United States District Court, D. Arizona
Madison Alley Transportation & Logistics Incorporated, Plaintiff,
Western Truck Insurance Company, et al., Defendants.
Honorable Susan M. Brnovich, United States District Judge
issue is Defendants Western Truck Insurance Company
(“Western Truck”) and Robert Dion's
(“Mr. Dion”) (collectively,
“Defendants”) Motion for Summary Judgment (Doc.
73, “Mot.”). Defendants also submitted a
Statement of Facts. (Doc. 74, “DSOF”). Plaintiff
Madison Alley Transportation and Logistics Inc.
(“Madison Alley” or “Plaintiff”)
submitted a Response to the Motion (Doc. 80,
“Resp.”), along with a Separate Statement of
Facts (Doc. 81, “PSOF”) and a Controverting
Statement of Facts (Doc. 82, “CSOF”). Defendants
submitted a Reply to Plaintiff's Response. (Doc. 83,
“Reply”). Plaintiff alleges Defendants did not
properly broker insurance for its warehouse in Phoenix.
Plaintiff alleges five claims: (1) Negligence/Insurance
Producer Malpractice; (2) Breach of Contract; (3) Breach of
the Covenant of Good Faith and Fair Dealing; (4) Negligent
Training and Supervision; and (5) Reasonable Expectations.
For the reasons that follow, the Court will grant summary
judgment on the counts arising out of contract-counts one,
three, and five-but deny summary judgment on the tort
claims-counts one and four.
operates a business that stores and delivers goods for large
retail merchants. (PSOF ¶ 2). Mindi Peters (“Ms.
Peters”) has an ownership interest in Madison Alley,
and Jeff Owen (“Mr. Owen”) runs the day-to-day
operations. (PSOF ¶¶ 3-4). In June 2015, Plaintiff
moved its warehouse operations from New York to Phoenix,
Arizona. (PSOF ¶ 5). As part of the move, Plaintiff
agreed to a lease for an 8, 329 square foot warehouse for $5,
247.27 per month. (PSOF ¶¶ 6-7). The lease required
Plaintiff to obtain insurance for the property. (PSOF ¶
8). The dispute that brings this case to the Court is whether
Defendants procured insurance as requested by Plaintiff.
early June 2016, a sublessee of Plaintiff caused a flood in
the warehouse. (PSOF ¶¶ 76-78). The flood damaged
Madison Alley's business property along with Ms.
Peters' and Mr. Owen's personal property and stopped
Madison Alley from operating for about five months. (PSOF
¶¶ 79, 81-85). For damages from the flood, Madison
Alley entered into a settlement with its sublessee's
insurer for $456, 000.
to the flood, Plaintiff contends Mr. Owen instructed
Defendants to procure a policy that complied with the
requirements of the lease. (PSOF ¶¶ 8-9). Among
other things, the lease required $2.5 million in general
liability coverage and insurance for “the loss of the
full rental . . . for one year.” (DSOF ¶ 13; PSOF
¶¶ 8-11; CSOF ¶ 13). Defendants procured a
policy with $3 million in general liability coverage and $20,
000 in business income coverage. (DSOF ¶ 5). These
coverage amounts represented annual limits, but Mr. Owen
alleges he interpreted the $20, 000 as weekly coverage based
on a conversation he had with Mr. Dion. (PSOF ¶ 22). In
that alleged conversation, Mr. Dion told Mr. Owen that
business income insurance was calculated “by the week,
” and Mr. Owen told Mr. Dion that Madison Alley
generates at least $20, 000 in revenue per week.
also believes Defendants failed to procure adequate insurance
because they did not disclose material terms of the policy,
including a coinsurance provision for business income
coverage and a “business income agreed value
clause.” (PSOF ¶¶ 11, 53-54). The business
income agreed value clause required a financial worksheet to
determine total exposure to the insured. (PSOF ¶¶
54, 58). The landlord also required a business income
worksheet that Mr. Owen forwarded to Mr. Dion, but Mr. Dion
did not complete. (PSOF ¶¶ 55-58). Furthermore, the
$20, 000 business income coverage would not cover a full
year's rental as required by the lease. (PSOF ¶ 9).
Plaintiff also alleges it could not have learned of the
policy's deficiencies until after the accident, because
Defendants sent a copy of the policy to the wrong address.
