Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-01448/USCOURTS-azd-2_04-cv-01448-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Mireles Harvesting and Packing Company,

Inc., 

Plaintiff, 

vs.

Westport Insurance Corporation, 

Defendant. 

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No. CV 04-1448-PHX-NVW

ORDER

[Not For Publication]

The court has considered defendant's Motion For Summary Judgment (doc. # 48)

("Motion"), Defendant's Statement Of Facts In Support Of Motion For Summary Judgment

(doc. # 49) ("DSOF"), Supplement To Defendant's Motion For Summary Judgment (doc. #

64), Defendant's Supplemental Statement Of Facts In Support Of Motion For Summary

Judgment (doc. # 65), Plaintiff's Response To Defendant's Motion For Summary Judgment

(doc. # 67) ("Response"), Statement Of Facts In Support Of Plaintiff's Response To

Defendant's Motion For Summary Judgment (doc. # 68) ("PSOF"), Plaintiff's Response/

Objections To Defendant's Statement Of Facts In Support Of Motion For Summary Judgment

(doc. # 69), Defendant Westport's Statement Of Disputed Facts (doc. # 76) and Reply In

Support Of Motion For Summary Judgment (doc. # 75) ("Reply").

Plaintiff Mireles Harvesting And Packing, L.L.C. ("Mireles") brought this action

against its insurer, Westport Insurance Corporation ("Westport Insurance"), alleging breach

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of the parties' insurance contract and bad faith refusal to pay insurance proceeds. Mireles

filed insurance claims with Westport Insurance regarding three stolen harvest belts and

brought this action alleging that Westport Insurance failed to pay the amount owing under

the parties' insurance contract and refused to consider value-enhancing improvements

Mireles had made to the belts before they were stolen. Westport Insurance now moves for

summary judgment and, in the alternative, for partial summary judgment on specific issues

in the case.

I. Background

Mireles leased the harvest belts in question from Salinas Equipment Distributors, Inc.

("Salinas"), a wholly-owned subsidiary of RDO Equipment ("RDO"), in February of 2001.

(PSOF at ¶ 1.) Mireles insured the belts with Westport Insurance on October 20, 2001,

through the Sundance Insurance Agency ("Sundance"), naming Salinas and RDO as "loss

payees" on the policy. (Complaint at ¶ 7; DSOF at ¶ 20.) The belts were stolen from Mireles

in Monterey County, California on or about July 11, 2002. (PSOF at ¶ 8.) Mireles reported

the theft to Deborah Blakesley, its insurance counselor at Sundance, who on August 2, 2002,

reported the claim to Westport Insurance's third-party administrator, Mattei Insurance

Services ("Mattei"). (DSOF at ¶ 12.) Gary Mattison, the claims adjuster at Mattei,

confirmed receipt of the claim by letter to Mireles on August 7, 2002, requesting copies of

the rental agreement and any police reports and notifying Mireles that Mattei could not move

forward on the claim until the requested information was provided. (DSOF Ex. I.) Over

three months later, on November 25, 2002, Deborah Blakesley provided Mattei the rental

agreement. (DSOF at ¶ 16; doc. # 69 at ¶ 16.) Nearly a month after that, Deborah Blakesley

provided Mattei the police report. (Reply Ex. VV at 1.) At Mireles' express request,

Deborah Blakesley told Gary Mattison to direct all questions related to the value of the stolen

belts to Chris Harmon, an employee of RDO and Salinas. (DSOF at ¶ 17; doc. # 69 at ¶ 17.)

Gary Mattison then assigned an appraiser to value the stolen belts. After the appraiser

spoke with both Deborah Blakesley and Chris Harmon – per Mireles' instructions – the

appraiser calculated the replacement value of each belt to be $12,100, rendering a total

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reimbursement amount after subtracting depreciation of $19,131.87. (DSOF at ¶ 47.) On

January 27, 2003, Chris Harmon informed Gary Mattison that RDO would accept payment

of that amount. (DSOF at ¶ 48.) After discussing the amount with Mireles, however, Chris

Harmon returned the check to Gary Mattison on February 10. (DSOF at ¶ 51.) Chris

Harmon explained that Mireles believed the amount was too low and that Mireles would

contact Gary Mattison to arrange final settlement. (DSOF at ¶ 51, Ex. HH.) 

