer in an amount not to exceed two times the damages sustained or five
thousand dollars, whichever is greater. Such penalties, if awarded, shall not be
used by the insurer in computing either past or prospective loss experience for the
purpose of setting rates or making rate filings.

La. Rev. Stat. § 22:1973(C). State Farm argues that the plaintiff cannot establish that he suffered
any damages as a result of the alleged misrepresentation and, therefore, is limited to recovering the
$5,000 penalty provided in the statute. The Court agrees. As set forth above, the plaintiff promptly
sought the services of counsel upon allegedly being told by State Farm that he could not be paid
benefits under his UM coverage. See Rec. Doc. 66-6 at 2 of 7 ("She told me that I was at fault, and
that you couldn't get paid nothing on UM.

2

So that's when I seeked out an attorney.").

E.g., Turner, 476 F.3d at 343.
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It is

uncontested that the plaintiff's notice of claim was timely and that he filed this lawsuit before any
prescriptive period had expired. See Rec. Doc. 66-1 at 8 of 11. Further, in his deposition, the
plaintiff testified as follows:
Q.

My question to you, sir, you told me you think State Farm misrepresented
something to you. How were you damaged by that misrepresentation? How
has it hurt you? How has it affected you either economically or in any
fashion?

A.

Because they haven't paid for my medical bills.
*

*

*

*

Q.

Other than their failure to pay, which you believe they owed you, which you
say was the medical bills and for pain and suffering associated with your
problems —

A.

Correct.

Q.

— did State Farm's misrepresentation damage you in any other way?

A.

That's all I can think of.

See Rec. Doc. 66-6 at 4-5 of 11.

Crediting this testimony fully and drawing all reasonable

inferences in the plaintiff's favor, no reasonable jury could conclude that the plaintiff sustained any
damages as a result of the alleged misrepresentation. To the contrary, it is clear from his testimony
that his only damages are those for which he seeks recovery under the UM provisions of his policy.
Contrary to his deposition testimony, in opposition to the instant motion, the plaintiff has
submitted an affidavit stating that he was "disappointed and confused" upon hearing that he could
not recover under his UM policy and that he felt "anxious and stressed" as a result. Rec. Doc. 67-2
at 5-6 of 6. Thus, he argues, he can establish damages resulting from the misrepresentation.
However, a non-moving party cannot raise a dispute of material fact simply by submitting an
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affidavit contradicting his own prior testimony. Doe v. Dallas Indep. Sch. Dist., 220 F.3d 380, 386
(5th Cir.2000); see also Bacon v. EDS, 219 Fed. App'x 355 (5th Cir. 2007); Albertson v. T.J.
Stevenson & Co., Inc., 749 F.2d 223, 228 (5th Cir. 1984) ("Although the court must resolve all
factual inferences in favor of the nonmovant, the nonmovant cannot manufacture a disputed material
fact where none exists....Thus, the nonmovant cannot defeat a motion for summary judgment by
submitting an affidavit which directly contradicts, without explanation, his previous testimony.").
Defense counsel's questions to the plaintiff were clear ("How were you damaged by that
misrepresentation? How has it hurt you? How has it affected you either economically or in any
fashion?"), and the plaintiff's answers under oath were equally clear.

He cannot now defeat

summary judgment with an affidavit to the contrary. Thus, State Farm is entitled to judgment as
a matter of law limiting bad faith penalties to the $5,000 statutory amount.
Accordingly;
IT IS ORDERED that the Motion for Partial Summary Judgment Regarding Plaintiff’s
Claim of Misrepresentation (Rec. Doc. 66), filed by defendant State Farm Mutual Automobile
Insurance Company is hereby GRANTED IN PART, in that plaintiff's claim for damages
arising from the alleged misrepresentation is dismissed, and plaintiff shall be limited to
recovering the statutory penalty of $5,000 for that claim, and DENIED IN PART, in that it is
denied in all other respects.
New Orleans, Louisiana, this 2nd day of May, 2014.

___________________________________
KURT D. ENGELHARDT
United States District Judge

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