Joiner v. USAA Insurance, Co.

Filing 46

MEMORANDUM OPINION AND ORDER directing that the defendant's 33 MOTION for Partial Summary Judgment is GRANTED as follows: (1) summary judgment is GRANTED in favor of defendant on plaintiff's bad faith claim and that claim is DISMISSED with prejudice; (2) the motion is otherwise DENIED. Signed by Chief Judge William Keith Watkins on 1/8/13. (Attachments: # 1 civil appeals checklist)(djy, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
STEPHANIE JOINER,
Plaintiff,
v.
USAA CASUALTY INSURANCE
COMPANY,
Defendant.

)
)
)
)
)
)
)
)
)
)

CASE NO. 2:10-CV-1006-WKW
[WO]

MEMORANDUM OPINION AND ORDER
Before the court is Defendant’s Motion to Dismiss or, in the Alternative, for
Partial Summary Judgment. (Doc. # 33.) Plaintiff responded in opposition (Doc. #
37), and Defendant replied (Doc. # 40).
This suit arises out of Plaintiff Stephanie Joiner’s claim for benefits against her
insurer, Defendant USAA Casualty Insurance Company (“USAA”), under her un- or
under-insured motorist (“UIM”) policy. Plaintiff alleges that Defendant breached
their contract and committed the tort of bad faith when it denied Plaintiff’s claim for
UIM benefits. Defendant moved to dismiss the bad faith claim as unripe or, in the
alternative, for summary judgment on the bad faith claim. Having considered the
arguments of counsel and the relevant law, the court finds that the bad faith claim is
ripe, but that it cannot survive summary judgment.

I. JURISDICTION AND VENUE
In October 2010, Plaintiff filed suit in the Circuit Court of Autauga County,
Alabama, alleging breach of contract, bad faith, unjust enrichment, and fraud1 on the
part of Defendant. Defendant timely removed the case on the basis of diversity
jurisdiction, and diversity jurisdiction is proper. Thus, the court exercises subject
matter jurisdiction pursuant to 28 U.S.C. §§ 1332(a) and 1441. The parties do not
contest personal jurisdiction or venue, and allegations sufficiently support both.
Defendant argues in its motion to dismiss that the court lacks subject matter
jurisdiction to hear the bad faith claim because it is not ripe under Alabama law, citing
Pontius v. State Farm Mut. Ins. Co., 915 So. 2d 557 (Ala. 2005) and Ex parte Safeway
Ins. Co., 990 So. 2d 344 (Ala. 2008).
II. STANDARDS OF REVIEW
A.

Motion to Dismiss for Lack of Subject Matter Jurisdiction
A motion to dismiss under Rule 12(b)(1) may assert either a factual attack or

a facial attack to jurisdiction. McElmurray v. Consol. Gov’t of Augusta-Richmond

1

The parties now agree that the unjust enrichment claim is due to be dismissed for
failure to state a claim, as there is no dispute that an insurance contract existed and a claim based
on an implied contract will not lie where there is an express contract. See Vardaman v. Florence
City Bd. of Educ., 544 So. 2d 962, 965 (Ala. 1989) (“It has long been recognized in Alabama that
the existence of an express contract generally excludes an implied agreement relative to the same
subject matter.”). Additionally, the parties jointly stipulated to the dismissal of the fraud count
shortly after removal. (Doc. # 14.)
2

Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007). Defendants bring a factual attack
challenging “the existence of subject matter jurisdiction in fact, irrespective of the
pleadings.” Id.
B.

Summary Judgment
To succeed on summary judgment, the movant must demonstrate “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). The court must view the evidence and the
inferences from that evidence in the light most favorable to the nonmovant.
Jean-Baptiste v. Gutierrez, 627 F.3d 816, 820 (11th Cir. 2010).
The party moving for summary judgment “always bears the initial responsibility
of informing the district court of the basis for its motion.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). This responsibility includes identifying the portions of the
record illustrating the absence of a genuine dispute of material fact. Id. If the movant
meets its evidentiary burden, the burden shifts to the nonmoving party to establish –
with evidence beyond the pleadings – that a genuine dispute material to each of its
claims for relief exists. Id. at 324. A genuine dispute of material fact exists when the
nonmoving party produces evidence allowing a reasonable factfinder to return a
verdict in its favor. Waddell v. Valley Forge Dental Assocs., 276 F.3d 1275, 1279
(11th Cir. 2001).
3

