Opinion
NO. CIV. S-08-1877 LKK/GGH.
May 12, 2011
ORDER
Plaintiff brings a class-action lawsuit against Allstate Indemnity Company ("Allstate") for five causes of action: Breach of Contract, Bad Faith, Breach of Implied Covenant of Good Faith and Fair Dealing, Fraud/Misrepresentation, and Unfair Competition. Plaintiff has not yet moved for class certification. The claims arise from Allstate's alleged practices regarding seatbelt inspection, replacement, and/or repair after cars covered by Allstate's insurance policies are involved collisions. Defendant Allstate has moved for Summary Judgment on all claims or partial summary judgment of plaintiff's Second Amended Complaint ("SAC"). Plaintiff opposes the motion. For the reasons stated below, defendant's motion is GRANTED.
The court previously dismissed plaintiff's RICO claim. See March 31, 2009 Order, ECF No. 66.
I. Factual Background
Plaintiff Robert Watts purchased a car insurance policy from defendant Allstate Indemnity Company ("Allstate") in 2004. Depo. of Robert Watts ("Watts Depo") 19:7-14, Ex. B of Defs.' Mot. for. Summary J., ECF No. 202-2. The policy provides that "Allstate will pay for direct and accidental loss to [plaintiff's] insured auto . . . from a collision." Allstate Auto Insurance Policy ("Policy") 18, Pl.'s Ex. A, ECF No. 211-1. The Policy further provides that "any person making claim must give [Allstate] written proof of loss. It must include all details reasonably required by us. We have the right to inspect the damaged property. We may require any person making claim to file with us a sworn proof of loss . . ." Id. at 22. The Policy also contains an Appraisal Clause, which specifies:
Both [plaintiff] and Allstate have a right to demand an appraisal of the loss. Each will appoint and pay for a qualified appraiser. Other appraisal expenses will be shared equally. The two appraisers, or a judge of a court of record, will choose an umpire. Each appraiser will state the actual cash value and the amount of loss. If they disagree, they'll submit their differences to the umpire. A written decision by any two of these three persons will determine the amount of the loss."Id. at 21. Finally, the policy states that "no one may sue [Allstate] under this coverage unless there is full compliance with all the policy terms." Id. at 22.
On March 29, 2006, plaintiff's 2005 Honda Civic was involved in a collision while it was being driven by plaintiff's wife. Second Amended Complaint ("SAC") ¶ 39. During the accident, both the driver and the front-seat passenger were restrained by their seat belts. As a result of the accident, the front seat passenger suffered a fractured rib, and the driver suffered from serious neck injuries. Pl.'s Opp'n 2, ECF No. 238. At the time of the collision, plaintiff was insured under the car insurance policy issued by Allstate. Id. Following the accident, plaintiff arranged for the vehicle towed to Artistic Collision, a garage of plaintiff's own choosing, and not part of Allstate's direct repair programs. Watts Depo 31:15. On March 30, 2006, Artistic Collision Shop Manager Bryan Welsh prepared a "visible damage quote." Depo. of Bryan Welsh ("Welsh Depo") 14:11-14. Ex. C of Defs.' Mot. for. Summary J., ECF No. 202-4. The visible damage quote did not include any amount for inspection, repair, or replacement of the seatbelts. Mr. Welsh testified that did not recall inspecting the seatbelts. Id. at 17.
Plaintiff disputes that Mr. Welsh prepared the visual inspection report. However, upon a review of the record, the court concludes that Mr. Welsh did prepare the quote: "Q: Then, back to Exhibit 1, which is the visible damage quote you prepared, that was prepared on March 30th, 2006; correct? A: Correct." Decl. of Bryan Welsh ("Welsh Depo") 14:11-14. Ex. C of Defs.' Mot. for. Summary J., ECF No. 202-4.
