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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lockwood v. Geico General Insurance Company (5/2/2014) sp-6904

Lockwood v. Geico General Insurance Company (5/2/2014) sp-6904

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                       

         corrections@appellate.courts.state.ak.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



JENNIFER LOCKWOOD,                                     )  

                                                       )         Supreme Court No. S-14552  

                            Appellant,                 )  

                                                       )         Superior Court No. 3AN-09-07127 CI  

         v.                                            )  

                                                       )         O P I N I O N  

GEICO GENERAL INSURANCE                                )  

COMPANY,                                               )         No. 6904 - May 2, 2014  

                                                       )  

                            Appellee.                  )  

                                                       )  



                  Appeal from the Superior Court of the State of Alaska, Third  

                                                                

                   Judicial District, Anchorage, Patrick J. McKay, Judge.  



                  Appearances:  Jeffrey  J.  Jarvi,  Anchorage,  for  Appellant.  

                                       

                   David S. Carter, Hughes Gorski Seedorf Odsen & Tervooren,  

                                                                           

                   LLC, Anchorage, for Appellee.  



                   Before:  Fabe, Chief Justice, Winfree, Stowers, and Maassen,  

                                                

                   Justices. [Carpeneti, Justice, not participating.]  



                   FABE, Chief Justice.  



I.       INTRODUCTION  



                   Jennifer Lockwood was injured in a car accident caused by an uninsured  



drunk driver.  Lockwood had car insurance through Geico General Insurance Company.  

                                                             



After exhausting her policy's medical payments coverage, Lockwood sought payment  

                                                                                   



under  her  uninsured  motorist  coverage.    Geico  offered  $750  to  settle  the  uninsured  


----------------------- Page 2-----------------------

motorist claim, and Lockwood declined.  Geico questioned Lockwood's medical bills  

                        



because they seemed "high" to the adjusters and refused to make additional medical  



payments outside of a total settlement of Lockwood's uninsured motorist claim.  Geico  



pointed to the fact that Lockwood had received treatment for a prior back problem, but  

                                   



it  took  no  action  to  resolve  the  alleged  medical  uncertainty,  such  as  requesting  an  



independent medical exam or voluntary arbitration, before refusing to pay for medical  



                                         

expenses.  Lockwood paid out of pocket for some of her treatment costs and took out a  



                                                                                                 

loan for her remaining medical bills.  She later ceased treatment due to its prohibitive  



cost and experienced ongoing pain.   



                                                       

                    The parties eventually settled Lockwood's uninsured motorist claim for  



                

$25,000.  Lockwood brought a tort claim against Geico for alleged breach of the duty of  



good  faith  and  fair  dealing  implied  in  her  insurance  contract,  arguing  that  Geico  



unreasonably delayed payment of Lockwood's uninsured motorist claim.  Lockwood  



                                                                                                       

sought to discover Geico's training and claims-handling manuals, but the superior court  



                                                         

denied her request. The superior court subsequently granted summary judgment in favor  



of Geico on the bad-faith tort claim and awarded attorney's fees.   



                                                                               

                    We reverse the superior court's grant of summary judgment because there  



                                                                                                   

is a genuine issue of material fact regarding whether Geico lacked a reasonable basis for  



delaying payment on Lockwood's uninsured motorist claim.  Because we reverse the  



                                                                                              

grant of summary judgment, we vacate the award of attorney's fees and we remand for  



further  proceedings.    We  also  conclude  that  it  was  an  abuse  of  discretion  to  deny  



                                                                  

discovery of Geico's manuals because they contain information that could be relevant  



to Lockwood's bad-faith claim.  



                                                             -2-                                                        6904
  


----------------------- Page 3-----------------------

II.        FACTS AND PROCEEDINGS1  



           A.         Car Accident And Injuries  



                     On May 21, 2007, a drunk driver in a large van rear-ended Lockwood while                    



she was stopped at a red light in her Nissan Sentra.  It was undisputed that the drunk  



driver was entirely responsible for the accident.  



                                                                                               

                     Lockwood sustained injuries in the accident.  According to the emergency  



room report, Lockwood felt tenderness in her neck that night.  The emergency room  



                                                                        

doctor diagnosed Lockwood with a cervical spine injury and strain of the muscles near  



               2  

                                                                            

the neck.   An X-ray of her neck showed no  spinal or "soft tissue abnormalit[ies]."  



                                                  

Lockwood  also  filled  out  an  injury  form  for  the  accident.    In  the  form  Lockwood  



                                                                                     

reported that she experienced a headache, dizziness, and pain in her left wrist, neck, and  



                                                                            

back.  Lockwood indicated in her affidavit that she continued to experience pain the day  



                                                                                               3  

after the accident, particularly in her back, neck, and wrist.   



