Court Opinion

ID: 4092652
Source: CourtListenerOpinion
Date Created: 2016-10-25 21:01:24.753388+00
Date Added: 2024-06-11T14:35:28.063544
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                           OCT 25 2016
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
ALYSSA WINSTEAD, individually and                No.   14-35364
on behalf of all individuals of the class
similarly situated; LISA LUBICK                  D.C. No. 2:14-cv-00006-SEH
PATTON,

              Plaintiffs-Appellants,             MEMORANDUM*

 v.

STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,

              Defendant-Appellee.

                    Appeal from the United States District Court
                            for the District of Montana
                     Sam E. Haddon, District Judge, Presiding

                            Submitted October 5, 2016**
                               Seattle, Washington

Before: W. FLETCHER, FISHER, and N.R. SMITH, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Plaintiffs Alyssa Winstead and Lisa Patton appeal from the district court’s

order granting defendant State Farm’s motion to dismiss for failure to state a claim.

We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

      We review de novo dismissals under Federal Rule of Civil Procedure

12(b)(6). Kahle v. Gonzales, 487 F.3d 697, 699 (9th Cir. 2007). We “accept[] the

complaint’s well pleaded allegations of fact and construe[] them in the plaintiff’s

favor.” Id. A district court’s decision not to abstain is reviewed for abuse of

discretion. Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1223 (9th Cir. 1998).

      1. The district court did not abuse its discretion in declining to remand

under federal abstention doctrines. Because Winstead alleged an independent

claim for monetary relief under the Montana Unfair Trade Practices Act

(“UTPA”), Brillhart/Wilton abstention is not appropriate. See United Nat’l Ins.

Co. v. R&D Latex Corp., 242 F.3d 1102, 1112 (9th Cir. 2001) (“[W]hen other

claims are joined with an action for declaratory relief . . . the district court should

not, as a general rule, remand or decline to entertain the claim for declaratory

relief.” (internal quotation marks omitted)). Pullman abstention does not apply

because it is applicable only in cases, unlike this one, that present federal

constitutional issues. See Colorado River Water Conservation Dist. v. United

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States, 424 U.S. 800, 814 (1976) (Pullman abstention is not appropriate when a

case “presents no federal constitutional issue for decision.”).

      2. To the extent the district court suggested this action is not justiciable

under federal law, we do not agree. For a declaratory judgment action

to satisfy Article III justiciability requirements, there must be a “substantial

controversy, between parties having adverse legal interests, of sufficient

immediacy and reality to warrant the issuance of a declaratory judgment.”

Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941). These

requirements are satisfied.

      3. To the extent the district court dismissed this action on the merits, it did

not err, because Winstead fails to state a claim under the UTPA. It provides, inter

alia, that an insurer may not make misrepresentations regarding policy provisions,

refuse to pay claims without conducting a reasonable investigation, or neglect to

attempt in good faith to effectuate a fair settlement after liability has become

reasonably clear. Mont. Code Ann. § 33-18-201. Winstead alleges that State Farm

violated the UTPA by improperly relying on Montana’s collateral source statute,

§ 27-1-308, in making its settlement offer. The collateral source statute provides

that, under certain circumstances, after receipt of a tort award, “a plaintiff’s

recovery must be reduced by any amount paid or payable from a collateral source

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that does not have a subrogation right.” Mont. Code Ann. § 27-1-308. Winstead

argues that State Farm was not entitled to consider the statute in making its

settlement offer.

      State Farm’s consideration of the collateral source statute during settlement

negotiations is not actionable under the UTPA. See Miller v. State Farm Mut.

Auto. Ins. Co., 155 P.3d 1278, 1282 (Mont. 2007) (rejecting the argument that an

“insurer cannot avail itself of the collateral source reduction and must make a

settlement offer that has not been reduced by collateral source payments”).

Winstead cites no case law to support her argument that this consideration was

improper. Instead, she relies on several bad faith cases that are readily

distinguishable. For example, Winstead cites Holmgren v. State Farm Mut. Auto.

Ins. Co., in which the Ninth Circuit concluded that State Farm acted in bad faith

when it took advantage of a claimant’s need for funds to force acceptance of an

unreasonably low settlement. 976 F.2d 573, 578 (9th Cir. 1992). Because

Winstead does not allege any facts suggesting that State Farm acted in bad faith in

considering the collateral source statute, she fails to state a claim upon which relief

can be granted.

      4. Winstead lacks standing to challenge the constitutionality of Montana’s

collateral source statute. Winstead concedes the statute does not apply to

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settlements, so she faces no “realistic danger of sustaining a direct injury” as a

result of the statute. Babbitt v. United Farm Workers Nat. Union, 442 U.S. 289,

298 (1979).

      AFFIRMED.

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