Summary
staying case because pending arbitration of plaintiff's insurance coverage would affect his claim alleging insurer's bad faith and breach of contract
Summary of this case from Lui v. State Farm Fire & Cas. Co.Opinion
No. C15-00509 CRB
04-02-2015
RICHARD THOMAS, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY ET AL., Defendants.
ORDER VACATING HEARING AND GRANTING MOTION TO STAY
Now calendared for a hearing on April 10, 2015 is Defendant State Farm's Motion to Stay the Action Until Completion of Binding Contractual Arbitration (dkt. 9). The Court finds this matter suitable for resolution without oral argument pursuant to Civil Local Rule 7-1(b), VACATES the hearing, and GRANTS the Motion.
This case arises out of Plaintiff Richard Thomas's car accident with an uninsured motorist. See generally Notice of Removal (dkt. 1) Ex. 1. Thomas brings suit against his insurer, State Farm, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief and negligence in State Farm's handling of Thomas's claims. Id. Specifically, Thomas alleges that State Farm failed to pay some of his medical bills, to compensate him for the actual value of his vehicle, to provide a coverage position on his vandalism claim, and to provide him with clear coverage information about his bodily injury and loss of earning claims. Id. ¶ 13. He also alleges that State Farm needlessly forced him to retain legal counsel to obtain a default judgment against the uninsured motorist. Id. ¶ 14.
State Farm moves to stay this case, arguing that Thomas's "claim has not yet been arbitrated as required under the arbitration provision of the policy." Mot. at 3. Thomas concedes that "the uninsured motorist claim is already going to binding arbitration," but argues that he is not "ask[ing] this Court to decide the uninsured motorist claim." Opp'n (dkt. 13) at 2. He maintains that the arbitration will decide only whether he is legally entitled to collect damages from the uninsured motorist, and if so, the amount of damages, and that "this bad faith case . . . does not involve" those questions. Id. at 2, 3.
He also argues that the Court lacks jurisdiction over this case, claiming that there is no diversity under 28 U.S.C. § 1332(c)(1)(A), and promising a motion to remand advancing this same argument. Id. However, following State Farm's Reply in this matter (dkt. 14), which argued that "the instant lawsuit is not a 'direct action' precluding diversity jurisdiction under § 1332(c)(1)(A)," id. at 1, Thomas withdrew his Motion to Remand, see Notice to Withdraw (dkt. 15), and, presumably, this argument. In any case, State Farm is correct that this is not a "direct action" under § 1332(c)(1)(A). See Searles v. Cincinnati Ins. Co., 998 F.2d 728, 728-29 (9th Cir. 1993) (bad faith action against a plaintiff's own insurer not a direct action).
But this case does involve those questions. Whether the uninsured motorist claim has merit has some bearing on whether State Farm acted negligently, or in bad faith, or in breach of its contract, in processing that claim the way it did. See, e.g., Morello v. Amco Ins. Co., No. 11-6623, 2012 WL 19493 87, at *2 (N.D. Cal. May 29, 2012) ("whether and to what extent plaintiff is entitled to UIM benefits will affect, inter alia, plaintiff's claims for breach of the implied covenant of good faith and fair dealing, infliction of emotional distress, and for unfair business practices."). The uninsured motorist claim is certainly at issue in this case. See, e.g., Notice of Removal Ex. 1 ¶ 4 ("As a result of the accident, Plaintiff sustained property damage to his vehicle, bodily injuries, and lost earnings."); ¶ 29 ("State Farm owes a duty to Plaintiff to provide him with reimbursement for the damages that he suffered as a result of his accident with an uninsured motorist. . . . Despite the clear duty, State Farm, and DOES 1-5, to date have refused to do so."); ¶ 33(h) (alleging bad faith in "[n]ot attempting in good faith to effectuate prompt, fair, and equitable settlements of Plaintiff's claims at the time when liability became reasonably clear"); ¶ 33(i) (alleging bad faith in "[c]ompelling Plaintiff to institute litigation to recover amounts due under the insurance policies by offering less than the amounts Plaintiff expects to receive and in some cases by not offering anything at all").
A stay pending completion of the arbitration is therefore appropriate, both under the Federal Arbitration Act and in the interest of judicial efficiency. See Federal Arbitration Act, 9 U.S.C. § 3 (2012) (if an arbitration agreement covers an issue, a court must "stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement."); Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (power to stay is "incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.").
The Court does not rely on State Farm's argument that California Code of Civil Procedure § 1281.4 applies; that section explicitly relates to "an issue involved in an action or proceeding before a court of [California]." See generally Mot.; Cal. Code Civ. Proc. § 1281.4.
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For the foregoing reasons, the Court GRANTS State Farm's Motion to Stay the Action Until Completion of Binding Contractual Arbitration and STAYS the case. The parties shall promptly notify the Court when the arbitration is complete.
IT IS SO ORDERED. Dated: April 2, 2015
/s/_________
CHARLES R. BREYER
UNITED STATES DISTRICT
JUDGE