United States District Court, E.D. California
ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Progressive Express Insurance Company
(“Progressive” or “Defendant”)
submits to this Court a motion for summary judgment, or in
the alternative, partial summary judgment (Doc. 16), on
Plaintiff John Michael DeFrenza's (“DeFrenza”
or “Plaintiff”) single claim that Progressive
acted in bad faith in resolving his uninsured motorist
insurance claim. DeFrenza was in an accident on September 18,
2011 and did not receive a settlement from Progressive until
April 2, 2015, almost 3 and a half years later. This matter
is now fully briefed. For the reasons that follow,
Progressive's motion for summary adjudication will be
granted in part and denied in part.
was a “Rated Driver” under a Progressive
Commercial Automobile Insurance Policy, Number 06764199-5
(the “Policy”), issued to DeFrenza's
employer, Ross Fabrication and Welding Inc.
(“Ross”), with a policy period of June 12, 2011
through December 12, 2011, and including Underinsured
Motorist coverage with a combined single limit of $750, 000.
SUMF 1. DeFrenza had underinsured motorist coverage through
his own carrier, AAA, with a limit of $250, 000/500, 000.
SUMF 2. Coverage was pro-rated between the two carriers. SUMF
September 18, 2011, DeFrenza and a co-worker were driving a
pickup truck owned by Ross to a jobsite, when it was struck
by a 1999 Chevrolet Astro Van. SUMF 4. The driver of the
Astro Van, who was at fault, struck DeFrenza's vehicle at
30 to 35 miles per hour while running a red light, and spun
DeFrenza's vehicle clockwise. Doc. 20 at 6-7. The 2011
Ford F-150 pickup truck DeFrenza was driving, which was less
than a year old, was totaled. Doc. 20 at 6.
August 13, 2012, Progressive confirmed DeFrenza would present
an Uninsured Motorist (“UIM”) claim through his
attorney, Brandon Holladay. SUMF 5. DeFrenza filed a first
party UIM claim on or about October 10, 2012. Doc. 20 at 8.
On October 10, 2012, after confirming DeFrenza's
policy-limits settlement with the at-fault driver,
Progressive opened the UIM claim. SUMF 6.
October 12, 2012, three days after the claim was opened, Emy
Liberty (“Liberty”) confirmed UIM coverage was in
order, with limits of $735, 000 ($750, 000 - 15, 000), and
documented the amount of coverage in the claim file. DSUF 7.
While confirming coverage, Liberty noted initial questions
about DeFrenza's own UIM coverage and a possible offset
for worker's compensation coverage. DSUF 8. On October
23, 2012, Rowena Pavlinac entered her own coverage statement
again affirming the amount of UIM coverage and noting the
need to rule out worker's compensation and whether
DeFrenza had his own UIM coverage. Pavlinac documented the
amount of UIM coverage in the claim file. DSUF 9.
October 25, 2012, Holladay's office told Pavlinac they
had no medical records for DeFrenza but would send them when
they became available. SUMF 10. On November 20, 2012,
Pavlinac wrote and left a voicemail message for Holladay
following up on her requests for information. SUMF 11. On
January 24, 2013, Pavlinac again spoke with Holladay, who
represented that he would provide medical authorizations and
confirmation of DeFrenza's personal UIM coverage. SUMF
12. On February 4, 2013, Holladay sent a demand letter for
the policy limits of $735, 000. SUMF 13. On February 4, 2013,
Holladay represented that DeFrenza had no personal UIM
coverage. SUMF 14. On February 4, 2013, Holladay stated that
DeFrenza was anticipated to undergo two additional surgeries.
