QUINTANA et al v. STATE FARM MUTUAL INSURANCE COMPANY
Filing
79
MEMORANDUM AND ORDER granting 76 MOTION for Summary Judgment. (Signed by Judge Ewing Werlein, Jr) Parties notified.(kcarr, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JENNIFER QUINTANA and
DAVID QUINTANA,
§
§
§
§
§
§
§
§
§
§
§
Plaintiffs,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
CIVIL ACTION NO. H-11-007-A
MEMORANDUM AND ORDER
Pending is Defendant’s Motion for Summary Judgment (Document
No. 76), on Plaintiffs’ extra-contractual claims.
After carefully
considering the motion, response, and applicable law, the Court
concludes as follows.
I.
Background
This is Part II arising out of Plaintiff Jennifer Quintana’s
demands that her automobile insurer Defendant State Farm Mutual
Automobile Insurance Company pay to her the full policy limits of
her underinsured motorist coverage in the amount of $100,000.
In
Part
of
I,
the
Jury
rendered
a
verdict
that
the
entirety
Plaintiff’s damages--after a 5% deduction for her contributory
negligence--totaled $80,287.00.
After applying the agreed offsets
to which Defendant was entitled and adding prejudgment interest,
the Court on December 19, 2012, pursuant to Fed. R. Civ. P. 54(b)
signed a Final Judgment awarding $19,191.46 to Plaintiff Jennifer
Quintana.1
The Court had previously severed for separate trial
Plaintiffs’ extra-contractual claims (Document No. 10) against
Defendant.
Defendant now moves for summary judgment on those
claims.
The
summary
Plaintiffs
judgment
notified
Underinsured
evidence
Defendant
motorist
of
(“UIM”)
establishes
their
claim
coverage,
for
that
after
Uninsured/
Defendant’s
claims
representative, Patricia Nicknish, collected documentation from
Mrs. Quintana’s various medical providers, applied credits to which
Defendant was entitled, and on November 8, 2010, made a settlement
offer of $27,000 to Plaintiff through her attorney, Mr. Blake C.
Erskine, Jr.
She stated that, “Once you notify us that your client
accepts this offer, we will forward a payment draft to you within
five business days.
If this amount is not acceptable or if you
have additional information you would like us to consider, please
forward it to our attention.”2
Although not disclosed to Plain-
tiffs at the time, Ms. Nicknish had made the following calculations
in reaching this proposed settlement figure:
1
Subsequent filings on Plaintiffs’ extra-contractual claims
have added to the cause number an “A,” to designate the severed
case (Document No. 63).
2
Id., ex. 8 at 734.
2
!
!
!
!
!
!
!
!
$22,390.75 in past paid/incurred medical expenses;
$0 for lost wages;3
A range of $42,000 to $57,000 for past and future
physical pain, mental anguish, and physical
impairment;
Total damages range of $64,390.75 to $79,390.75;
Less $25,000 paid under the Pattersons’ insurance
policy;
Less $10,000 Personal Injury Protection offset;
Less $2,449.70 workers compensation offset;4
Net damages range of $26,941.05 to 41,941.05.5
Ms. Nicknish rounded up her net damages estimate to a range of from
$27,000 to $42,000, and presented it to her supervisor, Jerry
Benavides, who “granted Ms. Nicknish a maximum of $42,000 in
settlement authority.”6 In response to Defendant’s initial $27,000
settlement offer, Plaintiffs’ attorney responded by asking her to
“[p]lease forward a payment draft in the amount of $27,000 by
November 17, 2010, as an unconditional tender of partial payment,
based on your current valuation of this claim.”7
Ms. Nicknish
replied to Attorney Erskine on November 24, 2010, stating that:
Once you notify us that your client accepts our offer of
$27,000.00, we will forward a payment draft to you within
3
Document No. 76, ex. 4 (Nicknish Aff.); Id., ex. 8 at 736739. She notes that Plaintiffs claimed $2,200 in lost wages but
did not provide documentation in support thereof.
