Jazi Kat 4659 Rockridge LLC et al v. Travelers Casualty Insurance Company of America et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Jazi Kat 4659 Rockridge LLC, et al.,
Plaintiffs,
v.
Travelers Casualty Insurance Company of
America, et al.,
Defendants.
No. CV-23-00716-PHX-DLR
ORDER
Before the Court is Defendant Travelers Casualty Insurance Company of America’s
(“Travelers”) motion for summary judgment against Plaintiffs Jazi Kat 4659 Rockridge,
LLC and Jazi Kat, LLC (collectively, “Plaintiffs”). (Doc. 119). The motion is fully briefed.1
(Docs. 126, 131.) For the following reasons, the Court grants the motion.
I. Background
Plaintiffs brought this insurance breach of contract and bad faith action, alleging
that Travelers failed to pay money Plaintiffs were owed under their insurance policy
(“Policy”). (Doc. 1-3 at 2–3.) In February 2020, Travelers issued the Policy to Plaintiffs to
insure two commercial properties located at 5314 and 5306 N. 7th Street respectively.
(Doc. 119-2 at 3.) Plaintiffs are fully owned by non-party Bridget O’Brien. (Doc. 92-3 at
5.)
1 Oral argument is denied because the motions are adequately briefed, and oral
argument will not help the Court resolve the issues presented. See Fed. R. Civ. P. 78(b);
LRCiv. 7.2(f).
Case 2:23-cv-00716-DLR Document 133 Filed 05/13/26 Page 1 of 7

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In February 2021, a fire occurred that destroyed the Property. (Doc. 1-3 ¶ 13.) The
following day, O’Brien submitted a claim to Travelers for the loss caused by the fire. (Doc.
92-3 at 3.) Travelers adjusted the claim and issued payment on two dates in May 2021.
(Doc. 92-6 at 2.) In April 2022, Plaintiffs, unsatisfied with the payments, demanded
appraisal in accordance with the terms of the Policy. (Doc. 1-3 ¶ 15.) Travelers accepted
the appraisal demand in June 2022. (Id. at ¶ 16.) Believing that Travelers still had not issued
sufficient payment or complied with the terms of the Policy, Plaintiffs filed the present suit
on February 24, 2023, while the appraisal process was ongoing. (See Doc. 1-3.) Travelers
timely removed (Doc. 1). As a result of the appraisal process, Travelers issued additional
payment. (Doc. 119-25 at 2–4.) Travelers now moves for summary judgment.
II. Summary Judgment
A. Legal Standard
Summary judgment is appropriate when there is no genuine dispute as to any
material fact and, viewing those facts in a light most favorable to the non-moving party,
the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A fact is
material if it might affect the outcome of the case, and a dispute is genuine if a reasonable
jury could find for the non-moving party based on the competing evidence. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment may also be entered
“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).
The party seeking summary judgment “bears the initial responsibility of informing
the district court of the basis for its motion, and identifying those portions of [the record],
if any, which it believes demonstrate the absence of a genuine issue of material fact.” Id.
at 323 (quotation omitted). The burden then shifts to the non-movant to establish the
existence of a genuine and material factual dispute. Id. at 324. The non-movant “must do
more than simply show that there is some metaphysical doubt as to the material facts” it
must “come forward with specific facts showing that there is a genuine issue for trial.”
Case 2:23-cv-00716-DLR Document 133 Filed 05/13/26 Page 2 of 7

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Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986)
(internal quotation and citation omitted). “If the nonmoving party fails to produce enough
evidence to create a genuine issue of material fact, the moving party wins the motion for
summary judgment.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies. Inc., 210
F.3d. 1099, 1103 (9th Cir. 2000).
In considering a motion for summary judgment, the court must regard as true the
non-moving party’s evidence, as long as it is supported by affidavits or other evidentiary
material. Anderson, 477 U.S. at 255. However, the non-moving party may not merely rest
on its pleadings; it must produce some significant probative evidence tending to contradict
the moving party’s allegations, thereby creating a material question of fact. Id. at 256–57
(holding that the plaintiff must present affirmative evidence to defeat a properly supported
motion for summary judgment); see also Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.
1989) (“A summary judgment motion cannot be defeated by relying solely on conclusory
allegations unsupported by factual data.” (citation omitted)).
