               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE FIFTH CIRCUIT
                       _____________________

                            No. 01-10342
                          Summary Calendar
                       _____________________

PENNY HESS,

                                               Plaintiff-Appellant,

                               versus

NATIONWIDE MUTUAL INSURANCE COMPANY,

                                               Defendant-Appellee.
__________________________________________________________________

           Appeal from the United States District Court
            for the Northern District of Texas, Dallas
                     USDC No. 3:99-CV-407-R
_________________________________________________________________
                          August 9, 2002
Before JOLLY, JONES, and STEWART, Circuit Judges.

PER CURIAM:*

     Penny Hess appeals the district court’s judgment in favor of

Hess’s insurer, Nationwide Mutual Insurance Company (“Nationwide”).

Finding no error, we affirm the district court’s judgment.

                                 I

     This case arises out of a motor vehicle accident involving

Hess and Refugio Barrientos.   On March 15, 1998, Barrientos -- who

was allegedly intoxicated at the time -- struck Hess when he failed

to yield to her and made a lefthand turn into her 1981 Ford pick-up

     *
     Pursuant to 5th Cir. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.

                                 1
truck. Hess brought suit against Barrientos and eventually settled

for Barrientos’s applicable insurance policy limit of $20,205.

Hess then filed two claims with her insurer, Nationwide.                              She

claimed    personal      injury    protection          benefits     and   underinsured

motorist benefits.        Nationwide paid the personal injury protection

claim and offered to settle the underinsured motorist claim.                          Hess

rejected       the   settlement    offer       and    filed   a   complaint    against

Nationwide in Texas state court alleging that (1) Nationwide

arbitrarily and in bad faith refused to compensate her for her

injuries and (2) breached its contractual obligation to pay damages

caused    by    Barrientos’s      negligence         beyond   the    amount    paid    by

Barrientos’s insurer.         Specifically, she alleged that Nationwide

breached the duty of good faith and fair dealing under Texas law in

connection with its proposed settlement of Hess’s underinsured

motorist claim.

     Nationwide removed the case to federal court, where it filed

a motion for partial summary judgment on the bad faith claim.                         The

motion for partial summary judgment was referred to a magistrate

judge    for    recommendation.        The       magistrate       judge   recommended

granting Nationwide’s motion for partial summary judgment and

dismissing       the   bad   faith   claim           with   prejudice.        After    an

independent review of the record, the district court adopted the

magistrate judge’s recommendation and dismissed Hess’s bad faith

claim.     Following the district court’s grant of partial summary



                                           2
judgment in favor of Nationwide, the sole remaining question was

the    amount    of   compensable   damages    caused   by     Barrientos’s

negligence.     This issue was tried before a jury, which found that

Hess was entitled to $6,093.94 in damages.       Because this amount was

less    than    the   $20,025   settlement    that   Hess    received   from

Barrientos’s insurer, the district court ordered that Hess take

nothing.   This appeal followed.

                                     II

       On appeal, Hess primarily challenges the district court’s

grant of partial summary judgment in favor of Nationwide.               Hess

argues that the district court erred for two primary reasons.

First, Hess argues that she produced sufficient evidence to survive

summary judgment on her extra-contractual bad faith claim. Second,

she argues that summary judgment was not appropriate in this case

because there was no evidence before the court concerning the terms

of the insurance contract.       Without a copy of the contract, Hess

argues, the court could not construe the duties each party owed to

the other.      We address each issue in turn, reviewing de novo the

district court’s legal conclusions.           See Commerce and Industry

Insurance Co. v. Grinnell Corp., 280 F.3d 566 (5th Cir. 2002).            We

must determine whether, viewing the record in the light most

favorable to Hess, there is a genuine issue of material fact. See

id.; Fed.R.Civ.P. 56(c).

                                     A



                                     3
       In order to prevail on a claim for bad faith under Texas law,

“an insured must show (1) the absence of a reasonable basis for

denying or delaying payment of benefits of the policy and (2) that

the [insurer] knew or should have known that there was not a

reasonable basis for denying the claim or delaying payment of the

claim.” Robinson v. State Farm Fire & Casualty Co., 13 F.3d 160,

162 (5th Cir. 1994)(quoting Aranda v. Insurance Co. of North Am.,

748 S.W.2d 210, 213 (Tex. 1988)).                 Stated differently, the insured

must produce evidence that “the insurer knew or should have known

that it was reasonably clear that the claim was covered.” Universe

Life Ins. Co. v. Giles, 950 S.W.2d 48, 49 (Tex. 1997).

       In the present case, the question is whether Hess produced

sufficient evidence of bad faith to survive Nationwide’s summary

judgment motion.           Specifically, Hess must produce some evidence

that Nationwide’s settlement offer was made in bad faith because it

was “reasonably clear” that Hess’s claim was covered by her policy.

The summary judgment evidence presented to the district court,

however, does not support Hess’s claim that Nationwide acted

arbitrarily or in bad faith.              To the contrary, the evidence before

the district court suggested only a good faith disagreement between

Hess and Nationwide concerning the valuation of her claim.1                           It is

well settled that a legitimate dispute over coverage does not



       1
         Hess does not argue that Nationwide made any misrepresentations to her concerning her
claim or her policy coverage.

