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Franco v. State Farm Mutual Automobile Insurance Co.

United States District Court, D. Idaho

August 7, 2018

BECCA E. FRANCO, an individual, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant. Elements of Recovery Low High Elements of Recovery Low High

          MEMORANDUM DECISION AND ORDER

          DAVID C. NYE U.S. DISTRICT COURT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on Defendant State Farm Mutual Automobile Insurance Company's (“State Farm”) Motion for Partial Summary Judgment. Dkt. 17. State Farm asks this Court to grant summary judgment in its favor on Plaintiff Becca Franco's bad faith claim. Having reviewed the record and briefs, the Court finds that the parties have adequately presented the facts and legal arguments. Accordingly, in the interest of avoiding further delay, and because the Court finds that the decisional process would not be significantly aided by oral argument, the Court will decide the Motion without a hearing. Dist. Idaho Loc. Civ. R. 7.1(d)(2)(ii). For the reasons set forth below, the Court finds good cause to GRANT the Motion.

         II. BACKGROUND

         On October 23, 2015, Franco was involved in a motor vehicle accident on I-15 in Bingham County, Idaho, while driving her 2003 Honda CRV. The third-party driver, Patrick Lepage, was wholly at fault. At the time of the accident, Franco's vehicle was insured under an insurance policy with State Farm (“the Policy”). The Policy included underinsured motor vehicle coverage up to $50, 000. Specifically, the Policy provided that State Farm “will pay compensatory damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle.” Dkt. 17-8, at 19. The Policy also included medical payment coverage up to $5, 000.

         On November 3, 2015, Franco submitted a claim to State Farm under the Policy. State Farm responded that same day seeking additional information. On November 11, 2015, Tim Gresback, Franco's attorney, sent a letter to State Farm asking it to open an underinsured motorist claim. On January 15, 2016, State Farm advised Gresback that Franco had exhausted the $5, 000 medical payment coverage benefits under the Policy.

         On April 27, 2016, Gresback sent State Farm two settlement offers he had received from third party insurers: $100, 000 from American Family Insurance Group under a policy held by Betty Hansen (the owner of the third-party vehicle), and $50, 000 from Viking Insurance Company of Wisconsin under a policy held by Patrick Lepage (the driver of the third-party vehicle). Both third-party insurers offered their policy limits. On June 2, 2016, State Farm authorized Franco to settle with these third-party insurers for the offered amounts.

         On June 14, 2016, Gresback sent State Farm a “Settlement Proposal” valuing Franco's damages as follows: $122, 099.66 in total medical bills, $10, 153.71 in lost wages, and $1, 008.34 in family travel expenses, for a total of $133, 261.71 in special damages. The Settlement Proposal also valued “General Damages” including “[p]ast and future pain and suffering, loss of enjoyment of life, impairment, disfigurement, emotional distress, and future medical bills” at “policy limit.” Accordingly, Gresback requested that State Farm pay Franco the $50, 000 policy limit for underinsured motor vehicles.

         On July 12, 2016, State Farm responded, indicating it would waive the $5, 000 medical payment coverage subrogation against the liability settlement. Based on the $155, 000.00 that Franco had already received (comprised of the $150, 000 settlements from the third-party insurers, plus the $5, 000 medical payment coverage from State Farm), State Farm indicated to Gresback that “[w]ith all the information [received] to date, . . . [and after] contractual write-downs of the medical bills, it appear[s] Ms. Franco has been fully compensated.” Dkt. 17-20. Neither party has provided an “auto injury evaluation” form that shows how State Farm was valuing Franco's past and likely future damages as of July 12, 2016.

         On August 11, 2016, Gresback sent a “request for reconsideration” to State Farm. Among other things, the request stated, “Earlier we provided you with the health insurance contractual adjustment. In so doing, we did not intend to suggest that her medical damages or overall loss should be reduced thereby.” Dkt. 17-21.

         In a September 8, 2016, letter, State Farm again stated that it was “waiv[ing] the Medical Pay Coverage subrogation, ” but that, based on its “evaluation of the claim and the amounts the insured has recovered from underlying sources, ” it “believed that [Franco] ha[d] been fully compensated for the loss.” Dkt. 17-24. Neither party has provided an “auto injury evaluation” form that shows how State Farm was valuing Franco's past and likely future damages as of September 8, 2016.

         On February 28, 2017, Gresback sent State Farm a “final policy limit demand.” Dkt. 20-9, at 2. The demand stated Franco's “medical expenses now total $124, 459.83, ” but that “she is likely to have a lifetime of residuals.” Id. at 2-3. State Farm received the final demand on March 3, 2017. State Farm asserts that it then re-evaluated the claim. State Farm's reevaluation is outlined in an email chain between two State Farm employees, Bill Paseman and Justin Wright, from mid-April 2017. This evaluation identified that although Franco's billed medical expenses totaled $124, 459.83, due to contractual write-downs, only $54, 686.29 had been paid, for a difference of $69, 773.54. Dkt. 17-26. The evaluation also examined Franco's “demand” and “medical reports” and determined she was likely entitled to between $65, 000 and $115, 000 in general damages for pain and suffering. State Farm set out these evaluation numbers in a formalized “auto injury evaluation” form dated June 15, 2017. Notably, State Farm's low-end estimate of Franco's past pain and suffering increased to $95, 000 on this form. This evaluation form reads as follows:

Current Evaluation Range of Damages
Elements of Recovery
Low
High
Past Medical Bills
$54, 686.29
$124, 459.83
Future Medical Bills
$0.00
$0.00
Past Wage Loss
$10, 200.00
$10, 200.00
Future Wage Loss
$0.00
$0.00
Past Pain/Suffering
$95, 000.00
$115, 000.00
Future Pain/Suffering
$0.00
$0.00
=Subtotal
$159, 886.29
$249, 659.83

         Subtracting the $155, 000 Franco had already recovered from its low-end estimate, State Farm determined Franco was entitled to $4, 886.29. Id. at 6. From the high-end estimate, State Farm subtracted both the $155, 000 that Franco had already recovered and the $69, 773.54 difference between the billed for and contracted for medical expenses. Id. Thus, State Farm determined Franco was entitled to $24, 886.29 in gross damages at the high end. Id.

         On April 27, 2015, State Farm made a settlement offer to Franco in the amount of $4, 886.29 (the low-end estimate). Dkt. 17-29. On April 28, 2017, State Farm made a settlement offer in the amount of $25, 000 (in excess of the high-end estimate). Dkt. 17-30.

         Franco filed this lawsuit on May 15, 2017. She asserted two claims: breach of contract and bad faith. Dkt. 1.

         On June 19, 2017, State Farm paid the $25, 000 offer it had offered on April 28, 2017. Dkt. 17-31. On October 4, 2017, State Farm received additional medical records from Franco during discovery in this case. Dkt. 17-32. After reviewing these ...


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