Klass v. Fidelity Capital App, et al, No. 2:2004cv02337 - Document 81 (D. Ariz. 2009)
Court Description: ORDER granting 57 Motion for Summary Judgment; denying as moot 60 Motion for Partial Summary Judgment; denying as moot 64 Motion for Partial Summary Judgment; denying as moot 74 Motion to Strike. The Clerk of Court is directed to enter judgment in favor of dft and terminate this case. (See document for full details). Signed by Judge Robert C Broomfield on 3/31/2009. (LAD)
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Klass v. Fidelity Capital App, et al 1 Doc. 81 WO 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 10 11 12 Leslie J. Klass, 13 Plaintiff, 14 vs. 15 Fidelity & Guaranty Life Insurance Company, a Maryland Corporation, 16 17 Defendant. ) ) ) ) ) ) ) ) ) ) ) ) No. CIV 04-2337-PHX-RCB O R D E R 18 19 Currently pending before the court are four motions: (1) a 20 motion for summary judgment by defendant, Fidelity & Guaranty Life 21 Insurance Company (“Fidelity”) (doc. 57); (2) a motion for partial 22 summary judgment by plaintiff Leslie J. Klass (doc. 60); a cross- 23 motion for partial summary judgment by Fidelity (doc. 64); and 24 plaintiff’s “Motion to Strike Defendants’ Controverting Statement 25 of Facts to Plaintiff’s Statement of Facts” (doc. 74). 26 27 28 Background Unless otherwise indicated, the following facts are undisputed. In May 1990, plaintiff’s then-husband, Robert C. Dockets.Justia.com PSOF II1 1 Mothershead, applied for life insurance with Fidelity. 2 (doc. 66), exh. 1 thereto. 3 and Relationship to Proposed Insured[,]” plaintiff’s name appears, 4 followed by “wife[.]” Id. 5 there are two boxes which can be marked – “Spouse[]” or “Other 6 Insured[]” 7 provided. 8 box “Other Insured[]” is left blank. 9 Under the section entitled “Beneficiary In section 1.A of that application, – and then other identifying information can be See id. There is an “X” in the “Spouse[]” box, and the See id. Consistent with that application, the “policy information” 10 sheet identifies the “insured” and the “owner” solely as “Robert 11 Mothershead[.]” DSOF I (doc. 58), exh. A thereto. 12 “beneficiary,” that same sheet states: “Beneficiary is as named in 13 the application or in the most recent change on record in our home 14 office.” 15 insurance application designated plaintiff as the primary 16 beneficiary. 17 an “initial specified amount” of “$500,000[.]” Id. Id. (emphasis omitted). After And, as just explained, the The policy date was issued on June 8, 1990, and had 18 More than a decade later, on July 15, 2002, plaintiff 19 commenced a matrimonial dissolution proceeding against Mr. 20 Mothershead. 21 Arizona, Maricopa County, issued a preliminary injunction against 22 the parties in that action. 23 That injunction expressly prohibited plaintiff Klass and Mr. 24 Mothershead from “tak[ing] out a loan on the community property[.]” On that same date, the Superior Court of the State of See PSOF I (doc. 61), exh. 2 thereto. 25 26 27 28 1 The plaintiff and Fidelity filed four separate statements of fact each. Plaintiff’s will be designated as “PSOF” and Fidelity’s as “DSOF,” followed by a Roman numeral corresponding to the date of filing. That is, plaintiff’s first filed PSOF will be referred to herein, as “PSOF I,” etc. Likewise, Fidelity’s first filed DSOF will be referred to herein as “DSOF I,” etc. -2- 1 Id., exh. 2 thereto. 2 injunction also required the parties, among other things, to 3 “maintain all insurance coverage in full force and effect.” 4 exh. 2 thereto at ¶ 1(d). 5 In accordance with A.R.S. § 25-315(A), the Id., Plaintiff and Fidelity vigorously dispute whether Fidelity 6 received notice of that injunction. 7 April 1, 2003 letter to Fidelity from her matrimonial lawyer, 8 enclosing a copy of that injunction. 9 In that letter, plaintiff’s lawyer wrote: 10 Plaintiff has submitted an Id., exh. 2 thereto at 255. Arizona State law dictates that each party is restricted from canceling any insurance policy and/or changing the beneficiaries until the Decree of Dissolution is entered with the Court or by further Order of the Court. Please note that the Preliminary Injunction becomes effective the date the Petition for Dissolution is filed. The Petition for Dissolution was filed on July 15, 2002, in the [Klass v. Mothershead] matter. 11 12 13 14 15 Id., exh. 2 thereto. 16 received the foregoing letter or copy of the injunction until more 17 recently, as fully explained below. 18 Fidelity adamantly maintains that it never Fidelity does acknowledge receiving, on April 12, 2003, a 19 letter from attorney Jay M. Polk dated the previous day. 20 (doc. 1), ¶ 2; and exh. B thereto at 255.2 21 for that policy, Mr. Polk enclosed a certified copy of his 22 “Letters” and Order appointing him “Special Conservator”3 of Mr. 23 Mothershead. 