B. Analysis
1. Breach of Contract
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). Travelers argues that its engagement in the appraisal process defeats any
claim it committed a breach. (Doc. 119 at 8–10.) It further argues that if Plaintiffs can
establish breach, they cannot establish damages because Travelers promptly paid the
appraisal award. (Id. at 8–12.) Plaintiffs mainly respond that compliance with the appraisal
process cannot defeat the bad faith claim (Doc. 126 at 5–6) but Travelers only puts forth
this argument in relation to the breach of contract claim, not the bad faith claim.
Additionally, Plaintiffs seem to respond that Travelers committed a breach because the
payments following appraisal were more than Traveler’s initial payments to Plaintiffs. (Id.
at 6.)
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According to the Policy, if Plaintiffs and Travelers disagree on the amount of a loss,
either side “may make written demand for an appraisal of the loss.” (Doc. 119-2 at 8.) That
process requires each side “select a competent and impartial appraiser” and those “two
appraisers will select an umpire.” (Id.) The two appraisers make independent
determinations of the amount of loss and, if they disagree, the two appraisers “submit their
differences to the umpire.” (Id.) The umpire then agrees with one of the appraisers and that
decision is binding. (Id.) In April 2022, Plaintiffs demanded an appraisal. Travelers
accepted the appraisal demand in June 2022. (Doc. 1-3 at 3). After the appraisal process,
Travelers promptly issued additional payment. (Doc. 119-25 at 2–4.)
Travelers asserts that “[b]ecause Travelers complied with the express terms of the
Policy by complying with the appraisal provision and thereafter promptly paying the
award, it has not breached the insurance contract as a matter of law.” (Doc. 119 at 8–9.)
The Court agrees. The Court previously decided that: “The result of the appraisal process
may defeat the breach of contract claim.” (Doc. 16 at 3.) It has now done so. “Because
Defendant already has satisfied this award, . . . the Court will dismiss Plaintiff’s breach of
contract claim alleging that Defendant has failed to pay Plaintiff for the covered loss[.]”
Jasem v. State Farm Fire & Cas. Co., No. CV-06-595-PHX-DGC, 2007 WL 1146433, at
*4 (D. Ariz. Apr. 18, 2007). Travelers is entitled to summary judgment on Plaintiffs’ breach
of contract claim.
2. Bad Faith
“An insurer commits the tort of bad faith by intentionally and without reasonable
basis denying, failing to process, or failing to pay a claim.” Alvarez v. CSAA Gen. Ins. Co.,
No. CV-24-00617-PHX-SMB, 2025 WL 389140, at *7 (D. Ariz. Feb. 4, 2025) (citing
Noble v. National Am. Life Ins., 624 P.2d 866, 868 (Ariz. 1981)). Thus, in addressing a bad
faith claim at summary judgment, the proper inquiry is whether there is sufficient evidence
from which reasonable jurors could conclude that in the investigation, evaluation, and
processing of a plaintiff’s claim, the insuring defendant (1) acted unreasonably (2) either
knew of or acted with reckless disregard of the lack of reasonable basis for its actions, and
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(3) caused the plaintiff damages. Noble, 624 P.2d at 868; Merkens v. Fed. Ins. Co., 349
P.3d 1111, 1114–15 (Ariz. Ct. App. 2015). Travelers argues that no reasonable juror could
find it acted unreasonably and, in any event, that Plaintiffs cannot prove damages because
their only disclosed basis for damages has been stricken. (Doc. 119 at 12–14.) Plaintiffs
respond that there is evidence of bad faith and that they can recover damages for “costs for
an appraiser, the umpire costs, interest on the appraisal award, for testing the properties,
attorney’s fees incurred and punitive damages.” (Doc. 126 at 6–9.)
Plaintiffs have no recoverable damages for a bad faith claim. As an initial matter,
the Court previously ordered that “Plaintiffs are precluded from offering evidence or
argument that Defendant’s alleged delay in issuing payment caused Plaintiffs to lose rental
income, which, in turn, caused Plaintiffs to breach a loan agreement.” (Doc. 78 at 7.)
