State Farm Mutual Auto. Ins. v. Shelbie Frounfelter

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 31, 2018
• Docket: 17-35313
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 31 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

STATE FARM MUTUAL AUTOMOBILE No. 17-35313 INSURANCE COMPANY; STATE FARM FIRE AND CASUALTY COMPANY, D.C. No. 3:16-cv-05242-BHS foreign insurers,

Plaintiffs - Appellees, MEMORANDUM *

v.

SHELBIE FROUNFELTER, a single person,

Defendant,

and

SERGIO MORELOS, individually and the marital community comprised thereof; ROSA MORELOS, as administratrix of the Estate of M. Rosario Chacon-Cisneros,

Defendants - Appellants.

Appeal from the United States District Court for the Western District of Washington Benjamin H. Settle, District Judge, Presiding

Argued and Submitted July 13, 2018 Seattle, Washington

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: CLIFTON and NGUYEN, Circuit Judges, and BATTAGLIA, ** District Judge.

Sergio Morelos and Rosa Morelos (the “Morelos”) appeal the district court’s

orders granting summary judgment in favor of State Farm Mutual Automobile

Insurance Company and State Farm Fire and Casualty Company (individually and

collectively, “State Farm”). We have jurisdiction under 28 U.S.C. § 1291, and we

affirm.

1. We review a district court’s summary judgment orders de novo,

considering the evidence in the light most favorable to the non-moving party.

Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir.

2014). “Summary judgment is appropriate where ‘there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.’” Id.

(quoting Fed. R. Civ. P. 56(a)).

2. The district court did not err in granting summary judgment in favor of

State Farm on the issue of coverage. The Morelos claim coverage under two

insurance policies issued to Defendant Shelbie Frounfelter’s father, Michael Webb.

But Webb’s policies define “insured” as persons or relatives who “reside

primarily” with the named insured or whose “primary residence” is with the named

insured. It is undisputed that Frounfelter primarily lived with her mother, Lisa

** The Honorable Anthony J. Battaglia, United States District Judge for the Southern District of California, sitting by designation.

2 Siler, at the time of the accident giving rise to the Morelos’ claims. Therefore, the

district court did not err in concluding that Frounfelter was not an insured under

Webb’s policies.

3. The Morelos cite no authorities supporting their claim that the district

court’s reading of the term “insured” in Webb’s policies violates Washington

public policy. “In general, a contract which is not prohibited by statute,

condemned by judicial decision, or contrary to the public morals contravenes no

principle of public policy.” State Farm Gen. Ins. Co. v. Emerson, 102 Wash. 2d

477, 481 (1984) (citation omitted). The cases the Morelos cite reflect a different

public policy: “full compensation for innocent victims of automobile accidents.”

Safeco Ins. Co. of Ill. v. Automobile Club Ins. Co., 108 Wash. App. 468, 475

(2001). But Frounfelter was not an innocent victim of an automobile accident.

Rather, a jury found that she acted negligently in causing the Morelos’ harm.

4. Finally, the district court did not err in granting summary judgment on

the Morelos’ bad faith claim. Even if State Farm breached a duty of good faith and

fair dealing to Frounfelter by failing to produce Webb’s policies in pre-litigation

negotiations, there is no evidence that the breach resulted in any harm. “[A]

showing of harm is an essential element of an action for bad faith handling of an

insurance claim.” Safeco Ins. Co. of Am. v. Butler, 118 Wash. 2d 383, 389 (1992).

3 Without a showing of harm, the Morelos’ bad faith claim fails. 1

AFFIRMED.

1 The Morelos argue that “there is a presumption of harm once an insured establishes that the insurer acted in bad faith.” Werlinger v. Calrendon Nat’l Ins. Co., 129 Wash. App. 804, 809–10 (2005) (citing Butler, 118 Wash. 2d at 391). But this presumption is rebuttable. Id. Because the case continued to a jury verdict even after Webb’s policies were disclosed a few weeks after the lawsuit was filed, and there is no reason to assume things might have proceeded differently with earlier disclosure, the facts demonstrate that no harm resulted from the lack of disclosure.