Crowe v. Trustgard Insurance Company

Filing 75

MEMORANDUM OPINION AND ORDER: It is ordered that Lisa Crowe's 30 Motion to Dismiss for Failure to State a Claim or for More Definite Statement is DENIED. Signed by Judge Karen K. Caldwell on 5/21/2013. (SCD)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION AT LEXINGTON
LISA CROWE,
Plaintiff

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)
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v.
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)
TRUSTGARD INSURANCE COMPANY, )
Defendant
)

CIVIL ACTION NO. 5:12-240-KKC

MEMORANDUM OPINION
AND ORDER

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This matter is before the Court on Lisa Crowe’s Motion to Dismiss or For a More
Definite Statement. (Case No. 5:12-cv-312, DE 5; Case No. 5:12-cv-240, DE 30). 1 Crowe filed
her Motion pursuant to Federal Rule of Civil Procedure 12(b)(6) and argues that Trustgard
Insurance Company has failed to state a claim upon which relief may be granted. For the reasons
stated below, the Court will deny the motion.
I. Background
This action stems from two claims for insurance benefits made by Lisa Crowe under the
homeowner’s policy issued to her by Trustgard. Crowe’s first claim was for $1,115,292.64 after
her residence in Montgomery County, Kentucky, was destroyed by fire on June 29, 2011. Her
second claim was for $31,550.00 based on a theft she alleged occurred on her property on
August 10, 2011. Trustgard denied both of these claims, and this litigation followed.
Trustgard seeks a declaratory judgment that Trustgard is not required to provide
insurance proceeds or an appraisal to Crowe. Crowe filed suit against Trustgard in state court
based on four claims: (1) Crowe’s policy issued by Trustgard covered her loss from the fire; (2)

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For purposes of docket consolidation, the motion to dismiss was terminated and then re-filed in the lead case, No.
5:12-cv-240. Trustgard’s response and Crowe’s reply, however, were not filed in the lead case, so the case did not
appear “submitted,” or ripe, in the lead case.

Crowe’s policy issued by Trustgard covered her loss from the theft; (3) Trustgard’s denials of
coverage were breaches of obligations and bad faith; and (4) Trustgard violated the Consumer
Protection Act by claiming to cover fire losses but not actually doing so. (Case No. 5:12-cv-240,
DE 1-1.) Crowe’s suit was later removed to this Court. (Case No. 5:12-cv-240, DE 1). The
Court subsequently consolidated these cases. (Case No. 5:12-cv-240, DE 29).
II. Analysis
Crowe argues that Trustgard has failed to meet the pleading standards set forth under the
Federal Rules of Civil Procedure. Rule 8(a)(2) sets forth a liberal pleading standard; it requires
only “a short and plain statement of the claim showing that the pleader is entitled to relief,’ in
order to ‘give the [opposing party] fair notice of what the … claim is and the grounds upon
which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson,
355 U.S. 41. 47 (1957)). Detailed factual allegations are not required, but a party’s “obligation
to provide the ‘grounds’ of ‘entitle[ment] to relief’ requires more than labels and conclusions.”
Twombly, 550 U.S. at 555. “[T]hreadbare allegations” will not meet the notice-pleading standard
of the Federal Rules. Bondex Int’l, Inc. v. Hartford Acc. & Indem. Co., 667 F.3d 669, 681 (6th
Cir. 2011). Instead, a pleading must “contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)
(quoting Twombly, 550 U.S. at 570). A claim is plausible “‘when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.’” In re Harchar, 694 F.3d 639, 644 (6th Cir. 2012) (quoting Iqbal, 129 S.Ct.
at 1949)).
Trustgard’s complaint meets the pleading standard as clarified by the Supreme Court, and
so dismissal is not warranted. Pursuant to 28 U.S.C. § 2201(a), Trustgard filed a Petition for

