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 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 26 27 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, 25 26 592 Fed.Appx. 630 (9th Cir. 2015), and aff’d, 592 Fed.Appx. 630 (9th Cir. 2015) (internal quotation 26 27 marks omitted).
Free access — add to your briefcase to read the full text and ask questions with AI
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 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 26 27 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, 25 26 592 Fed.Appx. 630 (9th Cir. 2015), and aff’d, 592 Fed.Appx. 630 (9th Cir. 2015) (internal quotation 26 27 marks omitted). 27 28 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. 22 23 23 24 24 ELAYNA J. YOUCHAH 25 UNITED STATES MAGISTRATE JUDGE 25 26 26 27 27 28 28