Barten v. State Farm Mutual Automobile Insurance (28 F. Supp. 3d 978, 2014)

United States District Court for the District of Arizona 2014-07-01

Citations

Full opinion text

ORDER

CINDY K. JORGENSON, District Judge.

On March 21, 2014, Magistrate Judge Leslie A. Bowman issued a Report and Recommendation, (Doc. 348), which addressed defendant’s three motions for partial summary judgment. (Docs. 108, 186, and 188). Magistrate Judge Bowman advised the parties that written objections to the Report and Recommendation were to be filed "within fourteen days after service of a copy of the Report and Recommendation pursuant to 28 U.S.C. § 636(b). Defendant has filed an objection. (Doc. 350). Plaintiffs have filed a response. (Doc. 353). On May 7, 2014, Defendant’s filed a Motion for Leave to File a Reply. (Doc. 354). Plaintiff filed an-Opposition to Defendant’s Motion on May 13, 2014, (Doc. 356), and Defendant filed a Reply in Support of their Motion to File a Reply to Defendant’s Objections on May 23, 2014. (Doc. 357).

I. Motion for Leave to File a Reply

Rule 72 of'the Federal Rules of Civil Procedure permits a party to file objections to a Magistrate Judge’s Report and Recommendation and permits a party to respond to another party’s objections. Fed.R.Civ.P. 72(b)(2). However, the rule does not permit the filing of replies. Moreover, in Magistrate Judge Bowman’s Report and Recommendation, she specifically explained that the rules do not permit the filing of a reply to a response to a party’s objections. (Doc. 348 at p. 1006).

Further, the Court does not find that a reply to the response is necessary in this matter. There has been extensive briefing and argument related to the issues presented to this Court. The parties have filed three separate summary judgment motions all with corresponding responses and replies, conducted oral argument before Magistrate Judge Bowman and had an opportunity to file objections and a response to the objections to Magistrate Judge Bowman’s Report and Recommendation. A review of Plaintiffs proposed reply reveals that it does not add anything significant to the briefing in this matter. As such, Defendant’s Motion to File a Reply is denied. See Hess v. Ryan, 651 F.Supp.2d 1004, 1009, n. 1 (D.Ariz.2009).

II. Standard of Review

This Court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1). Pursuant to 28 U.S.C. § 636(b)(1), if a party makes a timely objection to a magistrate judge’s recommendation, then this Court is required to “make a de novo determination of those portions of the [report and recommendation] to which objection is made.” See also Schmidt v. Johnstone, 263 F.Supp.2d 1219, 1226 (D.Ariz.2003) (reading the Ninth Circuit’s decision in Reyna-Tapia as adopting the view that district courts are not required to review “any issue that is not the subject of an objection”); United States v. Reyna-Tapia, 328 F.3d 1114 (9th Cir.2003) (disregarding the standard of review employed by the district court when reviewing a report and recommendation to which no objections were made).

III. Background

The parties do not object to the factual background as set forth in the Report and Recommendation. As such, the Court adopts the Report and Recommendation’s background information.

IV. Defendant’s Motion for Partial Summary Judgment Re: Contract and Bad Faith Claims. (Doc. 108).

Defendant’s Motion addresses several subjects. Defendant argues that Michigan law applies to Plaintiffs breach of contract and bad faith claims. Applying Michigan law, Plaintiffs claims for benefits are subject to Michigan’s statutory one year back rule, which limits contract and tort claims for personal injury protection (“PIP”) benefits from one year prior to the date on which the action is commenced. MCL § 500.3145(1).

Further, Michigan law does not recognize the tort of bad faith and as such, Plaintiffs claims for bad faith are barred. See Roberts v. Auto-Owners Ins. Co., 422 Mich. 594, 604, 374 N.W.2d 905, 909 (Mich.1985) (citation omitted). Compare Zilisch v. State Farm Mutual Auto. Ins. Co., 196 Ariz. 234, 237, 995 P.2d 276, 279 (Ariz. 2000); Rawlings v. Apodaca, 151 Ariz. 149, 160, 726 P.2d 565, 576 (1986) (Arizona law does allow a bad faith tort action). In the alternative, Defendant argues that even if the Court were to apply Arizona law to Plaintiffs bad faith claim, any claims that occurred before April 13, 2010 are barred by Arizona’s two-year statute of limitations.

Choice of Law—Plaintiffs Breach of Contract Claim

Magistrate Judge Bowman found that Plaintiffs breach of contract claim should be decided pursuant to Michigan law. The parties have not raised any objections to this recommendation. As such, the Court adopts this recommendation.

One Year Limitations—Plaintiffs Breach of Contract Claim

Magistrate Judge Bowman found that Plaintiffs recovery for breach of- contract damages is limited by Michigan’s one year back rule. Plaintiff has not raised any objections to this recommendation. As such, the Court adopts this recommendation.

Choice of Law—Plaintiffs Bad Faith Claim

Magistrate Judge Bowman found that Plaintiffs bad faith claims are governed by Arizona law. Defendant timely filed an objection to this recommendation and suggests that Michigan law should apply to Plaintiffs bad faith claims.

Federal courts sitting in diversity must apply the forum state’s choice of law rules. Love v. Associated Newspapers, Ltd., 611 F.3d 601, 610 (9th Cir.2010). “Arizona courts apply the principles of the Restatement (Second) of Conflict of Laws (1971) (“Restatement”) to determine the controlling law for multistate torts.” Bates v. Superior Court of State of Ariz. In and For the County of Maricopa, 156 Ariz. 46, 48, 749 P.2d 1367, 1369 (Ariz.1988); Pounders v. Enserch E & C, Inc., 232 Ariz. 352, 354, 306 P.3d 9, 11 (Ariz. 2013).

“Restatement '§ 6(2) lists the general factors relevant to choosing the applicable rule of law and § 145 gives further guidance for the application of the § 6 factors to tort issues.” Bates, 156 Ariz. at 48-49, 749 P.2d at 1369-70. Pursuant to § 145, in resolving multistate tort issues, the courts must apply the law of the state which “has the most significant relationship to the occurrence and the parties under the principles stated in § 6.” Restatement (Second) Conflict of Laws § 145(1); Bates, 156 Ariz. at 48-49, 749 P.2d at 1369-70.