Plaintiff then presented a claim to Allstate for repairs to the vehicles. On March 31, 2006, Allstate adjuster Elio Lencioni prepared an estimate for the repair. Mr. Lencioni's estimate did not include any amount for inspection or repair of plaintiff's seatbelts, although Lenocioni testified that it would have been his custom and practice to inspect the seatbelt for "fraying, twisting, any deformation, any stitching that was coming loose," to "pull [the seatbelt] hard to see if it locks," to see if it goes back to where it is supposed to go. And then to insert it in the buckle make sure that it inserts in the buckle and it releases from the buckle, . . . as it's supposed to." Depo. of Elio Lencioni 148, Def.'s Ex. D. Mr. Lencioni stated that several circumstances would prompt him to conduct the type of inspection describe above, including any time there was "significant front-end damage" to the vehicle, and "if it's a significant impact of any kind." Id. at 143-144. Mr. Lencioni clarified that "a significant impact would be . . . a hard hit," and stated that if he saw that kind of impact, he "would look at the seatbelts."Id. at 144:12-18.
Artistic Collision then repaired the car in accordance with Mr. Lencioni's estimate. Artistic Collision did not replace the vehicle's seatbelts. Allstate then paid Artistic Collision for the repairs. Welsh Depo 24.
At some point in between the time of the accident and September 18, 2007, plaintiff reviewed the owner's manual issued by Honda for his vehicle. Watts Depo 75:13. In the owner's manual, plaintiff read that seatbelts should be replaced in all vehicles involved in serious collisions. Watts Depo 83:6. On September 18, 2007, plaintiff sent a letter to Allstate that stated, among other things, "we have several concerns that we believe need further repair . . . this was a major frontal impact. The damage to the car exceeded $6500 and both driver and passenger sustained injuries. The airbags did not deploy and we are requesting that the airbag sensors be inspected to ensure that they are operating correctly. We are also requesting that the seatbelt tensioners be replaced." Watts Depo 66:8-13, Ex. 27 ("September 18 Letter").
In response, Allstate adjuster Tina Parker directed plaintiff to contact Artistic Collision or the Bureau of Automotive Repairs.
Plaintiff filed his complaint in this action on February 29, 2008. On April 30, 2008 Allstate demanded an appraisal of the loss pursuant to the Appraisal Clause in the Policy. Martin Decl. Ex A 2, Ex. 1.
In May, 2008, plaintiff took his vehicle to the Elk Grove Honda dealership to have the seatbelts replaced based on the recommendation in the Honda Owner's Manual. Watts Depo. 84:1-7. Mr. Watts did not ask the dealership to inspect the seatbelts before replacing them. Id. at 84. Plaintiff paid the Honda dealership $1029 to replace the seatbelts, and was not reimbursed for the cost by Allstate.
In addition to the specific facts surrounding plaintiff's collision and his claim to Allstate, plaintiff alleges that Allstate had a general scheme or policy to "increase profitability by refusing to replace, repair, or inspect seatbelts in it's policyholders' vehicles that were damaged and made unsafe in automobile collisions." SAC 5:1-2.
II. Standard for Summary Judgment
Summary judgment is appropriate when there exists no genuine issue as to any material fact. Such circumstances entitle the moving party to judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970); Secor Ltd. v. Cetus Corp., 51 F.3d 848, 853 (9th Cir. 1995). Under summary judgment practice, the moving party
always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c)).
If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish the existence of a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986);see also First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Secor Ltd., 51 F.3d at 853. In doing so, the opposing party may not rely upon the denials of its pleadings, but must tender evidence of specific facts in the form of affidavits and/or other admissible materials in support of its contention that the dispute exists. Fed.R.Civ.P. 56(e); see also First Nat'l Bank, 391 U.S. at 289. In evaluating the evidence, the court draws all reasonable inferences from the facts before it in favor of the opposing party. Matsushita, 475 U.S. at 587-88 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); County of Tuolumme v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001). Nevertheless, it is the opposing party's obligation to produce a factual predicate as a basis for such inferences. See Richards v. Nielsen Freight Lines, 810 F.2d 898, 902 (9th Cir. 1987). The opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 586-87 (citations omitted).
