Lawson v. State Farm Fire and Casualty Company
ORDER granting in part and denying in part 7 Motion to Dismiss; plaintiff is GRANTED leave to re-file an amended complaint ONLY for the purpose of making allegations sufficient to state a claim or claims for bad faith by 5/22/15. Signed by Magistrate Judge Katherine P. Nelson on 5/15/2015. (srr)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
) CIVIL ACTION NO. 15-00026-N
STATE FARM FIRE AND CASUALTY )
This action is before the Court on the Motion to Dismiss Second and Third
Causes of Action (Doc. 7) filed by Defendant State Farm Fire and Casualty
Company (“State Farm”). State Farm moves for dismissal of these causes of action
for failure to state a claim upon which relief can be granted, Fed. R. Civ. P. 12(b)(6),
or in the alternative for lack of subject matter jurisdiction, Fed. R. Civ. P. 12(b)(1).
This motion has been fully briefed (see Docs. 7, 18, 21) and is ripe for
adjudication (see Doc. 11). By the consent of the parties (see Doc. 16), the Court has
designated the undersigned Magistrate Judge to conduct all proceedings in
accordance with 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. (See
Doc. 20). Upon consideration, and for the reasons stated herein, the Court finds
that the motion is due to be DENIED in part and GRANTED in part, with leave
given to file an amended complaint, as set out.
On November 12, 2013, Plaintiff Teresa Lawson (“Lawson”) was operating
her vehicle at the intersection of Jupiter St. and Michigan Ave. in Foley, Alabama,
and had brought her vehicle to a complete stop, when a vehicle traveling
immediately behind her failed to stop at the intersection, thereby striking Plaintiff’s
vehicle in the rear. The vehicle then stopped and the occupants informed Lawson
that they had called the police. After that, the occupants reentered their vehicle
and drove off without providing Lawson with any information. Eventually Lawson
learned that the police were never called. She eventually filed a police report, and
made a claim with State Farm. On October 29, 2014, State Farm denied Lawson’s
claim for payment under her UM contract. State Farm stated, “Our investigation
has determined that you did not comply with the policy provisions of filing a police
report within 24 hours of the loss. Therefore, the Uninsured Motorist Coverage will
not extend to this loss.”1
On December 17, 2014, Lawson filed a complaint against State Farm in the
uninsured/underinsured motorist (“UM/UIM”) coverage (“First Cause of Action”)2
and bad faith (“Second” and “Third Cause[s] of Action”) arising from State Farm’s
failure to pay UM/UIM benefits to her pursuant to an insurance policy she held
with State Farm. (See Doc. 1-1 at 2 – 6). On January 22, 2015, Defendant removed
the case to this Court pursuant to 28 U.S.C. §§ 1441 and 1446. (See generally Doc.
1). Removal was timely pursuant to 28 U.S.C. § 1446, and the Court has original
This statement of facts is derived from the allegations in Lawson’s Complaint (Doc. 1-1 at
2 – 6), which the Court must accept as true for purposes of the present motion to dismiss for
failure to state a claim. See, e.g., Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir.
2010) (in deciding a motion to dismiss under Rule 12(b)(6), a court must “take the factual
allegations in the complaint as true and construe them in the light most favorable to the
“As statutorily defined, ‘un insured motorist’ includes ‘under insured’ motorist.” Lowe v.
Nationwide Ins. Co., 521 So. 2d 1309, 1309 n.1 (Ala. 1988) (citing Ala. Code § 32-7-23(b)).
jurisdiction due to diversity pursuant to 28 U.S.C. § 1332. (Doc. 22).
Following removal, State Farm filed the present motion to dismiss Lawson’s
bad faith causes of action under Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim upon which relief can be granted, or, alternatively, under Rule
12(b)(1) for lack of subject matter jurisdiction. (Doc. 7) Because this Court must
first have subject matter jurisdiction before it can address the merits of Lawson’s
claims under Rule 12(b)(6), the Court will address State Farm’s arguments under
Rule 12(b)(1) first.
Before addressing the parties’ substantive contentions, the Court must decide
what substantive law governs the claims in this diversity action. “A federal court in
a diversity case is required to apply the laws, including principles of conflict of laws,
of the state in which the federal court sits.” Manuel v. Convergys Corp., 430 F.3d
1132, 1139 (11th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941)).
