Vogt v. State Farm Life Insurance Company
ORDER entered by Judge Nanette Laughrey. Defendant State Farm's motion to dismiss, Doc. 12 , is granted for Plaintiff Vogt's Count III, conversion; dismissal is denied for the remainder of Vogt's claims. Plaintiff Vogt's motion for leave to amend, Doc. 31 , is denied. Signed on 2/3/2017 by District Judge Nanette K. Laughrey.(Specker, Suzanne)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
on behalf of himself and all others
STATE FARM LIFE
Defendant State Farm Life Insurance Company moves to dismiss Plaintiff Michael
Plaintiff Michael Vogt moves for leave to amend his Complaint.
For the following reasons, Defendant’s motion to dismiss is granted in part and
denied in part; Plaintiff’s motion for leave to amend is denied.
Plaintiff Michael Vogt filed this class action for claims arising out of his life insurance
policy with Defendant State Farm Life Insurance Company.
On October 6, 1999, Vogt
purchased a State Farm flexible premium adjustable whole life insurance policy with an initial
basic amount of $100,000. [Doc. 1, p. 3]. Unlike standard term life insurance policies, this type
of policy provides an investment, savings, or interest-bearing component in addition to the usual
[Doc. 1, p. 3].
Under this policy, State Farm maintains an interest-bearing
account in trust for the insured, and this account’s value, which is owned by the insured, grows
At the motion to dismiss stage, all of Plaintiff’s allegations are accepted as true and construed
in the light most favorable to the Plaintiff. Stodghill v. Wellston Sch. Dist., 512 F.3d 472, 476
(8th Cir. 2008).
over time. [Doc. 1, p. 4]. The policy authorizes State Farm to take a monthly deduction from
this account, defined as:
This deduction is made each month, whether or not
premiums are paid, as long as the cash surrender value is enough to cover that
monthly deduction. Each deduction includes:
(1) the cost of insurance,2
(2) the monthly charges for any riders, and
(3) the monthly expense charge.
[Doc. 1-1, p. 10 (Vogt Policy) (emphasis added)]. The policy states the monthly expense charge
is $5.00. [Docs. 1, p. 5 and 1-1, p. 4 (Vogt Policy)]. The policy also defines how the cost of
insurance charge (“COI charge”) is to be calculated:
Cost of Insurance. This cost is calculated each month. The cost is determined
separately for the Initial Basic Amount and each increase in Basic Amount.
The cost of insurance is the monthly cost of insurance rate times the difference
between (1) and (2), where:
(1) is the amount of insurance on the deduction date at the start of the
month divided by 1.0032737, and
(2) is the account value on the deduction date at the start of the month
before the cost of insurance and the monthly charge for any waiver of
monthly deduction benefit rider are deducted. . . .
[Doc. 1-1, p. 11 (Vogt Policy) (emphasis added)]. The policy goes on to disclose the factors
State Farm may use to determine the “monthly cost of insurance rate,” which is used to calculate
the COI charge that is deducted from Vogt’s account each month:
Monthly Cost of Insurance Rates. These rates for each policy year are based on
the Insured’s age on the policy anniversary, sex, and applicable rate class. A rate
class will be determined for the Initial Basic Amount and for each increase. The
rates shown on page 4 are the maximum monthly cost of insurance rates for the
Initial Basic Amount. Maximum monthly cost of insurance rates will be provided
for each increase in the Basic Amount. We can charge rates lower than those
shown. Such rates can be adjusted for projected changes in mortality but cannot
exceed the maximum monthly cost of insurance rates. Such adjustments cannot
be made more than once a calendar year.
The way that State Farm calculates the cost of insurance charge is what is disputed in this
[Doc. 1, p. 6 (emphasis added)].
State Farm calculates the Monthly Cost of Insurance Rates by looking to factors
including but not limited to: expense experience, persistency, taxes, profit assumptions,
investment earnings, and capital and reserve requirements.
[Doc. 1, p. 7].