SUMF 15. On February 4, 2013, Holladay did not return the
medical authorizations. SUMF 16. On February 4, 2013,
Holladay provided 365 pages of medical records relating to
DeFrenza's treatment, along with wage information. SUMF
17. On or about February 8, 2013,  DeFrenza made a demand to
Progressive to pay the underlying UIM policy limits of $735,
000. Doc. 20 at 8.
February 15, 2013, Pavlinac told Holladay she required all of
DeFrenza's prior Kaiser records, not just the surgery
records. SUMF 18. On March 8, 2013, at Progressive's
request, Holladay provided what he represented were
DeFrenza's medical records for three years prior to the
accident. SUMF 19. On April 10, 2013, Pavlinac sent Holladay
a letter requesting the promised medical authorizations and
AAA declarations page. SUMF 20. On April 10, 2013, after
speaking with Holladay and explaining the medical records
provided were incomplete, Pavlinac again asked for complete
medical records and billings. SUMF 21. Holladay never
returned the signed medical authorizations. SUMF 22.
April 29, 2013, Holladay asked for Progressive's
settlement position, Pavlinac advised Holladay that she
needed to review specific coverage issues, including whether
worker's compensation applied, and possible additional
UMBI coverage through DeFrenza's policy with AAA, which
up to that date had not been notified of a potential claim.
SUMF 23. On June 14, 2013, Holladay-while continuing to
demand policy limits-asked that Progressive make an offer of
the “undisputed value” of DeFrenza's injuries
“even if they are keeping believe [sic] that a
reduction should be taken against the worker's
compensation benefit.” SUMF 24.
31, 2013, Pavlinac advised Holladay that Progressive would
“not be able to make any payments . . . until we reach
an agreement for the full amount of the claim.” SUMF
25. On August 2, 2013, Pavlinac informed Holladay that
Progressive still had not received DeFrenza's
post-operative reports and requested updated medical records
and billing. Holladay said he was unaware that Progressive
did not have the updated medical records. SUMF 26. On August
13, 2013, Pavlinac advised Holladay that Progressive would
not assert a workers' compensation offset and renewed her
request for updated medical records. SUMF 27. August 26,
2013, Pavlinac received the updated Kaiser records and began
her evaluation of DeFrenza's injury and medical records
and billings. SUMF 28.
August 27, 2013, assuming pro-rata coverage with AAA,
Pavlinac arrived at a settlement range of $219, 942 - 294,
742 as Progressive's 88% share. SUMF 29. On September 4,
2013, using, inter alia, a different loss of
earnings component, Pavlinac's manager reached a
settlement range of $152, 791 - 327, 791. SUMF 30. On
September 10, 2013, Holladay made a formal arbitration
demand. SUMF 31. On September 17, 2013, Progressive offered
the low end of its evaluation, $152, 791 (as its pro-rated
share), to settle DeFrenza's entire claim. SUMF 32.
September 17, 2013, while making her offer of settlement,
Pavlinac advised Holladay that the medical records he
provided were neither numbered nor Bates-stamped, and that
they made references to numerous procedures for which there
were no corresponding records. SUMF 33. On September 17,
2013, Holladay told Progressive that it could obtain any
additional necessary records via subpoena. SUMF 34. In a
letter dated September 17, 2013, Holladay rejected the $152,
791 offer, asserted that it constituted an “undisputed
amount, ” and demanded immediate advance payment
“while we move forward with the demanded
arbitration.” SUMF 35.
basis for Holladay's demand for immediate payment of the
settlement offer was language from the implementing
regulations of the Fair Claims Practices Act found at Cal.
Code.Regs. tit. 10 § 2695.7(h). SUMF 36. Progressive
referred the arbitration defense to Richard Phillips
(“Phillips”). SUMF 37. On October 11, 2013,
Rowena Pavlinac (“Pavlinac”) spoke with
[Phillips] who had further researched Insurance Code
2695.7(h), and noted on its face it appears Progressive ought
to pay out its undisputed offer of $152, 791. PSUF 6. On
October 14, 2013, Phillips communicated to Holladay that the
authority he relied upon for his argument that Progressive
had a duty to advance an undisputed amount was inapposite.
