Robinson v. Affirmative Insurance Holdings Inc et al

Filing 25

MEMORANDUM OPINION. Signed by Judge Sharon Lovelace Blackburn on 3/27/2014. (AVC)

FILED
2014 Mar-27 AM 09:22
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
PEARLIE ROBINSON

)
)
Plaintiff,
)
)
v.
)
)
AFFIRMATIVE INSURANCE,
)
HOLDINGS, INC.; AFFIRMATIVE )
INSURANCE COMPANY;
)
USAGENCIES MANAGEMENT
)
SERVICES, INC.; LIFCO, LLC.
)
)
Defendants.
)

CASE NO. 2:12-cv-2159-SLB

MEMORANDUM OPINION
This case is presently before the court on defendants’ Motion to Dismiss, (doc. 19).1
Upon consideration of the motion, the supporting and opposing memoranda, arguments of
counsel and the relevant law, the court finds, for the reasons stated below, that defendants’
Motion to Dismiss is due to be granted in part and denied in part.
I. STANDARD OF REVIEW
A complaint is required to contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). When a plaintiff alleges fraud
or mistake, the complaint must “state with particularity the circumstances constituting fraud

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Reference to a document number, (“Doc. ___”), references to the number assigned each
document as it is filed in the court’s record.
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or mistake.” FED. R. CIV. P. 9(b). A defendant may move to dismiss a complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) if the plaintiff has failed to state a claim upon
which relief may be granted. To survive a 12(b)(6) motion, the complaint “does not need
detailed factual allegations”; however, the “plaintiff’s obligation to provide the grounds of
his entitlement to relief requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007) (internal quotation marks and citations omitted).2 Accordingly, “[f]actual
allegations must be enough to raise a right to relief above the speculative level . . . on the
assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id.
(citations and footnote omitted). The plaintiff need not prove his case, but must plead
“enough facts to state a claim to relief that is plausible on its face.” Id. at 570 (emphasis
added). Additionally, “[w]hen considering a motion to dismiss, all facts set forth in the
plaintiff’s complaint ‘are to be accepted as true and the court limits its consideration to the
pleadings and exhibits attached thereto.’” Grossman v. Nationsbank, N.A., 225 F.3d 1228,
1231 (11th Cir. 2000) (quoting GSW, Inc. v. Long Cnty., 999 F.2d 1508, 1510 (11th Cir.

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In Bell Atlantic Corp. v. Twombly, the United States Supreme Court abrogated the
oft-cited standard that “a complaint should not be dismissed for failure to state a claim unless
it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief,” which was set forth in Conley v. Gibson, 355 U.S. 41
(1957). See Twombly, 550 U.S. at 561 (quoting Conley, 355 U.S. at 45-46). The Supreme
Court stated that the “no set of facts” standard “is best forgotten as an incomplete, negative
gloss on an accepted pleading standard: once a claim has been stated adequately, it may be
supported by showing any set of facts consistent with the allegations in the complaint.” Id.
at 562-63. The “decision in Twombly expounded the pleading standard for ‘all civil actions.’”
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009).
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1993)). Further, all “reasonable inferences” are drawn in favor of the plaintiff. St. George v.
Pinellas Cnty., 285 F.3d 1334, 1337 (11th Cir. 2002). However, “‘[u]nsupported conclusions
of law or of mixed fact and law have long been recognized not to prevent a Rule 12(b)(6)
dismissal.’” Dalrymple v. Reno, 334 F.3d 991, 996 (11th Cir. 2003) (quoting Marsh v. Butler
Cnty., 268 F.3d 1014, 1036 n.16 (11th Cir. 2001)). Therefore, though the court must accept
all factual allegations as true, it is “not bound to accept as true a legal conclusion couched
as a factual allegation.” Iqbal, 556 U.S. at 678 (citation omitted).
II. FACTUAL AND PROCEDURAL BACKGROUND
While visiting a USAgencies retail office around July 28, 2009, plaintiff obtained
insurance coverage through defendants for her 2008 Kia Spectra. (Doc. 18 ¶ 33.)3 Plaintiff
alleges that the agent at the retail office made various representations about the insurance
agreement and plaintiff relied on these representations in entering a “premium finance
agreement.” (Id. ¶ 34-37). Plaintiff’s insurance policy, issued by Affirmative Insurance
Company (“AIC”), provided for “full coverage” for loss and damage resulting from “theft,
fire, larceny, malicious mischief and/or vandalism.” (Id. ¶¶ 8-9.)
On the evening of January 27, 2010, plaintiff’s 2008 Kia Spectra was parked outside
of her home when she went to bed. (Id. ¶ 10.) The following morning, plaintiff discovered
that her vehicle was missing. (Id. ¶ 10.) Plaintiff reported the incident to law enforcement
authorities as a “theft.” (Id. ¶ 11.) Authorities eventually located and recovered the missing