By using these
additional factors in its rate calculation, State Farm charges Monthly Cost of Insurance Rates that
are higher than if State Farm relied only on the factors listed in the above provision: the insured’s
age, sex, applicable rate class, and projected changes in mortality. [Doc. 1, p. 7].
Vogt alleges that State Farm was aware of its non-disclosure because of its superior
knowledge of its insurance calculations. [Doc. 1, p. 8]. Vogt did not discover that State Farm
was improperly calculating these charges until approximately May 2016 when he engaged
counsel and consulted an actuarial expert.
[Doc. 1, p. 8-9].
Prior to this date, Vogt had no
knowledge of State Farm’s practice regarding these charges, and he was unable to discover this
practice without the help of an expert.
[Doc. 1, p. 8-9]. Vogt further alleges that State Farm
does not disclose to Vogt or other policyholders the Monthly Cost of Insurance Rates that are
used to calculate the monthly Cost of Insurance Charges, nor does State Farm disclose the
components or factors comprising those rates. [Doc. 1, p. 8].
Vogt brings claims for (I) breach of contract based on State Farm’s Cost of Insurance
Charge, (II) breach of contract based on State Farm’s Expense Charge, (III) conversion, and (IV)
declaratory relief. Vogt seeks to represent a class of insureds who own or owned a State Farm
life insurance policy that provided for: (1) a COI charge or deduction using a rate based on the
insured’s age, sex, and applicable premium or rate class, and which can be adjusted for projected
changes in mortality; (2) additional but separate policy charges, deductions, or expenses; (3) an
investment, interest-bearing, or savings component; and (4) a death benefit. [Doc. 1, p. 9].
State Farm argues that Vogt’s Complaint should be dismissed in its entirety because all of
his claims are barred by the applicable five-year statute of limitations. In the alternative, State
Farm contends that Vogt’s Count III conversion claim should be dismissed for two independent
reasons: (1) conversion claims do not lie for recovery of money, and (2) the claim is barred by
Missouri’s economic loss doctrine.
As to Vogt’s Count IV declaratory judgment claim, State
Farm contends dismissal is additionally required because this claim serves no useful purpose and
is duplicative of his breach of contract claims.
Finally, Vogt moves for leave to amend his
Complaint to add a claim under the Missouri Merchandising Practices Act, which State Farm
At the pleading stage, a plaintiff is not required to present detailed factual allegations.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “A claim has facial plausibility when the
pleaded factual content allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).
A. Statute of Limitations
State Farm contends that Vogt’s claims are barred by Missouri’s five-year statute of
limitations because his cause of action accrued in 1999 when the first charge was levied on his
account under the policy, but he did not file this lawsuit until 2016. Vogt, however, argues that
the statute of limitations did not begin to run until May 2016, when Vogt obtained counsel and
actuarial experts who ascertained his damages.
Under Missouri law, a five-year statute of limitations applies to claims for breach of
contract, conversion, and requests for declaratory judgment, and the statute begins to run at the
time when the action accrues. Mo. Rev. Stat. §§ 516.120(1), (2), and (4). Missouri law further
The cause of action shall not be deemed to accrue when the wrong is done or the
technical breach of contract or duty occurs, but when the damage resulting
therefrom is sustained and capable of ascertainment, and, if more than one item of
damage, then the last item, so that all resulting damage may be recovered, and full
and complete relief obtained.
Mo. Rev. Stat. § 516.100. As such, “the mere occurrence of an injury itself does not necessarily
coincide with the accrual of a cause of action.” Martin v. Crowley, Wade & Milstead, Inc., 702
S.W.2d 57 (Mo. banc. 1985) (citing Anderson v. Griffin, Taylor, Penner & Lay, P.C., 684
S.W.2d 858 (Mo. App. 1984)).
Therefore, whether Vogt’s claims are barred by the statute of
limitations depends upon when his damages were “capable of ascertainment.”
have applied a “consistent approach” to interpreting this provision, finding that “the statute of
limitations begins to run when the ‘evidence was such to place a reasonably prudent person on
notice of a potentially actionable injury.’” Powel v. Chaminade Coll. Prep., Inc., 197 S.W.3d
576, 582 (Mo. 2006). Accordingly, the Court must apply an objective, rather than a subjective
standard to determine when Vogt was on sufficient notice that State Farm was overcharging him.