Alabama law follows the traditional conflict-of-law principles of lex loci
contractus and lex loci delicti. See Liberty Mut. Ins. Co. v. Wheelwright,
851 So.2d 466 (Ala. 2002). Under the principles of lex loci contractus, a
contract is governed by the law of the jurisdiction within which the
contract is made. Cherry, Bekaert & Holland v. Brown, 582 So.2d 502
(Ala.1991). Under the principle of lex loci delicti, an Alabama court
will determine the substantive rights of an injured party according to
the law of the state where the injury occurred. Fitts v. Minnesota
Mining & Mfg. Co., 581 So.2d 819 (Ala.1991).
Lifestar Response of Alabama, Inc. v. Admiral Ins. Co., 17 So. 3d 200, 213 (Ala.
2009) (footnote omitted).
Here, Lawson’s injuries all appear to have occurred in Alabama. The parties
apply Alabama law in their briefing, and neither has argued that the law of any
other jurisdiction should apply to Lawson’s claims. Therefore, the Court will apply
Alabama law to the bad faith claims at issue.
Rule 12(b)(1) Motion to Dismiss for Lack of Ripeness
Standard of Review
As the Eleventh Circuit has explained the standard on motions to dismiss for
lack of subject matter jurisdiction:
Attacks on subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1)
come in two forms. “Facial attacks ” on the complaint “require the
court merely to look and see if the plaintiff has sufficiently alleged a
basis of subject matter jurisdiction, and the allegations in his
complaint are taken as true for the purposes of the motion.” Menchaca
v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.), cert. denied, 449
U.S. 953, 101 S.Ct. 358, 66 L.Ed.2d 217 (1980) (citing Mortensen v.
First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir.1977)).
“Factual attacks,” on the other hand, challenge “the existence of
subject matter jurisdiction in fact, irrespective of the pleadings, and
matters outside the pleadings, such as testimony and affidavits, are
These two forms of attack differ substantially. On a facial attack, a
plaintiff is afforded safeguards similar to those provided in opposing a
Rule 12(b)(6) motion-the court must consider the allegations of the
complaint to be true. Williamson v. Tucker, 645 F.2d 404, 412 (5th
Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981).
But when the attack is factual, the trial court may proceed as it never
could under 12(b)(6) or Fed.R.Civ.P. 56. Because at issue in a factual
12(b)(1) motion is the trial court’s jurisdiction-its very power to hear
the case-there is substantial authority that the trial court is free to
weigh the evidence and satisfy itself as to the existence of its power to
hear the case. In short, no presumptive truthfulness attaches to
plaintiff’s allegations, and the existence of disputed material facts will
not preclude the trial court from evaluating for itself the merits of
jurisdictional claims. Id. at 412–13 (quoting Mortensen, 549 F.2d at
Lawrence v. Dunbar, 919 F.2d 1525, 1528–29 (11th Cir. 1990).
State Farm moves to dismiss Lawson’s bad faith claims, set forth in the
Second and Third Causes of Action in her Complaint, without prejudice for lack of
subject matter jurisdiction. (Doc. 7). State Farm does not dispute that, at time of
the underlying accident, Lawson had a valid policy with it for UM/UIM benefits.
State Farm’s motion is a facial attack on Lawson’s bad faith and breach of contract
claims, arguing that, under the reasoning of Pontius v. State Farm Mutual
Automobile Insurance Company, 915 So. 2d 557 (Ala. 2005), those claims are not
ripe for adjudication, and thus do not present a justiciable controversy.
The Alabama Supreme Court recently explained Pontius as follows:
Pontius involved a husband and wife who were in a car accident with a
vehicle driven by an uninsured driver, a minor. The husband and wife
sued the minor and the minor's parents and then filed a claim with
State Farm for uninsured-motorist benefits. State Farm denied the
claim and intervened in the case. The husband and wife amended their
complaint to add State Farm as a defendant and alleged, among other
things, that State Farm had denied their claim in bad faith. State
Farm filed a motion to dismiss pursuant to Rule 12(b)(6), Ala. R. Civ.
P., or for a judgment on the pleadings pursuant to Rule 12(c), Ala. R.
Civ. P. The trial court granted the motion and entered a judgment in
favor of State Farm.
On appeal, the issue before this Court was whether an action for badfaith failure to pay an uninsured-motorist claim could be maintained
against an insurance company before the plaintiff demonstrated that
she was legally entitled to recover damages from the uninsured
motorist. This Court held that “ ‘[t]o be “legally entitled to recover as
damages” the insured must establish fault on the part of the uninsured
motorist, which gives rise to damages, and must then prove the extent
of those damages.’ ” Pontius, 915 So. 2d at 560 (quoting State Farm's
motion to dismiss and LeFevre v. Westberry, 590 So. 2d 154, 157 (Ala.
