Frutiger v. USAA General Indemnity Company

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Jane Frutiger, et al., No. CV-18-00547-PHX-JJT 10 Plaintiffs, ORDER 11 v. 12 USAA General Indemnity Company, 13 Defendant. [14] 15 At issue is Defendant’s Motion for Summary Judgment (Doc. 140, “MSJ 2”), to 16 which Plaintiffs filed a Response (Doc. 147, “Resp.”) and Defendant filed a Reply 17 (Doc. 151, “Reply”). Also at issue is Plaintiffs’ previously filed Motion Seeking an Order 18 that Plaintiffs Have Shown a Prima Facie Case Regarding Punitive Damages (Doc. 98, “Pl. 19 Mot.”), to which Defendant filed a combined Response in Opposition and Cross-Motion 20 for Summary Judgment on Plaintiffs’ Punitive Damages Claim (Doc. 109, “MSJ 1”), 21 Plaintiffs filed a combined Reply in Support of its Motion Seeking an Order and Response 22 in Opposition to Defendant’s Motion for Summary Judgment Regarding Punitive Damages 23 (Doc. 116), and Defendant filed a Reply in Support of its Motion for Summary Judgment 24 Regarding Punitive Damages (Doc. 127). 25 The Court finds these matters appropriate for decision without oral argument. See 26 LRCiv 7.2(f). For the reasons set forth below, the Court will grant Defendant’s Motion for 27 Summary Judgment. [28] 1 I. BACKGROUND 2 Plaintiff Frutiger owns a vehicle that she insures through a policy issued by 3 Defendant USAA. (Doc. 131, First Amended Compl. (“FAC”) ¶ 8.) She has had that policy 4 for approximately ten years and renews it every six months. In October 2016, Frutiger 5 rented a minivan for a trip with her sisters, Plaintiffs Jimenez and Decherd. (FAC ¶ 25.) 6 Plaintiffs were driving on the US 60 freeway when the rented minivan was struck by an 7 oncoming vehicle. All three Plaintiffs sustained serious injuries. 8 The driver of the oncoming vehicle was later determined to be at fault. Upon finding 9 the driver had insufficient insurance limits for their medical costs, Plaintiffs submitted 10 insurance claims to Defendant. All three Plaintiffs submitted claims for medical payments 11 under Part B of Frutiger’s policy, as well as Part C for underinsured motorist (“UIM”) 12 benefits. Under Part C, a “covered person” is defined as: [13] (1) You or any family member[;] 14 (2) Any other person occupying your covered auto[;] (3) Any person for damages that person is entitled to recover because of [15] [bodily injury] to which this coverage applies sustained by a person 16 described in 1 or 2 above. 17 (Doc. 1, Compl. Ex. A. at) 18 A “family member,” defined elsewhere in the policy, is “a person related to you by 19 blood, marriage, or adoption who resides primarily in your household.” (Compl. Ex. A. at 20 25.) Jimenez and Decherd did not reside with Frutiger and were therefore not covered 21 persons under Section 1. (FAC ¶ 39.) Defendant further determined that Jimenez and 22 Decherd were not covered persons under Section 2 because the rented minivan was not 23 Frutiger’s “covered auto” as defined in the policy. (MSJ 2 at 4.)1 24 Defendant paid Frutiger $10,000 for medical payments under Part B and $100,000 25 for UIM coverage under Part C, comprising her full policy limit. (MSJ 2 Ex. 1 at 104.) 26 Defendant denied Jimenez’s and Decherd’s claims for UIM coverage on the grounds that [27] 28 1 The parties agree that Section 3 is irrelevant as applied to Jiminez and Decherd. (FAC ¶ 42.) 1 they did not qualify as a “covered person” under Part C. However, Jimenez and Decherd 2 did receive $10,000 each for medical payments, despite the fact that the definition of a 3 covered person under Part B is materially the same as it is under Part C. (FAC ¶ 48.) 4 Defendant contends this was an oversight on the part of the claims adjuster; Plaintiffs argue 5 that such an error is evidence of ambiguity in the policy. 6 Plaintiffs assert that, notwithstanding the contractual language excluding Jiminez 7 and Decherd from coverage, Defendant led Frutiger to believe that her sisters—as 8 passengers in the rented minivan—would be covered. Plaintiffs point to two events that 9 gave rise to this belief. First, prior to renting the minivan in October 2016, Frutiger rented 10 another car in September 2015 to take a road trip with her daughter, who did not reside in 11 Frutiger’s home. Before renting that car, Frutiger went to the USAA website to determine 12 the extent of their coverage. Frutiger testified that she saw a banner advertisement on 13 USAA’s website that “said something to the fact that renting [a vehicle] is now easier . . . 