State Farm argues that Vogt’s damages were capable of ascertainment in 1999 when he
first incurred a COI charge under his policy. State Farm contends that a reasonable person could
have discovered these damages back in 1999 because Vogt knew the amount of the COI charges
being levied against his account, and he knew the terms of his policy.
In response, Vogt
contends that he has alleged sufficient facts showing there was no evidence that would have
placed a reasonably prudent person in his position on notice that his charges exceeded what was
permitted by the policy.
Although State Farm provides an annual statement to policy holders,
which shows the amount of COI Charges that were deducted from the Account Value each
month, this information was not enough to put Vogt on notice that anything was amiss. Vogt
contends that he and other policy holders had no way of knowing that the COI Charges listed in
their statements were calculated using impermissible factors not disclosed in their policies.
Because only State Farm possessed the actuarial information and equations underlying its rate
and charges computations, Vogt lacked the tools necessary to determine the proper COI Rates.
Even if State Farm had disclosed its rates or the factors comprising its rates, Vogt also contends
that he was not required to “double check” State Farm’s experts’ calculations in an attempt to
discover possible claims. Instead, Vogt contends his damages were not capable of ascertainment
without the help of an actuarial expert, which he hired in 2016.
Vogt relies on Martin v. Crowley, Wade & Milstead, Inc., which involved a suit filed in
1983 against defendants who negligently surveyed the plaintiffs’ residential lot ten years prior in
702 S.W.2d 57 (Mo. banc 1985). The inaccurate 1973 survey had caused plaintiffs to
build their home in the wrong place, diminishing its value.
Id. The trial court found the statute
of limitations began to run at the time of the negligent survey in 1973, at which point the “defect
complained of was visible and ascertainable by an easy inspection of the land or by asking a
neighbor.” Id. at 58. However, the Supreme Court of Missouri reversed, stating that plaintiffs
should not be required to “double check the services provided by a professional expert.”
Nothing indicated that “plaintiffs knew or should have known of any reason, until May 1981, to
question defendant’s work.” Id. Therefore, the Court reasoned that the statute did not begin to
run until 1981 when plaintiffs learned that the house had been built too close to the property line
due to a boundary dispute.
In a later decision, the Supreme Court of Missouri reaffirmed
Martin, noting that this decision “gave the phrase ‘capable of ascertainment’ a practical
construction; until plaintiff has sufficient knowledge to be put on ‘inquiry notice’ of the wrong
and damages, that standard is not met.” Powel, 197 S.W.3d at 583.
Vogt’s case is even stronger than that of the Martin plaintiffs.
Unlike the surveying
defect in Martin, the improper rate and charge calculations alleged by Vogt were not
ascertainable by mere visual inspection or asking a neighbor.
Instead, they were only
ascertainable with knowledge of the actuarial information used in State Farm’s calculations,
information that Vogt did not have.
Just as the Martin plaintiffs relied on surveying experts,
Vogt similarly relied on State Farm’s experts who administered his insurance policy.
As discussed above, Vogt plausibly alleges why he lacked knowledge of State Farm’s
improper calculations, including that Vogt did not have access to the factors State Farm used to
calculate its COI Charges. In contrast to the examples cited by State Farm, the Court is without
any reason to find that Vogt was on “inquiry notice” back in 1999 that State Farm’s experts were
improperly calculating the charges applied to his policy. Cf., e.g., O’Reilly v. Dock, 929 S.W.2d
297 (Mo. App. 1996) (finding statute of limitations began to run more than five years before the
action was filed when plaintiffs’ water damage was apparent, causing the additional damage for
which they sued even though they were not aware of the extent of the damage until later); Arst v.
