Cabrera et al v. MGA Insurance Company, Inc.
Filing
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ORDER granting 19 Defendant MGA Insurance Company's Motion to Dismiss Amended Complaint. The Clerk of Court shall enter judgment according, terminate any previously scheduled deadlines and pending motions, and CLOSE this case. Signed by Judge Sheri Polster Chappell on 3/5/2014. (LMF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
FRANCE CABRERA and JOAQUIN
GARCIA-POLA,
Plaintiffs,
v.
Case No: 2:13-cv-666-FtM-38DNF
MGA INSURANCE COMPANY, INC.,
Defendant.
/
ORDER1
This matter comes before the Court on Defendant MGA Insurance Company’s
Motion to Dismiss Amended Complaint (Doc. #19) filed on November 26, 2013, and
modified on January 29, 2014. Plaintiffs France Cabrera and Joaquin Garcia-Pola filed
their Response in Opposition (Doc. #20) on December 6, 2013. Thus, the Motion is ripe
for review.
BACKGROUND
On August 15, 2013, Plaintiffs France Cabrera and Joaquin Garcia-Pola initiated
this action in the Circuit Court of the Twentieth Judicial Circuit in and for Lee County,
Florida, by filing a two-count Complaint. (Doc. #3). On September 17, 2013, Defendant
MGA Insurance Company, Inc. removed the action to this Court.
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(Doc. #1).
On
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November 15, 2013, Plaintiffs requested leave to file an Amended Complaint (Doc.
#16), which the Court granted on November 18, 2013. (Doc. #17). Plaintiffs filed a twocount Amended Complaint on January 27, 2014 (Doc. #26).2
The Amended Complaint alleges that on September 13, 2003, Defendant
provided a policy of liability insurance to Helena Jimmie (“Jimmie”). On September 13,
2003, Plaintiffs were involved in a motor vehicle accident caused by Jimmie’s
negligence.
As a result of the accident, Plaintiffs sustained personal injuries and
property damage.
Defendant was presented with Plaintiffs’ claim for injuries, but
refused to resolve the claim. Plaintiffs then filed suit against Jimmie in Lee County,
Florida, and obtained a judgment for compensatory damages in the amount of
$504,644.44 plus interest against Jimmie.
Plaintiffs bring Count I for third party bad faith. Plaintiffs allege that Defendant
was notified of Plaintiffs’ claims against Jimmie, but Defendant refused to defend or
indemnify Jimmie for the claims.
Plaintiffs allege that Defendant had fiduciary
obligations to Jimmie to defend and otherwise handle claims against Jimmie in good
faith; to advise Jimmie of settlement opportunities and the potential outcome of
litigation; to advise Jimmie of ways and means in which to minimize her liability; and the
general duty to treat the claim against Jimmie responsibly and handle the claim as if the
carrier was liable for payment of the entire claim. Additionally, Plaintiffs allege that
Defendant had the duty to protect Jimmie’s interests and otherwise act with due
diligence and good faith in handling the claim against Jimmie. Plaintiffs allege that
Plaintiffs originally filed their Amended Complaint on November 18, 2013; however, the Clerk’s Office
erroneously re-filed the Original Complaint. On January 27, 2014, the Court entered an Order directing
the Clerk of Court to file the correct Amended Complaint. Defendant’s Motion to Dismiss, originally filed
on November 26, 2013, was updated on January 29, 2014, to address the correct Amended Complaint.
(Doc. #19).
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Defendant failed to protect Jimmie’s interests and otherwise handle the claim, and as
such, breached its fiduciary duty to Jimmie. As a result, Plaintiffs allege that Jimmie
was damaged in that a judgment was entered against her for $504,644.44, which has
been accruing interest.
Plaintiffs bring Count II for bad faith under legal assignment, alleging that
subsequent to the entry of the judgment against Jimmie, Plaintiffs were assigned all of
Jimmie’s rights against Defendant. (Doc. #26, Ex. C). Plaintiffs allege damages in the
amount of the judgment entered against Jimmie plus the cost of Plaintiffs’ attorney fees
in bringing the instant action.
