Wurm et al v. Mid-Century Insurance Company et al

Filing 60

ORDERED that the motion for judgment on the pleadings (ECF No. 39 ) is denied without prejudice to renew as a motion for summary judgment at the close of discovery. IT IS FURTHER ORDERED that the motion for sanctions pursuant to Federal Rule of Civil Procedure 11 (ECF No. 49 ) is denied. Signed by Judge Howard D. McKibben on 8/31/2017. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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MICHAEL WURM, an individual, and )
KRISTEN KENNEDY, an individual, )
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Plaintiffs,
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)
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vs.
)
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MARKEL INSURANCE COMPANY, a
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Virginia Corporation; MARKEL
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CORPORATION, a Virginia
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Corporation; MID-CENTURY
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INSURANCE COMPANY, a reciprocal )
or inter-insurance exchange; and )
ABC CORPORATIONS 1-30; and DOES )
1-30, inclusive,
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Defendants.
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_________________________________ )

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3:16-cv-00244-HDM-WGC
ORDER

Pending before the court is Defendant Markel Insurance Company’s

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(“MIC”) motion for judgment on the pleadings (ECF No. 39).

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Kristen Kennedy (“Kennedy”) responded (ECF No. 47) and MIC replied

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(ECF No. 48).

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Plaintiff

Also pending before the court is MIC’s motion for sanctions

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pursuant to Federal Rule of Civil Procedure 11 (ECF No. 49).

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responded (ECF No. 52) and MIC replied (ECF No. 58).

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I.

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Kennedy

Background
This action arises from an automobile accident that occurred on
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July 11, 2013.

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(“Wurm”) was driving a vehicle and Kennedy was his passenger when they

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were hit from behind by another vehicle.

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time of the accident, the vehicle driven by Wurm was insured by MIC

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under a policy that provided $1,000,000 Under Insured Motorist (“UIM”)

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coverage.

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(ECF No. 1-3 at ¶¶ 9-15).

Plaintiff Michael Wurm

(Id. at ¶¶ 9, 15).

At the

(Id. at ¶ 19).

Wurm and Kennedy each carried their own personal automobile

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insurance policies.

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the tortfeasor’s insurance carrier.

(Id. at ¶¶ 20-21).

Wurm received $40,000 from

(Id. at ¶ 29).

Kennedy received

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$50,000 from the tortfeasor’s insurance carrier and $25,000 in UIM

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benefits from her insurer, State Farm.

(Id. at ¶¶ 29, 32).

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This action was initially filed by Wurm and Kennedy in the Second

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Judicial District Court for the State of Nevada against MIC and

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Farmers Insurance Exchange1, Wurm’s personal automobile insurance

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carrier. (ECF No. 1-3). Plaintiffs allege breach of contract, breach

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of the duty of good faith and fair dealing, statutory violations, and

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intentional infliction of emotional distress.

This action was

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removed to this court on May 6, 2016.

On June 6, 2016,

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MIC filed a counterclaim against Wurm and Kennedy for declaratory

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relief.

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stipulation to dismiss with prejudice: (1) Wurm’s claims against MIC

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and Mid-Century Insurance Company and (2) MIC’s counterclaims against

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Wurm.

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II.

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(ECF No. 11).

(ECF No. 1).

On January 20, 2017, the court approved the

(ECF No. 33).
Motion for Judgment on the Pleadings
MIC now moves for judgment on the pleadings against Kennedy.

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On June 1, 2016, the court approved the stipulation to correct
the case caption so that all references to Farmers Insurance Exchange
are modified to Mid-Century Insurance Company. (ECF No. 10).
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(ECF No. 39).

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“[a]fter the pleadings are closed–but early enough not to delay trial–

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a party may move for judgment on the pleadings.”

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Pleadings are closed when all pleadings required or permitted in

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federal actions by Rule 7(a) have been served and filed.

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U.S., 419 F.3d 1058, 1061 (9th Cir. 2005).

Federal Rule of Civil Procedure 12(c) provides that

Fed.R.Civ.P. 12(c).

See Doe v.

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“A judgment on the pleadings is properly granted when, taking all

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allegations in the non-moving party’s pleadings as true, the moving

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party is entitled to judgment as a matter of law.”

United States v.

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Teng Jiao Zhou, 815 F.3d 639, 642 (9th Cir. 2016) (quoting Fajardo v.

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Cty. of L.A., 179 F.3d 698, 699 (1999)).

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judgment on the pleadings, the court accepts as true all well-pleaded

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factual allegations by the nonmoving party and construes the facts in

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the light most favorable to that party.

