Farmers Insurance Company of Oregon v. Brad Hopkins

Filing 10

ORDER Denying 6 Motion to Dismiss. Signed by Judge Gloria M. Navarro on 5/3/2011. (Copies have been distributed pursuant to the NEF - SLR)

UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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Plaintiff,
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vs.
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BRAD HOPKINS, a Nevada resident; DOES I )
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through X, inclusive, and ROE
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CORPORATIONS 1 through 100, inclusive,
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Defendants.
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FARMERS INSURANCE COMPANY OF
OREGON, an Oregon Corporation,

Case No.: 2:10-cv-00067-GMN-PAL
ORDER

INTRODUCTION
Before the Court is Defendant Brad Hopkins’ (Hopkins) Motion to Dismiss (ECF No.

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6). Plaintiff Farmers Insurance Company of Oregon (“Farmers”) filed its Response on June 2,

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2010 (ECF No. 9). Defendant did not file a Reply.

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FACTS AND BACKGROUND
This is an action for declaratory relief brought by Plaintiff Farmers against Defendant

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Hopkins. Farmers is seeking judgment from the Court adjudicating and declaring that Farmers

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has fulfilled its contractual obligations to Defendant Hopkins and owes him no further

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contractual obligations, and that the bankruptcy of Chrysler LLC bars any potential claims for

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damages Defendant Hopkins may assert against Farmers.

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Defendant Hopkins maintained an automobile insurance policy through Farmers that

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provided personal automobile coverage subject to its terms, conditions, limitations, definitions,

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exclusions, and restrictions. (Complaint ¶ VI, ECF No. 1). The limits of the policy were

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$50,000.00/100,000.00 for bodily injury, $50,000.00 for property damage and $50,000.00 for

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uninsured/underinsured motorist (“UM/UIM”) coverage. (Id.) Defendant Hopkins’ insured

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vehicle was a Dodge Dakota pickup truck manufactured by Chrysler.
On January 6, 2009, Defendant Hopkins was involved in an automobile accident. (Id. at

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¶ VII). Defendant Hopkins submitted a claim to Farmers pursuant to the UM/UIM provisions

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of his policy, and Farmers subsequently tendered the full amount of the UM/UIM coverage,

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$50,000.00. (Id.). Farmers also paid $10,493.90 to Defendant Hopkins under the policy’s

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property damage coverage to compensate him for the “total loss” of his vehicle. (Id.). In

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exchange for this sum of $10,493.90, Farmers took full possession and ownership of the

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vehicle. (Id.).

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Following Defendant Hopkins’ acceptance of the $10,493.90 “total loss” payment, he

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sent a letter to Farmers on or around January 14, 2009, requesting Farmers maintain and not

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sell the vehicle. (Id at ¶ IX). Defendant Hopkins made this request because he was

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contemplating a products liability action against Chrysler in relation to his accident. (Id.).

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Farmers sent a letter in response on April 6, 2009 stating that the “vehicle is on hold at the

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salvage pool and will remain on hold until the inspection is complete.” (See Defendant’s Ex.

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2, ECF No. 6). Defendant Hopkins’ counsel retained an accident reconstructionist and

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biomedical expert to inspect the vehicle in preparation for a claim against Chrysler. (See

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Plaintiff’s Ex. 1, ECF No. 9). On October 29, 2009, Defendant Hopkins’ counsel confirmed

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that the vehicle had been sold at auction and that an attorney for Farmers gave approval for the

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sale. (See id.).

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On December 7, 2009, Defendant Hopkins’ counsel sent a demand letter to Farmers

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demanding compensation for Defendant Hopkins’ loss. (Id.). Thereafter, Farmers filed the

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instant Complaint for Declaratory Judgment on January 19, 2010. (ECF No. 1). Defendant

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Hopkins moves to dismiss this Complaint pursuant to Fed. R. Civ. P. Rule 12(h)(3) and Rule

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12(b)(7) because the claim is not ripe and Farmers failed to join a necessary party.

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DISCUSSION

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A.

Declaratory Judgment Act
“In a case of actual controversy within its jurisdiction . . . any court of the United States

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. . . may declare the rights and other legal relations of any interested party seeking such

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declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). “The

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Declaratory Judgment Act was designed to relieve potential defendants from the Damoclean

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threat of impending litigation which a harassing adversary might brandish, while initiating suit

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at his leisure or never. The Act permits parties so situated to forestall the accrual of potential

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damages by suing for a declaratory judgment, once the adverse positions have crystallized and

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the conflict of interests is real and immediate.”Societe de Conditionnement en Aluminium v.

