Stone et al v. Government Employees Insurance Company et al

Filing 115

ORDER signed by Judge Benjamin H. Settle granting in part and denying in part 87 Motion to Compel; granting in part and denying in part 89 Motion to Compel.(TG)

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1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 6 7 8 MEGAN STONE and CHRISTINE CAROSI, 9 Plaintiffs, v. 10 11 CASE NO. C16-5383 BHS ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTIONS TO COMPEL GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant. 12 13 14 15 16 17 18 19 This matter comes before the Court on Defendant GEICO General Insurance Company’s (“GEICO”) motion to compel production (Dkt. 87) and motion to compel compliance with subpoena (Dkt. 89) and the Court’s request for additional briefing (Dkt. 104). The Court has considered the pleadings filed in support of and in opposition to the motions and the remainder of the file and hereby grants in part and denies in part the motions for the reasons stated herein. I. 20 21 22 PROCEDURAL HISTORY On June 17, 2015, Plaintiff Megan Stone (“Stone”) filed a class action complaint against multiple defendants in Pierce County Superior Court. Dkt. 3-2. In short, Stone ORDER - 1 1 alleged that GEICO failed to pay loss of use (“LOU”) damages in connection with an 2 underinsured motorist (“UIM”) claim. Id. 3 On August 3, 2015, GEICO moved to dismiss Stone’s complaint on multiple 4 grounds. Dkt. 3-13. Relevant to the instant motions, GEICO argued that “Stone’s 5 Complaint fails to allege a basis for her claimed ‘entitlement’ to LOU benefits under the 6 UIM coverage of auto insurance policies issued by the GEICO defendants.” Id. at 8. In 7 response, Stone argued that GEICO not only improperly cited unpublished opinions to 8 support its arguments, but also failed to rely on the actual language in its policy, which 9 differs from the language considered in the cited authorities. Dkt. 3-21 at 7–11. On 10 August 21, 2015, the state court summarily denied GEICO’s motion stating in part that, 11 “[f]or purposes of [court rule] 12(b)(6), defendants motion as to its insuring agreement 12 coverage is denied.” Dkt. 3-24 at 1. 13 On May 10, 2016, Stone filed an amended complaint, which added Plaintiff 14 Christine Carosi (“Carosi”) as a named plaintiff. Dkt. 1-2. On May 20, 2016, 15 Defendants removed the matter to this Court. Dkt. 1. On May 27, 2016, Defendants 16 answered the amended complaint. Dkt. 13. 17 On June 14, 2016, Plaintiffs Stone and Carosi (“Plaintiffs”) moved to remand. 18 Dkt. 16. On October 12, 2016, the Court denied the motion stating in part that subject 19 matter jurisdiction may always be challenged. Dkt. 51. 20 On March 15, 2017, GEICO served Plaintiffs with discovery requests regarding 21 the amount of attorney’s fees Plaintiffs’ attorneys have recovered in similar class action 22 cases, Dkt. 88, Exh. 1, and served a subpoena on Plaintiffs’ attorney Stephen Hanson ORDER - 2 1 requesting similar documents as well as records of billings in this case, Dkt. 90, Exh. 2. 2 Plaintiffs objected to both requests. On May 4, 2017, GEICO filed the instant motions 3 because the parties were unable to resolve the dispute themselves. Dkts. 87, 89. On May 4 15, 2017, Plaintiffs responded to the motion to compel production. Dkt. 91. On May 19, 5 2017, GEICO replied. Dkts. 93, 94. 1 On May 23, 2017, Plaintiffs filed a surreply. Dkt. 6 100. 7 On June 7, 2017, the Court requested additional briefing because the relevance of 8 the information may turn upon interpretation of the operative complaint. Dkt. 104. On 9 June 16, 2017, the parties filed supplemental opening briefs. Dkts. 106, 107. On June 10 23, 2017, the parties filed supplemental response briefs. Dkts. 110, 111. 11 12 II. FACTUAL ALLEGATIONS Plaintiffs allege that both were covered by a GEICO insurance policy and were 13 involved in separate accidents with uninsured motorists. Dkt. 1-2, ¶¶ 1.3, 1.6. They also 14 allege that they were without the use of their vehicles for periods of time between when 15 the accidents occurred until their vehicles were repaired. Id. ¶¶ 1.5, 1.8. 