Defendant now moves to dismiss Plaintiffs’ Amended Complaint pursuant to Fed.
R. Civ. P. 12(b)(6) for failure to state a claim.
STANDARD OF REVIEW
In deciding a Rule 12(b)(6) motion to dismiss, the Court must accept all factual
allegations in a complaint as true and take them in the light most favorable to plaintiff.
Bedasee v. Fremont Inv. & Loan, 2010 WL 98996 *1 (M.D. Fla. Jan. 6, 2010) (citing
Erickson v. Pardus, 551 U.S. 89, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007));
Christopher v. Harbury, 536 U.S. 403, 406, 122 S. Ct. 2179, 153 L. Ed. 2d 413 (2002).
“To survive dismissal, the complaint’s allegations must plausibly suggest that the
[plaintiff] has a right to relief, raising that possibility above a speculative level; if they do
not, the plaintiff’s complaint should be dismissed.” James River Ins. Co. v. Ground
Down Engineering, Inc., 540 F.3d 1270, 1274 (11th Cir. 2008) (citing Twombly, 550
U.S. at 555-56). The former rule—that “[a] complaint should be dismissed only if it
appears beyond doubt that the plaintiffs can prove no set of facts which would entitle
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them to relief,” La Grasta v. First Union Securities, Inc., 358 F.3d 840, 845 (11th Cir.
2004)—has been retired by Twombly. James River Ins. Co., 540 F.3d at 1274. Thus,
the Court engages in a two-step approach:
“When there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.” Iqbal, 129 S. Ct. at 1950. Dismissal is
warranted under Fed. R. Civ. P. 12(b)(6) if, assuming the truth of the factual allegations
of plaintiff's complaint, there is a dispositive legal issue which precludes relief.
Bedasee, 2010 WL 98996 at *1 (citing Neitzke v. Williams, 490 U.S. 319, 326, 109 S.
Ct. 1827, 104 L. Ed. 2d 338 (1989)); Brown v. Crawford County, 960 F.2d 1002, 100910 (11th Cir. 1992).
DISCUSSION
Under Florida law, a third-party bad faith claim is used to remedy a situation in
which an insured is exposed to an excess judgment because of the insurer’s failure to
properly defend a claim against the insured. Macola v. Gov’t Employees Ins. Co., 953
So. 2d 451, 458 (Fla. 2006). Here, Plaintiffs argue that the Amended Complaint states
a claim for third party bad faith by alleging coverage under an insurance policy, a
determination of liability and the extent of damages in the underlying tort claim, and that
Defendant breached its duties to the insured. Plaintiffs assert that Defendant’s Motion
to Dismiss relies on certain allegations contained in the original Complaint, which was
rendered moot with the filing of the Amended Complaint. Plaintiffs further argue that if
Defendant wishes to raise the issue of coverage, it must do so by filing an Answer and
Affirmative Defenses, not a Motion to Dismiss. Thus, Plaintiffs argue that Defendant’s
Motion to Dismiss should be denied.
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Defendant counters that Plaintiff must have a determination of liability and
coverage before filing a bad faith action.
Defendant argues that Plaintiff’s original
Complaint contained allegations for a determination of coverage as a result of a
November 10, 2003 correspondence indicating that Jimmie’s policy was void at the time
of her accident with Plaintiffs.
Defendant asserts that it met and conferred with Plaintiffs, at which time,
Defendant presented Plaintiffs with case law indicating that a determination of coverage
would have to be made before Plaintiffs could bring their bad faith claim. Defendant
argues that after Plaintiffs were given this information, Plaintiffs filed an Amended
Complaint, intentionally removing all language relating to the requirement for
determination of coverage. Defendant argues that regardless whether a bad faith claim
is a first party or a third party action, coverage under an insurance contract is the most
critical part of the claim. Therefore, Defendant argues that because Plaintiffs do not
have a determination of coverage, Plaintiffs’ bad faith claim is not yet ripe and must be
dismissed.