14 your insurance goes with you.” (Pl. Mot. Ex. 2 at 53–54.) 15 Second, after seeing this ad, Frutiger called USAA and spoke to a customer service 16 representative on August 15, 2015. (MSJ 1 Ex. 1 at 131; Ex. 13.) Frutiger says she 17 mentioned the ad to the representative and explained that her daughter was flying in from 18 Washington and the family planned to rent a car to drive to Las Vegas together. (MSJ 1 19 Ex. 1 at 139–40.) Frutiger then testified, [20] And I said, now, this ad says that I have the same coverage, you know, the 21 coverage moves with me to the rental car. And I said, is this true? And she says, well, let me look up your policy. And so, she looked it up, and she says, [22] yes, that is true, your vehicle will be covered just like it was your own 23 personal vehicle. 24 (MSJ 1 Ex. 1 at 139.) 25 Frutiger also testified that, although she had never read her policy before the above 26 events transpired, it was always her understanding that the policy provided “full coverage.” 27 (MSJ 1 Ex. 1 at 55, 107.) This belief stemmed from communications with her husband, 28 who had told her about various limits on their policy, including UIM limits, and 1 characterized it as providing full coverage. (MSJ 1 Ex. 1 at 54–55.) Frutiger testified, 2 however, that she and her husband never specifically discussed coverage for passengers. 3 Rather, Frutiger “assumed” those limits and the concept of full coverage extended to 4 passengers. (MSJ 1 Ex. 1 at 54.) Thus, when she called USAA in August 2015 to inquire 5 about the rental car, she asked whether her coverage would be the same—to which, as 6 Frutiger testified, the representative answered in the affirmative. Frutiger did not ask the 7 representative about UIM coverage specifically or coverage for passengers generally. (MSJ 8 1 Ex. 1 at 140–41.) 9 Before renting the minivan for the October 2016 trip with her sisters, Frutiger again 10 wanted to determine coverage for her and her passengers. She visited the USAA website 11 and saw the same banner ad. Knowing she had not made any changes to the policy between 12 the August 2015 phone call and her policy renewal in July 2016, Frutiger “assumed 13 everything was still the same” as when she rented the car in 2015. (Pl. Mot. Ex. 2 at 60.) 14 After seeing the same ad online, Frutiger group-texted Jiminez, Decherd, and her 15 other sisters who would be on the trip.2 In recounting the text, Frutiger testified, “I didn’t 16 go into specific details, but I do remember telling them that my insurance would go onto 17 [the rental vehicle] and so we didn’t have to buy extra [insurance].” (Pl. Mot. Ex. 2 at 57.) 18 Jiminez and Decherd both testified that, in the text, Frutiger said she got a good deal on the 19 rental car and that coverage on her personal vehicle would extend to the rental. (MSJ 1 Ex. 20 14 at 60; Ex. 15 at 52–53.) However, Plaintiffs all testified that the text said nothing about 21 UIM coverage specifically. Neither Jiminez nor Decherd discussed UIM or passenger 22 coverage with Frutiger, but Decherd testified that Frutiger orally told her about the August 23 2015 phone call with USAA. (MSJ 1 Ex. 14 at 65; Ex. 15 at 52.) 24 After Defendant refused to pay UIM benefits for Jiminez and Decherd the three 25 sisters sued. Plaintiffs’ First Amended Complaint alleges the following claims: (1) breach 26 of contract; (2) breach of the covenant of good faith and fair dealing; (3) first-party [27] 28 2 Plaintiffs testified that they no longer have the pertinent text messages and the Court has no other evidence of the contents of the texts. 1 insurance bad faith; (4) promissory estoppel, (5) declaratory judgment regarding the 2 interpretation of the policy language; (6) equitable estoppel; and (7) negligent 3 misrepresentation. (FAC at 13–24.) 4 II. LEGAL STANDARD 5 Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is 6 appropriate when: (1) the movant shows that there is no genuine dispute as to any material 7 fact; and (2) after viewing the evidence most favorably to the non-moving party, the 8 movant is entitled to prevail as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, [9] 477 U.S. 317 , 322–23 (1986); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285 , 1288–89 10 (9th Cir. 1987). Under this standard, “[o]nly disputes over facts that might affect the 11 outcome of the suit under governing [substantive] law will properly preclude the entry of 12 summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A 13 “genuine issue” of material fact arises only “if the evidence is such that a reasonable jury 14 could return a verdict for the nonmoving party.” Id. 15 In considering a motion for summary judgment, the Court must regard as true the 16 non-moving party’s evidence, if it is supported by affidavits or other evidentiary material. 