           B.         Geico Insurance Policy  



                     The  drunk  driver  was  an  uninsured  motorist,  but  Lockwood  had  an  



automobile  insurance  policy  with  Geico  General  Insurance  Company.    Lockwood's  



                                                                                   

policy provided two categories of coverage that are relevant here:  (1) medical payments  



                                                                            

coverage and (2) uninsured motorist coverage. The medical payments coverage covered  



           1         When reviewing a grant of summary judgment, we view the facts in the  



light most favorable to the nonmoving party.  See McCormick v. City of Dillingham , 16  

                                                               

P.3d 735, 738 (Alaska 2001).  



           2         The  hospital  report  lists  two  diagnoses:    "[c]ervical  spine  injury"  and  



"[p]aracervical  muscle  strain."    Cervical  means  "[r]elating  to  a  neck."    STEDMAN 'S  

MEDICAL DICTIONARY 351 (28th ed. 2006).  



           3  

                                                                                                                      

                     A contemporary report that Lockwood made to her insurer described the  

same injuries.  



                                                                   -3-                                                             6904
  


----------------------- Page 4-----------------------

"all reasonable [medical] expenses actually incurred by an insured" due to "bodily injury     



                                                                                            4  

caused   by   accident,"  with  payments  capped  at  $10,000.     The  uninsured  motorist  



coverage  would  "pay  damages  for  bodily  injury,  caused  by  an  accident,  which  the  

                                                                                 



insured is legally entitled to recover from the owner or operator of an uninsured motor  

                                                          



vehicle," provided that this benefit would not pay out "until the limits of liability of all  

                                            



                                                                                          5  

bodily injury . . . policies that apply have been used up."   The maximum benefit for  



uninsured motorist coverage was $50,000 per person.  The insurance policy established  

                                                                                     



several  conditions  for  receipt  of  payment  under  the  uninsured  motorist  coverage,  



                                             

including  notice  to  Geico,  "written  proof  of  claim,  under  oath  if  required,"  and  



willingness to submit to a medical exam if required.  The Geico policy explained that  



                                                                                                       

"[t]his [proof of claim] will include details of the nature and extent of injuries, treatment  



and other facts which may affect the amount payable."  



          C.         Medical Treatment  



                     The day after the accident, Lockwood went to a local chiropractor.  He  



                                    

diagnosed Lockwood with neck and shoulder muscle strains.  He ordered an MRI and  



performed x-rays of Lockwood's neck; both were normal.  He informed Geico that his  



treatment plan for Lockwood consisted of daily chiropractic treatment for two weeks,  



tapering  to  three  treatment  sessions  per  week.    But  when  Lockwood's  back  pain  



                                                                                              

continued, she continued her treatment from her chiropractor beyond the initial treatment  



period.  



                                                                     

                     In July 2007 Geico sent a letter to Lockwood's chiropractor requesting that  



                                                                                                    

he provide a complete billing history and all previous treatment records for Lockwood.  



Geico informed the chiropractor that it was unable to issue payment for services from  



          4          Emphasis omitted.  



          5          Emphasis omitted.  



                                                                 -4-                                                              6904  


----------------------- Page 5-----------------------

June 11, 2007 to July 2, 2007 until Geico received the requested information.  Geico's       



log notes indicate that Geico received the requested records from the chiropractor's  



office within the month, by August 1, 2007.  The records showed that Lockwood had  



received treatment from the chiropractor before the May 21, 2007 accident for a prior  



                                                                                          

back injury but that Lockwood had last seen the chiropractor on January 5, 2007, about  



                                                                                                              

five  months  before  the  accident.                  According  to  Lockwood's  medical  records,  an  



orthopedic surgeon determined that Lockwood was medically stable in December 2006.  



                                                                                   

                    By  July  25,  2007,  the  chiropractor  had  released  Lockwood  to  work.  



                                                                              

Lockwood's back felt sore from her return to work.  In the summer of 2008, over a year  



                                                   

after the accident, Lockwood was still receiving treatment from her chiropractor for her  



neck  strain  and  back  pain.    Lockwood's  back  pain  persisted,  and  her  chiropractor  



referred her to a medical doctor about a year after the accident.  



          D.	       Exhaustion Of Medical Payments Coverage  



                    Geico  initially  paid  for  Lockwood's  bills  under  the  medical  payments  



                                                                                                       

coverage of her insurance policy. Geico paid $2,867 for medical visits and examinations  



within the first five days of the accident and $7,133 for Lockwood's chiropractic care  



                                                                                                                   

from May 22, 2007 to August 17, 2007.   By August 2007, about 12 weeks after the  



                                                                          

accident, these medical payments totaled $10,000, and Lockwood exhausted her medical  



payments  coverage.    Geico  then  informed  Lockwood  about  her  uninsured  motorist  



coverage and the settlement process.  



          E.	       Dispute  Over  Uninsured  Motorist  Coverage  And  Settlement  Of  

                    Uninsured Motorist Claim  



                    Lockwood  sought  payment  for  her  medical  costs  under  her  uninsured  



motorist coverage.  But Geico never paid Lockwood's medical bills under her uninsured  



                                                             -5-	                                                       6904
  


----------------------- Page 6-----------------------

                        6  

                                                         

motorist policy.   Lockwood paid for $1,000 of her unpaid medical expenses and took  



                                           

out a loan for about $5,000 to cover the rest.  Because she could not afford to pay for  



continuing   treatment,   Lockwood   eventually   stopped   treatment   even   though   she  



maintained that she still suffered back pain.  



