1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Jesus Belmontes Alvarez, No. CV-24-00617-PHX-SMB
10 Plaintiff, ORDER
11 v.
12 CSAA General Insurance Company, et al.,
13 Defendants. 14 15 Pending before the Court is Defendant CSAA General Insurance Company’s 16 (“CSAA”) Motion for Summary Judgment (the “Motion”) (Doc. 14). The Court has 17 reviewed the Motion, Response (Doc. 18), and Reply (Doc. 21), and will grant the Motion. 18 I. BACKGROUND 19 This case arises from a February 23, 2021 automobile accident involving Plaintiff 20 and a motorist without insurance. (See Doc. 1-1.) After the accident, Plaintiff submitted 21 an uninsured motorist (“UM”) claim to his insurer, CSAA. (Id.; Doc. 15 at 3 ¶ 4.) 22 Plaintiff’s insurance policy (the “Policy”) provided UM coverage for five vehicles, with 23 limits of $100,000 per person and $300,000 per accident for each vehicle. (Doc. 15 at 2 24 ¶ 1; Doc. 15-1 at 2, 4.) 25 Plaintiff, through his attorney at Rack Law, made the UM claim with CSAA on 26 February 26, 2021. (Doc. 19 at 7 ¶ 7; Doc. 19-5 at 1.) Around March 15, 2021, CSAA 27 received a letter of representation from Rack Law. (Doc. 15 at 3 ¶ 6; Doc. 19 at 2 ¶ 6.) As 28 Plaintiff’s agent, Rack Law had the authority to negotiate a settlement with CSAA for the 1 UM claim. (Doc. 15 at 3 ¶ 8.) Around April 1, 2022, Rack Law sent a demand letter (the 2 “Demand Letter”) and a “HOLD HARMLESS AGREEMENT” to CSAA asking that 3 CSAA pay Plaintiff over $195,000 for medical expenses. (Id. at 3–5 ¶¶ 11, 18; see also 4 Doc. 19 at 3 ¶ 11.) The demand letter also noted that the $195,000 “is not inclusive of all 5 care. [Rack Law] submit[s] the demand at the present, knowing there is only $100,000 in 6 coverage, and the claim, as presented, significantly exceeds said amount.” (Id. at 3–5 7 ¶¶ 11, 18; see also Doc. 19 at 3 ¶ 11.) Rack Law represented that the Demand Letter’s 8 purpose was to facilitate a settlement agreement and, if settlement were to be reached, 9 Plaintiff must have the check in hand by April 15, 2022. (Doc. 15 at 4 ¶ 13–14.) If 10 settlement was reached pursuant to Plaintiff’s terms, then Plaintiff would release “any and 11 all claims” and “satisfy all liens” against CSAA. (Id. at 4–5 ¶¶ 15–16.) 12 On April 12, 2022, CSAA responded to the Demand Letter as follows: 13 The purpose of this letter is to extend our offer of $100,000 in settlement of your client’s claim. Please note that this offer constitutes a policy limits 14 tender for uninsured motorist bodily injury coverage and the settlement check along with the release has been sent to your office under a separate 15 cover. Please communicate my offer to your client at your earliest convenience. I look forward to concluding this matter in the near future. 16 (Doc. 15-5 at 2.) CSAA also sent a $100,000 check for Plaintiff to Rack Law. (Doc. 15 17 at 5 ¶ 20.) In the comment section of the check, CSAA wrote that the money represented 18 “Full and Final Settlement for Uninsured Motorist Bodily Injury, Inclusive of Any and All 19 Liens, Both Known and Unknown.” (Id. at 5–6 ¶ 21.) The back of the check stated: 20 “Endorsement constitutes acceptance of the Offer of Payment.” (Id. at 6 ¶ 22.) Alongside 21 the check, CSAA sent a “Release of Uninsured Motorist Coverage.” (Id. ¶ 23.) Plaintiff’s 22 counsel received CSAA’s check on April 20, 2022. (Doc. 19 at 6 ¶ 2.) The parties 23 negotiated the settlement check on April 22, 2022, which Plaintiff later accepted. (See 24 Doc. 15 at 6 ¶ 24.) On May 5, 2022, CSAA followed up with Rack Law on the status of 25 the release form for Plaintiff’s claims. (Doc. 19-7.) No response is on the record. 