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Document 18 is plaintiff’s Amended Complaint.
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vehicle, but the vehicle had sustained damage that had not existed prior to being stolen. (Id.
¶ 12.) Plaintiff notified defendants AIC and USAgencies Management Services (“USAMS”)
of the damage and submitted a claim for insurance benefits and indemnity. (Id. ¶ 14.) During
the course of defendants’ investigation into the claim, defendants suggested that the evidence
they had obtained demonstrated that plaintiff had been involved in the damage to the vehicle
and that, unless she dropped her claim, they would turn their investigation results over to law
enforcement, who would charge her with arson and/or insurance fraud. (Id. ¶ 26-27.)
Defendants continued to accept monthly “premium payments” on plaintiff’s insurance policy
during the investigation. (Id. ¶ 41.) Defendants denied plaintiff’s claim on April 29, 2010,
concluding that the damage to plaintiff’s vehicle did not fall within the Policy’s definition
of “loss.” (Id. ¶ 17.) The insurance policy defined “loss” as a “direct, sudden and accidental
loss or damage.” (Id.)
On April 24, 2012, plaintiff filed suit in the Circuit Court of Jefferson County against
defendants AIC, Affirmative Insurance Holdings, Inc., USAMS, and LIFCO, LLC
(collectively, “defendants”). (See doc. 1-1 at 4.) After removal, plaintiff filed an Amended
Complaint on April 26, 2013. (Doc. 18). On May 10, 2013, defendants filed a Motion to
Dismiss Counts IV-VII of plaintiff’s Amended Complaint ((IV) intentional infliction of
emotional distress, (V) misrepresentation and suppression, (VI) negligent hiring, training and

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supervision, and (VII) invasion of privacy, false light, and infliction of emotional distress).4
(Doc. 19.) The court will address each count in turn.
III. DISCUSSION
I. Count IV: Intentional Infliction of Emotional Distress
Defendants argue that the conduct alleged by plaintiff does not rise to the level of
outrage as recognized in Alabama case law. (Doc. 19-1 at 8-12). They cite Moore v.
Beneficial Nat’l Bank USA, 876 F. Supp. 1247, 1261 (M.D. Ala. 1995), in which the court
noted that in Alabama, the tort of outrageous conduct is limited to “discernable fact patterns”
including “wrongful conduct in the context of family burials; cases where insurance agents
employed heavy-handed, barbaric means in attempting to coerce an insured into settling an
insurance claim; and cases involving egregious sexual harassment.” Defendants note that in
Nat’l Sec. Fire & Casualty Co. v. Bowen, 447 So. 2d 133, 136-37 (Ala. 1983), in which the
court affirmed a verdict for the plaintiff for outrageous conduct, the insurance investigators:
(1) took the plaintiff out into the woods, held a gun to his head, and threatened to kill him,
(2) told the plaintiff he would look good next to his dead brother, (3) threatened to kill the
plaintiff’s two small sons, (4) bribed witnesses, and (5) obtained an indictment against the
plaintiff for arson and false pretenses based upon false evidence. (Doc. 19-1 at 12.) Nothing
as bad happened here, defendants argue—even if they had threatened to turn the investigation