In order to perform this analysis in accordance with Arizona law, this Court first considers the general tort choice of law principles of Restatement § 145 as well as the specific personal injury principles of Restatement § 146. See Bates, 156 Ariz. at 49, 749 P.2d at 1370 (finding that pursuant to Arizona law, a bad faith refusal to provide benefits to an insured can create sufficient mental distress to qualify as a personal injury). Then, the Court applies the guidelines of both of those sections to the general principles listed in Restatement § 6(2). Lange v. Penn Mut. Life Ins. Co., 843 F.2d 1175, 1178-1179 (9th Cir.1988) (citing Bates, 156 Ariz. at 48-50, 749 P.2d at 1369-71).

Restatement § 145 provides:

(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.

(2) Contracts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

These contacts are to be evaluated accordance to their relative importance with respect to the particular issue.

Applying the first § 145 factor, Magistrate Judge Bowman concluded that the injury occurred in Arizona because Arizona is where Plaintiff experienced mental and physical harm as a result of Defendant’s alleged bad faith in providing misleading information regarding the extent of his benefits. (Doc. 348, p. 997). Defendant argues that some of Plaintiffs alleged injuries occurred in Michigan.

The “place of injury” is where “the last event necessary for liability occurred (that is, the place where the injury manifested).” Pounders, 232 Ariz. at 356, 306 P.3d at 13. The last event necessary for liability can only occur in one location, which “preserves the Restatement goals of certainty, predictability, and uniformity of result.” Id.

On April 21, 1995, Plaintiff lived in Hart, Michigan when he was involved in a single vehicle accident in Lansing Michigan. (Doc. 169-1 at p. 1). At the time of his injury, Plaintiff was insured under his father’s insurance policy issued by Defen- ' dant in Michigan. Id. at 2. After the accident, on April 28, 1995, Plaintiff was represented by attorney George T. Sinas who applied for PIP benefits on Plaintiffs behalf. Id. at 4. Plaintiff began receiving various PIP benefits from Defendant in 1995 and all claims were handled by personnel in Michigan. Id. at 5.

Plaintiff moved to Tucson, Arizona in December 1996. Id. at 7. After moving to Tucson, Plaintiff was initially assisted by his girlfriend. Id. at 19-20. Defendant paid her for her services including shopping and transferring Plaintiff to and from his wheelchair. Id. at 20. Plaintiffs girlfriend moved in 1997 and Plaintiff subsequently experienced significant problems handling daily personal activities. Id. at 19-20. Plaintiff contacted Defendant and advised them that he needed help with “everything.” Id. at 21. He gave examples of shopping and cleaning and was advised that these services were not covered. Id. As a result, Plaintiff believed that all services other than medical bills were no longer covered. Id. In the fall of 2011, Plaintiff met Andy Zimmer in Las Vegas. Id. at 18. Mr. Zimmer was receiving PIP benefits from a Michigan no fault insurance policy and he advised Plaintiff on the actual extent of his coverage. Id.

While Plaintiff may allege that Defendant failed to provide him with his full panoply of benefits originating from his time in Michigan, he did not begin to suffer mental and physical distress as a result of Defendant’s alleged bad faith in the handling of his claim until after his girlfriend moved and Defendant , allegedly provided him with misleading information regarding his benefits. These acts occurred while Plaintiff was living in Arizona. Accordingly, the place of injury in this case is Arizona.

In analyzing the second § 145 factor, Magistrate Judge Bowman concluded that the conduct causing the injury occurred in Michigan where Plaintiffs claims were handled. (Doc. 348, p. 997). The Court agrees. Defendant allegedly injured Plaintiff through its bad faith practices and since Plaintiffs claims were handled in Michigan, that is where the bad faith conduct causing Plaintiffs injuries, allegedly occurred.

Analyzing the third § 145 factor, Magistrate Judge Bowman explained that Defendant is incorporated in Illinois and has its principal place of business in Illinois, while Plaintiff is domiciled in Arizona. Magistrate Judge Bowman gave more weight to Plaintiffs domicile. Defendant argues that Magistrate Judge Bowman failed to consider that Defendant does significant business in Michigan, the insurance policy was issued out of Defendant’s Michigan office, and Plaintiff resided in Michigan when he suffered the underlying injuries from the vehicular accident. Defendant suggests that this factor is a split between Michigan and Arizona.

While there are geographic contacts between Michigan and Arizona amongst the parties, Arizona applies “greater weight to the residence of the alleged tort victim” in cases where the injury is to plaintiffs personal interests. Bates, 156 Ariz. at 50, 749 P.2d at 1371. While Plaintiffs residence was Michigan at the time some of Defendant’s alleged bad faith conduct occurred, the Court has already determined that Plaintiff was domiciled in Arizona when he felt the impact of Defendant’s alleged conduct. As a result, the Court will ascribe greater weight to Plaintiffs Arizona contacts.

Analyzing the fourth § 145 factor, Magistrate Judge Bowman found that the relationship between the parties is centered between Illinois and Arizona. (Doc. 348, p. 997). Defendant argues that all of Plaintiffs claims were handled in Michigan by Michigan PIP claim representatives and Defendant’s claims representatives communicated with Plaintiff from Michigan.

As stated by the Arizona Supreme Court, in an insurance bad faith case, “the relationship would seem to be centered at the insurer’s home office.” Bates, 156 Ariz. at 50, 749 P.2d at 1371. It is undisputed that many of Defendant’s 69 employees who were involved in Plaintiffs claim handled his claim physically out of Michigan. See (Doc. 169-1 at pp 5-7). The claim was initially processed in Michigan based on an automobile insurance policy issued in Michigan to Plaintiffs father, a Michigan resident, as a result of an automobile accident that occurred in Michigan. See (Doc. 169-1 at pp. 1-3, 5-7). As such, this Court finds that the parties’ relationship is primarily centered in Michigan.

A review of this Court’s analysis reveals that the factors are quantitatively evenly split between Michigan and Arizona. However, the Court’s analysis on “which state has the most significant contacts is qualitative, not quantitative.” Lange, 843 F.2d at 1180 (citing Bates, 156 Ariz. at 49, 749 P.2d at 1370). In performing this analysis, the Court must consider Restatement § 146. Lange, 843 F.2d at 1180; Bates, 156 Ariz. at 49, 749 P.2d at 1370.

Restatement § 146 states:

In an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.

In this case, the injury occurred in Arizona. Accordingly, unless another state has a more significant relationship under the principles stated in Restatement § 6 to the occurrence and the parties, Arizona law shall apply. Pursuant to Restatement § 6:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.

(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and,

(g) ease in the determination and application of the law to be applied.

