Opinion
No. 2 CA-CV 2018-0048
09-07-2018
JAMES MATHIS, Plaintiff/Appellant, v. ALLSTATE INSURANCE COMPANY, AKA ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, Defendant/Appellee.
COUNSEL James Mathis, Cochise In Propria Persona Herman Goldstein Law Firm, Phoenix By Evan S. Goldstein and Hesam Alagha Counsel for Defendant/Appellee
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Cochise County
No. CV201600167
The Honorable Wallace R. Hoggatt, Judge
AFFIRMED
COUNSEL James Mathis, Cochise
In Propria Persona Herman Goldstein Law Firm, Phoenix
By Evan S. Goldstein and Hesam Alagha
Counsel for Defendant/Appellee
MEMORANDUM DECISION
Chief Judge Eckerstrom authored the decision of the Court, in which Presiding Judge Staring and Judge Brearcliffe concurred. ECKERSTROM, Chief Judge:
¶1 James Mathis appeals from the trial court's partial grant of summary judgment in favor of Allstate Fire and Casualty Insurance Company, in which the court dismissed his claim for tortious breach of the duty of good faith and fair dealing. Mathis argues that because Arizona law applies the covenant of good faith and fair dealing to every contract, he was entitled to bring an action in tort—rather than in contract—for breach thereof. We affirm.
The trial court also granted summary judgment in favor of Allstate as to Mathis's claim for punitive damages. Mathis does not raise the issue on appeal and, therefore, has waived review. Nelson v. Rice, 198 Ariz. 563, n.3 (App. 2000) (appellant waives review of issues not raised in opening brief).
Factual and Procedural History
¶2 "[W]e view the facts in the light most favorable to the party against whom summary judgment was entered." Rasor v. Nw. Hosp. LLC, 244 Ariz. 423, ¶ 3 (App. 2018). In May 2014, Douglas Andrick, an Allstate insured, drove through a red light in Sierra Vista and collided with Mathis. Mathis suffered bodily injury requiring medical treatment and also sustained damage to his truck. In an exchange by email in early July, an Allstate claims adjuster informed Mathis that Andrick had been determined to be "between 70-80%" at fault and offered to pay for repairs to his truck at that percentage. Mathis rejected the offer, explained that the repair shop had been awaiting authorization from Allstate, and offered that if Allstate "call[ed] them and authorize[d] the repair work" before he returned from a trip, he would "forget about [his claims for] loss of use and depreciation." The adjuster replied that he would "have a member of [Allstate's] Auto Department . . . authorize repairs," a statement Mathis interpreted as a promise to pay for the entire repair.
¶3 In late July, Mathis picked up his truck but paid for the repairs out of pocket because Allstate had not issued payment. Nevertheless, as Mathis asserts, an "Allstate agent told [him] Allstate had no intention of paying for 100% of [his] property damages but offered to send [him] a check for 75%." When Mathis informed the agent the claim had already been settled for the full value of the repair, the agent told him "Allstate 'never' paid more than 75%."
¶4 In April 2016, Mathis filed a complaint alleging claims for negligence against Andrick and, as against Allstate, breach of contract, bad faith and tortious breach of contract, and bad faith conduct in derogation of public policy. Allstate moved for summary judgment on the claims against it. At the hearing on the motion, the trial court denied summary judgment as to the breach-of-contract claim and, in a written ruling, granted summary judgment in favor of Allstate with respect to breach of the duty of good faith and fair dealing, as well as punitive damages. The court entered judgment pursuant to Rule 54(b), Ariz. R. Civ. P., certifying the issues for appeal. Mathis appealed; we have jurisdiction. A.R.S. §§ 12-120.21(A)(1), 12-2101(A)(1).
Duty of Good Faith and Fair Dealing
¶5 Mathis complains the trial court erred by "holding that there was no covenant of good faith and fair dealing implicit in the contract" that he and Allstate entered in July 2014. Arguing Arizona law imposes a duty of good faith and fair dealing in every contract, Mathis insists that "when a contracting party intentionally breaches [that] duty . . . , that intentional bad faith creates a separate cause of action in tort." This issue presents a question of law, which we review de novo. Kopp v. Physician Grp. of Ariz., Inc., 244 Ariz. 439, ¶ 7 (2018).
Whether this exchange formed a contract is a question not before this court; however, for the limited purpose of reviewing the issues before us on summary judgment, we assume a contract was formed. See Lindsey v. Dempsey, 153 Ariz. 230, 232 (App. 1987).
