United States District Court, D. South Dakota, Southern Division
OPINION AND ORDER ON PENDING MOTIONS
ROBERTO A. LANGE UNITED STATES DISTRICT JUDGE
Robin Wiebers (Robin) and Darin Wiebers (Darin) (collectively
the Wiebers) sued their insurance carrier Farmers Mutual Hail
Insurance Company of Iowa (FMH) after FMH declined to pay its
remaining underinsured motorist (UIM) coverage limit of $50,
000 to the Wiebers. The Wiebers' complaint makes claims
for breach of contract, first-party bad faith, intentional
infliction of emotional distress, breach of fiduciary duty,
and unfair or deceptive trade practices, and the Wiebers seek
compensatory and punitive damages and attorney's fees.
FMH filed a motion for partial summary judgment, Doc. 16,
seeking summary judgment on all claims except the breach of
contract claim, and a motion to bifurcate, Doc. 21, in the
alternative to the extent this Court opts not to grant
summary judgment on all non-contractual claims. For the
reasons explained, this Court grants in part FMH's motion
for partial summary judgment and bifurcates the contract
claim for a separate trial preceding any other claim this
Court might allow.
was driving home from work on June 15, 2016, lawfully
traveling between 45 and 55 miles per hour, when another car,
driven by Kerri Ann Latendresse, ran a stop sign and collided
with Robin's vehicle. Doc. 17 at ¶¶ 1-2; Doc.
26 at ¶¶ 1-2; Doc. 27-2 at 20. Robin was badly
injured in the accident and taken by ambulance to a hospital
in Sioux Falls. Doc. 17 at ¶ 3; Doc. 26 at ¶ 3;
Doc. 27-2 at 6.
emergency room doctor diagnosed Robin with a fractured right
ankle and a broken rib. Doc. 32-1 at 1; Doc. 17 at ¶ 3;
Doc. 26 at ¶ 3; Doc. 27-2 at 5. The ankle had punctured
Robin's skin and she would later testify that the injury
was "extremely, extremely painful." Doc. 27-2 at 7;
see also Doc. 32-1 at 1. Robin underwent surgery on
her ankle, with metal hardware being. inserted to repair the
fracture. Doc. 26 at ¶ 3; Doc. 27-2 at 6-7, 11. Robin
took prescription pain medication for two weeks after the
accident and ibuprofen thereafter to control her pain. Doc.
26 at ¶ 3; Doc. 27-2 at 8-10. Robin missed a full month
from her job as an assistant dean at the University of South
Dakota's School of Education and had to use a wheelchair,
scooter, and crutches to get about during her recovery. Doc.
26 at ¶ 3; Doc. 27-2 at 3, 7-8, 27. Robin's family
doctor eventually prescribed medication for what she
suspected was arthritis in Robin's right ankle. Doc. 26
at ¶ 3; Doc. 27-2 at 10. Robin testified that in the
summer of 2017, approximately one year after the accident,
she still had "chronic" and "constant"
ankle pain as well as difficulty going up and down steps and
walking on uneven ground. Doc. 26 at ¶ 3; Doc. 27-2 at
11. In short, Robin testified to life-altering injuries from
the car accident.
also testified that the accident injured her neck, causing
her pain in the neck and shoulder area and numbness in her
fingers. Doc. 26 at ¶ 3; Doc. 27-2 at 5, 17-18. She had
some injections for neck pain in October 2016, but at least
through August 2018 appears not to have received any
treatment for her neck since October 2016. Doc. 26 at ¶
3; Doc. 27-2 at 18-19.
time of the accident, Progressive Northern Insurance Company
(Progressive) insured Latendresse, with liability limits of
$250, 000. Doc. 17 at ¶ 3; Doc. 26 at ¶ 3. The
Wiebers had $300, 000 in UIM coverage with FMH. Doc. 17 at
¶ 3; Doc. 26 at ¶ 3. Under South Dakota law,
"[u]nderinsured motorist coverage allows the insured to
collect the amount of that insured's own coverage less
the amount of the tortfeasor's liability coverage."
Kirchoff v. Am. Cas. Co. of Reading. 997 F.2d 401,
402 n.2 (8th Cir. 1993) (cleaned up and citation omitted);
SDCL § 58-11-9.5. Accordingly, FMH's UIM exposure
was $50, 000-the $300, 000 UIM coverage limit minus the $250,
000 liability limit of Progressive.
Templeton, an FMH claims adjuster, called Robin on June 21,
2016. Doc. 17 at ¶ 6; Doc. 26 at ¶ 6. He notified
her of the $10, 000 medical payment benefit under the FMH
policy and began adjusting the property damage claim. Doc. 17
at ¶ 6; Doc. 26 at ¶ 6. FMH received medical bills
for Robin on July 13, 2016, and paid the $ 10, 000 medical
payment benefit to Sanford Hospital the next day. Doc. 17 at
¶ 7; Doc. 26 at ¶ 7. FMH's file reflects that
it had over one hundred pages of Robin's medical records
by July 14, 2016. Doc. 26 at ¶ 7; Doc. 27-7.