1991)). Consequently, “ ‘[t]here can be no breach of an uninsured
motorist contract, and therefore no bad faith, until the insured proves
that he is legally entitled to recover.’ ” LeFevre, 590 So.2d at 158
(quoting Quick v. State Farm Mut. Auto. Ins. Co., 429 So. 2d 1033,
The Court then cited LeFevre and Bowers v. State Farm Mutual
Automobile Insurance Co., 460 So. 2d 1288, 1290 (Ala. 1984), for the
proposition that a tort of bad-faith failure to pay uninsured-motorist
benefits is not ripe for adjudication until the insurer and the insured
become adversarial and that bad faith can arise only after that time,
provided also that the dispute is legitimate and that the issues of fault
and damages are resolved. “As to [the] bad-faith claim arising out of
[the uninsured-motorist] coverage with State Farm,” the Court
concluded, the husband and wife “had to demonstrate [that they were]
‘legally entitled to recover’ damages for bad-faith failure to pay under
the policy, and ... ‘ “must be able to establish fault on the part of the
uninsured motorist, which gives rise to damages and must be able to
prove the extent of those damages.” ’ ” Pontius, 915 So. 2d at 564.
Because the husband and wife failed to meet that burden, their claims
were not ripe and, the Court held, the trial court lacked subject-matter
jurisdiction. Id. at 564–65.
Ex parte Safeway Ins. Co. of Ala., Inc., 148 So. 3d 39, 41-42 (Ala. 2013) (hereinafter,
“Safeway II”), as modified on denial of reh'g (Dec. 13, 2013).
The Alabama Supreme Court reaffirmed [Pontius’s] holding in Ex parte
Safeway Insurance Company of Alabama, Inc., 990 So. 2d 344 (Ala.
2008) (hereinafter “Safeway I”). The plaintiff seeking UIM benefits
alleged that liability for the accident was uncontested and that the
damages were undisputed, but the insurance company submitted an
affidavit in which a claim manager stated the company needed to get
the plaintiff's medical records to establish the extent of her damages.
Id. at 347–52. The court held that the affidavit showed the plaintiff's
damages were in dispute, which made the plaintiff's breach of contract
and bad faith claims not ripe, and the court accordingly lacked subject
matter jurisdiction. Id. at 352–53. Justice Murdock concurred in the
result of Safeway I, but stated that, while the plaintiff's claim was
premature on the grounds that her damages weren't settled, it was
incorrect to say that the court lacked jurisdiction. Id. at 353 (Murdock,
J., concurring). Rather, if a plaintiff pleads premature claims for UIM
benefits, they should be subject to dismissal under 12(b)(6), or if a
plaintiff has failed to produce evidence of a completed harm, they
should be dismissed at summary judgment. Id. at 353 n. 6.
Broadway v. State Farm Mut. Auto. Ins. Co., 4 F. Supp. 3d 1271, 1279 (M.D. Ala.
Mar. 19, 2014), appeal dismissed (June 16, 2014).
In Safeway II, however, the Alabama Supreme Court limited the applicability
of Pontius. In that case, a driver was allegedly injured when an unknown hit-andrun motorist stuck his car. Safeway II, 148 S. 3d at 40. The driver filed a claim
with his UM/UIM insurer, which denied the claim. Id. The insured then sued his
UM/UIM insurer for breach of contract and bad faith refusal to pay his claim. Id.
The UM/UIM insurer moved to dismiss both claims for lack of subject matter
jurisdiction, “arguing that a claim for uninsured-motorist benefits is not ripe for
adjudication until liability and damages have been established.” Id. After the trial
court denied the insurer’s motion to dismiss, and its subsequent motion for
reconsideration, the insurer filed a petition “for a writ of mandamus directing the
trial court to dismiss only the bad-faith claim, not the breach-of-contract claim,
without prejudice, for lack of subject-matter jurisdiction[,]”3 arguing that the
Per the Alabama Supreme Court:
“Mandamus is an extraordinary remedy and will be granted only where there
is ‘(1) a clear legal right in the petitioner to the order sought; (2) an
imperative duty upon the respondent to perform, accompanied by a refusal to
do so; (3) the lack of another adequate remedy; and (4) properly invoked
jurisdiction of the court.’ Ex parte Alfab, Inc., 586 So. 2d 889, 891 (Ala. 1991).
