United States District Court, D. Arizona
ORDER
DAVID
G. CAMPBELL, SENIOR UNITED STATES DISTRICT JUDGE
Plaintiff
James McGee sued Defendant Zurich American Insurance Company
for breach of contract and bad faith, alleging that Defendant
improperly refused to defend Elizabeth Foutz in an underlying
tort action brought against her by Plaintiff. Defendant has
filed a motion for summary judgment. Doc. 49. The motion is
fully briefed (Docs. 51, 56), and oral argument will not aid
in the Court's decision. See Fed R. Civ. P.
78(b). For the following reasons, the Court will grant the
motion.
I.
Background.
Defendant
issued a general insurance policy to Underwood Bros, Inc.,
doing business as AAA Landscape (hereinafter
“AAA”). Doc. 52 at ¶ 60. The Policy provides
business auto liability coverage for bodily injury or
property damages caused by an accident “resulting from
the ownership or maintenance of a covered auto.”
Id. at ¶ 61. The Policy defines
“insured” as “[a]nyone . . . using with
your permission a covered ‘auto' you own.”
Doc. 52 at ¶ 64.
In
September 2012, AAA assigned a company vehicle to its
employee Elizabeth Foutz. Doc. 52 at ¶ 47. Foutz signed
AAA's Driver Policy and Agreement (“the
Agreement”), which allows authorized employees to drive
a company vehicle subject to certain terms and conditions.
Id. The Agreement states that employees are
responsible for the “safe and legal transportation of
the vehicle.” Doc. 50 at ¶ 2. It also requires
drivers to “abide by all laws.” Doc. 52 at ¶
43.
On
January 16, 2015, Foutz was involved in a car accident with
Plaintiff. Doc. 52 at ¶¶ 1-10. Plaintiff was found
at fault for the accident because he did not stop at a stop
sign (Doc. 50 at ¶ 4), and Foutz was cited for driving
while intoxicated. Doc. 52 at ¶ 10. She eventually pled
guilty to driving while under extreme intoxication.
Id. On August 17, 2016, Plaintiff sued Foutz for
personal injury, and Defendant was asked to evaluate whether
it had a duty to defend Foutz under AAA's business auto
coverage policy. Doc. 50 at ¶ 6.
After
learning that Foutz was driving while intoxicated, Defendant
requested an internal coverage opinion and the matter was
referred to Defendant's coverage counsel. Counsel
requested additional investigation into whether Foutz had her
own vehicle, whether she signed the Agreement, whether
AAA's employees regularly violated the Agreement, and
whether AAA overlooked such violations. Doc. 50 at
¶¶ 9-12. Defendant presented these questions to
George McNeely (“McNeely”), AAA's Human
Resources Manager. Doc. 50 at ¶ 13-14. McNeely responded
that Foutz signed the Agreement, that AAA disciplined her for
violating company policy while using her vehicle, and that
Foutz was the only employee who used her AAA vehicle while
intoxicated. Doc. 50 at ¶¶ 15, 32-33, 36.
After
receiving McNeely's responses, Defendant concluded that
Foutz did not qualify as an insured under the Policy because
she exceeded any permissible use by driving while
intoxicated. Doc. 50 at ¶ 16-17. Foutz and Plaintiff
then entered into an agreement in which Foutz assigned her
rights against Defendant to Plaintiff, the parties stipulated
to a $5 million judgment, and Plaintiff agreed not to execute
the judgment against Foutz. Id. at ¶ 18.
Plaintiff then filed this suit against Defendant, seeking to
recover the $5 million judgment and asserting the assigned
claims for breach of contract and bad faith. Doc. 1-1.
Remarkably,
Plaintiff's response to the summary judgment motion
emphasizes that he, not Foutz, caused the underlying
accident. Doc. 51 at 2. For example, Plaintiff admits that
“[s]everal witnesses confirmed McGee had pulled
directly into Foutz's path and ‘she had no time to
stop, '” that “McGee ran a stop sign and
appeared right in front of Foutz, ” and that
“Foutz could not have avoided the crash, even if
sober.” Id. at 2, 13 (citation omitted).
Citing case law, Plaintiff further asserts that “a
driver like [Foutz] - confronted by a sudden emergency - is
only liable if she acts unreasonably, ” and
“Foutz had no chance to act unreasonably.”
Id. at 13. He further maintains that “driving
under the influence of alcohol, in and of itself, is not a
tort.” Id. He states with emphasis that
“Foutz was not at fault” and
“drove safely.” Id. at 15 (emphasis in
original).
Plaintiff
never explains why, if these admissions are true, he sued
Foutz for causing the accident. He concedes that he had no
valid claim against her. Plaintiff presumably views his sole
responsibility for the accident as irrelevant now that he has
trained his aim on Defendant and its alleged insurance bad
faith toward Foutz. But the Court cannot help observing that
the purpose of Arizona's insurance-claim assignment law
is, at least in part, to make whole an underlying meritorious
plaintiff who was denied recovery because the underlying
defendant could not pay a judgment and her insurer wrongfully
denied coverage. It assuredly is not to permit a plaintiff
who has no valid claim to file a lawsuit and create an
insurance coverage dispute from which he might profit. In
light of the concessions Plaintiff makes in his summary
judgment brief, the Court views this case as a misuse of
Arizona law. The Court nonetheless will address the summary
judgment motion without regard to the admitted lack of merit
in Plaintiff's underlying claim.
II.
Summary Judgment Standard.
Summary
judgment is appropriate if the evidence, viewed in the light
most favorable to the nonmoving party, shows “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). Summary judgment is also appropriate against a party
who “fails to make a showing sufficient to establish
the existence of an element essential to that party's
case, and on which that party will bear the burden of proof
at trial.” Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). Only disputes over facts that might affect
the outcome of the suit will preclude summary judgment, and
the disputed evidence must be “such that a reasonable
jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
III.
Discussion.
A.
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