Judge Thomas D. Long, Case Number: 22STCV32318, Date: 2023-07-13 Tentative Ruling

On October 3, 2022, Plaintiff Mat Baburyan filed this action against Defendant Safeco Insurance Company of America.

On October 27, 2023, Defendant filed a motion for summary judgment, or in the alternative, summary adjudication. Plaintiff did not file an opposition.

On March 4, 2014, Plaintiff reported to Defendant that he was involved in an automobile accident on February 28, 2014. (Undisputed Material Facts “UMF” 1.) Plaintiff was insured under Defendant’s Policy Number A2809077, which had Uninsured Motorist (“UM”) Coverage and Medical Payment Coverage parts with limits. (UMF 2-3.) The UM Coverage included policy provisions that mirror Insurance Code section 11580.2, including an arbitration provision. (UMF 4-5.)

On December 3, 2014, Plaintiff’s counsel submitted to Defendant medical bills of $10,040 and claimed that Plaintiff required future spine surgery at a cost of over $80,000. (UMF 6.) On December 17, 2014, Defendant advised of its payment of the $5,000 Medical Payments Coverage (“MedPay”) policy limit, and it offered to settle the claim for $9,975 for medical bills plus general damages, less $5,000 offset for Medical Payments benefits paid under MedPay. (UMF 7.) Defendant received a letter from Plaintiff’s counsel demanding arbitration of the claim, but Plaintiff’s counsel later stated that the “demand” was to protect the statute of limitations and not to initiate formal arbitration because Plaintiff was still being treated. (UMF 8-9.)

On August 4, 2016, Plaintiff provided Defendant with a report from an independent medical examiner who opined that Plaintiff needed spine surgery. (UMF 9-10; Ex. 16.) To evaluate that medical opinion and whether the procedure was related to the accident, Defendant retained Dr. Rosabel Young. (UMF 10.)

On April 20, 2017, Defendant offered to settle the claim for $67,000, but five days later, Plaintiff rejected the offer and demanded UM arbitration. (UMF 11.) Discovery proceeded in the UM arbitration proceeding from in or about May 2017 to January 2020. (UMF 12.)

On February 11, 2020 Defendant received a CCP section 998 Offer to Compromise from Plaintiff in the amount of $250,000. (UMF 13.) On February 22, 2020 Defendant received Plaintiff’s arbitration brief in which he asserts entitlement to “no less than $250,000.” (UMF 14.) On June 17, 2020 Defendant received from Plaintiff’s counsel a demand to settle the UM claim for payment of $225,000. (UMF 15.) On June 23, 2020, Defendant increased its offer of settlement to $82,500: $49,328 for past and future medical specials and $38,172 in general damages for pain and suffering, minus $5,000 for Medical Payments already made. (UMF 16.) Plaintiff rejected that offer, and the arbitration proceeded on July 27, 2020. (UMF 17.)

The Arbitrator issued his Arbitration Award dated August 24, 2020 for $137,164: $42,164 for past and future medical specials and $100,000 for general damages, minus $5,000 for Medical Payments already made. (UMF 18.) The Arbitrator agreed with Defendant’s expert who found that Plaintiff was not entitled to over $100,000 for future spine surgery. (UMF 19.)

Defendant received the arbitration award on August 28, 2020 and issued a check to Plaintiff and his counsel the same day. (UMF 20.)

For each claim in the complaint, the defendant moving for adjudication must satisfy the initial burden of proof by showing that one or more elements of a cause of action cannot be established or that there is a complete defense to a cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520 (Scalf).) Then the burden shifts to the plaintiff to show that a triable issue of material fact exists as to that cause of action or a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf, supra, 128 Cal.App.4th at p. 1520.) 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, 162-163.)