This Court will not issue the writ of mandamus where the petitioner has ‘full
and adequate relief’ by appeal. State v. Cobb, 288 Ala. 675, 678, 264 So. 2d
523, 526 (1972) (quoting State v. Williams, 69 Ala. 311, 316 (1881)).”
Safeway II, 148 So. 3d at 41.
holding in Pontius controlled. Id. at 41-42.
The Alabama Supreme Court disagreed. Initially, in a footnote, the court
distinguished Pontius from the facts at issue in noting that “t]he present case
allegedly involves a phantom driver, whereas Pontius[,]” as well as both predecessor
and progeny cases, “involved a known driver.” Id. at 42 n.2. The court was unable
to find “any controlling decisions that apply Pontius to cases involving phantom
The Safeway II court then held that the trial court “d[id] have the authority
to hear the case and [could] dismiss it on the merits.” Id. at 42. As the court
The outcome of the case ought to depend on a Rule 12(b)(6) motion to
dismiss, not a Rule 12(b)(1) motion to dismiss, and proving fault and
damages ought to be an evidentiary or elemental prerequisite for
showing an insurer's bad-faith failure to pay benefits, not a
In determining a trial court's subject-matter jurisdiction, this Court
asks “ ‘only whether the trial court had the constitutional and
statutory authority’ to hear the case.” Russell v. State, 51 So.3d 1026,
1028 (Ala. 2010) (quoting Ex parte Seymour, 946 So.2d 536, 538
(Ala.2006)). Problems with subject-matter jurisdiction arise if, for
example, a party files a probate action in a juvenile court, a divorce
action in a probate court, or a bankruptcy petition in a circuit court,
because the nature or class of those actions is limited to a particular
forum with the authority to handle them. There are, however, no
problems with subject-matter jurisdiction merely because a party files
an action that ostensibly lacks a probability of merit.
Id. at 42-43.4
In so holding, the Safeway II court cited to Justice Murdock’s special concurrence in
Applying this analysis to the bad faith claim at issue, the court then
Alabama's uninsured-motorist statute, § 32–7–23, Ala. Code 1975,
protects “persons ... who are legally entitled to recover damages from
owners or operators of uninsured motor vehicles because of bodily
injury, sickness or disease, including death, resulting therefrom.” We
have held that “[u]nknown phantom drivers ... are included within the
definition of an uninsured motorist.” Walker v. GuideOne Specialty
Mut. Ins. Co., 834 So.2d 769, 772 (Ala. 2002) (citing Criterion Ins. Co.
v. Anderson, 347 So.2d 384, 386 (Ala.1977)); see also Wilbourn v.
Allstate Ins. Co., 293 Ala. 466, 468, 305 So. 2d 372, 373–74 (1974). Our
analysis in Walker is relevant here:
“A motorist ‘legally entitled to recover damages' under § 32–7–23
is one who presents facts sufficient to prove that the motorist
was involved in an accident under circumstances that would
entitle the motorist to uninsured-motorist coverage. Such a
motorist is ‘legally entitled’ to damages if the motorist meets his
or her burden of presenting substantial evidence to survive a
motion for a summary judgment or a judgment as a matter of
law and the fact-finder is reasonably satisfied from the evidence
that the motorist should recover damages. See § 12–21–12, Ala.
Code 1975. In [the plaintiff motorist's] case, the only evidence of
a culpable phantom vehicle is [the plaintiff motorist's] own
testimony, which could constitute substantial evidence.”
Walker, 834 So. 2d at 772. Like the plaintiff motorist in Walker,
Kimbrough has a chance to prove fault on the part of the phantom
motorist. The holding in Pontius requires that Kimbrough first
establish the fault of the phantom motorist before he may seek
damages from Safeway for bad-faith failure to pay. We see no reason
why ripeness and subject-matter jurisdiction must be implicated for
this to happen. If Kimbrough cannot establish the fault of the phantom
Safeway I. See 148 So. 3d at 42 n.3. This Court agrees with the U.S. District Court for the
Middle District of Alabama that Safeway II “indicates a move towards the view of Justice
Murdock in Safeway I.” Broadway, 4 F. Supp. 3d at 1279.
driver, then he cannot prove bad faith and, accordingly, Safeway may
prevail on a Rule 12(b)(6) motion to dismiss.