                    By  May  2008  Lockwood  had  retained  an  attorney  to  pursue  medical  



                                                                  

payments from Geico.   Lockwood's claim for benefits under her uninsured motorist  



policy was eventually settled after three years of negotiations and the early stages of  



litigation of her lawsuit against Geico.  Geico had first offered to settle Lockwood's  



                                            

uninsured motorist claim for $750 in June 2007, before she retained counsel.  According  



                                                                                              

to Geico, it based this settlement offer on Lockwood's request for the cost of her son's  



day care while she was in treatment.  Lockwood declined the offer.  



                                                                                         

                    In May 2008 Geico advised Lockwood that it would not consider paying  



                                                                                      

her medical bills "[o]utside [o]f  [t]otal [s]ettlement."  A Geico supervisor advised the  



                                                              

claims adjuster for Lockwood's case "to try to move the U[ninsured] M[otorist] claim  



in a posture to attempt to settle."  In July 2008 Geico advised Lockwood's attorney that  



                                                                        

Lockwood's medical bills seemed "[h]igh."  In April 2009 Lockwood offered to settle  



          6         Lockwood alleges that, in addition to denying her coverage, the Geico  



representatives  were  abusive,  rude,  and  unprofessional  in  their  dealings  with  her.  

Lockwood alleges that during phone calls about her claim, a Geico adjuster hung up on  

                                                                                           

her on two occasions.  She further maintains that when she called Geico about her claim,  

                                                                                                                   

the Geico adjuster was "sarcastic," "abusive," and "unprofessional"  in handling her  

claim.  She stated in her deposition that, because of the adjuster's negative demeanor, she  

felt "physically ill."  The Geico adjuster acknowledged that "calls were ended abruptly"  

                                                                                                  

but  denied  hanging  up  on  her.    Lockwood  alleged  in  her  affidavit  that  the  Geico  

                                           

adjuster's "rude and unprofessional behavior in handling [her] claim discouraged [her]  

from working with him to pursue [her] insurance claim after [she] was hit by a drunk  

                                                                                                            

driver."  



                                                              -6-                                                        6904
  


----------------------- Page 7-----------------------

for the policy limit of $50,000, and a month later Geico responded with an offer to settle  



for $12,000.  Lockwood refused the offer.  



                    Lockwood filed her first amended complaint on January 15, 2010, asserting  



a breach of contract claim under her uninsured motorist coverage and a tort claim for  



                                                      

Geico's "breach of the covenant of good faith and fair dealing" implied in the insurance  



policy.  



                                                                                   

                    Faced with a lawsuit, Geico requested for the first time in May 2010, nearly  



                  

three years after the accident, that a doctor perform an independent medical evaluation  



                                                          

of Lockwood.  The doctor found that Lockwood experienced "mild discomfort" in her  



                                                         

lower back in a range-of-motion test and diagnosed neck muscle and ligament strain or  



sprain as well as lower back muscle or ligament strain.  At the same time, the doctor  



                                              

reported  that  "[b]ased  upon  the  medical  records  reviewed,  my  history  taken  from  



                                                                                             

Ms. Lockwood, and the physical examination, I could find  no objective evidence to  



                    

support Ms. Lockwood's contention that she hurt her lower back in the accident of  



                                                                    

May 21, 2007."  He further concluded that he would have expected the "[s]oft tissue  



                                 

injuries sustained by Ms. Lockwood in the accident of May 21, 2007, [to be] resolved  



                                                                            

within six to eight weeks following the date of the accident."  His review of her records  



                                                                 

and medical history "provide[d] no reason to suspect extenuating circumstances which  



could delay recovery of the soft tissue injuries she sustained."  



                                               

                    In  August  2010  Geico  increased  its  settlement  offer  for  Lockwood's  



                                                          

uninsured motorist claim to $25,000. Lockwood accepted the offer in October 2010 and  



                                                                                        

signed the $25,000 settlement agreement in return for the release of her contract claim  



                                 

against Geico arising from the May 21, 2007 accident.  This release expressly preserved  



Lockwood's  "claims  for  alleged  extracontractual/bad  faith  damages."    Lockwood  



resumed  treatment  for  her  back  pain  after  she  settled  with  Geico  and  reported  that  



resuming treatment "has helped my pain and my condition."  