17 Celotex, 477 U.S. at 324 ; Eisenberg, 815 F.2d at 1289 . However, the non-moving party 18 may not merely rest on its pleadings; it must produce some significant probative evidence 19 tending to contradict the moving party’s allegations, thereby creating a material question 20 of fact. Anderson, 477 U.S. at 256–57 (holding that the plaintiff must present affirmative 21 evidence in order to defeat a properly supported motion for summary judgment); First Nat’l 22 Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968). 23 “A summary judgment motion cannot be defeated by relying solely on conclusory 24 allegations unsupported by factual data.” Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 25 1989). “Summary judgment must be entered ‘against a party who fails to make a showing 26 sufficient to establish the existence of an element essential to that party’s case, and on 27 which that party will bear the burden of proof at trial.” United States v. Carter, 906 F.2d 28 1375, 1376 (9th Cir. 1990) (quoting Celotex, 477 U.S. at 322 ). 1 III. ANALYSIS 2 Defendant moves for summary judgment on all seven counts as applied to all 3 Plaintiffs. The Court notes at the outset that the pleadings lack precision as to whether all 4 three Plaintiffs assert claims for relief under all seven counts, or whether just Frutiger or 5 just Jiminez and Decherd assert certain claims. Nonetheless, the Court will address each 6 claim as if Frutiger, Jiminez, and Decherd each seek recovery under all seven. 7 1. Breach of Contract; Declaratory Judgment 8 Defendant argues that Frutiger’s breach of contract claim must fail because 9 Defendant undisputedly timely paid Frutiger the limits of her policy. (MSJ 2 at 8.) Thus, 10 Defendant breached no duty and Frutiger sustained no damages. With respect to Jiminez 11 and Decherd, Defendant argues that the policy does not provide UIM coverage to them and 12 therefore Defendant had no contractual duty to breach. (MSJ 2 at 11–12.) 13 Plaintiffs combine the analysis for all three Plaintiffs and, in doing so, raise two 14 arguments in response. First, they contend that Defendant’s reliance on the four corners of 15 the document is an overly rigid approach to Plaintiffs’ breach of contract claims. Plaintiffs 16 seek to modify or expand the terms of the contract through equitable doctrines such as the 17 reasonable expectations doctrine, promissory estoppel, and equitable estoppel. (Resp. at 7.) 18 Modifying the contractual terms to cover Jiminez and Decherd would permit the sisters to 19 enforce the policy as third-party beneficiaries and would also give rise to a breach of 20 contract claim for Frutiger. Second, Plaintiffs argue that the policy is ambiguous as to 21 whether Jiminez and Decherd are covered. (Resp. at 8–9.) The Court will address 22 Plaintiffs’ arguments in reverse order. 23 A. Ambiguity 24 The Court finds as a matter of law that the terms of the contract are unambiguous. 25 See Chandler Med. Bldg. Partners v. Chandler Dental Grp., 855 P.2d 787, 791 (Ariz. Ct. 26 App. 1993 ) (“Whether a contract is ambiguous is a question of law.”) Language in a 27 contract is ambiguous only when it can reasonably be construed to have more than one 28 meaning. In re Estate of Lamparella, 109 P.3d 959, 963 (Ariz. Ct. App. 2005). Here, the 1 categories and accompanying definitions of a “covered person” are not susceptible to 2 different meanings. A “family member” within the meaning of policy must reside in 3 Frutiger’s household. Jiminez and Decherd undisputedly did not. An “other person 4 occupying the covered auto” requires that the subject vehicle be, as expected, a “covered 5 auto.” A covered auto is defined as: (1) a vehicle shown on the declarations page; (2) a 6 newly acquired vehicle; or (3) a trailer owned by the insured. Here, the rented minivan is 7 not on the declarations page; Frutiger did not acquire the minivan, she rented it; and the 8 rental was not a trailer owned by Frutiger. (Compl. Ex. A at 25–26, 33.) 