26 On July 28, 2023, nearly fifteen months after the parties negotiated the settlement, 27 the Arizona Supreme Court decided Franklin v. CSAA General Insurance, 532 P.3d 1145 28 (Ariz. 2023), addressing the stacking of underinsured motorist coverage (“UIM”). On 1 August 25, 2023, Plaintiff, relying on the holding in Franklin, demanded CSAA pay 2 additional UM coverage benefits under the Policy. (Doc. 15 at 6 ¶ 27.) CSAA declined to 3 pay. (Id. ¶ 28.) So, Plaintiff filed suit in the Maricopa County Superior Court (Doc. 1-1), 4 leading CSAA to remove the case to this Court. (Doc. 1.) The parties filed a Joint Case 5 Management Report signifying their intent to move for summary judgment to resolve the 6 matter prior to discovery. (Doc. 11 at 5–6.) CSAA’s Motion followed (Doc. 14), which 7 the Court now considers. 8 II. LEGAL STANDARD 9 Summary judgment is appropriate in circumstances where “there is no genuine 10 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 11 Fed. R. Civ. P. 56(a). Material facts are those that may affect the outcome of a case under 12 the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 13 Factual disputes are genuine when the evidence could allow a reasonable jury to find in 14 favor of the nonmoving party. Id. “A party asserting that a fact cannot be or is genuinely 15 disputed must support the assertion by . . . citing to particular parts of materials in the 16 record” or by “showing that an adverse party cannot produce admissible evidence to 17 support the fact.” Fed. R. Civ. P. 56(c)(1)(A)–(B). Additionally, the Court may enter 18 summary judgment “against a party who fails to make a showing sufficient to establish the 19 existence of an element essential to that party’s case, and on which that party will bear the 20 burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 21 When considering a motion for summary judgment, a court must view the evidence 22 in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. 23 Zenith Radio Corp., 475 U.S. 574, 587 (1986). The Court must draw all reasonable 24 inferences in the nonmovant’s favor. Anderson, 477 U.S. at 255. Additionally, the Court 25 does not make credibility determinations or weigh the evidence. Id. at 253. The 26 determination of whether a given factual dispute requires submission to a jury is guided by 27 the substantive evidentiary standards that apply to the case. Id. at 255. 28 The burden initially falls with the movant to demonstrate the basis for a motion for 1 summary judgment, and “identifying those portions of [the record] which it believes 2 demonstrate the absence of a genuine issue of material fact.” Celotex Corp., 477 U.S. at 3 323. If this initial burden is not met, the nonmovant does not need to produce anything 4 even if they would have the ultimate burden of persuasion at trial. Nissan Fire & Marine 5 Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102–03 (9th Cir. 2000). However, if the initial 6 burden is met by the movant, then the nonmovant has a burden to establish that there is a 7 genuine issue of material fact. Id. at 1103. The nonmovant “must do more than simply 8 show that there is some metaphysical doubt as to the material facts.” Zenith Radio Corp., 9 475 U.S. at 586. Bare assertions alone do not create a material issue of fact, and “[i]f the 10 evidence is merely colorable, or is not significantly probative, summary judgment may be 11 granted.” Anderson, 477 U.S. at 247–50 (citations omitted). 12 III. DISCUSSION 13 CSAA argues that summary judgment is appropriate because the parties entered into 14 a valid settlement agreement, or affected a valid accord and satisfaction, thereby barring 15 Plaintiff’s claims. (Doc. 14 at 6–8, 9–16.) In response, Plaintiff denies the existence of an 16 enforceable settlement agreement or accord and satisfaction. (Doc. 18.) Additionally, 17 Plaintiff requests relief under Federal Rule of Civil Procedure 56(d). (Doc. 18.) 