October 28, 2013, Phillips and Pavlinac discussed the case
and confirmed the value of the case was at a range of $350,
000 to $450, 000 with a target range of $390, 000. However,
no new offer was made after the original offer of $152, 791
(offered on September 17, 2013). PSUF 7. Carolyn Nogy
(“Nogy”) PMQ for Progressive testified that each
time a new value was placed on a claim the adjuster was to
start at the low end of the settlement value and Progressive
encouraged assertive negotiations as Progressive's goal
was to settle the claims quickly as it was not
Progressive's aim to delay claims in any manner. SUMF 9.
Progressive failed to follow and/or comply with its own
policy of adjusting its previous offers once new information
was obtained that increased the projected settlement value of
the case. PSUF 10.
discovery, Kaiser provided nearly 1, 500 pages of medical
records pursuant to subpoena. SUMF 39. Progressive and AAA
retained an expert, Brian Grossman, M.D., who opined that
DeFrenza's injury-related complaints about his back and
spine related back to previous injuries, prior surgery, and a
history of strenuous work. DSUF 40. Michael Tivnon, M.D., a
shoulder expert, performed an IME and opined that the need
for both shoulder replacement surgeries was due to
degeneration not the automobile accident. DSUF 41. Geoffrey
Miller, M.D., an orthopedic surgeon, opined that at least one
shoulder surgery and treatment to both shoulders and the
cervical spine were directly related to the auto accident.
Declaration of Seth O'Dell, Exh. C., Doc. 20-1
(“Miller Report”) at 26-27.
March 11, 2015, when the new adjuster Paul Nummelin
(“Nummelin”) completed a new evaluation for the
DeFrenza case, and based on his review of the file
information, he placed a settlement range with $243, 232 at
the low range and $518, 232 as the high range for settlement.
PSUF 8. On April 2, 2015, the parties resolved the claim at
mediation for $400, 000 ($300, 000 from Progressive and $100,
000 from AAA). SUMF 42. The settlement agreement, executed
April 2, 2015, included a release of all claims
“arising out of or in any way connected with [the
accident], including all injuries and deaths, loss of
services and consortium, and property damage, resulting
therefrom . . . .” SUMF 43. AAA advised Progressive that
it placed a maximum value of $400, 000 on DeFrenza's
claim. DSUF 44.
judgment is proper when it is demonstrated that there exists
no genuine issue as to any material fact, and that the moving
party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56; Adickes v. S.H. Kress & Co.,
398 U.S. 144, 157 (1970); Fortyune v. American
Multi-Cinema, Inc., 364 F.3d 1075, 1080 (9th Cir. 2004).
The party seeking summary judgment bears the initial burden
of informing the court of the basis for its motion and of
identifying the portions of the declarations (if any),
pleadings, and discovery that demonstrate an absence of a
genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986); Soremekun v.
Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir.
2007). A fact is “material” if it might affect
the outcome of the suit under the governing law. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49
(1986); United States v. Kapp, 564 F.3d 1103, 1114
(9th Cir. 2009). A dispute is “genuine” as to a
material fact if there is sufficient evidence for a
reasonable jury to return a verdict for the non-moving party.
Anderson, 477 U.S. at 248; Freecycle Sunnyvale
v. Freecycle Network, 626 F.3d 509, 514 (9th Cir. 2010).
the moving party will have the burden of proof on an issue at
trial, the movant must affirmatively demonstrate that no
reasonable trier of fact could find other than for the
movant. Soremekun, 509 F.3d at 984. Where the
non-moving party will have the burden of proof on an issue at
trial, the movant may prevail by presenting evidence that
negates an essential element of the non-moving party's
claim or by merely pointing out that there is an absence of
evidence to support an essential element of the non-moving
party's claim. See James River Ins. Co. v. Herbert
Schenk, P.C., 523 F.3d 915, 923 (9th Cir. 2008);
Soremekun, 509 F.3d at 984. If a moving party fails
to carry its burden of production, then “the non-moving
party has no obligation to produce anything, even if the
non-moving party would have the ultimate burden of
persuasion.” Nissan Fire & Marine Ins. Co. v.
