United States District Court, D. Arizona
CINDY K. JORGENSON, District Judge.
On March 21, 2014, Magistrate Judge Leslie A. Bowman issued a Report and Recommendation, (Doc. 348), which addressed defendant's three motions for partial summary judgment. (Docs. 108, 186, and 188). Magistrate Judge Bowman advised the parties that written objections to the Report and Recommendation were to be filed within fourteen days after service of a copy of the Report and Recommendation pursuant to 28 U.S.C. § 636(b). Defendant has filed an objection. (Doc. 350). Plaintiffs have filed a response. (Doc. 353). On May 7, 2014, Defendant's filed a Motion for Leave to File a Reply. (Doc. 354). Plaintiff filed an Opposition to Defendant's Motion on May 13, 2014, (Doc. 356), and Defendant filed a Reply in Support of their Motion to File a Reply to Defendant's Objections on May 23, 2014. (Doc. 357).
I. Motion for Leave to File a Reply
Rule 72 of the Federal Rules of Civil Procedure permits a party to file objections to a Magistrate Judge's Report and Recommendation and permits a party to respond to another party's objections. Fed.R.Civ.P. 72(b)(2). However, the rule does not permit the filing of replies. Moreover, in Magistrate Judge Bowman's Report and Recommendation, she specifically explained that the rules do not permit the filing of a reply to a response to a party's objections. (Doc. 348 at p. 24).
Further, the Court does not find that a reply to the response is necessary in this matter. There has been extensive briefing and argument related to the issues presented to this Court. The parties have filed three separate summary judgment motions all with corresponding responses and replies, conducted oral argument before Magistrate Judge Bowman and had an opportunity to file objections and a response to the objections to Magistrate Judge Bowman's Report and Recommendation. A review of Plaintiff's proposed reply reveals that it does not add anything significant to the briefing in this matter. As such, Defendant's Motion to File a Reply is denied. See Hess v. Ryan, 651 F.Supp.2d 1004, 1009, n.1 (D. Ariz. 2009).
II. Standard of Review
This Court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." 28 U.S.C. § 636(b)(1). Pursuant to 28 U.S.C. § 636(b)(1), if a party makes a timely objection to a magistrate judge's recommendation, then this Court is required to "make a de novo determination of those portions of the [report and recommendation] to which objection is made." See also Schmidt v. Johnstone, 263 F.Supp.2d 1219, 1226 (D.Ariz. 2003) (reading the Ninth Circuit's decision in Reyna-Tapia as adopting the view that district courts are not required to review "any issue that is not the subject of an objection"); United States v. Reyna-Tapia, 328 F.3d 1114 (9th Cir.2003) (disregarding the standard of review employed by the district court when reviewing a report and recommendation to which no objections were made).
The parties do not object to the factual background as set forth in the Report and Recommendation. As such, the Court adopts the Report and Recommendation's background information.
IV. Defendant's Motion for Partial Summary Judgment Re: Contract and Bad Faith Claims. (Doc. 108).
Defendant's Motion addresses several subjects. Defendant argues that Michigan law applies to Plaintiff's breach of contract and bad faith claims. Applying Michigan law, Plaintiff's claims for benefits are subject to Michigan's statutory one year back rule, which limits contract and tort claims for personal injury protection ("PIP") benefits from one year prior to the date on which the action is commenced. MCL § 500.3145(1).
Further, Michigan law does not recognize the tort of bad faith and as such, Plaintiff's claims for bad faith are barred. See Roberts v. Auto-Owners Ins. Co., 422 Mich. 594, 604, 374 N.W.2d. 905, 909 (Mich. 1985) (citation omitted). Compare Zilisch v. State Farm Mutual Auto. Inc. Co., 196 Ariz. 234, 237, 995 P.2d. 276, 279 (Ariz. 2000); Rawlings v. Apodaca, 151 Ariz. 149, 160, 726 P.2d. 565, 576 (1986) (Arizona law does allow a bad faith tort action). In the alternative, Defendant argues that even if the Court were to apply Arizona law to Plaintiff's bad faith claim, any claims that occurred before April 13, 2010 are barred by Arizona's two-year statute of limitations.
Choice of Law - Plaintiff's Breach of Contract Claim
Magistrate Judge Bowman found that Plaintiff's breach of contract claim should be decided pursuant to Michigan law. The parties have not raised any objections to this recommendation. As such, the Court adopts this recommendation.
One Year Limitations - Plaintiff's Breach of Contract Claim
Magistrate Judge Bowman found that Plaintiff's recovery for breach of contract damages is limited by Michigan's one year back rule. Plaintiff has not raised any objections to this recommendation. As such, the Court adopts this recommendation.