9 Further, none of the Plaintiffs, including Frutiger, had read Frutiger’s policy before 10 the accident. Plaintiffs therefore could not have formulated an interpretation based on the 11 policy’s language that could conflict with another interpretation, thereby giving rise to an 12 ambiguity. When Frutiger did go over the policy during her deposition, she admitted that 13 “as the policy is written, [her] sisters would not be entitled to underinsured motorist 14 coverage.” (MSJ 1 Ex. 1 at 127.) Thus, it appears Frutiger herself does not believe the 15 contract is ambiguous. 16 Finally, the fact that Lawrence Enriquez, a trained claims adjuster, made medical 17 payments under Part B to Jiminez and Decherd as if they were covered persons does not 18 suggest an ambiguity because Enriquez did not rely on the policy language in making the 19 determination to pay out said claims. (Reply Ex. 1 at 10.) He paid them out automatically, 20 without reference to the underlying policy. Accordingly, the Court finds that the terms of 21 the policy unambiguously do not provide coverage to Decherd and Jiminez as passengers 22 in the rental vehicle. 23 B. Reasonable Expectations 24 Alternatively, Plaintiffs ask the Court to apply the reasonable expectations doctrine 25 to modify or expand the coverage under the policy. This doctrine allows a court, under 26 limited circumstances, to refrain from enforcing unambiguous boilerplate terms of a 27 standardized insurance agreement. Gordinier v. Aetna Cas. & Sur. Co., 742 P.2d 277 , 283 28 (Ariz. 1987). The doctrine does not apply just because the insured experiences the “fervent 1 hope usually engendered by loss.” Darner Motor Sales, Inc. v. Universal Underwriters Ins. 2 Co., 682 P.2d 388, 395 (Ariz. 1984). Rather, it applies when (1) the insured had a 3 reasonable expectation of coverage, and (2) the drafter “had reason to believe that the 4 adhering party would not have assented to the particular term had he or she known of its 5 presence.” Id. at 396 . The drafter’s “reason to believe” may arise from prior negotiations 6 or other inferences drawn from the circumstances. State Farm Fire & Cas. Co. v. 7 Grabowski, 150 P.3d 275, 281 (Ariz. Ct. App. 2007). 8 As a threshold issue, the Court finds that the terms of coverage may be modified to 9 include Jiminez and Decherd only if it concludes Frutiger had reasonable expectations of 10 such coverage. Jiminez and Decherd were not parties to the contract or insureds under the 11 policy and had never read the policy, spoke to a USAA representative, visited the USAA 12 website, or contributed to premiums under Frutiger’s policy. See Alcala v. Mid-Century 13 Ins. Co., 828 P.2d 1262, 1264 (Ariz. Ct. App. 1992) (“Appellant had nothing to do with 14 the purchase of the policy in question. She never had an insurable interest or expectancy 15 under the policy. No coverage has been taken from her that she was entitled to receive. The 16 doctrine of reasonable expectations does not apply to her.”); see also Ogden v. U.S. Fid. & 17 Guar. Co., 933 P.2d 1200, 1203 (Ariz. Ct. App. 1996). Their expectations are immaterial 18 to the analysis. 19 Plaintiffs contend Alcala is distinguishable because, here, Jiminez and Decherd’s 20 expectations arose out of information relayed to them by Frutiger, whose own expectation 21 came from the phone call. Even if the Court considered this chain of hearsay and imputed 22 Frutiger’s expectation onto her sisters, Plaintiffs have not raised a genuine issue that their 23 resulting expectation of coverage was reasonable. All three Plaintiffs testified that Frutiger, 24 “without going into specific detail,” told them her insurance policy would cover the rental 25 van as if it was her personal vehicle. But Jiminez and Decherd never knew the terms of 26 Frutiger’s policy to begin with, so they could not reasonably form an expectation of 27 coverage—UIM, passenger, or otherwise. [28] 1 Thus, to reform the policy, Frutiger must show that (1) Frutiger had a reasonable 2 basis for believing her sisters were covered, and (2) Defendant had reason to believe 3 Frutiger would not have accepted the agreement had she known it did not provide UIM 4 coverage to her sisters in a rental car. The Court finds that Frutiger fails to create a genuine 5 dispute as to both. 6 Frutiger contends that her reasonable expectations have origins independent of the 7 policy: the online ad and the call with USAA’s representative. See Darner, 682 P.2d at 399 8 (holding an insured who had never read his policy could still have reasonable expectations 9 of coverage). However, Frutiger testified that the ad said “something to the fact that . . . 