III. Analysis
In essence, plaintiff's claim is that Allstate's auto insurance policy obligates Allstate to replace seatbelts that were in use during a serious collision, whenever the vehicle's owner's manual recommends such replacement. Plaintiff argues that Allstate's failure to pay to replace seatbelts in such circumstances constitutes breach of contract, insurance bad faith, fraud, and unfair competition.
A. Breach of Contract
Plaintiff alleges that there existed a valid contract between plaintiff and Allstate, that plaintiff performed all of his duties under the contract, that defendant breached its duty to pay to return plaintiff's insured vehicle to its pre-accident condition by not paying for the cost of inspecting and replacing the seatbelts, and that plaintiff suffered damages in the amount of $1029 due to defendant's breach.
Plaintiff must show that the four elements of a breach of contract claim are met, namely: "(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff."Reichert v. General Ins. Co., 68 Cal. 2d 822, 830 (Cal. 1968). Defendant does not dispute that the auto insurance policy purchased by plaintiff in 2004 was a valid contract between the parties. Thus, the court analyzes whether the defendant is entitled to summary judgment based on the three remaining elements of the breach of contract claim.
i. Whether Plaintiff performed his obligations or was excused from doing so.
Under the policy, plaintiff was obligated to pay premiums and to notify Allstate of claims for loss to the insured auto. The policy required plaintiff to provide written proof of loss along with his claim. There is no dispute that plaintiff paid his premiums. Defendant argues that plaintiff never made a claim for seatbelt inspection or replacement. Plaintiff contends that his initial claim following the accident served as notice of his claim for seatbelt inspection and repair, and that he made another claim on September 18, 2007, when "subsequently, upon discovering that the seatbelts were not replaced, Plaintiff sent a letter to Allstate requesting that the seatbelt tensioners in his vehicle be replaced." Pl.'s Opp'n 7:6-8. Defendant does not dispute that the initial communication regarding the accident, which resulted in the preparation of a Visual Damage Quote by Artistic Collision and a cost estimate by Allstate adjuster Lencioni, was a "claim" under the policy. Rather, defendant argues that the initial claim did not create an obligation to pay for replacement of the seatbelts since the seatbelts were not damaged in the accident.
Defendants deny that the September 18 letter to Allstate constituted a claim to have the seatbelts replaced. That letter stated, in relevant part, "Finally, this was a major frontal impact. The damage to the car exceeded $6,500, and both driver and passenger sustained injuries . . . We are also requesting that the seatbelt tensioners be replaced." September 18 Letter, Ex. H to Pl.'s Ex. A. Decl. of Wendy York. Allstate construed the letter not as a claim, but as a complaint about the work done by Artistic Collision. Depo. Of Tina Parker, Def.'s Ex. F 122. Allstate employee Tina Parker then sent plaintiff a letter recommending that he contact Artistic Collision or the Bureau of Automotive Repairs. Def.'s Ex. F, A0336 ("Tina Parker letter"). Plaintiff argues that Tina Parker's letter constituted a denial of a claim to have the seatbelt tensioners replaced.
Under California law, a "notice of claim means any written or oral notification to an insurer or its agent that reasonably apprises the insurer that the claimant wishes to make a claim against a policy or bond issued by the insurer and that a condition giving rise to the insurer's obligations under that policy or bond may have arisen." Cal. Code Regs. tit 10 § 2695.2. The court finds that both instances meet this definition of claim. As noted above, however, the Policy required plaintiff to give written proof of loss to Allstate, along with his claim. Policy 22. Plaintiff did not submit any proof of loss related to the seatbelts, before or after he had them replaced by Elk Grove Honda. Plaintiff's notifications of his claim to Allstate in March 2006 and September 2007 did not necessarily create an obligation on the part of Allstate to pay for the replacement of the seatbelts.
ii. Whether Allstate breached its obligations under the policy by not paying for the cost of replacing the seatbelts.
