Gorrell et al v. State Farm Mutual Automobile Insurance Company, No. 2:2008cv01757 - Document 38 (D. Nev. 2010)

Court Description: ORDER Granting 20 Motion for Summary Judgment and Denying 21 Motion to Bifurcate. Clerk of the Court is ordered to close this case. Signed by Chief Judge Roger L. Hunt on 6/25/10. (Copies have been distributed pursuant to the NEF - ASB)
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Gorrell et al v. State Farm Mutual Automobile Insurance Company Doc. 38 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF NEVADA 9 *** 10 11 12 13 14 15 16 17 18 KATHLEEN GORRELL and DANIEL GORRELL, ) ) ) Plaintiffs, ) ) vs. ) ) STATE FARM MUTUAL AUTOMOBILE ) INSURANCE COMPANY, a foreign ) corporation authorized to do business in ) Nevada; DOES I through X and ROE ) CORPORATIONS or Business Entities I ) through X, inclusive, ) ) Defendants. ) _______________________________________) Case No.: 2:08-cv-01757-RLH-RJJ ORDER (Motion for Summary Judgment–#20; Motion to Bifurcate–#21) 19 20 Before the Court is Defendant State Farm Mutual Automobile Insurance 21 Company’s Motion for Summary Judgment (#20), filed February 22, 2010. The Court has also 22 considered Plaintiffs Kathleen and Daniel Gorrell’s Opposition (#27), filed March 10, 2010, and 23 State Farm’s Reply (#37), filed May 7, 2010. 24 Also before the Court is State Farm’s Motion to Bifurcate Trial (#21), filed 25 February 22, 2010. The Court has also considered Plaintiffs’ Opposition (#26), filed March 10, 26 2010, and State Farm’s Reply (#32), filed March 22, 2010. AO 72 (Rev. 8/82) 1 Dockets.Justia.com 1 BACKGROUND 2 On October 8, 2006, Plaintiffs, who are residents of Wyoming, were waiting at a 3 stoplight in Las Vegas, Nevada in their Ford F-250 truck. While waiting for the light to turn 4 green, a Nevada driver who was operating his vehicle under the influence of alcohol struck the 5 front of Plaintiffs’ truck. The paramedics came to the scene, but Plaintiffs declined medical 6 treatment. The next day, Plaintiffs drove their truck back to their home in Rock Springs, 7 Wyoming. 8 Plaintiffs suffered soft tissue injuries to their backs and necks as a result of this 9 accident. Upon their arrival in Wyoming, Plaintiffs sought chiropractic treatment for their injuries. 10 Although both Plaintiffs have a history of neck and back problems, State Farm determined that the 11 automobile accident exacerbated these problems and agreed to pay “reasonable medical expenses” 12 caused by the accident as required by the medical coverage provision of their insurance agreement 13 with Plaintiffs. (Dkt. #29, Mot. 17.) Plaintiffs received chiropractic treatment in Wyoming from 14 Dr. Steffensmeier starting in October 2006 and continuing for approximately one year. After 15 reviewing Plaintiffs’ medical records and doctors’ notes (all of which will be discussed below), 16 State Farm sent a letter to Plaintiffs in August 2007 informing them it would no longer pay for 17 their medical bills because additional chiropractic treatment was not reasonable under the 18 insurance policy. Despite receiving this information, Plaintiffs continued to receive chiropractic 19 treatment for their soft tissue injuries. 20 On November 24, 2008, Plaintiffs filed suit in Nevada state court alleging claims 21 against State Farm for (1) breach of contract; (2) breach of the covenant of good faith and fair 22 dealing; (3) violation of Nevada’s Unfair Claims Practices Act, NRS 686A.300; (4) quantum 23 meruit; (5) bad faith; (6) negligent misrepresentation; and (7) punitive damages. State Farm 24 subsequently removed this case based on the diversity of the parties. Now before the Court is 25 State Farm’s motion for summary judgment and its motion to bifurcate the trial. For the reasons 26 / AO 72 (Rev. 8/82) 2 1 discussed below, the Court grants State Farm’s motion for summary judgment and denies as moot 2 its motion to bifurcate. 3 4 DISCUSSION I. 5 Legal Standard A court will grant summary judgment if “the pleadings, the discovery and 6 disclosure materials on file, and any affidavits show there is no genuine issue as to any material 7 fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). An 8 issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-finder could 9 find for the nonmoving party, and a dispute is “material” if it could affect the outcome of the suit 10 under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986). In 11 evaluating a motion, a court views all facts and draws all inferences in the light most favorable to 12 the nonmoving party. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). 13 The movant bears the burden of showing that there are no genuine issues of 14 material fact. Id. “In order to carry its burden of production, the moving party must either produce 15 evidence negating an essential element of the nonmoving party’s claim or defense or show that the 16 nonmoving party does not have enough evidence of an essential element to carry its ultimate 17 burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 18 (9th Cir. 2000). Once the movant satisfies the requirements of Rule 56, the burden shifts to the 19 party resisting the motion to “set forth specific facts showing that there is a genuine issue for trial.” 