10 your insurance goes with you.” This was true. Her insurance coverage did go with her, 11 evidenced by her timely receipt of payment on her claims. Frutiger also said she asked the 12 representative whether “the coverage moves with me to the rental car.” The representative 13 responded, “[Y]es . . . your vehicle will be covered just like it was your own personal 14 vehicle.” This was also true. The rental vehicle was provided the same comprehensive and 15 collision coverages as her own vehicle. (See Compl. Ex. A at 15.) Without asking about 16 passengers or being told that her passengers would be covered, Frutiger could not have 17 formed a reasonable expectation that her sisters would be covered.3 18 Frutiger testified that she told the representative her daughter was flying in from 19 Washington and that they were renting a car to drive to Las Vegas. Frutiger maintains this 20 gave Defendant “reason to believe” within the meaning of the doctrine. However, Frutiger 21 did not ask about coverage for her daughter or for passengers generally. In the absence of 22 other evidence, the Court finds this is insufficient to raise a genuine dispute that Defendant 23 had reason to believe Frutiger would have rejected the term excluding her sisters from UIM 24 coverage. [25] 26 3 Even if the Court construed Frutiger’s question of whether “the coverage moves with me” as specifically encompassing UIM coverage for passengers, Frutiger’s 27 understanding of “coverage” came from her husband—not the policy itself. Based on conversations with her husband, she assumed that she and her passengers had “full 28 coverage.” Her belief then that passengers were included in the representative’s response stemmed from extrinsic sources to begin with. 1 Accordingly, the reasonable expectations doctrine does not apply under these 2 circumstances. The Court therefore declines to modify the policy to cover Jiminez and 3 Decherd or permit its enforcement under an intended third-party beneficiary theory. As 4 Defendant had no contractual duty to Jiminez and Decherd, it is entitled to summary 5 judgment on their breach of contract claims. 6 As for Frutiger, Defendant paid her all benefits owed to her under the policy. 7 Frutiger admitted Defendant investigated her claim timely, paid it promptly, and does not 8 “contend that USAA breached any duty to [her] under the policy.” (MSJ 1 Ex. 1 at 104.) 9 Further, having established above that Defendant owed no contractual duty to Jiminez and 10 Decherd, any of Frutiger’s alleged damages deriving from the denial of their claims fail. A 11 breach of contract claim cannot be sustained without a breach or damages. See Thomas v. 12 Motelucia Villas, 302 P.3d 617, 622 (Ariz. 2013). Defendant is therefore entitled to 13 summary judgment on Frutiger’s breach of contract claim.4 14 Because the Court finds the contract unambiguous and the reasonable expectations 15 doctrine inapplicable, the Court also grants Defendant summary judgment as to Claim 5 16 (declaratory judgment regarding the interpretation of the policy language). 17 2. Contractual Breach of Covenant of Good Faith and Fair Dealing; Bad 18 Faith 19 Arizona law implies a covenant of good faith and fair dealing in every contract. 20 Rawlings v. Apodaca, 726 P.2d 565, 570 (Ariz. 1986). The covenant prohibits a party from 21 acting in a manner that impairs the right of the other to receive the benefits which flow 22 from their contractual agreement. Id. It arises, therefore, by virtue of a contractual 23 relationship. Wells Fargo Bank v. Arizona Laborers, 38 P.3d 12, 28 (Ariz. 2002). Because 24 the Court determined above that Jiminez and Decherd do not have a contractual [26] 27 4 Plaintiffs raise equitable estoppel and promissory estoppel as other theories under which the contract could be reformed, giving way to a breach of contract claim. They also 28 allege equitable and promissory estoppel as independent claims. The Court addresses them as their own claims later in this Order. 