                                                               -7-                                                         6904
  


----------------------- Page 8-----------------------

          F.       Discovery Dispute In Lockwood's Bad-Faith Tort Action  



                   With the bad-faith tort claim before the superior court, Lockwood requested  



                  

that  Geico  "produce  all  claims  handling  manuals  that  GEICO  provides  to,  makes  



available  to,  or  gives  access  to  Alaska  adjusters  .  .  .  for  their  use  and  reference  in  



handling automobile collision claims."  Geico objected, denying that the manuals were  



                                                                      

relevant "to any legitimate issue in this case."  Lockwood filed a motion to compel the  



                                               

requested discovery, which the superior court found "exceed[ed] the directive from the  



                                                                                           

court" for "narrowly drafted discovery requests." The superior court directed Lockwood  



                                                                                        

to "either redraft the discovery, or submit further argument as to why . . . the proposed  



                                                           

discovery fits the parameters for which the court allowed the [Alaska Civil Rule] 56(f)  



continuance."    After  additional  briefing,  the  superior  court  found  that  Lockwood's  



request for the manuals was "still overbroad and requests undiscoverable information  



                                                                                         

and documents" because Lockwood was unable to identify "what specific portions or  



                                                                    

topics of the materials would be relevant to the very narrow issues before the court."  But  



       

the  superior  court  also  ordered  Geico  to  produce  relevant  portions  of  any  training  



materials for in camera review.  



                                                                                 

                   In response, Lockwood suggested that the superior court order a "standard,  



reasonable protective order" providing that "all materials designated 'confidential' by  



the other side may only be used in this litigation; may not be viewed by anyone other  



                                                     

than plaintiff's counsel, their staff, experts and clients in this litigation; must be filed  



under seal; and must be returned at the end of this litigation."  



                    Geico opposed discovery of the manual but requested that the superior  



court require a confidentiality agreement and protective order "[i]n the event that the  



                           

court determines that some portion of the in camera materials should be disclosed to  



plaintiff."  Geico submitted to the superior court the "Claims Function" chapter of its  



manual.  After the superior court's in camera review, it concluded:  



                                                             -8-                                                       6904
  


----------------------- Page 9-----------------------

                   Generally,  there  is  nothing  contained  within  the  reviewed  

                   materials that would expand (if they could) any statutory or  

                   common   law    duty   owed   by   GEICO   to   [its]   insured.  

                   Specifically,   the   documents   require   the   GEICO   claims  

                   examiners to deal with insurance issues ethically, fairly, and  

                                                                            

                   promptly. . . .  This hardly novel concept does not justify the  

                                       

                   release of proprietary information contained in the produced  

                   documents.  The Court found nothing within the materials  

                   that would directly lead to any admissible evidence regarding  

                   any complaints concerning payments from different available  

                   coverages.    The  documents  will  remain  sealed  within  the  

                   court file available for further review should plaintiff be able  

                                                                                  

                   to  more  particularly  state  her  bad  faith  allegations  against  

                   GEICO.  



                            The Court has been informed there are no letters of  

                                                                        

                   reprimand or discipline in the requested personnel file.  



Lockwood appeals the discovery order, arguing that the Geico's manuals are relevant  



and discoverable under Alaska Civil Rule 26(b)(1).  



         G.        Summary Judgment  

                                                   



                   On February 5, 2010, Geico moved for summary judgment on Lockwood's  



bad-faith claim, and Lockwood opposed. The superior court granted Geico's motion for  

                                                                 



summary judgment, reasoning that "none of these facts suffice to raise a factual question  

                                                           



as to whether [Geico] lacked a reasonable basis in failing to pay the demanded settlement  

                                                           



amount."        The  superior  court  cited  several  reasonable  bases  for  Geico's  conduct:  

                        



"GEICO  had  ample  reason  to  delay  further  payments  to  Plaintiff  pending  further  



investigation  into  the  medical  necessity  of  further  treatment  and  a  determination  



                                                           -9-                                                    6904
  


----------------------- Page 10-----------------------

                                                                                                   7  

regarding causation of her injuries" and the "extent of damages."   Lockwood appeals  

                                                        



the grant of summary judgment to Geico.  



III.      STANDARDS OF REVIEW  



                    We review rulings on motions for summary judgment de novo, "reading the  



record in the light most favorable to the non-moving party and making all reasonable  



                                    8  

                                                                                                               

inferences in its favor."              "A party is entitled to summary judgment only if there is no  

genuine issue of material fact and if the party is entitled to judgment as a matter of law."9  



                                                                                           

"[T]he burden of showing the absence of a genuine issue as to any material fact is upon  



                              10  

the  moving  party."                Defeating  a  motion  for  summary  judgment  "only  requires  a  



showing that a genuine issue of material fact exists to be litigated, and not a showing that  



                                                11  

a party will ultimately prevail."                   "Whether the evidence presented a genuine issue of  



                                                                                                 12  

material fact is a question of law that we independently review."                                    



          7         The superior court also awarded Geico $4,657.40 in partial attorney's fees     



based on the superior court's determination of reasonable fees related to the bad-faith  

claim after the settlement of the contractual uninsured motorist claim.  Lockwood appeals  

the Rule 82 attorney's fee award, claiming that she received a "substantial affirmative  

recovery" in her settlement with Geico.  



          8         Lum v. Koles , 314 P.3d 546, 552 (Alaska 2013) (citation omitted).  



          9         ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc., __ P.3d __,  



Op. No. 6874, 2014 WL 995971, at *5 (Alaska, Mar. 14, 2014) (citation omitted).  