Beeler, another FMH claims adjuster, contacted Robin on July
18, 2016, to discuss the loan on her damaged vehicle. Doc. 17
at ¶ 8; Doc. 26 at ¶ 8. Beeler investigated the
matter and contacted Wells Fargo that day to obtain a pay-off
amount. Doc. 17 at ¶ 8; Doc. 26 at ¶ 8. On July 20,
2016, FMH issued a check to Wells Fargo to pay off the
vehicle loan and sent another check to Robin for her equity
in the vehicle. Doc. 17 at ¶ 8; Doc. 26 at ¶ 8.
called Beeler on August 16, 2016, to discuss the claims
process. Doc. 17 at ¶9; Doc. 26 at ¶ 9. She was
concerned that her own health insurance carrier was paying
her medical bills, but Beeler assured her that this was
normal, and that the health insurance carrier would be
reimbursed through subrogation. Doc. 17 at ¶ 10; Doc. 26
at ¶¶ 9-10; Doc. 20-1 at 8. Robin said she was
confused by the claims process and not sure whether she
needed an attorney, and Beeler explained that hiring an
attorney was Robin's choice. Doc. 17 at ¶ 11; Doc.
26 at ¶ 11; Doc. 20-1 at 8. FMH's claims notes from
this discussion show that Robin had signed a HIPP A
authorization(presumably not for FMH) by August 16,
2016. Doc. 26 at ¶ 9; Doc. 20-1 at 8. The notes from
August 2016 also show that FMH knew Progressive's limits
were $250, 000 and that Robin's medical bills were at
least $72, 558.26, but might be as much as $140, 000. Doc. 26
at ¶ 9; Doc. 20-1 at 7-8.
the Wiebers retained counsel, the Wiebers' attorney on
November 14, 2016, sent a letter to FMH that began:
I am representing Robin and Darin Wiebers concerning
Robin's motor vehicle accident on June 15, 2016. Although
I am seeking confirmation, it is my understanding that the
responsible driver, Kerri Latendresse, had insurance with
Progressive Northern Insurance Company with limits of $250,
000. Perhaps you have already confirmed those limits.
It is also my understanding that there is available from your
company an additional $50, 000 in underinsured motorist
coverage. Please confirm that UEVI coverage.
20-2 at 1. The letter then detailed the Wiebers' damages,
including roughly $87, 000 in past medical expenses, $6,
254.06 in lost income, and prejudgment interest on those
amounts. Doc. 20- 2 at 2-3; Doc. 17 at ¶ 12; Doc. 26 at
¶ 12. Describing Robin's injuries as "life
changing," the Wiebers' attorney predicted that a
jury would award her "several hundred thousand
dollars" for pain and suffering and loss of enjoyment of
life. Doc. 20-2 at 3. As for future damages, the attorney
wrote that Robin had suffered a disk injury in her neck and
had been told that there "is the likelihood of future
surgery." Doc. 20-2 at 4. He also claimed that Robin
would need ankle surgery, either to remove the hardware or
replace her ankle. Doc. 20-2 at 4. Although the attorney had
yet to obtain estimates for Robin's future medical
expenses, he opined that the cost of neck surgery, hardware
removal, and a potential ankle replacement could range
anywhere from $100, 000 to $225, 000. Doc. 20-2 at 4. The
attorney included records from Robin's health insurer
with the letter, but did not provide any medical or lost
income records. Doc. 17 at ¶ 12; Doc. 26 at ¶ 12.
The letter concluded with the following paragraph:
I am attempting to confirm payment of the policy limits by
Progressive National Insurance Company. Please confirm, that
I am willing to accept those policy limits on behalf of your
insured and that you will also pay your underinsured motorist
limits. Again, I don't think there is any question under
good faith and fair dealing that those UIM limits are due and
owing. I would hope to hear back from you regarding payment
of those limits within the next 20 days.
20-2 at 4. FMH did not respond to the November 2016 letter
despite the attorney's request that it do so within
twenty days. Doc. 26 at ¶ 12; Doc. 20-2 at 4.
wrote a claims note in December 2016 recognizing that
Robin's attorney had requested $50, 000 in UIM coverage.
Doc. 20-1 at 5. The note also stated: "Adjust Collision
reserve from $90.48 to $0.00. Increase the sub reserve for
collision to $12, 000 and sub medpay for $10, 000.00.
Increase BIUI to $50, 000 based on the medical bills, lost
wages, out of packet [sic] expenses and general
damages." Doc. 20-1 at 5. In Robin's view, this note
shows that FMH realized that her damages would exceed
Progressive's liability coverage. Doc. 25 at 6. FMH
disagrees, asserting that the note reflects "an
adjustment of the reserves because of how South Dakota
allocates UIM coverage with a credit for the underlying
policy limits." Doc. 30 at 4. FMH filed an affidavit
from Beeler saying that she had simply increased the reserves
and that the reserves "are not an indication of what a
case is worth or valued at." Doc. 31 at ¶ 2.