16 17 18 19 Plaintiffs allege that the damages for loss of use is a benefit that they are “legally entitled to” recover under the law, and a benefit that is covered, and not excluded by the GEICO policy. However, GEICO failed to authorize, adjust, or pay for this type of loss under its standard Washington insurance policy’s UIM coverage. By failing to pay for the loss that Plaintiffs and other policyholders incurred, GEICO has breached its contract with them. 20 21 22 1 GEICO argues that the Court should grant the motion regarding Mr. Hanson because he failed to specifically respond to the motion. The Court considers Plaintiffs’ response as an opposition to both motions. ORDER - 3 1 Id. ¶ 1.11. In their answer, GEICO “denies each and every allegation contained in 2 Paragraph 1.11 of the Complaint.” Dkt. 13, ¶ 1.11. 3 III. DISCUSSION 4 Rule 26(b)(1) allows “discovery regarding any nonprivileged matter that is 5 relevant to any party’s claim or defense and proportional to the needs of the case.” Fed. 6 R. Civ. P. 26(b)(1). In this case, GEICO has requested information relevant to attorney’s 7 fees and costs under Olympic Steamship Co. v. Centennial Ins. Co., 117 Wn.2d 37 (1991) 8 (en banc). See Dkt. 87 at 2. Plaintiffs oppose producing the information because (1) they 9 have not pled a dispute that entitles them to Olympic Steamship fees, (2) even if they pled 10 such a dispute, the issue has been determined by the state court and fees are minimal, and 11 (3) the requested discovery will not lead to relevant evidence. The Court will address 12 each argument. 13 A. Olympic Steamship 14 In Washington, “an award of fees is required in any legal action where the insurer 15 compels the insured to assume the burden of legal action, to obtain the full benefit of his 16 insurance contract, regardless of whether the insurer’s duty to defend is at issue.” 17 Olympic Steamship, 117 Wn.2d at 53. “[T]he rule articulated in Olympic Steamship is 18 applicable where the insurer forces the insured to litigate questions of coverage . . . .” 19 McGreevy v. Oregon Mut. Ins. Co., 128 Wn.2d 26, 33 n.6 (1995). “‘Coverage means the 20 assumption of risk of occurrence of the event insured against before its occurrence.’” 21 Kroeger v. First Nat. Ins. Co. of Am., 80 Wn. App. 207, 210 (1995) (quoting Ryan v. 22 Cuna Mut. Ins. Soc’y, 84 Wn.2d 612, 615 (1974)). “Coverage disputes include both ORDER - 4 1 cases in which the issue of any coverage is disputed and cases in which ‘the extent of the 2 benefit provided by an insurance contract’ is at issue.” Leingang v. Pierce Cty. Med. 3 Bureau, Inc., 131 Wn.2d 133, 147 (1997) (quoting McGreevy, 128 Wn.2d at 33). 4 On the other hand, “dispute[s] over the value of the claim presented under the 5 policy . . . are not properly governed by the rule in Olympic Steamship.” Dayton v. 6 Farmers Ins. Group, 124 Wn.2d 277, 280 (1994). “Where the insurer admits coverage 7 but, in good faith, denies or disputes the value of the claim, [Olympic Steamship] does not 8 authorize fees.” Solnicka v. Safeco Ins. Co. of Illinois, 93 Wn. App. 531, 533 (1999). 9 10 11 12 13 Often, however, there is a fine line between a coverage dispute and a claim dispute. The insurer may admit some coverage, but dispute the scope of coverage and then contend the case involves a claim dispute. Coverage disputes include cases in which coverage is denied and those in which the extent of the benefit is disputed. Coverage questions focus on such questions as whether there is a contractual duty to pay, who is insured, the type of risk insured against, or whether an insurance contract exists at all. Claim disputes, on the other hand, raise factual questions about the extent of the insured’s damages. They involve factual questions of liability, injuries, and damages and are therefore appropriate for arbitration. 14 Id. at 534 (citations omitted). 