Max Barken Inc., 655 S.W.2d 845 (Mo. App. 1983) (finding statute of limitations began to run in
1969 when plaintiff saw cracks in his home’s foundation but where plaintiff waited until 1979 to
hire someone to figure out the cause of the cracks and only then tried to sue his contractor).3
State Farm also contends that a cause of action that is difficult to ascertain but nonetheless
capable of ascertainment long before the complaint was filed, is time barred. The Court is
unpersuaded by this contention, however, because it contradicts the standard set forth in Powel
that “capable of ascertainment” requires the plaintiff to have sufficient knowledge to be put on
inquiry notice of the wrong and damages. See Powel, 197 S.W.3d at 582. Further, State Farm’s
cited authorities are not binding on this Court. See, e.g., Summerhill v. Terminix, Inc., 637 F.3d
877, 880 (8th Cir. 2011) (applying Arkansas law rather than Missouri law) and Drobnak v.
State Farm attempts to distinguish Martin from Vogt’s case by asserting that the land
survey in Martin was performed and then left unreferenced for years while, in Vogt’s case, his
COI charges were levied against him on a monthly basis beginning in 1999. The Court rejects
the conclusion, however, that by virtue of accruing on a monthly basis, Vogt’s damages were
somehow more ascertainable than a one-time land survey.
Without evidence showing Vogt had
sufficient knowledge to put him on inquiry notice that these charges were improperly calculated,
the Court is unpersuaded that his damages were ascertainable the moment his first monthly
charge was levied against his account.
State Farm also makes a passing argument that Vogt failed to allege the existence of any
newly discoverable information in 2016 that would justify the statute of limitations not
beginning to run until that date. However, the Court is unaware of any authority that requires a
plaintiff to show newly discoverable information in order to show his claims are timely. Even if
this were a requirement, Vogt has plausibly alleged that his hiring of an actuarial expert provided
him newly discoverable information—that his life insurance account was being overcharged—
which caused the statute of limitations to begin to run.
Construing all reasonable inferences in Vogt’s favor, his Complaint lacks any indication
that he knew or had reason to know in 1999 or at any time prior to May 2016 that these claims
Because Vogt did not have sufficient knowledge to be put on inquiry notice of
State Farm’s practice until he employed an actuarial expert in 2016, Vogt’s damages were not
capable of ascertainment until that date.
Therefore, Vogt’s cause of action did not accrue until
Anderson Corporation, 561 F.3d 778 (8th Cir. 2010) (applying Minnesota law and rejecting
plaintiff’s argument that the statute of limitations should be tolled on the basis of fraudulent
May 2016 when he hired this expert, and his Complaint is not barred by the five-year statute of
limitations. Vogt’s claims are timely.4
B. Count III – Conversion
In Count III, Vogt brings a claim for conversion, which requires him to show: “(1) he
owned the property or was entitled to possess it; (2) the defendant took possession of the
property with the intent to exercise some control over it; and (3) the defendant thereby deprived
the plaintiff of the right to possession.” Hunt v. Estate of Hunt, 348 S.W.3d 103, 114 (Mo. App.
In his Complaint, Vogt alleges that State Farm deducted unauthorized amounts each
month from Vogt’s Account. Vogt further alleges that he placed money in his account in State
Farm’s possession for a specific purpose to be applied consistently with the terms of the policy
and that State Farm misappropriated his money by diverting it for its own use in contravention of
Although requiring expert testimony, Vogt contends that the unauthorized COI
Charges that State Farm took from Vogt’s account can be determined to an identified sum by
comparing Vogt’s actual COI Charges per month with what the COI Charges should have been.
State Farm challenges Vogt’s conversion claim with two independent arguments: (1) the claim is
barred by Missouri’s economic loss doctrine, and (2) suits seeking recovery of money, not
specific chattels, cannot sound in conversion.
State Farm argues that Vogt’s conversion claim must be dismissed because it is barred by
Missouri’s economic loss doctrine.