1 relationship with Defendant, their claims for contractual breach of the duty of good faith 2 and fair dealing fail as a matter of law. 3 “[T]he remedy for breach of the implied covenant is an action for breach claiming 4 contract damages.” Id. (emphasis in original). Frutiger’s claim also fails as a matter of law 5 because she has no contract damages. Defendant did not impair Frutiger’s rights to receive 6 the benefits under the contract precisely because she did receive all the contractual benefits 7 owed to her when Defendant timely paid her claims. Further, payment of UIM benefits to 8 the insured’s non-resident relatives for an accident in a rental car was not contemplated by 9 or covered under the contract. Defendant therefore breached no duty of good faith to 10 Frutiger when it refused to pay her sisters’ claims.5 11 First-party insurance bad faith is the claim for breach of the covenant of good faith 12 that sounds in tort. An insurance company acts in bad faith when it intentionally and 13 unreasonably denies or delays payment to its insured. Zilisch v. State Farm Mut. Auto. Ins. 14 Co., 995 P.2d 276, 279 (Ariz. 2000). Like its contractual claim counterpart, a tortious bad 15 faith claim is borne out of the contractual relationship. See Rawlings, 726 P.2d at 574 . 16 Jiminez and Decherd were not insureds under the policy; they had no contractual 17 relationship with Defendant and were in fact strangers to the contract. Because they have 18 no legal right to payment, it was not unreasonable for Defendant to deny their claims. 19 Accordingly, Defendant is entitled to summary judgment on Jiminez’s and Decherd’s bad 20 faith claims. 21 Frutiger’s bad faith claim cannot survive for the same reasons that her breach of 22 contract and breach of the implied covenant claims cannot. Namely, Defendant paid 23 Frutiger all benefits owed to her under the policy, and she does not dispute that Defendant 24 investigated and paid her claim timely. Frutiger has not raised a genuine dispute that [25] 5 Plaintiffs argue their claims for contractual breach of the covenant of good faith 26 must survive because Defendant failed to move for summary judgment on them. While Defendant briefed its bad faith argument, it did not explicitly do so on the contractual 27 covenant claim. However, as Defendant noted, the first sentence in the Motion declared that Defendant “hereby files its Motion for Summary Judgment seeking an order entering 28 judgment in favor of [Defendant] on all Plaintiffs’ claims.” (MSJ 2 at 1.) Even so, Plaintiffs’ claims for contractual breach of good faith fail on their merits as a matter of law. 1 Defendant acted unreasonably in the processing of her claim. Summary judgment for 2 Defendant is therefore warranted on Frutiger’s bad faith claim. 3 3. Negligent Misrepresentation 4 Arizona follows the Restatement (Second) of Torts in defining a claim for negligent 5 misrepresentation. Section 552(1) of the Restatement provides: 6 One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false [7] information for the guidance of others in their business transactions, is 8 subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or [9] competence in obtaining or communicating the information. 10 Thus, Plaintiffs must establish (1) Defendant provided false information in a 11 business transaction; (2) Defendant intended or knew Plaintiffs would reasonably rely on 12 the information; (3) Defendant failed to exercise reasonable care in obtaining or 13 communicating the information; (4) Plaintiffs justifiably relied on the incorrect 14 information; and (5) resulting damages. KB Home Tucson, Inc. v. Charter Oak Fire Ins. 15 Co., 340 P.3d 405 , 412 n.7 (Ariz. Ct. App. 2014). 16 i. Frutiger 17 Defendant argues that Frutiger’s claim for negligent misrepresentation must fail 18 because Frutiger suffered no detriment. (MSJ 2 at 9.) Her claims were promptly paid. 19 (MSJ 2 at 9.) Plaintiffs respond that “USAA’s misconduct subjected Frutiger to a risk that 20 she, as the agent and person on whom her passengers relied, face a cause of action in 21 negligence and estoppel by her passengers.” (Resp. at 13.) An unrealized and speculative 22 risk of litigation does not constitute pecuniary loss or actionable damages.6 Accordingly, 23 Defendant is entitled to summary judgment on Frutiger’s negligent misrepresentation 24 claim. [25] 26 6 Although not specifically briefed by the parties, based on the evidence before it, the Court would also be hesitant to conclude that the information supplied by the USAA 27 representative was false. As noted about, Frutiger testified that the ad said “your insurance goes with you.” Her insurance coverage did, as she received payment on her claims. The 28 phrase “your vehicle will be covered just like it was your own personal vehicle” was also true because the rental