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Cindy Lee v. Government Employees Insurance Company

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII


February 22, 2013

CINDY LEE,
PLAINTIFF,
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY, A MARYLAND CORPORATION, DOES ONE THROUGH ONE HUNDRED, INCLUSIVE, AND ) OF EACH THEM, DEFENDANT.

The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge

ORDER DENYING PLAINTIFF'S MOTION FOR RECONSIDERATION, GRANTING DEFENDANT'S MOTION FOR PARTIAL RECONSIDERATION, AND GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Before the Court are (1) Plaintiff Cindy Lee's ("Plaintiff") Motion for Reconsideration of the Summary Judgment Order Filed on November 28, 2012 ("Plaintiff's Motion"), filed on December 12, 2012; and (2) Defendant Government Employees Insurance Company's ("GEICO") Motion for Partial Reconsideration of Order Filed November 28, 2012 ("GEICO's Motion"), filed on January 3, 2013. GEICO filed its memorandum in opposition to Plaintiff's Motion on December 31, 2012, and Plaintiff filed her reply on July 12, 2012. Plaintiff filed her memorandum in opposition to GEICO's Motion on January 17, 2013, and GEICO filed its reply on January 28, 2013. The Court finds this matter suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). After careful consideration of the motions, supporting and opposing memoranda, and the relevant legal authority, Plaintiff's Motion is HEREBY DENIED, and GEICO's Motion is HEREBY GRANTED for the reasons set forth below.

BACKGROUND

The relevant factual and procedural background in this case is set forth in this Court's November 28, 2012 Order Granting in Part and Denying in Part Defendant Government Employees Insurance Company's Motion for Summary Judgment and Denying Plaintiff Cindy Lee's Cross Motion for Summary Judgment ("11/28/12 Order"). 2012 WL 5987574. The Court therefore will not repeat that background here.

In the 11/28/12 Order, this Court concluded, inter alia, that neither the addition of vehicles nor the addition of a newly licensed driver to Plaintiff's automobile insurance policy constituted a material change requiring GEICO to make a new offer of optional uninsured motorist/underinsured motorist ("UM/UIM") coverage. 2012 WL 5987574 at *22-23. The Court therefore granted GEICO's Motion for Summary Judgment, filed on July 11, 2012 [dkt. no. 28,] as to all portions of the First Amended Complaint that were based on alleged material changes to the policy. Id. at *23.

The Court found that a question of fact existed as to whether GEICO intelligibly advised Plaintiff of the nature of UM/UIM coverage, and whether or not GEICO apprised Plaintiff that such coverage was available for a relatively modest increase in premium. Id. at *24.*fn1 The Court therefore denied GEICO's Motion for Summary Judgment, without prejudice, as to all portions of the First Amended Complaint based on alleged deficiencies in the 2001 offer of UM/UIM coverage. Id.*fn2

I. Plaintiff's Motion

Plaintiff argues that this Court should reconsider its 11/28/12 Order because (1) Plaintiff and the Court made a mistake of fact by making a distinction between a "named insured" and an "additional driver" for purposes of the GEICO policy; and (2) the Court "unintentionally" failed to follow a District of Utah decision and reached a different outcome on similar facts.

As to the first reason, Plaintiff argues that the addition of Karen as an additional driver on the policy increased GEICO's risk because it added "liability coverage for vehicles driven by Karen that were not owned by the Lees." [Mem. in Supp. of Plaintiff's Motion at 9-10.] As to the second reason, Plaintiff argues that the Court mistakenly reached an outcome different from the outcome reached by the Utah District Court in American National Property and Casualty Company v. Checketts, No. 2:11-cv-250 BSJ, 2012 WL 1835866 (May 21, 2012 D. Utah).

Plaintiff therefore asks the Court to reconsider the 11/28/12 Order, deny summary judgment on the issue of whether there was a material change to the policy, and grant Plaintiff's motion for summary judgment as to the insufficiency of the 2001 UM/UIM offer of coverage.

II. GEICO's Motion

In GEICO's Motion, GEICO seeks reconsideration of the portions of the 11/28/12 Order denying summary judgment as to all of Plaintiff's claims based on the validity of the 2001 offer of UM/UIM coverage. GEICO argues that newly available information, namely, Plaintiff's statements in Plaintiff's Motion, establishes that there is no issue of material fact regarding the sufficiency of GEICO's initial offer of UM/UIM coverage.

