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A and B are driving separate cars in State X. B’s car strikes A’s car, causing an accident. Both A and B are injured, and their cars are severely damaged. A sues B in the U.S. District Court for the District of State X. Assume that personal jurisdiction, subject-matter jurisdiction, and venue are proper.
Should A prevail, the applicable law would entitle A to recover for medical expenses, pain and suffering, and property damage. A’s prayer for relief demands compensation for pain and suffering, along with property damage, but it does not mention medical expenses.
B has an automobile insurance policy with C, an insurance company. The policy provides that C will defend B from any liability arising out of a covered accident. However, a clause in the policy relieves C of this duty to defend, if the accident occurred because the insured driver was texting on a cell phone while driving. C asserts that B was texting at the time of the accident, and thus refuses to defend B. B then impleads C as a third-party defendant under Fed. R. Civ. P. (Rule) 14, alleging that C has a duty to defend B. Assume that impleader is proper.
The judge schedules a pretrial conference per Rule 16. The scheduling order reads, in part, as follows: “Attendance at the pretrial conference is mandatory for the attorneys and the parties. A party that is a corporation must send an authorized representative. The parties must be prepared to discuss settlement in good faith.”
All parties and their attorneys attend the conference as ordered. The judge asks whether the parties are prepared to discuss settlement. C’s representative tells the judge that C refuses to discuss settlement, because C believes that it has no duty to defend B. The judge finds that C has failed to comply with the scheduling order, and then reschedules the conference for 14 days later, to give C time to comply. The judge then issues a written order requiring C to reimburse A and B for the attorney fees they would incur by attending the rescheduled pretrial conference.
After discovery, C moves for summary judgment against B, arguing that C has no duty to defend B because B was texting while driving. The judge grants the motion and dismisses C from the case. The judge’s written order, in its entirety, reads as follows: “Summary judgment is hereby granted in favor of C. C shall be relieved of any duty to defend B.” B wants to appeal C’s dismissal immediately, but B’s attorney advises B that the judge’s order is not yet appealable.
At trial, A presents competent evidence regarding A’s medical expenses, pain and suffering, and property damage. The jury returns a verdict in favor of A, awarding $50,000 for medical expenses, $100,000 for pain and suffering, and $40,000 for property damage. The judge tells the parties that the final judgment will be for $190,000. B objects, arguing that the judgment should be for only $140,000, because A’s complaint did not specifically demand compensation for medical expenses.