Allstate's obligations with respect to plaintiff's vehicle following the March 29 collision are encapsulated in the "Coverage DD" section of the Policy. Allstate is obligated to "pay for direct and accidental loss to [plaintiff's] insured auto . . . from a collision with another object." Policy 18. Allstate reserves the option of "pay[ing] for the loss in money," or "repair[ing] or replac[ing] the damaged property." Policy 21 (emphasis added). Further, the Policy limits Allstate's liability to "the actual cash value of the property or damaged part of the property at the time of loss." Policy 22.
In the SAC, plaintiff alleges that after the accident, the seatbelts were damaged: "the webbing of the seatbelts was elongated rendering the seatbelt ineffective in an subsequent condition," SAC 20:27-28, that plaintiff "sent a letter to Allstate requesting Allstate to replace the seat belts and tensioners in his vehicle," SAC 15:26-28, and that "Allstate refused to provide coverage to replace the damaged, post-collision seat belts and tensioners in plaintiff's vehicle, leaving the vehicle unsafe and not in its preaccident condition." SAC 21:3-6. Allstate's conduct, according to plaintiff, was a breach of its obligations under the insurance policy purchased by plaintiff.
In a prior order, this court denied defendant's motion to dismiss, holding that because it alleged "actual damage to the seatbelt," plaintiff's complaint could be distinguished from similar complaints that had been dismissed by the Fifth and Sixth Circuits. March 31 Order, ECF No. 66. In Sonnier v. State Farm Mut. Auto Ins. Co., 509 F.3d 673 (5th Cir. 2007), for example, plaintiffs had alleged that the insurance company had a duty to inspect the seatbelts after an accident. The court held there that "[i]f there were actually something wrong with the seatbelts, it would be arguable that State Farm would have to pay for the tests necessary to determine just what that was and how to fix it as part of the costs of repairing the seatbelt." Id. at 674, 676. But since the plaintiffs in that case did not allege that there was anything wrong with the seatbelts, the Fifth Circuit upheld the dismissal of plaintiff's breach of contract claim. This court concluded that the Sonnier reasoning did not apply in the instate case because plaintiff had alleged actual damage to the seatbelts. Thus, the court denied defendant's motion to dismiss the breach of contract claim. Order 14, March 31, 2010, ECF No. 66.
Now, however, plaintiff is confronted with evidence that, following the accident, the "seatbelt assemblies were in superb condition." Decl. of Daniel Davee in Supp. Def.'s Mot. for Summ. Judgment ("Davee Decl.") 4:15-16, Def.'s Ex I. Defendant's expert, a specialist in "automotive restraint performance as it relates to seat belt assemblies and supplemental occupant restraint systems," id. at 2, inspected each component of the seatbelts that were in use plaintiff's car at the time of the accident. Mr. Davee stated that "the subject seat belt web (driver and passenger) is not elongated or permanently distorted. Any minor change in web length . . . will have negligible effect in the effectiveness of the seatbelt assembly . . ." Id. at 6. Mr. Davee further testified that "the anchors were not deformed and would not affect the effectiveness of the seat belt assembly in any way," that, with respect to the retractor locking mechanism, "inertia sensing, web sensing, and tilt lock features all function without issue," and that "the effectiveness of the seat belt tensioners to mitigate injury in a subsequent accident was unchanged since they were found operational and fully functional." Id. 7-9.
Plaintiff objects to Mr. Davee's testimony as after-acquired evidence, saying that the conclusions from an inspection of the plaintiff's seatbelts that took place more than three years after the claim is irrelevant to whether Allstate acted in good faith in response to plaintiff's claim. Pl.'s Evidentiary Objections 14, ECF No. 240-1. The after-acquired nature of Mr. Davee's conclusions, however, do not diminish their relevance to plaintiff's Breach of Contract claim.