GEICO notes that, in Plaintiff's Motion, Plaintiff states that her claim of insufficiency of the 2001 UM/UIM offer was based upon the language of the UM/UIM Offer Form itself, rather than the GEICO agent's alleged oral statement that Plaintiff's premiums would be lower if she declined UM/UIM coverage. [Mem. in Supp. of GEICO's Motion at 4 (citing Mem. in Supp. of Plaintiff's Motion at 11).] GEICO argues that the 2001 UM/UIM Offer Form provided a legally sufficient offer of UM/UIM coverage as a matter of law and, as such, the Court should grant partial reconsideration of the 11/28/12 Order and hold that GEICO made Plaintiff a legally sufficient offer of coverage. Because all of Plaintiff's remaining claims depend on the theory that the initial UM/UIM offer was deficient, GEICO also requests that the Court enter summary judgment in its favor on all causes of action. [Id.]

DISCUSSION

In order to obtain reconsideration of the 11/28/12 Order, the instant motions "must accomplish two goals. First, a motion for reconsideration must demonstrate reasons why the court should reconsider its prior decision. Second, a motion for reconsideration must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision." See Donaldson v. Liberty Mut. Ins. Co., 947 F. Supp. 429, 430 (D. Hawai`i 1996); accord Tom v. GMAC Mortg., LLC, CIV. NO. 10--00653 SOM/BMK, 2011 WL 2712958, at *1 (D. Hawai`i July 12, 2011) (citations omitted). This district court recognizes three grounds for granting reconsideration of an order: "(1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or prevent manifest injustice." White v. Sabatino, 424 F. Supp. 2d 1271, 1274 (D. Hawai`i 2006) (citing Mustafa v. Clark County Sch. Dist., 157 F.3d 1169, 1178--79 (9th Cir. 1998)).

"Whether or not to grant reconsideration[,]" however, "is committed to the sound discretion of the court." Navajo Nation v. Confederated Tribes & Bands of the Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003) (citing Kona Enter., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000)). "As long as a district court has jurisdiction over the case, then it possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient." City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 889 (9th Cir. 2001) (internal quotation marks omitted).

I. Plaintiff's Motion

Plaintiff's Motion seeks reconsideration on the grounds that (1) the 11/28/12 Order contains an error of fact, namely that the Court distinguished between a "named insured" and an "additional driver" under the GEICO policy; and (2) the Court reached an opposite conclusion from that reached by the Utah District Court in American National Property and Casualty Company v. Checketts. Plaintiff argues that, because of these two "errors," the Court should revisit its holding that there were no material changes to Plaintiff's insurance policy during the relevant time period.

Plaintiff could have raised both of these arguments in connection with the underlying motions for summary judgment. Plaintiff's first argument, that the Court mistakenly drew a distinction between a "named insured" and an "additional driver," is based upon the terms of the GEICO policy, which was before the Court and the parties at the time of the underlying motions for summary judgment. Likewise, American National Property and Casualty Company v. Checketts was decided on May 21, 2012, more than three months before Plaintiff filed her motion for summary judgment on September 5, 2012. [See dkt. no. 34.] See also 2012 WL 1835866. Because Plaintiff could have raised both arguments in her underlying motion for summary judgment, Plaintiff has failed to raise any arguments warranting reconsideration. See Haw. Stevedores, Inc. v. HT & T Co., 363 F. Supp. 2d 1253, 1269 (D. Hawai`i 2005) ("reconsideration may not be based on evidence and legal arguments that could have been presented at the time of the challenged decision").

Further, to the extent Plaintiff's Motion attempts to challenge this Court's conclusion under Allstate Insurance Co. v. Kaneshiro, 93 Hawai`i 210, 221, 998 P.2d 490, 501 (2000), that the addition of a driver, rather than replacement of a named insured, does not constitute a material change to an automobile insurance policy, this district court has recognized that "[m]ere disagreement with a previous order is an insufficient basis for reconsideration." White, 424 F. Supp. 2d at 1274 (citing Leonq v. Hilton Hotels Corp., 689 F. Supp. 1572 (D. Haw. 1988)). This Court therefore FINDS that Plaintiff has not presented any ground warranting reconsideration of the 11/28/12 Order. Plaintiff's Motion is DENIED.

II. GEICO's Motion

GEICO's Motion seeks partial reconsideration on the grounds that new evidence, namely, statements made in Plaintiff's Motion, establish that no genuine dispute exists regarding the sufficiency of GEICO's initial offer of UM/UIM coverage.

