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Williams v. Allstate Insurance Co.

United States District Court, S.D. Mississippi, Northern Division

March 25, 2019




         This cause is before the court on the motion of defendant Allstate Insurance Company (Allstate) pursuant to Federal Rule of Civil Procedure 56 for partial summary judgment as to the claims of plaintiff Roosevelt Williams, Jr. for bad faith and extra-contractual damages. Williams has not responded to the motion, and the time for filing a response has now passed. The court, having considered the motion and accompanying memorandum and attachments, concludes the motion is well-taken and should be granted.

         In his complaint, Williams alleges that as the result of an October 3, 2015 automobile accident in which his vehicle was struck from the rear by an underinsured motorist, he sustained “severe injuries including but not limited to a cervical disc fracture and damage to hardware previously installed in [his] lumbar spine, necessitating surgical intervention to repair said damage, ” resulting in medical expenses in excess of $170, 000. Ultimately, the tortfeasor's liability carrier paid its $25, 000 limits of liability and Allstate paid an additional $2, 000 in medical payments under Williams' automobile policy. However, in response to Williams' claim for benefits under his policy's underinsured motorist coverage (UIM), Allstate took the position that the $25, 000 he had already received adequately compensated him for injuries sustained in the accident. Williams thus has brought the present action against Allstate asserting a claim for breach of contract to recover benefits allegedly due him under his UIM coverage and further demanding extra-contractual and punitive damages for Allstate's alleged bad faith breach of contract. By the present motion, Allstate seeks summary judgment on Williams' claims for extra-contractual and punitive damages.

         Summary Judgment Standard

         Under Federal Rule of Civil Procedure 56, “[a] party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought.” Fed.R.Civ.P. 56(a). Summary judgment on a claim or part of a claim is appropriate “‘if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Seacor Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675, 680 (5th Cir. 2011) (quoting Rule 56(a)). “An issue as to a material fact is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Id. (quoting Rule 56(a)).

         When the nonmovant bears the burden of proof, the movant may demonstrate entitlement to summary judgment by either (1) submitting evidence that negates the existence of an essential element of the nonmovant's claim or affirmative defense, or(2) arguing that there is no evidence to support an essential element of the nonmovant's claim or affirmative defense. Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has made this showing, the burden shifts to the nonmovant to establish that there is a genuine issue of material fact such that a reasonable jury might return a verdict in its favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

         In evaluating the record evidence to determine whether a material factual dispute exists, the court must refrain from weighing the evidence or making credibility choices. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). Factual controversies are to be resolved in favor of the nonmoving party, “but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Id. The court will not, “in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.” Id.

         Standard for Recovery of Extra-Contractual/Punitive Damages

         Under Mississippi law, to recover punitive damages for bad faith in the insurance context, the insured has the burden to prove that the insurer denied or delayed payment of the claim “(1) without an arguable or legitimate basis, either in fact or law, and (2) with malice or gross negligence in disregard of the insured's rights.” United States Fid. & Guar. Co. v. Wigginton, 964 F.2d 487, 492 (5th Cir. 1992). An insurer whose conduct was not sufficiently egregious to justify an award of punitive damages may nonetheless be liable for consequential or extra-contractual damages where it lacked a reasonably arguable basis for its delay or denial decision. Essinger v. Liberty Mut. Fire Ins. Co., 534 F.3d 450, 451 (5th Cir. 2008); Broussard v. State Farm Fire & Cas. Co., 523 F.3d 618, 628 (5th Cir. 2008) (citing Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172, 1186 n.13 (Miss. 1990)). Thus, in general, an insured may not recover punitive or extra-contractual damages where the insurer had a legitimate or arguable basis for its delay or denial of payment.

         The question whether an insurer had an arguable basis for its denial or delay is an issue of law for the court. James v. State Farm Mut. Auto. Ins. Co., 743 F.3d 65, 70 (5th Cir. 2014). Where the insurer has articulated an arguable or legitimate reason for its denial or payment delay, that is, where it shows that it had reasonable justifications, either in fact or in law, for its actions, then the insured has the burden to demonstrate by a preponderance of the evidence that the insurer had no arguable reason for its decision and/or actions. Id.; Wigginton, 964 F.2d at 492 (citation omitted). See also Stewart v. Gulf Guar. Life Ins. Co., 846 So.2d 192, 200-01 (Miss. 2002) (“Arguably-based denials are generally defined as those which were rendered upon dealing with the disputed claim fairly and in good faith.”) (quoting Andrew Jackson Life Ins. Co., 566 So.2d at 1184).

         Allstate's Legitimate or Arguable Reason

         Williams alleges that as a result of the October 5, 2015 accident, he sustained a fracture of a cervical disc and damage to hardware (pedicle screws) that had been previously surgically implanted; that surgery was required to repair the damage; and that his medical expenses for these injuries were over $170, 000. Allstate has articulated, and has offered supporting evidence, of a legitimate or arguable basis for its conclusions that the treatment Williams received from and after November 2016, including the spinal revision/fusion surgery he underwent in July 2017, did not relate to injuries he sustained in the October 2015 accident; that the only treatment Williams sought or received for injuries suffered in the October 2015 accident were his initial emergency department visit and the follow-up visit three weeks later, for which his total medical expenses were $10, 300; and that the $27, 000 he received in insurance payments from the tortfeasor and his medical payments coverage was adequate compensation for the injuries he sustained in the subject accident. There is ample support for Allstate's conclusions in the medical evidence.

         Records from the University of Mississippi Medical Center (UMMC) show that on the date of the subject accident, Williams was seen in UMMC's emergency department with complaints of neck and back pain. At that time, he reported having had spinal fusion surgery approximately one year earlier as the result of injuries he had sustained in a prior automobile accident. Williams reported that his lumbar pain “has been longstanding since his surgery....” The record recites: “[Patient] reports his cervical spine tenderness ... is more severe than normal[;] however he has always had [lumbar] spine tenderness even after surgery and this is unchanged.” Imaging showed “some broken pedicle screws”, but it was noted that it was “unclear if this is new or old.”

         Williams returned to UMMC for a follow-up visit three weeks later, on October 22, 2015. Repeat imaging showed the same “break of the screws in the lumbar S1 screw”; but it was again noted that “it is hard to correlate whether this is due to the injury or if this happened prior to [the injury].” Williams was advised to have a CT scan and ...

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