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Seventh-Day Adventists v. Seventh-Day Adventist Congregational Church,

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887 F.2d 228, 230 (9th Cir. 1989). Thus, the court must determine if,

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taking

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inferences in favor of plaintiff, whether the complaint plausibly

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states a claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct.

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1937 (2009); Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047,

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1054 n. 4 (9th Cir. 2011) (stating the standard governing a Rule 12(c)

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motion is “functionally identical” to that governing a Rule 12(b)(6)

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motion).

the

alleged

facts

as

true,

and

In ruling on a motion for

Gen. Conference Corp. of

drawing

all

reasonable

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MIC argues that Kennedy failed to satisfy certain conditions

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precedent to coverage, and as such cannot prevail on her claims for

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breach of contract and breach of the duty of good faith and fair

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dealing.

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Kennedy first claims that MIC breached the contract.
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Kennedy

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alleges the existence of a contract, that she “performed all of the

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conditions of the contract required to be performed on [her] part,”

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and that MIC “breached the contract by failing to pay and unreasonably

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delaying payment of benefits due and owing, including the undisputed

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benefits, and by failing to promptly, fairly and equitably process and

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investigate [Kennedy’s] claims.” (ECF No. 1-3 at ¶¶ 45, 47). Kennedy

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has asserted sufficient facts to plead the breach of contract claim.

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Kennedy also claims that MIC breached the duty of good faith and

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fair dealing.

Kennedy alleges that her contract with MIC had an

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implied covenant of good faith and fair dealing, that MIC breached its

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duties by, among other reasons, adjusting her claim in violation of

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the Nevada Unfair Claims Practices Act, and failing to promptly settle

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and process her claim.

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sufficient facts to plead the breach of the duty of good faith and

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fair dealing claim.

(Id. at ¶¶ 50–51).

Kennedy has asserted

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Accordingly, MIC is not entitled to judgment on the pleadings.

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MIC’s motion for judgment on the pleadings (ECF No. 39) is denied

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without prejudice to renew as a motion for summary judgment at the

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close of discovery.

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III. Motion for Sanctions

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On June 26, 2017, MIC filed a motion for sanctions pursuant to

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Federal Rule of Civil Procedure 11.

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for the imposition of sanctions when a pleading is frivolous, legally

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unreasonable, or presented for an improper purpose.

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11(b).

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to be exercised with extreme caution.”

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Lit., 78 F.3d 431, 437 (9th Cir. 1996) (quoting Operating Eng’rs

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Pension Trust v. A-C Company, 859 F.2d 1336, 1345 (9th Cir. 1988).

(ECF No. 49).

Rule 11 provides

See Fed.R.Civ.P.

Sanctions under Rule 11 is “an extraordinary remedy” and “one

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In re Keegan Mgmt. Co., Sec.

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“A court considering a motion pursuant to Rule 11 must do two

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things:

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decide whether to impose sanctions.”

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of Const. Indus. & Laborers Health & Welfare Trust, 244 F. Supp. 2d

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1098, 1103 (D. Nev. 2003). When, as here, a “complaint is the primary

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focus of Rule 11 proceedings, a district court must conduct a two-

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prong inquiry to determine (1) whether the complaint is legally or

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factually baseless from an objective prospective, and (2) if the

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attorney has conducted a reasonable and competent inquire before

(1) decide whether a Rule 11 violation has occurred, and (2)
Smith & Green Corp. v. Trustees

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signing and filing it.”

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1127 (9th

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Sanctions imposed under this rule “must be limited to what suffices

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to deter repetition of the conduct or comparable conduct by others

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similarly situated.”

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Christian v. Mattel, Inc., 286 F.3d 1118,

Cir. 2002) (internal quotations and citations omitted).

Fed.R.Civ.P. 11(c)(4).

MIC argues that the complaint contains four misrepresentations,

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is legally baseless, and was filed for an improper purpose.

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the pleadings and the current record the court cannot conclude that

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the complaint is legally or factually baseless from an objective

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prospective.

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conducted a reasonable and competent inquiry before signing the

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complaint. Therefore, the motion for sanctions (ECF No. 49) is denied.

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IV.

Additionally,

it

appears

that

Kennedy’s

Based on

counsel

Conclusion

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IT IS THEREFORE ORDERED that the motion for judgment on the

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pleadings (ECF No. 39) is denied without prejudice to renew as a

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motion for summary judgment at the close of discovery.

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/ / /

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/ / /
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IT IS FURTHER ORDERED that the motion for sanctions pursuant to
Federal Rule of Civil Procedure 11 (ECF No. 49) is denied.
DATED: This 31st day of August, 2017.

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____________________________
UNITED STATES DISTRICT JUDGE

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