18 A. Rule 56(d) Relief 19 Rule 56(d) provides: “If a nonmovant shows by affidavit or declaration that, for 20 specified reasons, it cannot present facts essential to justify its opposition, the court may: 21 (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or 22 declarations or to take discovery; or (3) issue any other appropriate order.” Fed. R. Civ. P. 23 56(d). Rule 56(d) creates “a device for litigants to avoid summary judgment when they 24 have not had sufficient time to develop affirmative evidence.” United States v. Kitsap 25 Physicians Serv., 314 F.3d 995, 1000 (9th Cir. 2002). “The burden is on the party seeking 26 additional discovery to proffer sufficient facts to show that the evidence sought exists and 27 that it would prevent summary judgment.” Okabayashi v. Travelers Home & Marine Ins. 28 Co., No. CV-17-03612-PHX-DJH, 2019 WL 1059982, at *3 (D. Ariz. Mar. 6, 2019) (citing 1 Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1161 n.6 (9th Cir. 2001)). The moving 2 party must show: “(1) that they have set forth in affidavit form the specific facts that they 3 hope to elicit from further discovery, (2) that the facts sought exist, and (3) that these 4 sought-after facts are ‘essential’ to resist the summary judgment motion.” Family Home 5 & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008). 6 Thus, a party requesting relief must “make clear what information is sought and how it 7 would preclude summary judgment.” Nicholas v. Wallenstein, 266 F.3d 1083, 1088–89 8 (9th Cir. 2001). “Failure to comply with these requirements ‘is a proper ground for denying 9 discovery and proceeding to summary judgment.’” Family Home & Fin. Ctr., 525 F.3d at 10 827 (quoting Campbell, 138 F.3d at 779). 11 Plaintiff asks this Court to deny the Motion without prejudice so that he may engage 12 in discovery to obtain a full copy of the insurance policy to support his stacking and bad 13 faith claims. (See Doc. 18 at 3.) In turn, CSAA argues that the parties’ intended to file 14 early motions for summary judgment and delay discovery. (Doc. 21 at 13–14; see also 15 Doc. 11.) 16 Plaintiff’s request for Rule 56(d) relief is disingenuous and waived based on his 17 representations in the Joint Case Management Report. (See, e.g., Doc. 11 at 5–6.) The 18 parties agreed to delay discovery as they “anticipate[d] the matter may be resolved by early 19 cross-motions for summary judgment” because “[t]he parties generally agree on the 20 material facts but disagree as to the application of the law to those facts.” (Id.) At the Case 21 Management Conference on May 24, 2024, Plaintiff’s counsel agreed that no scheduling 22 order should issue until the Court ruled on their anticipated motions for summary judgment. 23 (See Doc. 12.) Thus, the parties agreed that no discovery orders would issue until the Court 24 resolved the forthcoming motions. Additionally, CSAA’s pending Motion concerns the 25 parties’ understanding of the Policy at the time of settlement, not whether stacking is 26 allowed under Franklin. Even without discovering the Policy, Plaintiff understood that the 27 Policy insured five vehicles and provided UM coverage for $100,000 per individual for 28 each vehicle. So, Plaintiff could have made a stacking argument when the parties 1 negotiated the settlement, but instead, given the unclarity in the law, Plaintiff decided to 2 settle for $100,000. For the foregoing reasons, Plaintiff’s request for Rule 56(d) relief is 3 denied. 4 B. The Parties’ Settlement Agreement 5 Courts are empowered to enforce valid, complete settlement agreements. F.D.I.C. 6 v. Nova Fin. and Inv. Corp., No. CV-15-00855-PHX-GMS, 2017 WL 956095, at *2 (D. 7 Ariz. Jan. 10, 2017). “Where material facts concerning the existence or terms of an 8 agreement to settle are in dispute, the parties must be allowed an evidentiary hearing.” 9 Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987). Whether the parties entered into an 10 enforceable settlement agreement is a question of state law. See Wilcox v. Arpaio, 753 11 F.3d 872, 876 (9th Cir. 2014). 