Thomas v. State Farm General Insurance Company

Opinion

7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA Sarah Aislinn Flynn Thomas, Case No. 18-cv-00728-BAS-BGS 11 12 Plaintiff, S MU OP TP IL OE NM FE ON RT A SUL M O MRD AE RR Y RE: v. JUDGMENT 13 State Farm Insurance Company, 14 Defendant. 15 16 The Court issued an initial Order denying Defendant’s Motion for Summary 17 Judgment and Granting Plaintiff’s Motion for Summary Judgment on December 10, 2019, 18 and requesting that the parties file a joint report advising the status of the claims. (ECF 19 No. 35.) The parties informed the Court that Plaintiff’s claim for a breach of the implied 20 covenant of good faith and fair dealing remained unresolved.1 (ECF No. 36.) 21 After reviewing the issues, the Court finds that summary judgment in favor of 22 Defendant is appropriate on this claim. The Ninth Circuit has held that “[a]n insurer is 23 entitled to summary judgment on a claim that it breached the covenant of good faith and 24 fair dealing where its interpretation of the policy at issue, though incorrect, was 25 reasonable.” Aurafin-OroAmerica, LLC v. Fed. Ins. Co., 188 F. App’x 565, 567 (9th Cir. 26 2006). A district court “can conclude as a matter of law that an insurer’s denial of a claim 27 1 The Court’s initial Order granted Plaintiff’s Summary Judgment Motion and denied Defendant’s 28 1 is not unreasonable, so long as there existed a genuine issue as to the insurer’s liability.” 2 Am. Cas. Co. v. Krieger, 181 F.3d 1113, 1123 (9th Cir. 1999) (quoting Lunsford v. Am. 3 Guar. & Liab. Ins. Co., 18 F.3d 653, 656 (9th Cir. 1994)). The Ninth Circuit has repeatedly 4 held that a genuine issue exists where there is “a question concerning an insurer’s liability 5 under California law.” Guebara v. Allstate Ins. Co., 237 F.3d 987, 999 (9th Cir. 2001) 6 (Fletcher, J., dissenting in part) (citing cases). 7 The genuine dispute in this case did not concern the existence of coverage liability 8 afforded under the life insurance policies or the amount or extent of the claimed loss. See, 9 e.g., Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 1062, 1072 (2007), as modified on denial 10 of reh’g (Apr. 20, 2007). Rather, at the core of this case was a legal question about statutory 11 applicability; namely, whether two provisions of the California Insurance Code applied to 12 the policies at issue, and thus whether liability attached to Defendant under those statutes. 13 Therefore, because this case presented a genuine issue as to Defendant’s liability under law, 14 Defendant’s denial of benefits, though incorrect, was reasonable. This is supported by the 15 fact that at the time of Defendant’s denial of benefits, no state court had definitively 16 addressed the issues of retroactivity or renewal as to these two provisions.2 Thus, the Court 17 finds that as a matter of law, summary judgment is appropriate as to Plaintiff’s claim of 18 breach of good faith and fair dealing. See Safeco Ins. Co. of America v. Guyton, 692 F.2d 19 551, 557 (9th Cir. 1982) (bad faith claims are untenable where “there exist[s] a genuine 20 issue as to [an insurer’s] liability under California law”); see also Opsal v. United Services 21 Auto. Ass’n, 2 Cal. App. 4th 1197, 1205 (Ct. App. 1991) (citing Safeco). 22 Accordingly, the Court GRANTS Defendant’s Motion for Summary Judgment as to 23 the good faith and fair dealing claim. If Plaintiff wishes to object to this Order, Plaintiff 24 may submit a brief exceeding no more than five pages by January 15, 2020. If the Court 25 26 2 Defendant did not pay out the policies in 2017 on the basis that the policies had lapsed and ultimately 27 terminated for nonpayment of premiums. The California Court of Appeal’s decision in Hugh v. Protective Life Insurance, finding that the statutes in question have no retroactive application, was not issued until 28 1 || does not receive a timely objection from Plaintiff, the Court will instruct the Clerk to □□□□□ 2 ||judgment in this case. 3 IT IS SO ORDERED. 4 / 5 || DATED: January 7, 2020 (pillu.g (Lyohaa é 6 United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28