20 Anderson, 477 U.S. at 256; Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving 21 party “may not rely on denials in the pleadings but must produce specific evidence, through 22 affidavits or admissible discovery material, to show that the dispute exists,” Bhan v. NME Hosps., 23 Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and “must do more than simply show that there is some 24 metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 25 574, 586 (1986). 26 / AO 72 (Rev. 8/82) 3 1 II. Motion for Summary Judgment 2 3 4 Before considering Plaintiffs’ claims, the Court addresses the parties’ dispute regarding which law applies to this case. A. 5 Wyoming vs. Nevada Law State Farm argues that Wyoming law applies to this case, while Plaintiffs claim 6 Nevada law controls. This dispute is relevant because Plaintiffs’ claim for unfair claims practices 7 arises under Nevada statutory law. Federal courts sitting in diversity apply the forum state’s 8 choice-of-law rules. Rio Props. Inc. v. Stewart Annoyances, Ltd., 420 F. Supp. 2d 1127, 1130–31 9 (D. Nev. 2006). The Nevada Supreme Court has held that in insurance coverage disputes, Nevada 10 courts should apply the law of the state that has the most substantial relationship to the insurance 11 transaction. Sotirakis v. USAA, 787 P.2d 788, 790 (Nev. 1990). In making this determination, 12 courts look to the following factors: (1) the place of contracting; (2) the place of negotiation of the 13 contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) 14 the domicile, residence, nationality, place of incorporation, and place of business of the parties. 15 These factors all weigh in favor of applying Wyoming law to this case. Plaintiffs 16 negotiated and purchased their insurance contract with State Farm in Wyoming; the performance 17 of the contract—State Farm’s handling claims and payment of medical bills—took place in State 18 Farm’s Wyoming offices; Plaintiff’s truck was licensed, registered, and stored in Wyoming; and 19 Plaintiffs reside in Wyoming. Given these undisputed facts, the Court concludes that Wyoming 20 law governs this dispute. Because Wyoming law applies to this case, Plaintiffs’ cause of action for 21 unfair claims practices under NRS 686A.300 fails as a matter of law. The Court therefore 22 dismisses this claim and addresses Plaintiffs’ remaining claims under Wyoming law. 23 B. Breach of Insurance Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing 24 State Farm alleges it is entitled to summary judgment on Plaintiffs’ claim for 25 breach of insurance contract and breach of the implied covenant of good faith and fair dealing 26 AO 72 (Rev. 8/82) 4 1 because no genuine factual dispute exists regarding whether State Farm was obligated under the 2 insurance contract to continue paying for Plaintiffs’ chiropractic treatment. 3 1. 4 In addressing this assertion, the Court first outlines the relevant factual information Plaintiffs’ Treatment History 5 regarding the nature and extent of Plaintiffs’ chiropractic treatment. Shortly following their 6 automobile accident in October 2006, Plaintiffs began receiving chiropractic treatment from Dr. 7 Steffensmeier, a chiropractor in Wyoming, and continued receiving treatment for approximately 8 one year. On December 29, 2006, after having provided insurance payments for two months of 9 chiropractic care, State Farm sent a letter to Dr. Steffensmeier asking him to provide a written 10 update regarding Plaintiffs’ condition, their future treatment plan, and the anticipated date they 11 would reach maximum medical improvement (“MMI”). Dr. Steffensmeier responded to this 12 request and informed State Farm in a letter that Plaintiffs (1) suffered soft tissue damage as a result 13 of the car accident; (2) would both need treatment once a week; and (3) would each reach MMI by 14 July 1, 2007. (Dkt. #20, Mot. Ex. H.) 15 After receiving Dr. Steffensmeier’s response and reviewing Plaintiffs’ files (which 16 indicated their prior history of back and neck problems), State Farm decided to retain an 17 independent medical expert to review Plaintiffs’ records. State Farm subsequently hired Daniel R. 18 Staight, another Wyoming chiropractor, to review Plaintiffs’ medical records and give an opinion 19 regarding Plaintiffs’ condition and proposed future treatment. On August 6, 2007, after having 20 reviewing the records from Plaintiffs’ fifty-plus visits to Dr. Steffensmeier, Dr. Staight issued a 21 report in which he concurred with Dr. Steffensmeier regarding the general diagnosis and course of 22 treatment of Plaintiffs’ soft tissue injuries. However, Dr. Staight disagreed in part with Dr. 23 Steffensmeier regarding the date of MMI for Plaintiffs. Although Dr. Staight agreed with Dr. 24 Steffenmeier’s determination that Kathleen Gorrell reached MMI on July 1, Dr. Staight stated that 25 Daniel reached MMI after his June 13, 2007 session with Dr. Steffensmeier. 