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Defendants also filed an earlier motion to dismiss plaintiff’s original Complaint, but
it was rendered moot after the court granted plaintiff’s Motion for Leave to Amend the
Complaint. (See docs. 3, 16, 17.)
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over to the authorities, it would be insufficient to substantiate the tort of outrage. (Id.); see
also American Road Serv. Co. v. Inmon, 394 So. 2d 361 (Ala. 1980) (holding that the tort of
outrage does not recognize recovery for mere insults, indignities, threats, annoyances, petty
oppressions, or other trivialities).
Plaintiff responds that defendants are asking the court to “pre-judge” whether their
agents’ actions rose to the level of outrage. (Doc. 21 ¶ 7.) Plaintiff argues that a
determination of her claim is inappropriate until either more evidence is submitted or a jury
decides the matter. (Id. ¶¶ 8-9.) Plaintiff reiterates that defendants used their investigation
of her claim as a pretext to interrogate her, misrepresented that they had acquired evidence
that tended to prove her “criminal misconduct,” and threatened to inform police unless she
withdrew her claim. (Id. ¶ 10.)
The elements for intentional infliction of emotional distress are: “(1) defendant’s
conduct was intentional and reckless; (2) that it was extreme and outrageous; and (3) that it
caused emotional distress so severe that no reasonable person could be expected to endure
it.” Little v Robinson, 72 So. 3d 1168, 1172 (Ala. 2011) (internal quotation marks and
citations omitted). “By extreme we refer to conduct so outrageous in character and so
extreme in degree as to go beyond all possible bounds of decency, and to be regarded as
atrocious and utterly intolerable in a civilized society.” Inmon, 394 So. 2d at 365.
Contrary to plaintiff’s characterization, defendants’ argument does not request a
judgment as to whether their conduct was actionably outrageous. It points out that the facts
currently alleged, taken as true, do not state a claim for relief. In other words, plaintiff does
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not need more evidence—indeed, plaintiff needs no evidence at this time; she needs more
serious factual allegations. Plaintiff’s claim for intentional infliction of emotional distress is
thus due to be dismissed. The court will grant leave, however, for plaintiff to amend her
complaint.
II. Count V: Misrepresentation and Suppression
Count V consists of two distinct claims: fraudulent inducement and fraudulent
investigation. Defendants argue that plaintiff’s claim for fraudulent inducement is barred by
the two-year statute of limitation for fraud claims because it begins to run when the plaintiff
discovers or should have discovered the fraud. (Doc. 19-1 at 13); see Ala. Code § 6-2-3
(1975). They argue that plaintiff knew facts that would have put a reasonable person on
notice of an alleged fraud when she purchased her insurance policy on July 28, 2009. (Doc.
19-1 at 15-16.) What were those facts? Apparently they were in the “premium finance
agreement” itself. (Id. at 14-16.) Plaintiff had a duty to read and inspect any document that
might affect her legal rights or liabilities, and had she done so, defendants argue, she
reasonably should have discovered the fraud. (Id.); see Ramp Operations, Inc. v. Reliance
Ins. Co., 805 F.2d 1552, 1556 (11th Cir. 1986).
True, “the question of when a plaintiff should have discovered the fraud may be
removed from the purview of the jury and decided as a matter of law when the plaintiff
received documents in connection with the transaction that should have alerted him to the
possibility of fraud.” Sirmon v. Wyndham Vacation Resorts, Inc., 922 F. Supp. 2d 1261, 1272
(N.D. Ala. 2013) (citing Foremost Ins. Co. v. Parham, 693 So. 2d 409, 421 (Ala. 1997)). But
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not yet. The court does not have the premium finance agreement before it; as such, there is
no way to determine whether its terms “should have alerted [her] to the possibility of fraud.”
Sirmon, 922 F. Supp. 2d at 1272; see also Weathers v. Metro. Life Ins. Co., 14 So. 3d 688,
693 (Miss. 2009) (“[I]f the plain language of the policy does not clearly contradict the
agent’s representations such that the insured is put on notice, a fraud claim accrues when the
insured becomes aware of the misrepresentation.”). Because all reasonable inferences must
be drawn in favor of the plaintiff, St. George v. Pinellas Cnty., 285 F.3d 1334, 1337 (11th
Cir. 2002), the court cannot simply take defendants’ word for it that the premium finance
agreement “clearly contradicts the alleged misrepresentations” and so would have put