Defendant argues that several of these factors ' support applying Michigan law, specifically factors (c), (d), (e), and (f). The Court finds that factor (a), “the needs of the interstate and international systems,” has minimal relevance to this bad faith action. See Bates, 156 Ariz. at 50, 749 P.2d at 1371; Lange, 843 F.2d at 1180. Further, Plaintiffs bad faith action is based in tort not contract, as such, factor (d), “the protection of justified expectations,” is not a relevant factor to consider. See Lange, 843 F.2d at 1180-1181 (finding that plaintiffs claim alleging a breach of the implied covenant of good faith arises in tort and “in such a case, subsection (d) of Restatement § 6(2) is not applicable”) (citing Bates, 156 Ariz. at 50, 749 P.2d at 1371); see also Restatement § 145, comment (b) (“the protection of justified expectations of the parties, which is of extreme importance in such fields as contracts, property, wills and trusts, is of lesser importance in the field of torts.”).

Next, this Court finds that factor (e), “the basic policies underlying the particular field of law,” is similarly neutral. See Restatement § 6, comment (h) (“this factor [basic policies underlying particular field of law] is of particular importance in situations where the policies of the interested states are largely the same but where there are nevertheless minor differences between their relevant local law rules.”). Additionally, factor (f), is of “lesser importance in torts.” Restatement § 145, comment (b); see also Lange, 843 F.2d at 1180 (applying § 6 factors to an insurance bad faith claim the Court determined that a consideration of the principle of certainty, predictability and uniformity of result is not helpful); Bates, 156 Ariz. at 50, 749 P.2d at 1371 (finding that the factor considering certainty, predictability and uniformity of result is neutral in the insurance bad faith context), and factor (g) is insignificant to this analysis as this Court could easily apply either Arizona law or Michigan law to this claim. See Garcia v. General Motors Corp., 195 Ariz. 510, 519, 990 P.2d 1069, 1078 (Ariz.Ct.App.1999); see also Bates, 156 Ariz. at 50, 749 P.2d at 1371.

The Court finds that factors (b) and (c) are applicable to this case and carry greater weight than the other factors. Pounders, 232 Ariz. at 359, 306 P.3d at 16; see also Restatement § 145, comment (b) (identifying the policies of the forum and interested states as factors of relatively greater importance in tort cases). The Court evaluates the relevant policies of the forum state and other interested states “in light of § 145’s contacts, considering particularly the policy of the dominant state.” Pounders, 232 Ariz. at 359, 306 P.3d at 16.

The relevant policies of Arizona and Michigan are completely different in this case. Arizona permits recovery for insurance bad faith claims. See Zilisch, 196 Ariz. at 237, 995 P.2d at 279. Michigan does not recognize a separate cause of action for insurance bad faith. Roberts, 422 Mich, at 604, 374 N.W.2d at 909 (citations omitted). As the forum state, Arizona has an interest in making sure- that its residents are made whole for injuries caused while in Arizona. However, Defendant correctly points out that Michigan provides a comprehensive law governing no fault claims that permits among other things lifetime attendant care benefits. While Michigan may have an interest in precluding the use of insurance bad faith litigation in light of its expansive No Fault Act, the Court finds that this interest does not create a greater interest in applying Michigan law to Plaintiffs bad faith claim in this case.

After applying the principles of Restatement §§ 145, 146, and 6, this Court agrees with the Magistrate Judge and concludes that Arizona law shall apply to Plaintiffs insurance bad faith claim as it has the most significant relationship to the parties.

Defendant further argues that Michigan law should apply even though Plaintiff subsequently moved to Arizona and his resulting injuries were suffered in Arizona. See Pounders, 232 Ariz. at 358, 306 P.3d at 15. In Pounders, the plaintiff was exposed to asbestos in New Mexico but was diagnosed with mesothelioma in Arizona years later. Id. The court ascribed minimal significance to the place of injury in its choice of law analysis holding that the plaintiffs move to Arizona was fortuitous and as a result it applied significant weight to the location where the conduct causing the injury occurred. Id. Defendant suggests that the facts in this case are analogous to Pound-ers and as such, the Court should perform a similar analysis. See Id. This Court disagrees.

While, there may be situations where the place of injury does not play an important role in determining the state law to apply such as when the place of injury is fortuitous or when it bears little relation to the occurrence and the parties with respect to the particular issue', Restatement (Second) Conflict of Laws § 145 comment (e), generally, in cases involving personal injuries, the place where the injury occurred plays an “important role in the selection of the state of the applicable law.” Id.

In this case, there was an ongoing and continuing relationship between Plaintiff and Defendant from the time of the Plaintiffs underlying accident in Michigan and continuing after he moved to Arizona. However, most of the alleged acts of bad faith occurred while Plaintiff resided in Arizona. Further, the plaintiff in Pound-ers did not have a continuing relationship with the defendant and there was no relationship between defendant’s actions and the place of injury. As such, the Court finds this case distinguishable from the unique situation in Pounders and applies the general rule that the place of injury plays a. more significant role in the Court’s analysis. See Restatement (Second) Conflict of Laws § 146, comment (c).

Defendant argues that applying Arizona law to Plaintiffs insurance bad faith claim would create a new duty under Michigan’s no fault insurance policy that does not exist under Michigan law, such as a duty to advise the insured on his insurance benefits. However, Defendant is a national insurer and would have known that its Michigan insureds may relocate. As a result, Defendant is aware that it may have to perform its obligations as an insurer in any state. Defendant “could not justifiably expect that every aspect of its conduct would be governed by the law of the state in which the contract originally was made.” Bates, 156 Ariz. at 51, 749 P.2d at 1372. Moreover, as noted earlier, the Court is applying Arizona law only to Plaintiffs claim in tort; Plaintiffs claim for breach of contract remains subject to Michigan law.

Statute of Limitations■ — Bad Faith Claim

Magistrate Judge Bowman recommended applying Arizona’s two year statute of limitations to Plaintiffs bad faith claim. Neither party objects to this recommendation and it is adopted.

Magistrate Judge Bowman further recommended that this Court, refer a determination on whether the discovery rule is applicable to Plaintiffs bad faith claim to the trier of fact because a reasonable jury could find that Plaintiff was not aware of the extent of his benefits prior to the deadline for the statute of limitations. Defendant objects to this recommendation.

Pursuant to Arizona law:

[I]nsurance contracts include an implied covenant of good faith and fair dealing, whereby each party is ‘bound to refrain from any action which would impair the benefits which the other had the right to expect from the contract or the contractual relationship.’ Voland v. Farmers Ins. Co., 189 Ariz. 448, 451, 943 P.2d 808, 811 (App.1997), quoting Rawlings v. Apodaca, 151 Ariz. 149, 154, 726 P.2d 565, 570 (1986).