Mireles did not contact Gary Mattison until nearly three months later, on May 7, 2003.

(DSOF at ¶ 52; Ex. W.) On that date Mireles, through its lawyer, demanded payment in the

amount of $216,000.00. (PSOF Ex. D.) Mireles' lawyer calculated this figure based on a

quotation by Ramsay Highlander, Inc., offering with warranties an allegedly similar harvest

belt to the ones stolen for $72,000. (Id.) 

Mireles' explanation for its dramatically higher valuation of the belts is that after

leasing them, it made multiple expensive improvements to them to satisfy the requirements

of its contract with Dole Lettuce company. (See, e.g., PSOF Ex. E at 4; PSOF at ¶ 3.) Ruben

Mireles ("Ruben"), the operations manager for Mireles, testified that he had informed Gary

Mattison of these improvements from as early as the date of the theft but that Gary Mattison

had repeatedly quelled Ruben's input on the matter, telling Ruben that "everything is under

control" and that Mattei had all the information it needed to process the claim. (PSOF Ex.

I at 65-67.) 

Mireles thus implies that Gary Mattison sent the check for $19,131.87 knowing the

amount to be inadequate. (See doc. # 69 at ¶ 49.) Mireles, however, admits having directed

all questions related to the value of the stolen belts to Chris Harmon, who had no knowledge

of and had never even seen the improvements to the belts. (doc. # 69 at ¶ 17 (responding to

DSOF at ¶ 17); DSOF Ex. P at 47:10-25.) Mireles thus asserts its dissappointment that

Westport Insurance's valuation of the belts excluded the costly improvements but, given its

express instructions to Westport Insurance, struggles to justify any expectation that those

improvements would be considered in the valuation. 

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After Mireles' $216,000 demand, presumably during subsequent discussions in May

of 2003, Mireles' lawyer indicated to Gary Mattison that Mireles was now the owner of the

belts, as opposed to RDO/ Salinas. (See DSOF Ex. W.) The change of ownership led Gary

Mattison to request on May 29, 2003, that Mireles' lawyer provide documentation of the

"sale" of the stolen belts from RDO/ Salinas to Mireles. (Id.) Mireles' lawyer complied over

six months later on December 11, 2003, providing Gary Mattison an assignment of rights and

an "Acknowledgment and Bill of Sale" by RDO, which stated that all payments owing by

Mireles to RDO had been paid in full. (PSOF Ex. E.) The "Acknowledgment and Bill of

Sale" and assignment of rights were dated October 20, 2003, over four months after Mireles'

lawyer's initial representation to Gary Mattison that Mireles owned the belts and nearly two

months before Mireles' lawyer provided them to Gary Mattison. (Id.) Mireles' lawyer later

explained to Gary Mattison that Mireles had purchased the belts from RDO pursuant to an

option clause in the lease, although the lease document itself contained no such clause.

(DSOF at ¶¶ 67-68; doc. # 69 at ¶ 68.) 

After receiving the "sale" documents on December 11, 2003, Gary Mattison hired

Richard Kufner, an appraiser in Yuma County, to obtain documentation of the improvements

and to value them. (DSOF at ¶¶ 55-56.) Richard Kufner met with Ruben on January 16,

2004, to photograph a harvest belt allegedly identical to those stolen. (DSOF Ex. Z at ¶¶10-

12.) Richard Kufner also wrote to Ruben on January 20, 2004, requesting a breakdown of

costs of the improvements and noting that such information was necessary to process the

claim. (DSOF Ex. Z at ¶ 13.) Richard Kufner did not receive a response from Ruben,

despite writing two additional letters to Ruben requesting documentation of the

improvements. (DSOF Ex. Z at ¶¶ 13-17.) Richard Kufner also wrote to Chris Harmon

seeking confirmation that the photographed belt was similar to those lost but received no

response. (DSOF at ¶¶ 60-61.) 

Gary Mattison also contacted Mireles seeking documentation of the costs of the

improvements by facsimile on January 23, 2004. (See DSOF Ex. AA.) Thirty-seven days

after Gary Mattison's facsimile, on March 1, 2004, Mireles' lawyer responded that Mireles

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could not locate records for the period of time when the upgrades occurred. (Id.) Though

Mireles now contends that the records had been seized by the landlord – along with the

furniture – for failure to pay rent, in the letter Mireles' lawyer provided no reason for Mireles'

inability to produce the records. (See id.) According to the affidavit of Ruben, no one told

Mattei or Gary Mattison about the problem with the landlord because no one asked for an

explanation of Mireles' failure to provide documentation. (PSOF Ex. A at ¶ 12.) 

