Progressive Direct Insurance Company v. Madrigal de Mendoza

[1] 2 FILED IN THE U.S. DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 3 Nov 19, 2019 SEAN F. MCAVOY, CLERK [4] 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON [6] 7 PROGRESSIVE DIRECT INSURANCE COMPANY, a foreign 8 insurer, NO: 4:19-CV-5181-RMP 9 Plaintiff, ORDER RESOLVING CROSSMOTIONS FOR SUMMARY 10 v. JUDGMENT 11 ESTHER MADRIGAL de MENDOZA; TERESA BARRERA; 12 MARIA GARCIA; SANTOS CASTRO; and MARIA BARAJAS 13 DE INDA, 14 Defendants. [15] 16 BEFORE THE COURT are Progressive’s Motion for Summary Judgment, 17 ECF No. 20, and Defendants’ Motion for Summary Judgment, ECF No. 28. A 18 hearing was held on these matters on November 18, 2019. The Court has considered 19 the motions, the record, the oral argument, and is fully informed. 20 BACKGROUND 21 On February 23, 2017, Progressive issued an automobile insurance policy to 1 Jesus Mendoza. ECF No. 1 at 3. Mr. Mendoza rejected personal injury protection 2 (PIP) coverage on the policy through a signed waiver. Id. at 3–4. PIP coverage 3 protects against “losses or expenses incurred by or on behalf of one insured person 4 because of bodily injury sustained in any one accident.” ECF No. 24-9 at 14. In 5 February of 2018, Mr. Mendoza added his mother, Esther Madrigal de Mendoza, to 6 the insurance policy as a driver, along with her vehicle. Id. The parties agree that 7 PIP coverage was never added to Mr. Mendoza’s insurance policy. 8 On July 28, 2018, Ms. Madrigal de Mendoza was involved in a collision as a 9 driver. Id. at 5. She had five passengers in her car: Liliana Alvarez Torres, Teresa 10 Barrera, Maria Garcia, Santos Castro, and Maria Barajas de Inda. Id. After the 11 accident, Ms. Madrigal de Mendoza filed a claim with Progressive, seeking PIP 12 coverage, which was denied because neither she nor Mr. Mendoza had purchased 13 PIP coverage. Id. at 4.. 14 Ms. Madrigal de Mendoza challenged Progressive’s decision and filed an 15 Insurance Fair Conduct Act (IFCA) notice against Progressive. See ECF Nos. 21-7, 16 21-8. She argues that Progressive had a duty under Washington law to offer her PIP 17 coverage when she was added to the insurance policy. See ECF No. 27 at 7–8; 18 ECF No. 21-7 at 2–3; Wash. Rev. Code § 48.22.085 (1) (“Insurers providing 19 automobile insurance policies must offer minimum personal injury protection 20 coverage for each insured.”). 21 Progressive filed a Complaint in this Court seeking declaratory relief. ECF 1 No. 1 at 7. Progressive asks the Court to declare the rights and obligations of the 2 parties under the policy. Specifically, it requests “a declaration that Progressive 3 does not owe any PIP coverage to Defendants under the Policies for the subject 4 accident.” Id. 5 Both parties have moved for summary judgment, each arguing that there are 6 no issues of material fact remaining, and that the Court should decide Progressive’s 7 duties under Washington law and the relevant insurance policy as a matter of law. 8 The Court agrees that there are no issues of material fact in this matter, and that the 9 deciding question is whether Progressive had a legal duty to offer PIP coverage 10 when Ms. Madrigal de Mendoza and her car were added to the relevant insurance 11 policy. 12 LEGAL STANDARD 13 When parties file cross-motions for summary judgment, the Court considers 14 each motion on its own merits. See Fair Housing Council of Riverside Cty., Inc. v. 15 Riverside Two, 249 F.3d 1132 , 1136 (9th Cir. 2001). A court may grant summary 16 judgment where “there is no genuine dispute as to any material fact” of a party’s 17 prima facie case, and the moving party is entitled to judgment as a matter of law. 18 Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317 , 322–23 19 (1986). A genuine issue of material fact exists if sufficient evidence supports the 20 claimed factual dispute, requiring “a jury or judge to resolve the parties’ differing 21 versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, [1] 809 F.2d 626, 630 (9th Cir. 1987). 2 The moving party bears the burden of showing the absence of a genuine issue 3 of material fact, or in the alternative, the moving party may discharge this burden by 4 showing that there is an absence of evidence to support the nonmoving party’s prima 5 facie case. Celotex, 477 U.S. at 325 . The burden then shifts to the nonmoving party 6 to set forth specific facts showing a genuine issue for trial. See id. at 324 . The 7 nonmoving party “may not rest upon the mere allegations or denials of his pleading, 8 but his response, by affidavits or as otherwise provided . . . must set forth specific 9 facts showing that there is a genuine issue for trial.” Id. at 322 n.3 (internal 10 quotations omitted). 11 The Court will not infer evidence that does not exist in the record. See Lujan 12 v. Nat’l Wildlife Fed’n, 497 U.S. 871 , 888–89 (1990). However, “[t]he evidence of 13 the non-movant is to be believed, and all justifiable inferences are to be drawn in his 14 favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). 15 DISCUSSION 16 Summary of the Parties’ Legal Arguments 17 The defining legal question in this case is whether Progressive was required 18 to re-offer PIP coverage on the relevant insurance policy when Ms. Madrigal de 19 Mendoza and her car were added to the policy. RCW 48.22.085 governs PIP 20 coverage in Washington. Each time an insurer issues a new automobile insurance 21 policy, the insurer must offer PIP coverage to the insured. Wash. Rev. Code § 1 48.22.085(1). Any named insured on the policy may reject the offer of PIP 2 coverage in writing. Wash. Rev. Code § 48.22.085 (2). If a named insured rejects 3 PIP coverage in writing, then “[t]he insurer is not required to include personal 4 injury protection coverage in any supplemental, renewal, or replacement policy.” [5] Wash. Rev. Code § 48.22.085 (2)(b). 