Taylor et al v. National Union Fire Insurance Company of Pittsburgh, PA et al
Filing
19
MEMORANDUM DECISION AND ORDER. IT IS ORDERED: Defendant's Motion to Dismiss 11 is GRANTED with leave to amend. Plaintiffs shall file their amended complaint within 21 days of the date of this Order. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
ROBERT TAYLOR and VERONICA J.
TAYLOR, husband and wife,
Case No. 4:14-cv-00079-BLW
MEMORANDUM DECISION AND
ORDER
Plaintiff,
v.
NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA, a foreign
corporation, LOTSOLUTIONS, INC., a
foreign corporation, CHARTIS, INC. a
foreign corporation, AIG CLAIMS, INC.,
a foreign corporation, formerly known as
CHARTIS CLAIMS, INC., WELLS
FARGO BANK, N.A. a foreign
corporation, DOES I through X, and
BUSINESS ENTITIY DOES I through
X,
Defendant.
INTRODUCTION
Before the Court is Defendants’ Motions to Dismiss (Dkt. 11). For the following
reasons, the Court will grant the motion, but with leave to amend.
LEGAL STANDARD
1.
Legal Standard for Rule 12(b)(6) Motions
Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement
of the claim showing that the pleader is entitled to relief,” in order to “give the defendant
MEMORANDUM DECISION AND ORDER - 1
fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964 (2007). While a complaint
attacked by a Rule 12(b)(6) motion to dismiss “does not need detailed factual
allegations,” it must set forth “more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id. at 555. To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
“state a claim to relief that is plausible on its face.” Id. at 570. A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556.
The plausibility standard is not akin to a “probability requirement,” but it asks for more
than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint
pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the
line between possibility and plausibility of ‘entitlement to relief.’ ” Id. at 557.
The Supreme Court identified two “working principles” that underlie Twombly in
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, the court need not accept as true, legal
conclusions that are couched as factual allegations. Id. Rule 8 does not “unlock the
doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 67879. Second, to survive a motion to dismiss, a complaint must state a plausible claim for
relief. Id. at 679. “Determining whether a complaint states a plausible claim for relief
will . . . be a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id.
MEMORANDUM DECISION AND ORDER - 2
A dismissal without leave to amend is improper unless it is beyond doubt that the
complaint “could not be saved by any amendment.” Harris v. Amgen, Inc., 573 F.3d 728,
737 (9th Cir. 2009) (issued 2 months after Iqbal). The Ninth Circuit has held that “in
dismissals for failure to state a claim, a district court should grant leave to amend even if
no request to amend the pleading was made, unless it determines that the pleading could
not possibly be cured by the allegation of other facts.” Cook, Perkiss and Liehe, Inc. v.
Northern California Collection Service, Inc., 911 F.2d 242, 247 (9th Cir. 1990). The
issue is not whether plaintiff will prevail but whether he “is entitled to offer evidence to
support the claims.” Diaz v. Int’l Longshore and Warehouse Union, Local 13, 474 F.3d
1202, 1205 (9th Cir. 2007)(citations omitted).
Under Rule 12(b)(6), the Court may consider matters that are subject to judicial
notice. Mullis v. United States Bank, 828 F.2d 1385, 1388 (9th Cir. 1987). The Court
may take judicial notice “of the records of state agencies and other undisputed matters of
public record” without transforming the motions to dismiss into motions for summary
judgment. Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866,
n.1 (9th Cir. 2004). The Court may also examine documents referred to in the complaint,
although not attached thereto, without transforming the motion to dismiss into a motion
for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
MEMORANDUM DECISION AND ORDER - 3
ANALYSIS
1.
Motion To Dismiss
Defendants’ argue that Defendant Chartis, Inc. should be dismissed for lack of
personal jurisdiction, and that Defendant AIG Claims, Inc. should be dismissed because
the Amended Complaint contains no specific allegations of wrongdoing against AIG
Claims, Inc. Defendants also ask the Court to dismiss Counts Two, Three and Four of the
Amended Complaint.
The Taylors agree to the dismissal of Chartis, Inc. Accordingly, the Court will
grant that part of the motion. The Court will address the remaining issues below.