plaintiff on notice of the fraud immediately upon signing the agreement, (doc. 22 at 5 ¶ 20)
(emphasis added). Therefore, defendants Motion to Dismiss the fraudulent inducement claim
is due to be denied.
As for the fraudulent investigation claim, defendants argue that plaintiff does not
allege detrimental reliance on representations made during the claims investigation, (doc. 191 at 16), nor did she plead the circumstances of the fraud with sufficient particularity, (id. at
18). Plaintiff responds that, assuming defendants made the intentional misrepresentations
alleged in the Amended Complaint, there can be no doubt that they intended her to rely on
their misrepresentations. (Doc. 21 ¶¶ 20-21.)
A complaint satisfies Rule 9(b) when it sets forth:
(1) precisely what statements were made in what documents or oral
representations or what omissions were made, and (2) the time and place of
each such statement and the person responsible for making (or in the case of
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omissions, not making) same, and (3) the content of such statements and the
manner in which they misled the plaintiff, and (4) what the defendants
obtained as a consequence of the fraud.
Brooks v. Blue Cross & Blue Shield of Florida, Inc., 116 F.3d 1364, 1371 (11th Cir. 1997).
Plaintiff alleges that defendants already knew her car was totaled from their investigation,
but told her that they had not reached a conclusion on the matter and needed more
information, all the while continuing to accept her monthly premium payments. (Doc. 18 ¶¶
106, 108.) But plaintiff does not give specifics about the parties’ communications: who made
the representations, and how. As such, plaintiff’s fraudulent investigation claim is due to be
dismissed. The court will grant leave, however, for plaintiff to amend her complaint to add
the necessary facts.
III. Count VI: Negligent Hiring, Training, and Supervision
Defendants argue two points with regard to Count VI. First, they argue that an
allegation that they were negligent in hiring, training, or supervision is inconsistent with an
allegation of intentional bad faith: if they intentionally trained personnel to perform sham
investigations, then they were not being negligent in training—they were being intentional.
(Id. at 20-21.) Delving into the merit of that argument is unnecessary, because the Rules
specifically allow such inconsistencies in pleadings. See FED. R. CIV. P. 8(d)(2)-(3).
Second, defendants argue that plaintiff’s generalized allegations make it impossible
to know what she is alleging. (Doc. 19-1 at 20.) Defendants point out that plaintiff never
specifies which employees were negligent; what they did or did not do; or how they were
improperly supervised. (Id.) Accordingly, defendants argue that plaintiff has not met the
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minimum pleading standards for Rule 8 for Count VI. Plaintiff does not respond to this
argument. (See doc. 21 ¶ 23.)
A negligent hiring, training, and supervision claim is essentially the same as a regular
negligence claim, with the requirement that the principal or master was aware of the agent’s
actions. The Alabama Supreme Court has said:
In the master and servant relationship, the master is held responsible
for his servant’s incompetency when notice or knowledge, either
actual or presumed, of such unfitness has been brought to him.
Liability depends upon its being established by affirmative proof
that such incompetency was actually known by the master or that,
had he exercised due and proper diligence, he would have learned
that which would charge him in the law with such knowledge. It is
incumbent on the party charging negligence to show it by proper
evidence.
Thompson v. Havard, 235 So. 2d 853, 858 (Ala. 1970). Perhaps more pertinent to the
plaintiff’s allegations,
in order to establish that the employee is incompetent, a plaintiff
must allege prior similar acts of wrongdoing sufficient to establish
that the employer knew or should have known that the employee,
due to his incompetency, was prone to such wrongdoing. A
conclusory allegation of negligent hiring, training, or
supervision—without any accompanying facts that there was a
pattern of abuse or that [defendants] w[ere] otherwise on notice of
propensities of its employees to engage in tortious behavior toward
[others] . . . , much less that [defendants] failed to take corrective
action—is not sufficient to buoy such a claim through the pleadings
stage.
Agee v. Mercedes-Benz U.S. Int’l, Inc., No. 7:12-CV-4014-SLB, 2013 WL 832354, at *8
(N.D. Ala. Feb. 28, 2013) (internal quotation marks and citations omitted).

