Michael Sekera v. Allstate Insurance Company, an Illinois Corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL SEKERA,
Plaintiff-Appellant,
v.
ALLSTATE INSURANCE COMPANY, an
Illinois Corporation,
Defendant-Appellee.
No. 17-56587
D.C. No.
5:14-cv-01162-JGB-DTB
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Jesus G. Bernal, District Judge, Presiding
Submitted March 7, 2019**
Pasadena, California
Before: WARDLAW and BENNETT, Circuit Judges, and CARDONE,*** District
Judge.
After recovering $15,000 from the insurance company of the at-fault driver
* 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).
*** The Honorable Kathleen Cardone, United States District Judge for the
Western District of Texas, sitting by designation.
FILED
MAR 18 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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in an automobile accident, Appellant Michael Sekera filed a claim with Allstate
Insurance Company based on the underinsured motorist provision of the insurance
policy covering the vehicle he was driving. A few weeks later, in February 2013,
Allstate initiated arbitration pursuant to the policy in order to resolve the matter. In
June 2014, more than fifteen months after his initial contact with Allstate, and with
Allstate still investigating the claim, Sekera sued Allstate in federal district court
alleging bad faith. Allstate filed a motion to compel arbitration which the district
court granted and stayed the case. The arbitrator awarded Sekera $30,510 which
Allstate paid. The case resumed in district court, and the court granted summary
judgment for Allstate on Sekera’s bad faith claims. The court found that, pursuant
to Guebara v. Allstate Insurance Company, 237 F.3d 987, 992 (9th Cir. 2001),
there was a “genuine dispute” as to coverage and the value of Sekera’s claim,
precluding a finding of bad faith. Sekera appeals that decision as well as the
district court’s denial of his request to file a supplemental opposition to summary
judgment that included an expert report. We have jurisdiction under 28 U.S.C. §
1291. We affirm.
We review a district court’s summary judgment order de novo, considering
the evidence in the light most favorable to the non-moving party. Fresno Motors,
LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014). We
review a district court’s decision concerning the management of litigation for

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abuse of discretion. Preminger v. Peake, 552 F.3d 757, 769 n.11 (9th Cir. 2008)
(citing FTC v. Enforma Nat. Prods., Inc., 362 F.3d 1204, 1212 (9th Cir. 2004)).
Similarly, we review a lower court’s decision regarding the admission of expert
testimony for an abuse of discretion. City of Pomona v. SQM N. Am. Corp., 866
F.3d 1060, 1065 (9th Cir. 2017).
I
Sekera first argues that Allstate’s initiating arbitration before completing the
claim evaluation creates a fact question of bad faith precluding summary judgment.
He also argues that Allstate’s delay in evaluating his claim creates a fact issue.
“[T]o establish a breach of the implied covenant of good faith and fair dealing
under California law, ‘a plaintiff must show: (1) benefits due under the policy were
withheld; and (2) the reason for withholding benefits was unreasonable or without
proper cause.’” Pyramid Techs., Inc. v. Hartford Cas. Ins. Co., 752 F.3d 807, 823
(9th Cir. 2014) (quoting Guebara, 237 F.3d at 992). The reasonableness of an
insurer’s conduct is ordinarily a question of fact. Amadeo v. Principal Mut. Life
Ins. Co., 290 F.3d 1152, 1161 (9th Cir. 2002). However, bad faith claims may be
dismissed on summary judgment if the insurer can show both that there was a
“genuine dispute” as to liability, Guebara, 237 F.3d at 992, and that the insurer has
not acted in bad faith “for advancing its side of that dispute,” Chateau Chamberay
Homeowners Ass’n v. Assoc. Int’l. Ins. Co., 108 Cal. Rptr. 2d 776, 784 (Ct. App.