Plaintiff cites two pieces of evidence in an attempt to rebut defendant's expert testimony. See Pl.'s Response to Def.s' Statement of Undisputed Facts ¶ 44. The first citation is to excerpts from plaintiff's wife's deposition. In that deposition, Geanina Watts stated "[a]fter I had been in the accident, I remember one time [the seatbelt] it got stuck on me . . . it was constant speed and it just got stuck so I had to unlatch it because it was very tight on me. So I was wondering if that was normal, and so I remember a few times it was very loose and not go back. So I wanted to know if that was normal." G. Watts Deposition 25, Ex. H to Pl.'s Ex C. The second citation is to a declaration by plaintiff's expert James Mathis, in which Mr. Mathis simply cites Mrs. Watts' testimony that the seatbelts were damaged. Based on this testimony by Mrs. Watts, Mr. Mathis concluded: "Following the collision, the seatbelts in Plaintiff's vehicle were damaged." Decl. of James Mathis in Supp. of Pl.'s Opp'n to Summ. J. ¶ 61 (citing the G. Watts deposition). Mr. Mathis is a former Allstate employee whose relevant expertise consist of having been trained to use Allstate's internal computer programs for processing claims. Mr. Mathis does not claim to have technical expertise, nor does he claim to have inspected the seatbelts. Mr. Mathis' declaration does not effectively rebut defendant's expert's conclusion that the seatbelts were not damaged in the accident. Finally, Mrs. Watts' subjective concerns do not raise a triable issue.
Having concluded that there remains no genuine issue as to whether the seatbelts were damaged in the accident, the court turns to whether the defendant breached its obligations by failing to pay to have the seatbelts replaced even if they were undamaged. Plaintiff argues that Allstate was obligated to adhere to the recommendations in the owner's manual when determining the cost of "loss" to the automobile, and that in this case, those recommendations required replacement of the seatbelts following an accident. Pl.'s Opp'n 11. Plaintiff argues that the cost of replacing the seatbelts was part of the "loss" to the insured auto resulting from the accident, for which defendant is required to pay, even if the seat belts were not actually damaged in the accident. Plaintiff points to the owner's manual for his vehicle, which states: "If a seatbelt is worn during a crash, it must be replaced by the dealer. A belt that has been worn during a crash may not provide the same level of protection in a subsequent crash." Pl.'s Opp'n 12. Plaintiff urges the court to construe the contract as requiring Allstate to follow the owner's manual rather than the vehicle service and repair manual, which, in the case of plaintiff's car, apparently do not recommend seatbelt replacement.
Indeed, such an obligation may be present if the Policy is ambiguous, and if the court concludes that Allstate believed that, at the time the policy was purchased, the policyholder's understanding was that Allstate would adhere to vehicle owner's manual recommendations when paying to restore a vehicle to its pre-accident condition. "An insurance policy provision is ambiguous when it is susceptible of two or more reasonable constructions. If ambiguity exists, however, the courts must construe the provisions in the way the insurer believed the insured understood them at the time the policy was purchased."Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania, 50 Cal. 4th 1370, 1378 (Cal. 2010) (internal citations ommitted).
Plaintiff argues that statements by Allstate's senior training specialist, Thomas Perrett, as well as portions of the training materials for auto adjusters, are evidence that Allstate believed that it was obligated to defer to the owner's manual recommendations when determining how to restore an insured car to it's pre-loss condition. In his deposition, Mr. Parrett testified that he trains Allstate's auto adjusters to follow vehicle manufacturer's recommendations when estimating auto collision repairs in order to ensure that the car is restored to its "pre-accident condition." Depo. of Thomas Perrett ("Perret Depo.") 83:14-19. In their opposition brief and at oral argument, plaintiff characterized Mr. Perrett's testimony as establishing that Allstate adjusters are "instructed to refer to the vehicle owner's manuals to determine the proper procedures to follow in regards to inspection and replacement of seatbelts following a collision." Upon review of the deposition transcript, however, the court finds that no such conclusion is warranted. Mr. Parrett did testify that I-CAR, the training program used by Allstate, trains auto adjusters to follow the vehicle manufacturer's recommendations regarding replacement of seatbelts. Perrett Depo. 91:24-91:3. He testified that the "I-CAR recommendation is to follow the vehicle maker's recommendations," id. 82:7-8, in order "to ensure that the car is restored to its pre-accident condition." Id. 83:16-19. This testimony standing alone is ambiguous as to which manual is being referenced. Either Allstate trains its adjusters to refer to manufacturer repair or service manuals, or to the owner's manuals. Mr. Parret testified, however, that he had never "provided training to the Allstate auto adjusters in an format . . . that references the policyholder's owner's manual as a resource as to what repairs should be made." Id. 91:16-20.