While stating on the one hand that the records for that period of time could not be

found, Mireles' lawyer also indicated in the same letter that no such documentation existed

because the upgrade work was done in-house. (DSOF Ex. AA at 1-2.) The letter further

stated that in any event, Mattei had earlier been provided precise descriptions of the belts as

they existed on the dates they were stolen. (Id. at 2.) 

On June 1, 2004, Westport Insurance's lawyer wrote a letter to Mireles describing the

issues surrounding Mireles' insurance claim and again requesting documentation of the

improvements to the belts. (DSOF Ex. DD.) Mireles, concerned about the approaching

statute of imitations deadline and believing Westport Insurance to be making duplicative

requests in order to stall, responded by notifying Westport Insurance of its intention to bring

this action. (DSOF Ex. EE.) 

II. Standard For Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment shall

be entered if the pleadings, depositions, affidavits, answers to interrogatories, and admissions

on file show that there is no genuine dispute regarding the material facts of the case and the

moving party is entitled to a judgment as a matter of law. See Fed. R. Civ. P. 56(c) (2004);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The Court must evaluate a

party’s motion for summary judgment construing the alleged facts with all reasonable

inferences favoring the nonmoving party. See Baldwin v. Trailer Inns, Inc., 266 F.3d 1104,

1117 (9th Cir. 2001).

The party seeking summary judgment bears the initial burden of informing the Court

of the basis for its motion and identifying those portions of the pleadings, depositions,

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answers to interrogatories, and admissions on file, together with the affidavits, if any, which

it believes demonstrate the absence of any genuine issue of material fact. See Celotex Corp.

v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party has met its initial burden with

a properly supported motion, the party opposing the motion “may not rest upon the mere

allegations or denials of his pleading, but ... must set forth specific facts showing that there

is a genuine issue for trial.” Anderson, 477 U.S. at 248. 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. See also Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.

1994). Although the initial burden is on the movant to show the absence of a genuine issue

of material fact, this burden may be discharged by indicating to the Court that there is an

absence of evidence to support the nonmoving party’s claims. See Singletary v.

Pennsylvania Dep’t of Corr., 266 F.3d 186, 193 n.2 (3d Cir. 2001).

III. Evidentiary Issues

"It is well settled that only admissible evidence may be considered by the trial court

in ruling on a motion for summary judgment." Beyene v. Coleman Sec. Servs., 854 F.2d

1179, 1181 (9th Cir. 1988). On this motion Westport Insurance objects to the affidavit of

Ruben on the grounds that it does not provide a foundation for his competency to testify,

basing the objection on Ruben's deposition testimony that Ruben was not an officer, director

or shareholder in the corporation. (DSOF Ex. O at 10-11.)

The affidavit provides adequate foundation for Ruben's competency to testify.

Ruben's affidavit begins: "At all times relevant to this matter, I was the Manager of Plaintiff

Mireles Harvesting and Packing, and I make this affidavit of my own personal knowledge."

(PSOF Ex. A.) Ruben testified to having been manager "of all operations" at Mireles,

(DSOF Ex. O at 10-11), and Westport Insurance pervasively refers to Ruben on those terms

in its own briefs and statement of facts. (See DSOF at ¶ 21.) A manager in charge of "all"

operations, including "[l]abor, equipment, truckers, you name it," (DSOF Ex. O at 10 ln 23),

is as likely if not more likely to have the ability to convey information about the goings on

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of the corporation than an officer, director or shareholder. Ruben's competency to testify on

these matters requires no additional foundation. See Barthelemy v. Air Lines Pilots Ass'n,

897 F.2d 999, 1018 (9th Cir. 1990) (holding that affiants' "personal knowledge and

competence to testify are reasonably inferred from their positions and the nature of their

participation in the matters to which they swore"). 

