Williams et al v. The Travelers Home and Marine Insurance Company et al

Filing 12

ORDER that 5 Defendants' Motion to Dismiss is GRANTED. The Williamses' breach of contract claim against defendant The Travelers Home and Marine Insurance Company remains pending. Signed by Judge Andrew P. Gordon on 3/8/17. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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MAXWELL B. WILLIAMS and CLAIR
N. WILLIAMS,
Plaintiffs,

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v.
THE TRAVELERS HOME AND MARINE
INSURANCE COMPANY and THE
TRAVELERS INDEMNITY COMPANY,

Case No. 2:16-cv-01856-APG-CWH
ORDER GRANTING MOTION TO
DISMISS
(ECF No. 5)

Defendants.
Plaintiffs Maxwell Williams and Claire Williams filed this lawsuit in Nevada state court

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on June 17, 2016. Defendants The Travelers Home and Marine Insurance Company (THMIC)

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and The Travelers Indemnity Company (TIC) removed it to this court on August 5, 2016. ECF

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No. 1. The defendants now move to dismiss most of the Williamses’ claims. They argue that

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TIC should be dismissed because it is not a party to the insurance policy at issue. They also argue

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the claims for vicarious liability and punitive damages are remedies, not causes of action.

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According to the defendants, all of the Williamses’ other claims, except for their breach of

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contract claim, are time-barred. Finally, they contend the Williamses cannot bring negligence

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and intentional infliction of emotional distress claims against their insurance carrier.

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I convert the motion into one for summary judgment because the parties have attached

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evidence to the motion and response. I grant summary judgment in favor of TIC because it is not

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a party to the insurance contract out of which the Williamses’ claims arise. I dismiss the asserted

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claims for vicarious liability and punitive damages because these are theories of recovery, not

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causes of action. I grant summary judgment in THMIC’s favor on all of the Williamses’

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remaining claims, except for their breach of contract and negligence claims, as time-barred.

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Finally, I grant summary judgment in THMIC’s favor on the negligence claim because an insured

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cannot sue his or her insurer for negligence where that claim would be duplicative of a breach of

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contract or bad faith claim. As a result, the Williamses’ only remaining claim is a breach of

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contract claim against THMIC.

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I. BACKGROUND

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The Williamses purchased homeowners’ insurance from THMIC to cover their residence.

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ECF Nos. 1-1 at 5; 5-1. In June 2010, they suffered a water loss at their home and they submitted

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a claim under the policy. ECF No. 1-1 at 5. According to the complaint, THMIC inspected the

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property but refused to pay benefits for the reasonable repair of the residence or for replacement

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of damaged contents. Id. at 6. The complaint alleges that THMIC “ultimately closed the

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Plaintiffs’ outstanding claims without arriving at a fair and equitable settlement . . . .” Id. On

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October 5, 2011, THMIC sent a letter to the Williamses stating that it was “closing this file”

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because the Williamses allegedly had not cooperated with THMIC. ECF No. 5-3.

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Based on THMIC’s alleged acts and omissions in its handling of the Williamses’ claim,

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the complaint asserts the following: (1) vicarious liability for the alleged actions or inactions of

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the defendants’ employees; (2) breach of contract for failing to pay benefits due under the policy;

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(3) breach of the implied covenant of good faith and fair dealing for failing to make repairs or

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replace the contents and for “closing the Plaintiffs’ outstanding claims without arriving at a fair

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and equitable settlement resolution;” (4) statutory violations for unfair claims practices; (5)

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common law bad faith; (6) negligence; (7) intentional infliction of emotional distress; and (8)

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punitive damages. Id. at 6-13.

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II. ANALYSIS

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Although styled a motion to dismiss, the parties attach evidence to the motion and the

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response, which I have considered. I therefore convert the motion into one for summary

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judgment. See In re Rothery, 143 F.3d 546, 549 (9th Cir. 1998); Fed R. Civ. P. 12(d).

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Summary judgment is appropriate if the pleadings, discovery responses, and affidavits

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demonstrate “there is no genuine dispute as to any material fact and the movant is entitled to

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judgment as a matter of law.” Fed. R. Civ. P. 56(a), (c). A fact is material if it “might affect the

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outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

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(1986). An issue is genuine if “the evidence is such that a reasonable jury could return a verdict

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for the nonmoving party.” Id.

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The party seeking summary judgment bears the initial burden of informing the court of the

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basis for its motion and identifying those portions of the record that demonstrate the absence of a

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genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden

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then shifts to the nonmoving party to set forth specific facts demonstrating there is a genuine

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issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir.

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2000). I view the evidence and make reasonable inferences in the light most favorable to the

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nonmoving party. James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008).

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A. Defendant TIC

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TIC contends it is not a party to the contract out of which the plaintiffs’ claims arise. The

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Williamses respond that TIC is mentioned on page 11 of the policy, TIC sent them a pamphlet,

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and TIC sent correspondence in July 2012 regarding an uncashed check made out to the

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Williamses. They thus argue there are questions of fact regarding whether TIC is in privity of

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contract with the Williamses.