          10        Wilson v. Pollet, 416 P.2d 381, 383 (Alaska 1966).  



          11        Moffatt v. Brown , 751 P.2d 939, 943-44 (Alaska 1988).  



          12        Kalenka v. Jadon, Inc. , 305 P.3d 346, 349 (Alaska 2013).  



                                                              -10-                                                         6904
  


----------------------- Page 11-----------------------

                                                                                                            

                    "We  review  the  denial  of  a  motion  to  compel  discovery  for  abuse  of  



                 13  

                                                                                            

discretion."         "We generally review discovery orders under the deferential abuse of  



                                                                                                        

discretion standard, but we apply our independent judgment in deciding whether the trial  

court weighed the appropriate factors, because that is a legal question."14  



IV.       DISCUSSION  



                                                                                                            

                    Lockwood raises two main arguments that we address in this appeal.  First,  



Lockwood challenges the summary judgment order, arguing that there were genuine  



                                                                                                              15  

issues of material fact as to whether Geico unreasonably delayed payment.                                         Second,  



                                                                           

Lockwood claims that "[t]he superior court erred in not ordering production of [Geico's]  



claims  and  training  manuals  so  Lockwood  could  examine  the  adjusters  about  their  



                                   

contents  at  deposition  and  so  that  evidence  and  testimony  could  be  presented  and  



evaluated at summary judgment and at trial before the jury."  



          13        Coulson v. Marsh & McLennan, Inc., 973 P.2d 1142, 1146 (Alaska 1999)   



(citing Stone v. Int'l Marine Carriers, Inc., 918 P.2d 551, 554 (Alaska 1996)).  



          14        Id. (citing In re Mendel , 897 P.2d 68, 72 n.7 (Alaska 1995)).  



          15        Lockwood also argues that the "record evidence raises fact issues about  



whether [Geico] violated various provisions of AS 21.36.125 with its pattern of conduct  

in delaying payment."  But that statute "do[es] not create or imply a private cause of  

                                                                                                                   

action for a violation of this [statute]."  AS 21.36.125(b); see also O.K. Lumber Co. v.  

Providence Wash. Ins. Co. , 759 P.2d 523, 527 (Alaska 1988) (holding that the Unfair  

                   

Claim Settlement Practices Act does not provide a private cause of action for insureds  

                                                                         

or third-party claimants).  Accordingly, Lockwood's statutory argument on appeal is  

without merit.  Even if there were genuine issues of material fact regarding Geico's  

violation of AS 21.36.125, Lockwood would have no cause of action under that statute  

                                                                   

and summary judgment for Geico on the statutory claim would have been proper.  



                    In  addition,  Lockwood  contends  that  the  superior  court's  award  of  

attorney's fees was improper. Because we reverse the superior court's grant of summary  

                                             

judgment, we also vacate the award of attorney's fees to Geico without reaching the  

question whether that award was proper.  



                                                            -11-                                                       6904
  


----------------------- Page 12-----------------------

         A.       It Was Error To Grant Summary Judgment To Geico.  



                  Under  Alaska's  contract  law,  "the  covenant  of  good  faith  and  fair  



                                                  16  

                                                                                       

                                                      For insurance contracts, breach of this covenant  

dealing . . . is implied in all contracts." 



by the insurer gives the insured a cause of action sounding in tort because of "[t]he  

special relationship between the insured and insurer in the insurance  context"17 and  



because tort liability "provide[s] needed incentive to insurers to  honor their implied  



                                     18  

                                         "[W]ithout such a cause of action insurers can arbitrarily  

covenant to their insureds."  



deny coverage and delay payment of a claim with no more penalty than interest on the  

amount owed."19  



                                                                      

                  Although we have declined to define the elements of the tort of bad faith  



                                 20 

                                                                              

in an insurance contract,           our precedent makes clear that the element of breach at least  



requires the insured to show that the insurer's actions were objectively unreasonable  



         16       State Farm Mut. Auto. Ins. Co. v. Weiford, 831 P.2d 1264, 1266 (Alaska  



1992) (citing Alaska Pac. Assur. Co. v. Collins , 794 P.2d 936, 947 (Alaska 1990)).  



         17       State  Farm Fi     re   &   Cas.   Co. v. Nicholson, 777 P.2d 1152, 1156 (Alaska  



1989).  



         18       Id. at 1157.  



         19       Ennen v. Integon Indem. Corp., 268 P.3d 277, 291 (Alaska 2012) (alteration  



in original) (quoting Nicholson, 777 P.2d at1156).  



                  We note that an insurer's breach of the covenant of good faith and fair  

dealing gives the insured the ability to sue in tort as well as contract, with the distinction  

                                                                            

determining,  among  other  things,  which  types  of  damages  will  be  available.    See  

Weiford, 831 P.2d at 1266.  



         20       See  Hillman v. Nationwide Mut. Fire Ins. Co. ,  855 P.2d 1321,  1323 (Alaska  



1993) ("We had no  occasion  to comprehensively define the elements of the tort of bad  

faith in a f  irst-party insurance context in Nicholson ;  we  have  not  done  so in subsequent  

cases, see e.g., [Weiford]; nor do we do so now.").   



