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Estate of Bensfield v. Liberty Mutual Fire Insurance Co.

United States District Court, D. Arizona

September 22, 2017

Estate of Nicholas Edward Bensfield, by and through its Court Appointed Personal Representative, Shirley Bensfield, Plaintiff,
v.
Liberty Mutual Fire Insurance Company, a foreign corporation doing business in Arizona, Defendant.

          ORDER

          David G. Campbell United States District Judge

         Plaintiff, the Estate of Nicholas Edward Bensfield, filed a complaint in state court against Defendant Liberty Mutual Fire Insurance Company. Doc. 1 at 10-18. Liberty Mutual removed the action to this Court based on diversity jurisdiction. Id. at 1-8. Liberty Mutual now moves for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). Doc. 10. The motion is fully briefed, and no party requests oral argument. Docs. 13, 16. For reasons stated below, the Court will grant the Estate leave to amend its complaint and withhold a final ruling on Defendant's motion.

         I. Background.

         The Court must take the facts alleged in the complaint as true for purposes of this motion. Elvig v. Calvin Presbyterian Church, 375 F.3d 951, 955 (9th Cir. 2004). Liberty Mutual provided auto insurance coverage, including underinsured motorist coverage, to Nicholas Edward Bensfield. Doc. 1 at 11, ¶ 5. On November 12, 2014, an underinsured motorist caused a collision that injured Bensfield. Id. at 11, ¶¶ 6-7. As a result of the accident, Bensfield incurred medical expenses and suffered various general damages, including pain, disability, disfigurement, anxiety, and loss of enjoyment of life. Id. at 11, ¶ 7. The insurer for the motorist paid its policy limits to Bensfield, but this sum did not cover all of Bensfield's losses. Id. at 12, ¶ 14; Doc. 13 at 3.

         On March 12, 2015, Bensfield notified Liberty Mutual of his underinsured motorist claim. Doc. 1 at 11, ¶ 8. Four days later, Liberty Mutual confirmed coverage and requested Bensfield's authorization to review his medical records. Id. at 12, ¶ 10. Unfortunately, on March 25, 2016, and before Liberty Mutual finished its evaluation, Bensfield died. Id. at 10, ¶ 1. The Estate does not allege that Bensfield's death was related to the auto accident and does not assert a claim for wrongful death. See Doc. 1 at 10-18. Approximately four months later, Liberty Mutual learned of Bensfield's death, completed its evaluation, and issued a check to the Estate for the balance of Bensfield's medical expenses. Doc. 10 at 2; see Doc. 1 at 18. The Estate does not dispute that this payment, when combined with the payment from the motorist's insurance company, covered all of Bensfield's medical expenses. See Doc. 13.

         The complaint asserts a negligence claim in connection with Liberty Mutual's processing of Bensfield's insurance claim (Count One), a first-party bad faith claim (Count Two), and a request for punitive damages (Count Three). Doc. 1 at 12-17.

         II. Rule 12(c) Standard.

         A motion for judgment on the pleadings under Rule 12(c) “‘is properly granted when, taking all the allegations in the non-moving party's pleadings as true, the moving party is entitled to judgment as a matter of law.'” United States v. Teng Jiao Zhou, 815 F.3d 639, 642 (9th Cir. 2016) (quoting Fajardo v. Cty. of L.A., 179 F.3d 698, 699 (9th Cir. 1999)). Like a Rule 12(b)(6) motion to dismiss, a motion for judgment on the pleadings is directed at the legal sufficiency of the opposing party's pleadings. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). The Court will assess the legal sufficiency of the Estate's claims under Arizona law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-79 (1938).

         III. Analysis.

         A. Count One - Negligence.

         Count One alleges that Liberty Mutual negligently handled Bensfield's claim. Doc. 1 at 12-14. Liberty Mutual argues that Arizona law prevents an insured from suing its insurer for negligent handling of a claim. Doc. 10 at 3-4. The Estate concurs, conceding that “a cause of action based solely on negligence which does not rise to the level of bad faith is precluded under Arizona law.” Doc. 13 at 1. The Court agrees with both parties. Arizona law prohibits claims against insurers for negligent claims processing. Miel v. State Farm Mut. Auto. Ins. Co., 912 P.2d 1333, 1340 (Ariz.Ct.App. 1995). This bar applies to the Estate - “an insured or his assignee may not sue his insurer for negligent handling of claims that is separate and distinct from the claim of breach of contract or bad faith.” IDS Prop. Cas. Ins. Co. v. Gambrell, 913 F.Supp.2d 748, 752 (D. Ariz. 2012); see also Meineke v. GAB Bus. Servs., Inc., 991 P.2d 267, 271 (Ariz.Ct.App. 1999). The Estate's negligence claim fails as a matter of law.

         B. Count Two - Bad Faith.

         Liberty Mutual argues that it is entitled to judgment on the bad faith claim because the damages the Estate seeks are unrecoverable. Doc. 10 at 4-8. Liberty Mutual relies on Arizona's survival statute, which precludes the recovery of pain and suffering damages after an injured person's death:

Every cause of action, except a cause of action for damages for breach of [a] promise to marry, seduction, libel, slander, separate maintenance, alimony, loss of consortium or invasion of the right of privacy, shall survive the death of the person entitled thereto or liable therefor, and may be asserted by or against the personal representative of such person, provided that upon the death of ...

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