4
Id., ex. 8 at 739.
5
Id., ex. 4; Id., ex. 8 at 736-739.
6
Id., ex. 5 (Benavides Aff.).
7
Id., ex. 8 at 746.
3
five business days. If this amount is not acceptable or
if you have additional information you would like us to
consider, please forward it to our attention.
Please
also advise if your client is still being treated or
otherwise not ready to negotiate a final settlement of
her claim at this time.8
Plaintiffs did not provide additional information for Defendant to
consider, did not propose an alternative settlement amount, and did
not declare she was not ready to negotiate a final settlement.
Instead, her attorney responded with a faxed letter on November 30,
2010, stating only that they had not received “the partial payment
of $27,000” and that Defendant was in violation of Texas Insurance
Code § 542.057(a). Ms. Nicknish immediately replied to Plaintiffs’
counsel the same day, thanking him for the letter and again asking
for additional information to be considered if Plaintiffs found the
settlement offer not acceptable or if Plaintiff Jennifer Quintana
was “still being treated or otherwise not able to negotiate a final
settlement of her claim at this time.”
On December 9, 2010,
Plaintiffs’ counsel responded, again repeating that Plaintiffs
“accept as a partial payment the sum of $27,000,” and this time
reporting that Mrs. Quintana had an MRI on October 19, 2010, a
spinal CT scan on an unspecified date in November, and a nerve
construction
received
a
study
on
November
counteroffer
by
on
22,
2010.9
or
about
8
Document No. 76, ex. 8 at 748.
9
Id., ex. 8 at 752-53.
4
Having
December
still
30,
not
or
a
declaration that Plaintiff was not able to negotiate a final
settlement,
Ms.
Nicknish
concluded
that
an
impasse
had
been
reached, recorded in her notes that she contacted the Department of
Navy to get information concerning a lien that would have to be
paid with part of the insurance proceeds, and noted that she would
then send an impasse draft for the $27,000.10
On January 3, 2011 Plaintiffs filed this action, and the
next day Plaintiffs’ counsel sent a copy of the Complaint to
Ms. Nicknish.11
Ms. Nicknish that day also sent a letter to
Plaintiffs asking for information on the Department of Navy lien,
and informing them that once she received that information, she
would draft checks totaling $27,000.12
After receiving the lien
information, Defendant unconditionally issued two checks, one to
the United
States
Treasurer
for
$9,785.99,
and
the
other to
Plaintiff and her attorney for $17,214.01, a total of $27,000.13
Upon trial of Plaintiffs’ declaratory judgment claim, the Jury
determined
that
Mrs.
Quintana
should
receive
the
following
compensation for her injuries:
!
$30,993 in past paid/incurred medical expenses;
10
Id., ex. 4 at 2; ex. 8 at 8.
11
Id., ex. 8 at 758.
12
Id., ex. 8 at 756.
13
Id., ex. 5; Id., ex. 10 at 7 (admission that the two
payments entitled Defendant to a credit of $27,000).
5
!
!
!
$3,520 for lost wages;
$50,000 for past and future physical pain, mental
anguish, and physical impairment;14
Total damages of $84,513.15
After reducing the award by 5% based on the Jury’s finding of
Plaintiff’s
contributory
damages were $80,287.35.16
negligence,
Plaintiffs’
recoverable
This number was reduced by $35,000 in
agreed offsets and credit for the $27,000 Defendant had already
paid, leaving an unpaid loss figure of $18,287.00.
Prejudgment
interest was added to this sum when Final Judgment was entered.
II.
A.
Discussion
Legal Standard
Rule 56(a) provides that “[t]he 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).
Once the movant carries
this burden, the burden shifts to the nonmovant to show that
summary judgment should not be granted. Morris v. Covan World Wide
Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).
A party opposing
a properly supported motion for summary judgment may not rest upon
14
Id., ex. 2.
15
Document No. 63 at 2.
