Fehr v. American Family Mutual Insurance Company, S.I.

2 DISTRICT OF NEVADA [2] 3 * * * [3] 4 COBEY FEHR, Case No. 2:23-cv-02077-RFB-EJY [4] 5 Plaintiff, 5 ORDER 6 v. [6] 7 AMERICAN FAMILY MUTUAL 7 INSURANCE COMPANY, S.I., [8] 8 Defendant. [9] 10 Pending before the Court is Defendant’s Motion to Stay Discovery (the “Motion”). ECF No. [10] 11 16. The Court considered the Motion, Plaintiff’s Opposition (ECF No. 19), and Defendant’s Reply [11] 12 (ECF No. 20). Also pending before the Court is the Stipulated Discovery Plan and Scheduling Order. [12] 13 ECF No. 18. [13] 14 I. Background [14] 15 The instant case involves an alleged breach of contract, breach of the covenant of good faith [15] 16 and fair dealing (the “Good Faith claim”), and violation of Nevada Unfair Claims Practices Act (NRS [16] 17 686A.310) (sometimes “UCPA” or the “Act”) based on Defendant’s failure to pay benefits supposedly [17] 18 due under Plaintiff’s insurance policy. ECF No. 1-2. Defendant filed a Motion for Partial Summary [18] 19 Judgment seeking dismissal of Plaintiff’s Good Faith and UCPA claims on January 23, 2024. ECF [19] 20 No. 14. Plaintiff opposed Defendant’s Summary Judgment Motion arguing he should be allowed to [20] 21 conduct discovery under Federal Rule of Civil Procedure 56(d). ECF No. 15. In the instant Motion, [21] 22 Defendant says discovery as to Good Faith should be stayed because facts establish the insurer had a [22] 23 reasonable basis for valuing Plaintiff’s claims in the manner it did. ECF No. 16 at 7-8. Defendant [23] 24 further argues Plaintiff’s UCPA claim fails because Plaintiff did not plead a necessary element of the [24] 25 claim and offers no evidence in support of the claim. Id. at 8.1 Plaintiff counters he is entitled to [25] 26 discovery under Rule 56(d), which militates against Defendant’s argument that the Motion for Partial [27] 28 1 Defendant also argues if discovery proceeds, Defendant will incur unnecessary costs and undue burden. Id. 28 However, this is an insufficient reason to support a stay of discovery. Turner Broad. Sys., Inc. v. Tracinda Corp., 175 2 “preliminary peek” at Defendant’s Motion Partial Summary Judgment shows it is without merit [2] 3 because Plaintiff will be able to obtain or has already presented evidence that, when viewed in the [3] 4 light most favorable to Plaintiff, supports his claims. Id. at 21-24. Defendant replies Plaintiff is not [4] 5 entitled to discovery under Rule 56(d) because he did not identify any specific facts or information he [5] 6 will learn through discovery essential to opposing summary judgment. ECF No. 20 at 4-5. Defendant [6] 7 also argues a preliminary peek reveals it will likely prevail on the pending summary judgment motion [7] 8 because Plaintiff failed to provide any evidence that will overcome the evidence produced by [8] 9 Defendant. Id. at 5-6. [9] 10 II. Discussion [10] 11 Generally, a dispositive motion does not warrant a stay of discovery. Tradebay, LLC v. eBay, [11] 12 Inc., 278 F.R.D. 597, 601 (D. Nev. 2011). “The party seeking a stay ... has the burden to show good [12] 13 cause by demonstrating harm or prejudice that will result from the discovery.” Rosenstein v. Clark [13] 14 Cnty. Sch. Dist., Case No. 2:13-cv-1443-JCM-VCF, 2014 WL 2835074 , at *3 (D. Nev. June 23, 2014), [14] 15 citing Fed. R. Civ. P. 26(c)(1) (internal quotation marks omitted). Under certain circumstances, it can [15] 16 be an abuse of discretion to deny discovery while a dispositive motion is pending. Tradebay, 278 [16] 17 F.R.D. at 602. For this reason, a party seeking to stay discovery carries the heavy burden of making [17] 18 a strong showing why the discovery process should be halted. Tracinda Corp., 175 F.R.D. at 556. [18] 19 When deciding whether to stay discovery, the Court takes a “preliminary peek” at the merits [19] 20 of the pending dispositive motion to determine whether the motion is potentially