Richard Chowning v. Nationwide Insurance Co. of America, et al.

[1] 2 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA [3] 4 Richard Chowning, Case No. 2:22-cv-00798-CDS-EJY 5 Plaintiff Order Overruling Plaintiff’s Objection, Adopting the Magistrate Judge’s Report 6 v. and Recommendation, and Denying Plaintiff’s Motion 7 Nationwide Insurance Co. of America, et al., 8 Defendants [ECF Nos. 33, 36, 39, 69, 74] [9] 10 This is an insurance bad faith and related claims action brought by plaintiff Richard 11 Chowning against defendants Nationwide Insurance Company of America, Allied Insurance 12 Company of America, and Victoria Fire & Casualty Company, Titan Insurance Company and 13 Depositors Insurance Company, Inc. (collectively, “Nationwide”). Nationwide removed this 14 action from the Eighth Judicial District Court, Clark County, Nevada, on May 19, 2022, on the 15 basis of diversity jurisdiction. Pet., ECF No. 1. The parties recently entered a joint stipulation to: 16 (1) reopen discovery for the limited purpose of conducting discovery on Nationwide’s new 17 cooperation defense; (2) continue the dispositive motion deadline; and (3) grant Chowning 18 leave to serve eight additional interrogatories related to Nationwide’s new cooperation defense. 19 Stip., ECF No. 115; Min. order approving stip., ECF No. 116. As part of that stipulation, the 20 parties were ordered to file a status report regarding their pending motions.1 ECF No. 116. Then, 21 on November 17, 2025, the parties filed a joint status report withdrawing Chowning’s motion for 22 summary judgment (ECF No. 12) and Nationwide’s motion for leave to file excess pages (ECF 23 No. 113). See Status rep., ECF No. 117; Min. order striking mots., ECF No. 118.2 [25] 26 1 ECF Nos. 12, 113. 2 Because two of Chowning’s pending motions are associated with the now-withdrawn motion for summary judgment, I deny as moot the related motions for leave. ECF Nos. 33, 36. 1 Two matters remain outstanding before me: (1) Chowning’s second motion to amend the 2 complaint (ECF No. 39); and (2) Chowning’s objection to the magistrate judge’s report and 3 recommendation (R&R) (ECF No. 74). Nationwide responded to the objections. Resp., ECF 4 No. 86. For the reasons set forth herein, I overrule Chowning’s objection, adopt the R&R in full, 5 and deny the motion for leave to amend the complaint. 6 I. Background 7 I incorporate by reference the relevant facts and procedural background provided in the 8 R&R. See ECF No. 69 at 1–6. 9 II. Legal standard 10 “Any party wishing to object to a magistrate judge’s findings and recommendations . . . 11 must file and serve specific written objections with supporting points and authorities.” Local 12 Rule IB 3-2(a). When a party timely objects to a magistrate judge’s R&R, the court is required 13 to “make a de novo determination of those portions of the [R&R] to which objection is 14 made.” 28 U.S.C. § 636 (b)(1). The court “may accept, reject, or modify, in whole or in part, the 15 findings or recommendations made by the magistrate.” Id. 16 III. Discussion 17 Chowning objects to the R&R, asserting that Judge Youchah wrongly concluded that 18 insurers are not required to initiate settlement negotiations with third-party claimants under 19 Nevada law. Relying on California law, Chowning asserts that Nevada should recognize a 20 “potential claim” for bad faith for failing to “pursue” settlement negotiations even when no 21 demand is made. See ECF No. 74 at 3. He contends that the R&R should be rejected because it 22 constitutes a “blanket rule that a[n insurance] carrier has no duty to explore potential 23 settlement opportunities ‘pre-demand,’” which is contrary to California law. Id. at 6 . Chowning 24 further argues that he has an actionable claim against the defendants because Nationwide failed 25 to advise the third party as to its policy limits after receiving a letter from the third-party’s [26] 1 counsel requesting this information within the thirty-day timeframe provided for in Nevada 2 Administrative Code (NAC) 686A.670. See id. at 5 . 