vehicle itself had the same coverages as Frutiger’s own vehicle. [1] 2 ii. Jiminez and Decherd 3 A commercial supplier of information may be liable for negligent misrepresentation 4 when it knows or intends the representation to reach and influence a limited group or class 5 of persons. “[D]irect communication of the information to the person acting in reliance 6 upon it is not necessary.” Rest. 552 cmt. g (illustrating that a weigher of beans could be 7 liable to a buyer of beans for negligent misrepresentation, when the weigher miscalculated 8 the weight to the vendor and the vendor communicated such information to the buyer, who 9 then purchased the beans in reliance on the misinformation). Thus, the fact that Jiminez 10 and Decherd did not speak directly to the USAA agent is not fatal to their negligent 11 misrepresentation claims. 12 Rather, Defendant contends that the sisters’ claims fails because they produced no 13 evidence (1) that the representative’s information fell below the professional standard of 14 care for an insurance agent or producer, or (2) that Jiminez and Decherd relied on that 15 information. As the Court finds that Jiminez and Decherd have failed to produce evidence 16 of actual reliance, it need not address Defendant’s first argument. 17 To overcome summary judgment on a negligent misrepresentation claim, “there 18 must be some evidence in the record of reliance.” Sw. Non-Profit Hous. Corp. v. Nowak, [19] 322 P.3d 204, 212 (Ariz. Ct. App. 2014). In that case, the court upheld summary judgment 20 for the defendants, finding no indication in the record that the plaintiff relied on defendants’ 21 appraisals in acting or refraining from a course of action. Id. Conversely, in In re Allstate 22 Life Ins. Co. Litig., 971 F. Supp. 2d 930, 948 (D. Ariz. 2013), the defendants there had 23 misrepresented the sources for debt repayment on the bonds they had underwritten and 24 sold. A bond rating agency relied on these misrepresentations in calculating the bond rating 25 and plaintiffs subsequently relied on the rating in purchasing the bonds. Plaintiffs’ 26 declarations that they would not have purchased defendants’ bonds had they known they 27 were junk bonds were sufficient to establish a genuine dispute as to reliance. [28] 1 Here, Jiminez and Decherd have put forth no evidence that they acted in reliance on 2 the information or that they would have done things differently had they known the policy 3 did not cover them as passengers in the rental. In her deposition, Decherd responded “I 4 don’t know” to the following questions: “Do you know whether you would have done 5 anything differently?” “Would you have purchased additional coverage through the rental 6 car company?”7 “Would you have purchased higher limits on your own insurance policy?” 7 (MSJ 1 Ex. 15 at 94.) When Jiminez was asked what she would do if Frutiger “had come 8 back to you and said . . . the rental car is covered, but . . . passengers wouldn’t be covered 9 for UM/UIM in the rental van,” Jiminez responded, “I don’t even know what I would have 10 done.” (MSJ 1 Ex. 14 at 99.) She said, “I just don’t know” when further pressed with the 11 question, “Would you have done anything differently?” (MSJ 1 Ex. 14 at 99.) 12 Plaintiffs did not produce any evidence controverting or elaborating on this 13 deposition testimony. Rather, Plaintiffs point to testimony of Frutiger’s husband, Chris, 14 who testified that prior to the 2015 phone call, the Frutigers used to purchase additional 15 insurance on rental cars, but that they stopped this practice after the phone call. (See Pl. 16 Mot. Ex. 3 at 28.) While this may be evidence that Frutiger relied on the information, it 17 does not establish reliance on the part of Jiminez or Decherd. 18 The Court finds that, without more, Plaintiffs’ repeated answers of “I don’t know” 19 are insufficient to create a genuine issue of material fact as to their actual reliance on the 20 USAA representative’s response to Frutiger’s inquiry in 2015. See Anderson, 477 U.S. at 21 256–57. Accordingly, Defendant is entitled to summary judgment on the sisters’ negligent 22 misrepresentation claims. 23 4. Equitable Estoppel; Promissory Estoppel 24 Equitable estoppel “precludes a party from asserting a right inconsistent with a 25 position previously taken to the prejudice of another acting in reliance thereon.” Unruh v. 26 Indus. Comm’n, 301 P.2d 1029, 1031 (Ariz. 1956). It requires a showing that (1) one party [27] 7 As Defendant notes, Plaintiffs fail to show that the rental company even offered 28 additional UIM coverage for passengers, let alone that Decherd and Jiminez would have purchased it had they know they were not covered under Frutiger’s policy. 