Rowland v. Great States Ins. Co., 199 Ariz. 577, 582, 20 P.3d 1158, 1163 (Ariz.Ct.App.2001) (internal quotations omitted). This implied covenant is breached when an insurer’s conduct damages the security which the insured sought to gain by buying insurance. Deese, 172 Ariz. at 508, 838 P.2d at 1269 (citations omitted).

Arizona’s two year limitation period for bad faith claims “begins to run upon accrual.” Manterola v. Farmers Ins. Exchange, 200 Ariz. 572, 576, 30 P.3d 639, 643 (Ariz.Ct.App.2001) (citing Doe v. Roe, 191 Ariz. 313, 326, 955 P.2d 951, 964 (Ariz.1998)). “Under the common law discovery rule, a cause of action does not accrue until the plaintiff knows or with reasonable diligence should know” the defendant’s wrongful conduct. Id. (internal quotations and citations omitted).

Defendant argues that Plaintiff submitted requests for reimbursement to Defendant for attendant care services such as bathing, toileting, dressing and undressing before the April 13, 2010 limitations date. As such, Plaintiff knew he was entitled to services above and beyond his medical needs prior to April 13, 2010 and any claims relating to conduct that occurred prior to that date are time barred.

While this appears to be compelling evidence that Plaintiff at a minimum had reason to know that he was entitled to attendant care benefits beyond his medical needs prior to the April 13, 2010 limitations date, Plaintiff has submitted evidence that he was not aware of the actual extent of his benefits until after his conversation with Andy Zimmer in the fall of 2011.

In the context of a motion for summary judgment, the Court must draw all inferences in the light most favorable to the nonmoving party. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990). Further, the Court may not make credibility determinations or weigh conflicting evidence. Id. Applying these rules, the Court determines that a genuine issue of fact exists as to whether Plaintiff knew or reasonably should have known about Defendant’s alleged bad faith actions relating to his attendant care prior to April 13, 2010.

Next, Defendant argues that prior to 2010, Plaintiff was represented by attorney George Sinas in relation to his claim for benefits. As such, Plaintiff actually or constructively knew through Mr. ’ Sinas about the availability of attendant care benefits prior to April 13, 2010. Plaintiff responds that there are factual disputes regarding the nature, extent and relevance of Plaintiffs representation by Mr. Sinas.

There is significant evidence in this case to demonstrate that Plaintiff had an ongoing attorney client relationship with Mr. Sinas during intermittent periods from 1995 through 2006. On April 28,1995, Mr. Sinas drafted a letter advising Defendant that he had been retained by Plaintiff. (Doc. 108-2, p. 43). Then, on May 21, 1996, Mr. Sinas sent another letter to Defendant in relation to his representation of Plaintiff for replacement services. (Doc. 169-10). Further, it is undisputed that Mr. Sinas represented Plaintiff for a period of 12 months after the underlying accident for first party benefits. (Doc. 169-1 at p. 4).

Additionally, there is some evidence that Mr. Sinas represented Plaintiff between 2004 and 2008. During that time period, Plaintiff sent numerous letters to Defendant in which he copied Mr. Sinas. See (Doc. 108-2, pp. 92, 93, 95, and 96). Further, in a February 11, 2006 letter to Defendant, Plaintiff explicitly stated that he was requesting certain services “upon the advice of [his] attorney George T. Sinas.” (Doc. 108-2 at p. 95). Finally, there were communications between Plaintiff and Mr. Sinas relating to Plaintiffs claim from 2004 through 2008, in which Plaintiff sought legal advice. (Doc. 310-1 at p. 4).

However, Plaintiff contends that Mr. Si-nas did not represent him after 1996. While Defendant received letters from Plaintiff after 1996 that referenced Mr. Sinas, Defendant has not submitted any evidence that it received communications or correspondence directly from Mr. Sinas related to Plaintiffs claim after 1996.

An attorney client relationship is formed when: “(1) a person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person; and ... (a) the lawyer manifests to the person consent to do so.” Paradigm Ins. Co. v. Langerman Law Offices, P.A., 200 Ariz. 146, 149, 24 P.3d 593, 596 (Ariz.2001) (quoting Restatement (Third) of the Law Governing Lawyers § 14). There is no requirement that the relationship be subject to an express oral or written agreement and the relationship may be formed by an intent among the parties to create an attorney client relationship or acquiescence. Paradigm Ins. Co., 200 Ariz. at 148-149, 24 P.3d at 595-596. “As a practical matter, an attorney is deemed to be dealing with a client when ‘it may fairly be said that because of other transactions an ordinary person would look to the lawyer as a protector rather than as an adversary.’ ” Id. at 149, 24 P.3d at 596 (internal quotations and citations omitted).

The fact that Plaintiff sought legal advice from Mr. Sinas after 1996 and Mr. Sinas seemingly provided such advice may be sufficient to form an attorney client relationship. However, the Court finds that a question of fact remains regarding the extent of any relationship between Mr. Sinas and Plaintiff after 1996. In addition, the fact that Plaintiff may have had an attorney client relationship with Mr. Sinas after 1996 and prior to 2010 does not establish that Plaintiff had knowledge of the extent of his attendant care benefits.

Defendant cites to Hatch Companies Contracting, Inc. v. Arizona Bank, 170 Ariz. 553, 826 P.2d 1179 (Ariz.Ct.App.1991) for the proposition that Mr. Sinas’ knowledge of the extent of Plaintiffs attendant care benefits was imputed to Plaintiff. However, the court in Hatch addressed a client’s knowledge that a lis pendens was executed and recorded by counsel. The court held that any knowledge on the part of counsel relating to the propriety of recording the lis pendens was imputed to the attorney’s client, if the client was made aware by his counsel that he had filed the ms pendens and counsel had a reason to know that the filing of the lis pendens was improper. Id. at 559, 826 P.2d at 1185.

In this case, Plaintiff has submitted evidence demonstrating that Mr. Sinas submitted improper requests for benefits to Defendant during the initial year of his representation of Plaintiff. As such, there is a question' of fact as to whether Mr. Sinas had the requisite knowledge relating to Plaintiffs benefits to' impute to his client. See (Doc. 224-1 at p. 3) (Mr. Sinas confused replacement services with attendant care benefits, when replacement services were subject to a three year limit while attendant care benefits were not subject to such a time restriction).

Accordingly, the Court agrees with Magistrate Judge Bowman that a determination on when Plaintiffs bad faith claim accrued for statute of limitations purposes, in accordance with the discovery rule, should be left to the trier of fact. See Doe, 191 Ariz. at 323, 955 P.2d at 961 (“[w]hen discovery occurs and a cause of action accrues are usually and necessarily questions of fact for the jury.”).

