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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Charles Nyakondo, et al.,

Plaintiffs,

v. 

Still Water Insurance Company,

Defendant.

No. CV-18-00090-PHX-JAT

ORDER 

Pending before the Court is Defendant’s Motion for Summary Judgment (Doc. 30).

The Court now rules on the motion.1

I. BACKGROUND

On June 28, 2018, Defendant Stillwater Insurance Company (“Defendant”) filed the 

pending Motion for Summary Judgment (Doc. 30). Plaintiffs Charles and Elizabeth 

Nyakondo (individually and collectively, “Plaintiffs”) filed a Response on July 30, 2018 

(Doc. 31). Defendant did not file a reply memorandum. The Court liberally construes 

Plaintiffs’ Complaint (Doc. 1-1) to assert causes of action for breach of contract and bad 

faith. (Doc. 1-1 at 4–7).

2

 

1 Although Defendant requested oral argument on its motion, the Court will not set 

oral argument because it would not aid the Court’s decisional process. See Partridge v. 

Reich, 141 F.3d 920, 926 (9th Cir. 1998); Lake at Las Vegas Investors Grp., Inc. v. Pac. 

Malibu Dev. Corp., 933 F.2d 724, 729 (9th Cir. 1991).

2

In the case of a pro se complainant, the pleadings must be construed liberally, and 

the plaintiff must be given the “benefit of any doubt.” Abassi v. I.N.S., 305 F.3d 1028, 1032 

(9th Cir. 2002) (citations omitted).
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A. Facts

The following facts are either undisputed or recounted in the light most favorable to 

the non-moving party. At all relevant times, Plaintiffs’ home was insured by Defendant. 

(Doc. 31 at 2).3 On April 24, 2017, Plaintiffs’ home suffered water damage from a toilet 

overflow. (Id. at 1). Plaintiffs contacted Defendant the same day (Id.). The following day, 

Defendant sent a property claims examiner and an inspector to the home. (Compare Doc. 

30 at 1–2 with Doc. 31 at 2). Defendant also secured temporary lodging for Plaintiffs

through a temporary housing placement company, starting April 25, 2017. (Doc. 31 at 3). 

On April 26, 2017, Pelican Power, LLC (“Pelican”) inventoried Plaintiffs’ personal 

property items that were damaged in the incident and took some of the damaged items into 

storage. (Id.).4 Pelican valued the totality of Plaintiffs’ damaged personal items at 

$17,931.47. (Id. at 6 (citing Id. at 19–21)). Plaintiffs sent a copy of this list of damaged 

items and Pelican’s valuation to Defendant’s property claims examiner on June 9, 2017. 

(Id. at 7 (citing Id. at 38)). Following Defendant’s inspection process, Defendant 

reimbursed Plaintiffs $6,369.44 for the damaged personal property on or around July 27, 

2018. (Id. at 5–6 (citing Id. at 30); see also Doc. 30-11 at 2).5 Plaintiffs disputed the 

sufficiency of this compensation and requested that Pelican not dispose of any items stored 

by Pelican. (Doc. 31 at 6–7). Nevertheless, Pelican disposed of Plaintiffs’ items without 

Plaintiffs’ consent. (Id. at 6). 

On May 30, 2017, the temporary housing placement company notified Plaintiffs

 

3 Neither party provided a copy of the insurance policy, but there does not appear to 

be any dispute that the water damage incident suffered at Plaintiffs’ home is a covered 

event under the policy.

4 The Court observes that Pelican is not a party to this lawsuit. Accordingly, any 

grievances levied by Plaintiffs against Pelican are not redressable in this action. 

5 Elsewhere, Plaintiffs assert that Defendant covered damaged personal items in the 

amount of $6,624.98. (Doc. 31 at 6). While the record reflects that Defendant issued 

payment in the amount of $6,369.44, the difference between those two figures is immaterial 

to outstanding issues before the Court. (Compare Doc. 31 at 6 with Doc. 30-11 at 2).

