Lindfors v. State Farm Mutual Automobile Insurance Company

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
CORINNE LINDFORS,
Plaintiff,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,
Defendant.
Case No. 3:20-cv-00178-SLG
ORDER RE DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Before the Court at Docket 47 is Defendant State Farm Mutual Automobile
Insurance Company’s (“State Farm’s”) Motion for Partial Summary Judgment on
Plaintiff’s Claim for “Litigation Induced Stress” Damages. Plaintiff Corinne Lindfors
(“Ms. Lindfors”) responded in opposition at Docket 52. State Farm replied at
Docket 58. Oral argument was not requested and was not necessary to the Court’s
determination.
BACKGROUND
This litigation stems from a dispute between Ms. Lindfors and State Farm
regarding insurance coverage for injuries Ms. Lindfors sustained in a January 2019
motor vehicle collision.1 At the time, Ms. Lindfors had three automobile insurance
1 See Docket 1-1.
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policies from State Farm insuring three different vehicles,2 each of which included
underinsured motorist (UIM) coverage with limits of $250,000/person or
$500,000/accident and “med pay” coverage in the amount of $25,000/person.3
Ms. Lindfors notified State Farm of her med pay and UIM claims arising from the
accident, which State Farm valued at $152,874.12.4 Ms. Lindfors disagreed with
this valuation decision and ultimately commenced an action against State Farm in
the Superior Court for the State of Alaska on June 15, 2020, asserting breach of
contract and “bad faith” claims, and seeking recovery of compensatory, punitive,
and consequential damages.5 On July 24, 2020, State Farm removed the case to
this Court on the basis of diversity jurisdiction.6
State Farm filed the instant motion on July 27, 2021, seeking partial
summary judgment on Ms. Lindfors’ claim for emotional distress damages “to the
extent the claimed ‘emotional distress’ is due to the litigation process itself and
positions that State Farm has taken in defending itself.”7
2 Docket 1-1 at 2, ¶¶ 5–6; Docket 6 at 2, ¶ 5.
3 Docket 1-1 at 3, ¶ 7; Docket 6 at 3, ¶ 7.
4 Docket 1-1 at 5, 7, ¶¶ 15, 20.
5 Docket 1-1 at 11–17.
6 Docket 1 at 2, ¶¶ 2–3.
7 Docket 47 at 1.
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LEGAL STANDARD
Federal Rule of Civil Procedure 56(a) directs a court to “grant summary
judgment 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.” The burden of
showing the absence of a genuine dispute of material fact lies with the moving
party.8 If the moving party meets this burden, the non-moving party must present
specific factual evidence demonstrating the existence of a genuine issue of fact.9
Whether emotional distress damages are recoverable for a particular harm
is a question of law.10 There are no genuine issues of material fact relevant to the
instant motion.11
DISCUSSION
State Farm asks the Court to preclude Ms. Lindfors from seeking damages
for stress she has experienced as a result of the litigation process.12 While Ms.
Lindfors does not specifically allege such damages in her complaint, State Farm
8 Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
9 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986).
10 See Nelson v. Progressive Corp., 976 P.2d 859, 868 (Alaska 1999) (holding that emotional
distress damages are permissible under a theory of fraud “only when such damages are
severe”); see also Madonna v. Tamarack Air, Ltd., 298 P.3d 875, 878 (Alaska 2013).
11 Whether denominated as a motion for summary judgment or as a motion for a rule of law, the
Court intends this order to guide the parties on this legal issue, with further refinement anticipated
in the jury instructions.
12 Docket 47 at 1; see also Docket 58 at 1–2 (requesting that the Court preclude Ms. Lindfors
from “presenting testimony, evidence or argument regarding the stress associated with litigation
itself (i.e. having to appear for a deposition, having to appear for an IME, the time it takes for a
lawsuit to proceed etc.)”).
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points to Ms. Lindfors’ deposition testimony, in which she stated: “[T]his is an
incredibly stressful process for me, this is not – this is – it’s just stressful, it’s
weighing on me, this – this process.”13 State Farm asserts that federal courts have
unanimously precluded “claims for stress related to the litigation process itself.”14
The insurer also contends that the Alaska Supreme Court “impliedly held that such
damages were not recoverable” in Buoy v. ERA Helicopters, Inc., a case in which
the court upheld the superior court’s decision to allow a defendant to argue that it
was not liable for the plaintiff’s “litigation-induced depression.”15
Ms. Lindfors responds that an insured is “entitle[d] to emotional and financial
distress damages for the entire time the insurer acts in bad faith and delays paying
insurance proceeds” and that proving those damages requires “a lesser showing
than the recovery of emotional distress outside the special relationship arising from
the insurance contract.”16 She maintains that all but one of the cases State Farm
relies on in the instant motion are not relevant because they were decided in other
jurisdictions and did not involve first-party bad faith claims.17 Ms. Lindfors also