16
The Jury attributed 95% of the responsibility to Julie
Patterson and 5% to Mrs. Quintana.
6
mere allegations or denials in a pleading, and unsubstantiated
assertions that a fact issue exists will not suffice.
Id.
“[T]he
nonmoving party must set forth specific facts showing the existence
of a ‘genuine’ issue concerning every essential component of its
case.”
Id.
“A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by: (A) citing to
particular parts of materials in the record . . .; or (B) showing
that the materials cited do not establish the absence or presence
of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” FED . R. CIV . P. 56(c)(1).
“The court need consider only the cited materials, but it may
consider other materials in the record.”
Id. 56(c)(3).
In considering a motion for summary judgment, the district
court must view the evidence “through the prism of the substantive
evidentiary burden.”
Anderson v. Liberty Lobby, Inc., 106 S. Ct.
2505, 2513 (1986). All justifiable inferences to be drawn from the
underlying facts must be viewed in the light most favorable to the
nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 106 S. Ct. 1348, 1356 (1986).
“If the record, viewed in
this light, could not lead a rational trier of fact to find” for
the nonmovant, then summary judgment is proper.
Kelley v. Price-
Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir. 1993).
On the other
hand, if “the factfinder could reasonably find in [the nonmovant’s]
favor, then summary judgment is improper.”
7
Id.
Even if the
standards of Rule 56 are met, a court has discretion to deny a
motion for summary judgment if it believes that “the better course
would be to proceed to a full trial.”
B.
Anderson, 106 S.Ct. at 2513.
Analysis
1.
Breach of Common Law Duty of Good Faith and Fair Dealing
Plaintiffs alleged in their Complaint that Defendant violated
its duty of good faith and fair dealing because “Defendant had no
reasonable basis for denying or delaying payment of Mrs. Quintana’s
claim for her UIM benefits of $100,000.00.”17
In response to the
Motion for Summary Judgment, Plaintiffs contend that Defendant
violated its duty of good faith and fair dealing because Defendant
[after allowing for offsets] offered only $27,000 and not “its true
$44,000.00
valuation
of
Plaintiffs’
claims--even
though
its
liability was reasonably clear--as early as November 8, 2010.”18
“An insurer breaches its duty of good faith and fair dealing
when the insurer had no reasonable basis for denying or delaying
payment of a claim, and the insurer knew or should have known that
fact.” Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 50-51 (Tex.
1997) (citation and quotation marks omitted); see also Hamburger v.
State Farm Mut. Auto. Ins. Co., 361 F.3d 875, 880-81 (5th Cir.
2004) (“In order to impose liability on State Farm for violations
17
Document No. 16 at 12.
18
Document No. 78 at 10.
8
of the duty of good faith and fair dealing . . . Hamburger was
required to show that State Farm knew or should have known that it
was reasonably clear that Hamburger’s UIM claim was covered, but
failed to attempt in good faith to effectuate a prompt, fair, and
equitable settlement.”).
“An insurer does not breach its duty
merely by erroneously denying a claim.
Evidence that only shows a
bona fide dispute about the insurer’s liability on the contract
does not rise to the level of bad faith.”
U.S. Fire Ins. Co. v.
Williams, 955 S.W.2d 267, 268 (Tex. 1997) (citations omitted).19
Here, the dispute turns not on the insurer’s denial of a claim
but rather on the amount of UIM benefits that Plaintiff was
entitled to receive for her relatively minor injuries. There is no
evidence that Defendant ever denied the claim or its liability
19
Defendant argues that it is entitled to summary judgment as
a matter of law because it could not have breached its duty of good
faith and fair dealing since Texas law holds that an insurer does
not have a contractual obligation to pay the insured “until the
insured obtains a judgment establishing the liability and
underinsured status of the other motorist.” Brainard v. Trinity
Universal Ins. Co., 216 S.W.3d 809, 818 (Tex. 2006). As observed
by Judge Lee Rosenthal of this Court, however, the Fifth Circuit in
Hamburger “implicitly recognized that there may be cases in which
an insurer’s liability to pay UN/UIM benefits is reasonably clear
despite the fact that no judicial determination of the UM/UIM’s
liability has been made.” Accardo v. America First Lloyds Ins.