Under Missouri law, “the economic loss doctrine bars
recovery of purely pecuniary losses in tort where the injury results from a breach of a contractual
Because the Court finds that Vogt’s claims are timely under Missouri law’s “capable of
ascertainment” standard, it need not address Vogt’s alternative timeliness arguments, including
under a continuing violation theory and fraudulent concealment theory.
duty.” Dubinsky v. Mermart, LLC, 595 F.3d 812, 819 (8th Cir. 2010) (discussing Missouri law).
“Where the parties have a relationship based in contract, ‘[a tort] claim to recover economic
losses must be independent of the contract or such claim [is] precluded by the economic loss
doctrine.’” HHCS Pharm., Inc. v. Express Scripts, Inc., 2016 WL 7324968, at *5 (quoting Self v.
Equilon Enterprises, LLC, 2005 WL 3763533, at *11 (E.D. Mo. March 30, 2005) (reviewing
Missouri case law)).
Vogt responds that his tort claim for conversion is independent of his policy contract with
State Farm, and thus, the economic loss doctrine does not bar his claim. As support, Vogt argues
that he has a possessory right in his money and that State Farm violated this right by taking more
of his money than permitted by the policy. Vogt further contends that the common law imposes
the duty not to convert another’s property, which is a duty independent from State Farm’s duties
under the contract.
Although Vogt cites to several cases applying Iowa and Virginia law, the Court is
unaware of any Missouri case recognizing an exception to the economic loss doctrine for claims
like Vogt’s. [See Doc. 22, p. 19, citing, e.g., Cook v. John Hancock Life Ins. Co., 2015 WL
178108 (W.D. Va. Jan 14, 2015) (finding Virginia’s economic loss doctrine did not bar
plaintiff’s conversion claim where “Virginia courts routinely have held that the duty not to
convert others’ property is a common law duty owed by all, and would exist even in the absence
of a contract between the parties”)].
Furthermore, even if Vogt’s theory could apply under
different facts, the facts before this Court indicate that Vogt and State Farm have a relationship
based in contract, and Vogt’s conversion claim is dependent on his breach of contract claims.
Specifically, for his conversion claim, Vogt alleges that State Farm violated his possessory rights
in his money, which he entrusted to State Farm. This claim will rise or fall based on the Court’s
interpretation of the policy contract.
Ultimately, whether State Farm converted funds from
Vogt’s account or rightfully deducted them depends on whether State Farm breached its contract
under the policy by using unlisted factors in its rate and charge calculations.
conversion claim arises from State Farm’s alleged breaches of the parties’ policy contract. For
the previous reasons, Vogt’s tort claim for conversion is not independent from his contract
claims, and therefore, it is barred by the economic loss doctrine.5 The Court grants State Farm’s
motion to dismiss Count III.
C. Count IV – Declaratory Relief
In Count IV, Vogt requests a declaration that State Farm’s use of undisclosed factors to
compute the Monthly Cost of Insurance Rates and its resulting withdrawal of higher COI
Charges from policyholders’ accounts is contrary to the policy. [Doc. 1, p. 14]. Vogt also seeks
a declaration that State Farm’s inflation of the Monthly Cost of Insurance Rates with expense
factors not disclosed and its deduction of Expense Charges greater than the fixed and maximum
Expense Charges authorized also violates the policy. [Doc. 1, p. 14]. State Farm, however,
contends this declaratory relief claim should be dismissed because it “serves no useful purpose”
due to Vogt’s virtually identical breach of contract claims.
The availability of declaratory relief is a matter of federal law, governed by the
Declaratory Judgment Act. See G.S. Robins & Co. v. Alexander Chem. Corp., 2011 WL
1431324, at *1 n. 1 (E.D.Mo. Apr. 14, 2011). The Declaratory Judgment Act provides that in a
“case of actual controversy within its jurisdiction . . . any court of the United States . . . may
Because the Court dismisses Count III as barred by the economic loss doctrine, it need not
address State Farm’s second argument that suits seeking the recovery of money cannot sound in
declare the rights and other legal relations of any interested party seeking such declaration.” 28
U.S.C. § 2201. As its language suggests, the Act “granted the federal courts discretion to make a
declaration of rights; it did not impose a duty to do so.” Alsager v. District Ct. of Polk Cnty.,
Iowa, 518 F.2d 1160, 1163 (8th Cir.1975) (internal quotation and citation omitted). Therefore, a
district court should deny declaratory relief unless (1) “the judgment will serve a useful purpose
in clarifying and settling the legal relations in issue” and (2) “it will terminate and afford relief
from the uncertainty, insecurity, and controversy giving rise to the proceedings.” Id.