Westport Insurance also seeks a holding that the Ramsey Highlander quotation is not

evidence of the value of the harvest belts on the date of the alleged loss. (Motion at 11:20-

22.) Federal Rule of Evidence 403 states that "Although relevant, evidence may be excluded

if its probative value is substantially outweighed by the danger of unfair prejudice, confusion

of the issues, or misleading the jury . . . ." Here, the court has reservations about whether a

mere quotation, as opposed to evidence of consummated sales, would be excessively

speculative to be considered legally relevant. Compare United States v. 179.26 Acres of

Land, 644 F.2d 367, 371-72 (10th Cir. 1981) (noting that best evidence of market value is

comparable sales); Cities Serv. Gas Co. v. United States, 580 F.2d 433, 440-42 (Ct. Cl. 1978)

(holding that gas sales prices were the proper measure of market value). The court need not

decide the issue on this motion, however. Westport Insurance provides the court no authority

in support of its position that the quotation is inadmissible and therefore has not satisfied its

burden as the moving party. See LRCiv 7.2(b) ("[T]he moving party shall serve and file with

the motion's papers a memorandum setting forth the points and authorities relied upon in

support of the motion."). For purposes of this motion, then, the court assumes that the

Ramsey Highlander quotation is admissible.

IV. Validity Of The Policy

Westport Insurance argues that by submitting an overstated and inflated valuation of

the allegedly lost property, Mireles has voided the entire insurance policy. According to

Westport Insurance, the $72,000 Ramsay Highlander, Inc. quotation submitted by Mireles

was inflated because that price was for a sale including warranties, overhead and interest

costs of the seller and excluding any possible discount available for a cash sale. Westport

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Insurance touches on this point as both a general issue of insurance law and as an interpretive

matter related to these parties' contract.

A. General Insurance Law

Westport Insurance provides no authority for the proposition that overstating an

insurance claim voids the entire policy as a general matter of insurance law. The general

assertion to this effect by Westport Insurance's expert is not authority for this court. See

Fed.R.Evid. 702 (establishing that the purpose of expert testimony is to "assist the trier of

fact to understand the evidence or to determine a fact in issue"). The court declines to

perform for Westport Insurance the research required to support its motion on this issue. See

LRCiv 7.2(b) ("[T]he moving party shall serve and file with the motion's papers a

memorandum setting forth the points and authorities relied upon in support of the motion.").

B. Contractual Interpretation

Westport Insurance suggests that Mireles has violated a provision of the insurance

contract related to fraud or misrepresentation and that the contract is therefore voided. The

court gleans this argument from a footnote in the Motion citing the "Misrepresentation,

Concealment or Fraud" provision of the contract. (Motion at 11 fn.2.) Merely pointing to

a contractual provision without more is insufficient to properly raise the issue on a motion

for summary judgment. Even if the issue were properly raised, Westport Insurance has not

shown a lack of factual dispute as to whether Mireles committed a fraud or

misrepresentation, which is a requirement of that provision. The motion is therefore denied.

V. Valuation Of The Belts

Westport Insurance seeks summary adjudication that the amounts payable to Mireles

under the contract are capped at a certain amount. Due to the peculiar contractual language

involved, Westport Insurance's motion on this issue deals first with two of the stolen belts

and then with the third. 

A. The First Two Belts

A schedule from the contract lists "harvest belt" as Items 14 and 15 and gives $12,000

and $13,000 as payout limits. (Complaint at Ex. A at M-1661 Ed. 1.0.) Westport Insurance

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therefore asks the court to hold that reimbursement be capped at $12,000 and $13,000 for two

of the three stolen belts, less depreciation. 

Mireles contests this motion on two grounds. First, Mireles argues that Items 14 and

15 do not correspond to the stolen belts. (Response at 3:11-13.) According to Mireles, all

three belts fall under Item 16, "Hired, Leased or Borrowed Equipment," which provides a

$200,000 payout limit. (Complaint at Ex. A at M-1661 Ed. 1.0.) Second, Mireles contends

that the amount payable should not be reduced by depreciation. (Response at 4:27-28.) 

1. The Correct Belts

The only reasonable interpretation of the contract is that Items 14 and 15 refer to two

of the stolen belts. The contract indicates that the belts in Items 14 and 15 were leased from

Salinas. (Complaint Ex. A at IM-1271 Ed. 1.0.) At oral argument counsel for Mireles

conceded that the only belts leased from Salinas by Mireles were the three stolen belts. If

no other belts were leased from Salinas, then the two referred to in Items 14 and 15 had to

be two of the three stolen. 

