Judge: Daniel S. Murphy, Case: 22STCV11558, Date: 2024-01-22 Tentative Ruling

Case Number: 22STCV11558    Hearing Date: January 22, 2024    Dept: 32

BACKGROUND

            On April 5, 2022, Plaintiff Justin Dowdell filed this action against Defendants USAA Casualty Insurance Company and United Services Automobile Association, asserting (1) breach of contract and (2) breach of the covenant of good faith and fair dealing. Plaintiff alleges that USAA failed to properly cover his medical costs after he was injured in an auto accident.

            On November 2, 2023, Defendant USAA Casualty Insurance Company filed the instant motion for summary judgment or adjudication in the alternative. Plaintiff has not filed an opposition.

LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

DISCUSSION

I. Breach of Contract

            To establish breach of contract, a plaintiff must show: (1) the contract existed, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

            At the time of the accident, Plaintiff had a policy with Defendant that contained a Med Coverage Limit of $50,000. (UF 1.) The policy obligates Defendant to cover “medical expense benefits to an insured who sustains bodily injury . . . caused by an accident arising out of the ownership, maintenance or use of a motor vehicle.” (UF 2.) Medical expenses are defined as those that are “reasonable and necessary.” (Ibid.) The policy further requires the claimant to promptly provide proof of claim and “any other information which may assist [USAA] in determining the amount due and payable.” (Ibid.) The claimant must also “[a]uthorize [USAA] to obtain medical reports and other pertinent records . . . [which] may be used by [USAA] in determining whether [benefits] are payable under this policy.” (Ibid.)

            The accident occurred on November 23, 2016, and Plaintiff filed a claim for Med Pay benefits with Defendant on November 28, 2016. (UF 3, 5.) For the first time on August 27, 2018, Plaintiff submitted medical records and $48,220 in medical bills. (UF 7.) Plaintiff demanded that Defendant pay the policy limit of $50,000. (Ibid.) Defendant retained Auto Injury Solutions, Inc. (AIS) to review Plaintiff’s submitted documentation. (UF 9.) After consultation with AIS, Defendant issued payouts in the amounts that it determined were reasonable and necessary. (UF 10-14.) For the amounts that were denied or adjusted, Defendant found that they were not properly substantiated but requested further documentation to continue its evaluation. (UF 15-16.) Defendant sent multiple notices to Plaintiff and his medical providers for additional documentation but received none. (UF 17-20.)

            The undisputed evidence shows that Defendant complied with the contract terms, specifically by paying out those amounts that were deemed “reasonable and necessary.” The contract terms required Plaintiff to provide documentation supporting his claim, which Plaintiff failed to do. Defendant was not obligated to cover those amounts that were unsupported by proper documentation. Additionally, Plaintiff submitted $48,220 in medical bills but already recovered $100,000 from the other driver’s insurance. (UF 4.) Therefore, assuming Defendant breached the policy, Plaintiff cannot prove damages arising from such breach.  

Defendant has satisfied its burden on summary judgment, and Plaintiff presents no evidence raising a triable issue. Therefore, summary adjudication is warranted on the breach of contract claim.

II. Covenant of Good Faith and Fair Dealing

“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-50.) “When the insurer engages in unreasonable conduct in connection with an insured’s insurance claim, the insurer is said to have tortiously breached the implied covenant.” (Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 948.) This requires more than a mere failure to discharge its contractual duties due to mistake, bad judgment, or negligence; instead, there must be a conscious and deliberate act designed to frustrate the reasonable expectations of the insured. (Id. at p. 949.) An insurer does not act in bad faith if it withholds benefits based on a legitimate dispute as to the insurer’s liability. (Ibid.)  

The undisputed evidence discussed above shows that Defendant acted reasonably and denied coverage based on a genuine dispute regarding its liability. Defendant consulted with an outside provider, paid out certain amounts, and requested further supporting documentation from Plaintiff, which Plaintiff failed to provide. Defendant was contractually entitled to determine which costs were “reasonable and necessary.” (See UF 2.) The implied covenant cannot “be read to prohibit a party from doing that which is expressly permitted by an agreement.” (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 374.) Absent contrary evidence, this shows as a matter of law that Defendant did not breach the covenant. Therefore, summary adjudication is warranted on the breach of implied covenant claim.

CONCLUSION

            Defendant USAA Casualty Insurance Company’s motion for summary judgment is GRANTED.