Co., Civ. A. No. H-11-0008, 2012 WL 1576022, at *5 (S.D. Tex.
May 3, 2012) (citing Hamburger v. State Farm Mut. Ins. Co., 361
F.3d at 880-81). Defendant highlights the fact that Hamburger was
decided before Brainard, but points to nothing in Brainard that
contradicts the holding in Hamburger.
See id. (finding that
“[c]ontrary to America First’s argument, Brainard does not address
or call into doubt Hamburger’s holding” and further holding that
“Hamburger, not Weir, is binding on this court”).
9
under the policy.
To the contrary, the undisputed evidence shows
that Defendant acknowledged that the claim was covered by Plaintiffs’ UIM policy and offered $27,000 [after offsets] to settle the
claim.20
Plaintiffs do not assert that Ms. Nicknish in formulating
her estimate of Plaintiff’s damages erred in calculating Mrs.
Quintana’s medical expenses based on the information she had
received at that time or that she excluded from her estimate any
documented lost wages.
Plaintiffs’ argument that Defendant was in
bad faith centers on Ms. Nicknish’s estimate of Plaintiff’s past
and future pain and suffering damages as being in a range of from
$42,000 up to $57,000, and that she used the low estimate instead
of the high estimate in making her initial settlement offer.
Plaintiffs’ premise is that Defendant necessarily determined that
it was “reasonably clear” that Defendant’s liability was only for
its highest estimate of possible damages rather than its lowest
estimate or anything in between.21
There is no summary judgment
evidence that Defendant’s “true valuation” was its highest estimate
of possible liability, nor do Plaintiffs present any evidence from
which it can be inferred that Defendant’s settlement offer of
$27,000, which included an estimate of $42,000 for past and future
20
Document No. 76, ex. 8 at 000734.
21
Document No. 78 at 10-12.
10
physical pain, mental anguish, and physical impairment, was made in
bad faith.22
As Defendant points out, the reason for estimating a range of
damages for past and future physical pain, mental anguish, and
physical impairment, is because these losses--unlike lost wages and
medical expenses--are inherently subjective. See Gen. Motors Corp.
v. Burry, 203 S.W.3d 514, 551 (Tex. App.–Fort Worth 2006, no pet.)
(“The process of awarding damages for amorphous, discretionary
injuries such as mental anguish or pain and suffering is inherently
difficult because the alleged injury is a subjective, unliquidated,
nonpecuniary
loss.
The
presence
or absence
of
pain,
either
physical or mental, is an inherently subjective question.
objective
measures
exist
for
analyzing
pain
and
No
suffering
damages. . . . The jury is given a great deal of discretion in
awarding an amount of damages it deems appropriate for pain and
suffering.”) (citations omitted).
At trial, the Court without
objection from any party instructed the Jury that there is “no
exact standard” in awarding such damages, as follows:
You may award damages for any bodily injury that the
plaintiff sustained and any pain and suffering, loss of
capacity for enjoyment of life that the plaintiff
experienced in the past or will experience in the future
as a result of the bodily injury. No evidence of the
22
The Jury’s award of $50,000 for past and future physical
pain, mental anguish, and physical impairment was essentially right
in the middle of Ms. Nicknish’s estimated range. Document No. 76,
ex. 2.
11
value of intangible things, such as mental or physical
pain and suffering, has been or need be introduced. You
are not trying to determine value, but an amount that
will fairly compensate the plaintiff for the damages she
has suffered. There is no exact standard for fixing the
compensation to be awarded for these elements of damage.
Any award that you make should be fair in the light of
the evidence.
The fact that the Jury returned a verdict awarding $50,000 for
Mrs. Quintana’s subjective, intangible damages tends in this case
to corroborate the seemingly prescient judgment of Ms. Nicknish
that these damages may range from $42,000 to as high as $57,000.