24 the petition which resulted in that appointment. Id., exh. B thereto at 255. DSOF I Along with a payment Plaintiff Klass filed Id. at 1, ¶ 3, 25 26 27 2 For Fidelity’s exhibits, the court is using the handwritten numbers on the bottom right corner thereof. 3 28 To simplify, hereinafter the court will use “Conservator,” which shall be read as meaning “Special Conservator.” -3- 1 citing exh. B thereto at 262. 2 “power and duty to[,]” among other things, “[a]ccess and 3 investigate any and all financial accounts in the name of” Mr. 4 Mothershead. 5 Those Letters granted Mr. Polk the Id., exh. B thereto at 257, ¶ c). Pursuant to the terms of the conservatorship order, which was 6 filed April 3, 2003, Mr. Mothershead was “temporarily restrained” 7 from, inter alia, “‘accessing any financial account’” and from 8 “‘accessing any existing lines of credit and credit accounts, 9 obtaining new lines of credit or credit accounts, and from 10 incurring additional debt through credit.’” 11 (quoting exh. B thereto at 264, ¶¶ 5 and 6). 12 stated that it would “continue in full force until the expiration 13 of ninety . . . days unless otherwise ordered by this Court[.]” 14 Id., exh. B thereto at 265, ¶ 9. 15 as Conservator stated that they “shall expire on” July 3, 2003. 16 Id. at 2, ¶ 4; see also exh. B thereto at 258, ¶ f). 17 Id. at 1-2, ¶ 3 That Order expressly The letters appointing Mr. Polk The record includes three additional Letters of Special 18 Conservatorship. 19 Polk as Mr. Mothershead’s Conservator. 20 appointments expired on January 1, 2004.4 21 KLASSDST00139. 22 to the Letters and Acceptance filed on April 3, 2003. 23 proof in the record that Fidelity ever received copies of these 24 later filed Letters, however. PSOF I (doc. 61), at 3, ¶ 18. Each appoints Mr. The last of those periodic Id., exh. 7 thereto at Substantively, those Letters are nearly identical There is no In fact, during her deposition 25 26 27 28 4 Interestingly, the first of these additional Letters was filed May 7, 2003, slightly more than a month after the filing of the original Letters which plaintiff claims were sent to Fidelity. PSOF I (doc. 61), exh. 7 thereto at KLASS DST 00166. Those May letters were to expire on November 4, 2003. Id., exh. 7 thereto at KLASS DST 00167. -4- 1 plaintiff was specifically asked, “You’ve testified today that 2 you’re not aware that anyone, yourself included, ever notified 3 Fidelity that the court had entered an order extending the 4 conservatorship over your husband beyond July 3 of 2003, correct?” 5 DSOF I (doc. 58), exh. G thereto at 70:11-15. 6 “That’s correct.” 7 Plaintiff responded, Id., exh. G thereto at 70:16. On July 21, 2003, Mr. Mothershead, contrary to the preliminary 8 injunction, and 18 days after expiration of the original Letters 9 and Order of Conservatorship, faxed a “Request for Disbursement” 10 form to Fidelity. 11 and 239. 12 Loan” available on the policy. 13 thereto at 239). 14 he further requested, “‘[i]f possible, . . . please expedite loan[] 15 due to emergency of resource access.’” Id. at 2, ¶ 6 (quoting exh. 16 C thereto at 238 and 239). 17 signature line on the first page of the request form, it states: 18 19 20 21 22 23 Id. at 2, ¶ 6; see also exh. C thereto at 238 On that form Mr. Mothershead requested the “‘Maximum Id. at 2, ¶ 6 (quoting exh. C On the fax cover sheet and the loan request form, Immediately preceding the “[o]wner[’s]” The undersigned hereby warrant[s] that there has been no assignment, tax lien, bankruptcy, receivership, incompetency proceeding, divorce or separate maintenance action, attachment, garnishment, execution, or any other legal process under which any other person is claiming the policy or rights thereunder. Id., exh. C thereto at 239 (emphasis added). The “Loan Request” section on that form provides, “This loan 24 is to be in accordance and subject to the loan and interest 25 provisions of the policy and said policy is hereby assigned to 26 [Fidelity] as sole security for this loan.” 27 239 (emphasis added). 28 Mothershead to answer several federal tax withholding questions. Id., exh. C thereto at Additionally, that form required Mr. -5- 1 He was required to provide “[t]he Owner’s Taxpayer Identification 2 (Social Security Number)[,]” as well as “[t]he Owner’s date of 3 birth[,]” which he did. 4 sought the same information as to the “Joint Owner[,]” to which Mr. 5 Mothershead replied, “N/A” – presumably not applicable. 6 page two of the request form, there is a “CERTIFICATION” line which 7 states, “Under the penalty of perjury, I certify that the 8 information provided on this form is true, correct and complete.” 9 Id., exh. C thereto at 240 (emphasis in original). See id., exh. C thereto at 240. The form Id. Just beneath 10 that certification is a signature purporting to be that of Mr. 11 Mothershead. 12 check to Mr. Mothershead in the loan amount of $14,363.57. 13 2, ¶ 9; and exh. D thereto at 201-202. 