Plaintiffs cannot recover damages for the cost of the appraiser, the umpire, or for
testing the properties for purposes of the appraisal. The Policy clearly states that “[e]ach
party will . . . [p]ay its chosen appraiser; and [] [b]ear the other expenses of the appraisal
and umpire equally.” (Doc. 119-2 at 8.) “Provisions of insurance policies are to be
construed in a manner according to their plain and ordinary meaning.” Sparks v. Republic
Nat. Life Ins. Co., 647 P.2d 1127, 1132 (Ariz. 1982).
Plaintiffs are also not entitled to recover prejudgment interest on the appraisal award
because the claim was not liquidated. “A claim is liquidated when it is subject to
mathematical computation without reliance upon opinion or discretion.” Aries v. Palmer
Johnson, Inc., 735 P.2d 1373, 1384 (Ariz. 1987). When, as here, a claim requires
“ascertaining construction repairs” this “necessarily involves opinion and discretion.”
Vigilant Ins. v. Sunbeam Corp., 231 F.R.D. 582, 596 (D. Ariz. 2005) (citing Custom
Roofing Co., Inc. v. Alling, 706 P.2d 400, 403 (Ariz. 1985)). And once the appraisal
determined the award amount, Travelers promptly paid. See Port United Inc. v. Sestus LLC,
No. CV-11-00367-PHX-ROS, 2014 WL 12521331, at *2 (D. Ariz. Sep. 29, 2014) (noting
that generally prejudgment interest does not accrue from the actual date of loss.). Thus,
Plaintiffs are not entitled to prejudgment interest.
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Nor are Plaintiffs entitled to punitive damages. “In a bad faith tort case against an
insurance company, punitive damages may only be awarded if the evidence reflects
‘something more’ than the conduct necessary to establish the tort.” Holy Trinity Greek
Orthodox Church v. Church Mut. Ins. Co., 476 F.Supp.2d 1135, 1140 (D. Ariz. 2007)
(quoting Rawlings v. Apodaca, 726 P.2d 565, 576 (Ariz. 1986)). “Punitive damages must
be proved by ‘clear and convincing evidence of the defendant’s evil mind.’” Id. (quoting
Linthicum v. Nationwide Life Ins. Co., 723 P.2d 675, 679 (Ariz. 1986)). Despite this high
burden, Plaintiffs do not address their burden or point to any evidence, let alone clear and
convincing evidence, that meets that burden.
Even if Plaintiffs had recoverable damages, they still have not presented evidence
suggesting that Travelers intentionally denied, failed to process, or failed to pay their claim
without a reasonable basis. Travelers asserts that Plaintiffs’ claim was fairly debatable.
(Doc. 119 at 13.) The dispute centered on whether one of the insured buildings needed to
be completely demolished. (Doc. 119-6 at 2; Doc. 119-15; Doc. 119-16 at 2.) Plaintiffs, in
response, have proffered no evidence to show that their claim was not fairly debatable and
thus there is no genuine dispute of fact. “If the plaintiff offers no significantly probative
evidence that calls into question the defendant’s belief in the fairness of its actions, the
court may rule on the issue as matter of law.” Jasem v. State Farm Fire & Cas. Co., No.
CV-06-595-PHX-DGC, 2007 WL 3307012, at *2 (D. Ariz. Nov. 6, 2007). Because there
is undisputed evidence that Plaintiffs’ claim was fairly debatable, Plaintiffs cannot
establish that Travelers acted in bad faith. Desert Mountain Properties Ltd. P’ship v.
Liberty Mut. Fire Ins. Co., 236 P.3d 421, 442 (Ariz. Ct. App. 2010) (noting that an insurer’s
failure to pay a claim is not unreasonable when the claim’s validity is “fairly debatable.”);
Aetna Cas. & Sur. Co. v. Superior Court, 778 P.2d 1333, 1336 (Ariz. Ct. App. 1989) (“Even
if ultimately wrong, if a reasonable basis existed for denying the claim, the insurer cannot
be liable for bad faith.”). Accordingly, Travelers is entitled to summary judgment on
Plaintiffs’ bad faith claim.
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IT IS ORDERED that Defendants’ motion for summary judgment (Doc. 119) is
GRANTED. The Clerk of the Court is directed to enter judgment accordingly and
terminate the case.
Dated this 13th day of May, 2026.
Douglas L. Rayes
Senior United States District Judge
Case 2:23-cv-00716-DLR Document 133 Filed 05/13/26 Page 7 of 7