In light of the foregoing, Safeway has not clearly demonstrated that
this case is not ripe or that the trial court lacks subject-matter
jurisdiction. Therefore, Safeway does not have a clear legal right to
Id. at 43.5
Like Safeway II, this case also involves a “unknown phantom driver” that
allegedly struck the plaintiff’s vehicle and fled the scene; 6 whatever the wisdom of
Safeway II,7 the Alabama Supreme Court declined to apply the ripeness reasoning
To date, no Alabama appellate court has applied the reasoning of Safeway II in a
Two Alabama federal district courts have found this distinction to be key. See Broadway,
4 F. Supp. 3d at 1279 (“The question before the Court is whether the holding in Safeway II
requires the Court to analyze State Farm's motion to dismiss under Rule 12(b)(1) or
12(b)(6). The Court concludes that the Safeway II court intended to distinguish that case
from Pontius and Safeway I on the grounds that Safeway II involved a phantom driver.”),
appeal dismissed (June 16, 2014); Andersen v. Omni Ins. Co., No. 1:13–cv–2163, 2014 WL
838811, at *3 n.6 (N.D.Ala. Mar. 4, 2014) (“Safeway II expressly distinguishes itself
factually from Pontius (and those following Pontius, like Safeway I) because the latter two
decisions involved known uninsured drivers, not phantom drivers.” (quotation omitted)).
Unlike the present action, however, both of those decisions involved known uninsured
drivers; thus, those courts applied the ripeness analysis of Pontius to the plaintiffs’ breach
of contract and bad faith claims.
State Farm states that it “does not agree with the rationale derived from this mandamus
case” (Doc. 7-1 at 4 n.3) but cites no authority to indicate that Alabama Supreme Court
mandamus decisions carry less precedential weight than other opinion, and it is not this
Court’s place to second-guess that court’s interpretation of Alabama law. State Farm also
attempts to distinguish Safeway II by pointing out that “Safeway II was a case in which
breach of contract was alleged which, as set forth in the preceding section, is not present in
this case.” (Id.). This distinction is immaterial, however. While true that the plaintiff in
Safeway II alleged claims for both breach of contract and bad faith, on mandamus review
the insurer challenged only the trial court’s denial of dismissal of the bad faith claim. The
breach of contract claim was mentioned only as part of the case’s procedural history, and
there is no indication in Safeway II that the breach of contract claim played any significant
of Pontius to the plaintiff’s bad faith claims. Because State Farm raises the same
argument here as the insurer in Safeway II, the Court will do likewise. As with
Safeway II’s plaintiff motorist, “[i]f [Lawson] cannot establish the fault of the
phantom driver, then [s]he cannot prove bad faith and, accordingly, S[tate Farm]
may prevail on a Rule 12(b)(6) motion to dismiss[,]” and there is “no reason why
ripeness and subject-matter jurisdiction must be implicated for this to happen.” 148
So. 3d at 43. See also Broadway, 4 F. Supp. 3d at 1279 (“The issue of whether the
plaintiff stated a claim was a matter of satisfying Rule 12(b)(6) by stating the
elements or satisfying Rule 56 by producing evidence of a completed harm.” (citing
Safeway II)). Therefore, the motion to dismiss Lawson’s bad faith claims for lack of
subject matter jurisdiction under Rule 12(b)(1) is due to be DENIED.
Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim
Standard of Review
A defendant may move to dismiss a complaint under Federal Rule of Civil
Procedure 12(b)(6) if the plaintiff has failed to state a claim upon which relief may
be granted. “When 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 County, 999 F.2d
1508, 1510 (11th Cir. 1993)). All “reasonable inferences” are drawn in favor of the
plaintiff. St. George v. Pinellas County, 285 F.3d 1334, 1337 (11th Cir. 2002).
role in the court’s reasoning.
A complaint must “set forth a short and plain statement of the claim showing
that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007), the Supreme Court set forth the parameters of a
well-pleaded complaint. A claim for relief “must set forth enough factual matter
taken as true to suggest the required elements of a cause of action.” Id. at 556; see
also Watts v. Florida Int'l University, 495 F.3d 1289, 1295 (11th Cir. 2007)
(applying Twombly). Furthermore, a complaint must “provide the defendant with
fair notice of the factual grounds on which the complaint rests.”
Bellsouth Telecommc'ns, Inc., 372 F.3d 1250, 1271 (11th Cir. 2004).