                                                       - 12-                                                  6904
  


----------------------- Page 13-----------------------

                                       21  

under  the  circumstances.                   Thus,  in  order  to  prevail  on  her  bad-faith  claim  at  trial,  



                                                                                             

Lockwood will have to show that Geico's delay in payment of her claims breached the  



                

covenant  of  good  faith  and  fair  dealing  because  it  was  "made  without  a  reasonable  



           22  

basis."         



                     The  superior  court  in  this  case  granted  Geico's  motion  for  summary  



judgment, concluding that there was no genuine issue of material fact as to whether  



          21         See   Hillman ,  855  P.2d  at  1324  ("[T]he  tort  of  bad   faith  in  first-party  



insurance cases . . . necessarily requires that the insurance company's refusal to honor  

a claim be made without a reasonable basis.").  



                     Whether the insured must also show some sort of culpable mental state in  

                                                                                       

addition to objective unreasonableness in a bad-faith insurance tort action is a matter left  

open by our case law.  See, e.g., Nicholson , 777 P.2d at 1154 n.3 (reviewing jury verdict  

                                                                                    

finding  breach  of  duty  of  good  faith  and  fair  dealing  by  insurer  under  first-party  

                                       

insurance  contract  where  jury  was  instructed  that  "[b]ad  faith  does  not  mean  bad  

                 

judgment or negligence, but means having a dishonest purpose through some motive of  

                                                       

self-interest or ill will, or having maliciousness or hostile feelings toward its insureds,  

or  acting  with  reckless  indifference  to  the  interests  or  rights  of  its  insureds,"  but  

disposing of case on other grounds and not reviewing propriety of jury instruction);  

                 

Ennen ,  268  P.3d  at  287-88  (upholding  bench  trial  decision  that  insurer  tortiously  

                                                                                                  

breached duty of good faith and fair dealing owed to insured where insurer engaged in  

                                                                     

no " 'intentional' scheme to 'deceive and deny [underinsured motorist] claims' " but  

nonetheless acted objectively unreasonably under the circumstances and was reckless  

                             

with regard to its unreasonableness); cf. Jackson v. Am. Equity Ins. Co. , 90 P.3d 136,  

                                                                                        

 143-45 (Alaska 2004) (disapproving use of Nicholson jury instruction in bad-faith tort  

                                                                                     

action against insurer for failure to settle third-party claim against insured within policy  

                                   

limits);  Cont'l Ins. Co. v. Bayless & Roberts, Inc., 608 P.2d 281, 293 (Alaska 1980)  

                                                                                                        

(holding "that an insurer, defending an action against the insured, is bound to exercise  

                                                                                    

that degree of care which a man of ordinary prudence would exercise in the management  

                                                                                                         

of his own affairs . . . irrespective of fraud or bad faith." (citation omitted)).  We decline  

                                                    

to address  this issue now because it is unnecessary for us to do so in the course of  

reversing the superior court's grant of summary judgment.  



          22        Hillman , 855 P.2d at 1324.  



                                                               -13-                                                         6904
  


----------------------- Page 14-----------------------

Geico  acted  unreasonably  by  delaying  payment  on  Lockwood's  uninsured  motorist  



benefits.  We conclude that summary judgment was improperly granted in this case.  



                     Looking  at  the  circumstances  of  this  case  as  a  whole  and  viewing  the  



evidence  and  reasonable  inferences  therefrom  in  a  light  most  favorable  to  the  non- 



moving party, we conclude that there is a genuine issue of material fact as to Geico's  



reasonableness in delaying payment on Lockwood's uninsured motorist claim.  First,  



                                                                                                                        

Geico initially offered to settle Lockwood's uninsured motorist claim in June 2007 for  



                  

just $750.  Geico based this offer solely on Lockwood's childcare expenses and not on  



                                    

her medical condition, the connection of that condition to the car accident, her expected  



                                                                                

medical bills, general damages, or lost wages.  After exhaustion of her medical payment  



                                                                                               

benefits, Lockwood was continuing to incur medical expenses and suffer lost wages and  



                                 

other non-economic general damages.  Under these circumstances, in conjunction with  



                

the other factors discussed below, a genuine issue of material fact exists as to whether  



                                                                               

an offer of $750 was unreasonable behavior on the part of an insurer subject to the duty  



                                              23  

of good faith and fair dealing.                    



                     Second, Geico decided in May 2008 not to pay any of Lockwood's medical  



bills after exhaustion of the medical payments benefits without a total settlement of the  

                                                                                                    



uninsured motorist claim.  Drawing all reasonable inferences in favor of Lockwood, a  

                                                                                                                 



genuine issue of material fact exists as to whether the basis for Geico's decision was  

                                                                                                                 



unconnected  to  Lockwood's  actual  medical  condition  but  rather  motivated  by  the  



exhaustion of the medical payments benefits.  If Geico had legitimate concerns about the  

                                                        



extent of Lockwood's injuries, an inference can be drawn that a reasonable insurer would  

                                                                                                                



advise her of those concerns with specificity and either ask Lockwood for more medical  

                              



          23  

                                                                                                

                     Cf. Weiford, 831 P.2d at 1268-69 (concluding that an initial settlement offer  

of $5,000, which was low in the context of the damages and ultimate outcome in that  

                                                                                                 

case, "might support a fact finder's conclusion that [the insurer] was guilty of bad faith").  