Additionally, the Court observes that Defendant’s estimated the full cost of 

Plaintiffs’ personal property at $10,615.72 before factoring in applicable depreciation of 

$4,246.28 to arrive at the $6,369.44 claim payment. (Doc. 30-12 at 2). 
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that they would have to vacate their temporary lodging on June 28, 2017. (Id. at 7 (citing 

Id. at 40)). The remodeling company working at Plaintiffs’ home, however, did not certify

that remodeling work was complete until July 12, 2017. (Id. (citing Id. at 42)). 

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when “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). “A party asserting that a fact cannot be or is genuinely disputed must support that 

assertion by . . . citing to particular parts of materials in the record, including depositions, 

documents, electronically stored information, affidavits, or declarations, stipulations . . . 

admissions, interrogatory answers, or other materials,” or by “showing that materials cited 

do not establish the absence or presence of a genuine dispute, or that an adverse party 

cannot produce admissible evidence to support the fact.” Id. 56(c)(1)(A), (B). Thus, 

summary judgment is mandated “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). 

Initially, the movant bears the burden of demonstrating to the Court the basis for the 

motion and the elements of the cause of action upon which the non-movant will be unable 

to establish a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmovant to establish the existence of material fact. Id. A material fact is any factual issue 

that may affect the outcome of the case under the governing substantive law. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant “must do more than simply 

show that there is some metaphysical doubt as to the material facts” by “com[ing] 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)). A 

dispute about a fact is “genuine” if the evidence is such that a reasonable jury could return 

a verdict for the non-moving party. Liberty Lobby, Inc., 477 U.S. at 248 (1986). The nonmovant’s bare assertions, standing alone, are insufficient to create a material issue of fact 

and defeat a motion for summary judgment. Id. at 247–48. However, in the summary 
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judgment context, the Court construes all disputed facts in the light most favorable to the 

non-moving party. Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004).

At the summary judgment stage, the Court’s role is to determine whether there is a 

genuine issue available for trial. There is no issue for trial unless there is sufficient evidence 

in favor of the non-moving party for a jury to return a verdict for the non-moving party. 

Liberty Lobby, Inc., 477 U.S. at 249-50. “If the evidence is merely colorable, or is not 

significantly probative, summary judgment may be granted.” Id. (citations omitted).

III. ANALYSIS

Defendant moves for summary judgment on Plaintiffs’ claims, which the Court 

believes sound in bad faith and breach of contract. (Doc. 30). Due to the ambiguity of the 

Complaint (Doc. 1-1), the Court will address each cause of action in turn.

A. Bad Faith

Defendant first argues that it is entitled to summary judgment on Plaintiffs’ claim 

for bad faith. (Doc. 30 at 4).

1. Legal Standard

“The tort of bad faith arises when the insurer ‘intentionally denies, fails to process 

or pay a claim without a reasonable basis.’ ” Zilisch v. State Farm Mut. Auto. Ins. Co., 995 

P.2d 276, 279–80 ¶ 20 (Ariz. 2000) (quoting Noble v. Nat’l Am. Life Ins. Co., 624 P.2d 

866, 868 (Ariz. 1981)). An insured alleging a bad faith claim against his insurer must show 

that “in the investigation, evaluation, and processing of the claim,” the insurer acted 

unreasonably, and either knew or recklessly disregarded the fact that its conduct was 

unreasonable. Id. at 280 ¶ 22; Noble, 624 P.2d at 868. “The first prong of the test for bad 

faith is an objective test based on reasonableness. The second prong is a subjective test, 

requiring the plaintiff to show that the defendant insurance company committed 

consciously unreasonable conduct.” Milhone v. Allstate Ins. Co., 289 F.Supp.2d 1089, 

1094 (D. Ariz. 2003) (citing Trus Joist Corp. v. Safeco Ins. Co., 735 P.2d 125, 134 (Ariz. 

Ct. App. 1986)).

In Zilisch, the Arizona Supreme Court clarified that considerations such as whether 
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the claim was fairly debatable are not the beginning and the end of the bad faith analysis. 