III. FACTUAL BACKGROUND
Plaintiff Stephanie Joiner’s trip home from the 2009 Prattville, Alabama Fourth
of July Parade was more exciting than the parade itself. As Plaintiff was driving
home, a teenage driver took his eyes off the road while reaching for the phone he
dropped on his truck’s floorboard. When he looked back up, he met the rear of
Plaintiff’s Honda. The parties agree that driver carries the blame for the accident on
his teenage shoulders, but there is disagreement about whether the accident is to blame
for Plaintiff’s jaw pain and resulting surgery.
In April 2009, about two months before the accident, Plaintiff underwent
surgery on the right side of her jaw to treat her temporomadibular joint disorder
(“TMJ”). When Plaintiff sought treatment at the emergency room the day of the
accident, she reported neck and back pain, but no jaw pain. Later, Plaintiff began
experiencing jaw pain, and approximately two weeks after the accident, she saw Dr.
Louis, the physician who was treating her TMJ and who performed her earlier surgery.
Dr. Louis observed that Plaintiff’s pain had increased considerably after the accident
and that it restricted her jaw movement. An MRI indicated surgery was necessary,
and in October 2009, Dr. Louis performed a second surgery to treat her TMJ, this time
on the left side of her jaw.

4

About six months after the accident, Auto Owners Insurance – the insurer for
the other driver – offered policy limits of $25,000 to settle Plaintiff’s claim against
him. Defendant USAA then issued a check to Plaintiff for that amount as a
substituted payment for the tortfeasor’s settlement offer. The accident had totaled
Plaintiff’s car, and she suffered injuries to her back and knee, injuries indisputably
attributable to the accident.
Defendant did, however, dispute its liability for Plaintiff’s jaw pain when she
filed a claim for UIM benefits to cover the cost of treatment and the second surgery.
At Defendant’s request, Plaintiff provided her medical records, including those of Dr.
Louis, in support of her claim for UIM benefits. Because Plaintiff suffered from TMJ
requiring surgery before the accident, Defendant engaged a dental expert to review
Plaintiff’s claim and investigate whether the accident caused the pain requiring the
later surgery. In March 2010, following a review of Plaintiff’s medical records and
based upon her education and clinical experience, the expert concluded that the
accident did not cause the injuries necessitating a second surgery. The same month,
Defendant relied on the report to deny Plaintiff’s claim for UIM benefits.
In May 2010, Plaintiff asked Defendant to reconsider its denial. This time, she
included a letter from Dr. Louis stating his opinion that trauma from the accident led
to Plaintiff's second jaw surgery. Defendant again denied the claim. It reiterated its
5

position that Plaintiff’s jaw problems were not attributable to the accident.
Additionally, Defendant concluded that Plaintiff’s other injuries fell well within the
limits afforded by the $25,000 paid by Auto Owners Insurance and the already
exhausted $5,000 in medical payments coverage on Plaintiff’s USAA policy. This
suit ensued.
IV. DISCUSSION
A.

Ripeness
Under Alabama law, a bad faith claim for failure to pay UIM benefits is not ripe

for adjudication prior to determination of the alleged tortfeasor’s fault and the extent
of damages. Pontius v. State Farm Mut. Ins. Co., 915 So.2d 557, 564 (Ala. 2005)
(“[T]here can be no bad faith action based on conduct arising before the uninsured
motorist’s liability is established and damages are fixed . . . .”).
Here, USAA argues that the “liability” of the underinsured motorist for the jaw
injuries has not been established, and until it is, there can be no bad faith claim. But
in both Pontius and Ex parte Safeway Ins. Co., 990 So. 2d 344 (Ala. 2008), the
Supreme Court of Alabama appears to use “liability” to mean fault for the accident
when discussing the ripeness of a bad faith claim. Neither party to this case disputes
that the teenage motorist who hit Plaintiff from behind breached a duty of care.

6

Moreover, common sense counsels that this controversy is ripe. It is instructive
to consider the alternatives if the court found Plaintiff’s claim was unripe. Plaintiff
now brings a breach of contract suit against her insurer. To succeed on her breach of
contract claim, she must prove that she was entitled to UIM benefits, and doing so
requires proof that the UIM is responsible for her injuries. In short, her bad faith
claim would, under these circumstances, only become “ripe” when – if ever – liability
for breach of contract is established. Defendant’s position would require Plaintiff to
bring her breach of contract suit, receive a favorable verdict, and only then make a
demand on her insurer. This does not comport with the rule under Alabama law that
an insured need not obtain a verdict against the alleged tortfeasors before joining her
UIM carrier as a defendant. Pontius, 915 So. 2d at 564.
The alleged breach has already occurred, unlike in Pontius. There, neither the
breach of contract claim nor the bad faith claim had become ripe. Here, the action
forming the basis of the suit – the refusal to pay – has already occurred. Either it was
a breach or it was not; either it was bad faith or it was not. Plaintiff’s bad faith claim,
like her breach of contract claim, is ripe.
B.