Y. Defendant’s Motion for Partial Summary Judgment on Plaintiffs Claims Re: Sixteen Hours Per Day of Attendant Care. (Doc. 186).

Magistrate Judge Bowman recommended denying Defendant’s Motion because there were genuine issues of material fact regarding Plaintiffs contract and bad faith claims relating to whether he was entitled to 16 hours of attendant care.

Defendant objects to Magistrate Judge Bowman’s recommendation. Specifically, Defendant argues that while Plaintiff submitted claim forms to Defendant for 16 hours of attendant care signed by his wife starting in 2011, both Plaintiff and his wife testified at their depositions that she had not been providing him with 16 hours of attendant care per day. Further, Plaintiffs wife admitted she did not review the forms before signing them and did not keep track of the time she spent providing services to Plaintiff.

As explained in the Report and Recommendation, in order for benefits to be payable, “(1) the expense must have been incurred, (2) the expense must have been for a product, service, or accommodation reasonably necessary for the injured person’s care, recovery, or rehabilitation, and (3) the amount of the expense must have been reasonable.” Moghis v. Citizens Ins. Co. of America, 187 Mich.App. 245, 247, 466 N.W.2d 290, 292 (App.1990). (Doc. 348, p. 1002).

Defendant acknowledges that Plaintiff submitted documentation demonstrating that his wife was providing him with 16 hours of attendant care per day. (Doc. 187-1 at pp. 31-46). While Plaintiff testified that he did not receive sixteen hours of attendant care on a daily basis from his wife as specifically listed in the forms for reimbursement, see (Doc. 220-2 at p. 63), his deposition further demonstrates that he had difficulty preparing the forms and the amount of care he needed in a given day for a given task varied. (Doc. 187-1 at pp. 15-29); (Doc. 220-2 at p., 63). Further, Plaintiff testified that there were days where he received more than 16 hours of attendant care and his wife was always on call to provide assistance. Accordingly, the Court agrees with Magistrate Judge Bowman that viewing the evidence in a light most favorable to the non-moving party, there are credibility issues and factual issues for the trier of fact to resolve relating to Plaintiffs claim for 16 hours of daily attendant care.

VI. Defendant’s Motion for Partial Summary Judgment Re: Alleged Hurdles to Plaintiffs Recovery of Benefits and Plaintiffs Claims for Bad Faith and Punitive Damages. (Doc. 188).

In this Motion, Defendant argues that it is entitled to judgment as a matter of law on several issues. Each issue shall be addressed below.

Failure to Advise

Magistrate Judge Bowman concluded that since there is no statutory provision in Michigan’s No Fault Act requiring that an insurer explain benefits to its insured, the failure to explain or advise Plaintiff about his benefits cannot result in a breach of contract. The parties have not raised any objections to this recommendation and it is adopted.

Magistrate Judge Bowman further concluded that a failure to advise an insured about the extent of his benefits and his rights under the policy in a non-misleading way can support a claim of bad faith. See Nardelli v. Metropolitan Group Property and Cas. Ins. Co., 230 Ariz. 592, 603, 277 P.3d 789, 800 (Ariz.Ct.App.2012). As such, Magistrate Judge Bowman reasoned that there were issues of fact regarding Defendant’s explanation of benefits to Plaintiff that precluded summary judgment.

Defendant objects to this recommendation arguing that Plaintiff was represented by counsel and his attorney, Mr. Sinas’ knowledge of the extent of Plaintiffs benefits are imputed to the Plaintiff. Accordingly, it was reasonable for Defendant to assume that Plaintiff had been properly advised of his benefits.

Even if the imputed knowledge of his attorney was sufficient to excuse Defendant’s failure to advise Plaintiff, the Court has previously addressed this argument in relation to the statute of limitations for Plaintiffs bad faith claims and concluded that there is a genuine question of fact regarding Plaintiffs relationship with Mr. Sinas after 1996 and any knowledge imputed to Plaintiff by Mr. Sinas. Accordingly, Magistrate Judge Bowman’s recommendation related to this issue is adopted.

Coordinated Care

Magistrate Judge Bowman recommended granting Defendant partial summary judgment on the issue of whether it acted properly by requiring Plaintiff to seek reimbursement from his private health insurer before seeking benefits from Defendant. Plaintiff has not objected to this recommendation and it is adopted.

Reasonable and Customary Payment

Magistrate Judge Bowman recommended granting Defendant partial summary judgment on the issue of whether it acted properly by paying providers “reasonable and customary” amounts for services rendered rather than the amounts actually billed. Plaintiff has not objected to this recommendation and it is adopted.

Documentation

Magistrate Judge Bowman recommended granting Defendant partial summary judgment on the issue of whether any of Plaintiffs claims were denied for failure to provide formal documentation. Plaintiff has not objected to this recommendation and it is adopted.

Bad Faith

Magistrate Judge Bowman recommended denying Defendant’s Motion for Partial Summary Judgment on the issue of bad faith because there existed a genuine issue of material fact as to whether Defendant acted in bad faith in the handling of Plaintiffs claim. Defendant has- not objected to this recommendation and it is adopted.

Punitive Damages

Magistrate Judge Bowman found that there was sufficient evidence from which the trier of fact could find punitive damages in this case and as such, recommended denying Defendant’s Motion for Partial Summary Judgment regarding Plaintiffs punitive damages claim. Defendant objects to this recommendation.

In Arizona, an “insured may recover punitive damages on a bad faith claim.” Medical Protective Co. v. Pang, 606 F.Supp.2d 1049, 1064 (D.Ariz.2008) (citing Walter v. Simmons, 169 Ariz. 229, 818 P.2d 214, 225-26 (Ariz.Ct.App.1991)). However, in an insurance bad faith case, punitive damages may not be awarded “unless the evidence reflects ‘something more than the conduct necessary to establish the tort.’ ” Rawlings, 151 Ariz. at 162, 726 P.2d at 578 (finding that “plaintiff must prove that defendant’s evil hand was guided by an evil mind”) (citation omitted). An evil mind may be found where the defendant intended to injure the plaintiff or where defendant “consciously pursued a course of conduct knowing that it created a substantial risk of significant harm to others.” Id. “It has been stated that action justifying the award of punitive damages is ‘conduct involving some element of outrage similar to that usually found in crime.’ ” Id. (citation omitted).