14 On The next day, on July 24, 2003, Fidelity issued a Id. at Nearly a year later, on June 17, 2004, a “Property Settlement 15 Agreement” was filed in the Klass v. Mothershead dissolution. 16 exh. F thereto at 35. 17 was “awarded” the Fidelity policy which is the subject of this 18 action. 19 along with two others, “including the remaining cash value, subject 20 to the outstanding loans, on each of said policies.” 21 F thereto at 67). 22 earlier in the year, on January 1, 2004, plaintiff was to pay all 23 premiums to maintain the policies which she had been awarded. 24 id., exh. F thereto at 67. 25 Id., Under the terms of that Agreement, plaintiff Id., exh. F thereto at 67. She was awarded that policy, DSOF I, exh. According to the Settlement Agreement, beginning See That Settlement Agreement further provided that the “Special 26 conservator shall execute an assignment in favor of” plaintiff 27 Klass. 28 assignment was to “assign[] to [Ms. Klass] the claim of the . . . Id., exh. F thereto at 67 (emphasis added). -6- Such 1 Conservator, as [Mr. Mothershead’s] fiduciary, against Fidelity 2 . . . for negligently and wrongfully making a loan to [Mr. 3 Mothershead][] from” the subject policy. 4 67. 5 required to “continue to designate [Ms. Klass] as beneficiary on 6 all policies in [his] name, until such time as the transfer of 7 ownership occurs.” Id., exh. F thereto at Under the terms of that Agreement, Mr. Mothershead was Id., exh. F thereto at 67 (emphasis added). 8 Several weeks later, on July 7, 2004, Fidelity received a 9 “Transfer of Ownership and Beneficiary request executed by Jay 10 Polk, as Mothershead’s Conservator, requesting that the ownership 11 of the [subject] policy be changed from [Mr.] Mothershead to 12 [plaintiff].” 13 dated July 21, 2004, Fidelity advised plaintiff that that change 14 had been made. 15 its view of the circumstances surrounding the loan to Mr. 16 Mothershead, Fidelity concluded by “respectfully refus[ing] 17 [plaintiff’s] demand for repayment of the July 2003 policy loan[.]” 18 Id., exh. 10 thereto at 182. 19 PSOF I (doc. 61), exh. 10 thereto at 181. Id., exh. 10 thereto at 181. By letter After setting forth Evidently in response to that refusal, on July 23, 2004, 20 plaintiff faxed to Fidelity a copy of the April 1, 2003, letter 21 from her divorce lawyer and the accompanying copy of the 22 preliminary injunction. 23 Stressing that the injunction prohibited “‘tak[ing] out a loan on 24 the community property[,]’” plaintiff “renew[ed] [her] demand that 25 these funds [$14,363.57], along with the accrued interest, be 26 reimbursed to the policy.” 27 claims that on that date, it “learned for the first time that its 28 insured,” Mr. Mothershead, “had been in the middle of a divorce DSOF I, exh. E thereto at 87-92. Id., exh. E thereto at 87. -7- Fidelity 1 proceeding [when] he requested the loan, and that the Court had 2 issued an injunction precluding him from ‘tak[ing] out a loan on 3 the community property[.]’”5 Id. at 3, ¶¶ 10 and 11 (quoting exh. E 4 thereto at 90:2-3). 5 as to exactly when, “Fidelity also learned that Mr. Mothershead 6 . . . had purportedly assigned to plaintiff his interest in [the 7 subject] Policy via a . . . property settlement agreement[.]” Id. 8 at 3, ¶ 12 (citation omitted). 9 At some point, although the record is unclear On October 5, 2004, plaintiff commenced the present action in 10 the Superior Court of the State of Arizona, Maricopa County against 11 Fidelity. 12 alleges that she was “awarded the [subject] Policy[]” on May 17, 13 2004, pursuant to the “Property Settlement Agreement.” 14 2, ¶ 10. 15 rights in the claim of the Conservator against [Fidelity] for 16 wrongfully making a loan against the Policy in violation of the 17 Conservatorship and Preliminary Injunction.” 18 Not. of Removal (doc. 1), attachment thereto. Plaintiff Id., Co. at Plaintiff further alleges that she was “assigned all Id. In her first cause of action, plaintiff alleges that Fidelity 19 breached the “insurance contract” by “knowingly and wrongfully 20 permitting Mothershead to withdraw loan funds against the Policy.” 21 Id., Co. at 3, ¶ 18. 22 bad faith[,]” wherein plaintiff alleges, among other things, that 23 Fidelity “breached the implied duty of good faith and fair dealing 24 owed to [her].” Her second cause of action is for “insurance Id., Co. at 4, ¶ 21. In a similar vein, plaintiff 25 26 27 28 5 There is a suggestion in the record that perhaps Fidelity learned of this information prior to July 23, 2004, but not much before. In a July 21, 2004, letter from Fidelity to Ms. Klass, it references a July 16th and a July 21st fax from plaintiff to Fidelity. PSOF I (doc. 61), exh. 10 thereto at KLASS DST 000182. It also mentions that the loan to Mr. Mothershead was “apparently in violation of a preliminary injunction.” Id., exh. 10 thereto at KLASS DST 000182 n. 1. -8- 1 further alleges that Fidelity “wrongfully disbursed loan proceeds 2 and has intentionally withheld, delayed, and denied the return of 3 these proceeds to [her] without a reasonable basis for doing so.” 4 Id., Co. at 4, ¶ 22. 