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Hunter Engineering Co., Inc., 655 F.2d 938, 943 (9th Cir.1981).
The party seeking declaratory relief must show an actual controversy regarding a matter

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within federal court subject matter jurisdiction. 1 See Calderon v. Ashmus, 523 U.S. 740, 745,

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118 S.Ct. 1694, 1698 (1998). The existence of an “actual controversy” is the same as a case

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being ripe for adjudication. “Basically, the question in each case is whether the facts alleged,

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under all the circumstances, show that there is a substantial controversy, between parties

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having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a

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declaratory judgment.” Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61

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S.Ct. 510, 512 (1941); Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240–

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41, 57 S.Ct. 461, 464 (1937) (“A justiciable controversy is thus distinguished from a

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difference or dispute of a hypothetical or abstract character; from one that is academic or

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moot. . . . It must be a real and substantial controversy admitting of specific relief through a

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The parties do not dispute that this court has subject matter jurisdiction over the case because there is diversity of
citizenship between the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332.

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decree of a conclusive character, as distinguished from an opinion advising what the law

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would be upon a hypothetical state of facts.”).
The facts of this case present a judiciable controversy suitable for determination in a

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suit for declaratory relief. Defendant Hopkins’ December 2, 2009 letter to Farmers presents a

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real threat of impending litigation. The letter lays out potential causes of actions and demands

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a settlement payment from Farmers. Defendant Hopkins alleges that Farmers committed

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tortuous breach of contract by violating the duty of good faith and fair dealing, negligent

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spoliation of evidence and breach of fiduciary duty. The letter advises that if the parties were

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unable to settle Defendant Hopkins would be filing a lawsuit. The adverse positions are clear

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and the conflict of interests is real and immediate.
Defendant Hopkins argues that there are many factual issues in dispute such that the

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issues of law cannot be determined at this time. “That the dispute turns upon questions of fact

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does not withdraw it . . . from judicial cognizance. The legal consequences flow from the facts

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and it is the province of the courts to ascertain and find the facts in order to determine the legal

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consequences.” Aetna Life Ins. Co., 300 U.S. at 242, 57 S.Ct. 461 at 465. Thus, the Court

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finds that there is a judiciable case or controversy and as such Defendant Hopkins’ Motion to

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Dismiss must be denied.

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B.

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Failure to Join a Necessary and Indispensible Party
Defendant Hopkins argues that Chrysler is a necessary party that should be joined to

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this suit and without Chrysler this suit should be dismissed. A person must be joined as a party

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if (1) in that person’s absence, the court cannot accord complete relief among existing parties

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or (2) that person claims an interest relating to the subject of the action and is so situated that

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disposing of the action in the person’s absence may impair or impede the person’s ability to

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protect the interest or leave an existing party subject to a substantial risk of incurring double,

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multiple, or otherwise inconsistent obligations because of the interest. Fed. R. of Civ. P. Rule

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19(a).

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The Court finds that it can accord complete relief among the existing parties. Chrysler

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is not a party to the subject insurance policy and thus complete relief can be given to Farmers

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without Chrysler’s participation. Further, Farmers is asking the Court to rule as a matter of

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law whether or not damages claims against Farmers are barred by Chrysler’s bankruptcy.

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Chrysler’s participation would not implicate the Court’s interpretation of case law to bar a

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damages claim against Farmers.

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Plaintiff argues that Chrysler has a protectable interest in this suit that would be

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impaired if it were not joined. Chrysler never claimed an interest in this case. “Joinder is

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‘contingent . . . upon an initial requirement that the absent party claim a legally protected

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interest relating to the subject matter of the action.’” U.S. v. Bowen, 172 F.3d 682 (9th Cir.

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1999). Therefore it is unnecessary to add Chrysler as a necessary party under Rule 19.

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Even if the Court were to determine that Chrysler was a necessary party, it does not

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result in an automatic dismissal of this action. Dismissal would only be proper if joinder were

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not feasible. In this case joinder would be feasible because adding the US Trustee for

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Chrysler, LLC or Old Chrysler would not defeat diversity jurisdiction and the Court would

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retain subject matter jurisdiction.
CONCLUSION

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IT IS HEREBY ORDERED that Defendant Brad Hopkins’ Motion to Dismiss (ECF
No. 6) is DENIED.
DATED this 3rd day of May, 2011.

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________________________________
Gloria M. Navarro
United States District Judge

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