Failure to State a Claim for Bad Faith
The Court disagrees with State Farm’s first argument under Rule 12(b)(6)
that Lawson’s bad faith claims are due to be dismissed because she has failed to
allege breach of contract, a necessary element for proving a bad faith claim under
Alabama law. See Safeway I, 990 So. 2d at 351 (“Breach of an insurance contract is
an element of a bad-faith-failure-to-pay claim.” (quoting Pontius, 915 So. 2d at 564
(citing Ex parte Alfa Mut. Ins. Co., 799 So. 2d 957 (Ala. 2001))). Though Lawson
admittedly does not invoke the precise phrase “breach of contract” anywhere in her
Complaint, in both of her bad faith causes of action, Lawson alleges, inter alia, that,
“by the terms of [her] contract, [State Farm] was obligated to pay [her] claims” but
instead denied her coverage or refused to pay. (Doc. 1-1 at 4 – 6). These allegations
adequately state that a breach of contract has occurred.
As part of its second argument under Rule 12(b)(6), State Farm points out, “ ‘
“there can be no breach of an uninsured motorist contract, and therefore no bad
faith, until the insured proves that he is legally entitled to recover.” ’ ” Safeway I,
990 So. 2d at 351 (quoting Pontius, 915 So. 2d at 563 (quoting Quick v. State Farm
Mut. Auto. Ins. Co., 429 So. 2d 1033, 1035 (Ala. 1983))). State Farm argues that
“[h]ere, Plaintiff seeks to prove that legal entitlement so no claim for bad faith can
lie.” (Doc. 7-1 at 3).
The “legally entitled to recover” “prerequisite to bad faith liability stems from
Section 32–7–23 of the Alabama Code, which requires automobile policies to include
UIM coverage ‘for the protection of persons insured thereunder who are legally
entitled to recover damages’ from uninsured owners or operators. See LeFevre v.
Westberry, 590 So. 2d 154, 156–57 (Ala.1991) (explaining the genesis of the term).”
Joffrion v. Allstate Ins. Co., Civil Action No. 12-0434-WS-M, 2014 WL 3518079, at
*3 (S.D. Ala. July 16, 2014) (Steele, C.J.).
The “legally entitled to recover” standard requires that the insured
“must be able to  establish fault on the part of the uninsured
motorist, which  gives rise to damages, and must be able to prove 
the extent of those damages.” Quick, 429 So. 2d at 1035 (emphasis,
internal quotes omitted); accord Ex parte State Farm Mutual
Automobile Insurance Co., 893 So. 2d 1111, 1115 (Ala. 2004). That is,
the insured must “prov[e] a lack of insurance on the part of the tortfeasor; the tort-feasor's legal liability; proximate cause; and damages,”
including “the extent of his damages.” LeFevre, 590 So.2d at 162.
This threshold burden is placed on the insured because, although he is
seeking benefits under his own policy, he is seeking benefits based on
the wrongdoing of a third party, and the insurer may resist payment
on substantive grounds “that would have been available to the
uninsured motorist.” State Farm Mutual Automobile Insurance Co. v.
Bennett, 974 So. 2d 959, 962 (Ala. 2007) (internal quotes omitted).
“Thus, until the liability of the uninsured motorist has been
determined, the insurer and insured occupy an adversary position
toward each other.” Quick, 429 So. 2d at 1035. Their positions remain
adverse “until the uninsured motorist's liability is fixed; therefore,
there can be no action based on the tort of bad faith based on conduct
arising prior to that time, only for subsequent bad faith conduct.”
LeFevre, 590 So.2d at 159.
Id. Accord Pontius, 915 So. 2d at 564 (“As to her bad-faith claim arising out of her
UIM coverage with State Farm, Pontius had to demonstrate that she was ‘legally
entitled to recover’ damages for bad-faith failure to pay under the policy, and she ‘
“must be able to establish fault on the part of the uninsured motorist, which gives
rise to damages and must be able to prove the extent of those damages.” ’ LeFevre,
590 So. 2d at 157 (quoting Quick, 429 So.2d at 1035.”).
As Safeway II noted, a “ ‘motorist “legally entitled to recover damages” under
§ 32–7–23 is one who presents facts sufficient to prove that the motorist was
involved in an accident under circumstances that would entitle the motorist to
uninsured-motorist coverage.’ ” 148 So. 3d at 43 (quoting Walker, 834 So. 2d at 772)
(emphasis added). Moreover, Alabama law is clear that an insured need not obtain
a judgment against an uninsured motorist before bringing a claim for bad faith
against the insured’s UM/UIM insurer. See LeFevre, 590 So. 2d at 160 (“Clearly,
the legislature did not intend that the insured would have to sue and receive a
judgment in his or her favor before bringing an action alleging bad faith.”). Thus, at
the Rule 12(b)(6) stage, Lawson need only allege facts that, taken as true, are
sufficient to show that she was involved in an accident under circumstances that
would entitle her to uninsured-motorist coverage. Walker, 834 So. 2d at 772.