In Plaintiff's Motion, she states that her claims regarding the sufficiency of the 2001 UM/UIM offer "were based upon the language of the form itself. There is no factual dispute as to the language of the form. The Court should find that the language on its face is insufficient to meet the Mollena test." [Mem. in. Supp. of Plaintiff's Motion at 11 (citing to Mollena v. Fireman's Fund Ins. Co. of Hawai`i, Inc., 72 Haw. 314, 816 P.2d 968 (1991)).] Plaintiff thus seems to admit that no question of fact exists as to the sufficiency of the UM/UIM offer. In her memorandum in opposition to GEICO's Motion, however, Plaintiff states that she does not "abandon her claim regarding the advice that Defendant's representative gave to Mr. Lee." [Plaintiff's Mem. in Opp. at 4.]

Nevertheless, Plaintiff's statements in her motion and memorandum in opposition clarify her position such that the Court now finds that no dispute of fact exists as to the issue of the sufficiency of the UM/UIM offer. The Court thus concludes that the issue of sufficiency may be decided as a matter of law. As such, this Court, in its discretion, GRANTS GEICO's Motion for Partial Reconsideration. See City of Los Angeles, Harbor Division, 254 F.3d at 889 (finding that a district court "possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order . . . ."); United States v. Smith, 389 F.3d 944, 949-950 (9th Cir. 2004) (recognizing a district court's authority to "reconsider an order over which it has not been divested of jurisdiction.").

Having granted GEICO's Motion, the Court next turns to the sufficiency of the offer of UM/UIM coverage.

III. Motion for Summary Judgment as to the Sufficiency of the UM/UIM Offer

Plaintiff alleges that GEICO failed to provide her with a legally sufficient offer of UM/UIM coverage. It is undisputed that Mr. Lee signed the 2001 UM/UIM Offer Form and rejected UM/UIM coverage. [Complaint at ¶ 17; see also Mem. in Supp. of GEICO's Motion, Exh. A (Signed UM/UIM Offer Form).] Plaintiff argues, however, that the 2001 UM/UIM Offer Form was insufficient as a matter of law. [See Mem. in Supp. of Plaintiff's Motion at 11.]

Hawai`i law sets forth the requirements for a legally sufficient written offer of coverage:

An insurer may offer the underinsured motorist coverage required by this paragraph in the same manner as uninsured motorist coverage; provided that the offer of both shall:

(A) Be conspicuously displayed so as to be readily noticeable by the insured;

(B) Set forth the premium for the coverage adjacent to the offer in a manner that the premium is clearly identifiable with the offer and may be easily subtracted from the total premium to determine the premium payment due in the event the insured elects not to purchase the option; and

(C) Provide for the written rejection of the coverage by requiring the insured to affix the insured's signature in a location adjacent to or directly below the offer.

Haw. Rev. Stat. § 431:10C-301(b)(4); see also Haw. Rev. Stat. § 431:10C-301(d)(2) (indicating that an insured must be "provided the opportunity to purchase or reject the coverages in writing under the options").

The Hawai`i Supreme Court has set forth a four-part test to determine whether an offer of UM/UIM coverage is legally sufficient:

Under the four-part test, an offer is legally sufficient when all of the following are met: (1) if made other than face-to-face, the notification process must be commercially reasonable; (2) the limits of optional coverage must be specified and not merely offered in general terms; (3) the insurer must intelligibly advise the insured of the nature of the optional coverage; and (4) the insurer must apprise the insured that the optional coverage is available for a relatively modest increase in premium.

Mollena, 72 Haw. at 320, 816 P.2d at 971 (citing Hastings v. United Pac. Ins. Co., 318 N.W.2d 849 (Minn. 1982)). Pursuant to Mollena, the insurer bears the burden of proving that it made a legally sufficient offer of UM/UIM coverage.

Plaintiff concedes that GEICO satisfied the first two requirements of the Mollena test, but argues that GEICO failed to meet the third and fourth. See 2012 WL 5987574 at *24. [See also Plaintiff's Mem. in Supp. of Cross Motion for Summary Judgment, (dkt. no. 34,) at 24.] The Court disagrees.

First, the UM/UIM Offer Form satisfied the third prong of Mollena, requiring that the insurer "intelligibly advise the insured of the nature of the optional coverage." 72 Haw. at 320, 816 P.2d at 971. The form, completed and signed by Mr. Lee in 2001, provides, in relevant part:

Uninsured Motorists applies to you, your resident relatives and occupants of the insured auto. Uninsured Motorist Coverage is for the protection of persons insured under this policy who sustain bodily injury or death in an accident for which the owner or operator of an uninsured motor vehicle or hit-and-run motor vehicle is liable. . .