As such, “punitive damages will [only] be awarded on proof from which the jury may ' find that the defendant was ‘aware of and consciously disregarded a substantial and unjustifiable risk that’ significant harm would occur.” Id. While sufficient to establish the tort of bad faith, an indifference to facts or failure to investigate are insufficient to establish punitive damages-. Id. To obtain summary judgment on the punitive damages issue, a defendant must show that no reasonable jury could find the requisite evil mind by clear and convincing evidence. Holy Trinity Greek Orthodox Church v. Church Mut. Ins. Co., 476 F.Supp.2d 1135, 1140 (D.Ariz.2007) (citing Thompson v. Better-Bilt Aluminum Products Co., Inc., 171 Ariz. 550, 832 P.2d 203, 211 (Ariz.1992)).

Based on the evidence submitted in this case and viewed in a light most favorable to the Plaintiff, the Court finds that there is sufficient evidence from which a jury could find punitive damages by clear and convincing evidence.

VI. Conclusion

The recommendations of Magistrate Judge Bowman are adopted. Plaintiffs contract claim is to be construed in accordance with Michigan law and as such, the one-year back rule limits his contract damages to one year prior to filing. Plaintiffs bad faith claim shall be construed in accordance with Arizona law and genuine issues of material fact remain as to whether the discovery rule tolls Arizona’s two year statute of limitations on Plaintiffs bad faith claim.

Additionally, genuine issues of material fact remain on Plaintiffs contract and bad faith claims related to his entitlement to 16 hours of attendant care and Defendant’s failure to advise Plaintiff of the extent of his benefits in good faith. However, there are no genuine issues of material fact and partial summary judgment is granted in relation to any claims related to coordinated care, reasonable and customary payment or a failure to provide documentation as referenced in this Order and the Report and Recommendation. Finally, partial summary judgment related to Plaintiffs bad faith claim and punitive damages claim is denied.

Accordingly, IT IS ORDERED:

1. The Report and Recommendation is ADOPTED. (Doc.348).

2. Defendant’s Motion for Partial Summary Judgment Re: Contract and Bad Faith Claims, (Doc. 108), is GRANTED IN PART.

3. Defendant’s Motion for Partial Summary Judgment Re: Sixteen Hours Per Day of Attendant Care, (Doc. 186), is DENIED.

4. Defendant’s Motion for Partial Summary Judgment Re: Alleged “Hurdles” to Plaintiffs Recovery of Benefits and Plaintiffs Claims for Bad Faith and Punitive Damages, (Doc. 188), is GRANTED IN PART.

5. Defendant’s Motion for Leave to File a Reply, (Doc. 354), is DENIED. Dated this 30th day of June, 2014.

REPORT AND RECOMMENDATION

LESLIE A. BOWMAN, United States Magistrate Judge.

Pending before the court are the defendant’s three motions for partial summary judgment: (1) Defendant’s Motion for Partial Summary Judgment Re: Contract and Bad Faith Claims (Doc. 108), (2) Defendant’s Motion for Partial Summary Judgment on Plaintiffs Claims Re: Sixteen Hours Per Day of Attendant Care (Doc. 186), and (3) Defendant’s Motion for Partial Summary Judgment Re: Alleged “Hurdles” to Plaintiffs Recovery of Benefits and Plaintiffs Claims for Bad Faith and Punitive Damages (Doc. 188).

The plaintiff in this action, Bryan Bar-ten, was covered by a personal injury protection (PIP) policy issued by the defendant, State Farm, when he was involved in an automobile accident and rendered a quadriplegic. Barten claims State Farm breached this policy by failing to pay benefits due and failing to inform him of the extent of his benefits.

First, State Farm moves that the contract and bad faith' claims should be construed in accordance with Michigan law. State Farm also moves that the court should' limit the scope of the action pursuant to the one-year-back damages rule or pursuant to the appropriate statute of limitations.

State Farm moves for summary judgment on Barten’s claim that State Farm improperly failed to pay for 16 hours per day of attendant care. State Farm further moves for summary judgment as to several “hurdles” that Barten asserts were raised by State Farm to unjustly deny benefits. Finally, State Farm argues the evidence is insufficient to support Barten’s bad faith claim or his claim to punitive damages.

The ease has been referred to Magistrate Judge Bowman for all pretrial matters pursuant to the local Rules of Practice. LRCiv 72.2. A hearing on the motion was held on March 11, 2014. At the hearing, the court was informed that the parties have reached a settlement regarding Barten’s claim for car modifications and home modifications.

Background

In April of 1995, Barten was involved in an automobile accident in Lansing, Michigan and rendered a quadriplegic. (Doc. 169-1, p. 1) At the time of his injury, Barten was covered by his father’s personal injury protection (PIP) policy pursuant to the Michigan No-Fault Act, which was issued by the defendant, State Farm. Id., p. 2.

Immediately after the accident, Barten was represented by attorney George T. Sinas, who applied for PIP benefits on Barten’s behalf. (Doc. 169-1, p. 4) In a letter sent to State Farm, Sinas explained that his office would keep the insurer informed as to Barten’s course of treatment and would “be in contact with your office concerning attendant care, replacement services, home accommodations, etc.” Id., p. 5. Barten believes Sinas’s office erroneously applied for certain benefits such as transfers and shopping assistance under the “replacement services” benefit rather than the “attendant care services” benefit. (Doc. 169-1, p. 4) The replacement services benefit is limited to three years. Id. State Farm filed a notice pursuant to A.R.S. § 12-2506(B) identifying Sinas as a nonparty at fault. (Doc. 30)

After his accident, Barten moved to Arizona to escape the harsh winters in Michigan. For a time, he was assisted by his girlfriend. (Doc. 169-1, pp. 19-20) State Farm paid her for her services including shopping and transferring Barton to and from his wheelchair. (Doc. 169-1, p. 20)

When his girlfriend moved away in 1997, Barton was at a loss as to how he would be able to cope with his day-to-day needs. Id., pp. 19-21. He had problems opening bottles, getting dressed, changing his linens, taking out the garbage, and getting back into his wheelchair after a fall. (Doc. 169-1, pp 19-20) He contacted State Farm and asked if they would pay for someone else to do the jobs she formerly performed. Id. He explained he needed help with “everything.” Id., p. 21. He gave the examples “shopping” and “cleaning,” but he was told those things are not covered. Id., p. 21; (Doc. 169-3, pp. 27-29) He inferred that all benefits other than medical bills had ended as of April 21, 1998. Id., p. 21; (Doc. 169-3, pp. 27-29)