At oral argument counsel for Mireles argued that the two belts should nonetheless fall

within the umbrella provision of Item 16. Whether or not the additional policy limit in Item

16 also applies to the two belts, however, is irrelevant, given that liability for the belts in

Items 14 and 15 is specifically capped at $12,000 and $13,000.

Mireles has submitted no parol evidence to suggest, moreover, that the parties

intended upon entering into the contract that only the $200,000 limit of Item 16 should be

applied to these two belts. Ruben's affidavit states that Deborah Blakesley of Sundance

represented to Ruben that the $200,000 limit applied to the three harvest belts (PSOF Ex. A

at ¶ 5), but nothing in the record suggests Deborah Blakesley was an agent of Westport

Insurance such that her statements could bind Westport Insurance. Counsel for both parties

agreed at oral argument that Deborah Blakesley was not an agent for Westport Insurance.

Even if Deborah Blakesley did have some authority to bind Westport Insurance, Ruben's

affidavit makes no suggestion that Deborah Blakesley's statements to Ruben were made

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during contract negotiations or before the contract was executed. The statement is therefore

not parol evidence of the mutually intended meaning of the contract language. 

Ruben's other affidavit suggestion — that he "understood" the contract to provide

$200,000 coverage for the belts — is similarly not parol evidence of the mutually intended

meaning of contractual language. The statement does not relate specifically to occurrences

prior to or contemporaneous with the contract's execution. Moreover, the statement shows

only Ruben's purely subjective understanding, and nothing in the record suggests Westport

Insurance had any reason to know of that understanding. Compare Hill-Shafer Partnership

v. Chilson Family Trust, 165 Ariz. 469, 474, 799 P.2d 810, 815 (1990) ("The manifestations

of the parties are operative in accordance with the meaning attached to them by one of the

parties if . . . the other has reason to know the meaning attached by the first party.") (citing

Restatement (Second) of Contracts § 20 (1979)). 

In any event, the court finds this statement to be sham testimony, submitted to create

an issue of fact on summary judgment. See, e.g., Kennedy v. Allied Mutual Ins. Co., 952 F.2d

262, 266-67 (9th Cir. 1991). Ruben's affidavit testimony on this point recants his prior

deposition testimony that Items 14 and 15 were two of the belts reported stolen. (See PSOF

Ex. A at ¶¶ 5, 13; DSOF Ex. O at 20:24-21:17.) Ruben's affidavit testimony is not a

clarification or explanation of his deposition testimony but an attempt to escape the prior

admission. Ruben had an opportunity to earlier fix any erroneous statements in his testimony

but only did so in order to oppose the motion for summary judgment. The testimony is

therefore disregarded. Cf. Hambleton Brothers Lumber Co. v. Balkin Enters., Inc., 397 F.3d

1217, 1226 (9th Cir. 2005) (holding that district court did not abuse its discretion by striking

deposition errata for failure to comply with the procedural requirements of Rule 30(e) and

citing Rios v. Bigler, 67 F.3d 1543 (10th Cir. 1995), as "holding that requesting review is an

absolute prerequisite for correcting a deposition under FRCP 30(e)"). 

The only other evidence submitted by Mireles is the notice of loss, sent by Deborah

Blakesley to Westport Insurance, in which Deborah Blakesley identified coverage for the

claim as falling under the $200,000 rental equipment provision. (PSOF Ex. J at 1.) The

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actions of Deborah Blakesley after the theft, however, do not shed light on what the parties'

mutually communicated understanding was when the contract was made. 

2. Depreciation

Westport Insurance has not carried its burden to show that its calculation of

depreciation, or of the effect of that depreciation on the reimbursement amount, was correct.

Both parties agree that the reimbursement amount should be "actual cash value," which the

contract defines as replacement value less depreciation (Compl. at Ex. A at IL 01 03 06 99),

but nothing suggests that Mattei's calculation of depreciation was appropriate or that the

reduction for depreciation must reduce the reimbursement amount below the policy limit.

Mireles, for its part, has provided evidence that the harvest belts were regularly repaired, in

good shape, and had a replacement value of $72,000. (PSOF Ex. A at ¶ 7; PSOF Ex. D.)

Without evidence or authority to support its position that "actual cash value" should be

calculated by subtracting depreciation from the policy limit, Westport Insurance is not

entitled to summary judgment on this issue. 