5 plaintiff is seeking “punitive and exemplary damages in an amount 6 to be determined at trial to be appropriate to punish, deter and 7 set an example of [Fidelity][.]” Id., Co. at 5, ¶ D. 8 9 In addition to compensatory damages, Following extensive discovery, the parties filed the present summary judgment motions. If Fidelity does not prevail on its 10 motion for summary judgment on the entire complaint, it seeks 11 partial summary judgment on the bad faith and punitive damages 12 claims. 13 issues: (1) “that Fidelity . . . had notice of a preliminary 14 injunction[;]” and (2) “that Mr. Mothershead himself cannot be held 15 responsible for his actions with [Fidelity] during the times he was 16 under a conservatorship.” 17 moved for partial summary judgment on those same two issues. 18 & Cross-Mot. (doc. 64) at 1:23-24. 19 Plaintiff seeks partial summary judgment on two narrow Mot. (doc. 60) at 1 -2. Fidelity cross Resp. The court will first consider Fidelity’s motion for summary 20 judgment as to the entire action because if Fidelity prevails, the 21 other motions become moot. 22 23 24 Discussion I. Governing Legal Standards The court assumes familiarity with what has sometimes been 25 referred to as the Celotex trilogy wherein the Supreme Court, in 26 1986, clarified and refined the standards for deciding Rule 56 27 summary judgment motions. 28 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); See Anderson v. Liberty Lobby, Inc., 477 -9- Celotex Corp. v. 1 Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); and 2 Matsushita Elec. Industr. Co. v. Zenith Radio Corp., 475 U.S. 574, 3 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). There is no need to repeat 4 the entire body of summary judgment case law which has developed 5 since then, especially, as will be seen, these motions turn on 6 purely legal issues, making them proper for resolution pursuant to 7 Fed. R. Civ. P. 56. 8 II. 9 10 Fidelity’s Summary Judgment Motion A. Breach of Contract Fidelity premises its summary judgment argument upon 11 plaintiff Klass’ status as a “mere purported assignee of Fidelity’s 12 insured,” Mr. Mothershead. 13 contends that in that capacity plaintiff is subject to all claims 14 and defenses which Fidelity could assert against Mothershead. 15 Fidelity thus reasons that because supposedly Mothershead 16 fraudulently obtained a $14,363.57 loan from it, plaintiff, as his 17 assignee, is now deemed to have fraudulently obtained the loan. 18 turn, Fidelity reasons that the doctrine of “unclean hands” 19 “precludes [plaintiff] as a matter of law from seeking judicial 20 relief” due to “her own fraudulent . . . conduct.” 21 Therefore, Fidelity believes that it is entitled to summary 22 judgment. 23 Mot. (doc. 57) at 6:1. Fidelity Id. at 6: 4-5. Plaintiff’s response to this argument is terse to say the 24 least. 25 response memorandum states that she “has always been an owner of 26 the Policy[.]” Resp. (doc. 67) at 12:26 (emphasis added). 27 Plaintiff continues, stating that since “June 23, 2004,” she has 28 been the “sole owner” of that Policy, “and is an assignee of the First, with no legal or factual support, plaintiff’s - 10 - In 1 conservator’s interest.” 2 no legal support or analysis, plaintiff baldly asserts that 3 Fidelity’s “claims that [she] has no greater rights in the Policy 4 than Mr. Mothershead because mere assignees are subject to all the 5 same claims and defenses that could be asserted against their 6 assignors, is incorrect.” 7 marks and citation omitted). 8 the Policy and has always had an ownership interest[]” in it. 9 at 13:2-3 (citation omitted). Id. at 12:26-27 (citation omitted). With Id. at 12:27-13:2 (internal quotation Plaintiff reiterates that she “owns Id. Plaintiff concludes by simply 10 stating that Fidelity “owed a duty to [her] as the Policy owner.” 11 Id. at 13:3. 12 Fidelity counters that “plaintiff failed to present any 13 evidence that she ever executed an actual assignment[.]” Reply 14 (doc. 68) at 5 (emphasis omitted). 15 “any actual assignment is void as a matter of law . . . because the 16 policy had already been assigned to Fidelity as sole security for 17 the loan.” 18 assignment issue, that Mr. Mothershead was required to execute an 19 assignment of the claim. 20 does not change the fact that there is no written proof of an 21 assignment of the Conservator’s claim, as the Settlement Agreement 22 required. 23 this action. 24 1. 