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2001). “The genuine dispute rule does not relieve an insurer from its obligation to
thoroughly and fairly investigate, process, and evaluate the insured’s claim. A
genuine dispute exists only where the insurer’s position is maintained in good faith
and on reasonable grounds.” Brehm v. 21st Century Ins. Co., 83 Cal. Rptr. 3d 410,
419 (Ct. App. 2008) (quoting Wilson v. 21st Century Ins. Co., 171 P.3d 1082, 1089
(Cal. 2007)).
Sekera argues that there can be no genuine dispute until after Allstate
completed its investigation and presented him with a claim valuation. However,
Allstate need not have completed the claim investigation or valuation for a genuine
dispute to exist. See Guebara, 237 F.3d at 995–96; Chateau Chambery, 108 Cal.
Rptr. 2d at 783–84. As with all bad faith claims, the pivotal concern is whether the
insurer acted unreasonably or without proper cause in its handling of the claim.
See Pyramid Techs., 752 F.3d at 823; Guebara, 237 F.3d at 992; Chateau
Chambery, 108 Cal. Rptr. 2d at 784.
Further, Allstate did not wrongly initiate arbitration before there existed a
formal disagreement. Certainly, “an insurer cannot shield other dilatory conduct,
such as failing to investigate a claim, by the mere act of requesting uninsured
motorist arbitration.” Hightower v. Farmers Ins. Exch., 45 Cal. Rptr. 2d 348, 54
(Ct. App. 1995). But, Sekera’s allegations of Allstate’s bad faith during the
investigation of the claim, including the initiation of arbitration, is without support

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in the record.
Within two weeks of receiving Sekera’s claim, Allstate’s claims adjuster
promptly wrote to Sekera seeking a signed medical authorization to allow Allstate
to review Sekera’s medical records. Sekera did not sign the medical authorization,
and his counsel informed Allstate that Sekera would ignore medical releases along
with other forms unless Sekera was asked otherwise. About two weeks later, the
adjuster wrote again to Sekera’s counsel explaining that further investigation of the
claim was needed due to Allstate’s specific concerns about missing bills, an
unusually low bill for a surgery, and inconsistencies between surgical notes and
diagnoses. Allstate explained it would initiate arbitration pursuant to the policy in
order to gather the evidence needed to evaluate the claim. Because there was a
disagreement as to the value of the claim and as to coverage, arbitration was
justified. Moreover, that disagreement constituted a genuine dispute. See
Guebara, 237 F.3d at 993–94; Chateau Chamberay, 108 Cal. Rptr. 2d at 784.
Further supporting the genuine dispute, Allstate’s expert, who conducted the
independent medical exam, disagreed that the accident caused Sekera’s injuries.
See Fraley v. Allstate Ins. Co., 97 Cal. Rptr. 2d 386, 391 (Ct. App. 2000) (“The
‘genuine dispute’ doctrine may be applied where the insurer denies a claim based
on the opinions of experts.”). Sekera challenges the independence of this medical
expert because the expert stated that he almost always works for insurance

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companies in insurance disputes.
In Hangarter v. Provident Life & Accident Insurance Co., 373 F.3d 998,
1010-11 (9th Cir. 2004), we found “substantial evidence” that the insurer engaged
in a biased investigation aimed at denying the plaintiff’s disability claim, as part of
a “comprehensive system for targeting and terminating expensive claims.” Id.
Here, there is no evidence calling into question the legitimacy of the expert’s
assessment or the process by which the independent medical exam was initiated or
carried out. Thus, Allstate was entitled to rely in good faith on its expert’s report
in disputing Sekera’s claim. See Fraley, 97 Cal. Rptr. 2d at 391.
II
Sekera also challenges the district court’s denial of his request to file a
summary judgment surreply which included the expert report of David Reilly.
The district court did not err in denying Sekera’s request because Allstate did not
introduce new arguments in its reply to warrant the surreply. See JG v. Douglas
Cty. Sch. Dist., 552 F.3d 786, 803 n.14 (9th Cir. 2008) (citing Provenz v. Miller,
102 F.3d 1478, 1483 (9th Cir. 1996)) (holding district court did not abuse its
discretion in denying leave to file surreply because the court did not consider new
evidence included in reply brief). Further, as Sekera acknowledges, the deadline
for expert witness designation had passed by the time he sought to file the report,
and the report itself added nothing material to Reilly’s affidavit which was

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attached to the summary judgment response. The district court did not abuse its
discretion. See City of Pomona, 866 F.3d at 1065.
AFFIRMED.

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