Foraker v. USAA Casualty Insurance Company

Filing 437

Opinion and Order - Plaintiff's Motion for an Order Certifying a Determinative Question of Law to the Oregon Supreme Court (ECF 427 ) is DENIED. Signed on 2/7/2019 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

PEGGY FORAKER,

Case No. 3:14-cv-87-SI

Plaintiff,
OPINION AND ORDER
v.
USAA CASUALTY INSURANCE
COMPANY,
Defendant.
Stephen Hendricks, HENDRICKS LAW FIRM, 30088 SW Egger Rd., Hillsboro, OR 97213; Heather
A. Brann, HEATHER A. BRANN, ATTORNEY AT LAW, P.O. Box 11588, Portland, OR 97211. Of
Attorneys for Plaintiff.
Robert S. McLay and Joshua N. Kastan, DKM LAW GROUP, LLP, 535 Pacific Avenue, Suite 101,
San Francisco, CA, 94133; Matthew C. Casey, BULLIVANT HOUSER BAILEY, PC, 300 Pioneer
Tower, 888 SW Fifth Avenue, Portland, OR 97204. Of Attorneys for Defendant.
Michael H. Simon, District Judge.
INTRODUCTION
Plaintiff Peggy Foraker moves that the Court certify the following three questions for
consideration by the Oregon Supreme Court:
1.
Ivanov v. Farmers Ins. Co., 344 Or. 421, 430 (2008), held
that “[o]bedience to that prohibition [of ORS § 746.230(1)(d)] is a
component of [an insurer’s] good faith obligation in this context.” Would

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Oregon law extend the reasoning of Ivanov to a violation of
ORS 746.230(1)(g)?
2.
Is a violation of ORS 746.230(1)(g), without more, a
breach of the implied covenant of good faith and fair dealing by an insurer
as a matter of Oregon law under similar reasoning to that of Ivanov v.
Farmers Ins. Co., 344 Or. 421 (2008)?
3.
To recover at trial for breach of the implied covenant of
good faith and fair dealing related to a violation of ORS 746.230(1)(g),
must the plaintiff prove “something more” in terms of unreasonable
insurer conduct, apart from the fact that the insurer compelled its insured
to litigate by offering substantially less than amounts recovered at trial?
Conversely, would it be a defense to a violation of ORS § 746.230(1)(g)
that the insurer’s claims handling was “reasonable but wrong” in
formulating a substantially small prelitigation offer?
For the following reasons, Plaintiff’s motion to certify these questions to the Oregon
Supreme Court is denied.
STANDARDS
Certification of questions to the Oregon Supreme Court is governed by Oregon Revised
Statutes (“Or. Rev. Stat.”) § 28.200, et seq. (“Certification Act”). These statutory provisions are
Oregon’s adopted form of the Uniform Certification of Questions of Law Act. See Or. Rev. Stat.
§ 28.255; F.D.I.C. v. Smith, 328 Or. 420, 423 (1999). Because Oregon’s Certification Act is
based on a uniform act, commentary relating to the uniform act and other cases interpreting
similar statutes based on the uniform act may be instructive. See W. Helicopter Servs., Inc. v.
Rogerson Aircraft Corp., 311 Or. 361, 363 n.2 (1991) (“Because our statute is based on a
uniform law there exist[s] useful commentary on the Uniform Act, instructive case law from
other uniform-law jurisdictions, and informative academic treatment of the subject.”).
The primary statutory provision relating to certification establishes that the Oregon
Supreme Court may answers questions of law certified to it from certain courts, including this
United States District Court, “if there are involved in any proceedings before it questions of law
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of this state which may be determinative of the cause then pending in the certifying court and as
to which it appears to the certifying court there is no controlling precedent in the decisions of the
Supreme Court and the intermediate appellate courts of this state.” Or. Rev. Stat. § 28.200.
Oregon’s Certification Act also requires that the certifying court set forth the questions to be
answered and a statement of all facts relevant to the questions and “showing fully the nature of
the controversy.” Or. Rev. Stat. § 28.210. “The decision to certify a question to a state supreme
court rests in the ‘sound discretion’ of the district court.” Eckard Brandes, Inc. v. Riley, 338
F.3d 1082, 1087 (9th Cir. 2003) (quoting Louie v. United States, 776 F.2d 819, 824 (9th
Cir. 1985). “Even where state law is unclear, resort to the certification process is not obligatory.”
Id.
DISCUSSION
The Court previously denied Plaintiff’s motion for summary judgment in which Plaintiff
argued that a violation of Or. Rev. Stat. § 746.230(1)(g) is a per se violation of an insurer’s duty
of good faith and fair dealing. The Court also denied Plaintiff’s subsequent motion for
reconsideration. Plaintiff now argues that because the Court noted in its Opinion and Order
denying Plaintiff’s motion for summary judgment that there was no Oregon case agreeing with
Plaintiff’s theory, the question should be certified. The Court disagrees.
A. Threshold Inquiry
The certification process serves many purposes. It originally arose out of cases where
abstention might be appropriate, but in lieu of abstention courts could certify a question to the
state court. See, e.g., Wright & Miller, Certification to State Court, 17A Fed. Prac. & Proc. Juris.
§ 4248 (3d ed.) (hereinafter “Wright & Miller”). In those circumstances, the U.S. Supreme Court
emphasized that certification to state supreme courts can “save time, energy, and resources and
helps build a cooperative judicial federalism.” Lehman Bros. v. Schein, 416 U.S. 386, 391
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(1974). Another purpose of certifying a question to a state supreme court “is to provide foreign
courts with the benefit of [the state Supreme Court’s] determination of [state] law.” Abrams v. W.
Virginia Racing Comm’n, 164 W. Va. 315, 318, 263 S.E.2d 103, 106 (1980). Where that benefit
is not needed or necessary, however, certification is not appropriate. See id.
“Where certification is available, it is not a device to be used indiscriminately.” Wright &
Miller, § 4248. “Questions ought not be certified if the answer is reasonably clear.” Id; see also
Russell v. Salve Regina Coll., 938 F.2d 315, 318 (1st Cir. 1991) (noting that the fact that the state
courts had never addressed the issue “reflects only the fact that the court apparently has not been
faced squarely with the issue” and denying certification because the First Circuit was
“convince[d]” about how the state court would rule on the issue); White v. Celotex Corp., 907
F.2d 104, 106 (9th Cir. 1990) (finding that it was “highly unlikely that the Supreme Court of
Arizona” would adopt the proposed legal theory and concluding that “[t]he question is not close
and so the district court did not err in exercising its discretion to deny certification”); Bi-Rite
Enters., Inc. v. Bruce Miner Co., 757 F.2d 440, 443 n.3 (1st Cir. 1985) (“Although
Massachusetts allows certification of difficult questions of state law to the Supreme Judicial
Court, it is inappropriate for a federal court to use such a procedure when the course state courts
would take is reasonably clear.”); Marston v. Red River Levee & Drainage Dist., 632 F.2d 466,
468 (5th Cir. 1980) (holding, in a matter of first impression in constructing a state statute: “For
several reasons, we deny the motion to certify to the Louisiana Supreme Court. First, this cause
is long in the tooth and should be disposed of if that can be done by us with confidence. Second,
the law involved seems clear on its face, and we are relatively certain of its meaning.”); State of
Fla. ex rel. Shevin v. Exxon Corp., 526 F.2d 266, 275 (5th Cir. 1976) (declining to certify a
question because the court did not find the question to be “an extremely close one” and because