Declaratory relief does not serve a useful purpose where “the declaratory judgment
plaintiff has another, more appropriate remedy.” Glover v. State Farm Fire & Cas. Co., 984 F.2d
259, 261 (8th Cir.1993). “It is well-established that a party is entitled to equitable relief only if
there is no adequate remedy at law.” Id. (citing Morales v. Trans World Airlines, Inc., 504 U.S.
374, 381, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992)); see also *852 Midwest Special Surgery, P.C.
v. Anthem Ins. Companies, 2010 WL 716105, at *6 (E.D.Mo. Feb. 24, 2010) (and cases cited
In his declaratory relief count, Vogt alleges breaches of State Farm’s obligations under
the terms of the insurance contract and asks for a declaration that the terms have been breached.
The declaratory relief count essentially duplicates Vogt’s breach of contract counts in which he
alleges State Farm breached the contract in the same ways. However, Vogt also seeks class
certification, and the Court cannot say at this stage of the litigation whether there will be class
certification or if there is, whether a declaratory judgment would serve a useful purpose.
Therefore, the Court denies State Farm's motion as to Count IV, without prejudice.
D. Motion for Leave to File the First Amended Complaint
After State Farm’s motion to dismiss was fully briefed but before the deadline to amend
the pleadings, Vogt moved for leave to amend his class Complaint. Specifically, Vogt moved for
leave to add a claim under the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.101
(“MMPA”). [Doc. 31].
Rule 15(a)(2) provides that a “court should freely give leave when justice so requires.”
Fed. R. Civ. P. 15(a)(2). “[D]enial of leave to amend pleadings is appropriate only in those
limited circumstances in which undue delay, bad faith on the part of the moving party, futility of
the amendment, or unfair prejudice to the nonmoving party can be demonstrated.” Roberson v.
Hayti Police Dept., 241 F.3d 992, 995 (8th Cir. 2001).
State Farm argues that leave should not be granted because of futility, contending that
Vogt fails to state a claim under the MMPA. A district court may deny a motion for leave to
amend on the basis of futility if it “has reached the legal conclusion that the amended complaint
could not withstand a motion to dismiss under Rule 12(b)(6).” Zutz v. Nelson, 601 F.3d 842, 850
(8th Cir. 2010) (internal quotations omitted). Therefore, the Court considers whether Vogt’s
proposed amended complaint states a claim under Rule 12(b)(6).
Vogt requests leave to add a new claim under the MMPA, which allows private actions to
recover damages for “a method, act or practice declared unlawful by section 407.020.” Mo. Rev.
Stat. § 407.025. Section 407.020.1 provides:
The act, use or employment by any person of any deception, fraud, false pretense,
false promise, misrepresentation, unfair practice or the concealment, suppression,
or omission of any material fact in connection with the sale or advertisement of
any merchandise in trade or commerce . . . in or from the state of Missouri, is
declared to be an unlawful practice.
Mo. Rev. Stat. § 407.020.1. Vogt contends that the facts already alleged in his Complaint are
sufficient to state an MMPA claim: State Farm engages in deceptive and unfair conduct when it
informs policyholders that COI Rates will be based on specific factors and then does not reveal
to policyholders that it also includes other undisclosed factors to set those rates, which produce
inflated rates and COI Charges. State Farm, however, responds that it is exempt from the
MMPA because it is an insurance company regulated by the director of the department of
insurance. Section 407.020.2(2) provides for this exemption, stating:
Nothing contained in this section shall apply to . . . [a]ny institution, company, or
entity that is subject to chartering, licensing, or regulation by the director of the
department of insurance, financial institutions and professional registration under
chapter 354 or chapters 374 to 385, the director of the division of credit unions
under chapter 370, or director of the division of finance under chapters 361 to
369, or chapter 371, unless such directors specifically authorize the attorney
general to implement the powers of this chapter or such powers are provided to
either the attorney general or a private citizen by statute.
