John Fuchs v. State Farm General Ins.

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 21, 2019
• Docket: 17-56182
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 21 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

JOHN R. FUCHS; ROBYN R. FUCHS, No. 17-56182

Plaintiffs-Appellants, D.C. No. 2:16-cv-01844-BRO-GJS v.

STATE FARM GENERAL INSURANCE MEMORANDUM* COMPANY, an Illinois corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Central District of California Beverly Reid O’Connell, District Judge, Presiding

Argued and Submitted March 6, 2019 Pasadena, California

Before: FERNANDEZ and M. SMITH, Circuit Judges, and CHRISTENSEN,** Chief District Judge.

Plaintiffs John R. and Robyn R. Fuchs (“Fuchses”) appeal from the district

court’s orders granting summary judgment to Defendant State Farm General

Insurance Company (“State Farm”), entering judgment in favor of State Farm, and

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Dana L. Christensen, Chief United States District Judge for the District of Montana, sitting by designation. denying their motion for reconsideration. As the parties are familiar with the facts,

we do not recount them here. We affirm.

1. State Farm was entitled to summary judgment on the Fuchses’ claim for

breach of the covenant of good faith and fair dealing. Under California law, when

an insurer raises genuine issues concerning its liability under the policy, “there can

be no bad faith liability imposed on the insurer for advancing its side of that

dispute.” Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90

Cal. App. 4th 335, 347 (2001). Moreover, “a court can conclude as a matter of law

that an insurer’s denial of a claim is not unreasonable . . . so long as there existed a

genuine issue as [to] the insurer’s liability.” Franceschi v. Am. Motorists Ins. Co.,

852 F.2d 1217, 1220 (9th Cir. 1988) (applying California law).1

2. This court reviews a district court’s denial of a motion for reconsideration

brought under Federal Rule of Civil Procedure 60(b) for an abuse of discretion and

“will reverse ‘only upon a clear showing of abuse of discretion.’” De Saracho v.

Custom Food Mach., Inc., 206 F.3d 874, 880 (9th Cir. 2000) (quoting Molloy v.

Wilson, 878 F.2d 313, 315 (9th Cir. 1989)). First, the Fuchses claim they are

entitled to reconsideration because they were mistaken that State Farm would carry

1 Although the Fuchses also nominally appealed summary judgment of their punitive damages claim, they have failed to advance any argument to support an assignment of error and, consequently, this court refrains from addressing this issue.

2 17-56182 out its contractual obligations in good faith. This argument is untenable in light of

the fact that the Fuchses sued State Farm for bad faith. A party’s regret is not the

type of “mistake” that provides relief under Rule 60(b)(1). See Engleson v.

Burlington N. R.R. Co., 972 F.2d 1038, 1043 (9th Cir. 1992) (“Neither ignorance

nor carelessness on the part of the litigant or his attorney provide grounds for relief

under Rule 60(b)(1).” (quoting Kagan v. Caterpillar Tractor Co., 795 F.2d 601,

607 (7th Cir. 1986))). Second, the Fuchses claim they were entitled to

reconsideration because State Farm obtained summary judgment by either failing

to present deposition testimony or presenting fabricated evidence to support its

case. However, the Fuchses were present during the subject depositions and their

allegations of fabrication are unsupported. As a result, the Fuchses have failed to

make the clear showing of abuse of discretion required for them to succeed.

3. Finally, the Fuchses claim they were the prevailing party in the

underlying action entitling them to recover fees and costs. A plaintiff prevails

“when actual relief on the merits of his claim materially alters the legal relationship

between the parties by modifying the defendant’s behavior in a way that directly

benefits the plaintiff.” Farrar v. Hobby, 506 U.S. 103, 111–12 (1992). A material

alteration of a legal relationship occurs when “‘the plaintiff becomes entitled to

enforce a judgment, consent decree, or settlement against the defendant.’” Fischer

v. SJB-P.D. Inc., 214 F.3d 1115, 1118 (9th Cir. 2000) (quoting Farrar, 506 U.S. at

3 17-56182 113). The district court did not grant any form of relief to the Fuchses. The

Fuchses claim that they are the prevailing party because the district court

confirmed the modified appraisal award which was then paid by State Farm.

However, because the appraisal award in this case merely determined the value of

loss without determining liability or coverage, the district court’s “statutory

authority was limited to the issuance of a judgment which brought finality to the

dollar amount of the replacement cost values, and nothing more.” Devonwood

Condo. Owners Ass’n v. Farmers Ins. Exch., 162 Cal. App. 4th 1498, 1507 (2008).

Consequently, State Farm was not obligated to pay the appraisal award and its

decision to do so was voluntary. “[L]itigants are not prevailing parties based on

the ‘catalyst theory,’ i.e., when ‘the lawsuit brought about a voluntary change in

the defendant’s conduct.’” Klein v. City of Laguna Beach, 810 F.3d 693, 701 n.8

(9th Cir. 2016) (quoting Buckhannon Bd. and Care Home, Inc. v. W. Virginia

Dep’t of Health & Human Res., 532 U.S. 598, 601 (2001)). In the absence of

damages, the Fuchses could not prove an essential element of their claim for

breach of contract thus warranting summary judgment on that claim and entry of

judgment in favor of State Farm.

AFFIRMED.

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