Plaintiff also directs the court to exhibits purported to be portions of Allstate's training materials. Exhibit P to Wendy York's declaration, Pl.'s Ex A, appears to be a page from "Day Seven" of a "Vehicle Loss Technical Skills Workshop." It directs its readers "to locate more specific information on the seat belt in question [by] consult[ing] the service or owner's manual for that model." Exhibit S, purported to be a copy of "ATRL: Auto Technical Reference Library," however, states "the following information is provided to serve as general guidelines to follow when evaluating seatbelts for reuse after being used during a collision. When available, refer to the manufacturers service manual for specific information about the vehicle model being evaluated." Exhibit S to Decl. York, Pl.'s Ex A. The court finds that the evidence provided by plaintiff does not establish that Allstate's own interpretation of its policy was that Allstate was obligated to adhere to the Honda owner's manual when determining how to return plaintiff's vehicle to its pre-accident condition.
To consult the owner's manual for additional information is hardly the equivalent of being bound by that manual.
As is the case for much of plaintiff's evidence, neither Exhibit P or S is properly cited in plaintiff's opposition brief. Additionally, neither document appears to be properly authenticated. Ms. York stated in her declaration that Exhibit P is "a true and correct copy of relevant portions of Allstate's training material that reference owner's manufacturer's recommendations," something that Ms. York does not, as plaintiff's attorney, have personal knowledge of. The court did not find any declaration by plaintiff that the exhibits were produced by defendant in discovery
This conclusion is in accord with Levy v. State Farm Mut. Auto. Ins. Co., 150 Cal.App.4th 1 (2007). In that case, the Court of Appeal affirmed a lower court holding that the auto insurance contract at issue "did not purport to obligate State Farm to follow any particular industry standard, but required State Farm only to `restore the vehicle to its pre-loss condition.'" InLevy, the "complaint does not allege in what manner [plaintiff's] car after repair differed from its pre-accident condition." In this case, although plaintiff did allege that the seatbelts were actually damaged in the accident, as already discussed, the plaintiffs have failed to show that there is a genuine issue as to whether the seatbelts were damaged. The Levy court rejected the plaintiffs' attempt "to establish a link between the cited industry standards and the policy's promise to restore the vehicle to preaccident condition." Id. at 5.
District courts are not bound by decisions of state intermediate courts, Dimidowich v. Bell Howell, 803 F.2d 1473 (9th Cir. 1986), but they are not free to disregard them in the absence of other authority. West v. American Tel. Tel. Co., 311 U.S. 223 (1940).
From all that appears, plaintiff's insurance policy did not require Allstate to replace plaintiff's undamaged seatbelts following the collision, and the court cannot construe the Policy to require Allstate to adhere to the recommendations of the owner's manual, when there is no evidence that Allstate intended to bind itself to do so.
The court finds no issue of material fact as to whether Allstate breached its obligations to plaintiff under the Policy. Accordingly, defendant's motion for summary judgment on the breach of contract claim is GRANTED.