                                              4
amount to bad faith.       See    Higginbotham v. State Farm Mut. Auto

Ins.   Co.,   103   F.3d   456,   459   (5th    Cir.   1997)   (“A   bona   fide

controversy is sufficient reason for failure of an insurer to make

a prompt payment of a loss claim.”); Robinson, 13 F.3d at 162-63

(holding that evidence that shows only a bona fide coverage dispute

does not rise to the level of bad faith).

       Hess nevertheless maintains that she has raised questions of

fact concerning whether Nationwide’s disposition of her claim was

unreasonable.       First, Hess argues that Nationwide has adopted a

policy of arbitrarily denying claims based solely on the name of

the medical provider.      To support this contention, Hess points to

the deposition testimony of a Nationwide claims adjuster, Deborah

Diviney. In her testimony, Diviney stated that the clinic where

Hess received treatment is known to “overtreat” its patients and

that Hess’s bills seemed high.              Later in her testimony, Diviney

clarified that she thought the bills were excessive because the

clinic had performed unnecessary procedures on Hess. To the extent

that Diviney’s testimony is equivocal, it is simply not sufficient

to raise an issue of fact concerning whether Nationwide had a

policy under which it automatically denied claims based solely on

the name of the medical provider.

       Second, Hess appears to argue that the district court’s grant

of partial summary judgment was inappropriate because an issue

remains concerning Nationwide’s allegedly unreasonable denial of



                                        5
coverage for “damages incident to gross negligence” under Hess’s

underinsured motorist policy.2                  Nationwide concedes, however, that

the policy covers compensatory damages incurred by Hess as a result

of the accident -- regardless of whether the accident was caused by

negligence or gross negligence.                   Thus, we construe Hess’s argument

to be that Nationwide’s settlement offer was unreasonable because

it reflected Nationwide’s decision not to pay punitive damages that

the    jury      could      award      based      on    Barrientos’s          alleged        gross

negligence.

       In any event, we need not address the merits of this argument

because Hess did not raise the argument before the magistrate judge

or the district court in her response to Nationwide’s motion for

partial summary judgment.3               More precisely, Hess did not argue that



       2
         Hess similarly argues that the district court erred during the trial on damages by excluding
evidence that Barrientos was intoxicated at the time of the accident. According to the
parties’ joint pre-trial order, however, the only issue at trial
was “the nature and extent of [Hess’s] alleged personal injuries
resulting from this automobile collision as well as the amount of
medical expenses and any causal relationship to this automobile
accident.” The district court therefore did not abuse its discretion when it ruled that evidence
of Barrientos’s intoxication was not admissible at trial because it is not relevant to the
damage issue.
       3
       In her (untimely) objections to the magistrate judge’s
recommendations, Hess discussed whether Texas law permits insurance
coverage for punitive damage awards.     Hess indicated that this
discussion was in response to Nationwide’s “request[] that the
court declare there is no coverage” for punitive damages under the
underinsured motorist policy. As an initial matter, Nationwide did
not make any such “request” in its motion for partial summary
judgment. In any event, Hess’s objection on this point was framed
as a “breach of contract issue” and therefore was not connected to
Hess’s extra-contractual bad faith claim.

                                                 6
Nationwide’s settlement offer was made in bad faith because the

offer was based on an unreasonable refusal to cover any potential

punitive damage award.

     We have held that, “[o]nce the movant presents a properly

supported motion for summary judgment,” Rule 56 imposes on the non-

moving party a “duty to ‘designate’ the specific facts in the

record that create genuine issues precluding summary judgment.”

Jones v. Sheehan, Young & Culp, P.C., 82 F.3d 1334, 1338 (5th Cir.

1996) (citations omitted).        Because Hess failed to raise her

punitive    damages   argument   below   to   support   her   claim   that

Nationwide acted unreasonably, she did not fulfill her duty under

Rule 56.    We therefore find no error in the district court’s grant

of partial summary judgment in favor of Nationwide.

                                    B

     As noted above, Hess also argues that the district court erred

in granting partial summary judgment in favor of Nationwide because

the record did not contain the insurance policy at issue.             This

argument is unavailing because the terms of the insurance policy

were not directly at issue in disposing of the summary judgment

motion. Although the terms of the insurance policy may be relevant

to bad faith allegations under some circumstances, the policy terms

were not at issue in Nationwide’s motion for partial summary

judgment.    Similarly, the only evidence of bad faith identified in

Hess’s brief in opposition to the summary judgment motion was



                                    7
Diviney’s testimony concerning the basis for the settlement offer.

     In sum, we conclude that the district court properly granted

Nationwide’s motion for partial summary judgment because Hess has

not produced any probative evidence from which a reasonable fact-

finder   could   conclude   that   Nationwide’s   settlement   offer   was

unreasonable or made in bad faith.

                                    III

     For the reasons set out above, the judgment of the district

court is

                                                               AFFIRMED.




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