(PSOF ¶¶ 62-63).
argue that in the context of Plaintiff's request for
insurance, Plaintiff only instructed Mr. Dion to find the
cheapest amount of business interruption coverage that would
satisfy Madison Alley's landlord and the policy clearly
shows that Madison Alley was paying annual premiums for
annual coverage limits. (DSOF ¶¶ 12, 14). In
Defendants' view, the landlord let Madison Alley move
into the warehouse, so they sufficiently performed to the
standard of care. (DSOF ¶ 4). They also argue they have
no obligation to advise insureds about the appropriateness of
their coverage, (Mot. at 10), and Mr. Dion did not agree to
fill out the financial worksheets nor could he have because
he did not have the required expertise and Madison Alley had
not be operating long enough to have the required
information, (DSOF ¶¶ 27-28, 34-35).
judgment is appropriate when “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). A
material fact is any factual issue that might affect the
outcome of the case under the governing substantive law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A dispute about a fact is “genuine” if
the evidence is such that a reasonable jury could return a
verdict for the nonmoving party. Id. “A party
asserting that a fact cannot be or is genuinely disputed must
support the assertion by . . . citing to particular parts of
materials in the record” or by “showing that
materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” Fed.R.Civ.P.
56(c)(1)(A), (B). The court need only consider the cited
materials, but it may also consider any other materials in
the record. Id. 56(c)(3). Summary judgment may also
be entered “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). Initially, the movant
bears the burden of demonstrating to the Court the basis for
the motion and “identifying those portions of [the
record] which it believes demonstrate the absence of a
genuine issue of material fact.” Id. at 323.
If the movant fails to carry its initial burden, the
nonmovant need not produce anything. Nissan Fire &
Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03
(9th Cir. 2000). If the movant meets its initial
responsibility, the burden then shifts to the nonmovant to
establish the existence of a genuine issue of material fact.
Id. at 1103. The nonmovant need not establish a
material issue of fact conclusively in its favor, but it
“must do more than simply show that there is some
metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). The nonmovant's bare
assertions, standing alone, are insufficient to create a
material issue of fact and defeat a motion for summary
judgment. Liberty Lobby, 477 U.S. at 247-48.
“If the evidence is merely colorable, or is not
significantly probative, summary judgment may be
granted.” Id. at 249-50 (citations omitted).
However, in the summary judgment context, the Court believes
the nonmovant's evidence, id. at 255, and
construes all disputed facts in the light most favorable to
the nonmoving party, Ellison v. Robertson, 357 F.3d
1072, 1075 (9th Cir. 2004). If “the evidence yields
conflicting inferences [regarding material facts], summary
judgment is improper, and the action must proceed to
trial.” O'Connor v. Boeing N. Am., Inc.,
311 F.3d 1139, 1150 (9th Cir. 2002).
Plaintiff's Contract Claims
assert, and the Court agrees, that they cannot be liable for
breach of contract (Count 2), breach of the covenant of good
faith and fair dealing (Count 3), or reasonable expectations
(Count 5) because there is no contract between Defendants and
Plaintiff. Further, if there is a contract, the claim still
sounds in tort rather than contract because Defendants were
hired to provide professional services. At oral argument,
Plaintiff said the contract was partially verbal and
partially written, but admitted the contract claims were
brought as an “alternative theory.” Plaintiff
specifically points to a June 9, 2015, letter sent by
Defendants that promised “[i]nsurance marketing
services, administration of policies, support services to you
regarding this insurance, and other risk
management consultation.” (PSOF ¶
25) (emphasis added by Plaintiff). The Court agrees with
contract requires “an offer, an acceptance,
consideration, and sufficient specification of terms so that
obligations involved can be ascertained.” K-Line
Builders, Inc. v. First Federal Sav. & Loan
Ass'n, 677 P.2d 1317, 1320 (Ariz.Ct.App. 1983). Even
viewing the facts in the light most favorable to Plaintiff,
the Court is unable to ascertain specific terms in order to
determine the obligations involved. For example, the letter
Plaintiff points to was an insurance quote. It may have
promised risk management consultation by Western Truck, but
not with enough specificity that the Court can ascertain the
obligations involved. Plaintiff does not even allege Mr. Owen
asked Mr. Dion for a specific amount or gave an acceptable
range of business income coverage that he wanted or needed.
Instead, he merely alleges that “[n]either Mr. Owen nor
any other representative of [Madison Alley] ...