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Frutiger v. USAA General Indemnity Co.

United States District Court, D. Arizona

May 23, 2019

Jane Frutiger, et al., Plaintiffs,
USAA General Indemnity Company, Defendant.



         At issue is Plaintiffs' Motion to Amend Complaint (Doc. 52, Mot.), to which Defendant filed a Response (Doc. 60, Resp.) and Plaintiffs filed a Reply (Doc. 64, Reply). The Court finds these matters appropriate for decision without oral argument. See LRCiv 7.2(f). For the reasons set forth below, the Court will grant in part and deny in part Plaintiffs' Motion to Amend Complaint.

         I. BACKGROUND

         Plaintiff Frutiger rented a minivan for a trip with her sisters, Plaintiffs Jimenez and Decherd. (Compl. ¶ 25.) Frutiger owns a vehicle which she insures through a policy issued by Defendant USAA. (Compl. ¶ 8.) Frutiger alleges that the USAA website led her to believe that she and her sisters would all receive the full coverage of her existing policy while driving a rented vehicle. (Compl. ¶¶ 14-20.) Frutiger further alleges that a USAA customer service representative assured her that the policy would apply to her rental car. (Compl. ¶ 21.)

         Plaintiffs were driving on the U.S. 60 freeway when the rented minivan was struck by an oncoming vehicle. (Compl. ¶¶ 26-27.) All three Plaintiffs sustained serious injuries and were evacuated from a hospital in Globe to Chandler Regional Medical Center, where each of them underwent emergency surgery. (Compl. ¶¶ 30-32.)

         Upon finding that the driver of the oncoming vehicle had insufficient insurance limits for their medical costs, Plaintiffs submitted insurance claims to Defendant. All three Plaintiffs submitted claims for medical payments under Part B of Frutiger's policy, as well as Part C for underinsured motorist (“UIM”) benefits. While Frutiger received the full policy limit of $110, 000, Jimenez and Decherd each received only $10, 000 under Part B for medical payments. Defendant denied Jimenez and Decherd's claims for UIM coverage because it found that only Frutiger satisfied the definition of a “covered person” under Part C of her policy.[1]

         Under Part C, a “covered person” is defined as “(1) You or any family member[;] (2) Any other person occupying your covered auto[; or] (3) Any person for damages that person is entitled to recover because of [bodily injury] to which this coverage applies sustained by a person described in 1 or 2 above.” (Compl. Ex. A.) Defined elsewhere in the policy, “family member” includes only “a person related to you by blood, marriage, or adoption who resides primarily in your household.” (Compl. Ex. A.) Jimenez and Decherd do not reside with Frutiger. (Compl. ¶ 39.) Further, Defendant determined that Jimenez and Decherd do not qualify as “[a]ny other person occupying” the covered auto because the rented minivan was not Frutiger's “covered auto” under the meaning of the policy. (Compl. ¶ 41.)

         Plaintiffs brought claims for breach of contract, breach of the covenant of good faith and fair dealing, first party insurance bad faith, promissory estoppel, and a fifth count labeled Declaratory Judgment Regarding Interpretation of Policy Language. (Compl.) Plaintiffs now timely seek to amend their Complaint to include claims for estoppel, negligent misrepresentation, and negligent marketing.[2] (Mot. Ex. 4; Doc. 54 ¶¶ 176-81.)


         A party may amend a pleading once as a matter of course within 21 days after serving it, or within 21 days of service of, inter alia, a Rule 12(b)(6) motion. Fed.R.Civ.P. 15(a). In all other circumstances, absent the opposing party's written consent, a party must seek leave to amend from the court. Fed.R.Civ.P. 15(a)(2). Although the decision to grant or deny a motion to amend is within the trial court's discretion, “Rule 15(a) declares that leave to amend shall be freely given when justice so requires.” Foman v. Davis, 371 U.S. 178, 182 (1962) (citation and internal quotation marks omitted). “In exercising its discretion with regard to the amendment of pleadings, a court must be guided by the underlying purpose of Rule 15-to facilitate a decision on the merits rather than on the pleadings or technicalities.” Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987) (citation and internal quotation marks omitted).

         However, the policy in favor of allowing amendments is subject to limitations. After a defendant files a responsive pleading, leave to amend is not appropriate if the “amendment would cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue delay.” Madeja v. Olympic Packers, 310 F.3d 628, 636 (9th Cir. 2002) (citation and internal quotation marks omitted). “Futility alone can justify the denial of a motion for leave to amend.” Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2003).

         “A proposed amended complaint is futile if it would be immediately subject to dismissal. Thus, the proper test to be applied when determining the legal sufficiency of a proposed amendment is identical to the one used when considering the sufficiency of a pleading challenged under Rule 12(b)(6).” Nordyke v. King, 644 F.3d 776, 788 n.12 (9th Cir. 2011) (quotations and citations omitted), aff'd on reh'g en banc on other grounds, 681 F.3d 1041 (9th Cir. 2012). To survive a Rule 12(b)(6) motion, a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A dismissal for failure to state a claim can be based on either (1) the lack of a cognizable legal theory or (2) insufficient facts to support a cognizable legal claim. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

         III. ANALYSIS

         Defendant does not argue that Plaintiff's proposed amendments would cause prejudice or undue delay, nor that they are sought in bad faith. Its only argument is that the addition of Plaintiff's new counts would be futile. Defendant argues that all three proposed claims for estoppel, negligent misrepresentation, and negligent marketing “are futile because they fail to state a claim under Arizona law.” (Resp. at 1.) Further, Defendant argues that the ...

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