Free Order on Motion for Summary Judgment - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 John Roehrs, M.D. and Jean Roehrs, his) wife, ) ) 10 Plaintiffs, ) ) 11 vs. ) ) 12 ) 13 Minnesota Life Insurance Company, et al.,) ) Defendants. ) 14 ) ) 15 16 17 ("Defendant" or "Minnesota Life") denial of Plaintiffs John Roehrs, M.D. and Jean Roehrs' 18 ("Plaintiffs" or "Dr. Roehrs") claim for benefits under an income protection and disability 19 insurance policy issued by Minnesota Life in April, 1992 to the Plaintiffs. Plaintiffs timely 20 21 issues of fact regarding Minnesota Life's breach of the subject insurance contract and 22 Plaintiffs' tort claim of breach of implied covenant of good faith and fair dealing, commonly 23 called "bad faith." (document # 97). All parties have previously consented in writing to 24 25 26 27 28 There is no significance to the Court's beginning its resolution of the three pending dispositive motions with the subject motion.
Case 2:03-cv-01373-LOA Document 121 Filed 09/13/2005 Page 1 of 6
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

No. CV-03-1373-PHX-LOA ORDER

This lawsuit arises out of Defendant Minnesota Life Insurance Company's1

filed a Motion For Summary Judgment2 on May 13, 2005, claiming there are no genuine

Other than footnote 1 to Defendants' Response to Plaintiffs' Motion For Summary Judgment, the exact relationship between the two Defendants is not clear to the Court at this time. This relationship is irrelevant to the subject motion.

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magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c)(1). (document # 24) After considering all the pleadings submitted on the subject motion and the relevant case law, the Court concludes that pursuant to Rule 56(c), FED.R.CIV.P., genuine issues of material fact exist for jury resolution. The subject motion will be denied because Plaintiffs are not entitled to judgment as a matter of law at this time. SUMMARY JUDGMENT A Court must grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the nonmoving party, "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Rule 56(c), FRCvP ; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986); Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir. 1994). Substantive law determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986); Jesinger, 24 F.3d. at 1130. In addition, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. The dispute must be genuine, that is, "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex, 477 U.S. at 323-24, 106 S. Ct. at 2553. Summary judgment is appropriate against a party who "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2553; Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir. 1994). The moving party need not disprove matters on which the opponent has the burden of proof at trial. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. The party opposing summary judgment "may not rest upon the mere allegations or denials of [the party's] pleadings, but. . . must set forth specific facts showing that there is a genuine issue for trial." Rule 56(e), FRCvP; Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356 (1986). Brinson v. Lind Rose Joint -2Case 2:03-cv-01373-LOA Document 121 Filed 09/13/2005 Page 2 of 6

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Venture, 53 F.3d 1044, 1049 (9th Cir. 1995). There is no issue for trial unless there is sufficient evidence favoring the nonmoving party. If the evidence is merely colorable or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 24950, 106 S.Ct. at 2511. However, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his [or her] favor." Id. at 255, 106 S.Ct. at 2513 [citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598,1608-1609 (1970)]. In evaluating the evidence submitted by both parties, all evidence and inferences to be drawn therefrom must be construed in the light most favorable to the nonmoving party. T.W. Elec. Services v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 630-31 (9th Cir.1987). Whatever facts which may establish a genuine issue of fact must both be in the district court's file and set forth in the response. Carmen v. San Francisco Unified School District, 237 F.3d 1026, 1029 (9th Cir. 2001). The trial court: "may determine whether there is a genuine issue of fact, on summary judgment, based on the papers submitted on the motion and such other papers as may be on file and specifically referred to and facts therein set forth in the motion papers. Though the court has discretion in appropriate circumstances to consider other materials, it need not do so. The district court need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found." Id. at 1031. DISCUSSION Except for footnote 4 in Defendant's Response, the parties have provided the Court with no meaningful discussion, authority or analysis on the choice of law that should apply in this case. In diversity cases, the law of the forum state is applied in choice-of-law analyses. Van Dusen v. Barrack, 376 U.S. 612, 628, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Lange v. Penn Mut. Life Ins. Co., 843 F.2d 1175, 1178 (9th Cir.1988). Because Arizona is the forum state, the Court must analyze which law applies under Arizona's choice-of-law rules. Arizona has adopted the choice of law rules of the Restatement (Second) of Conflicts (1971). Bates v. Superior Court of Maricopa County, 156 Ariz. 46, 48, 749 P.2d 1367, 1369 (1988); Bryant v. Silverman, 146 Ariz. 41, 42, 703 P.2d 1190, 1191 (1985). The determination of which state has the most significant contacts is a qualitative, not -3Case 2:03-cv-01373-LOA Document 121 Filed 09/13/2005 Page 3 of 6