3 The defendants respond that the R&R should be adopted in full. See ECF No. 86. They 4 argue that Chowning has failed to cite any authority that supports “the new theory of liability 5 set forth in his proposed amended complaint.” Id. at 2 . They also argue that Chowning’s 6 amended complaint does not allege any theory of liability based on a letter of representation or a 7 request for disclosure of the policy’s limits sent shortly after the underlying accident.3 Id. 8 Having conducted a de novo review, I overrule Chowning’s objection. Judge Youchah 9 correctly analyzed a key issue in denying Chowning’s leave to amend—whether a failure to 10 initiate a settlement offer to a third party early in a case and pre-demand is the basis upon which 11 a violation of an insurer’s legal obligations may be alleged. ECF No. 69 at 8. After considering the 12 arguments of the parties, I find that Judge Youchah properly denied Chowning’s motion to 13 amend as futile because Chowning cannot bring a bad faith claim against an insurer based on a 14 failure to initiate settlement discussions before receiving a demand from a third party. 15 In rendering her recommendation, Judge Youchah properly considered and applied the 16 Restatement of the Law, Liability Insurance, § 24, comment f. That section adopts a 17 reasonableness standard in regard to insurers obligations to make settlement offers. As 18 recognized in the R&R, this is not dispositive but relevant to the determination that granting 19 Chowning’s leave to amend would be futile. [22] 3 The underlying motorcycle accident that injured Chowning’s then-domestic partner, Deeana Parks, 23 occurred on February 21, 2015. First am. compl. (FAC), ECF No. 25 at ¶¶ 8–9. As alleged in the FAC, counsel for Parks “sent a letter to [Defendants] wherein [she] offered to resolve her claim against 24 [Chowning] for the applicable insurance policy limits[.]” Id. at ¶ 10; ECF No. 25-1 at 1–2. That letter further stated that “[Parks] is willing [to] enter into our settlement agreement containing a covenant not 25 to execute in favor of your insured for the policy limits provided that you have the same in my office within thirty (30) days together with proof that those are the only funds available to provide 26 compensation to my client for this incident.” ECF No. 25-1 at 1. Nationwide did not accept Parks’ offer to settle her claim for the policy limits. 1 Further, as found by Judge Youchah, there is no law in Nevada or California which 2] stands for the proposition that a bad faith claim exists when an insurer fails to initiate 3]| settlement discussions before receiving a demand from a third party. See ECF No. 69 at 9-10 4|| (first citing Sharp v. Evanston Ins. Co., 817 Fed. App’x 317, 320 (9th Cir 2020); then citing Reid v. 5}| Mercury Ins. Co., 162 Cal. Rptr. 3d 894, 906 (Cal. App. 2d Dist. 2013) (explaining that California 6|| law suggests that an insurer’s mere failure to initiate or pursue settlement discussions in a third7|| party case does not incur bad faith liability)). 8 In sum, Judge Youchah’s R&R is thoroughly well-reasoned. And the arguments and Q] cases cited by Chowning are insufficient to demonstrate that the R@R’s findings and 10] recommendations are erroneous. I therefore overrule Chowning’s objection, adopt the R@R in 11} full, and deny Chowning’s motion to amend his complaint. Conclusion B IT IS HEREBY ORDERED that Chowning’s objection to the R@R [ECF No. 74] is 14 OVERRULED, and the magistrate judge’s report and recommendation [ECF No. 69] is accepted and adopted in its entirety; therefore, Chowning’s second motion to amend [ECF 16]| No. 39] is DENIED. 17 IT IS FURTHER ORDERED that Chowning’s motion to supplement his motion for summary judgment [ECF No. 33] and his second motion to supplement his motion for summary 19]| judgment [ECF No. 36] are DENIED as moot. /) 20 Dated: December 1, 2025 7 / 7 Le _— Cristina B. Silva 22 Unit dAtates District Judge 23 Ly