¶6 Mathis correctly observes that "[t]he law implies a covenant of good faith and fair dealing in every contract," a duty that "arises by virtue of a contractual relationship" and "[t]he essence of [which] is that neither party will act to impair the right of the other to receive the benefits which flow from their agreement." Rawlings v. Apodaca, 151 Ariz. 149, 153 (1986). This does not, however, mean that the breach of this duty will give rise to a cause of action in tort in every contract. Enyart v. Transamerica Ins. Co., 195 Ariz. 71, ¶ 14 (App. 1998). Instead, "a party may bring a tort action for breach of an implied covenant if there is a 'special relationship arising from elements of public interest, adhesion, and fiduciary responsibility,'" or when the object of the contract is "procurement of service, professional help, security, or other intangibles." Id. (quoting Burkons v. Ticor Title Ins. Co. of Cal., 168 Ariz. 345, 355 (1991)). Indeed, our "[c]ourts have been reluctant . . . to extend the tort action [for breach of duty of good faith and fair dealing] beyond the insurance setting." Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 385 (1985).
Nevertheless, such claim could proceed in contract for contractual damages. Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 383 (1985) (remedy for breach of duty of good faith and fair dealing generally on contract itself). We note the trial court denied Allstate's motion for summary judgment as to Mathis's breach-of-contract claim, and that claim has proceeded in the trial court independent of this appeal. See Ariz. R. Civ. P. 54(b). --------
¶7 Although insurance contracts form a special relationship between insurer and insured, "it is well established that a third-party claimant, a stranger to the contract, cannot sue the insurer for tortious breach of the duty of good faith." Leal v. Allstate Ins. Co., 199 Ariz. 250, ¶ 21 (App. 2000).
¶8 Here, Mathis, a third-party claimant to the policy between Allstate and Andrick, has not established that he and Allstate have formed a special relationship. Although Mathis has produced evidence of a contract, that contract merely concerns the mechanics of how and when Allstate would authorize repair of his truck. While Mathis released his claims for his loss of use and depreciation of the truck, this alone is insufficient to create a special relationship that would support a cause of action in tort. Particularly, Mathis did not entrust his security to Allstate, and the agreement cannot be construed as one imposing a fiduciary obligation on Allstate. See Enyart, 195 Ariz. 71, ¶ 17.
¶9 Thus, the trial court correctly determined, "the only contract [Mathis] may have had with Allstate was for Allstate to pay $2,679.57 in settlement of [his] property claim." Concluding, "[this] is not the kind of contract that creates a special relationship between the parties," the court rightly granted summary judgment in Allstate's favor as described above.
¶10 Mathis attempts to distinguish this case from those determining third-party claimants are strangers to an insurance contract to whom no duty of good faith is owed. See id. ¶ 19. He argues that "[w]hile no covenant of good faith is implied as to [third] party actions . . . that is certainly not the case . . . as between [first] parties." By framing the issue as whether or not a duty of good faith and fair dealing is implied in every contract, Mathis mistakes what he must prove to bring an action in tort, rather than in contract. To bring a claim in tort Mathis must not only establish that he is a first party to a contract, but also that the contract has created a special relationship. See Burkons, 168 Ariz. at 355. This he has not done.
¶11 Mathis also argues that Allstate is a "quasi-public party with enhanced fiduciary responsibilities" that "sells a product that all drivers are required by law and public policy to purchase," and, therefore, "is no longer just an ordinary contracting party." Citing A.R.S. § 20-461, Mathis urges that our legislature has established "a virtual laundry list of elevated duties required of insurers and of no other contracting parties." But Mathis has not brought a claim under this statute and, in any event, the statute explicitly has not created a private right of action, but rather "an administrative remedy to the director [of the Department of Insurance]." § 20-461(D); see Leal, 199 Ariz. 250, ¶ 28. Furthermore, having rejected this argument in Leal, we are not persuaded to revisit it. Id. ¶¶ 24-28. Accordingly, we determine the trial court did not err.
Attorney Fees and Costs
¶12 Allstate requests attorney fees and costs on appeal under A.R.S. § 12-341.01. An award of fees pursuant to this statute is discretionary, and Allstate has not explained why it would be appropriate here. See Munger Chadwick, P.L.C. v. Farwest Dev. & Constr. of the Sw., LLC, 235 Ariz. 125, ¶ 14 (App. 2014). Accordingly, we decline to award fees. However, an award of costs to a successful party in a civil action is mandatory. A.R.S. § 12-341. Thus, we award Allstate its costs on appeal, pending compliance with Rule 21, Ariz. R. Civ. App. P. See McEvoy v. Aerotek, Inc., 201 Ariz. 300, ¶ 9 (App. 2001).
Disposition
¶13 For all the foregoing reasons, we affirm.