While Plaintiffs’ Amended Complaint alleges bad faith insurance coverage under
Florida law for failure to defend or indemnify Jimmie, a determination of coverage must
have been made in favor of Jimmie before such a claim can be made. “For both first
party and third party bad faith claims against insurers, recent case law has clarified the
point that coverage and liability issues must be determined before a bad faith cause can
be prosecuted.” Gen. Star Indem. Co. v. Anheuser-Busch Companies, Inc., 741 So. 2d
1259, 1261 (Fla. Dist. Ct. App 1999) (citing Blanchard v. State Farm Mut. Auto. Ins. Co.,
575 So. 2d 1289, 1291 (Fla. 1991) (“[A]n insured’s underlying first-party action for
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insurance benefits against the insurer necessarily must be resolved favorably to the
insured before the cause of action for bad faith in settlement negotiations can accrue.”));
Md. Cas. Co. v. Alicia Diagnostic, Inc., 961 So. 2d 1091, 1092 (Fla. Dist. Ct. App. 2007)
(“Under Florida law, it is inappropriate to litigate a bad faith claim against an insurer until
after any underlying coverage dispute is resolved. This is premised on the notion that if
there is no insurance coverage, nor any loss or injury for which the insurer is
contractually obligated to indemnify, the insurer cannot have acted in bad faith in
refusing to settle the claim.”); Calhoon v. Leader Specialty Ins. Co., No. 2:06-cv-425FtM-29SPC, 2007 WL 4098840, at *3 (M.D. Fla. Nov. 15, 2007) (quoting Spencer v.
Assurance Co. of Am., 39 F.3d 1146, 1149 (11th Cir. 1994)) (“A determination of
coverage, therefore, is a condition precedent to any recovery against an insurer. . . .
Coverage must be determined before an action for bad faith may proceed.”).
The
Supreme Court of Florida has held that “in order to state a cause of action for bad faith,
[plaintiff] had to allege that there had been a determination of the extent of his damages
covered by the underlying insurance contract.” Vest. Travelers Ins. Co., 753 So. 2d
1270, 1274 (Fla. 2000) (emphasis added). A plaintiff must allege that there has been a
determination not only of the amount of damages, but also that the insurance contract
actually covered those damages. id. The rationale behind this rule is that there can be
no liability for bad faith settlement of a claim if coverage did not exist in the first place.
OneBeacon Ins. Co. v. Delta Fire Sprinklers, Inc., 898 So. 2d 113, 115 (Fla. Dist. Ct.
App. 2005) (citing Hartford Ins. Co. v. Mainstream Const. Grp., Inc., 864 So. 2d 1270,
1272 (Fla. Dist. Ct. App. 2004)).
Therefore, before an action for bad faith can be
brought, there must be a determination of coverage in favor of the insured.
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Plaintiffs do not indicate in their Amended Complaint that a determination of
coverage has been made; nor have they attached any documents to their Amended
Complaint indicating compliance with this prerequisite. Therefore, because Plaintiffs
have not demonstrated that a determination of coverage has been made in favor of
Jimmie, the Court cannot presume that Plaintiffs’ bad faith claims are mature.
Consequently, because Plaintiffs have not directly pled the prerequisites for filing a bad
faith action, Plaintiffs’ Amended Complaint is dismissed.
Accordingly, it is now
ORDERED:
(1) Defendant MGA Insurance Company’s Motion to Dismiss Amended
Complaint (Doc. #19) is GRANTED.
(2) The Clerk of Court shall enter judgment according, terminate any previously
scheduled deadlines and pending motions, and CLOSE this case.
DONE and ORDERED in Fort Myers, Florida this 5th day of March, 2014.
Copies: All Parties of Record
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