12 Arizona constructs and enforces settlement agreements under general contract 13 principles. Emmons v. Superior Court, 968 P.2d 582, 585 (Ariz. Ct. App. 1998). “A valid 14 contract in Arizona consists of ‘an offer, acceptance, consideration, and sufficient 15 specification of terms so that obligations can be ascertained.’” F.D.I.C., 2017 WL 956095, 16 at *2 (quoting K-Line Builders v. First Fed. Sav. & Loan Ass’n, 677 P.2d 1317, 1320 (Ariz. 17 Ct. App. 1983)). “It is well-established that before a binding contract is formed, the parties 18 must mutually consent to all material terms. Mutual assent is determined based on 19 objective evidence, not the hidden intent of the parties.” Id. (cleaned up). 20 CSAA argues that Plaintiff’s acceptance of the check after the April 22, 2022 21 negotiations constituted a valid, enforceable settlement agreement that bars Plaintiff’s 22 claims. (Doc. 14 at 8.) In response, Plaintiff contends that no valid settlement exists 23 because CSAA failed to comply with the time requirements in the Demand Letter, the 24 settlement check violates the Arizona Administrative Code (“A.A.C.”), and that there is no 25 copy of the executed release of claims form on record. (Doc. 18 at 9.) 26 According to Plaintiff, the Demand Letter required “strict compliance” with the 27 clause stating that “[Plaintiff] hereby demand[s] the policy limit and expect settlement with 28 check in hand by April 15, 2022.” (Doc. 15-3 at 6.) Although, the clause does not use any 1 prescribing language such as “CSAA must” provide the check by April 15, nor does it state 2 that “time is of the essence.” (See id.) Instead, the Demand Letter merely expressed 3 Plaintiff’s expectation that a check be in hand by April 15. Cf. BMW of N. Am., LLC v. 4 Mini Works, LLC, 166 F. Supp. 3d 976, 982 (D. Ariz. 2010) (holding that a letter requesting 5 defendant to “return the acknowledgement . . . by June 21, 2007” was a suggestion and not 6 a demand that defendant meet the deadline). Moreover, the effect of the clause is not 7 changed by the Demand Letter stating: “[I]f the claim is not resolved by our deadline, we 8 will file suit.” (Doc. 15-3 at 5.) It is undisputed that CSAA wrote Plaintiff on April 12 9 assenting to the terms of the Demand Letter, thereby “resolving” the claim. (Doc. 15 ¶ 19.) 10 At bottom, the Demand Letter required strict compliance with the demand to pay the policy 11 limit, but otherwise only expected the check to arrive by April 15. 12 Even if the Demand Letter required strict compliance, Plaintiff’s counsel either 13 waived non-compliance, or the late settlement check served as a counteroffer, which 14 Plaintiff accepted. See BMW of N. Am., LLC, 166 F. Supp. 3d at 982; see Restatement 15 (Second) of Contracts § 70 (“A late or otherwise defective acceptance may be effective as 16 an offer to the original offeror.”). The check noticed the instrument as the full and final 17 settlement of Plaintiff’s claims and that endorsement would constitute acceptance of the 18 offer. (Doc. 15 at 5–6 ¶¶ 21–22.) Therefore, Plaintiff’s acceptance of the check would 19 constitute a separate settlement of the Plaintiff’s UM claim irrespective of compliance with 20 the terms of the Demand Letter. 21 Plaintiff’s argument that CSAA did not believe it had settled the claim is also 22 unavailing. Plaintiff claims that because CSAA’s counsel “request[ed] an executed copy 23 of the proposed Release on 05/16/22,” the insurer did not believe any settlement had been 24 reached. (Doc. 19 at 7.) However, CSAA’s attorney averred that he “considered 25 [Plaintiff’s] UM Claim fully settled and satisfied as of April 2022,” after the check was 26 negotiated and accepted. (Doc. 15-10 at 3 ¶ 8.) To the extent that Plaintiff attempts to 27 conjure a dispute of fact regarding CSAA’s subjective belief of settlement, such dispute 28 would not be genuine. Donges v. USAA Fed. Savings Bank, 391 F. Supp. 3d 907, 910 (D. 1 Ariz. 2019) (“A