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The complaint does not allege facts supporting TIC’s liability. It groups the two

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defendants together and identifies them collectively as “Travelers.” ECF No. 1-1 at 4-5. But it

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contains no factual allegations about why TIC is liable. The insurance policy identifies the

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insurer as THMIC. ECF No. 5-1 at 2. TIC is not listed as an insurer or a party to the contract.

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The October 5, 2011 letter closing the claim file was issued by THMIC. ECF No. 5-3.

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The Williamses rely on three exhibits to raise an inference that TIC was a party to the

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insurance contract. The first is a privacy notice “given by Travelers Indemnity Company, and its

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property and casualty insurance affiliates, members of the Travelers group of companies.” ECF

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No. 8-2 at 11-12. THMIC identifies itself in the policy as “One of The Travelers Property

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Casualty Companies.” Id. at 5. Consequently, THMIC’s use of the form does not indicate that

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TIC is a party to the insurance contract.

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The second exhibit is a pamphlet about calculating depreciation issued by TIC “and its

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property casualty affiliates.” ECF No. 8-6. at 5. For the same reasons, this pamphlet does not

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indicate TIC is a party to the insurance contract.

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Finally, the Williamses rely on a July 7, 2012 letter sent to them from TIC. That letter

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references the date of the loss and the claim number for their claim. ECF Nos. 8-5 at 2; see also

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8-4 (October 2011 letter from THMIC listing same claim number and date of loss). The July

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2012 letter states that “[o]ur records indicate the check number listed above has not been returned

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to us as a cashed item by our bank.” Id. It is unclear why TIC, as opposed THMIC, sent this letter

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to the Williamses. However, the letter does not raise an issue of fact that TIC was a party to the

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insurance policy or had any obligations under it. Accordingly, I grant summary judgment in

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TIC’s favor.

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B. Vicarious Liability and Punitive Damages

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THMIC argues vicarious liability and punitive damages are theories of recovery, not

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causes of action. THMIC admits it is vicariously liable for its employees’ actions taken within

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the scope of their employment. ECF No. 5 at 5. The Williamses do not oppose dismissal given

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this admission by THMIC. ECF No. 8 at 3. They also agree that punitive damages are a remedy.

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Id. at 6. The parties agree these are not independent claims. I therefore grant this portion of

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THMIC’s motion.

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C. Statute of Limitations

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1. Breach of the Implied Covenant of Good Faith and Fair Dealing/Bad Faith
THMIC argues these claims are governed by a four-year limitations period, and because it

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closed the case file and notified the Williamses of that fact on October 5, 2011, the Williamses’

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bad faith claims are time-barred. The Williamses respond that this case is in the early stages and

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it is unclear when THMIC breached the covenant.1 The Williamses note that TIC sent a letter on

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July 7, 2012. They thus argue the file was open in July 2012, which was less than four years

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The plaintiffs did not request I defer ruling on the motion under Federal Rule of Civil Procedure
56(d), nor did they comply with that Rule’s requirements.

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before they filed this lawsuit. Alternatively, the Williamses argue that the statute of limitations

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does not begin to run until THMIC refuses payment, and there is no evidence THMIC ever made

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a final decision not to pay.

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The Williamses’ duplicative2 bad faith claims are governed by a four-year limitations

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period. Nev. Rev. Stat. § 11.190(2)(c) (four-year period for “[a]n action upon a contract,

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obligation or liability not founded upon an instrument in writing”); see also Schumacher v. State

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Farm Fire & Cas. Co., 467 F. Supp. 2d 1090, 1094-95 (D. Nev. 2006). The complaint alleges

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that THMIC acted in bad faith because it closed the file without reaching a fair settlement. ECF

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No. 1-1 at 6. THMIC sent a letter to the Williamses stating that the file was closed as of October

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2011. The Williamses thus had until October 2015 to bring suit. They did not file their

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complaint until June 2016. Their bad faith claims are therefore time-barred.

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The Williamses’ reliance on the July 2012 letter is misplaced. The fact that TIC inquired

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about an uncashed check does not suggest that the claims file was still open or that THMIC was

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still mulling whether to pay more benefits. THMIC stated in its October 2011 letter that it was

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closing the file due to a purported lack of cooperation by the Williamses. Regardless of whether

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that allegation was true, there is no genuine dispute that at that moment, THMIC was refusing to

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pay anything further. The Williamses thus were aware as of that date that no additional benefits

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would be forthcoming. They do not identify anything that occurred after October 2011, other

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than the July 2012 letter, to suggest the closing of the file was not a final decision. I therefore

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grant summary judgment in THMIC’s favor on the Williamses’ bad faith claims.

