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Williams v. Safeway Insurance Co.

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

September 27, 2019




         BEFORE THE COURT is Defendant Safeway Insurance Company’s Motion [39] for Summary Judgment. Plaintiff Tracy Williams alleges Defendant wrongfully and in bad faith withheld benefits owed to Plaintiff under his insurance contract with Safeway Insurance Company. After consideration of the record, Defendant’s Motion, and relevant legal authority, the Court is of the opinion that Defendant’s Motion [39] for Summary Judgment should be denied insofar as it argues that Plaintiff failed to give timely notice of his uninsured motorist claim and obtain consent to settle as required by his policy. Defendant’s Motion should be granted with respect to Plaintiff’s bad faith claim.

         I. BACKGROUND

         A. Factual background[1]

         As he was driving east on Three Rivers Road in Gulfport, Mississippi, on May 20, 2016, Plaintiff Tracy Williams (“Plaintiff”) was involved in a motor vehicle accident. Compl. [1-2] at 2. Jessica L. Ramirez (“Ramirez”) was traveling north on Highway 605 in Gulfport and struck the vehicle driven by Plaintiff. Id. Plaintiff alleges that he suffered permanent knee damage as a result of the accident. Aff. of Kathleen May [39-1] at 4. Ramirez was found to be at fault for the accident based upon her failure to yield the right of way. Id. USA Insurance Company (“USA”) insured Ramirez’s vehicle with policy limits of $25, 000.00. Id. It tendered the $25, 000.00 limit to Plaintiff to cover his expenses arising from his injuries sustained in the accident, but this amount was allegedly insufficient. Id. Plaintiff claims that medical expenses were $17, 286.97 as of January 25, 2017. Aff. of Kathleen May [39-1] at 4. Adding this amount to his claims for present and future pain and suffering, future medical expenses, and accelerated degenerative process, Plaintiff estimates he was entitled to receive approximately $160, 000.00. Id.

         Plaintiff was insured by Defendant Safeway Insurance Company (“Defendant”) under the policy number 2522455-MS-PP-001 (“Policy”), id. at 3, which provided for $75, 000.00 in uninsured motorist coverage, Mem. in Opp’n [58] at 2. The Policy defined an uninsured motorist to include an under-insured driver. Policy [57-3] at 6-7. Despite a demand from Plaintiff, to date Defendant has not tendered these coverage benefits to Plaintiff. Compl. [1-2] at 3.

         Defendant first received notice of the accident on October 31, 2016, Mem. in Opp’n [58] at 2, when it was contacted by a treatment provider who sought to make a claim under the Policy, Mem. in Supp. [40] at 2. Defendant contacted Plaintiff and he advised that he did not wish to open a claim or provide any additional information. Id. Defendant then sent Plaintiff a “Reservation of Rights” letter. Id. On November 7, 2016, Defendant became aware that USA had accepted liability on behalf of Ramirez and that her policy limit was $25, 000.00. Mem. in Opp’n [58] at 2-3. It also became aware that Plaintiff may have a possible uninsured motorist claim. Id. at 3.

         Defendant received a written demand to open an uninsured motorist claim from Plaintiff’s then-counsel, Shantrell Nicks (“Nicks”), on January 26, 2017. Id. Nicks spoke with one of Defendant’s insurance adjusters, Richard Henley (“Henley”), sometime later in January 2017. Id. In a sworn deposition, Nicks has testified that she advised Henley that USA had offered to settle Plaintiff’s claim for the policy limits of $25, 000.00. Id. Nicks also stated that, upon being informed of this offer, Henley orally consented to the settlement on behalf of Defendant and agreed to begin evaluating Plaintiff’s uninsured motorist claim. Id. at 4. Henley did not record this conversation in the claim notes. Id.

         Defendant subsequently sent Plaintiff a letter requesting additional information and stating in part: “the above requests should in no way be construed as an intention for us to waive our subrogation rights.” Mem. in Supp. [40] at 3. Defendant renewed this request, including the same language, on February 3, 2017. Id. Plaintiff provided some of the required documentation, and Defendant sent a third request for the remaining information on February 22, 2017, containing the same subrogation language. Id.

         On January 27, 2017, USA advised Defendant that it had tendered policy limits of $25, 000.00 to Plaintiff as a settlement of his claim against Ramirez. Mem. in Opp’n [58] at 5. Defendant received a copy of the settlement check and declarations page from USA on February 22, 2017, id., and opened an uninsured motorist claim on March 13, 2017, id. When Defendant contacted USA on April 6, 2017, it learned that USA had not yet received the executed release from Plaintiff. Id. at 6. Defendant received a copy of the executed release from USA on April 17, 2017, id., which indicated that Plaintiff had waived Defendant’s subrogation rights, Mem. in Supp. [40] at 3.

         Defendant conducted an asset check on Ramirez on April 25, 2017, which showed that she owned a home and two cars. Mem. in Opp’n [58] at 7. The asset check indicated that the home had approximately $2, 000 worth of equity and the two vehicles were of nominal value. Id. Defendant then issued Plaintiff a letter denying the uninsured motorist claim, id. at 8, based upon Plaintiff’s failure to obtain Defendant’s prior consent to settle and given Ramirez’s assets, Mem. in Supp. [40] at 3. Plaintiff insists that he had obtained consent from Defendant prior to settling, and that for Defendant to withhold consent was arbitrary based on the limited value of the home and cars. Mem. in Opp’n [58] at 9.

         B. Procedural history

         Plaintiff filed suit on September 14, 2017, in the County Court of Harrison County, Mississippi, First Judicial District. Compl. [1-2] at 1. The Complaint asserted causes of action for an underinsured motorist claim and a bad faith failure to pay benefits. Id. at 3. Defendant removed the case to this Court based on diversity of citizenship. Notice of Removal [1] at 1. Defendant subsequently filed the present Motion [39] for Summary Judgment, arguing that Plaintiff did not report the accident within the time required by his Policy and that, by failing to obtain Defendant’s consent to settle his liability claim against Ramirez, his uninsured motorist claim is excluded from coverage under the terms of the Policy. M. for Summ. J. [39] at 1.

         Alternatively, Defendant contends that it had a legitimate basis to deny coverage and therefore, partial summary judgment is warranted as to the claims for bad faith, extra-contractual damages, and punitive damages. Id. at 1-2. Plaintiff’s Response [57] in Opposition claims that there is a dispute as to whether Defendant consented to the settlement, such that summary judgment is not warranted, or in the alternative, that the delay in rendering a coverage decision waived Defendant’s right to consent and subrogation. Resp. in Opp’n [57] at 2-3. Further, Plaintiff argues that because Defendant consented to settle, any subsequent denial of coverage based on a failure to obtain consent was made in bad faith. Id. at 3.


         A. Summary judgment standard

         Summary judgment 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.” Fed.R.Civ.P. 56(a). If the movant carries this burden, “the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).

         To rebut a properly supported motion for summary judgment, the opposing party must show, with “significant probative evidence, ” that there exists a genuine issue of material fact. Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir. 2000). “A genuine dispute of material fact means that evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013) (quotation omitted). If the evidence is merely colorable, or is not significantly probative, summary judgment is appropriate. Cutting Underwater Techs. USA, Inc. v. ENI U.S. Operating Co., 671 F.3d 512, 516 (5th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). In deciding whether summary judgment is appropriate, the Court views facts and inferences in the light most favorable to the nonmoving party. RSR Corp., 612 F.3d at 858.

         B. Uninsured ...

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