factual dispute is genuine if the evidence is such that a reasonable trier of 2 fact could resolve the dispute in favor of the nonmoving party.”) Indeed, based on the 3 proffered evidence, CSAA’s attorney was executing his duty to retrieve an executed copy 4 of the release forms after Plaintiff had accepted the $100,000. Here, no rational person 5 would believe that CSAA gave Plaintiff a $100,000 check signifying the full and final 6 release of any claims against it while simultaneously believing a settlement had not been 7 reached. See id. 8 Finally, Plaintiff’s argument that the check did not comply with A.A.C. 9 § 20-6-801(D)(6) fails. That statute requires insurers to avoid “[m]isrepresentation of 10 policy provisions,” and provides that “[n]o insurer shall issue checks . . . in partial 11 settlement . . . which contain language that releases the insurer or its insured from its total 12 liability.” A.A.C. § 20-6-801(D)(6). At the time the check was tendered, no clear answer 13 existed in Arizona law concerning the ability of an insured to stack his policy coverages. 14 See Franklin, 532 P.3d at 1148, 1150; accord Franklin v. CSAA Gen. Ins. Co., 15 No. CV-22-00540-PHX-JJT, 2022 WL 16631090, at *2 (D. Ariz. Nov. 2, 2022) (certifying 16 the question to the Arizona Supreme Court). Therefore, CSAA’s tender of the $100,000 17 as representative of the limits under Plaintiff’s Policy would not automatically amount to 18 a violative misrepresentation. And no evidence exists on the record to show that CSAA 19 did misrepresent the terms of the Policy. Additionally, Plaintiff had the option to reject the 20 check and file a lawsuit, but instead opted to negotiate and accept the $100,000. Therefore, 21 the complained of noncompliance with the A.A.C. as it relates to the 2022 settlement check 22 lacks merit. 23 In sum, there is no material dispute that the parties negotiated a check for $100,000 24 to satisfy all of Plaintiff’s claims. Therefore, given that the parties have settled the claim, 25 summary judgment is appropriate against Plaintiff’s Complaint (Doc. 1-1) and for CSAA’s 26 Counterclaim (Doc. 1-9). 27 C. Accord and Satisfaction 28 CSAA argues that both Arizona Revised Statute (“A.R.S.”) § 47-3311 and Arizona 1 common law show that the parties’ resolved Plaintiff’s UM claim through an accord and 2 satisfaction. (Doc. 14 at 9–10.) In response, Plaintiff argues that accord and satisfaction 3 could not occur because CSAA misrepresented the UM limits under the Policy in violation 4 of A.A.C. § 20-6-801(D)(1), (D)(6). (Doc. 18 at 10 (citing Abbott v. Banner Health 5 Network, 372 P.3d 933, 937 (Ariz. 2016).) 6 1. A.R.S. § 47- 3311 7 Section 47-3311 provides in relevant part: 8 A. If a person against whom a claim is asserted proves that the person in good faith tendered an instrument to the claimant as full satisfaction of the claim, 9 the amount of the claim was unliquidated or subject to a bona fide dispute and the claimant obtained payment of the instrument, subsections B and C 10 apply. 11 B. Unless subsection C applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying 12 written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.1 13 14 CSAA argues it complied with the statutory requirements of accord and satisfaction. 15 First, CSAA tendered, in good faith, an instrument in full satisfaction of Plaintiff’s claim, 16 which Plaintiff thereafter accepted to resolve his $100,000 UM claim. (Doc. 14 at 9.) 17 Alternatively, CSAA tendered the check as a counter-offer to the Demand Letter, which 18 Plaintiff accepted. Next, there was a bona fide dispute: the Demand Letter stated that it 19 was sent as a “compromise offer” to “reach a settlement short of litigation.” (See id.) 20 Finally, Plaintiff obtained payment of the instrument when his counsel negotiated the 21 $100,000 check. (Id.); see also A.R.S. § 47-3311(D) (“A claim is discharged if the person 22 against whom the claim is asserted proves . . . the claimant, or an agent of the 23 claimant, . . . knew that the instrument was tendered in full satisfaction of the claim.”). 24 In response, Plaintiff argues accord and satisfaction did not occur because CSAA 25 acted in bad faith and violated A.A.C. § 20-6-801(D). (Doc. 18 at 10.) Section 26 20-6-801(D)(1) and (2) of the A.A.C. provide that “[n]o insurer shall fail to fully disclose 27 to first party claimants all pertinent benefits, coverages or other provisions of an insurance