26 / AO 72 (Rev. 8/82) 5 1 In August 2007, State Farm sent Plaintiffs and their medical providers a letter 2 indicating that chiropractic services were no longer medically necessary under the insurance policy 3 and that State Farm would not continue making payments. Nonetheless, and despite the fact that 4 both doctors agreed that Plaintiffs reached or would reach MMI no later than July 1, 2007, 5 Plaintiffs continued to receive chiropractic treatment from Dr. Steffensmeier. 6 2. 7 The Court finds State Farm is entitled to summary judgment on Plaintiffs’ claim for 8 breach of contract because the uncontroverted evidence indicates that State Farm was not obligated 9 to continue making payments for Plaintiffs’ chiropractic treatment. The Court comes to this 10 conclusion for two reasons. First, Plaintiffs’ treating chiropractor and an independent chiropractor 11 both agree that Plaintiffs would reach or had already reached MMI on July 1. Dr. Steffensmeier, 12 who had already been treating Plaintiffs for almost three months, concluded that Plaintiff would 13 reach MMI by July 1, and Dr. Staight, after reviewing Plaintiffs’ medical records, concluded in 14 August that both Plaintiffs had reached MMI by July 1. Second, Plaintiffs have brought forth no 15 evidence to indicate that Dr. Steffensmeier or Dr. Staight’s conclusions were inaccurate or that 16 Plaintiffs have not in fact reached MMI. As the plaintiffs in this case, the Gorrells bear the burden 17 of providing evidence to support their breach of contract claim. Plaintiffs have not carried this 18 burden: instead of bringing forth credible evidence to refute the medical testimony regarding their 19 condition or to indicate that they required additional treatment, they have done little more than 20 allege that State Farm should have continued to cover their chiropractic treatments. In light of Dr. 21 Steffensmeier and Dr. Staight’s conclusions, Plaintiffs’ failure to provide this evidence is fatal to 22 their claim. Accordingly, the Court grants State Farm’s motion for summary judgment on 23 Plaintiffs’ breach of contract claim. 24 Plaintiffs’ Contractual Claims The Court also grants State Farm’s motion for summary judgment as to Plaintiffs’ 25 claim for breach of the implied covenant of good faith and fair dealing. Under Nevada law, 26 “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance AO 72 (Rev. 8/82) 6 1 and execution.” A.C. Shaw Constr. v. Washoe County, 784 P.2d 9, 9 (Nev. 1989) (quoting 2 Restatement (Second) of Contracts § 205). Thus, a party can be liable for breach of the covenant 3 of good faith and fair dealing “[w]hen [it] performs a contract in a manner that is unfaithful to the 4 purpose of the contract” or otherwise acts in bad faith. Hilton Hotels v. Butch Lewis Prods., 808 5 P.2d 919, 923 (Nev. 1991). 6 The Court grants summary judgment on Plaintiffs’ claim for breach of this duty for 7 the same reason it grants summary judgment on their claim for breach of contract. The 8 uncontroverted evidence, including the medical opinion of Plaintiffs’ treating chiropractor, 9 indicates that Plaintiffs reached MMI on or before July 1, 2007. Consequently, the Court finds 10 that no factual dispute exists regarding whether State Farm acted in bad faith when it determined 11 that Plaintiffs were not entitled to additional insurance coverage under their insurance policy. The 12 Court therefore grants State Farm’s motion for summary judgment on Plaintiffs’ claim for breach 13 of the implied covenant of good faith and fair dealing. 14 C. 15 Non-Contractual Claims Because the Court finds State Farm was not required under the terms of the 16 insurance policy to continue paying for Plaintiffs’ chiropractic treatment, Plaintiffs’ non- 17 contractual claims—all of which stem from State Farm’s allegedly wrongful refusal to render 18 payment—also fail as a matter of law. Since State Farm complied with its obligations under the 19 insurance contract, it cannot be liable to Plaintiffs for quantum meruit, bad faith, negligent 20 misrepresentation, or punitive damages. Accordingly, the Court grants State Farm’s motion for 21 summary judgment as to these claims. 22 III. 23 Motion to Bifurcate State Farm’s motion to bifurcate the trial is now moot because the Court has 24 granted State Farm’s motion for summary judgment in its entirety. Accordingly, the Court denies 25 this motion as moot. 26 / AO 72 (Rev. 8/82) 7 1 CONCLUSION 2 Accordingly, and for good cause appearing, 3 IT IS HEREBY ORDERED that Defendant State Farm Automobile Insurance 4 5 6 Company’s Motion for Summary Judgment (#20) is GRANTED. IT IS FURTHER ORDERED that State Farm’s Motion to Bifurcate (#21) is DENIED as moot. 7 The Clerk of the Court is ordered the close this case. 8 Dated: June 25, 2010. 9 10 ____________________________________ ROGER L. HUNT Chief United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 AO 72 (Rev. 8/82) 8