Dern v. Liberty Mutual Insurance Company

Filing 18

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 12/11/2015. (kw2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division

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.JANE DERN,

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Plaintiff,

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Case No.: G.JH-15-1737

v.

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LIBERTY

MUTUAL INSURANCE

CO.,

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Defendant.

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MEMORANDUM

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ECF

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the insurer of her home, after her home was damaged

I.

22, 2014.

Motion to Dismiss. ECF

the record and deems a hearing unnecessary?

Md.). For the reasons stated herein, Defendant's

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Liberty Mutual Insurance

by a fire on or about May

NO.2 at ~'l2-6. Presently before the Court is Defendant's

The Court has reviewed

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OPINION

Plaintiff Jane Oem filed the present action against Defendant
Co.,

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NO.9.

See Loc. R. 105.6 (D.

Motion is granted.

BACKGROUND
According

to the Complaint.

Maryland

in exchange

Plaintiffs

home was damaged

Defendant

for monthly premiums.

insured Plaintiff's
ECF

NO.2 at

by fire, which left it "extensively

home located in Frederick,

4. On or about May 22, 2014,
damaged"

and "uninhabitable,"

I Ms. Oem filed this action against
"Liberty Mutual Insurance Company d/b/a Safeco Insurance Company of
America," See ECF NO.2. In its Motion, Defendant indicates that Liberty Mutual is a separate entity from Safeco
Insurance Company of America. but that they are affiliated. ECF NO.9 at I n.1. Although Plaintiff repeatedly refers
to Safeco in the Complaint, for purposes of this Motion. the Court will refer only to Liberty Mutual as "Defendant,"
as that is the only entity presently named in the Complaint.

On November 24.2015, Plaintiff. on her own behalf, filed a request for an emergency hearing with the Court. It .
appears, however, that she is still represented by counsel. Plaintiffis reminded that, so long as she is represented by
an attorney, she may not, on her own, file any documents with the Coul1. See Loc. R. 102.1 (a) (D.Md.) ("When a
party is represented by counsel, the Clerk shall accept for filing only documents signed by a member of the Bar of
this Court whose appearance is entered on behalf of that party.").
2

and Plaintiff filed a claim with Defendant for coverage. ld. at ~~ 4-6. Although "numerous
respected local contractors" have opined that Plaintiffs house must be torn down and rebuilt,
Defendant has relied on the opinion of one contractor who has stated that the house could be
repaired, rather than rebuilt. ld. at ~ 9.
Unable to reach a resolution, Plaintiff filed the present action alleging one count of unfair
claim settlement practices under Md. Code Ann., Ins. ~ 27-303 and one count for breach of
contract. See ECF NO.2. Specifically, as to her claim under ~ 27-303, Plaintiff alleges that
"despite [her] good-faith efforts to resolve the matter ... Defendant[] h[as] refused to move
forward in good faith and h[as] continually pressured the Plaintiff to sign paperwork and settle
the claim in such a way that would not appropriately cover the work that needs to be done .... "
ld. at ~ 8. She further contends that Defendant has failed to act in good faith with respect to
covering personal property that was damaged in the fire, and that Defendant has "intimidated the
[Plaintiff], as she has been repeatedly asked to agree to have [Defendant's] contractor perform
inadequate repairs for an unreal istic price." ld. at

,r 10-11.

She further alleges that this claim is

ripe for decision by this Court because "a final decision has been entered by the Maryland
Insurance Administration .... " ld. at

13.

With respect to her breach of contract claim, Plaintiff alleges that, although she has paid
the required monthly premiums, "Defendant has refused to adequately compensate the Plaintiff
pursuant to the Homeowner's Insurance agreement between the parties for the damage it caused
to the Plaintiffs

vehicle," and that "no work has even begun toward rebuilding the home and the

Plaintiff has ... been unable to move back into her home." Id. at

15,12(2)-13(2).3

The Complaint is improperly numbered, as it proceeds from paragraph 15 to paragraphs labeled as 12 and 13.
When referring to the second occurrence of paragraph numbers 12 and higher, the Court will cite to the paragraph
number indicated in the Complaint followed by "(2)."