3. Westport Insurance's Alternative Motion

In the alternative, and without explanation, Westport Insurance asks the court to hold

that reimbursement for these two belts be capped at $12,754, which is two-thirds of the

$19,131.87 originally calculated by Gary Mattison's appraiser. (Motion at 12:19-21.) Since

Westport Insurance has not explained or provided authority for its motion and has not cited

contractual language suggesting Gary Mattison's appraiser appropriately calculated the

reimbursement, Westport Insurance has failed to carry its initial burden on summary

judgment. The court therefore denies Westport Insurance's alternative motion.

B. The Third Belt

Westport Insurance moves for summary adjudication that the third harvest belt stolen

had a maximum value of $18,000. As evidence that the third stolen belt could be worth no

more than $18,000, Westport Insurance submits: (1) an insurance policy purchased by

Mireles after the theft covering what was apparently a fourth harvest belt for up to $18,000

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(DSOF Ex. D at 1), and (2) evidence that Mireles owned a harvest belt in identical condition

to the ones stolen (DSOF Ex. Z at ¶¶ 10-11). 

Westport Insurance's evidence is insufficient to show entitlement to judgment as a

matter of law. To begin with, the belt insured for $18,000 might have been a different kind

than the three stolen. Moreover, no evidence has been placed before the court to suggest that

the newly-insured belt was the same belt as the one in identical condition to those stolen.

Even if it were, the insured value in a new insurance contract does not conclusively indicate

the belt's "actual cash value" as that term was used in a prior contract; an insured need not

insure its property for the full value. Westport Insurance has merely submitted circumstantial

evidence opposing Mireles' evidence about the value of the stolen belts and is therefore not

entitled to summary judgment.

VI. Breach As Of May 7, 2003

Westport Insurance moves for summary adjudication that it did not breach the

insurance contract as of May 7, 2003. Because payment of an incorrect amount could be a

breach of the contract and as of yet it is unclear how much Westport Insurance owed,

Westport Insurance's attempted payment of $19,131.87 may have been a breach. The court

therefore denies the motion.

VII. Tortious Refusal To Pay Insurance Proceeds

Westport Insurance has moved for summary judgment on Mireles' claim of bad faith,

arguing that no reasonable jury could find that Westport Insurance had treated Mireles

unfairly. The covenant of good faith and fair dealing requires the insurer to "deal fairly with

an insured, giving equal consideration in all matters to the insured's interests." Rawlings v.

Apodaca, 151 Ariz. 149, 157, 726 P.2d 565, 573 (1986) (emphasis omitted). On summary

judgment, the issue in bad faith cases is "whether there is sufficient evidence from which

reasonable jurors could conclude that in the investigation, evaluation, and processing of the

claim, the insurer acted unreasonably and either knew or was conscious of the fact that its

conduct was unreasonable." Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234, 238,

995 P.2d 276, 280 (2000) (citations omitted). "A failure to pay a claim is unreasonable

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unless the claim's validity is 'fairly debatable' after an adequate investigation." Rawlings, 151

Ariz. at 156, 726 P.2d at 572 (citations omitted). The argument that a claim was "fairly

debatable," however, and that nonpayment was therefore reasonable "cannot be raised where

the insurer failed to make an adequate investigation." Id. (citing Farr v. Transamerica

Occidental Life Ins. Co., 145 Ariz. 1, 699 P.2d 376 (App. 1984)). 

Mireles opposes Westport Insurance's motion by arguing that Mattei's investigation

into the value of the stolen belts was inadequate. (Response at 6-7.) On the evidence

submitted, however, no reasonable jury could conclude that Westport Insurance's

investigation was inadequate. At a minimum, no reasonable jury could assign fault to

Westpoint Insurance regarding its investigation. 

Up until May of 2003, Mattei investigated precisely according to Mireles' directions.

Mireles does not deny that it referred all questions related to valuation of the belts to Chris

Harmon. (doc. # 69 at ¶ 17 (responding to DSOF at ¶ 17).) Mireles cannot now legitimately

argue that Mattei's observance of Mireles' instructions – by predominantly questioning Chris

Harmon about the value of the belts – was improper. Regardless of what information Chris

Harmon actually had (see DSOF Ex. P at 47:10-25), Mattei was following Mireles' direct

counsel on how to best obtain knowledge about the value of the belts.