Underinsured Motorist applies to you, your resident relatives and occupants of the insured auto. Underinsured Motorist Coverage is a separate and distinct coverage from Uninsured Motorists Coverage. Underinsured Motorist Coverage provides protection to persons insured under this policy who are legally entitled to recover damages for bodily injury, including death, arising from accidents with motorists who have insurance but the coverage limits under all bodily injury policies applicable at the time of the accident are less than the total damages for bodily injury or death resulting from the accident. [Mem. in Supp. Of GEICO's Motion, Exh. A (Signed UM/UIM Offer Form).] This portion of the UM/UIM Offer Form explains in relatively straightforward language what UM/UIM coverage is and the circumstances under which it may be used by the insured. As such, the Court FINDS that the UM/UIM Offer Form meets the third prong of the Mollena test. See Mollena, 72 Haw. 314 at 322-323, 816 P.2d 968 at 972.

Second, the UM/UIM Offer Form satisfied the fourth prong of the Mollena test as well. The fourth prong requires the insurer to inform the insured that the optional coverage is available for a relatively small increase in premium. Id. at 320. Here, the UM/UIM Offer Form clearly set forth the options available and costs associated with the additional coverage. For example, the form stated that the UIM limits of $100,000 per person/$300,000 per accident would cost an additional $35.50 for non-stacked coverage, or $37.40 for stacked coverage. [See Mem. in Supp. of GEICO's Motion, Exh. A.]*fn3 The form gave Plaintiff detailed information about the cost associated with the optional coverage, making readily apparent the additional charges associated with acceptance of the UM or UIM coverage. See Mollena, 72 Haw. 314 at 323, 816 P.2d at 972 (rejecting a form that did not make the cost of UM coverage "readily apparent"); Haw. Rev. Stat. § 431:10C-301(b)(4)(B) (stating that a UM/UIM offer must "[s]et forth the premium for the coverage adjacent to the offer in a manner that the premium is clearly identifiable with the offer and may be easily subtracted from the total premium . . . ."). This information was sufficient to enable Plaintiff to evaluate the cost of coverage and make an informed decision. The Court therefore FINDS that the UM/UIM Offer Form meets the fourth prong of the Mollena test.

Because the 2001 UM/UIM Offer Form meets all four prongs of the Mollena test, the Court FINDS that the form constituted a legally sufficient offer of UM/UIM coverage.*fn4

Plaintiff nevertheless argues that alleged statements made by the GEICO agent should negate the otherwise legally sufficient offer. The Court rejects this argument. Plaintiff alleges that a GEICO employee "failed to reasonably inform Mr. Lee of the benefits of UM and UIM coverage of his two vehicles other than (sic) rejecting the UM and UIM policy would result in 'cheaper premium payments.'" [Complaint at ¶ 17.] Even assuming this statement was made, it does undermine the sufficiency of the offer. The statement that the insurance premium would be cheaper if Plaintiff rejected UM/UIM coverage is accurate and does not negate the more detailed information regarding the nature and cost of coverage in the form. See Ranger v. State Farm Ins. Co., 333 F. Supp. 2d 935, 940 (2004) (finding that a form satisfied the Mollena test and that the defendant's statement that non-stacked coverage costs less than stacked coverage was accurate and did not render the otherwise sufficient offer deficient). As such, the Court rejects Plaintiff's arguments that alleged statements or "explanations" made by GEICO's employees regarding the UM/UIM coverage rendered GEICO's offer of UM/UIM coverage legally insufficient.

In sum, the Court FINDS that the UM/UIM Offer Form executed by Mr. Lee in 2001 provided a legally sufficient offer of UM/UIM coverage as a matter of law. Because all of Plaintiff's remaining claims depend on the theory that the initial UM/UIM offer was deficient, they must fail. The Court therefore GRANTS GEICO's Motion for Summary Judgment as to: (1) the portion of Plaintiff's First Cause of Action seeking a declaration that the initial offer of UM/UIM insurance to Mr. Lee in 2001 was invalid; (2) the portion of Plaintiff's Third Cause of Action, Plaintiff's Fourth Cause of Action, and Plaintiff's Fifth Cause of Action based on the alleged deficiencies in the 2001 offer of UM/UIM coverage; and (3) the portion of Plaintiff's Sixth Cause of Action alleging intentional infliction of emotional distress based on the alleged deficiencies in the 2001 offer of UM/UIM coverage. There are no remaining claims against GEICO.

CONCLUSION

On the basis of the foregoing, Plaintiff's Motion for Reconsideration of the Summary Judgment Order Filed on November 28, 2012, filed December 12, 2012, is HEREBY DENIED. GEICO's Motion for Partial Reconsideration of Order Filed November 28, 2012, filed on January 3, 2013, is HEREBY GRANTED. GEICO's Motion for Summary Judgment, filed on July 11, 2012, is HEREBY GRANTED. The Clerk's Office is directed to close this case.

IT IS SO ORDERED.

Leslie E. Kobayashi


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