Mo. Rev. Stat. § 407.020.2(2) (emphasis added).
First, Vogt contends that State Farm’s exemption argument is an affirmative defense,
which he is not required to plead around. Even assuming Vogt is correct that this is an
affirmative defense, “[i]f an affirmative defense . . . is apparent on the face of the complaint . . .
that [defense] can provide the basis for dismissal under Rule 12(b)(6).” ABF Freight System,
Inc. v. Int’l Broth. of Teamsters, 728 F.3d 853, 861 (8th Cir 2013) (quoting C.H. Robinson
Worldwide, Inc. v. Lobrano, 695 F.3d 758, 764 (8th Cir. 2012) (internal quotation marks
omitted)). In this case, the exemption defense is apparent on the face of Vogt’s Complaint,
which admits that State Farm is a life insurance company registered to do business in the State of
Missouri. [Doc. 1, p. 2].
Next, Vogt argues that this exemption for insurance companies does not apply to State
Farm because of his attached November 7, 2016 letter from John M. Huff, the Director of the
Department of Insurance, to the Deputy Attorney General. [Exhibit A, Doc. 45-1]. The letter
“authoriz[es] the Office of the Attorney General to implement the powers of Chapter 407 . . . for
the purpose of investigating State Farm Life Insurance Company and prosecuting any violation
of Chapter 407 that your Office may discover.” [Exhibit A, Doc. 45-1]. Vogt argues that
because this letter evidences that “such directors specifically authorize[d] the attorney general to
implement the powers of [Chapter 407]” against State Farm, State Farm is not an exempt
defendant and is subject to suits by private citizens. Mo. Rev. Stat. 407.020.2(2).
The November 7 letter, however, merely authorizes the Attorney General of Missouri to
investigate and prosecute State Farm; the letter does not authorize private citizens like Vogt to
pursue claims against an otherwise exempt defendant like State Farm. To interpret this letter as
somehow creating a private right of action under the MMPA against State Farm would be
inconsistent with the plain language of Section 407.020.2(2). As stated above, the exception
provides in relevant part:
. . . unless such directors specifically authorize the attorney general to implement
the powers of this chapter or such powers are provided to either the attorney
general or a private citizen by statute.
Mo. Rev. Stat. § 407.020.2(2). The statute’s plain language merely provides that the director of
insurance can authorize the Attorney General to “implement the powers of this chapter,” not a
private citizen. This is further evidenced by a comparison of the first clause, which provides for
an exception by the director’s authorization, and the second clause, which provides for an
exception by statute. In the second clause, the legislature specifically provides that the
exception may apply to private citizens in addition to the attorney general: “or such powers are
provided to either the attorney general or a private citizen by statute.” Id. Had the legislature
intended for the trigger for the exception—the director’s authorization—to be applicable to both
the Attorney General and private citizens, it could have included “private citizen” in this clause
in the same way that it did in the latter clause, so that it read: “unless such directors specifically
authorize the attorney general or a private citizen to implement the powers of this chapter.” But
that is not what the statute provides.
Although Vogt relies on Fielder v. Credit Acceptance Corp., this district court decision is
not binding and does not alter the Court’s previous conclusion. 19 F.Supp.2d 966 (W.D. Mo.
1998); see Ctr. For Family Med. v. United States, 614 F.3d 937, 942 (8th Cir. 2010) (“One
district court is not bound by the decision or reasoning of another district court involving other
parties with the same issue.”). In Fielder, private citizen plaintiffs brought suit under the Truth
in Lending Act and MMPA against a company that administered retail installment contracts used
in the purchase and sale of automobiles. 19 F.Supp.2d at 971, 977.