25 Id. at 6. Next, Fidelity responds that Fidelity misstates one important fact on the In the end, though, that misstatement Absent such proof, plaintiff lacks standing to bring Assignment At the outset it is necessary to distinguish between two 26 potential assignments here, something the parties did not always 27 do. 28 the second pertains to the Conservator’s claim against Fidelity. The first potential assignment pertains to the policy itself; - 11 - 1 The court will consider these two assignments in reverse order 2 because, as just indicated, the latter impacts plaintiff’s standing 3 to pursue this action. 4 a. Cause of Action 5 “[T]he general rule in [Arizona] is well-settled that the 6 valid assignee of a chose in action may bring suit thereon in [her] 7 own name.” 8 602, 570 P.2d 769, 770 (1977) (citation omitted) (emphasis added); 9 see also In re Exxon Valdez, 239 F.3d 985, 988 (9th Cir. 2001) Certified Collectors, Inc. v. Lesnick, 116 Ariz. 601, 10 (internal quotation marks and citation omitted) (“[A] valid 11 assignment confers upon the assignee standing to sue in place of 12 the assignor.”) 13 effect a legal assignment of any kind there must be evidence of an 14 intent to assign or transfer the whole or part of some specific 15 thing, debt, or chose in action, and the subject matter of the 16 assignment must be described sufficiently to make it capable of 17 being readily identified.” 18 omitted). 19 assignment here, thus entitling it to summary judgment. 20 “It is, however, hornbook law that in order to Id. at 603, 570 P.2d at 771 (citations Fidelity argues that there has not been a valid Initially Fidelity relegated to a footnote the issue of 21 plaintiff’s status as what it terms “a mere ‘purported’ 22 assignee[.]” Mot. (doc. 57) at 6 n. 1. 23 Fidelity asserts that plaintiff has not met her burden of proof 24 that “she executed an actual assignment with Mr. Mothershead[.]” 25 Resp. (doc. 68) at 6:10-11 (emphasis added). 26 the Settlement Agreement, and quoting the phrase thereon, “‘shall 27 execute an assignment[,]’” Fidelity repeatedly states that that 28 Agreement required Mr. Mothershead to execute an assignment in - 12 - In its reply, though, Citing to page 67 of 1 plaintiff’s favor. See, e.g., Mot. (doc. 57) at 6 n. 1 (emphasis 2 added) (“[T]he . . . settlement agreement . . . provided that Mr. 3 Mothershead ‘shall execute an assignment[.]’”); Resp. (doc. 68) at 4 5:26-38 (emphasis added) (“The Court has before it the relevant 5 pages of the . . . Settlement Agreement . . . ([DSOF I], ¶ 12; 6 Exhibit F, p. 67), which provide that Mr. Mothershead ‘shall 7 execute an assignment[.]’”) 8 Page 67 of the Settlement Agreement does not state that Mr. 9 Mothershead is required to execute an assignment to plaintiff.6 10 Rather, in unequivocal language that Agreement states that the 11 “Special Conservator shall execute an assignment in favor of 12 [plaintiff][.]” DSOF I (doc. 58), exh. F thereto at 67 (emphasis 13 added). 14 be to “assign[] to [plaintiff] the claim of the Special 15 Conservator, as [Mr. Mothershead’s fiduciary], against [Fidelity] 16 for negligently and wrongfully making a loan to [Mr. Mothershead] 17 . . . in violation of the terms of the Special Conservatorship and 18 Preliminary Injunction issued in this matter.” 19 added). 20 The effect of such an assignment, as noted earlier, would Id. (emphasis After clarifying that under the terms of the Settlement 21 Agreement, the Special Conservator, and not Mr. Mothershead, was to 22 execute the assignment, the next issue is whether the Special 23 Conservator’s claim is assignable. 24 claim determines whether it can be assigned.” 25 212 Ariz. 320, 322, 131 P.2d 492, 494 (Ariz. Ct. App. 2006) “In Arizona, the nature of the Martinez v. Green, 26 6 27 28 The Agreement does state that plaintiff “shall be awarded[,]” among other policies, the policy which is the subject of this lawsuit, but it does not require Mr. Mothershead to execute an assignment of anything. See DSOF I (doc. 58), exh. F thereto at 67. - 13 - 1 (citations omitted). 2 assigned before judgment.” Id. (citation omitted). 3 “involv[ing] pecuniary loss, not injury to person or property[]” 4 id. at 322 n. 3, 131 P.2d at 494 n.3 (citations omitted), are 5 assignable though. 6 Ariz. 6, 17, 945 P.2d 317, 328 (Ariz. Ct. App. 1997). 7 alleged loss here is strictly monetary, the value of the loan, the 8 Special Conservator’s claim is properly assignable. 9 “[P]ersonal injury claim[s] cannot be Economic torts Standard Chartered PLC v. Price Waterhouse, 190 Because the The next and most critical issue is whether plaintiff has met 10 her burden of showing that a valid assignment of the Special 11 Conservator’s claim was made here. 12 Settlement Agreement provided that the Special Conservator “shall 13 execute an assignment[.]” DSOF I (doc. 58), exh. F thereto at 67. 14 The court must decide the meaning of the quoted phrase. 15 not a difficult task especially given the well-settled principle 16 that “[w]hen the provisions of the contract are plain and 17 unambiguous upon their face, they must be applied as written, and 18 the court will not pervert or do violence to the language used, or 19 expand it beyond its plain and ordinary meaning[.]” 