6 Progressive maintains that the statute governing PIP coverage is 7 unambiguous, making its argument simple: Ms. Madrigal de Mendoza did not 8 purchase a new policy with Progressive. Rather, she was added to an existing 9 policy. Therefore, Progressive had no duty to re-offer PIP coverage. 10 On the other hand, Defendants argue that a “new policy” was created for the 11 purposes of RCW 48.22.085 when Ms. Madrigal de Mendoza and her car were 12 added to the existing policy. Defendants rely on the “material change” standard 13 adopted by Washington courts to argue that a “new policy” was created here. 14 Washington courts recognize the material change rule in the context of uninsured 15 and underinsured motorist coverage (“UIM coverage”). Torgerson v. State Farm 16 Mutual Auto. Ins. Co., 957 P.2d 1283 , 1286–87 (Wash. Ct. App. 1998). The 17 material change rule dictates that, when there is a material change in an insurance 18 policy, the policy is a “new policy” for purposes of UIM coverage. Id. Like PIP 19 coverage, insurance providers are required to offer UIM coverage when they issue 20 “new policies,” and the named insured may reject UIM coverage in writing. See [21] Wash. Rev. Code § 48.22.030 . While the material change rule clearly applies to 1 UIM coverage, no Washington court has applied the rule to PIP coverage. 2 Defendants argue that, given the similarity between the UIM and PIP statutes, this 3 Court should apply the material change rule to PIP coverage. 4 Progressive counters by arguing that, even if the material change standard 5 applies to PIP coverage, the facts presented here do not constitute a material 6 change. Progressive maintains that, under Washington law, adding a new car and 7 new insured driver to an existing policy does not create a new policy and does not 8 constitute a material change in an existing policy. Therefore, even under the 9 material change rule, Progressive had no duty to offer PIP coverage to Ms. 10 Madrigal de Mendoza. 11 Material Change 12 For the purposes of its analysis, this Court will begin by assuming, without 13 deciding, that the material change rule applies to PIP Coverage. If no material 14 change occurred, then Progressive must prevail as a matter of law, as no new 15 policy was issued, and Progressive’s duty to re-offer PIP coverage was not 16 triggered. 17 There is no bright line rule to determine which changes to an insurance 18 policy are material changes. Rather, the court must engage in a fact-specific 19 inquiry. Torgerson, 957 P.2d at 1287–88. In Torgerson v. State Farm Insurance 20 Company, the Washington Court of Appeals outlined a number of scenarios that 21 failed to constitute a material change in the UIM context. The Torgerson Court 1 explained, “A ‘majority of jurisdictions which have dealt with the question do not 2 find a new policy created when a party replaces a vehicle covered under an 3 existing policy with a new vehicle.’” Id. at 1286 (quoting Johnson v. Farmers Ins. 4 Co., 817 P.2d, 841, 847 (Wash. 1991)). Similarly, the addition of a new car to an 5 existing policy is not a material change. Id. Although the Torgerson Court did not 6 state it expressly, the court strongly implied that “just changes of vehicles and 7 named insureds” do not constitute material changes. Id. at 1287. 8 On the other hand, when an insured makes changes to the types of coverage 9 in her policy, or increases the level of coverage, a material change may occur. Id. 10 Indeed, the Torgerson Court found these types of changes convincing when it 11 concluded that a material change had occurred in that case. See id. 12 The facts of this case align with the scenarios described in Torgerson that 13 failed to constitute material change. As the Torgerson Court explained, “the 14 addition of a new car to an existing policy is no more than a renewal of, or an 15 action supplementary to, the original policy.” Id. at 1287. Here, Ms. Madrigal de 16 Mendoza, and her car, were added to an existing policy. 17 Conversely, Ms. Madrigal de Mendoza did not change any terms of the 18 policy by adding or removing types of coverage. Defendants argue that coverage 19 of the new car resulted in increased liability under the policy, and therefore a de 20 facto change to the terms of the coverage occurred. However, increased liability 21 naturally results from adding a vehicle to an insurance policy, and the Washington 1 Court of Appeals already has decided that such an action does not constitute a 2 material change. Id. at 1287. 3 Therefore, even if the material change standard applies to PIP coverage, no 4 material change occurred on these undisputed facts, and Progressive prevails as a 5 matter of law. 6 Accordingly, IT IS HEREBY ORDERED: 7 1. Plaintiff’s Motion for Summary Judgment, ECF No. 20, is GRANTED 8 and judgment shall be entered for Plaintiff against Defendant Esther Madrigal de 9 Mendoza. Progressive does not owe PIP coverage to Defendants for the subject 10 accident. 11 2. Defendants’ Motion for Summary Judgment, raised in their response 12 memorandum, ECF No. 28, is DENIED. 13 3. Any remaining, pending motions in this matter are DENIED AS MOOT, 14 and any hearing dates are hereby STRICKEN. 15 IT IS SO ORDERED. The District Court Clerk is directed to enter this 16 Order, provide copies to counsel, and close this case. 17 DATED November 19, 2019. [18] s/ Rosanna Malouf Peterson 19 ROSANNA MALOUF PETERSON United States District Judge