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Dey v. State Farm Mutual Automobile Insurance Co.

United States District Court, Fifth Circuit

December 30, 2013

DANIEL F. DEY, Plaintiff,



BEFORE THE COURT is Defendant State Farm Mutual Automobile Insurance Company's Motion for Partial Summary Judgment [65] seeking judgment as a matter of law as to Plaintiff Daniel F. Dey's claims for bad faith/punitive damages and conversion. Having considered the Motion, Plaintiff's Response [70], Defendant's Reply [74], the evidence submitted, and relevant legal authority, the Court finds that Defendant is entitled to judgment as a matter of law on Plaintiff's claims for conversion and bad faith/punitive damages.


On October 7, 2009, Plaintiff Daniel F. Dey ("Plaintiff") was involved in an automobile accident with a City of Gulfport police officer. Compl. 3 [1-2]. At the time of the accident, Plaintiff was the named insured on two State Farm Mutual Automobile Insurance Company ("Defendant") policies bearing policy numbers XXXX-XXX-XXE and XXXX-XXX-XXB (collectively, "the Policies"). Compl. 2. The Policies provided uninsured motorist ("UM") coverage to Plaintiff with a total limit of $100, 000. Dep. of Donald Evans 44:12-45:15 [65-3].

Plaintiff eventually began to develop left shoulder pain and sought medical treatment from Dr. Jeffrey Noblin on October 23, 2009. Compl. at 4, Ex. "B" to Mot. for Partial Summ. J. 108 of 173 [65-2]. On January 6, 2010, Dr. Noblin released Plaintiff to return to his job as a border patrol agent. Savoie Report 2 [74-2]. Dr. Noblin ordered an MRI of Plaintiff's left shoulder, which revealed arthrosis in the AC joint of Plaintiff's shoulder. Ex. "B" to Mot. for Partial Summ. J. 97 of 173 [65-2]. Plaintiff continued to follow-up with Dr. Noblin, and after a May 11, 2010, visit in which Dr. Noblin noted Plaintiff's shoulder appeared to be healing on its own, Dr. Noblin found Plaintiff had reached maximum medical improvement ("MMI") on October 1, 2010. Id., Ex. "B" to Mot. for Partial Summ. J. 15-16 of 173 [65-2]. Dr. Noblin attributed to Plaintiff permanent partial impairment of 2% of his upper extremity and 1% of his body as a whole, and he noted that if pain occurred with an increase in activities, Plaintiff may require a surgical procedure. Ex. "B" to Mot. for Partial Summ. J. 16 of 173 [65-2].

On March 9, 2010, Dr. Noblin referred Plaintiff to Dr. Charles Winters to have Plaintiff's back pain evaluated. Id. Dr. Winters noted on April 8, 2010, that a MRI revealed evidence of degenerative disc disease. Ex. "B" to Mot. for Partial Summ. J. 91 of 173 [65-2]. Dr. Winters' notes of December 8, 2010, reflect that the nerves in Plaintiff's back were healing and that he would not recommend surgery. Ex. "B" to Mot. for Partial Summ. J. 66 of 173 [65-2]. After a follow-up visit on March 9, 2011, Dr. Winters observed that Plaintiff was experiencing some hip pain when he wore his gun belt and had pain down his left leg if he stood for too long. Pl.'s Ex. "10" [70-10]. Otherwise, Plaintiff was "doing really fairly well" and should follow-up as needed. Id.

On May 19, 2011, Plaintiff submitted a demand to State Farm for $125, 000 to settle claims for UM benefits under the Policies. Ex. "B" to Mot. for Partial Summ. J. 29 of 173 [65-2]. At that time, however, Plaintiff had not yet exhausted his administrative remedies as required by Mississippi Code ยง 83-11-103(c)(vi). In a letter dated June 17, 2011, Plaintiff informed Defendant that he had completely exhausted his administrative remedies and renewed his demand for "policy limits" under the Policies. Ex. "B" to Mot. for Partial Summ. J. 26 of 173 [65-2].

On July 7, 2011, Defendant's claim representative, Donald Evans, prepared an Injury Evaluation Report ("IER"). Pl.'s Ex. "5" [70-5]. The evaluation resulted in a recommendation that the claim be settled and placed Defendant's settlement range between $37, 000 and $47, 000. Id. The next day, Defendant offered Plaintiff $37, 000 to settle his UM claim. Pl.'s Ex. "6" [70-6]. In a letter dated July 12, 2011, Plaintiff rejected this initial offer and reiterated his demand for policy limits. Pl.'s Ex. "7" [70-7]. On August 25, 2011, Defendant increased its offer to settle the UM claim to $45, 000. Pl.'s Ex. "8" [70-8]. While these negotiations were ongoing, Plaintiff and Defendant were also communicating about terms and exclusions contained in the Policies. Pl.'s Ex. "8" [70-8]. Having not received a definitive answer in response to its $45, 000 settlement offer, Defendant contacted Plaintiff on October 20, 2011, to inquire as to Plaintiff's position regarding Defendant's last offer. Pl.'s Ex. "8" [70-8].

