UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

ALFREDO PRIETO, MARIA RAMIREZ, )

and FRANCISCO N. RAMIREZ, )

Plaintiff, )

)

v. ) CAUSE NO.: 2:15-CV-452-JEM

)

STATE FARM INSURANCE COMPANY, )

Defendant. )

OPINION AND ORDER

This matter is before the Court on Defendant, State Farm Mutual Automobile Insurance

Company’s Motion for Partial Summary Judgment [DE 28], filed on November 22, 2017, and

Plaintiffs’ Motion to Strike [DE 38], filed on February 26, 2018.

I. Procedural Background

Plaintiffs Alfredo Prieto, Francisco N. Ramirez, and Maria E. Ramirez filed a Complaint in

state court on November 5, 2015, that was removed to this Court on December 15, 2015. It seeks

damages from Defendant State Farm, including allegations of breach of contract and breach of an

obligation to deal in good faith with respect to State Farm’s nonpayment of funds under a policy

providing under-insured motorist coverage. 

On November 22, 2017, State Farm filed the instant Partial Motion for Summary Judgment.

On February 26, 2018, Plaintiffs filed a response as well as the instant Motion to Strike. State Farm

filed a response to the Motion to Strike and a separate reply in support of its Motion for Summary

Judgment on March 22, 2018.

The parties filed forms of consent to have this case assigned to a United States Magistrate

Judge to conduct all further proceedings and to order the entry of a final judgment in this case. 

Therefore, this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c).
II. Summary Judgment Standard

The Federal Rules of Civil Procedure mandate that motions for summary judgment be

granted “if the movant shows that there is no genuine dispute as to any material fact and the movant

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Rule 56 further requires the entry

of summary judgment, after adequate time for discovery, 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986) (citing Fed. R. Civ. P. 56(c)). “[S]ummary judgment is appropriate – in fact, is mandated –

where there are no disputed issues of material fact and the movant must prevail as a matter of law.

In other words, the record must reveal that no reasonable jury could find for the non-moving party.”

Dempsey v. Atchison, Topeka, & Santa Fe Ry. Co., 16 F.3d 832, 836 (7th Cir. 1994) (citations and

quotations omitted).

A party seeking summary judgment bears the initial responsibility of informing the court of

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

interrogatories, and admissions on file, together with the affidavits, if any, that it believes

demonstrate the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323; Fed. R.

Civ. P. 56(c). The moving party may discharge its initial responsibility by simply “‘showing’ – that

is, pointing out to the district court – that there is an absence of evidence to support the nonmoving

party’s case.” Celotex, 477 U.S. at 325. When the nonmoving party would have the burden of proof

at trial, the moving party is not required to support its motion with affidavits or other similar

materials negating the opponent’s claim. Id. at 323, 325; Green v. Whiteco Indus., Inc., 17 F.3d 199,

201 n.3 (7th Cir. 1994); Fitzpatrick v. Catholic Bishop of Chi., 916 F.2d 1254, 1256 (7th Cir. 1990).

However, the moving party, if it chooses, may support its motion for summary judgment with
affidavits or other materials, and, if the moving party has “produced sufficient evidence to support

a conclusion that there are no genuine issues for trial,” then the burden shifts to the nonmoving party

to show that an issue of material fact exists. Becker v. Tenenbaum-Hill Assoc., 914 F.2d 107,

110-111 (7th Cir. 1990) (citations omitted); see also Hong v. Children’s Mem’l Hosp., 993 F.2d

1257, 1261 (7th Cir. 1993).

Once a properly supported motion for summary judgment is made, the non-moving party

cannot resist the motion and withstand summary judgment by merely resting on its pleadings. See

Fed. R. Civ. P. 56(e); Donovan v. City of Milwaukee, 17 F.3d 944, 947 (7th Cir. 1994). Rule 56(e)

provides that “[i]f a party fails to properly support an assertion of fact or fails to properly address

another party’s assertion of fact as required by Rule 56(c), the court may . . . consider the fact

undisputed for purposes of the motion [or] grant summary judgment if the motion and supporting

materials – including the facts considered undisputed – show that the movant is entitled to it . . . .”