As such, the mere fact that Lawson is asserting her bad faith claims
contemporaneously with her claim for UM/UIM benefits does not, by itself, mandate
dismissal of the bad faith claims. Apart from that, the only other element of bad
faith State Farm appears to challenge as lacking is the extent of damages.8 (See
Doc. 7-1 at 4 (“Here, Plaintiff seeks to liquidate her damages caused by the
uninsured motorist. The damages stated by Plaintiff include ‘pain and suffering,’
‘mental anguish,’ ‘future damages’ and even ‘others as proven.’ Complaint, ¶ 6.
Clearly, Plaintiff’s damages are uncertain, unliquidated and necessarily disputed. It
is also clear that Plaintiff has not alleged any amount certain, clearly indicating
damages that show undisputed fluidity and speculative.”). It is true that, “where
the evidence of the extent of damages is disputed, the insured has not proven,
of course, that he is ‘legally entitled to collect’; therefore, one of the elements of
proof necessary to support an action for bad faith is missing.” LeFevre, 590 So. 2d
at 160 (emphasis added).
Moreover, “[m]ere delay does not constitute vexatious or
unreasonable delay in the investigation of a claim if there is a bona fide dispute on
the issue of liability…Likewise, mere delay in payment does not rise to the level of
bad faith if there is a bona fide dispute on the issue of damages.” Id. at 161.
“The insured, in short, cannot set up a bad faith claim merely by demanding
payment. Instead, he must present the insurer with evidence supporting the
demand. How much evidence? The insured's proof must attain a threshold
‘specificity necessary to recover against an insurer for bad faith.’ ” Joffrion, 2014
Lawson has alleged that, in the incident giving rise to her UM/UIM claims, she was rearended by an unknown driver (deemed an “uninsured motorist” under Alabama law), that
the unknown driver was “negligent and/or wanton” in doing so by failing to stop behind her
at an intersection, and that she has suffered injury as a result of the accident. (See Doc. 1-1
at 2 – 3). Absent a substantive challenge from State Farm, the Court finds that she has
sufficiently alleged facts showing “a lack of insurance on the part of the tort-feasor; the tortfeasor's legal liability; [and ]proximate cause…” LeFevre, 590 So.2d at 162.
WL 3518079, at *4 (citing LeFevre, 590 So. 2d at 158; Aetna Cas. & Sur. Co. v.
Beggs, 525 So. 2d 1350, 1352-53 (Ala. 1988)). Here, Lawson’s allegations do not
meet that threshold, as she alleges only that she “made a claim against Defendant
State Farm for uninsured motorist benefits.” (Doc. 1-1 at 4). Nowhere does she
allege how much this claim was, that she submitted any evidence to State Farm to
support this demand, or that her damages could be reasonably ascertained at the
time of the claim. See Joffrion v. Allstate Ins. Co., 2014 WL 3518079, at *4 (“[T]he
insured must present substantial evidence to the insurer, not merely that some
vague amount of damage was caused by the fault of the uninsured motorist, but
that the full amount of damage he claims actually was (or will be) suffered, that it
has the value he claims, and that it was (or will be) all proximately caused by the
accident.”); LeFevre, 590 So. 2d at 162 (“Alabama has imposed a rather heavy
burden on a bad faith claimant; a cause of action for bad faith arises only ‘where the
insurer has acted with an intent to injure.’ King v. National Found. Life Ins. Co.,
541 So.2d 502, 505 (Ala.1989); Alfa Mut. Ins. Co. v. Smith, 540 So.2d 691 (Ala.1988).
In the present case, LeFevre has not presented sufficient evidence to prove that
State Farm acted with an intent to injure him by delaying the offer of the entire
policy limits until the damages were conclusively ascertained.”). Because Lawson
has not met her burden of alleging facts showing the extent of her damages, she has
failed to sufficiently allege a cause of action for bad faith by State Farm.
LeFevre, 590 So. 2d at 162 (holding that the plaintiff insured had failed to show bad
faith where he “proved each element except the extent of his damages”).
Accordingly, State Farm’s Rule 12(b)(6) motion is due to be GRANTED as to
Lawson’s bad faith claims.