Summary Judgment
Alabama law recognizes two kinds of bad faith: the “normal” case and the

“abnormal” case. See Jones v. Alfa Mut. Ins. Co., 1 So. 3d 23, 32 (Ala. 2008)
7

(contrasting “normal” and “abnormal” bad faith claims). Under either rubric, Plaintiff
has not avoided summary judgment on the bad faith claim.
1.

“Normal” Bad Faith

To succeed in a normal bad faith, a plaintiff must prove: “(1) the existence of
an insurance contract; (2) an intentional refusal to pay the claim; and (3) the absence
of any lawful basis for refusal and the insurer’s knowledge of that fact or the insurer’s
intentional failure to determine whether there is any lawful basis for its refusal.” Id.
at 32 (quoting Acceptance Ins. Co. v. Brown, 832 So. 2d 1, 16 (Ala. 2001)). To
submit a normal bad faith claim to a jury, “the underlying contract claim must be so
strong that the plaintiff would be entitled to a preverdict judgment as a matter of law.”
Id. (quoting Shelter Mut. Ins. Co. v. Barton, 822 So. 2d 1149, 1155 (Ala. 2001)).
The Supreme Court of Alabama’s decision in Jones controls this case. There,
the plaintiffs brought a bad faith claim against their home- and farm- owner’s insurer
after it denied the plaintiffs’ claim to repair damage to their home. Jones, 1 So. 3d at
26. The parties disputed the cause of the damage. The defendant’s engineer
concluded the brick and sheetrock cracks and caulk separations were due to settlement
of the foundation and therefore not covered by the plaintiffs’ policy. Id. The
defendant denied the plaintiffs’ claim on this basis, and over the plaintiffs’ insistence
that Hurricane Opal caused the damage. Id.
8

The defendant’s motion for summary judgment on the bad faith claim was
affirmed because the engineer’s “report creat[ed] a question of material fact that
would preclude the [plaintiffs] from receiving prejudgment as a matter of law on the
underlying breach-of-contract claim.” Id. at 34. Likewise, summary judgment in
favor of Defendant USAA on Plaintiff’s bad faith claim is appropriate here. The
conclusion of Defendant’s expert that the accident did not cause Plaintiff’s jaw pain
or necessitate a second surgery creates an issue of fact on the breach of contract claim
that a jury must resolve.
On the record before the court, a reasonable juror could conclude that the
accident did cause Plaintiff’s jaw injury. But, a reasonable juror could also conclude
that the accident did not cause Plaintiff’s jaw injury. Under Alabama law, where there
is a genuine dispute of material fact on a plaintiff’s breach of contract claim, the
defendant is entitled to summary judgment on a bad faith claim arising from the
contract. Id.
2.

“Abnormal” Bad Faith

Under Alabama law, an “abnormal” case of bad faith involves “(1) intentional
or reckless failure to investigate a claim, (2) intentional or reckless failure to properly
subject a claim to a cognitive evaluation or review, (3) the manufacture of a debatable
reason to deny a claim, or (4) reliance on an ambiguous portion of a policy as a lawful
9

basis for denying a claim.” Jones, 1 So. 3d at 32. Unlike a normal case of bad faith,
a plaintiff in an abnormal bad faith case need not prove she is entitled to judgment as
a matter of law on the underlying breach of contract claim. Id. (citing White v. State
Farm Fire & Cas. Co., 953 So. 2d 340, 348 (Ala. 2006)).
A plaintiff may not raise a new claim for the first time in her response to a
summary judgment motion. Gilmour v. Gates, McDonald & Co., 382 F.3d 1312,
1315 (11th Cir. 2004). Though Plaintiff argues abnormal bad faith in her brief
opposing Defendant’s motion for summary judgment, she did not plead facts
suggesting her bad faith claim was an “abnormal” one. This alone would be enough
to prevent her bad faith claim from going forward based on a theory of abnormal bad
faith.
Assuming Plaintiff did plead facts suggesting abnormal bad faith in her
complaint, summary judgment is nonetheless appropriate. The unrefuted evidence
illustrates that Defendant investigated Plaintiff’s claim, as it hired an expert to review
her injuries. The same evidence establishes that Defendant subjected Plaintiff’s claim
to a cognitive evaluation and indicates that the reason to deny the claim was not
pretextual. Finally, there is no allegation that Defendant relied on an ambiguous
portion of the policy to deny the claim.

10

IV. CONCLUSION
Accordingly, it is ORDERED that Defendant’s Partial Motion for Summary
Judgment (Doc. # 33) is GRANTED as follows:
1.

Summary judgment is GRANTED in favor of Defendant on Plaintiff’s
bad faith claim and that claim is DISMISSED with prejudice;

2.

The motion is otherwise DENIED.

DONE this 8th day of January, 2013.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

11