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Defendant now moves to dismiss both counts of the Complaint. Defendant argues that
Plaintiff's claim under

* 27-303 cannot be pursued in a civil cause of action and that Plaintiff's

exclusive remedy under that statute is to seek redress before the Maryland Insurance
Administration. See ECF NO.9-I at 3-4. Defendant further argues that Plaintiffs breach of
contract claim must be dismissed because the Complaint is so lacking in specificity as to render
the claim inscrutable. Id. at 4-5.
II.

STANDARD OF REVIEW
Defendants have moved to dismiss Plaintiff's Complaint on the ground that the

Complaint fails to state a claim upon which relief can be granted.4 When deciding a motion to
dismiss, a court "must accept as true all of the factual allegations contained in the complaint,"
and must "draw all reasonable inferences [from those facts] in favor of the plaintiff." £.1. du
Pont de Nemours & Co. v. Kolonlndus .. Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations and
internal quotation marks omitted). To survive a motion to dismiss invoking Fed. R. Civ. P.
12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, 'to state a claim to
relief that is plausible on its face.'" Ashcr(~ft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell
Atlantic COl]). v. Twombly, 550 U.S. 544, 570 (2007)). The factual allegations must be more than
"labels and conclusion ....

Factual allegations must be enough to raise a right to relief above the

speculative level .... " Twombly, 550 U.S. at 555; see also id. ("[T]he pleading must contain
something more ... than ... a statement of facts that merely creates a suspicion [ot] a legally
cognizable right of action" (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure
1216,235-36

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(3d ed. 2004)). A complaint will not survive Rule 12(b)(6) review where it

4 Although in its motion Defendant relies on the standard for dismissal under Maryland Rule 2-322, the Court will
treat the Motion as one to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6). See. e.g., Rowlandv.
Patterson, 852 F.2d 108, 110 (4th Cir. 1988), on reh 'g, 882 F.2d 97 (4th Cir. 1989) ("Federal courts apply federal
rules of procedure, both those promulgated in the Federal Rules of Civil Procedure as well as wholly judge made
procedural rules, unless the Erie doctrine commands otherwise.").

contains "naked assertion[s]" devoid of "further factual enhancement." ld. at 557. "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." Iqbal. 556 U.S. at
663. "But where the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged-but

it has not 'show[n)'-'that

the pleader

is entitled to relief.'" See ;d. at 679 (citing Fed. Rule Civ. Proc. 8(a)(2)).
III.

DISCUSSION
A. Unfair Claim Settlement Practices
The first count of the Complaint invokes

S 27-303

of the Insurance Al1icle of the

Maryland Code, ECF NO.2 at ~ 12, which provides that certain conduct of an insurer, including
the refusal to pay a claim for an arbitrary or capricious reason, constitutes an unfair claim
settlement practice. Md. Code Ann., Ins.
the ground that

S 27-303

S 27-303.

Defendant seeks dismissal of this claim on

provides for administrative remedies only and does not create a

separate cause of action against an insurer. ECF No. 9-1 at 3. Plaintiff, in opposing Defendant's
Motion, first argues that, although the Complaint invokes

S 27-303,

"the relief requested by ...

Plaintiff is not wholly or independently reliant upon successfully proving ... violations [of

S 27-

S 27-303

serve

303]." ECF No. 14 at 3. Rather, Plaintiff contends that "Defendant's violations of

to support the claims made by Plaintitf as to the bad faith nature of Defendant's conduct in
breaching the contract it holds with ... Plaintiff." ld. Plaintiff further argues, in the alternative,
that this claim may be adjudicated by this Court because a final decision has been entered by the
Maryland Insurance Administration under a complaint that was filed by Plaintiff acting pro se.
ECF No. 14 at 3-4; see also ECF NO.2 at ~ 13.

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Based on Plaintiffs opposition to Defendant's Motion to Dismiss, it seems that she
cannot decide whether she is pursuing a claim directly under

S 27-303,

or rather is raising an

independent tort or contract claim for unfair claim settlement practices. In any case, this claim
must be dismissed. If Plaintiff seeks to bring a civil claim directly under

S 27-303,

she cannot do

so in this forum. The Maryland legislature made it explicit that the unfair claim settlement
practices subtitle "provides administrative remedies only." Md. Code Ann., Ins.