Barton now believes State Farm’s de-' scription of the limited scope of his benefits was erroneous. He thinks he was given this incorrect information because his girlfriend’s services were improperly paid under the “replacement services” benefit. The “replacement services” benefit only lasts for a limited period of time after th.e accident. (Doc. 169-3, pp. 28-29) The “attendant care” benefit, however, is not so limited. See (Doc. 347, p. 42) (arguing that State Farm’s documents indicate shopping is covered under attendant care)

In December of 2009, Barten was fitted with a peripherally inserted central catheter (PICC) intravenous line to treat an infection. (Doc. 169-1, p. 24) Barton called State Farm and explained he was unable to maintain the line and use it to administer his antibiotics. Id. When State Farm employee Ms. Parker asked if three hours of attendant care would help him, Barton gratefully accepted. Id. Barten obtained from his physician, Theodore Brysacz, a prescription for three hours of attendant care. (Doc. 186, p. 4) Under this “attendant care” benefit, State Farm paid for feeding, bathing, toileting, dressing, undressing, and transferring. (Doc. 186, p. 4)

In the Fall of 2011, Barten met Andy Zimmer in Las Vegas. (Doc. 169-1, p. 18) Zimmer had a similar injury and was also receiving benefits from a PIP Michigan no-fault policy. Id. Barten credits Zimmer with informing him of the extent of his PIP benefits. Id., p. 19.

Shortly afterwards, Barten requested State Farm provide 16 hours per day of attendant care. (Doc. 169-1, p. 18) Barten obtained from his physician, Theodore Brysacz, a prescription for 16 hours of attendant care. (Doc. 186, p. 5)

State Farm refused to pay for 16 hours of attendant care because Barten’s medical condition had not changed since the time he claimed three hours of care. (Doc. 169-1, p. 25) Barten argues he did not ask for three hours of care because he believed it was the amount he needed, but rather accepted that amount because Ms. Parker told him State Farm would pay for that amount of care. (Doc. 169-1, p. 12)

On April 13, 2012, Barten filed this action in Pima County Superior Court claiming breach of contract, insurance bad faith, and violation of the Medicare Second Payer Act, 42 U.S.C. § 1395y(b)(3)(A). (Doc. 1-3, pp. 2-10) It was removed by the defendant on May 22, 2012. (Doc. 1) The medicare claim was dismissed by stipulation. (Doc. 143)

Barten claims State Farm breached its duty to disclose all the benefits available under his policy. (Doc. 1-3, pp. 2-10) He further claims State Farm has not paid all benefits due. Id. For example, State Farm is only paying for three hours of attendant care per day instead of the 16 hours recommended by Barten’s physician. Id.

Standard of Review: Summary Judgment

Summary judgment is appropriate only “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.” Fed.R.Civ.P. 56(a). There is just such a dispute “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

The initial burden rests on the moving party to point out the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the moving party has the burden of proof at trial, that party carries its initial burden by presenting evidence showing no reasonable trier of fact could find for the nonmoving party. Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986); U.S. v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir.1991). If the moving party does not have the burden of proof at trial, that party carries its initial burden either by presenting evidence negating an essential element of the nonmoving party’s claim or demonstrating the nonmoving party cannot meet its burden at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Nissan Fire & Marine Insurance v. Fritz, 210 F.3d 1099 (9th Cir.2000).

Once satisfied, the burden shifts to the nonmovant to demonstrate through production of probative evidence that an issue of fact remains to be tried. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Summary judgment is appropriate “against a party who fails to make a showing sufficient to establish the existence of an element essential to the party’s case, and on which that party will bear the burden of proof at trial.” Thomas v. Douglas, 877 F.2d 1428, 1430 (9th Cir.1989).

When considering a motion for summary judgment, the court is not to make credibility determinations or weigh conflicting evidence. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990). Instead, the court should draw all inferences in the light most favorable to the nonmoving party. Id. That said, it remains the job of the nonmoving party “to identify with reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.1996).

(1) Defendant’s Motion for Partial Summary Judgment Re: Contract and Bad-Faith Claims (Doc. 108)

Contract Claim: Choice of Law

State Farm argues that Barten’s breach of contract claim should be decided pursuant to Michigan law. Barten agrees. This aspect of the motion is uncontested and should be granted. See (Doc. 347, pp. 7, 43)

Contract Claim: One-Year-Back Limitation on Damages

State Farm argues Barten’s contract recovery is limited by the one-year-back rule, M.C.L. § 500.3145(1), which limits recovery to losses incurred within one year of the filing of the action. The court agrees.

The one-year-back rule limits, the damages that a potential plaintiff may recover in an action for recovery of personal protection insurance benefits. Simply put, “the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced.” M.C.L. § 500.3145(1).

“The Michigan Supreme Court has confirmed that this is a damages limitation provision, and not a statute of limitations.” Buntea v. State Farm Mut. Auto Ins. Co., 467 F.Supp.2d 740, 749 (E.D.Mich.2006). “Therefore, traditional judicial tolling doctrines ... such as insanity or infancy of a party, do not apply to the one year back rule.” Id. The court, nevertheless, retains equitable authority to extend the recovery period in “unusual circumstances such as fraud or mutual mistake.” Id.

Barten argues summary judgment on this issue is not appropriate because there is evidence from which a reasonable trier of fact could find equitable estoppel. (Doc. 169, p. 6)

“The principle of estoppel is an equitable defense that prevents one party to a contract from enforcing a specific provision contained in the contract.” City of Grosse Pointe Park v. Michigan Munic ipal Liability and Property Pool, 473 Mich. 188, 203-204, 702 N.W.2d 106, 116 (2005). “For equitable estoppel to apply, [Barten] must establish that (1) [State Farm’s] acts or representations induced him to believe [some fact about his coverage], (2) [Barten] justifiably relied on this belief, and (3) [Barten] was prejudiced as a result of [his] reliance....” Id. Barten argues first that equitable estoppel could be found from State Farm’s failure to explain his benefits.

“Silence or inaction may form the basis for an equitable estoppel only where the silent party had a duty or obligation to speak or take action.” Conagra, Inc. v. Farmers State Bank, 237 Mich.App. 109, 141, 602 N.W.2d 390, 406 (App.1999). Here, however, there is no evidence that State Farm had such a duty to explain under Michigan law. See Schwein v. State Farm Mut. Auto. Ins. Co., 2013 WL 4605892, *4 (E.D.Mich.2013) (“Indeed, as the court acknowledged in Paquette [v. State Farm Mut. Auto Ins. Co., 2009 WL 2168918, at *3 (Mich.Ct.App.2009) ], there is no statutory obligation to explain benefits under the No Fault Act.”).