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2. Unfair Claims Practices
This claim is governed by a three-year limitations period. Nev. Rev. Stat. § 11.190(3)(a)
(three-year period for “[a]n action upon a liability created by statute, other than a penalty or

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An insurer’s breach of the covenant of good faith and fair dealing is the same as bad faith. See
Tracey v. Am. Family Mut. Ins. Co., No. 2:09-CV-01257-GMN-PAL, 2010 WL 3613875, at *2 (D. Nev.
Sept. 8, 2010) (“A claim of breach of the covenant of good faith and fair dealing is, in essence, a claim for
bad faith.”); Drennan v. Maryland Cas. Co., 366 F. Supp. 2d 1002, 1005 (D. Nev. 2005) (stating a “breach
of the good faith and fair dealing covenant constitutes bad faith when the relationship of the parties is that
of insurer and insured”).

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forfeiture”). This claim is time-barred for the same reasons as the bad faith claims. I therefore

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grant summary judgment in THMIC’s favor on the Williamses’ claim for unfair claims practices.

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3. Intentional Infliction of Emotional Distress

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This claim is governed by a two-year limitations period. Nev. Rev. Stat. § 11.190(4)(e)

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(two-year period for “an action to recover damages for injuries to a person”). This claim is time-

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barred for the same reasons as the bad faith claims. There is no allegation of outrageous conduct

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after the October 2011 closing of the file. I therefore grant summary judgment in THMIC’s favor

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on the Williamses’ intentional infliction of emotional distress claim.

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D. Negligence
THMIC argues Nevada law does not recognize a claim for negligence by an insured

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against his or her insurer. It argues insurers do not owe insureds duties beyond what are owed

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under the contract and the duty of good faith. The Williamses respond that THMIC is vicariously

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liable for the negligence of its employees who ignored communications from the Williamses,

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ignored evidence of damage to the house, claimed that the parties had reached agreements that

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were not made, and did not fairly resolve the Williamses’ insurance claim.

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The Williamses do not respond to THMIC’s citations to case law holding that Nevada

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does not recognize a negligence claim by an insured against his or her insurer that is duplicative

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of a breach of contract or bad faith claim. See Phillips v. Clark Cnty. Sch. Dist., 903 F. Supp. 2d

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1094, 1104 (D. Nev. 2012) (“Defendant argues that summary adjudication is appropriate because

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Defendant does not owe a duty of care beyond the duties imposed by the insurance contract and

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the corresponding duty of good faith . . . . The Court agrees.”); Sierzega v. Country Preferred

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Ins. Co., No. 2:13-CV-1267-JCM-NJK, 2014 WL 1668630, at *5 (D. Nev. Apr. 25, 2014)

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(“Nevada does not recognize a negligence cause of action against an insurer who has wrongfully

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denied or delayed payment . . . .”). There may be circumstances under which an insurer could be

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liable to its insured for negligence. But I agree that cannot be the case when the claim is

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duplicative of a breach of contract or bad faith claim because the insured’s duties in those

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situations are defined by the contract and by the law on insurance bad faith, not by the law of

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negligence. A negligence claim is particularly inappropriate when it is duplicative of a bad faith

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claim. As explained by Judge Mahan, “[i]f a plaintiff could succeed against an insurer under a

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theory of ordinary negligence, it would be absurd for courts to impose a stricter standard for

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identical claims arising under the covenant of good faith.” Sierzega, 2014 WL 1668630, at *5.

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The Williamses’ negligence claim rests on allegations that THMIC’s employees did not

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respond to the Williamses, ignored evidence supporting their claim, claimed the parties had

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reached agreements that were not made, and failed to resolve the Williamses’ claim. These acts

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were taken as part of the claims handling process and are part of the alleged bad faith denial of

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benefits. THMIC’s duties thus are governed by the contract and the law on bad faith. I therefore

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grant summary judgment in THMIC’s favor on the Williamses’ negligence claim.3

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III. CONCLUSION

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IT IS THEREFORE ORDERED that defendants’ motion to dismiss (ECF No. 5) is

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GRANTED. Summary judgment is granted in favor of defendant The Travelers Indemnity

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Company on all of the Williamses’ claims against it. The Williamses’ claims for vicarious

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liability and punitive damages are dismissed because they are remedies, not independent causes

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of action. Summary judgment is granted in favor of defendant The Travelers Home and Marine

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Insurance Company on the Williamses’ claims for bad faith, breach of the covenant of good faith

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and fair dealing, unfair claims practices, intentional infliction of emotional distress, and

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negligence. The Williamses’ breach of contract claim against defendant The Travelers Home and

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Marine Insurance Company remains pending.

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DATED this 8th day of March, 2017.

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ANDREW P. GORDON
UNITED STATES DISTRICT JUDGE

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I assume without deciding that the negligence claim is timely. The plaintiffs argue this claim is
subject to a six-year limitations period under Job’s Peak Ranch Cmty. Ass’n, Inc. v. Douglas Cnty., No.
55572, 2015 WL 5056232, at *4 (Nev. Aug. 25, 2015) (stating that “claims for negligence based on breach
of a written contract expire after six years, NRS 11.190(1)(b)”). The defendants did not respond to this
contention. I decline to consider the defendants’ argument, raised for the first time in the reply brief, that
the negligence claim is barred by the policy’s two-year limitation. See Vasquez v. Rackauckas, 734 F.3d
1025, 1054 (9th Cir. 2013).

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