13 Docket 47 at 3 (Ex. A).
14 Docket 47 at 2–4 (citing Knussman v. Maryland, 272 F.3d 625, 641–42 (4th Cir. 2001);
Zimmerman v. Direct Fed. Credit Union, 262 F.3d 70, 79 (1st Cir. 2001); Stoleson v. United
States, 708 F.2d 1217, 1223 (7th Cir. 1983); Flowers v. First Hawaiian Bank, 295 F. Supp. 2d
1130, 1140 (D. Haw. 2003); Picogna v. Bd. of Educ. of Twp. of Chery Hill, 671 A.2d 1035, 1039
(N.J. 1996)).
15 Docket 47 at 3 (quoting Buoy v. ERA Helicopters, Inc., 771 P.2d 439, 445 (Alaska 1989)).
16 Docket 52 at 2, 8.
17 Docket 52 at 5–6 (“[E]mployment contract cases are not relevant authority for what damage
are compensable for insurance bad faith.”).
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distinguishes Buoy, asserting that that case “addressed the scope of fair cross-
examination relative to an expert’s opinions on causation” rather than “address[ing]
what damages are compensable when an insurer acts in bad faith.”18
State Farm replies that it “is not disputing that Lindfors is free to attempt to
prove that she sustained emotional distress due to the actual pre-litigation handling
of her UIM claim” but rather asserting that she cannot recover for “experiencing
emotional distress associated with the discovery and motion practice related to
pursuing claims against State Farm.”19 The insurer also maintains that
“[r]egardless of the type of claim asserted, the legal authority cited by State Farm
stands for the common-sense proposition that a plaintiff cannot recover damages
based on the fact that it is stressful and can cause anxiety to participate in a lawsuit
as a party.”20
The Alaska Supreme Court has not directly addressed the issue of whether
litigants can recover for the emotional distress associated with being a party to
litigation.21 “When the state’s highest court has not squarely addressed an issue,”
18 Docket 52 at 7 (emphasis omitted) (citing Buoy, 771 P.2d at 441, 444–45).
19 Docket 58 at 4.
20 Docket 58 at 2–3.
21 See Allen v. State Farm Mut. Auto. Ins. Co., Case No. 3:15-cv-0019-HRH, 2018 WL 1474526,
at *7 (D. Alaska Mar. 26, 2018). Neither party has identified any Alaska state court case in
which a party was permitted to seek damages based on litigation-induced emotional distress,
and the Court is not aware of such a case. Successful litigants in first-party bad faith cases in
Alaska have seemingly only received damages for emotional distress when that distress was
caused by the delay or denial of their insurance claim. See, e.g., Ennen v. Integon Idem. Corp.,
268 P.3d 277, 290–91 (Alaska 2012).
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a federal court “must ‘predict how the highest state court would decide the issue
using intermediate appellate court decisions, decisions from other jurisdictions,
statutes, treaties and restatements for guidance.’”22 The District of Alaska recently
made such a prediction in Allen v. State Farm, another first-party bad faith case,
concluding that “the Alaska Supreme Court would hold that litigation-induced
stress is not recoverable, primarily because ‘the heavy weight of authority holds
that litigation-induced stress is not ordinarily recoverable as an element of
damages.’”23 A survey of federal and state cases that discuss litigation-induced
stress supports Allen’s determination that such emotional distress is generally not
compensable.24 The Court finds the reasoning of these cases persuasive: “[T]here
22 First Intercontinental Bank v. Ahn, 798 F.3d 1149, 1157 (9th Cir. 2015) (quoting Glendale
Assocs., Ltd. v. Nat’l Lab. Relations Bd., 347 F.3d 1145, 1154 (9th Cir. 2003)).
23 Allen, 2018 WL 1474526, at *7.
24 See, e.g., Knussman, 272 F.3d at 641–42 (reversing damages award for § 1983 claim
because plaintiff’s “anxiety and emotional distress in large measure were associated with the
litigation of [the] action” and thus not compensable); Zimmerman, 262 F.3d at 80 (implying that
damages would be “undeserved” if awarded based on “the effects of litigation-induced stress”);
Fees v. Am. Family Life Ins. Co. of Columbus, Case No. 19-CV-0476-CVE-JFJ, 2021 WL
2104990, at *6 (May 25, 2021) (“[L]itigation-induced distress is not compensable in a bad faith
action against an insurer.”); Rainville v. Boxer Blake & Moore PLLC, Case No. 2:20-cv-0051,
2021 WL 949415, at *10 (D. Vt. Mar. 12, 2021); Gorawara v. Caprio, Case No. 3:19-cv-756
(MPS), 2020 WL 5097488, at *7 (D. Conn. Aug. 28, 2020); Wright v. Watkins & Shepard
Trucking, Inc., Case No. 2:11-CV-01575-LRH-GWF, 2016 WL 10749220, at *10 (D. Nev. Jan.