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Declaration of Rights stating it was excused from performance under the homeowner’s insurance
policy because the policy was voided by the operation of certain exclusion provisions. (Case No.
5:12-cv-312, DE 1). Declaratory judgments are appropriate for settling controversies between an
insurer and its insured. See, e.g. Aetna Cas. & Sur. Co. v. Sunshine Corp., 74 F.3d 685, 687 (6th
Cir. 1996). In support of its petition, Trustgard has alleged the existence of a homeowner’s
insurance contract between Trustgard and Crowe, that Crowe filed insurance claims with
Trustgard, that the policy was in effect at the time of the losses claimed by Crowe, and that
Trustgard denied these claims after conducting an investigation. (Case No. 5:12-cv-312, DE 1 at
¶ ¶ 6, 10, 12, 13). Trustgard identified two dated and sworn statements made by Crowe. (Id. at
¶¶ 10, 12). These were also attached as exhibits. (Case No. 5:12-cv-312, DE 1-2, DE 1-3).
Trustgard alleges that Crowe’s claims are barred by one or more of the applicable provisions of
the policy and has included these provisions in the petition. (Case No. 5:12-cv-312, DE 1 at ¶¶
7-8, 17). Specifically, Trustgard alleges that it believes Crowe’s home was destroyed by arson,
and that material misrepresentations were made regarding the claims for fire loss and theft loss
occurring at this home. (Id. at ¶ 15-16). Viewed in the light most favorable to Trustgard, the
facts alleged are sufficient to make out Trustgard’s claim.

In other words, the claim for

declaratory relief is plausible.
Crowe also has argued that Trustgard failed to comply with the requirements of Federal
Rule of Civil Procedure 9(b), which requires that parties “alleging fraud … must state with
particularity the circumstances constituting fraud.” Rule 9(b) is to be considered with other
pleading standards, including Rule 8’s requirement that allegations be as plain, concise, and
direct as is reasonable under circumstances. Beyond meeting the plausibility standard for a
motion to dismiss, a fraud claim must meet the special pleading requirements of Rule 9(b).

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Minger v. Green, 239 F.3d 793, 800 (6th Cir. 2001). To satisfy Rule 9(b), a complaint of fraud,
“at a minimum, must allege the time, place, and content of the alleged misrepresentation on
which [the plaintiff] relied; the fraudulent scheme; the fraudulent intent of the defendants; and
the injury resulting from the fraud.” United States ex rel. Bledsoe v. Cmty. Health Sys., Inc.
(Bledsoe I), 342 F.3d 634, 643 (6th Cir. 2003) (internal quotation marks and citations omitted)).
While Trustgard has not brought a separate claim for fraud, it has alleged
misrepresentations by Crowe. Trustgard, however, has alleged the circumstances of constituting
these misrepresentations. As noted above, the petition incorporates Crowe’s sworn and dated
statements and describes the subsequent Trustgard investigation and eventual denial of claims
based, in part, on those statements. These descriptions are brief, but they satisfy Rule 9(b),
which seeks “to provide defendants with notice of the specific conduct with which they were
charged, so that the defendants can prepare responsive pleadings.” U.S. ex rel. Marlar v. BWXT
Y-12, L.L.C., 525 F.3d 439, 445 (6th Cir. 2008) (internal quotation marks and citation omitted).
Here, Crowe clearly can respond to the allegations of misrepresentation Trustgard has raised
about the claims filed regarding fire and theft loss.
Finally, in the alternative, Crowe has moved for a more definite statement under Rule
12(e). Trustgard’s petition is readily distinguished from pleadings requiring this relief. See, e.g.
Terrell v. Tecsec, Inc., No. 06-310, 2007 WL 2670047, at *8 (E.D. Ky. Sept. 7, 2007). (“[A]
motion for more definite statement is designed to strike at unintelligibility rather than simple
want of detail.... [It] must be denied where the subject complaint is not so vague or ambiguous as
to make it unreasonable to use pretrial devices to fill any possible gaps in detail.”) Because
Trustgard’s petition contains sufficient factual support, accepted as true, to state a plausible
claim, it neither warrants dismissal nor the need for a more definite statement.

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III. Conclusion
Accordingly, IT IS HEREBY ORDERED that Lisa Crowe’s Motion to Dismiss or For a
More Definite Statement (Case No. 5:12-cv-312, DE 5; Case No. 5:12-cv-240, DE 30) is
DENIED.
This 21st day of May, 2013.

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