In the alternative, Barton alludes to the fact that State Farm had an internal policy of explaining benefits. He does not, however, provide any evidence that Barten was aware of this policy and reasonably relied on it.

Barten states in a conclusory fashion that estoppel could be found from State Farm’s affirmative misrepresentation of the extent of his benefits. He may be referring to evidence that he contacted State Farm when his girlfriend moved away and asked if he could get someone to help him with the tasks that she previously performed. (Doc. 169-1, pp. 19-20) He was told, however, that those things are not covered, and he inferred that all benefits other than medical bills had ended as of April 21, 1998. Id., p. 21; (Doc. 169-3, pp. 27-29)

In order for this statement to trigger equitable estoppel, however, Barton must show that it induced him to believe falsely that certain benefits were not covered and that he was reasonable in his belief. The Michigan Supreme Court, however, has stated that reliance on an insurer’s statement that contradicts the terms of the policy cannot induce reasonable reliance because the insured is presumed to have read the terms of the insurance policy. Cooper v. Auto Club Ins. Ass’n, 481 Mich. 399, 415, 751 N.W.2d 443, 451-52 (2008); see, e.g., Brown v. Travelers Indem. Co., 2011 WL 41911, *7 (M.D.Fla.2011) (One-year-back rule applied even where the defendant “sought to and did mislead Plaintiff as to the nature and scope of attendant care benefits under the no-fault law” because any reliance on the defendant’s communications, “app'ears unjustified as a matter of law.”).

Barten’s contract recovery is limited by the one-year-back rule, M.C.L. § 500.3145(1). State Farm is entitled to partial summary judgment on this issue.

Bad Faith Claim: Choice of Law

State Farm argues Barten’s bad faith claim must be dismissed because the court should apply Michigan law, and Michigan does not recognize an action for insurer bad faith. The court finds to the contrary that this claim should be construed in accordance with Arizona law.

A federal court sitting in diversity applies the choice of law rules of the forum state. Patton v. Cox, 276 F.3d 493, 495 (9th Cir.2002). “Arizona courts follow the Restatement (Second) of Conflict of Laws (hereinafter ‘Restatement’) as a guide in choice of law questions.” Id. (Punctuation modified) Where the plaintiff brings a bad faith insurance claim, the court should consider Restatement § 145, which is applicable to tort issues in general, and Restatement § 146, which is specifically directed toward personal injury actions. Bates v. Superior Court of State of Ariz., In and For Maricopa County, 156 Ariz. 46, 49, 749 P.2d 1367, 1370 (1988).

Restatement § 145 “provides that courts are to resolve tort issues under the law of the state having the most significant relationship to both the occurrence and the parties with respect to any particular question.” Id. The following factors are ordinarily the most important:

1. The place where the injury occurred;

2. The place where the conduct causing the injury occurred;

3. The domicile, residence, nationality, place of incorporation and place of business of the parties;

4. The place where the relationship, if any, between the parties is centered. Id.

In this case, the injury occurred in Arizona where the plaintiff experienced mental, physical, and financial harm as a result of State Farm’s alleged improper failure to provide benefits. Bates, 156 Ariz. at 49, 749 P.2d at 1370. Barten argues State Farm violated the covenant of good faith and fair dealing in a number of ways, but his strongest argument is that State Farm gave him misleading information about the extent of his benefits. This conversation took place when Barten was living in Arizona.

The conduct causing the injury occurred mainly in Michigan where Barten’s claims were handled. (Doc. 108-1, p. 3)

As to factor 3, Barten is domiciled in Arizona, while State Farm is domiciled in Illinois where it is incorporated and has its principal place of business. (Doc. 108, p. 13) Arizona courts, however, give more weight to the residence of the tort victim where, as here, the injury is to the plaintiffs personal interests. Bates, 156 Ariz. at 50, 749 P.2d at 1371.

Factor 4 asks where the relationship between the parties is centered. The relationship between the parties here is the relationship between an insurer and an insured. One could therefore find the relationship “centered” between their two domiciles, Arizona and Illinois. Arizona is where Barten incurred medical expenses and received benefits. Illinois is the home of the insurer, the place where Barten directed his claim requests, and the place from which State Farm communicated to him. (Doc. 108-2, pp. 91-97, 103, 105-110)

Having examined these factors, a court might be tempted to compare in a straightforward way the number of factors favoring each alternative state. The court’s inquiry, however, “is qualitative, not quantitative.” Bates, 156 Ariz. at 49, 749 P.2d at 1370. “The court must evaluate the contacts according to their relative importance with respect to the particular issue.” Id.

The Restatement gives the following specific qualitative guideline for personal injury cases:

In an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.

Restatement § 146. The Restatement § 6 gives the following factors relevant to the choice of law determination:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law, certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

Most of these factors are neutral and do not provide a reason for overriding the general rule of Restatement § 146. See Bates, 156 Ariz. at 50, 749 P.2d at 1371. Factor (d), however, “the protection of justified expectations,” bears closer analysis. State Farm argues that Michigan law should apply because the Michigan No-Fault Act was enacted in reliance on Michigan’s prohibition on bad faith claims. (Doc. 108, p. 15); (Doc. 347, p. 19) It would be unfair to require insurance companies to pay No-Fault benefits without enforcing the prohibition against bad faith claims which acts as an economic offset. Id., see also Bates, 156 Ariz. at 50, 749 P.2d at 1371.

The cases cited by State Farm, however, do not explicitly state the No-Fault Act was created in reliance on a prohibition against bad faith claims. In fact, Michigan recognized a related cause of action, the Michigan Consumer Protection Act, which permitted noncontract causes of action to be brought alongside a No-Fault contract claim. See Buntea v. State Farm Mut. Auto Ins. Co., 467 F.Supp.2d 740, 743-45 (E.D.Mich.2006).

Moreover, national insurers such as State Farm know that insureds sometimes relocate and know “that it might be required to perform its obligations as an insurer in any state in the union.” Bates, 156 Ariz. at 51, 749 P.2d at 1372. “It could not justifiably expect that every aspect of its conduct would be governed by the law of the state in which the contract originally was made.” Id.

Because no other state has “a more significant relationship under the principles stated in § 6 to the occurrence and the parties,” the general rule should apply, and the law of Arizona should be applied to Barten’s bad faith claim. Restatement § 146, see, e.g., Bates, 156 Ariz. at 47-48, 749 P.2d at 1368-69 (Arizona law applied to bad faith insurance claim where the insured was covered by a Michigan no-fault policy, was a Michigan resid