A.
Claims Against AIG Claims, Inc.
Based upon the record before the Court, it appears AIG Claims, Inc. is a successor
in interest to Chartis Claims, Inc. However, the Amended Complaint (Dkt. 10) does not
direct any allegations toward either AIG Claims, Inc. or Chartis Claims, Inc. The
Amended Complaint does, however, repeatedly reference the now dismissed Defendant,
Chartis, Inc. Although it is not altogether clear, it appears the Taylors allegations against
Chartis, Inc. were meant to be directed toward AIG Claims, Inc. The Court will not
simply reach that conclusion based upon the pending Amended Complaint, however.
Accordingly, the Court will grant the motion to dismiss all claims against AIG Claims,
Inc, but will give the Taylors leave to amend their complaint so they can clarify whether
they meant to assert claims against AIG, Claims, Inc. The amended complaint must
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specifically direct claims at AIG, Claims, Inc. or the Court will dismiss AIG, Claims, Inc.
as a defendant with prejudice.
B.
Count Two – Bad Faith
To recover on a bad faith claim, the “insured must show: (1) the insurer
intentionally and unreasonably denied or delayed payment; (2) the claim was not fairly
debatable; (3) the denial or delay of payment was not the result of a good faith mistake;
and (4) the resulting harm is not fully compensable by contract damages.” Simper v.
Farm Bureau Mut. Ins. Co. of Idaho, 974 P.2d 1100, 1103 (Idaho 1999) (citing White v.
Unigard Mutual Insurance Co., 730 P.2d 1014, 1018–20 (Idaho 1986)).
While the Taylors’ Amended Complaint indicates that their claims were denied
(Am. Compl. Dkt. 10 ¶ 25), nothing in the Amended Complaint is stated with enough
specificity to show whether or not the claim was debatable. Defendants cannot argue a
good faith mistake because no claims are specific enough to know which actions might
reflect which claim. Furthermore, the Amended Complaint simply states that
“Defendants’ failure to act in good faith proximately caused Plaintiffs to suffer
damages.” Id. ¶ 40. This allegation gives no insight into whether resulting harm is fully
compensable by contract damages.
Accordingly, the Court will grant the motion to dismiss Count Two, but will give
the Taylors leave to amend. In their amended complaint, the Taylors must provide factual
content which allows the defendants and the Court to draw the reasonable inference that a
defendant is liable for the misconduct alleged. Twombly, 550 U.S. at 556.
MEMORANDUM DECISION AND ORDER - 5
C.
Count Three – Fraud
To prove fraud, a plaintiff must establish the following elements: “(1) a
representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge about its
falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person
and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7)
his reliance on the [representation]; (8) his rights to rely thereon; (9) his consequent and
proximate injury.” Jenkins v. Boise Cascade Corp., 108 P.3d 380, 386 (Idaho 2005)
(internal citation omitted). Moreover, these elements must be pled with particularity. That
is, a party claiming fraud or mistake is required to go beyond the minimalist requirements
of Rule 8(a)(2), and must state “with particularity the circumstances constituting fraud or
mistake.” Fed .R.Civ.P. 9(b).
It is well-established that “[a] pleading is sufficient under Rule 9(b) if it identifies
the circumstances constituting fraud so that a defendant can prepare an adequate answer
from the allegations.” Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th
Cir.1989). In this regard, it is sufficient to plead items such as the time, place and nature
of the alleged fraudulent activities. Id. Additionally, “Rule 9(b) does not allow a
complaint to merely lump multiple defendants together but require[s] plaintiffs to
differentiate their allegations when suing more than one defendant ... and inform each
defendant separately of the allegations surrounding his alleged participation in the fraud.”
Swartz v. KPMG LLP, 476 F.3d 756, 764–65 (9th Cir.2007). Finally, “[i]n the context of
a fraud suit involving multiple defendants, a plaintiff must, at a minimum, ‘identif[y] the
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role of [each] defendant[ ] in the alleged fraudulent scheme.’ ” Id. at 765 (citing Moore,
885 F.2d at 541).
1) Fraud
The Amended Complaint sets out a premise that each successive policy was
accompanied by cumulative coverage. Dkt. 10 ¶ 43. The Taylors claim that this
constitutes fraud because they were denied coverage, and those denials were improper.