                                                               -14-                                                             6904  


----------------------- Page 15-----------------------

                                                                                           

information or ask for an independent medical exam.  Geico took no such actions at the  



time it demanded a global settlement.  This could raise the question whether Geico's  



                

decision to condition additional medical payments on a global settlement actually was  



connected to Lockwood's medical situation and the accident.   



                      Third, Geico denied any further payment under the uninsured motorist  



                                                                     

policy and declined to make any further attempts to reach a settlement, based solely on  



                                                                                 

its unsubstantiated doubts about the necessity of medical care for injuries sustained in the  



                                                                              

accident.  Lockwood presented evidence in her deposition, affidavit, and medical records  



                                                                                                     

that she experienced ongoing, life-changing pain as a result of the accident and having  



                               24                                                                                    25 

                                                                  

to cease treatment.                 Geico noted that she had had a prior back injury                                     and expressed  



                                                                                                                          

concern that her medical bills were "high" in the context of this accident.  But other than  



                                                                                           

asserting these doubts, Geico did nothing to reduce the alleged medical uncertainty about  



the cause of Lockwood's pain or to clarify the necessity of further treatment from the  



                                                                                                       

chiropractor.  Geico did not request a second medical opinion or an independent medical  



                                                                                                                           

exam until 2010, about three years after it stopped paying Lockwood's medical bills.  



                                                                                                                             

Indeed, Geico's staff did not cite a medical basis of any kind to call into question the  



                                                                                                   

chiropractor's treatment for Lockwood's injuries in 2007.  Geico did not seek to use the  



                                                                                                           

voluntary-arbitration clause present in the insurance contract to resolve the issue of  



medical uncertainty.  Nor did Geico inform Lockwood what she would have to do to  



                                                                            

resolve  the  medical  uncertainty  to  Geico's  satisfaction.      Geico  took  none  of  these  



           24          She explained in her deposition that her back pain has "definitely cut[]       



down on" her "every day activities" and "changed . . . [her] way of life."  She claimed                            

that even daily activities were difficult:  "[f]olding laundry, after a while I'm in pain, I                                       

can't finish it."  Three years after the accident, she described her back as "hurt[ing] about   

six out of seven days a week."  She reported that she finds "it difficult to roll over in bed         

without pain" and that her "lower back pain is worse than [her] neck pain."  



           25         A doctor had pronounced her prior back injury stable as of 2006.  



                                                                     -15-                                                               6904
  


----------------------- Page 16-----------------------

                                                                                            

affirmative steps to clarify the alleged medical uncertainty after Lockwood presented all  



                                                  26  

requested information to Geico.                       



                     Taking these circumstances and all reasonable inferences that may be drawn  



                                                                                         

from the facts favorable to Lockwood, we conclude that a genuine issue of material fact  



exists as to whether Geico acted unreasonably by delaying payment on Lockwood's  



                                               

uninsured motorist benefits.  Geico argues that it had several reasonable bases to delay  



                                                              

payment in this case:  the severity of the car accident that "did not involve a heavy  



                                                                                    

impact," Lockwood's "high" medical bills in light of "a diagnosis of a neck strain," and  



the fact that "Lockwood had recently treated with her chiropractor for more than a year,  



                                                         

with similar complaints."  Whether or not Geico's arguments ultimately prevail at trial,  



they are insufficient to justify summary judgment.  We conclude that, under the three  



                                                                               

circumstances discussed above, there is a genuine issue of material fact on the questions  



whether Geico had a reasonable basis for delaying payment of Lockwood's uninsured  



motorist benefits and whether Geico breached its duty of good faith and fair dealing.  We  



                                                                        

therefore reverse the superior court's grant of summary judgment and remand for further  

proceedings.27  



                                                                                               

           B.	       It  Was  An  Abuse  Of  Discretion  To  Deny  Lockwood's  Motion  To  

                     Compel Discovery Of Geico's Manuals.  



                     After its in camera review, the superior court concluded that the claims  



                                                                                                                           

function chapter of Geico's manual requires "the GEICO claims examiners to deal with  



          26         See   Wilson v. 21st Century Ins. Co.                   , 171 P.3d 1082, 1084-89 (Cal. 2007)  



(affirming reversal of summary judgment for the insurer in a bad-faith insurance tort suit           

where the insurer delayed payment for two years as a result of its failure to launch a     

timely investigation to support its medical assertions of a preexisting injury).  



          27  

                                                                               

                     This  does  not  imply  that  Geico's  delay  of  payment  was  necessarily  

                                                                                                             

unreasonable and thus will constitute bad faith in a trial on the merits.  That question can  

be answered only by the ultimate finder of fact.  