dispositive of the [20] 21 entire case and whether the motion can be decided without additional discovery. Tradebay, 278 F.R.D. 21 22 at 602; Buckwalter v. Nevada Bd. of Med. Exam’rs, Case No. 2:10-cv-02034-KJD-GWF, 2011 WL 22 23 841391, at *1 (D. Nev. Mar. 7, 2011). In reviewing the merits of a dispositive motion, the Court keeps [23] 24 in mind Federal Rule of Civil Procedure 1’s goal for the “just, speedy, and inexpensive” determination [24] 25 of actions. Tradebay, 278 F.R.D. at 602-03 . Nevertheless, motions for summary judgment frequently [25] 26 arise in federal practice and “[a]n overly lenient standard for granting motions to stay all discovery is [26] 27 likely to result in unnecessary discovery delay in many cases.” Trzaska v. Int’l Game Tech., Case No. [27] 28 2:10-cv-02268-JCM-GWF, 2011 WL 1233298 , at *4 (D. Nev. Mar. 29, 2011). [28] 2 “In order to establish a breach of the implied covenant of good faith and fair dealing, the [2] 3 plaintiff must prove the following: (1) the insurance company had no reasonable basis for its conduct [3] 4 in the handling of plaintiff’s claim; (2) the insurance company knew, or recklessly disregarded, the [4] 5 fact that there was no reasonable basis for its conduct; and (3) the insurance company’s unreasonable [5] 6 conduct was a legal cause of harm to the plaintiff.” Drye v. Glatfelter Claims Mgmt., Inc., Case No. [6] 7 2:23-CV-00943-RFB-NJK, 2024 WL 1330117 , at *7 (D. Nev. Mar. 27, 2024) citing Falline v. Golden [7] 8 Nugget Hotel & Casino, 823 P.2d 888, 891 (Nev. 1991)). In its Motion for Partial Summary Judgment [8] 9 Defendant argues Plaintiff’s Good Faith claim fails as a matter of law because Defendant had a [9] 10 “reasonable basis” for its valuation of Plaintiff’s claim. ECF No. 14 at 9-10. Plaintiff responds that [10] 11 Defendant’s claims handling investigation and claim offer were unreasonable, and the discovery to [11] 12 which he is entitled under Fed. R. Civ. P. 56(d) will demonstrate this unreasonableness. ECF No. 15 [12] 13 at 17-21, 25-27. [13] 14 Rule 56(d) states that if “a nonmovant shows by affidavit or declaration that, for specified [14] 15 reasons, it cannot present facts essential to justify its opposition,” the Court may defer consideration [15] 16 of the motion, deny the motion, allow the parties to complete additional discovery, or grant other [16] 17 appropriate relief. Fed. R. Civ. P. 56(d). The party seeking discovery under the Rule “must show: (1) [17] 18 it has set forth in affidavit form the specific facts it hopes to elicit from further discovery; (2) the facts [18] 19 sought exist; and (3) the sought-after facts are essential to oppose summary judgment.” Family Home [19] 20 & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008). While the [20] 21 failure to satisfy Rule 56(d)’s requirements permits a court to rule on summary judgment without [21] 22 allowing additional discovery, “[c]ourts should grant Rule 56(d) motions fairly freely when a party [22] 23 has not had any realistic opportunity to pursue discovery relating to its theory of the case” unless “a [23] 24 Rule 56(d) continuance if discovery would be futile.” Ins. Co. of Pennsylvania v. Nat’l Fire & Marine [24] 25 Ins. Co., Case No. 2:11-CV-02033-PMP, 2012 WL 4482674 , at *2 (D. Nev. Sept. 26, 2012), aff’d, [26] 592 Fed.Appx. 630 (9th Cir. 2015), and aff’d, 592 Fed.Appx. 630 (9th Cir. 2015) (internal quotation [26] 27 marks omitted). [28] 2 claim has sufficient merit to permit such discovery to proceed. Plaintiff’s counsel filed a declaration [2] 3 with Plaintiff’s response to Defendant’s Motion for Partial Summary Judgment setting forth in [3] 4 affidavit form specific facts he hopes to elicit from further discovery. ECF No. 15 at 3. In this [4] 5 affidavit, Plaintiff asserts the discovery he seeks will provide “evidence regarding the [5] 6 unreasonableness of the [o]ffer and Defendant’s investigation of [Plaintiff’s] crash, which are genuine [6] 7 issues of material fact in dispute.” Id. Though Defendant argued its offer and investigation of [7] 8 Plaintiff’s crash was “reasonable,” “[t]he reasonableness of an insurer’s claims-handling conduct is a [8] 9 factual question, generally left for the jury.” Drye, 2024 WL 1330117 , at *7, citing Amadeo v. [9] 10 Principal Mut. Life Ins. Co., 290 F.3d 1152, 1162 (9th Cir. 2002). Thus, the evidence Plaintiff seeks [10] 11 to discover pertains to issue of material fact essential to oppose summary judgment. For these reasons, [11] 12 the Court finds Defendant’s request to stay discovery relating to Plaintiff’s Good Faith claim is not [12] 13 supported. [13] 14 b. Nevada Unfair Claims Practices Act. [14] 15 In its Motion for Partial Summary Judgment Defendant contends Plaintiff cannot establish [15] 16 Defendant violated Nevada’s Unfair Claims Practices Act because Plaintiff does not provide [16] 17 evidentiary support for an executive level statutory violation; nor does Plaintiff provide evidence that [17] 18 he exhausted his administrative remedies before filing suit. ECF No. 14 at 12-13. Plaintiff responds [18] 19 that his Complaint provides evidence establishing each element of Defendant’s violation of the Act. [19] 20 ECF No. 15. Unfortunately, Plaintiff does not respond to Defendant’s argument that he failed to [20] 21 exhaust administrative remedies before filing suit. Id. [21] 22 “NRS 686A.310 is Nevada’s [U]nfair [T]rade [P]ractices statute, which enumerates various [22] 23 standards of practice for investigating and handling insurance claims. Nevada gives exclusive [23] 24 jurisdiction of any claims arising under Title 57 (in which NRS 686A.310 is contained) to the [24] 25 Commissioner of the Nevada Department of Insurance [‘NDOI’].” Hwang v. Redwood Fire & Cas. [25] 26 Ins. Co., Case No. 2:22-CV-879-JCM-EJY, 2024 WL 385657 , at *3 (D. Nev. Feb. 1, 2024) (citing [26] 27 NRS 679B.120(3) (2024); 686A.015(1) (2024)). The NDOI Commissioner has “exclusive [27] 28 jurisdiction” over “any matter…in which a party seeks to ensure compliance with the Insurance Code [28] 2 989, 994 (2007). “Plaintiffs must therefore exhaust their administrative remedies with the NDOI [2] 3 before their claims under the Insurance Code become ripe.” Id. citing id. (further citations omitted). [3] 4 Plaintiff’s UCPA claim is subject to the exclusive jurisdiction of the NDOI Commissioner. [4] 5 Plaintiff fails to demonstrate he exhausted his administrative remedies before filing suit. And, Plaintiff [5] 6 was silent in response to Defendant’s contention he failed to do so. Thus, the “preliminary peek” [6] 7 reveals Plaintiff’s UCPA claim cannot proceed. The Court finds in the absence of administrative [7] 8 exhaustion Defendant’s Motion for Partial Summary Judgment will dispose of Plaintiff’s UCPA claim [8] 9 in its entirety. No discovery is needed in order to reach this decision. As a result, the Court finds [9] 10 Defendant satisfied its burden justifying a stay of discovery regarding Plaintiff’s Nevada Unfair [10] 11 Claims Practices Act claim. [11] 12 III. Order [12] 13 Accordingly, IT IS HEREBY ORDERED that Defendant’s Motion to Stay Discovery (ECF [13] 14 No. 16) is GRANTED in part and DENIED in part. [14] 15 IT IS FURTHER ORDERED that discovery is stayed as to Plaintiff’s Nevada Unfair Claims [15] 16 Practices Act claim. [16] 17 IT IS FURTHER ORDERED that discovery is not stayed with respect to Plaintiff’s Covenant [17] 18 of Good Faith and Fair Dealing claim. [18] 19 IT IS FURTHER ORDERED that the parties’ Stipulated Discovery Plan and Scheduling [19] 20 Order (ECF No. 18) is GRANTED to the extent that the Plan will proceed as to Plaintiff’s Breach of [20] 21 Contract and Breach of the Covenant of Good Faith and Fair Dealing claim only. [21] 22 DATED this 2nd day of May, 2024. [24] 24 ELAYNA J. YOUCHAH 25 UNITED STATES MAGISTRATE JUDGE