Fed. R. Civ. P. 56(e)(2), (3); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986).

Thus, to demonstrate a genuine issue of fact, the nonmoving party must “do more than simply show

that there is some metaphysical doubt as to the material facts,” but must “come forward with

‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed. R. Civ. P. 56(e)) (emphasis in original).

In viewing the facts presented on a motion for summary judgment, a court must construe all

facts in a light most favorable to the non-moving party and draw all legitimate inferences in favor

of that party. See Liberty Lobby, 477 U.S. at 255; Srail v. Vill. of Lisle, 588 F.3d 940, 948 (7th Cir.

2009); NLFC, Inc. v. Devcom Mid-Am., Inc., 45 F.3d 231, 234 (7th Cir. 1995). A court’s role is not

to evaluate the weight of the evidence, to judge the credibility of witnesses, or to determine the truth

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of the matter, but instead to determine whether there is a genuine issue of triable fact. See Liberty

Lobby, 477 U.S. at 249-50.

III. Facts

On November 6, 2012, a vehicle driven by Plaintiff Alfredo Prieto was in a traffic accident.

Plaintiff Maria Ramirez was a passenger in the vehicle, which was owned by her husband, Plaintiff

Francisco Ramirez. The driver of the other car was the named insured on an automobile policy

written by State Farm with policy limits for bodily injuries of $25,000 per individual. Francisco

Ramirez’s vehicle was covered by a policy written by State Farm on which he was the sole named

insured. The policy provided underinsured motorist’s coverage up to $100,000 “for bodily injury

an insured is legally entitled to recover from the owner or driver of an underinsured motor vehicle.”

Plaintiffs’ injuries exceeded the other individual’s $25,000 policy limits, so Plaintiffs sought

payment from State Farm pursuant to the underinsured motorists coverage in the policy obtained by

Francisco Ramirez. When State Farm did not pay Plaintiffs pursuant to this underinsured motorist

coverage, they brought suit.

IV. Analysis

State Farm argues that it is entitled to summary judgment on Plaintiffs’ claims that it

breached its duty to act in good faith pursuant to the insurance contract between State Farm and

Francisco Ramirez. In Indiana, “there is a legal duty implied in all insurance contracts that the

insurer deal in good faith with its insured.” Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 518

(Ind. 1993). Plaintiffs allege that State Farm has breached that duty.

State Farm argues that Prieto lacks standing to sue State Farm for bad faith because he is

not an insured under the operative automobile insurance contract. In this case, the named insured

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was Francisco Ramirez. Prieto asserts that his status as a “permissive user” of the covered vehicle

makes him an insured under the contract, and that he is therefore entitled to good faith from State

Farm.

Plaintiffs do not dispute that Prieto was not the named insured on the relevant policy, nor do

they allege that he was in privity of contract with State Farm. Instead, he is a third-party beneficiary

of the insurance contract between Francisco Ramirez and State Farm. This gives him standing to sue

to enforce the contract, but under Indiana law, “third-party beneficiaries cannot sue an insurer in tort

for bad faith.” Samaron Corp. v. United of Omaha Life Ins. Co., No. 3:12-CV-397, 2014 WL

4906314, at *14 (N.D. Ind. Sept. 29, 2014) (citing Cain v. Griffin, 849 N.E.2d 507, 514 (Ind. 2006));

Estate of Swan v. Westfield Ins. Co., No. 3:07-CV-69 JVB, 2009 WL 3200298, at *4 (N.D. Ind. Sept.

25, 2009) (“Indiana law does not permit [a third party beneficiary] to bring a direct action against

[an insurance company] on his tort action of bad faith dealing.”). Accordingly, as State Farm

argues, since Prieto was not the named insured, the holder of the policy with State Farm, or in privity

of contract with State Farm, State Farm does not owe him any duty of good faith and fair dealing.