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certification would cause further delay in a case that had already been litigated for two and onehalf years with many preliminary issues still being decided).
All three of Plaintiff’s proposed questions are essentially the same—whether a violation
of Or. Rev. Stat. § 746.230(1)(g) constitutes a per se breach of an insurer’s implied duty of good
faith and fair dealing, regardless of whether the insurer conducted a reasonable investigation or
acted in good faith in making a settlement offer. The Court thus analyzes them together.
The three questions proposed by Plaintiff do not well serve the purposes of certification.
Certification here would cause delay, when this case already has been litigated for more than five
years. It would not save the parties time and resources but would cause additional expenditures.
Furthermore, and perhaps more importantly, the Court does not find that the legal question—
whether a violation of § 746.230(1)(g) is a per se violation of an insurer’s implied duty of good
faith and fair dealing regardless of the reasonableness and good faith of the insurer’s conduct—is
a close one. The Court has already explained why Plaintiff’s theory is unreasonable and
unsupported under Oregon law. The Court further finds that the answer is reasonably clear under
Oregon law and that it is highly unlikely that the Oregon Supreme Court would find otherwise.
Thus, the Court would not benefit from waiting for the Oregon Supreme Court’s determination.
Given these findings and the associated delay and expense that certification would cause, as a
threshold matter certification is inappropriate. See Russell, 938 F.2d at 318; White, 907 F.2d
at 106; Bi-Rite Enters., 757 F.2d at 443 n.3; Marston, 632 F.2d at 468; Shevin, 526 F.2d at 275.
B. Statutory Elements
Certification also is inappropriate in this case because the statutory requirements are not
satisfied. To be eligible for certification, a proposed question:
must meet five criteria created by the statute: (1) The certification
must come from a designated court; (2) the question must be one
of law; (3) the applicable law must be Oregon law; (4) the question
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must be one that “may be determinative of the cause;” and (5) it
must appear to the certifying court that there is no controlling
precedent in the decisions of this court or the Oregon Court of
Appeals.
W. Helicopter Servs., 311 Or. at 364 (quoting Or. Rev. Stat. § 28.200). When one or more of
these factors is not met, the analysis ends and the question is not appropriate for certification. Id.
at 366.
The questions proposed by Plaintiff do meet the requirement that they be “determinative
of the cause.” This factor means that the Oregon Supreme Court’s determination must “have the
potential to determine at least one claim in the case.” Id. at 365 (emphasis added). Plaintiff’s
question regarding whether a violation of Or. Rev. Stat. § 746.230(1)(g) is a per se violation of
an insurer’s implied duty of good faith and fair dealing will not be determinative of that claim in
this case. This is because even if the Oregon Supreme Court were to agree with Plaintiff’s
theory, this Court previously determined that because Plaintiff is seeking non-economic damages
for her claim for breach of the implied duty of good faith and fair dealing, she must also prove
related physical injury.
Additionally, the answers to Plaintiff’s questions are not cause determinative because the
Court found in its Opinion and Order on Plaintiff’s motion for summary judgment that there
were questions of fact regarding whether Defendant “compelled” Plaintiff to litigate. Thus, even
if a violation of § 746.230(1)(g) were a per se violation of an insurer’s implied duty of good faith
and fair dealing, Plaintiff’s claim would still need to be litigated to determine whether in this
case Defendant violated § 746.230(1)(g).
Plaintiff’s claim for breach of the implied duty of good faith and fair dealing will not be
determined based solely on the answer to any of Plaintiff’s proposed questions. Even if the
answers to Plaintiff’s proposed questions all comport with her interpretations, she will still have
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to litigate whether she suffered a physical injury as a result of the alleged breach of contract and
whether she was “compelled” to litigate. Accordingly, the proposed questions are not
determinative of any cause.
CONCLUSION
Plaintiff’s Motion for an Order Certifying a Determinative Question of Law to the
Oregon Supreme Court (ECF 427) is DENIED.
IT IS SO ORDERED.
DATED this 7th day of February, 2019.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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