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quantitative, analysis. Bates, 749 P.2d at 1370. The Court will not engage in such an analysis without appropriate briefing or stipulation from the parties whether Arizona or Nebraska statutory and case law applies to this case. Notwithstanding the foregoing, questions of fact exist for jury resolution. Plaintiffs claim Dr. Roehrs sustained a disabling back injury as a result of a tripping incident on a golf course in April 2000 after the subject policy lapsed for lack of payment and was reinstated on December 2, 1999. Dr. Roehrs cites the policy's definition of "injury" as defined in the subject policy and relies on the Nebraska case of Brown v. Inter-Ocean Ins. Co., 195 Neb. 189, 237 N.W.2d 146 (1976) as authority that he is entitled to recover benefits under the subject policy. Dr. Roehrs argues that under the General Definitions of the subject policy relating to a reinstated policy, the "reinstated policy will cover any loss that results from an injury [Dr.Roehrs] sustain[ed] after the date of reinstatement." (PSOF3, ¶ 1; DSOF ¶ 6) In the Brown case, an action to recover for disability and medical expenses under two accident insurance policies, the Nebraska Supreme Court held that there was coverage due to plaintiff's total disability wherein the plaintiff, who had preexisting degenerative disk disease, fell and reinjured his back. There, unlike here, the undisputed medical evidence indicated that the fall and the preexisting disease contributed to plaintiff's injury and in the absence of either, plaintiff's disabling back injury would not have been sustained. Similar to the case at bar, the Brown case centered around a coverage exclusion that provided: "This policy shall not cover . . . (f) any loss caused directly or indirectly by any sickness, disease or mental infirmity . . . ." Id. at 147. On the other hand, Minnesota Life provides sworn testimony that Dr. Roehrs denied sustaining a new injury in 2000 during a telephone conversation with Minnesota Life's Christine Peterson on August 1, 2000, (DSOF, ¶¶ 71- 73), and that evidence exists that Dr. Roehrs' back problems really began in 1997 when Dr. Roehrs was seen professionally "PSOF" refers to Plaintiffs' Statement of Facts, filed on May 13, 2005; document # 98). "DSOF" refers to Defendant Minnesota Life's Statement of Facts, filed on May 13, 2005; document # 96). -4Case 2:03-cv-01373-LOA Document 121 Filed 09/13/2005 Page 4 of 6
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by Patrick Bowman, M.D., a spine surgeon, for symptoms caused by Dr. Roehrs' degenerative disk disease related to spinal stenosis. (DSOF, ¶¶ 35-38) Minnesota Life argues that spinal stenosis is a disease and supports its argument with reference to some of Dr. Roehrs' pre-1999 medical records (referencing degenerative disk "disease") and an unverified, hearsay report4, dated October 5, 2000, of Paul M. Francis, M.D., a neurological surgeon, which indicates that Dr. Roehrs' "current condition of spinal stenosis represents a progression of disease which was first diagnosed in 1997." (DSOF, § 91, Exhs. 8, 14, 31 and 32)(Emphasis added.) It is undisputed that the subject policy defines "sickness" as "[a] disease or illness", (DSOF, ¶ 3), and provides, in part, regarding a reinstated policy: " . . . Any loss due to sickness will be covered if the sickness first manifested itself more than 10 days after the date of reinstatement. . . ." (Emphasis added.) (DSOF, ¶ 6) In this case, the parties disagree whether Dr. Roehrs' disabling back problem was caused by an injury or a sickness and, if a sickness as Minnesota Life argues, when such sickness "first manifested itself." Depending how these issues are resolved will go a long way in determining who prevails in this litigation. In Arizona, the question of causation, even on medical issues, is ordinarily a question of fact for the jury. Ontiveros v. Borak, 136 Ariz. 500, 507, 667 P.2d 200, 207 (1983); Robertson v. Sixpence Inns of America, 163 Ariz. 539, 546, 789 P.2d 1040, 1047(1990)("Ordinarily, the question of proximate cause is a question of fact for the jury."). Additionally, construing the evidence in the light most favorable to Minnesota Life, as the Court must on summary judgment motions, Minnesota Life had, at a minimum, a fairly debatable basis to deny Dr. Roehr's claim under the subject policy. Thus, Plaintiff's bad faith claim is also a question of fact for the trier of fact, not this Court, to decide as a matter of law under the present state of the record. Zilisch v. State Farm

Because Plaintiffs' experienced counsel failed to object to the unverified nature of this report on hearsay or any other grounds in their Additional Facts etc. pleading (doc. # 118) and Reply (doc. # 117), the Court will consider this evidence as admissible evidence for purposes of this motion only. -5Case 2:03-cv-01373-LOA Document 121 Filed 09/13/2005 Page 5 of 6

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Mutual Auto. Ins. Co., 196 Ariz. 234, 995 P.2d 276 (2000). Summary judgment is not appropriate on Plaintiffs' claims of breach of contract and bad faith. IT IS ORDERED that Plaintiffs' Motion For Summary Judgment (doc. # 97) is DENIED. IT IS FURTHER ORDERED that the parties' request for oral argument is DENIED. The Court determines that oral argument is not necessary for the Court to decide the subject motion. Therefore, the Court declines to exercise its wide discretion to permit oral argument. Domegan v. Fair, 859 F.2d 1059, 1065 (1st Cir. 1988)("As we have stated with echolalic regularity, the district courts have considerable discretion in deciding whether or not to allow oral argument on a dispositive motion."); Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 411 (1st Cir.1985)(discussing trial court's "wide latitude" on setting oral argument.). DATED this 9th day of September, 2005.

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