Accordingly, his claim for breach of that duty must fail, and State Farm is entitled to judgment on

Prieto’s claim against it for bad faith. 

The Court next turns to the claims of bad faith brought by the Ramirez Plaintiffs. The Indiana

Supreme Court has recognized that

The obligation of good faith and fair dealing with respect to the

discharge of the insurer’s contractual obligation includes the

obligation to refrain from (l) making an unfounded refusal to pay

policy proceeds; (2) causing an unfounded delay in making payment;

(3) deceiving the insured; and (4) exercising any unfair advantage to

pressure an insured into a settlement of his claim.

Erie Ins. Co. v. Hickman, 622 N.E.2d 515, 519 (Ind. 1993). However, “poor judgment or negligence

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do not amount to bad faith; the additional element of conscious wrongdoing must also be present.

A finding of bad faith requires evidence of a state of mind reflecting dishonest purpose, moral

obliquity, furtive design, or ill will.” Lumbermens Mut. Cas. Co. v. Combs, 873 N.E.2d 692,

713-714 (Ind. Ct. App. 2007) (quoting State Farm Mut. Auto Ins. Co. v. Gutierrez, 844 N.E.2d 572,

580 (Ind. Ct. App. 2006)) (other citations omitted); see also Allstate Ins. Co. v. Fields, 885 N.E.2d

728, 732 (Ind. Ct. App. 2008).

State Farm argues that there is no indication that it had conscious wrongdoing with respect

to its treatment of the insurance claims in this case. In Indiana, “a good faith dispute about the

amount of a valid claim or about whether the insured has a valid claim at all will not supply the

grounds for a recovery in tort for the breach of the obligation to exercise good faith.” Erie Ins. Co.

v. Hickman by Smith, 622 N.E.2d 515, 520 (Ind. 1993) (listing cases). State Farm argues that it

diligently investigated Plaintiffs’ injuries and attempted to obtain continued information from

counsel for Plaintiffs, including requests for authorization of payments, to obtain utilization reviews

after treatment exceeded a year, and for an under-insured motorists claim demand.

Plaintiffs make no argument regarding State Farm’s good faith with respect to Maria and

Francisco Ramirez, and therefore have waived these claims. See De v. City of Chicago, 912 F. Supp.

2d 709, 733-34 (N.D. Ill. 2012) (summarizing a large body of case law concluding that “the

opposing party waives any argument that it does not present and develop in its memorandum of law

in opposition to summary judgment”) (citations omitted). As to Prieto, Plaintiffs argue that there are

genuine issues of fact regarding what they characterize as “Defendant’s delay and refusal to pay

Prieto’s UIM claim.” However, as described above, Prieto is owed no duty of good faith as a thirdparty beneficiary to the contract. Accordingly, State Farm is entitled to summary judgment on the

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claims of bad faith as to all three Plaintiffs. 

Plaintiffs also move to strike materials designated by State Farm in support of its Motion.

In particular, they argue that significant portions of one affidavit be stricken because those

statements lack basis in the affiant’s personal knowledge and include inadmissible hearsay, and

argue that two other exhibits should be stricken because they are not properly authenticated by that

affidavit. However, the Court has found that Prieto cannot bring a claim for bad faith against State

Farm, and Plaintiffs have abandoned any such claims on behalf of the Ramirez Plaintiffs, so the

Court need not consider or rely on the affidavits for determinations regarding State Farm’s treatment

of Plaintiffs’ insurance claims.

V. Conclusion

For the foregoing reasons, the Court hereby GRANTS Defendant, State Farm Mutual

Automobile Insurance Company’s Motion for Partial Summary Judgment [DE 28] and ORDERS

that judgment is entered in favor of Defendant State Farm on all of Plaintiffs’ claims for breach of

good faith. The Court DENIES as moot Plaintiffs’ Motion to Strike [DE 38].

SO ORDERED this 12th day of July, 2018.

s/ John E. Martin 

MAGISTRATE JUDGE JOHN E. MARTIN

UNITED STATES DISTRICT COURT

cc: All counsel of record

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