Zilisch, 995 P.2d at 280 ¶ 21. “[W]hile fair debatability is a necessary condition to avoid a 

claim of bad faith, it is not always a sufficient condition.” Id. at 280 ¶ 22. Nor does the fact 

that an insurer ultimately pays a claim preclude a finding of bad faith, if the insurer acted 

unreasonably in its processing of the claim. Id. at 279–80 ¶ 20 (“[I]f an insurer acts 

unreasonably in the manner in which it processes a claim, it will be held liable for bad faith 

‘without regard to its ultimate merits.’ ” (citation omitted)).

2. Analysis

Plaintiffs implicitly argue that Defendant committed the tort of bad faith by failing 

to pay the full estimated value of their damaged personal property items stored by Pelican 

and for poor communication throughout the handling of the claim. (Doc. 31 at 4, 6). First, 

Plaintiffs point out that there is a discrepancy of over $10,000 in the valuation placed on 

their damaged property by Pelican and the amount paid to cover the damaged personal 

property items by Defendant. (Compare Doc. 31 at 21 (Pelican’s valuation of $17,931.47) 

with Doc. 30-11 at 2 (Defendant’s payment of $6,369.44)). Defendant asserts, without a 

supporting citation, that “a difference in estimates is not evidence of breach of contract or 

bad faith[.]” (Doc. 30 at 5). Insurers, however, “cannot lowball claims or delay claims 

hoping that the insured will settle for less.” Young v. Allstate Ins. Co., 296 F. Supp. 2d 

1111, 1116 (D. Ariz. 2003); see also Daly v. Royal Ins. Co. of Am., No. Civ. 00-0040-PHXSRB, 2002 WL 1768887, at *16 (D. Ariz. July 17, 2002) (“Summary judgment is not 

appropriate on the bad faith claim involving [a defendant’s] alleged efforts to ‘low-ball’ 

the Plaintiffs”). 

Moreover, Defendant fails to articulate a sufficient basis for its lower valuation 

beyond the conclusory statement “that reasonable minds may have differed in terms of the 

evaluation of personal property items[.]” (Doc. 30 at 5). “Such a conclusory statement, 

however, does not demonstrate that Defendant’s acts and omissions in investigating, 

evaluating, and processing [Plaintiffs’] claim were not unreasonable as a matter of law.” 

Young, 296 F. Supp. 2d at 1116 (finding that a bad faith claim must survive summary 
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judgment over a defendant-insurance company’s argument “that the parties here clearly 

had a good faith dispute about the value of [the plaintiff’s] claim” without satisfactorily 

demonstrating why the value was “fairly debatable”). Defendant points to evidence that it 

immediately acknowledged coverage for the loss and ultimately paid Plaintiffs’ claim, but 

“the fact that an insurer ultimately pays a claim [does not] preclude a finding of bad faith[.]” 

(See Doc. 30-1; Doc. 30-2); see also Zilisch, 995 P.2d at 279–80 ¶ 20. Defendant’s vague 

correspondence likewise cannot establish its reasonableness as a matter of law. (See Doc. 

30-9 (email regarding inspection of damaged items stored by Pelican); Doc. 30-10 (the 

same); Doc. 30-11 (coverage letter); Doc. 30-12 (replacement cost coverage statement)). 

Conversely, Plaintiffs provide that the “claims adjuster [ ] could not be reached for 

sometimes more than a week at a time,” and the claim was only processed after Plaintiffs 

contacted the claim adjuster’s manager. (Doc. 31 at 7). The record indicates that Pelican 

had similar communication issues with Defendant (Doc. 31 at 34 (email from Pelican 

stating that “[w]e have attempted to call the adjuster . . . and he has not returned our call in 

about a week”)). 

Here, the unresolved discrepancy in Pelican’s valuation and that of Defendant 

creates a genuine dispute of fact regarding the reasonableness of Defendant’s handling of 

Plaintiffs’ claim. (See Doc. 30 at 4; Doc. 30-7 at 2). “While an insurer may challenge claims 

which are fairly debatable, its belief in fair debatability is a question of fact to be 

determined by the jury.” Zilisch, 995 P.2d at 279 ¶ 20 (internal quotation marks and citation 

omitted). Accordingly, Defendant is not entitled to summary judgment on the claim of bad 

faith because, on this record, the Court cannot say as a matter of law whether Defendant’s

valuation is “fairly debatable.” Zilisch, 995 P.2d at 280 ¶ 22 (“fair debatability is a 

necessary condition to avoid a claim of bad faith”). Additionally, Defendant’s 

communication delays throughout the claim handling process provide further evidence to 

support Plaintiffs’ claim of bad faith.