28 1 Section C sets forth two exceptions that do not apply to the facts of this case. See § 47-3311. 1 policy or insurance contract under which a claim is presented” and “[n]o agent shall conceal 2 from first party claimants benefits, coverages or other provisions of any insurance policy 3 or insurance contract when the benefits, coverages or other provisions are pertinent to a 4 claim.” Further, A.A.C. § 20-6-801(D)(6) provides “[n]o insurer shall issue checks or 5 drafts in partial settlement of a loss or claim under a specific coverage which contain 6 language that releases the insurer or its insured from its total liability.” 7 Though the A.A.C. invariably applies, it does not help Plaintiff’s case. Here, 8 Plaintiff premises his argument on the unsupported narrative that CSAA misrepresented 9 the Policy’s limits. (See Doc. 18.) The Court cannot ignore that at the time Plaintiff and 10 CSAA resolved his claim, the viability of stacking was unresolved. Indeed, until the 11 Arizona Supreme Court decided Franklin, there was no binding precedent on the validity 12 of intra-policy stacking. See Franklin, 2022 WL 16631090, at *2. And, while deciding 13 the issue, Arizona Supreme Court recognized and resolved patent ambiguities in A.R.S. 14 § 20-259.01(H) regarding stacking. See Franklin, 532 P.3d at 1148, 1150. So, because the 15 law was unclear in 2022, CSAA’s failure to disclose the availability of stacking under the 16 policy does not, without more evidence, equate to bad faith. For this reason, the Court 17 agrees with CSAA. It tendered payment in good faith to settle a bona fide dispute, and 18 Plaintiff received and accepted the payment. Therefore, the parties executed a valid accord 19 and satisfaction under § 47-3311, which settled Plaintiff’s claim. 20 2. The Common Law 21 Under the common law, a person against whom a claim is asserted has the burden 22 to prove four elements for accord and satisfaction: (1) proper subject matter; (2) competent 23 parties; (3) assent or meeting of the minds of the parties; and (4) consideration. Abbot, 372 24 P.3d at 937. 25 i. Proper Subject Matter 26 “An accord and satisfaction has proper subject matter unless it is founded on a 27 contract that violates statues or is contrary to public policy.” Abbott, 372 P.3d at 937 (citing 28 1800 Ocotillo, LLC v. WLB Grp., Inc., 196 P.2d 222, 202 (Ariz. 2008)). 1 Plaintiff argues that this element fails as a matter of law because the check violates 2 the A.C.C. (Doc. 18 at 10.) For the reasons discussed above, the Court does not agree 3 with Plaintiff. Now, regarding the subject matter, Arizona’s Underinsured/Uninsured 4 Motorist Act governs the Policy providing Plaintiff with UM coverage. See A.R.S. 5 § 20-259.01. Further, Arizona courts treat the settlement of these types of claims as “an 6 ordinary contract,” and thus the check, acting as the contract to settle the claims under the 7 Policy, satisfies the proper subject matter element. See Emps. Mut. Cas. Co. v. McKeon, 8 821 P.2d 766, 770 (Ariz. Ct. App. 1991). 9 ii. Competent Parties 10 Where the partes agents have authority to bind them in a settlement, the “competent 11 parties” element is met. Best Choice Fund, LLC v. Low & Childers, P.C., 269 P.3d 678, 12 686–87 (Ariz. Ct. App. 2011). Under Arizona law, “[a]ctual authority includes both 13 express authority outlined in specific language, and implied authority when the agent acts 14 consistently with the agent’s reasonable interpretation of the principal’s manifestation in 15 light of the principal’s objective and other facts known to the agent.” Id. at 687 (internal 16 quotation marks omitted). 