                                                                 -16-	                                                          6904
  


----------------------- Page 17-----------------------

                                                                         

insurance issues ethically, fairly, and promptly. . . .  This hardly novel concept does not  



                                                                                            

justify the release of proprietary information . . . ."  As a result, the superior court denied  



Lockwood's  motion  to  compel  discovery  of  Geico's  manuals,  concluding  that  the  



                                                  

manuals would not "directly lead to any admissible evidence regarding any complaints  



                                                      

concerning payments from different available coverages."  On appeal, Lockwood argues  



that Geico's manuals are relevant and discoverable under Alaska Civil Rule 26(b)(1)  



because (1) the "relevancy standard is to be broadly construed at the discovery stage"  



                                                                                                 

and (2) "the court impliedly noted that the materials were relevant to [Geico]'s handling  



of Lockwood's approved [uninsured motorist] claim."  Geico replies that, despite the  



superior  court's  direction  that  Lockwood  narrow  her  discovery,  she  only  requested  



"generic" documents and "failed to articulate the relevance of her demand."  



                                        

                    We conclude that the superior court abused its discretion by not compelling  



relevant discovery.  Alaska Civil Rule 26(b)(1) provides:  



                    Parties  may  obtain  discovery  regarding  any  matter,  not  

                    privileged which is relevant to the subject matter involved in  

                                                        

                    the pending action . . . .  The information sought need not be  

                    admissible  at  the  trial  if  the  information  sought  appears  

                    reasonably calculated to lead to the discovery of admissible  

                    evidence.  



                                                                         

As we have stated, our "discovery rules are to be broadly construed and 'relevance for  

purposes of discovery is broader than for purposes of trial.' "28  



          28        Lee  v.  State ,  141  P.3d  342,  347  (Alaska  2006)  (quoting  Hazen  v.  



Municipality of Anchorage , 718 P.2d 456, 461 (Alaska 1986)) (holding that the superior  

                                                                                 

court did not abuse its discretion by granting discovery of corporate documents and  

information  about  companies'  technologies  and  employees  because  they  related  to  

                                                                   

liability and a defense); see also Langdon v. Champion , 752 P.2d 999, 1004 (Alaska  

                                                                

 1988) (construing the attorney-client privilege narrowly in light of " 'our commitment  

                                  

to liberal pre-trial discovery' " (quoting  United Servs. Auto. Ass'n v. Werley, 526 P.2d  

                                                                                                                  

                                                                                                           (continued...)  



                                                            -17-                                                       6904
  


----------------------- Page 18-----------------------

                                                                                                         

                    After conducting an in camera review of the materials, we conclude that the  



                                                                                                     

claims handling chapter of Geico's manual contains information that is arguably relevant  



                                    

to Lockwood's claims. In particular, the portions of the manual that address professional  



                                                                                     

ethics, settlement practices, and negotiations may prove relevant to Lockwood's bad- 



faith claim. These portions shed light on Geico's standard practices and could lead to  



admissible evidence as to what a typical investigation entails and whether the Geico  



                                                           29  

adjusters followed standard procedures.    We therefore conclude that, under our broad  



                                                                           

discovery rules, Lockwood is entitled to discover portions of Geico's manuals relevant  



to Geico's claims-handling practices.   



                    Finally, we note that Lockwood offered to stipulate to a protective order  



and that Geico requested a confidentiality agreement and protective order to protect  



                                                                                          

confidential information in the manual if the superior court were to compel discovery.  



The superior court, at its discretion, may issue a protective order to protect confidential  



information in the materials.  



V.        CONCLUSION  



                                     

                    Because a reasonable inference could be drawn that Geico did not have a  



                                                               

reasonable basis for delaying payment of Lockwood's uninsured motorist benefits, we  



                                                                                                   

conclude  that  there  is  a  genuine  issue  of  material  fact  as  to  Geico's  bad  faith.  



                      

Accordingly,  we  REVERSE  the  superior  court's  grant  of  summary  judgment  and  



          28(...continued)  



28, 31 (Alaska 1974))).  



          29        While allegations in Hillman  that the insurer's agents violated company  



guidelines failed to raise a factual question as to whether the insurer's denial of coverage  

                                                                                                                

lacked a reasonable basis because "[t]he denial was based on an explicit exclusion in the  

                               

policy," Hillman v. Nationwide Mut. Fire Ins. Co. , 855 P.2d 1321, 1325 (Alaska 1993),  

                                                                            

the guidelines here may assist the fact finder in developing a complete understanding of  

                                                         

Geico's handling of Lockwood's claim.   



                                                             -18-                                                        6904
  


----------------------- Page 19-----------------------

                                                             

VACATE the award of attorney's fees.  We also REVERSE the superior court's denial  



                                                                                       

of Lockwood's motion to compel discovery of Geico's claims-handling and training  



                                                                                                          

materials. The case is REMANDED for further proceedings consistent with this opinion.  



                                                                 -19-                                                      6904
  

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