S 27-301.

And

any administrative appeals must be taken in accordance with Section 2-215 of the Insurance
Code, see Md. Code Ann., Ins.

S 27-306,

which in turn provides that appeals from an

administrative order may be appealed "(i) to the Circuit Court for Baltimore City; or (ii) if a
party to an appeal is an individual, to the circuit court of the county where the individual
resides." Md. Code Ann., Ins.
any claim arising under

S 2-215(c)(I).

S 27-303.5

This Court, therefore, is without power to consider

See Moye v. Avis Budget Grp., No. CIY.A. TDC-14-2714,

2015 WL 410515, at *3 (D. Md. Jan. 27, 2015) ("To the extent that [Plaintiff] seeks review of
[an administrative] determination [under

S 27-303],

any available appeal would need to be

brought in Maryland Circuit Court in accordance with Md.Code Ann., Ins.

SS 27-306

and 2-215.

Accordingly, any claim brought under the provisions of the Unfair Claims Settlement Practices
Act is not properly before the Court .... "); see also Hartz v. Liberty Mut. Ins. Co., 269 F.3d 474,
476 (4th Cir. 2001) ("[F]ederal courts simply have no license to upend Maryland's decision to
resolve this sort of insurance complaint administratively.").
If Plaintiff's Complaint is intending to allege an independent tort violation, her claim also
must fail because

S 27-303

does not create an independent first party action in tort against an

Importantly, the Complaint is stylized as a civil complaint, rather than an administrative appeal. Plaintiff, therefore,
has failed to properly pursue the only remedies available under 27-303, requiring dismissal of any claim under that
statute. Even if she had properly filed an administrative appeal, however, the Court would have to remand the case
to Maryland circuit court, as that is the only court with power to hear such an administrative appeal pursuant to 2215(c)( 1). In either case, any claim under 27-303 is not properly before this Court.
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insurer for a bad faith failure to settle a claim. Md. Code Ann., Ins.

S 27-301 (b)(2)

("This subtitle

does not provide or prohibit a private right or cause of action to, or on behalf oC a claimant or
other person in any state."); Johnson v. Fed. Kemper Ins. Co., 536 A.2d 1211, 1213 (Md. Ct.
Spec. App. 1988) (holding that predecessor to

S 27-303

provides for administrative relief only

and "cannot be said to create a separate cause of action" in tort); see also Hartz, 269 F.3d at 47576. PlaintitT cites Zappone v. Liberty Lt(e Insurance Co., 706 A.2d 1060 (Md. 1998) in support
of her contention that this Court may adjudicate a claim alleging unfair claim settlement
practices so long as the claimant first exhausts her administrative remedies, ECF No. 14 at 4, but
that case does not support such a broad proposition. In Zappone, the Court of Appeals of
Maryland concluded that claims alleging fraud, negligent misrepresentation, and negligence in
connection with the sale of insurance were not preempted by the Insurance Code of Maryland
and that a plaintiff need not exhaust administrative remedies before pursuing such claims in
court. Zappone, 706 A.2d at 1071. The court reached that conclusion, however, after recognizing
that the plaintiff s causes of action in that case were "wholly independent of the Insurance
Code's Unfair Trade Practices subtitle." ld. Thus, because the court would not be called upon to
interpret or apply the Insurance Code or any of its regulations, and the plaintiffs right to
recovery was "totally dependent on ... common law tort principles," the plaintifrs claims were
able to proceed without prior exhaustion of such claims before the Maryland Insurance
Administration. ld.
Here, however, Plaintiff has not alleged any tort claims independent of her allegation of
unfair claim settlement practices-a

claim undeniably covered by the Insurance Code. Thus,

even assuming Plaintiff's allegations in count one of the Complaint can be characterized as a
tort, that claim is not cognizable and must be dismissed. See Johnson, 536 A.2d at 1213