Choice of Law - Plaintiff's Bad Faith Claim
Magistrate Judge Bowman found that Plaintiff's bad faith claims are governed by Arizona law. Defendant timely filed an objection to this recommendation and suggests that Michigan law should apply to Plaintiff's bad faith claims.
Federal courts sitting in diversity must apply the forum state's choice of law rules. Love v. Associated Newspapers, Ltd., 611 F.3d 601, 610 (9th Cir. 2010). "Arizona courts apply the principles of the Restatement (Second) of Conflict of Laws (1971) ("Restatement") to determine the controlling law for multistate torts." Bates v. Superior Court of State of Ariz. In and For the County of Maricopa, 156 Ariz. 46, 48, 749 P.2d. 1367, 1369 (Ariz. 1988); Pounders v. Enserch E&C, Inc., 232 Ariz. 352, 354, 306 P.3d. 9, 11 (Ariz. 2013).
"Restatement § 6(2) lists the general factors relevant to choosing the applicable rule of law and § 145 gives further guidance for the application of the § 6 factors to tort issues." Bates, 156 Ariz. at 48-49, 749 P.2d. at 1369-70. Pursuant to § 145, in resolving multistate tort issues, the courts must apply the law of the state which "has the most significant relationship to the occurrence and the parties under the principles stated in § 6." Restatement (Second) Conflict of Laws § 145(1); Bates, 156 Ariz. at 48-49, 749 P.2d. at 1369-70.
In order to perform this analysis in accordance with Arizona law, this Court first considers the general tort choice of law principles of Restatement § 145 as well as the specific personal injury principles of Restatement § 146. See Bates, 156 Ariz. at 49, 749 P.2d. at 1370 (finding that pursuant to Arizona law, a bad faith refusal to provide benefits to an insured can create sufficient mental distress to qualify as a personal injury). Then, the Court applies the guidelines of both of those sections to the general principles listed in Restatement § 6(2). Lange v. Penn Mut. Life Ins. Co., 843 F.2d 1175, 1178-1179 (9th Cir. 1988) (citing Bates, 156 Ariz. at 48-50, 749 P.2d. at 1369-71).
Restatement § 145 provides:
(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
(2) Contracts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
These contacts are to be evaluated accordance to their relative importance with respect to the particular issue.
Applying the first § 145 factor, Magistrate Judge Bowman concluded that the injury occurred in Arizona because Arizona is where Plaintiff experienced mental and physical harm as a result of Defendant's alleged bad faith in providing misleading information regarding the extent of his benefits. (Doc. 348, p. 9). Defendant argues that some of Plaintiff's alleged injuries occurred in Michigan.
The "place of injury" is where "the last event necessary for liability occurred (that is, the place where the injury manifested)." Pounders, 232 Ariz.at 356, 306 P.3d. at 13. The last event necessary for liability can only occur in one location, which "preserves the Restatement goals of certainty, predictability, and uniformity of result." Id.
On April 21, 1995, Plaintiff lived in Hart, Michigan when he was involved in a single vehicle accident in Lansing Michigan. (Doc. 169-1 at p. 1). At the time of his injury, Plaintiff was insured under his father's insurance policy issued by Defendant in Michigan. Id. at 2. After the accident, on April 28, 1995, Plaintiff was represented by attorney George T. Sinas who applied for PIP benefits on Plaintiff's behalf. Id. at 4. Plaintiff began receiving various PIP benefits from Defendant in 1995 and all claims were handled by personnel in Michigan. Id. at 5.
Plaintiff moved to Tucson, Arizona in December 1996. Id. at 7. After moving to Tucson, Plaintiff was initially assisted by his girlfriend. Id. at 19-20. Defendant paid her for her services including shopping and transferring Plaintiff to and from his wheelchair. Id. at 20. Plaintiff's girlfriend moved in 1997 and Plaintiff subsequently experienced significant problems handling daily personal activities. Id. at 19-20. Plaintiff contacted Defendant and advised them that he needed help with "everything." Id. at 21. He gave examples of shopping and cleaning and was advised that these services were not covered. Id. As a result, Plaintiff believed that all services other than medical bills were no longer covered. Id. In the fall of 2011, Plaintiff met Andy Zimmer in Las Vegas. Id. at 18. Mr. Zimmer was receiving PIP benefits from a Michigan no fault insurance policy and he advised Plaintiff on the actual extent of his coverage. Id.
While Plaintiff may allege that Defendant failed to provide him with his full panoply of benefits originating from his time in Michigan, he did not begin to suffer mental and physical distress as a result of Defendant's alleged bad faith in the handling of his claim until after his girlfriend moved and Defendant allegedly provided him with misleading information regarding his benefits. These acts ...