United States District Court, D. Arizona
Douglas L. Rayes United States District Judge
Martin and Deborah Wojtysiak allege that Defendant State Farm
Mutual Automobile Insurance Company (“State
Farm”) breached the parties' insurance contract by
failing to investigate and make settlement offers on
Plaintiffs' underinsured motorists (“UIM”)
and Medical Payments (“Med Pay”) claims. (Doc.
1.) Before the Court is State Farm's motion for summary
judgment (Doc. 22), which is fully briefed. For the following
reasons, State Farm's motion is granted.
Wojtysiak started Piper Plastics, an Illinois corporation
with its principle place of business in Illinois. (Doc. 23
¶¶ 5-6.) Piper Plastics registered all its vehicles
through a State Farm insurance agent located in Illinois.
purchased a 2003 Cadillac Escalade in California, where he
was living at the time. (¶ 7.) Wojtysiak then drove his
Escalade to Illinois for it to be registered and licensed.
(¶¶ 8, 17.) The Escalade's Illinois license
plate read “Piper II.” (¶ 17.) Wojtysiak
also insured the Escalade with State Farm in Illinois, using
the same Illinois insurance agent as Piper Plastics.
(¶¶ 10-11.) Wojtysiak's Cadillac Escalade
insurance policy (“Escalade Policy”) provided for
$1, 000, 000 per person per accident in UIM coverage, and
$100, 000 in Med Pay coverage. (Doc. 23-1 at 3.) Wojtysiak
and Piper Plastics were Named Insureds on the Escalade
Policy, and Wojtysiak used Piper Plastics' corporate
address in Illinois for the “[l]ocation used to
determine rate charged[.]” (Doc. 23 ¶¶ 6,
13-15.) Moreover, Piper Plastics paid Wojtysiak a $400 per
month stipend, at least in part, to pay the premium on the
Escalade Policy. (¶ 16.)
2006, Wojtysiak moved to Arizona. (¶ 28.) The parties
dispute whether Wojtysiak informed State Farm that he was
relocating the Escalade to Arizona. Nevertheless, as of 2011,
Wojtysiak continued to register the Escalade in Illinois,
using Piper Plastics' address. (¶¶ 31-32.) On
October 2, 2011, Wojtysiak was involved in a motor vehicle
accident with Gerard Sheridan, an underinsured driver.
(¶ 29.) At the time of the accident, the Escalade was
still registered in Illinois using Piper Plastics corporate
address and included the company as a Named Insured under the
Escalade Policy. (Doc. 23 ¶¶ 31-32; Doc. 23-1 at
September 2015, Wojtysiak settled with Sheridan for $1, 104,
683.85 (“Sheridan Settlement”). (Doc. 29 ¶
16; Doc. 23-2 at 12.) Plaintiffs also sought UIM and Med Pay
coverage under the Escalade Policy. State Farm declined.
Thereafter, Plaintiffs filed suit, alleging breach of
contract against State Farm. State Farm now moves for summary
judgment on all of Plaintiffs' claims.
judgment is appropriate if the evidence, viewed in the light
most favorable to the nonmoving party, demonstrates
“that 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 fact is material if it
might affect the outcome of the case, and a dispute is
genuine if a reasonable jury could find for the nonmoving
party based on the competing evidence. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);
Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054,
1061 (9th Cir. 2002). 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).
party seeking summary judgment “bears the initial
responsibility of informing the district court of the basis
for its motion and identifying those portions of [the record]
which it believes demonstrate the absence of a genuine issue
of material fact.” Id. at 323. The burden then
shifts to the non-movant to establish the existence of a
genuine and material factual dispute. Id. at 324.
Thus, the nonmoving party must show that the genuine factual
issues “‘can be resolved only by a finder of fact
because they may reasonably be resolved in favor of either
party.'” Cal. Architectural Bldg. Prods., Inc.
v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th
Cir. 1987) (quoting Anderson, 477 U.S. at 250).
State Farm contends that Plaintiffs are not entitled to UIM
coverage under the Escalade Policy because State Farm is
entitled to set off the Sheridan Settlement against the UIM
insurance under the “difference in limits”
provision. Under such a provision, an UIM insurer's
liability is capped at the UIM coverage limit less those
amounts the insured actually recovers under the applicable
insurance policies maintained on the underinsured vehicle.
215 ILCS 5/143a-2(4). Plaintiffs argue that the
“difference in limits” provision is void under
Arizona law. The Escalade Policy, however, states:
Without regard to choice of law rules, the law of the state
a. Illinois will control in the event of any disagreement as
to the interpretation and application of any provision in
this policy . . .
(Doc. 23-1 at 46.) The parties agree that resolution of the
“difference in limits” issue requires the Court
to determine whether the Escalade Policy's choice of law
Choice of Law
federal court sitting in diversity applies the choice of law
rules of the state in which it sits. Abogados v.
AT&T, Inc., 223 F.3d 932, 934 (9th Cir. 2000)
(citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 496 (1941)). As this Court sits in Arizona, it
applies Arizona choice of law rules. In a contract action,
Arizona follows the Restatement (Second) of Conflict of Laws
(“Restatement”). Swanson v. Image Bank,
Inc., 77 P.3d 439, 441 (Ariz. 2003). Where, as here, the
contract includes a choice of law provision, § 187 of
the Restatement provides the test for whether that provision
is “valid and effective.”Id. (quoting
Cardon v. Cotton Lane Holdings, Inc., 841 P.2d 198,
202 (Ariz. 1992)). Under § 187, the court must first
decide whether the “particular issue”-here, a
“difference in limits” provision-“is one
which the parties could have resolved by an explicit
provision in their agreement directed to that issue.”
Restatement § 187(1). If the answer to that question is
yes, then the choice of law clause is valid and effective.
determining whether the parties could have resolved a
particular issue by explicit agreement, courts apply
“the local law of the state selected by application of
the rule of § 188.” Cardon, 841 P.2d at
203 (citing Restatement § 187 cmt. c)). Section 188(2)