In stark contrast to the reasonableness of Defendant’s offer, after
Plaintiffs filed this case they claimed in their interrogatory
answers that Mrs. Quintana should be awarded $450,000 for past and
future physical pain, mental anguish, and physical impairment.23
In final arguments at trial, Plaintiffs’ counsel implored the Jury
to return a finding that Mrs. Quintana’s damages were in the
$450,000 range.24 This uncontroverted summary judgment evidence and
trial record finally unveil why Defendant’s efforts to effectuate
a prompt, fair, and equitable settlement were destined to come to
an impasse: Plaintiffs had a vastly exaggerated idea of Mrs.
Quintana’s intangible damages, so much so that she never deigned to
make a counter-offer to Defendant after initially demanding policy
limits, and even ignored Defendant’s reasonable requests to advise
23
Document No. 76, ex. 9 (Interrogatory No. 10).
24
Document No. 78 at 12.
12
if Plaintiff was “still being treated or [was] otherwise not ready
to negotiate a final settlement of her claim at this time.”
The
summary judgment evidence in this case shows nothing more than a
bona fide dispute about the amount of UIM benefits that the insured
should receive for her subjective pain and suffering, which is
insufficient on this summary judgment record even to raise a fact
issue on bad faith.
See Hamburger, 361 F.3d at 881 (affirming
summary judgment for the UIM insurer denying extra-contractual bad
faith claims where insured determined $16,039.10 was adequate
compensation for the plaintiff’s subjective pain and suffering
caused by an injury in which the plaintiff presented $18,960.90 in
medical bills).
In sum, the uncontroverted summary judgment evidence shows
Defendant never denied its liability under the policy and acted in
good faith to effectuate a prompt, fair, and equitable settlement
of Plaintiffs’ claim.
Plaintiffs have not raised so much as a
genuine issue of material fact that Defendant violated its duty of
good faith and fair dealing.
2.
Insurance Code Violations
Plaintiffs’ Complaint adds claims that Defendant violated the
Texas Insurance Code § 541.060(a)(2)(A) “by failing to attempt in
good faith to effectuate a prompt, fair, and equitable settlement
of
Mrs.
Quintana’s
UIM
claim
in
13
which
liability
has
become
reasonably clear.”25
Because Plaintiffs have failed to raise a
genuine issue of material fact that Defendant acted in bad faith,
Plaintiffs’ claim that Defendant violated § 541.060(a)(2)(A)
likewise fails.
See Higginbotham v. State Farm Mut. Auto. Ins.
Co., 103 F.3d 456, 460 (5th Cir. 1997) (“Texas courts have clearly
ruled that these extra-contractual tort claims [under the DTPA and
Insurance Code] require the same predicate for recovery as bad
faith causes of action in Texas.”); Douglas v. State Farm Lloyds,
37 F. Supp. 2d 532, 544 (S.D. Tex. 1999); Tucker v. State Farm Fire
& Cas. Co., 981 F. Supp. 461, 465 (S.D. Tex. 1997).
III.
Order
For the foregoing reasons, it is
ORDERED that Defendant’s Motion for Summary Judgment (Document
No. 76) is GRANTED and Plaintiffs Jennifer and David Quintana take
25
Document No. 16 at 13.
The Complaint further alleged a
violation of Texas Insurance Code § 542.057(a), but Plaintiffs
abandoned that claim. Document No. 76, ex. 9 at 6-7 (Request for
Interrogatory No. 5: “Please set forth the specific acts and
omissions committed by State Farm or its employee(s) which violated
Texas Insurance Code Chapter 542.” Answer: “None.”).
14
nothing on their extra-contractual claims against Defendant State
Farm Mutual Automobile Insurance Company.
The Clerk will enter this Order and provide a correct copy to
all parties.
SIGNED at Houston, Texas, on this 2nd day of October, 2013.
____________________________________
EWING WERLEIN, JR.
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?