A. Defendant Has Shown that Plaintiff Cannot Establish All Elements of Breach of Contract (First Cause of Action).

The first cause of action alleges that Defendant breached its contract with Plaintiff by unreasonably refusing to pay benefits due and payable. (Complaint ¶ 68.) The standard elements of a claim for breach of contract are (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Defendant argues that there is no breach because it paid all policy benefits per the policy and arbitration award. (Motion at pp. 10-11.) It is undisputed that the policy had an arbitration provision, the parties went to arbitration, the arbitrator rendered an award, and Defendant issued a check to Plaintiff the same day that it received notice of the award. (UMF 5, 12, 18, 20.) There can be no breach of contract when an insurer pays all policy benefits that an insured is entitled to receive. (Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1468.)

Defendant has met its initial burden of showing that Plaintiff cannot establish an essential element of his claim. The burden now shifts to Plaintiff to show the existence of a triable issue of fact. Plaintiff did not file any opposition.

B. Defendant Has Shown that Plaintiff Cannot Establish All Elements of Breach of Good Faith and Fair Dealing (Second Cause of Action).

The second cause of action alleges bad faith and breach of the duty good faith and fair dealing when Defendant unreasonably withheld benefits due under the policy. To establish a breach of the covenant of good faith and fair dealing for insurance claims, a plaintiff must establish that (1) benefits due under the policy were withheld, and (2) the reason for withholding benefits was unreasonable or without proper cause. (Love v. Fire Insurance Exchange (1990) 221 Cal.App.3d 1136, 1151.)

“[B]efore an insurer can be found to have acted tortiously (i.e., in bad faith), for its delay or denial in the payment of policy benefits, it must be shown that the insurer acted unreasonably or without proper cause. [Citations.] However, where there is a genuine issue as to the insurer’s liability under the policy for the claim asserted by the insured, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute. [Citation.]” (Chateau Chamberay Homeowners Ass’n v. Associated Intern. Ins. Co. (2001) 90 Cal.App.4th 335, 347.) “The genuine dispute rule does not relieve an insurer from its obligation to thoroughly and fairly investigate, process and evaluate the insured’s claim.” (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 723 (Wilson).) “[A]n insurer is entitled to summary judgment based on a genuine dispute over coverage or the value of the insured’s claim only where the summary judgment record demonstrates the absence of triable issues (Code Civ. Proc., § 437c, subd. (c)) as to whether the disputed position upon which the insurer denied the claim was reached reasonably and in good faith.” (Wilson, supra, 42 Cal.4th at pp. 724.) “A genuine dispute exists only where the insurer’s position is maintained in good faith and on reasonable grounds.” (Id. at p. 723.)

Defendant argues that it was reasonably debatable whether Plaintiff’s alleged need for spine surgery was compensable under the claim. (Motion at p. 12.) It is undisputed that the parties had differing expert opinions, and the arbitrator agreed with Defendant’s expert who found that Plaintiff was not entitled to over $100,000 for future spine surgery. (UMF 9-10, 19.)

Defendant made several settlement offers in increasing amounts, and its last offer of $82,500 ($49,328 for past and future medical specials and $38,172 in general damages for pain and suffering, minus $5,000 for Medical Payments) was close to the final arbitration award of $137,164 ($42,164 for past and future medical specials and $100,000 for general damages, minus $5,000 for Medical Payments). (UMF 16, 18.) The major difference in the awards is the amount of general damages, and an award of nonpecuniary damages “is ‘a matter on which there legitimately may be a wide difference of opinion.’” (Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 498, 508.) Additionally, the arbitration award was over $100,000 below the policy limit and below Plaintiff’s CCP section 998 Offer to Compromise. (Motion at p. 12; see UMF 3, 13, 18.)

C. Defendant Has Shown that Plaintiff Cannot Establish a Basis for Punitive Damages.

For the reasons set forth above, Plaintiff cannot establish an underlying claim upon which punitive damages may be awarded because Defendant did not act in bad faith. (See Motion at pp. 14-15.)

Defendant has met its initial burden of showing that Plaintiff cannot establish a basis for punitive damages. The burden now shifts to Plaintiff to show the existence of a triable issue of fact. Plaintiff did not file any opposition.

The motion for summary judgment is GRANTED. Defendant is ordered to submit a proposed judgment within five days.

A Non-Appearance Case Review Re: Submission of Proposed Judgment is scheduled for January 31, 2024 at 9:00 a.m.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court