1 acted inconsistently with a position it later adopted; (2) the other party relied on the prior 2 position; and (3) injury to the latter resulted from the former’s repudiation of its prior 3 conduct. Valencia Energy Co. v. Ariz. Dep’t of Revenue, 959 P.2d 1256, 1267 (Ariz. 1998). 4 Somewhat similarly, in asserting promissory estoppel, a party must show (1) the 5 other party made a promise; (2) it was reasonable reasonably foreseeable that the first party 6 would rely on that promise; and (3) the first party actually relied on the promise to his 7 substantial detriment. See Higginbottom v. State, 51 P.3d 972, 977 (Ariz. Ct. App. 2002); 8 Emp’rs Reinsurance Corp. v. GMAC Ins., 308 F. Supp. 2d 1010, 1018 (D. Ariz. 2004). The 9 major distinction between the two estoppel theories is that equitable estoppel refers to 10 reliance on a misrepresentation of some present or past fact, whereas promissory estoppel 11 rests upon a promise to do something in the future. Trollope v. Koerner, 470 P.2d 91 , 99 12 (Ariz. 1970). 13 However, critical to this Court’s analysis is not the theories’ distinction, but their 14 similarities. Both equitable and promissory estoppel require justifiable and detrimental 15 reliance on the representations made by the other party. Thus, for the reasons Plaintiffs’ 16 negligent misrepresentation claims fail, so too do their claims of equitable and promissory 17 estoppel. Frutiger has not established that she suffered an actionable detriment resulting 18 from the information conveyed in the August 2015 phone call.8 See GMAC Ins., 308 F. 19 Supp. 2d at 1018 (“Under Arizona law the prejudice necessary for estoppel must be 20 substantial; the injury must be real and not technical or formal in nature.”). Jiminez and [23] 24 8 Frutiger argues that the relief she seeks under promissory estoppel is not monetary damages for emotional damages, but rather equitable relief in the form of “establishing 25 coverage greater than the policy language.” (Resp. at 13.) Regardless of the form of relief, Frutiger has not established a requisite element of promissory estoppel: legal detriment. It 26 is further questionable whether the statement “your vehicle is covered just like your personal vehicle”—or some variation of that—is a promise at all. See, e.g., GMAC Ins., [27] 308 F. Supp. 2d at 1018 (noting the difficulty in determining whether the statement, “Our policy would be to protect any and all liens . . . we will protect your lien,” is a promise or 28 merely an expression of intent or declaration of policy). In the very least, it does not appear to be a specific promise to pay UIM coverage for passengers. || Decherd have not established actual reliance on the same. Accordingly, Defendant is 2|| entitled to summary judgment on Plaintiffs’ estoppel claims.’ 3 IT IS THEREFORE ORDERED granting Defendant’s Motion for Summary Judgment (Doc. 140). 5 IT IS FURTHER ORDERED denying Plaintiffs’ Motion Regarding Punitive 6 || Damages (Doc. 98) and Defendant’s Motion for Summary Judgment on Punitive Damages (Doc. 109) as moot. 8 IT IS FURTHER ORDERED directing the Clerk of Court to enter final judgment 9|| in favor of Defendant and to close this case. 10 Dated this 25th day of November, 2019. CN 11 i . 12 Hon le Joff J. Tuchi Unifga State#District Judge [23] 24 □ Defendant also argues that equitable estoppel is available only as a defense by the relying party and that it is not a basis for its own cause of action for damages against the 25 misrepresenting party. (MSJ 2 at 10 (citing Tiffany, Inc. v. W.M.K. Transit Mix, Inc., 493 P.2d 1220, 1224 (Ariz. Ct. App. 1972); Humetrix, Inc. v. Cemplus S.C.A., 268 F.3d 910 , 26|| 918 (9th Cir. 2001)).) This alone, Defendant contends, is fatal to Plaintiffs’ claims. Plaintiffs counter that Darner permitted an insured to expand coverage under a theory of 27 equitable estoppel and asserts that they seek “not monetary damages, but relief. . . under estoppel theories.” To the extent that Plaintiffs’ equitable estoppel claim could be construed asa defense to Defendant’s assertion of no coverage, rather than its own claim for damages, Plaintiffs have still not established all elements required for a finding of equitable estoppel. -16-