Fritz Cos., 210 F.3d 1099, 1105-06 (9th Cir. 2000). If
the moving party meets its initial burden, the burden then
shifts to the opposing party to establish that a genuine
issue as to any material fact actually exists. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586 (1986); Nissan Fire, 210 F.3d at 1103.
The opposing party cannot “‘rest upon the mere
allegations or denials of [its] pleading' but must
instead produce evidence that ‘sets forth specific
facts showing that there is a genuine issue for
trial.'” Estate of Tucker v. Interscope
Records, 515 F.3d 1019, 1030 (9th Cir. 2008).
opposing party's evidence is to be believed, and all
justifiable inferences that may be drawn from the facts
placed before the court must be drawn in favor of the
opposing party. See Anderson, 477 U.S. at 255;
Matsushita, 475 U.S. at 587; Narayan v. EGL,
Inc., 616 F.3d 895, 899 (9th Cir. 2010). While a
“justifiable inference” need not be the most
likely or the most persuasive inference, a "justifiable
inference" must still be rational or reasonable. See
Narayan, 616 F.3d at 899. Summary judgment may not be
granted “where divergent ultimate inferences may
reasonably be drawn from the undisputed facts.”
Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771
F.3d 1119, 1125 (9th Cir. 2015); see also Holly D. v.
Cal. Inst. of Tech., 339 F.3d 1158, 1175 (9th Cir.
2003). Inferences are not drawn out of the air, and it is the
opposing party's obligation to produce a factual
predicate from which the inference may be drawn. See
Fitzgerald v. El Dorado Cnty., 94 F.Supp.3d 1155, 1163
(E.D. Cal. 2015); Sanders v. City of Fresno, 551
F.Supp.2d 1149, 1163 (E.D. Cal. 2008). “A genuine issue
of material fact does not spring into being simply because a
litigant claims that one exists or promises to produce
admissible evidence at trial.” Del Carmen Guadalupe
v. Agosto, 299 F.3d 15, 23 (1st Cir. 2002); see
Bryant v. Adventist Health System/West, 289 F.3d 1162,
1167 (9th Cir. 2002). The parties have the obligation to
particularly identify material facts, and the court is not
required to scour the record in search of a genuine disputed
material fact. Simmons v. Navajo Cnty., 609 F.3d
1011, 1017 (9th Cir. 2010). Further, a “motion for
summary judgment may not be defeated . . . by evidence that
is ‘merely colorable' or ‘is not
significantly probative.'” Anderson, 477
U.S. at 249-50; Hardage v. CBS Broad. Inc., 427 F.3d
1177, 1183 (9th Cir. 2006). If the nonmoving party fails to
produce evidence sufficient to create a genuine issue of
material fact, the moving party is entitled to summary
judgment. Nissan Fire, 210 F.3d at 1103.
Summary of the Parties' Positions on the Current
characterizes DeFrenza's claim for breach of the covenant
of good faith and fair dealing (“bad faith”) as
based upon three distinct theories: (1) Progressive failed to
immediately tender its initial settlement offer - what
DeFrenza terms “failure to pay undisputed covered parts
of the claim;” (2) Progressive made an unreasonably low
initial offer of settlement; and (3) Progressive unreasonably
delayed resolution of the claim. If the Court is unable to
grant the motion in full, Progressive requests discrete
rulings that it did not commit bad faith based on one or more
of DeFrenza's three theories for purposes of narrowing
the case for trial. Progressive maintains that their actions
were reasonable, timely, and thorough, and that they had no
obligation to make advance payments on a claim in the absence
of a settlement.
DeFrenza's opposition to the motion (“Doc.
20”), DeFrenza addresses the three main theories of bad
faith as outlined by Progressive, and argues that there are
at least seven issues of fact that the jury must decide,
1. Did Progressive intentionally delay its investigation into
the facts and circumstances of ...