20 Mut. Cas. Co. v. DGG & CAR, Inc., 218 Ariz. 262, 267, 183 P.3d 513, 21 518 (2008) (internal quotation marks and citations omitted). 22 phrase “shall execute” is unambiguous and clearly contemplates a 23 written assignment. 24 written assignment from the Special Conservator to plaintiff. 25 As previously stressed, the This is See Employers The The record is completely void, however, of a In PSOF II, plaintiff declares that she was “assigned the 26 Conservator’s rights to pursue [Fidelity] for giving up the loan 27 funds.” 28 74:4-75:11). PSOF II (doc. 66) at 1, ¶ 3 (citing exh. 3 thereto at To support that statement, plaintiff cites to her - 14 - 1 deposition testimony, but it does not establish that the Special 2 Conservator executed an assignment in her favor as the Settlement 3 Agreement mandates. 4 telling Fidelity, are you not, that the reason why you believe you 5 have the right to assert this claim is because the claim was 6 assigned to you, correct[,]” plaintiff answered, “No.” 7 (doc. 66), exh. 3 thereto at 74:4-8. 8 as to her “belie[f] that . . . it would be cleaner if [she] had all 9 of the authority to assert this claim rather than [the Special In fact, when directly asked, “Well, you’re PSOF II Plaintiff did further testify 10 Conservator] asserting this claim on behalf of Mr. Mothershead and 11 then [her] asserting this claim on [her] own behalf.” 12 thereto at 75:5-9. 13 testimony to which plaintiff cites is there any mention of the 14 Special Conservator actually executing an assignment in her favor.7 15 Thus, there is absolutely no proof before the court that the 16 Special Conservator assigned to plaintiff his claim that Fidelity 17 “wrongfully and negligently ma[de] a loan to [Mr. Mothershead][.]” 18 See DSOF I (doc. 58), exh. F thereto at 67. 19 Id., exh. e Again, however, nowhere in the deposition “The burden of proving the validity of an assignment lies with 20 the purported assignee.” 21 Kiritchenko, 2007 WL 2669841, at *6 (N.D.Cal. Sept. 7, 2007) 22 (citing Britton v. Co-op Banking Group, 4 F.3d 742, 746 (9th Cir. 23 1993)). 24 That lack of proof is fatal to her lawsuit. 25 Collectors, the court described the “purported assignment” as “at Universal Trading & Investment Co. v. As just discussed, plaintiff did not meet that burden. In Certified 26 27 28 7 Assuming arguendo that Arizona law permits an oral assignment of a cause of action, there is no mention, for that matter, of such an assignment in this case. - 15 - 1 best [a] cryptic form assignment.” 117 Ariz. at 603, 570 P.2d at 2 771 (footnote omitted). 3 “entitled ‘Assignment[,]’” but it was a “form [which] contain[ed] 4 only a recitation of the consideration involved, and the seal of a 5 . . . notary public.” 6 constitute an assignment, such as the “identity” of one party 7 thereto and the “capacity in which he made th[at] agreement, his 8 relation (if any) to [the supposed assignor] and any identification 9 [as to] what debt th[at] assignment related[]” was all missing. There was a document in the record Id. The “crucial information necessary” to 10 Id. 11 elements of [a] legal assignment [were] so lacking that [it] 12 c[ould] find no basis in the record on which to conclude that 13 [plaintiff] ha[d] any right to bring an action . . . as the real 14 party in interest.” 15 trial court’s grant of summary judgment in defendant’s favor, but 16 it did so on the basis of this lack of proof of an assignment, 17 which was not the basis for the trial court’s decision. 18 Aperm of South Carolina v, Roof, 290 S.C. 442, 448, 351 S.E.2d 171, 19 174 (S.C. Ct. App. 1986) (alleged assignment ineffective where 20 “agreement set[] out in clear and unambiguous language” that it has 21 to be “in writing and consented to by [plaintiff][,]” and there was 22 no evidence of such a writing). 23 Thus, in Certified Collectors, the court held that the “basic Id. (footnote omitted). It thus affirmed the Accord In the present case, there is not even a “cryptic form 24 assignment.” 25 Conservator to plaintiff, as the Settlement Agreement required. 26 Thus, because plaintiff has not met her burden of proving a valid 27 assignment of the Conservator’s claim against Fidelity for wrongful 28 and negligent conduct, she has not shown that she has any right to There is no evidence at all of an assignment from the - 16 - 1 pursue that claim herein. 2 Co., 201 Ariz. 564, 570, 38 P.3d 1229, 1235 (Az. Ct. App. 2002) 3 (affirming summary judgment against plaintiff where the record 4 “contain[ed] no affidavits, deposition testimony, or other 5 evidence” of intent to assign broker’s commissions to her). 6 Therefore, the court finds that Fidelity is entitled to summary 7 judgment as to plaintiff’s breach of contract claim. 