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Leland Garner v. Nationwide Mutual Insurance Company

May 27, 2011

LELAND GARNER,
PLAINTIFF,
v.
NATIONWIDE MUTUAL INSURANCE COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Sandra M. Snyder United States Magistrate Judge

ORDER DENYING PLAINTIFF'S MOTIONS TO AMEND THE COMPLAINT AND FOR REMAND TO STATE COURT (Docs. 20 and 34)

Plaintiff Leland Garner moves for leave to amend his complaint to add claims for declaratory relief, malicious prosecution, and intentional infliction of emotional distress, and to add George S. Arata and Allied Insurance Company as a defendants. Because the joinder of Arata would destroy diversity, Plaintiff also moves for remand to the California Superior Court. Defendant Nationwide Mutual Insurance Company opposes the motions. Having reviewed the record and applicable law, the Court denies Plaintiff's motions.

I. Procedural and Factual Background

According to the allegations of Plaintiff's complaint, on May 2, 2002, Plaintiff was driving on McHenry Avenue in Modesto, California, when a van in the lane to Plaintiff's right suddenly changed lanes without signaling, cutting off Plaintiff's pickup truck. Although the pickup truck struck the van, its driver continued into the left turn lane, turned left onto Granger Avenue, and fled. The car behind Plaintiff, driven by Christopher Paul Michael, rear-ended Plaintiff's pickup and pushed the pickup into a fourth vehicle ahead of it. The fourth vehicle also fled.

In the second collision, Plaintiff received a severe blow to his abdomen from the "old-style" air bag in his 1996 pickup. The resultant injuries required extensive vascular surgeries, including two replacements of his aorta. Subsequent septic infection caused kidney failure, requiring Plaintiff to be hospitalized for many months. Plaintiff's medical bills exceeded $2 million. Kidney dialysis cost $30,000 per month. Plaintiff estimated the value of his injuries to be $6 million.

Plaintiff owned one-third of his employer, Charles Felmley Enterprises, Inc. ("CFE"), which operated car washes in Modesto. CFE continued to pay Plaintiff's salary while he was disabled by his injuries. Following the accident, Plaintiff elected to use Anthem Blue Cross medical insurance rather than file a workers' compensation claim.

Defendant Nationwide,*fn1 through Allied Insurance Company, issued a business automobile insurance policy to CFE, in which all three of its owners, including Plaintiff, were named insureds. Michael was underinsured, having liability insurance with $15,000 policy limits. On April 30, 2003, Garner sued Michael in Stanislaus County Superior Court. By latter dated July 9, 2003, Plaintiff notified Defendant's claims department and demanded arbitration. After Defendant approved Plaintiff's settlement with Michael for his policy limits, Plaintiff dismissed the complaint on March 5, 2004.

Thereafter, Plaintiff's attorney, Stephen Solano, informally negotiated with Defendant's adjusters and its attorney, Matthew G. Salazar. By April 2005, Salazar and Solano agreed that the case was ready for mediation or arbitration following depositions of Plaintiff and expert witnesses. Although depositions were scheduled to begin in June 2005, they were cancelled when Plaintiff relapsed due to sepsis and underwent a second aorta transplant.

In October 2005, Solano notified Salazar that Plaintiff could proceed with arbitration. Salazar subpoenaed Plaintiff's most recent medical records and requested that Garner provide a demand letter. Solano sent the demand letter on January 20, 2006. Salazar advised Solano that Defendant had transferred the case to attorney George S. Arata.

Arata took Plaintiff's deposition on February 27, 2006. Solano informed Arata that Anthem Blue Cross, which had paid Plaintiff's medical bills, was not asserting a medical lien. Thereafter, Arata informed Solano that Defendant's subsidiary, Allied Insurance Company, was entitled to credit for all benefits that Plaintiff would have been paid by his workers' compensation carrier.*fn2 Replying that workers' compensation was a red herring, Solano requested that the claim immediately be sent to arbitration. Defendant did not respond. On April 17, 2006, Plaintiff petitioned the California Superior Court for an order compelling arbitration and appointing arbitrators. On November 20, 2006, the California Court issue a declaratory judgment that Plaintiff was not required to file for workers' compensation.

On December 29, 2006, Defendant filed a separate indemnity action against the California State Compensation Insurance Fund, Plaintiff's workers' compensation carrier, which the state court denied April 7, 2008. (Plaintiff alleges that Defendant, having unsuccessfully filed complaints for indemnity against the State Fund in two prior actions, knew the Court would summarily dismiss a complaint for indemnity, but maliciously brought its indemnity claims as a means of further delay.)

Defendant repeatedly cancelled scheduled arbitration dates at the last minute, claiming its experts were unavailable. After Defendant cancelled arbitration scheduled for June 2008, again claiming unavailability of its experts, it moved to dismiss Plaintiff's right to arbitrate, contending that Plaintiff had failed to arbitrate his case within the five-year statutory period. Arbitrator Matthew Hawkins denied the motion on December 10, 2008, noting, "[I]t is abundantly clear that [Plaintiff] has gone to great efforts to move this case forward over the course of many years and that Defendant's position on the comp issue and its requests for rescheduling made completion by July 2009 impossible, impractical and futile and that [Defendant] should be estopped from asserting this defense."

In a letter dated August 3, 2009, in response to Arata's request to Solano, Anthem confirmed that it did not assert a lien on first-party uninsured motorist benefits. The arbitration hearing scheduled for August 17, 2009, could not proceed since Defendant again raised the workers' compensation issues even though the arbitrator lacked jurisdiction to hear them. Plaintiff refused to let arbitration proceed since any determination on the workers' compensation defense would not be appealable. Plaintiff returned to the California court, which dismissed Defendant's summary judgment motion and ordered that the workers' compensation defense could not be raised in arbitration. Arbitration was then rescheduled for March2010.

On the last possible date, Defendant filed a writ of mandate for a stay of arbitration, again asserting its workers' compensation defense. The March 2010 arbitration was cancelled. On April 8, 2010, the California Court of Appeals denied Defendant's writ and lifted the stay of arbitration. In May 2010, Defendant advised Plaintiff that it would appeal the Appellate Court's decision to the California Supreme Court. It did not do so. Arbitration was then scheduled for July 27, 2010. On May 20, 2010, ...


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