Subsequent investigation was largely stifled by Mireles and its employees. The

appraiser assigned by Gary Mattison sent Ruben three letters asking for information about

the improvements to the belts but never received a response. (DSOF Ex. Z at ¶¶ 13-17.)

Gary Mattison's parallel inquest to this effect remained unanswered for thirty-seven days, and

Mireles in response provided contradictory information about the documentation sought; the

documentation could not be located, but there was no documentation. (DSOF Ex. AA.) At

no time did Mireles or any of its agents explain why the documentation requested was

unavailable (PSOF Ex. A at ¶ 12), presenting Mattei instead with a suspicious wall of silence.

In the absence of any explanation as to why Mireles was refusing to provide the

documentation, Westport Insurance's decision to press for that documentation as evidence

of the value of the stolen belts was very reasonable. The only basis for valuation provided

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 Considering that Mireles brought this action out of concern that Westport Insurance

was stalling to invoke the statute of limitations (DSOF Ex. EE), any argument based on

investigatory delay is noticably absent from Mireles' briefs. Mireles' responsibility for

creating the delays may explain its decision not to make the argument, which is otherwise

a potential basis for alleging bad faith. See, e.g., Rawlings, 151 Ariz. at 156, 726 P.2d at 572

("[A]n insurer that intentionally and unreasonably denies or delays payment breaches the

covenant of good faith owed to its insured." (emphasis added; citations omitted)); Zilisch,

196 Ariz. at 237, 995 P.2d at 279 ("The tort of bad faith arises when the insurer intentionally

denies, fails to process or pay a claim without a reasonable basis." (emphasis added; citations

and internal quotations omitted)). 

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by Mireles was a quotation for new belts, costing roughly seven times the stolen belts' value

as originally estimated and agreed upon by Chris Harmon. (PSOF Ex. D.) Ruben himself

testified that due to the improvements, the stolen belts would be particularly hard to value,

and that he did not believe anyone could value them. (DSOF Ex. O at 67:24-25 to 68:1-3.)

Under the fair assumption that documentation of the improvements existed but was being

withheld, and in light of the difficulty of the undertaking and the unresponsiveness of

Mireles' employees, Westport Insurance's pursuit of documentary evidence of the

improvements' cost was a very reasonable approach to narrowing the scope of possible

valuation for the stolen belts. 

Westport Insurance was expressly entitled, moreover, to press for documentation. The

contract places the burden of providing such documentation on Mireles. (Complaint at Ex.

A at IM-7001 Ed. 1.1 ("Records – 'You' must produce records, including tax returns and

bank microfilms of all cancelled checks relating to value, loss and expense and permit copies

and extracts to be made of them as often as 'we' reasonably request.).) The parties agreed at

oral argument that this provision requires the insured to provide evidence of its loss. 

Lastly, although Mireles does not contest Westport Insurance's motion on the ground

of investigatory delay, Mattei's investigation was significantly delayed by Mireles.1

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step of the way, Mireles took excessive time in providing the documentation sought by

Westport Insurance or in articulating any other form of response. Although no evidence in

the record reveals precisely when Mireles submitted the original documentation required to

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process the claim, Mattei did not receive the two necessary documents until three and four

months after the claim was submitted. (DSOF ¶ 16; doc. # 69 at ¶ 16; Reply Ex. W.) After

Mireles rejected the initially agreed-upon reimbursement and Gary Mattison was informed

that Mireles would contact him to arrange final settlement, Mireles did not do so for three

additional months. (DSOF at ¶ 52; DSOF Ex. W; PSOF Ex. D.) When asked for

documentation of the sale of the stolen belts to Mireles, the acknowledgement of sale was

not provided for six months, nearly two months after its execution. (PSOF Ex. E.) Finally,

when asked for documentation of the improvements, Ruben simply failed to respond, and

Mireles waited thirty-seven days to assert that the documents were unavailable and did not

exist. 

IT IS THEREFORE ORDERED that Westport's Motion for Summary Judgment

(doc. # 48) and Supplement To Defendant's Motion For Summary Judgment (doc. # 64) are

granted in part and denied in part. Westport Insurance's motion for summary adjudication

that two of the belts are subject to liability caps of $13,000 and $12,000 is granted, as is the

motion for summary judgment on the bad faith claim. All Westport Insurance's other

motions are denied.

DATED this 1st day of March 2006.

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