Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before trial.
KEY MOTIONS AND DECISIONS
Plaintiff's Motion for Partial Summary Judgment to Establish a General Business Practice
This motion was denied. Bernier failed to provide sufficient evidence that State Farm had a general business practice of not offering prejudgment interest or Rule 82 attorney fees on UM/UIM claims.
Plaintiff's Motion for Partial Summary Judgment to Establish Bad Faith
This motion was denied. The court found that there was a genuine issue of material fact regarding whether State Farm's behavior was objectively unreasonable.
State Farm's Motion for Summary Judgment on Count IV (Punitive Damages)
This motion was denied. The court found that there was a genuine issue of material fact regarding whether State Farm acted with reckless indifference to the interests of its insureds.
ANALYSIS
A court must 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 movant bears the initial responsibility of presenting the basis for its motion and identifying those portions of the record which it believes demonstrate the absence of a genuine dispute of material fact.
If the movant fails to carry its initial burden of production, the nonmovant need not produce anything. But if the movant meets its initial responsibility, the burden shifts to the nonmovant to demonstrate the existence of a material, factual dispute. A summary judgment motion cannot be defeated by relying solely on conclusory allegations unsupported by factual data.
Bernier's Motion for Partial Summary Judgment to Establish a General Business Practice
Bernier sought a Partial Summary Judgment from this Court that State Farm is engaged in a particular established general business practice, an element of the tort of bad faith.
In the insurance context, when the insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort. Although the tort of bad faith in first-party insurance cases may or may not require conduct which is fraudulent or deceptive, it necessarily requires that the insurance company's refusal to honor a claim be made without a reasonable basis.
The contractual provision at issue provides that State Farm will pay prejudgment interest and Rule 82 attorney fees “in addition to the limits of this coverage.” Thus. the plain language of the insurance policy here requires State Farm to pay such fees.
Viewing the facts in the light most favorable to State Farm, there is a genuine issue as to whether Bernier, himself, needed to litigate, as State Farm offered to pay full policy limits plus add-ons before State Farm knew Bernier was suing.
Bernier's Motion for Partial Summary Judgment to Establish Bad Faith
Bernier did not plead sufficient facts to demonstrate that State Farm's alleged violations are general business practices. Whether the individual acts are “objectively unreasonable” is a genuine issue of material fact.
Whether State Farm excludes contracted-for add-ons as a general business practice, such that it may be evidence of bad faith, is a genuine issue for trial.
The experts hired by both sides for this litigation disagree as to whether the claim adjustor's reduction of Bernier's medical bills was defensible, creating a genuine issue of material fact. Because Bernier sufficiently raised a factual question as to whether, taking State Farm's actions as a whole, State Farm's denial of Bernier's claim lacked a reasonable basis, State Farm's Motion for Summary Judgment to Count III was denied.
Negligent and Reckless Claims Handling
Alaska courts do not recognize the existence of a negligence tort action against an insurer in a first-party insurance context.
State Farm's Motion for Summary Judgment on Count IV of Plaintiff's Complaint
To support punitive damages under Alaska law, a plaintiff must prove by clear and convincing evidence that the wrongdoer's conduct was outrageous, such as acts done with malice or bad motives or reckless indifference to the interests of another person. Malice need not be express but may be inferred from acts evidencing a callous disregard for the rights of others.
The District Court Judge concluded that there were genuine issues as to whether State Farm had a general business practice of not offering to pay elements of its coverage obligations and a practice of improperly reducing medical expenses. Whether this conduct is sufficiently outrageous to warrant an award of punitive damages is a question for a jury.
ZALMA OPINION
Alaska is different because its statutes require - and insurer's include in their policies - the need to pay attorneys fees and add on additional payments not usually found in other states. However, evidence is still required and the court in a very lengthy opinion reduced the issues needed for trial and left important issues like the tort of bad faith and availability of punitive damages to the jury.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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