John Fuchs v. State Farm General Ins. ( 2019 )

NOT FOR PUBLICATION FILED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.
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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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