Plaintiff saw Dr. Winters again on November 16, 2011. Dr. Winters' records indicate Plaintiff was experiencing some pain but there was no need for surgery. Pl.'s Ex. "10" [70-10]. On February 6, 2012, Plaintiff communicated to Defendant the fact that he was still experiencing pain. Pl.'s Ex. "10" [70-10]. A manager for Defendant reviewed Plaintiff's claim on February 23, 2011, and Defendant unconditionally tendered to Plaintiff a draft in the amount of Defendant's initial offer of $37, 000 because the parties had reached an impasse in their negotiations. Pl.'s Ex. "11" [70-11], Pl.'s Ex. "12" [70-12]. Defendant further informed Plaintiff that the claim "remain[ed] open subject to a final determination of damages." Pl.'s Ex. "12" [70-12].

On April 2, 2012, Plaintiff's counsel acknowledged the impasse but demanded payment of an additional $13, 000 based on an alleged prior offer of $50, 000 and reiterated this demand on April 19, 2012. Pl.'s Exs. "13" and "14" [70-13] [70-14]. Defendant's claim representative responded on May 2, 2012, that there must have been a misunderstanding because the last settlement offer for $45, 000 was not accepted, and Defendant unconditionally tendered its initial offer in recognition of an impasse between the parties. Pl.'s Ex. "15" [70-15]. On May 4, 2012, Plaintiff's counsel demanded payment of the difference between $50, 000 and the $37, 000 unconditional tender based upon "previous cases in which [Plaintiff's attorney] has been involved...." Pl.'s Ex. "16" [70-16].

While the parties were in the midst of these exchanges, Plaintiff visited Dr. Noblin again on June 1, 2012. Dr. Noblin examined Plaintiff and concluded that Plaintiff would need to undergo shoulder surgery consisting of a subacrimonial decompression and an AC joint resection. Pl.'s Ex. "18" [70-18]. Dr. Noblin attributed the need for this surgical procedure to the October 7, 2009, automobile accident.[1] Id. Subsequent to this visit, Plaintiff's counsel wrote Defendant on June 12, 2012, once again demanding the $13, 000 difference. Pl.'s Ex. "17" [70-17]. On August 17, 2012, Plaintiff forwarded Dr. Noblin's records reflecting the June 1, 2012, visit and setting forth the plan for performing shoulder surgery, which Dr. Noblin concluded was necessitated by the accident. Pl.'s Ex. "18" [70-18].

Defendant's internal records indicate that on September 6, 2012, Defendant began to question the mechanics and causation of Plaintiff's shoulder injury based upon its review of Dr. Noblin's records received on August 17, 2012. Ex. "B" to Mot. for Partial Summ. J. 1 of 173 [65-2]. Plaintiff, however, filed this lawsuit on September 18, 2012. Ex. "A" to Notice of Removal [1-2]. By letter dated September 27, 2012, Defendant requested that Plaintiff sit for an examination under oath as part of its investigation and pursuant to the terms of the Policies. Ex. "4" to Reply Br. [74-4]. The next day, Plaintiff's counsel responded offering to let Defendant postpone the EUO until Plaintiff's deposition was taken and enclosing a courtesy copy of the Complaint. Pl.'s Ex. "19" [70-19]. The Complaint was formally served upon Defendant on October 3, 2012. Notice of Removal 1 [1].

On October 31, 2012, Defendant removed this action from the Circuit Court of Hancock County, Mississippi. Id. The case management conference took place on January 24, 2013, following which Plaintiff was to execute a waiver of medical privilege. Case Management Order 3 [7]. From March 14, 2013, to April 8, 2013, the parties informally disputed the terms and breadth of the medical authorization Plaintiff was to provide Defendant. See Pl.'s Exs. 27, 28 [70-27] [70-28]. Defendant then retained Dr. Felix Savioe, M.D., to evaluate Plaintiff's medical records. Savoie Report 1 [74-2]. In a report dated July 3, 2013, Dr. Savoie noted that he was unable to determine the etiology of the shoulder surgery and concluded that "any shoulder specialist would be unable to assign the need for surgery" to the automobile accident given the delay between Plaintiff's initial release and the determination that surgery was necessary. Id. at 3.

Defendant filed its Motion for Partial Summary Judgment on August 15, 2013. State Farm Mutual Automobile Insurance Company's Mem. Br. in Supp. of Mot. for Partial Summ. J. ("Mot. for Partial Summ. J.") 1 [66]. Defendant asserts that Plaintiff is not entitled to punitive damages as a matter of law because such damages generally are not available on contract claims. Id. at 13. According to Defendant, the dispute between Plaintiff and Defendant is a mere "pocketbook dispute, " and Plaintiff cannot seek punitive damages because Plaintiff cannot establish Defendant breached the contract either intentionally or through gross negligence. Id. Defendant further contends that it is entitled to judgment as a matter ...

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