United States District Court, D. Nevada
ORDER GRANTING IN PART AND DENYING IN PART THE
DEFENDANT'S SUMMARY JUDGMENT MOTION (ECF NO. 74)
P. GORDON, UNITED STATES DISTRICT JUDGE
Rosalind Searcy brought this lawsuit for extra-contractual
damages against her insurer, defendant Esurance Insurance
Company, alleging Esurance refused to pay her policy limits
in bad faith and engaged in unfair claims practices. Esurance
moves for summary judgment, arguing Searcy's claims for
breach of contract and unfair claims practices are barred by
claim preclusion because Searcy should have brought those
claims in her prior breach of contract action against
Esurance. Alternatively, Esurance seeks summary judgment
against any award of punitive damages because it contends
Esurance relied in good faith on its counsel's advice.
Esurance also argues Searcy cannot recover attorney's
fees and costs incurred in the underlying breach of contract
action because she agreed to dismiss that action with each
party to bear its own fees and costs. Finally, Esurance
argues Searcy cannot recover damages for actions taken by
Esurance's counsel in the underlying action because those
actions are privileged.
responds that she properly waited until she established her
entitlement to contractual benefits in the first litigation
before bringing extra-contractual claims in this second
lawsuit. As to the punitive damages, Searcy argues that
Esurance cannot rely on the advice of counsel because
Esurance had already decided to deny her the full policy
limits and it ignored its attorney's advice to reevaluate
her claim upon receipt of new evidence. As to the
attorney's fees and costs, Searcy they are recoverable
for her bad faith claim, which was not part of the prior
action. Finally, Searcy contends the litigation privilege
does not apply to Esurance for its bad faith conduct in
forcing its insured to litigate past the time when her right
to benefits became clear.
August 2, 2012, Searcy was injured in a car accident caused
by another driver rear-ending her vehicle. ECF No. 75-10 at
2-3. The insurance company for the person who caused the
accident paid Searcy the policy limit of $15, 000. ECF No.
75-4 at 5.
was insured by Esurance for underinsured motorist coverage up
to $50, 000 per person and $100, 000 per accident. ECF No.
75-1 at 2. Searcy made several demands on Esurance for the
$50, 000 policy limit. ECF Nos. 75-5; 75-6; 75-7. Esurance
agreed to pay some amounts as the case progressed, but never
agreed to pay the full policy limit. ECF Nos. 75-7; 75-8.
September 16, 2013, Searcy filed suit in Nevada state court
against Esurance. ECF Nos. 75-9; 76-1. In that complaint
(Searcy I), Searcy asserted a single claim that
Esurance breached the insurance contract. ECF No. 76-1. She
did not assert extra-contractual claims. Id.
case went to arbitration and Searcy prevailed. ECF No. 76-2.
The arbitrator issued his award on September 5, 2014,
directing Esurance to pay the $50, 000policy limit.
Id. Following the parties' request for
clarification, the arbitrator issued a second order on
September 17 stating that Searcy was entitled to the entire
policy limit without offset for prior recoveries. ECF No.
76-3. The next day, Esurance sent a check for the remaining
balance on the $50, 000 policy limit to its attorney to
forward to Searcy. ECF Nos. 75-11; 75-12 at 8. However,
Searcy did not receive the check until October 23, 2014. ECF
No. 75-12 at 9; 75-13. According to Esurance's attorney,
the delay was caused by the check being mailed to the wrong
address. ECF No. 75-12 at 9. On February 3, 2015,
the parties stipulated to dismiss Searcy I with
prejudice, with each party to bear its own costs and
attorney's fees. ECF No. 76-4.
filed this action (Searcy II) in Nevada state court
on December 4, 2014. ECF No. 1-2. Esurance then removed the
case to this court. ECF No. 1. In her amended complaint,
Searcy asserts against Esurance claims for bad faith and
unfair claims practices. ECF No. 43.
“must give to a state-court judgment the same
preclusive effect as would be given that judgment under the
law of the State in which the judgment was rendered.”
White v. City of Pasadena, 671 F.3d 918, 926 (9th
Cir. 2012) (quotation omitted). I therefore look to
Nevada's rules of preclusion to determine whether
Searcy I bars the claims in this case. Id.
Under Nevada law, claim preclusion applies where: (1)
“the final judgment is valid, ” (2) “the
parties or their privies are the same in the instant lawsuit
as they were in the previous lawsuit, or the defendant can
demonstrate that he or she should have been included as a
defendant in the earlier suit and the plaintiff fails to
provide a good reason for not having done so, ” and (3)
“the subsequent action is based on the same claims or
any part of them that were or could have been brought in the
first case.” Weddell v. Sharp, 350 P.3d 80, 85
(Nev. 2015) (en banc) (quotation and emphasis omitted).
there is no dispute that the final judgment in Searcy
I is valid. The parties stipulated to dismiss Searcy
I with prejudice following the arbitrator's award.
There also is no question the parties are the same in the two
actions. Searcy sued Esurance in both cases.
parties dispute whether Searcy's new claims are based on
the same claims that were or could have been brought in the
first case. “Generally, the date of final judgment in
the first case marks the latest date at which the claim
preclusion bar could apply.” Carstarphen v.
Milsner, 594 F.Supp.2d 1201, 1209 (D. Nev. 2009);
see also Lawlor v. Nat'l Screen Serv. Corp., 349
U.S. 322, 328 (1955) (“While the 1943 judgment
precludes recovery on claims arising prior to its entry, it
cannot be given ...