17 Plaintiff does not contest that his attorneys were competent and had the authority to 18 bind him. (Doc. 18 at 11.) Although, Plaintiff contends that there is no indication he was 19 bound by an enforceable settlement agreement because CSAA either materially 20 misrepresented, or made a mutual mistake, in concluding that the UM coverage was only 21 $100,000. (Id.) Again, Plaintiff’s argument is based on the unsupported premise that 22 CSAA affirmatively misrepresented the terms and limits of the Policy. Additionally, 23 Plaintiff does not adduce any evidence or legal support for its contention that CSAA’s offer 24 to settle Plaintiff’s UM claim, in light of the then-existing ambiguities in the law, was a 25 “mutual mistake” that would render settlement or accord and satisfaction ineffective. (See 26 id.) 27 Here, there is no dispute that Rack Law had the authority to, and in fact did, 28 negotiate and settle Plaintiff’s UM claim. Additionally, there is no dispute that CSAA’s 1 claims adjuster had authority to settle the claim. Therefore, the competent parties element 2 is met. iii. Assent or Meeting of the Minds 3 Before a contract is formed, the parties must “mutually consent to all material terms. 4 Hill-Shafer P’ship v. Chilson Fam. Tr., 799 P.2d 810, 814 (Ariz. 1990). In situations like 5 these, “a check marked with words such as ‘full payment’ or ‘account in full’ will not result 6 in an accord and satisfaction unless it is clear which claims or accounts are intended to be 7 covered.” Mobilife Corp. v. Delta Inv. Corp., 592 P.2d 782, 785 (Ariz. Ct. App. 1979); see 8 also Med-Fibers Eur. GmbH v. Med-Fibers Inc., CV-19-04962-PHX-DJH, 2021 WL 9 3773768, at *3 (D. Ariz. Aug. 25, 2021) (“[A]ssent or meeting of the minds[] may be 10 inferred from a party’s acceptance of funds.” (citing Frank Culver Elec., Inc. v. Jorgenson, 11 664 P.2d 226, 227 (Ariz. Ct. App. 1983))). 12 Plaintiff argues that if he believed he was “compromising his claim for the full UM 13 limits,” and CSAA believed it was “resolving the UM claim for less than the full limits,” 14 then the parties clearly did not have a meeting of the minds. (Doc. 18 at 11.) Here, 15 Plaintiff’s argument seems to be that CSAA understood that it was settling Plaintiff’s claim 16 for less than the Policy allowed. Not so. Both the Demand Letter and the check signified 17 that the Policy provided $100,000 in UM coverage and each document indicated that the 18 transaction was meant to satisfy and discharge Plaintiff’s claim. Again, Plaintiff attempts 19 to support a conspiracy that CSAA knew it was misrepresenting the Policy’s limits without 20 any evidentiary support. Nothing on record detracts the fact that both parties understood 21 the terms of the settlement, agreed to those terms, and executed it. See Med-Fibers Eur. 22 GmbH, 2021 WL 3773768, at *3. 23 iv. Consideration 24 Arizona courts “presume written promises are supported by consideration.” Best 25 Choice, 269 P.3d at 689 (citing A.R.S. § 44-121 (“Every contract in writing imports a 26 consideration.”)). When a contract “contains mutual promises and is in writing,” 27 consideration will almost always be adequate. Id.; Abbott, 372 P.3d at 937 (“The 28 1 settlement of a bona fide dispute provides consideration if it is made fairly and in good 2 faith.”). 3 There is seemingly no dispute regarding consideration. (See Doc. 14; Doc. 18.) To 4 the extent that such a dispute exists, the parties’ execution of the Check as an instrument 5 signifying the full payment of Plaintiff’s claims under the Policy, and lack of evidence 6 showing CSAA acted in bad faith, satisfies the consideration requirement. 