Wiebers' attorney sent FMH a letter on January 31, 2017,
explaining that Progressive would pay Robin the $250, 000
policy limits if FMH approved this settlement and waived its
subrogation claim under the Schmidt/Clothier
procedure. Doc. 17 at ¶ 13; Doc. 26 at ¶
13; Doc. 20-3 at 1. He wrote that FMH had thirty days to
either pay its UIM limit or substitute its draft for the
payment from Progressive. Doc. 20-3 at 1. If FMH did neither,
the Wiebers' attorney explained, "we will proceed as
though you have waived your right of subrogation, and we will
have our clients execute a full Release with the tortfeasor,
Kerri Latendresse." Doc. 20-3 at 1-2.
wrote the Wiebers' attorney on February 8, 2017,
requesting copies of all medical bills and records concerning
the accident and documentation supporting the lost wages
claim. Doc. 17 at ¶ 14; Doc. 26 at ¶ 14; Doc. 20-4.
She explained that FMH needed this information before it
could decide whether to waive its subrogation rights. Doc.
Wiebers' attorney did not respond to Beeler until a March
10, 2017 letter. Doc. 17 at ¶ 15; Doc. 26 at ¶ 15;
Doc. 20-5. He wrote that Robin would sign a medical
authorization if FHM sent one, even though he had already
provided FMH with information about Robin's bills and
damages in his November 2016 letter. Doc. 17 at ¶ 15;
Doc. 26 at ¶ 15; Doc. 20-5. He also asked FMH to decide
whether to waive subrogation or substitute its draft. Doc. 17
at ¶ 15; Doc. 26 at ¶ 15; Doc. 20-5.
emailed the Wiebers' attorney on March 16, 2017, writing
that she was considering the March 10 letter but that she had
not been able to gather the necessary decision makers because
it was the week of spring break. Doc. 17 at ¶ 16; Doc.
26 at ¶ 16; Doc. 20-6. On March 23, 2017, Beeler
forwarded a medical authorization and a letter stating that
FMH would waive its "medpay subrogation right" and
that the Wiebers could accept the settlement with
Progressive. Doc. 17 at ¶ 16; Doc. 26 at ¶ 16; Doc.
Wiebers' attorney emailed Beeler on April 3, 2017, asking
her to confirm that FMH agreed to waive all of its
subrogation rights, not just the medpay subrogation right
Beeler mentioned in her March 23 letter. Doc. 27-3; Doc. 26
at ¶ 16. He also noted that he was attaching Robin's
medical records and bills that Progressive had gathered. Doc.
27-3; Doc. 26 at ¶ 16. Beeler confirmed the following
day that FMH waived all of its subrogation rights. Doc.
20-15. Doc. 17 at ¶ 17; Doc. 26 at ¶ 17. Thus, the
waiver of FMH's subrogation rights and right to
substitute its draft occurred about 65 days after the January
31, 2017 notice of Progressive having tendered liability
limits, and that time included a 30-day delay in the
Wiebers' attorney responding to FMH's February 8,
received Robin's medical authorization on April 17, 2017,
along with a letter from the Wiebers' attorney opining
that the medical records he had forwarded should be enough
for FHM to resolve Robin's UTJVI claim. Doc. 17 at ¶
18; Doc. 26 at ¶ 18; 20-8. Beeler replied by email,
explaining that FMH was reviewing Robin's records and
would get back to her attorney once this was done. Doc. 17 at
¶ 18; Doc. 26 at ¶ 18; 20-8 at 4.
April 20, 2017, FMH sent Robin's medical records to ReMed
Casualty Consultants (ReMed) for a nurse to review. Doc. 17
at ¶ 19; Doc. 26 at ¶ 19. The ReMed nurse replied
the next day, saying that she needed some additional records
to complete the review but that the records she did have
showed a "high probability" of arthritis in the
ankle and that future surgery could be
necessary. Doc. 17 at ¶ 20; Doc. 26 at
¶¶ 19-20; Doc. 20-1 at 3.
wrote the Wiebers' attorney on May 11, 2017, explaining
that FMH was still gathering Robin's medical records for
the review. Doc. 17 at ¶ 21; Doc. 26 at ¶ 21; Doc.
20-9. The Wiebers' attorney emailed Beeler that same day,
saying that the Wiebers had given FMH ample opportunity to
review the claim and asking whether litigation would be
necessary. Doc. 26 at¶16;Doc. 27-3 at 3.
1, 2017, ReMed informed FMH that it had now gathered the
necessary medical records and that its review should be
complete by June 23, 2017. Doc. 17 at ¶¶ 22-23;
Doc. 26 at ¶¶ 22-23; Doc. 20-1 at 2. Beeler updated
the Wiebers' attorney on the status of Robin's ...