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Plaintiff does state the elements of the claim, alleging there was a duty, breach,
causation, and damages. (Doc. 18 ¶¶ 120-26.) Plaintiff also alleges that defendants “knew
or should have known that its employees, agents, claim handling personnel and retained
experts and/or investigators were not properly or adequately trained, and/or supervised, to
perform the job duties for which they were hired.” (Id. ¶ 122). However, she fails to identify
any “prior similar acts of wrongdoing sufficient to establish that the employer knew or should
have known that the employee, due to his incompetency, was prone to such wrongdoing.”
Agee, 2013 WL 832354 at *8. Actually, Count VI fails to put forth a single fact. See Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (“[Rule 8] demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation.”).5 Because plaintiff has failed to allege
sufficient facts in support of her claim, Count VI is due to be dismissed. The court will grant
leave for plaintiff to amend her complaint to include such facts.
IV. Count VII: Invasion of Privacy, False Light, Infliction of Emotional Distress
Defendants argue that plaintiff’s claims in Count VII are not facially plausible because
she gives no information about the alleged intrusion on her privacy. (Doc. 19-1 at 22-24.)
Also, they observe that when one makes a claim for insurance benefits, the claimant’s

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Compare the language in Count VI, (doc. 18 ¶¶ 120-126), with the language
condemned in Iqbal, 556 U.S. at 680-681: “Respondent pleads that petitioners ‘knew of,
condoned, and willfully and maliciously agreed to subject [him]’ to harsh conditions of
confinement ‘as a matter of policy, solely on account of [his] religion, race, and/or national
origin and for no legitimate penological interest’ . . . that Ashcroft was the ‘principal
architect’ of this invidious policy . . . and that Mueller was ‘instrumental’ in adopting and
executing it . . . . These bare assertions . . . amount to nothing more than a ‘formulaic
recitation of the elements’ . . . .”) (internal citations omitted).
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expectation of privacy is somewhat diminished. (Id. at 23.) Plaintiff responds that defendants
have relied “upon a[n] ‘overly technical’ interpretation of Rule 12(b)(6),” and that defendants
“have confused the requirements of Rule 9 with the requirements of Rule 12.” (Doc. 21 ¶¶
24-25.)
Alabama courts define the tort of invasion of privacy as “the intentional wrongful
intrusion into one’s private activities in such a manner as to outrage or cause mental
suffering, shame, or humiliation to a person of ordinary sensibilities.” Nipper v. Variety
Wholesalers, Inc., 638 So. 2d 778, 781 (Ala. 1994). There are four distinct wrongs in an
invasion of privacy claim: “(1) intruding into the plaintiff’s physical solitude or seclusion;
(2) giving publicity to private information about the plaintiff that violates ordinary decency;
(3) putting the plaintiff in a false, but not necessarily defamatory, position in the public eye;
or (4) appropriating some elements of the plaintiff’s personality for a commercial use.”
Johnston v. Fuller, 706 So. 2d 700, 701 (Ala. 1997). “[O]ne may invade another’s privacy
through either an intrusion upon a physical space, such as a trespass, or by an invasion of
one’s ‘emotional sanctum.’” Carter v. Innisfree Hotel, Inc., 661 So. 2d 1174, 1178 (Ala.
1995). When people file insurance claims, however, they “must expect reasonable inquiry
and [i]nvestigation to be made of [their] claim[s] and to this extent [their] interest in privacy
is circumscribed.” Ala. Elec. Co-op., Inc. v. Partridge, 225 So. 2d 848, 851 (1969) (quoting
Forster v. Manchester, 189 A.2d 147, 150 (Pa. 1963)).
Count VII asks the court and opposing counsel to wade through “each and every
material fact and allegation in paragraphs 1-126 above, as if set forth fully herein,” (doc. 18
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at 58), and find how those facts might satisfy the legal elements the Count recites. But none
of these facts, on their own or with the guiding hand of counsel, show how plaintiff was put
in a false light or how her privacy was invaded. (See doc. 18 ¶¶ 1-126.) Plaintiff has thus
failed to present a “short and plain statement of the claim showing that [she] is entitled to
relief” on Count VII, and the count is due to be dismissed.6 See FED. R. CIV. P. 8(a)(2). The
court will grant plaintiff leave to amend her complaint to make the requisite showing.
IV. CONCLUSION
For the reasons set out above, defendants’ Motion to Dismiss is due to be granted with
regard to Count IV (intentional infliction of emotional distress), Count V’s claim of
fraudulent investigation, Count VI (negligent hiring, training, and supervision), and Count
VII (invasion of privacy). Plaintiff will be granted leave to replead these claims and set forth
sufficient factual allegations to satisfy the relevant requirements of Rule 8(a)(2) or Rule 9(b).
Defendants’ Motion to Dismiss is due to be denied with regard to Count V’s fraudulent
inducement claim. An order in accordance will be entered contemporaneously with this
Memorandum Opinion.
DONE this 27th day of March, 2014.

SHARON LOVELACE BLACKBURN
UNITED STATES DISTRICT JUDGE

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Since plaintiff’s claim of intentional infliction of emotional distress has already been
addressed in Count IV, there is no need to address it separately under Count VII.
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