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("Maryland does not recognize a specific tort action against an insurer for bad faith failure to pay
an insurance claim."); Jones v. Hyall Ins. Agency. Inc., 741 A.2d 1099, 1107 (Md. 1999) ("Under
Maryland law, an insurer which mistakenly denies coverage does not breach a tort duty owed
either to the insured or to third-party claimants .... ").
Finally, to the extent that Plaintiff contends that her allegation of violations of ~ 27-303
serve only to "support" her breach of contract claim, the Court notes that any injury arising
specifically from Defendant's alleged bad faith in breaching the contract does not state a
cognizable claim. Even assuming Plaintiff properly stated a claim for breach of contract, her
recovery would be limited to any payment required under the contract. See Hartz, 269 F.3d at
476 ("Maryland has declined to enact a statute providing for collection of damages beyond the
confines of the insurance agreement. ").
Thus, regardless of whether count one of the Complaint is deemed to be an action directly
under ~ 27-303, an action in tort, or allegations supporting Plaintiff's claim for breach of
contract, that count does not provide Plaintiff with a cognizable cause of action and must be
dismissed with prejudice. See Cozzarelli v. Inspire Pharm. Inc., 549 F.3d 618, 630 (4th Cir.
2008) (noting that district court may dismiss claim with prejudice where "it is clear that
amendment [of the complaint] would be futile in light of the fundamental deficiencies in
plaintiffs' theory of liability").
B. Breach of Contract
In the second count of the Complaint, Plaintiff's seeks to recover for breach of contract.
ECF NO.2 at ~~ 14-15(2). Defendant seeks dismissal of this claim on the ground that the
Complaint is so vague that it fails to properly state a claim. ECF No. 9-1 at 4-5. The Court
agrees. In the Complaint, Plaintiff only alleges that she has paid the required monthly premiums

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and that Defendant has "refused to adequately compensate [her] ... for the damage [the fire]
caused to Plaintiff's vehicle." ECF No. 2at ~ 12(2). Plaintiff further alleges that, because no
work has begun toward rebuilding the house, she has been unable to move back into her home.
Id at ~ 13. These allegations are insufficient to "raise a right to relief above the speculative
level." See Twombly, 550 U.S. at 555.
In Maryland, a Complaint alleging a breach of contract "must of necessity allege with
certainty and definiteness.filcts showing a contractual obligation owed by the defendant to the
plaintiff and a breach of that obligation by defendant."

RRC Ne.. LLC v. BAA Md., Inc., 994

A.2d 430, 440 (Md. 2010) (quoting Continental Masomy Co.. Inc. v. Verdel Const,.. Co., Inc.,
369 A.2d 566, 569 (Md. 1977)) (emphasis in original). Plaintiff has failed to allege what
contractual duty was breached. Notably, the Complaint does not indicate what provision of the
insurance agreement has been implicated, how Defendant's conduct breached any such
provision, or what damage occurred to her vehicle for which Plaintiff was purportedly
undercompensated.

See ECF NO.2 at ~ 12(2). Count two of the Complaint is so vague that

Defendant cannot reasonably prepare a response, and, accordingly, the claim must be dismissed.
However, the Court will decline Defendant's invitation to dismiss this count with
prejudice and will allow Plaintiff the opportunity to amend the Complaint. See Ostrzenski v.
Seigel, 177 F.3d 245, 252-53 (4th Cir. 1999) ("The federal rule policy of deciding cases on the
basis of the substantive rights ... rather than on technicalities requires that [a] plaintiff be given
every opportunity to cure a formal defect in his pleading." (quoting 5A C. Wright & A. Miller,
Federal Practice and Procedure

S

1357, at 360-67 (2d ed.1990)).

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IV.

CONCLUSION
For the foregoing reasons, Defendant's Motion to Dismiss, ECF No.9, is granted. Count

one of the Complaint, alleging unfair claims settlement practices, is dismissed with prejudice and
count two of the Complaint, alleging breach of contract, is dismissed without prejudice. A
separate Order follows.

Dated: December

AJ-

I( , 2015

GEORGE J. HAZEL
United States District Judge

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