Hullverson Law Firm P.C., The et al v. Liberty Insurance Underwriters, Inc.
MEMORANDUM AND ORDER IT IS HEREBY ORDERED that defendant Liberty Insurance Underwriters, Inc.'s motion to dismiss is GRANTED. [Doc. 3] An order of partial dismissal will accompany this memorandum and order. Signed by District Judge Charles A. Shaw on 7/22/2013. (NCL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
THE HULLVERSON LAW FIRM, P.C., et al.,
LIBERTY INSURANCE UNDERWRITERS,
No. 4:12-CV-1994 CAS
MEMORANDUM AND ORDER
This matter is before the Court on defendant Liberty Insurance Underwriters, Inc.’s motion
to dismiss Count IV of plaintiffs’ complaint. Plaintiffs oppose the motion, and defendant has filed
a reply. The matter is fully briefed and ready for decision. For the following reasons, the Court will
grant defendant’s motion.
This action arises out of a policy of lawyers professional liability insurance issued by
defendant Liberty Insurance Underwriters, Inc. (“Liberty”) to plaintiff The Hullverson Law Firm,
P.C. In January 2012, the Hullverson Law Firm and the individual plaintiffs were sued for various
activities related to the firm’s advertising. Plaintiffs denied liability in the underlying suit and
requested that Liberty provide defense and indemnity pursuant to their professional liability
insurance policy. Liberty denied coverage in the underlying suit, and denied defense and indemnity
to all of the plaintiffs herein.
Plaintiffs have brought a four-count complaint against Liberty. Count I seeks declaratory
relief; Count II asserts a claim for breach of the insurance contract; Count III asserts a claim for
vexatious refusal to pay pursuant to Missouri Revised Statutes §§ 375.296 and 375.420; and Count
IV asserts a claim for bad faith failure to defend and indemnify. Liberty moves to dismiss Count IV
for bad faith failure to defend and indemnify, stating that it is preempted by plaintiffs’ claim under
Missouri’s vexatious refusal to pay statute.
On a motion to dismiss, the Court accepts as true the factual allegations contained in the
complaint and grants the plaintiff the benefit of all reasonable inferences that can be drawn from
those allegations. See Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). “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.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.
In its motion to dismiss, Liberty asserts plaintiffs’ claim for bad faith failure to defend and
indemnify must be dismissed, because courts have consistently held that the tort of bad faith is
preempted by Missouri’s vexatious refusal to pay statute. Plaintiffs counter that their claim is a
third-party claim (as opposed to a first-party claim) and Missouri courts have not held that third-party
claims are preempted by the vexatious refusal to pay statute. Plaintiffs state, without factual support,
that their “claims in Count IV are based on conduct distinct from conduct that merely constituted a
breach of contract.” (Pls.’ Resp. at 8).
Missouri law is clear that “an insurance company’s denial of coverage itself is actionable
only as a breach of contract and, where appropriate, a claim for vexatious refusal to pay.” Overcast
v. Billings Mut. Ins. Co., 11 S.W.3d 62, 69 (Mo. 2000). A party complaining of breach of contract
cannot also bring a tort claim dependent on the same elements as the contract claim. “An insured
cannot recast a contract claim as a . . . tort claim under Missouri law.” Wiles v. Capitol Indem.
Corp., 280 F.3d 868, 870 (8th Cir. 2002). Attaching additional tort liability to a breach of contract
claim is only allowed when an independent tort has been committed against the plaintiff. See
Overcast, 11 S.W.3d at 68. The independent tort alleged cannot be “dependent on the elements of
the contract claim.” Id. at 67. Independent facts must form the basis for the tort claim to survive a
motion to dismiss.
The Court must examine the facts pled in plaintiffs’ cause of action for bad faith failure to
defend and indemnify to those pled in its causes of action for breach of contract and vexatious
refusal to pay. See Ryann Spencer Group, Inc. v. Assurance Co. of Am., 275 S.W.3d 284, 289-90
(Mo. Ct. App. 2008). Plaintiffs allege no independent facts in their bad faith claim. See Complaint
at ¶¶ 41-48. They adopt and incorporate all of the facts alleged in the prior Counts I, II, and III and
state that Liberty owed various common law duties to plaintiffs. Id. at 41-45. Plaintiffs allege that
Liberty in bad faith refused to defend and indemnify plaintiffs, thereby breaching its duties of good
faith and fair dealing, duty to investigate, duty to defend, and duty to indemnify. Plaintiffs then
allege corresponding damages. Id. at ¶¶ 46-48.
Plaintiffs have failed to plead or argue any conduct in Count IV that is distinct from conduct
alleged in Counts I, II, and III. The bad faith claim is not wholly independent of their breach of
contract and vexatious refusal claims. This is not they type of independent tort claim contemplated
by Overcast. Plaintiffs have merely stated a claim for bad faith based almost wholly on Liberty’s
refusal to pay their insurance claim. Missouri courts have consistently interpreted the holding in
Overcast to preclude these types of claims. See, e.g., Ryann Spencer Group, 275 S.W.3d at 290.
Plaintiffs are foreclosed from asserting their claim of bad faith failure to defend and
indemnify “because the facts pled in [Count IV] are already within the causes of action for breach
of contract and vexatious refusal to pay.” Champ Realty Co. v. American States Ins. Co., 2010 WL
2985676, *2 (E.D. Mo. Jul. 23, 2010) (quoting Ryann Spencer Group, 275 S.W.3d at 290). The
Court will dismiss Count IV of plaintiffs’ complaint for failure to state a claim upon which relief
may be granted.
IT IS HEREBY ORDERED that defendant Liberty Insurance Underwriters, Inc.’s motion
to dismiss is GRANTED. [Doc. 3]
An order of partial dismissal will accompany this memorandum and order.
CHARLES A. SHAW
UNITED STATES DISTRICT JUDGE
day of July, 2013.
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