B. Breach of Contract

Defendant also argues that it is entitled to summary judgment on Plaintiffs’ claim 
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for breach of contract. (Doc. 30 at 5).

1. Legal Standard

“An insurance policy is a contract between the insurer and its insured.” Liberty Ins. 

Underwriters, Inc. v. Weitz Co., LLC, 158 P.3d 209, 212 (Ariz. Ct. App. 2007). Under 

Arizona law, the elements of a breach of contract claim are: “(1) the existence of a contract; 

(2) breach; and (3) resulting damages.” First Am. Title Ins. Co. v. Johnson Bank, 372 P.3d 

292, 297 (Ariz. 2016).

2. Analysis

Here, it is undisputed that Plaintiffs’ insurance policy is a contract between the 

parties. See Liberty Ins. Underwriters, Inc., 158 P.3d at 212. Defendant argues that it did 

not breach that contract because it paid all benefits due to Plaintiffs in a timely manner, 

including all legitimate alternative living expenses owed to Plaintiffs under the policy. 

(Doc. 30 at 5). Conversely, Plaintiffs argue that Defendant failed to fully cover Plaintiffs’ 

loss and specifically failed to pay for temporary lodging on the night of the incident and 

near the completion of restoration work on Plaintiffs’ home. (Doc. 31 at 2–3, 8). The record 

is undisputed that Defendant did secure temporary lodging for Plaintiffs starting on April 

25, 2017; one day after Plaintiffs first contacted Defendant to report the incident. (Doc. 31 

at 1–2). Additionally, the temporary lodging was only available to Plaintiffs until June 28, 

2017, even though remodeling work at Plaintiffs’ home was not complete until July 12, 

2017. (Id. at 7 (citing Id. at 40, 42)).

Without a copy of the insurance policy, the Court cannot determine the extent of 

Defendant’s obligations to provide temporary lodging thereunder, other than to recognize 

that Defendant had some obligation based on the parties’ course of dealing. See supra Part 

I(A) n.2. Accordingly, the Court finds that Defendant, as the moving party, fails to carry 

the initial burden of production required to prevail on its motion for summary judgment

with respect to the breach of contract claim.

6

 

6

“A moving party without the ultimate burden of persuasion at trial . . . has both the 

initial burden of production and the ultimate burden of persuasion on a motion for summary 

judgment.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 

1103 (9th Cir. 2000). “[T]o carry its burden of production, the moving party must either 
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Additionally, there is evidence in the record to create a dispute that Defendant failed 

to fully cover Plaintiffs’ claim for damaged personal property based not only on Plaintiffs’ 

affidavit to that effect, but also the discrepancy between Pelican’s valuation of Plaintiffs’ 

personal property and the amount paid by Defendant. See supra Part III(A). Accordingly, 

Defendant is not entitled to summary judgment on the claim of breach of contract.

IV. CONCLUSION

For the reasons set forth above, 

IT IS ORDERED that Defendant’s Motion for Summary Judgment (Doc. 30) is 

DENIED. The Clerk of the Court shall not enter judgment at this time.

Dated this 13th day of December, 2018.

 

produce evidence negating an essential element of the nonmoving party’s claim or defense 

or show that the nonmoving party does not have enough evidence of an essential element 

to carry its ultimate burden of persuasion at trial.” Id. If a moving party fails to carry its 

initial burden of production, the nonmoving party has no obligation to produce anything, 

even if the nonmoving party would have the ultimate burden of persuasion at trial. Id. at 

1102–03. “In such a case, the nonmoving party may defeat the motion for summary 

judgment without producing anything.” Id. Such is the case here. On the record before it, 

the Court finds that there is a genuine dispute of fact regarding whether Defendant breached 

the insurance contract by failing to provide Plaintiffs with sufficient temporary lodging.