19, 2016); Leporace v. N.Y. Life & Annuity Corp., Case No. 11-2000, 2014 WL 1806788, at *3
(E.D. Pa. May 7, 2014); Karl v. City of Mountlake Terrace, Case No. C09-1806RSL, 2011 WL
2173848, at *4 (W.D. Wash. June 2, 2011); Gasque v. Williamsburg Cnty. Sch. Dist., Case No.
4:07-cv-01757-RBH, 2009 WL 10711823, at *2 (D.S.C. Oct. 22, 2009); Flowers, 295 F. Supp. 2d
at 1140; Blakey v. Continental Airlines, Inc., 992 F. Supp. 731, 736 n.3 (D.N.J. 1998); State ex
rel. Universal Underwriters Ins. Co. v. Wilson, 801 S.E.2d 216, 225 n.18 (W. Va. 2017); Picogna,
671 A.2d at 1039; Torres v. Auto. Club of S. Cal., 43 Cal. Rptr. 2d 147, 150–55 (Cal. Ct. App.
1995), reversed on other grounds, 937 P.2d 290 (Cal. 1997); Sch. Dist. No. 1, Multnomah Cnty.
v. Nilsen, 534 P.2d 1135 (Or. 1975); see also Barry A. Lindahl, 4 Modern Tort Law: Liability and
Litigation § 31:2 (2d ed. 2021) (“The majority of the courts which have addressed the issue have
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is no question that filing a lawsuit . . . is the plaintiff’s decision, and imposing
additional damages on the defendant for defending against the plaintiff’s claim
would impair the defendant’s right to defend [itself].”25 Further, the Court agrees
with State Farm that the Alaska Supreme Court’s reasoning in Buoy implicitly relied
on the premise that litigation-induced stress is not compensable, as the court held
that the superior court did not err by permitting the defendant to question witnesses
regarding whether the plaintiff’s depression was caused by the underlying
helicopter accident or the ensuing litigation.26 That topic would not have been
relevant if the defendant were liable for emotional distress stemming from both the
accident and the litigation.27 Thus, the Court agrees with Allen’s conclusion that
Alaska law does not allow recovery for emotional distress caused solely by being
a party to a lawsuit and having to participate in discovery and trial.
treated litigation-induced stress as a non-compensable component of damages.”). But see
Jarchow v. Transamerica Title Ins. Co., 122 Cal. Rptr. 470, 480–86 (Cal. Ct. App. 1975)
(allowing plaintiff to recover for emotional distress associated with litigation).
25 Leporace, 2014 WL 1806788, at *3; see also Stoleson, 708 F.2d 1217, 1223 (7th Cir. 1983)
(“It would be strange if stress induced by litigation could be attributed in law to the tortfeasor. An
alleged tortfeasor should have the right to defend himself in court without thereby multiplying his
damages . . . .”).
26 Buoy, 771 P.2d at 443–44.
27 See id. at 444 (“[O]ne of the central issues at trial was whether the helicopter accident was a
substantial factor in causing Glen Buoy’s depression. The Buoys introduced evidence that the
crash led to Glen Buoy’s mental condition, as well as evidence that the litigation did not cause
or worsen his depression. However, the verdict rendered by the first jury was clearly less than
Buoy had hoped for. Therefore, ERA was entitled to test the weight of Dr. Green’s assertion that
the litigation did not affect Buoy's mental condition by inquiring into whether Buoy’s
disappointment in the first jury’s verdict deepened his depression.”).
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However, the Court disagrees with the assumption State Farm appears to
make in its Reply that Ms. Lindfors may only seek damages for emotional distress
associated with events that occurred pre-litigation.28 If Ms. Lindfors prevails on her
bad faith claims, she may “be able to recover damages for the emotional distress
related to the delay in payment of [her] UIM claim,” which could include delay
during the period of litigation.29
CONCLUSION
For the foregoing reasons, Defendant’s Motion for Partial Summary
Judgment at Docket 47 is GRANTED as set forth herein.
DATED this 28th day of December, 2021, at Anchorage, Alaska.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE
28 See Docket 58 at 1–2 (asserting that the “stress associated with litigant itself” includes “the
time it takes for a lawsuit to proceed”); id. at 4 (“State Farm is not disputing that Lindfors is free
to attempt to prove that she sustained emotional distress due to the actual pre-litigation handling
of her UIM claim . . . .” (emphasis added)).
29 Allen, 2018 WL 1474526, at *8 (citing Ennen, 268 P.3d at 291). To the extent it is difficult to
disentangle delay or bad faith in the post-complaint claims handling process from litigation
conduct, that is a topic that can be refined in the jury instructions.
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