15 Plaintiffs’ allegations walk the fine line between a coverage dispute and a claim 16 dispute. They allege that GEICO accepted their UIM claims and paid for their property 17 damage. On the issue of LOU damages, they do not allege that they requested 18 reimbursement for LOU damages or that GEICO explicitly denied coverage for these 19 damages. Instead, Plaintiffs allege an implicit denial of coverage because GEICO denied 20 them “a benefit that is covered, and not excluded by the GEICO policy.” Dkt. 1-2, ¶ 21 1.11. Given that the Court should construe the complaint liberally, Skaff v. Meridien N. 22 ORDER - 5 1 Am. Beverly Hills, LLC, 506 F.3d 832, 839 (9th Cir. 2007), and that the “‘claims dispute’ 2 exception to Olympic Steamship attorney fees is narrow,” King Cty. v. Vinci Const. 3 Grands Projets, 191 Wn. App. 142, 189 (2015), the Court concludes that Plaintiffs have 4 alleged a coverage dispute. This conclusion is supported by the fact that GEICO has 5 denied Plaintiffs’ allegations that coverage exists for LOU damages, Dkt. 13, ¶ 1.11, and 6 even moved to dismiss the complaint for failure to state a claim, Dkt. 3-21. Therefore, 7 the Court concludes that Plaintiffs’ objection that Olympic Steamship fees are not 8 awardable is without merit. 9 B. 10 State Court Ruling Plaintiffs contend that the state court disposed of all coverage issues in its order 11 denying GEICO’s motion to dismiss. Dkt. 106 at 4–7. The order, however, gives no 12 indication of its reasoning for its denial of the motion. For instance, the court could have 13 based its ruling on Stone’s argument that GEICO cited improper authorities and failed to 14 analyze the actual policy language in question. Moreover, the allegation that there is 15 more than one plausible interpretation of the policy language could have been sufficient 16 to state a plausible claim for relief. Thus, the Court concludes that the issue of coverage 17 has not been conclusively adjudicated. This conclusion also disposes of Plaintiffs’ 18 argument that the fees for coverage issues are minimal. 19 C. 20 Relevance GEICO propounded discovery on Plaintiffs and their attorneys requesting 21 information relevant to attorney’s fees in this matter and similar matters litigated by 22 Plaintiffs’ attorneys. See Dkts. 88 at 10–11, 90 at 15–18. Regarding fees incurred in this ORDER - 6 1 matter, Plaintiffs and their attorney’s objections are without merit. The Court has 2 concluded that the operative complaint alleges a coverage matter. Accordingly, it would 3 seem that all fees incurred thus far relate to litigating to obtain coverage for Plaintiffs and 4 those similarly situated. Such fees should be included in determining the amount in 5 controversy. Therefore, the Court grants GEICO’s motion. Plaintiffs and their attorney 6 should produce relevant information within their possession and control within fourteen 7 days from the date this order issues. 8 Regarding fees incurred in other cases, the issue is more complicated. For 9 example, if the other cases settled and attorney’s fees were determined as a percentage of 10 the common fund, then the amount of fees is irrelevant to the issues in this matter. 11 McGraw v. GEICO Gen. Ins. Co., C16-5876BHS, 2017 WL 1386085, at *3 (W.D. Wash. 12 Apr. 18, 2017). On the other hand, any billing records from similar class actions wherein 13 coverage was at issue and the matter was litigated all the way to judgment may be 14 relevant to estimate the potential Olympic Steamship fees in this matter. Unless the 15 matter was fully litigated through trial and judgment, then the Court and the parties 16 would have to rely on speculation and conjecture and be in no better position than 17 GEICO’s attorneys in the McGraw matter. Id. at *5 (“GEICO asserted that attorney’s 18 fees could be in excess of ‘6.6 million.’”). Therefore, in order to be relevant to a 19 potential award, the Court concludes that the matter must have been fully litigated and 20 did not settle. To the extent that Plaintiffs or their attorneys possess any documents 21 responsive to this limitation, the documents shall be produced within fourteen days from 22 the date of this order. ORDER - 7 1 2 IV. ORDER Therefore, it is hereby ORDERED that GEICO’s motion to compel production 3 (Dkt. 87) and motion to compel compliance with subpoena (Dkt. 89) are GRANTED in 4 part and DENIED in part as set forth herein. 5 Dated this 8th day of July, 2017. A 6 7 BENJAMIN H. SETTLE United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ORDER - 8

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