B. Bad Faith and Breach of the Covenant of Good Faith and Fair Dealing
Plaintiff's second and third causes of action are duplicative of one another. Under California law, the "insurance bad faith," cause of action is simply a cause of action for breach of the covenant of good faith and fair dealing in the insurance context.Hangarter v. Provident Life Accident Ins. Co., 373 F.3d 998, 1009 (9th Cir. Cal. 2004). As plaintiff asserts, "to establish a breach of the implied covenant of good faith and fair dealing, plaintiff must show that (1) benefits due under the policy were withheld; and (2) the reason for withholding the benefits was unreasonable or without proper cause." Pl.'s Opp'n 17 (citingLove v. Fire Exchange, 221 Cal.App.3d 1136, 1150 (1990). As discussed above, no policy benefits were withheld in this case. Defendants are therefore entitled to summary judgment on plaintiff's second and third causes of action, and defendant's motion is GRANTED.
C. Fraud and Misrepresentation
Plaintiff's fraud claim stems from allegations that Allstate falsely represented to plaintiff and class members "it would completely restore their post-collision Allstate-insured vehicles to the vehicle's pre-accident safe condition." The representations were allegedly false and known to be false because "Allstate "implemented and exercised a corporate-wide policy to decline to replace seatbelts that have been worn during a collision" during the time that the representations were made SAC 24-25.
Defendant correctly states the elements of a fraud claim: "(a) a misrepresentation, (b) knowledge of falsity, (c) intent to defraud/to induce reliance, (d) justifiable reliance, and (e) resulting damage." Def.'s Mot. 18 (citing Nagy v. Nagy, 210 Cal. App.3d 1262, 1268 (1989).
Plaintiff claims that Allstate's representations that it would restore insured vehicles to their pre-accident condition following an accident were false. Plaintiff contends that at the time Allstate was making such representations, it was implementing a corporate-wide policy to refuse to test or replace seatbelts. Plaintiff alleges that Allstate had no intention of honoring its contractual responsibilities with regard to seatbelts. In general, a breach of a promise, without more, is not fraud. "The basis for a contract action is the parties' agreement; to succeed under the consumer protection law, one must show not necessarily an agreement, but in all cases, an unfair or deceptive practice. American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995). See also, Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 399 (7th Cir. 2011) ("Greenberger alleges that GEICO never intended to restore his car to its preloss condition and failed to disclose that it regularly breaches this contractual promise. These are breach-of-contract allegations dressed up in the language of fraud. They cannot support statutory or common-law fraud claims."). Here, the court has found that Allstate did not, in fact, breach its obligations under the contract. Allstate's obligation to plaintiff was to pay to have his car restored to its pre-accident condition. Plaintiff has not shown that the condition of his car differed before the accident and after it was repaired. Allstate simply made no representations either to the general public as part of its marketing campaign, or to policy holders under the terms of the agreement to pay to replace undamaged seatbelts following a collision.
In this case, the court has previously held that proof that "Allstate had an established and uniform policy of refusing to pay for repairs to seatbelts," could support an inference that Allstate entered into contract with the intent of not performing its obligations. March 31, 2009 Order 21, ECF No. 66. Therefore, the court looks for evidence of an established and uniform policy by Allstate of refusing to pay for repairs to seatbelts. Defendant has submitted a declaration by Allstate Claims Project Manager, who stated that Allstate's "policy and practice is to pay for any physical damage sustained by seatbelts in an insured vehicle as a result of a covered collision. I estimate that Allstate has paid to replace seatbelts on hundreds or thousands of first party auto clams in California during the past five years." Decl. of Robert Howell ¶ 3, ECF No. 204. In his response to defendant's statement of undisputed facts, plaintiff disputes Mr. Howell's statement, and state that Allstate has paid for inspection or replacement of seat belts in fewer than 1.1% of the 135,000 claims submitted in California each year. To support this proposition, plaintiff cites "Defendants' Response to Special Interrogatories Number 2 and 3," but those documents do not appear in Plaintiff's Index of Evidence in Support of Plaintiff's Opposition to Allstate's Motion for Summary Judgment. The court is "not required to comb through the record to find some reason to deny a motion for summary judgment." Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001).