Nevertheless, the Eleventh Circuit has held that, “[w]here it appears a more
carefully drafted complaint might state a claim upon which relief can be granted, …
a district court should give a plaintiff an opportunity to amend his complaint
instead of dismissing it.” Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir. 1991) (per
curiam). This rule in Bank was overruled in part in Wagner v. Daewoo Heavy
Industries America Corp., 314 F.3d 541 (11th Cir. 2002) (en banc), which
substituted the rule that a district court may but “is not required to grant a
plaintiff leave to amend his complaint sua sponte when the plaintiff, who is
represented by counsel, never filed a motion to amend nor requested leave to amend
before the district court.” 314 F.3d at 542 (emphasis added). Because the Court is
of the belief that Lawson may still be able to allege a viable bad faith claim, the
Court will, in exercise of its discretion, permit Lawson an opportunity to do so.
“Redundant” Bad Faith Claims
In a footnote, State Farm asserts that it is redundant for Lawson to assert
two causes of action for bad faith and that one of them should accordingly be
stricken. (Doc. 7-1 at 2 n.1). The Alabama Supreme Court has recently clarified
that “there is only one tort of bad-faith refusal to pay a claim, not two ‘types' of bad
faith or two separate torts.” State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d
248, 257–58 (Ala. 2013) (emphasis in original), reh'g denied (Jan. 17, 2014). When
the court “in 1981 adopted the tort of bad faith in regard to the failure to pay an
insurance claim, it held, ‘an actionable tort arises for an insurer's intentional
refusal to settle a direct claim where there is either “(1) no lawful basis for the
refusal coupled with actual knowledge of that fact or (2) intentional failure to
determine whether or not there was any lawful basis for such refusal.” ’ ” Id. at 257
(quoting Chavers v. National Sec. Fire & Cas. Co., 405 So. 2d 1, 7 (Ala. 1981)).
“Since Chavers, [the Alabama Supreme Court] has referred to this tort in the
singular[,]” and its decisions have “recogniz[ed] the singularity of the tort, albeit
with different options for proof thereof.” Id. at 258.
[T]he tort of bad-faith refusal to pay a claim has four elements—(a) a
breach of insurance contract, (b) the refusal to pay claim, (c) the
absence of arguable reason, (d) the insurer's knowledge of such
absence—with a conditional fifth element: (e) if the intentional failure
to determine the existence of a lawful basis is relied upon, the plaintiff
must prove the insurer's intentional failure to determine whether
there is a legitimate or arguable reason to refuse to pay the claim.
Thus, for the tort of bad-faith refusal to pay, requirements (a) through
(d) represent the ‘normal’ case. Requirement (e) represents the
‘abnormal’ case. But the tort has always been one.
Id. (citations and quotations omitted).
Here, Lawson’s Second Cause of Action appears to allege the “normal” case of
bad faith/bad-faith refusal to pay, while her Third Cause of Action, alleging that
State Farm “intentionally failed to determine whether there was a legitimate or
arguable reason to refuse to pay [her] claim[,]” alleges the “abnormal” case/bad-faith
refusal to investigate. The Court, however, finds nothing redundant about pleading
such claims in separate counts. Rather, this appears to be permissive alternative
pleading, in which Lawson alleges her intention to prove bad faith both by using
only the first four elements of such a claim and by also using the conditional fifth
element of the claim. Accordingly, the Court will DENY State Farm’s request to
strike one of Lawson’s bad faith causes of action as redundant.
In accordance with the foregoing analysis, it is ORDERED that State Farm’s
Motion to Dismiss Second and Third Causes of Action (Doc. 7) is DENIED as to
dismissal under Rule 12(b)(1) and as to striking one of Lawson’s bad faith claims as
redundant, and GRANTED as to dismissal under Rule 12(b)(6). Lawson’s Second
and Third Causes of Action alleging claims for bad faith, as set forth in her
Complaint (Doc. 1-1 at 2 – 6) are DISMISSED.
However, Lawson is hereby
GRANTED leave to file, no later than Friday, May 22, 2015, an amended
complaint only for the purpose of making allegations sufficient to state a claim or
claims for bad faith, in accordance with the reasoning of this Order and should she
DONE and ORDERED this the 15th day of May 2015.
/s/ Katherine P. Nelson
KATHERINE P. NELSON
UNITED STATES MAGISTRATE JUDGE
The Court wishes to make clear that Lawson is not being granted wholesale leave to
amend her complaint. To the extent Lawson may wish to amend her complaint in a
manner not provided for in this Order, she must do so in accordance with Federal Rule of
Civil Procedure 15(a).
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