8 9 b. Cf. Sherman v. First American Title Ins. Policy To the extent plaintiff bases her breach of contract claim on 10 the “assignment” of the policy to her under the terms of the 11 Settlement Agreement, she fares no better. 12 Agreement plainly states, she was “awarded” that policy, along with 13 two others, “subject to the outstanding loans, on each of said 14 policies.” 15 added). 16 based upon an “assignment” of the policy (as distinguished from an 17 assignment of the Conservator’s claim), she has a claim against 18 Fidelity for the 2003 loan it made to Mr. Mothershead.8 As the Settlement DSOF I (doc. 58), exh. F thereto at 67 (emphasis Given that plain language, plaintiff cannot now claim that 19 B. 20 To this point, the court’s focus has been exclusively on count Insurance Bad Faith 21 one of the complaint, breach of contract. 22 an “insurance bad faith” claim though, wherein she alleges the 23 Fidelity “breached the implied good faith and fair dealing owed to 24 [her].” Plaintiff also asserts Doc. 1, Co. thereto at 4, ¶ 21:4-5. Allegedly Fidelity 25 26 27 28 8 The record strongly implies, although it does not conclusively establish, that plaintiff waived any claim against Mr. Mothershead or the conservatorship to half of any supposed claim against Fidelity with regard to the loan. See PSOF I (doc. 61), exh. 10 thereto at KLASS DST 000182 at n.1; and PSOF II (doc. 66), exh. 3 thereto at 75:13 - 76:3. - 17 - 1 breached that duty in the first place by “wrongfully disburs[ing] 2 loan proceeds” to Mr. Mothershead. 3 Thereafter, Fidelity allegedly breached that duty by “intentionally 4 withh[o]lding, delay[ing], and den[ying] the return of th[o]se 5 proceeds to [plaintiff] without a reasonable basis for doing so.” 6 Id., Co. thereto at 4, ¶ 22:6-8. 7 basis for this supposed duty, but in her response plaintiff states 8 that Fidelity “owed a duty to [her] as the Policy owner.” 9 (doc. 67) at 13:3 (emphasis added). 10 Id., Co. thereto at 4, ¶22:6. The complaint does not allege the Resp. Fidelity advances several reasons as to why it is entitled to 11 summary judgment on this bad faith claim. 12 “an insurer does not owe a duty of good faith and fair dealing to 13 the spouse of its insured.” 14 omitted). 15 explain why, as a matter of law, it did not breach that duty. 16 First, it argues that Mot. (doc. 57) at 7:2-3 (citations Assuming the existence of a duty, Fidelity goes on to For the moment, the court will confine its analysis to the 17 issue of whether Fidelity owed a duty to plaintiff. 18 proceed in this way because obviously, if Fidelity did not owe 19 plaintiff a duty, this claim cannot stand as a matter of law. 20 Fidelity then would be entitled to summary judgment and there would 21 be no need to address the merits. 22 The court will Plaintiff asserts that Fidelity is “minimiz[ing] [her] legal 23 status[]” by “misidentifying [her] as just the spouse of the 24 insured [Mr. Mothershead] and limiting its analysis to its early 25 bad faith acts.” 26 returns to a dominant theme of her response, which is that Fidelity 27 fails to take into account her community property interest in the 28 policy. Resp. (doc. 67) at 3:27; and 16-17. Plaintiff Plaintiff further contends that regarding her as “just the - 18 - 1 spouse” also “ignores” Fidelity’s alleged continued bad faith in 2 dealing with her “after [she] became sole owner of the policy.” 3 Id. at 3:19-20. 4 stressing that she has “always been an owner of the policy,” and 5 “always had an ownership interest[,]” plaintiff contends that 6 Fidelity owed her a duty “as the Policy owner.” 7 and at 13:2-3 (citations omitted) (emphasis added). 8 that she has “an ownership interest in the Policy . . . as 9 Mothershead’s assignee [and] the conservator’s assignee[.]” Id. at 10 11 Expressly disavowing her status as a spouse, and Id. at 12:25-26; Plaintiff adds 16:3. Given the finding herein that plaintiff has not shown a valid 12 assignment from the Conservator, there is no need to consider 13 whether Fidelity owed plaintiff a duty as the Conservator’s 14 assignee. 15 that she has an ownership interest as her ex-husband’s assignee. 16 This assertion is irrelevant because that “assignment” occurred 17 after the alleged initial breach, i.e. Fidelity’s loan to 18 Mothershead. 19 wayside if there was no duty owed in the first place. 20 differently, if plaintiff was not the policy owner, to which 21 Fidelity owed a duty, when the initial breach occurred (the 22 Mothershead loan), Fidelity did not have a “continuing duty” to 23 plaintiff as she urges. 24 plaintiff’s argument that Fidelity owed her a duty as an “owner” of 25 the policy. 26 There is also no need to consider plaintiff’s assertion Plaintiff’s continuing duty theory falls by the Put Consequently, the court will focus on The flaw with this argument is that, as the record reveals, 27 there is no evidence that plaintiff was the policy owner, or, for 28 that matter, the insured, at the time of the loan. - 19 - In fact, all of 1 the evidence is to the contrary. 