Id. These conclusions are consistent with a claim which may be fraudulent. But, the
Taylors fail to provide sufficient facts which connect and support these allegations. The
Taylors fail to provide facts which explain why claim denials were improper. They fail to
provide facts which explain how the denied claims should have been covered under
successive policies and cumulative coverage. It is not enough to say coverage increased.
Only cumulative coverage which is related to improperly denied claims would be
relevant here.
Thus, the Taylors have not pled fraud with particularity, and the Court will grant
the motion to dismiss the fraud claim in Count Three. However, the Court will once again
give the Taylors leave to amend. In their amended complaint, the Taylors must address
the issues discussed in the preceding paragraph.
2) Silence as Fraud
According to the Idaho Supreme Court, silence may constitute fraud when a duty
to disclose exists. G & M Farms v. Funk Irrigation Co., 808 P.2d 851 (1991). A party
may have a duty to disclose: (1) if there is a fiduciary or other similar relation of trust and
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confidence between the two parties; (2) in order to prevent a partial statement of the facts
from being misleading; or (3) if a fact known by one party and not the other is so vital
that if the mistake were mutual the contract would be voidable, and the party knowing the
fact also knows that the other does not know it. Sowards v. Rathbun, 8 P.3d 1245, 1250
(2000).
The Taylors claim that “Defendants failed to disclose limitations contained in the
policies at the time of sale. These actions constitute fraud and fraud by silence.” Am.
Compl. Dkt. 10 ¶ 45. The Amended Complaint fails to establish a duty to disclose. The
Taylors silence as fraud claim also suffers from a lack of particularity similar to their
fraud claim. The Taylors fail to provide facts that explain which limitations in their
policy were not disclosed, and how those failures are relevant to their denied claims.
Simply concluding that Defendants failed to disclose limitations is inadequate for a
silence as fraud claim. Therefore, the Court will grant the motion to dismiss the silence as
fraud claim on Count Three as well. Once again, the Taylors will be given leave to
amend.
D.
Count Four – Intentional Infliction of Emotional Distress
“To prevail on a claim for intentional infliction of emotional distress: (1) the
conduct must be intentional or reckless; (2) the conduct must be extreme and outrageous;
(3) there must be a causal connection between the wrongful conduct and the emotional
distress; and (4) the emotional distress must be severe.” Mortensen v. Stewart Title Guar.
Co., 149 Idaho 437, 235 P.3d 387, 396 (Idaho 2010) (internal citations omitted). “To be
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actionable, the conduct must be so extreme as to ‘arouse an average member of the
community to resentment against the defendant,’ and ‘must be more than unreasonable,
unkind, or unfair.’ ” Id. at 397 (citing 86 CJ. S. Torts § 74 (2009) (citations omitted)).
The Taylors allege that a duty to act fairly and in good faith, along with the facts
of the case, make Defendants refusal to pay Plaintiffs’ legitimate claims extreme and
outrageous. Am. Compl. ¶ 48. However, no facts have been sufficiently pled here. No
facts have been presented which support a conclusion that any of these claims were
legitimate. The Taylors also fail to provide any facts showing that there was emotional
distress, that it was sever, and that Defendants caused it. The Taylors simply make
conclusory statements that they suffered emotional distress and that it was the result of
Defendant’s extreme and outrageous conduct. Id. ¶ 50.
Accordingly, the Court will grant Defendants’ motion to dismiss Count Four.
However, the Court will once again grant leave to amend. In their amended complaint,
the Taylors must address the issues noted by the Court in the preceding paragraph.
ORDER
IT IS ORDERED:
1. Defendant’s Motion to Dismiss (Dkt. 11) is GRANTED with leave to amend
as explained above. Plaintiffs shall file their amended complaint within 21 days
of the date of this Order.
MEMORANDUM DECISION AND ORDER - 9
DATED: November 7, 2014
_________________________
B. Lynn Winmill
Chief Judge
United States District Court
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