In fact, in his opposition to defendant's motion for summary judgment, plaintiff does not cite any evidence of such a policy. The only evidence cited in the "Fraud" section of plaintiff's opposition is a statement by an Allstate senior specialist and trainer that "inspection of the seatbelt systems following a collision would be covered in direct and accidental loss under the policy." Pl.'s Opp'n 22 (citing Perrett Depo., 231:5-11).
This section of plaintiff's brief is entitled "Plaintiff's Complaint Alleges Allstate's Fraud and Misrepresentation with Particularity." Plaintiff misunderstands his burden, given the procedural posture of the case. The court already held that plaintiff's fraud claim was pled with particularity; the question now is one of evidence.
Further, the plaintiff in this case cannot prove any damages from Allstate's allegedly fraudulent statements. Plaintiff argues that: "Allstate's fraudulent marketing materials induced Mr. Watts to obtain an insurance policy with Allstate. Through said marketing materials, Mr. Watts believed that should his vehicle be involved in an accident, his vehicle, including his seat belts, would be inspected and restored to a pre-loss condition." Pl.'s Opp'n 22:18-21. The evidence submitted by the parties shows that Mr. Watts' vehicle was indeed restored to its pre-loss condition. As discussed above, the seatbelts were undamaged.
Defendant's motion for summary judgment of plaintiff's claim for fraud is GRANTED.
D. Unfair Competition
California's Unfair Competition Law, ("UCL", Cal. Bus. Prof. Code § 17200, proscribes "unlawful, unfair, or fraudulent business acts." This court's previous order dismissed plaintiff's UCL claim insofar as it was based on unlawful acts, but allowed plaintiff's UCL claim to proceed on the basis of unfair acts and fraudulent acts. March 31, 2009 Order 21-22.
i. Fraudulent Acts
For the reasons already discussed, the court concludes that there is no genuine issue of material fact as to whether defendant engaged in the fraudulent acts alleged by plaintiff. Accordingly, the defendant's motion for summary judgment is GRANTED with respect to plaintiff's UCL claim based on fraudulent acts.
ii. Unfair Acts
This court previously held that plaintiff stated a claim by alleging that defendant "unreasonably exerted their considerable influence to prevent third-party auto-repair shows from inspecting and repairing the seat belts in plaintiff's and class members' post-collision Allstate-insured vehicles." March 31, 2009 Order 23, ECF No. 66. The court held that plaintiff's allegations that Allstate interfered with independent repair shop's judgment and placed consumers at risk was not fair as a matter of law. Defendants now argue that there is no evidence that Allstate exerted such influence over third party repair shops or interfered with those shops' judgment. Def.'s Mot. Summ. J. 19. Plaintiff cites the declaration of Ken Klein for evidence of Allstate's influence over third-party shops and interference with those shops' judgment. Decl. of Klein, Pl.'s Ex. B. In that declaration, Mr. Klein describes general practices in the auto insurance industry, as well as some practices particular to Allstate. Mr. Klein describes the process that Allstate uses "to control the collision repair process." For example, "if a shop does not accept Allstate's estimate, Allstate will do all they can to transfer the vehicle to one of their preferred shops that will conduct the repairs per Allstate's estimate. If the vehicle is at a non-preferred shop, the Allstate adjustor meets with the collision repair price and objects to their price." Plaintiff does not allege or present any evidence that Allstate followed this policy in his case. Allstate never tried to get plaintiff's vehicle transferred to an Allstate-preferred shop, and did not object to the estimate prepared by Artistic Collision, Mr. Watts' shop of choice. Mr. Klein stated that Allstate denied a supplemental estimate from Artistic Collision, but that estimate was unrelated to the seatbelts. Accordingly, the court finds that there is no genuine issue of material fact as to whether defendant engaged in unfair competition by exerting undue influence over and interfering in the independent judgment of Artistic Collision with respect to the repair of plaintiff's car, and defendant's motion for summary judgment on that claim is GRANTED.
IV. Conclusion
For the foregoing reasons, Defendant's motion for summary judgment is GRANTED in its entirety.
IT IS SO ORDERED.
DATED: May 11, 2011.