2 Mr. Mothershead, he was the sole owner and insured on the policy. 3 When Fidelity made the loan to The court does not have the advantage of having the whole 4 policy before it. 5 directly to the policy are the “Policy Information” sheet and 6 application discussed earlier. 7 clearly identifies Mr. Mothershead as the sole “insured” and the 8 sole “owner[.]” DSOF I (doc. 58), exh. A thereto at 10. 9 also appears on the policy application form as the only “Proposed The only two documents before it pertaining The “Policy Information” sheet His name 10 Insured[.]” PSOF II (doc. 66), exh. A thereto at 3. 11 information regarding an “Other Insured[]” is left blank. 12 This is consistent with the subsequent loan which, as mentioned 13 earlier, requested tax information regarding the “Joint Owner.” 14 DSOF I (doc. 58), exh. C thereto at 240. 15 provided. 16 insured or an owner of the policy when it was issued or when Mr. 17 Mothershead made the loan request. 18 “primary beneficiary,” as Mr. Mothershead’s wife. 19 (doc. 66), exh. 1 thereto at 3. 20 “awarded” this policy as part of the Settlement Agreement, and 21 thereafter sought and obtained from Fidelity a transfer of policy 22 ownership, further undermines her contention that the “has always 23 been an owner of the policy.” 24 omitted). 25 would have been no need for a transfer of ownership. 26 Id. The space for Id. No such information was As the foregoing shows, plaintiff was not an Instead, she was designated the See PSOF II The fact that plaintiff was Resp. (Doc. 67) at 12:25 (emphasis If she had always been an owner, then clearly there Plaintiff also asserts that “[a]t all times [she] had an 27 ownership interest in the Policy . . . as community property.” 28 at 16:2. Id. Plaintiff is improperly equating community property with - 20 - 1 ownership, however. 2 community property and ownership is especially critical in the 3 insurance context. 4 owners, assignees and beneficiaries have separate and distinct 5 interests. 6 following: 7 Failing to make the distinction between As Fidelity explained, under the insurance law, A particularly important distinction here is the [U]ntil the benefits [of any life or disability insurance policy] become payable[,] the insurer shall be entitled to deal with the insured or person designated in the policy as having control thereof with respect to the policy and all benefits thereof, including loan and cash surrender values, without first securing the consent of such spouse. 8 9 10 11 Ariz. Stat. § 20-1128 (West 2002) (emphasis added). 12 provides some authority for Fidelity dealing with Mr. Mothershead, 13 as the insured, regarding the loan, “without first securing the 14 consent of” plaintiff, his spouse at the time, who was not then an 15 insured. 16 This statute The ownership of an insurance policy is determined from the 17 contract itself and insurance law, irrespective of whether that 18 policy may also be community property. 19 necessarily follow, as plaintiff urges, that because the policy may 20 have been community property, as an asset acquired after marriage 21 with community funds, she was the 22 date of issuance. 23 she was the owner of the policy when the initial alleged breach 24 occurred, she has not shown that Fidelity owed her a duty of good 25 faith and fair dealing which can be carried forward. 26 therefore entitled to summary judgment on this bad faith claim as 27 well. 28 Thus, it does not “owner” of that policy from its In short, because plaintiff has not shown that Fidelity is Plaintiff’s recourse, if any, seems to be against her ex- 21 - 1 husband. 2 have breached the preliminary injunction - an injunction to which 3 he, but not Fidelity, was a party. 4 holding that Fidelity is entitled to summary judgment on the entire 5 complaint, renders moot the parties’ respective motions for partial 6 summary judgment, as well as plaintiff’s motion to strike. 7 Accordingly, the court denies those motions. By making the loan request from Fidelity, he appears to In any event, the court’s 8 For the reasons set forth herein, IT IS ORDERED that: 9 (1) the motion for summary judgment by defendant Fidelity & Guaranty Life Insurance Company (doc. 57) is GRANTED; 10 11 12 13 14 (2) the motion for partial summary judgment by plaintiff Leslie J. Klass (doc. 60) is DENIED as moot; (3) the cross-motion for partial summary judgment by defendant Fidelity & Guaranty Life Insurance Company (doc. 64) is DENIED as moot; and (4) the motion to strike the controverting statement of facts by plaintiff Leslie J. Klass (doc. 74) is DENIED as moot. 15 16 17 18 The Clerk of the Court is directed to enter judgment in favor of defendant and terminate this case. DATED this 31st day of March, 2009. 19 20 21 22 23 24 25 26 27 28 Copies to counsel of record - 22 -
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