7 At bottom, CSAA has satisfied its burden to show the elements of a valid accord 8 and satisfaction under both statute and a common law. Therefore, the Court will grant 9 summary judgment against Plaintiff on this ground. 10 D. Bad Faith and Punitive Damages 11 An insurer commits the tort of bad faith by intentionally and without reasonable 12 basis denying, failing to process, or failing to pay a claim. Noble v. National Am. Life Ins., 13 624 P.2d 866, 868 (Ariz. 1981). To show bad faith by the insurer, the insured must show: 14 (1) that the insurer acted unreasonably toward the insured; and (2) that the insurer “acted 15 knowing that it was acting unreasonably or acted with such reckless disregard that such 16 knowledge may be imputed to it.” Trus Joist Corp. v. Safeco Ins., 735 P.2d 125, 134 (Ariz. 17 Ct. App. 1986). 18 Plaintiff argues that CSAA acted in bad faith by failing to disclose applicable 19 coverage, violating multiple Arizona statutes, and thus failed to pay all UM limits to which 20 Plaintiff is entitled under the Policy. (Doc. 18 at 12.) As discussed, the record lacks 21 evidence that CSAA failed to disclose applicable coverage, violated Arizona law under the 22 circumstances surrounding the settlement, or that it failed to pay the $100,000 UM limit. 23 Again, Plaintiff’s argument is based upon a false premise that CSAA misrepresented the 24 Policy. At the time the Check was executed, there was no clear answer under Arizona law 25 regarding stacking. Only after Franklin did the availability of stacking become clear. 26 See Franklin, 532 P.3d at 1148, 1150. When the settlement occurred, Plaintiff’s counsel 27 was free to advance a stacking argument or claim but failed to do so. As it stands, the only 28 evidence Plaintiff offers to support its bad faith claim is conjecture and speculation about 1 what he believes CSAA did. This is not enough to defeat summary judgment considering 2 uncontroverted evidence to the contrary showing that the parties either executed a 3 settlement or settled the claim by accord and satisfaction. Therefore, the Court will grant 4 summary judgment against Plaintiff’s bad faith claim. 5 “[T]o obtain punitive damages, plaintiff must prove that defendant’s evil hand was 6 guided by an evil mind. The evil mind which will justify the imposition of punitive 7 damages may be manifested in either of two ways. It may be found where defendant 8 intended to injure the plaintiff. It may also be found where, although not intending to cause 9 injury, defendant consciously pursued a course of conduct knowing that it created a 10 substantial risk of significant harm to others.” Burton v. United Servs. Auto. Ass’n, No. 11 CV-22-00837-PHX-DWL, 2023 WL 5507829, at *9 (D. Ariz. Aug. 25, 2023) (quoting 12 Farr v. Transamerica Occidental Life Ins. Co. of Cal., 699 P.2d 376, 384 (Ariz. Ct. App. 13 1984)). 14 If a party fails to sustain a claim for an underlying tort, a claim for punitive damages 15 will not stand. Burton, 2023 WL 5507829, at 9 (“Under Arizona law, [t]here is no such 16 thing as a cause of action simply for punitive damages. Rather, the right to an award of 17 punitive damages must be grounded upon a cause of action for actual damages.” (internal 18 quotation marks omitted)). Because Plaintiff’s bad faith claim fails, his punitive damages 19 claim must also fail. Therefore, the Court will grant summary judgment against Plaintiff’s 20 claim for punitive damages. 21 IV. CONCLUSION 22 Accordingly, 23 IT IS HEREBY ORDERED granting Defendant CSAA General Insurance 24 Company’s Motion for Summary Judgement (Doc. 14). 25 … 26 … 27 … 28 … 2 IT IS FURTHER ORDERED instructing the Clerk of Court to enter judgment 3 || consistent with this Order and terminate this case. 4 Dated this 4th day of February, 2025. 5 Se . ~P 6 SO □
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