On summary judgment, the
defendant argued that it was exempt from liability under the MMPA because it was a company
supervised by the Division of Finance.
Id. at 977.
The plaintiffs responded by submitting a
letter from the Director of Finance addressed to the Missouri Attorney General stating that he
was authorized to implement Chapter 407’s powers against the defendant. Id.
The Fielder court
concluded that the defendant was not exempt “because the Attorney General was authorized to
implement the powers and the 1992 amendment to the statute creates the powers for a private
citizen.” Id. at 977-78, vacated on other grounds, 188 F.3d 1031 (8th Cir. 1999).6 The Court is
not persuaded by the conclusion in Fielder and instead, already found that the statute allows for
the director of insurance to authorize the Attorney General to bring suit, not a private citizen.
This Court’s previous analysis of the statute is consistent with its plain language.
In 1992 and prior to Fielder, Section 402.020.2 of the MMPA was amended to add the final
clause, “or such powers are provided to either the Attorney General or a private citizen by
statute.” Mo. Rev. Stat. § 402.020.2.
In a footnote, Vogt argues in the alternative that because Section 407.025 authorizes
private citizens to bring suit under the MMPA, Vogt’s case is brought beyond the reach of the
MMPA exemption in Section 407.020.2(2). The Court rejects this argument, as well.
As already discussed, Section 407.020.2(2) specifically exempts from suit under the
MMPA those companies like State Farm that are subject to chartering, licensing, or regulation by
the Department of Insurance
. . . unless such directors specifically authorize the attorney general to implement
the powers of this chapter or such powers are provided to either the attorney
general or a private citizen by statute.
Mo. Rev. Stat. § 407.020.2(2) (emphasis added). Again, Vogt does not dispute that State Farm is
subject to chartering, licensing, or regulation by the Department of Insurance and therefore
exempt from liability under the MMPA. However, Vogt argues that Section 407.025 of the
MMPA provides an exception to this exemption. In other words, implicit in Vogt’s argument is
the conclusion that the exemption from liability under the MMPA for insurance companies and
other regulated entities has been nullified by Section 407.025, which gives private citizens the
right to sue under the MMPA. Vogt’s argument is based on the 1992 amendment to Section
407.020.2(2), which modified the exemption for regulated entities by adding the following
Nothing contained in this section shall apply to . . . [a]ny institution, company,
or entity that is subject to chartering, licensing, or regulation by the director of the
department of insurance, financial institutions and professional registration under
chapter 354 or chapters 374 to 385 . . . unless such directors specifically authorize
the attorney general to implement the powers of this chapter or such powers are
provided to either the attorney general or a private citizen by statute.
The above bolded provision providing for this exception was added to Section 407.020.2(2)
years after the legislature passed Section 407.025, which provided private citizens with a cause
of action under the MMPA. Vogt, however, contends that Section 407.025 qualifies as a statute
that provides “such powers” to a private citizen so that exempt defendants are, in fact, subject to
suit. Section 407.025, entitled “Civil action to recover damages—class actions authorized,
Any person who purchases or leases merchandise primarily for personal, family
or household purposes and thereby suffers an ascertainable loss of money or
property, real or personal, as a result of the use or employment by another person
of a method, act or practice declared unlawful by section 407.020, may bring a
private civil action in either the circuit court of the county in which the seller or
lessor resides or in which the transaction complained of took place, to recover
actual damages. The court may, in its discretion, award punitive damages and
may award to the prevailing party attorney’s fees, based on the amount of time
reasonably expended, and may provide such equitable relief as it deems necessary
Mo. Rev. Stat. § 407.025.1.
When analyzing a statute, the goal is to determine the legislature’s intent by giving the
statute’s language its plain and ordinary meaning. United Pharmacal Co. of Mo., Inc. v. Mo. Bd.
of Pharm., 208 S.W.3d 907, 909-10. “When the legislative intent cannot be determined from the
plain meaning of the statutory language, rules of statutory construction may be applied to resolve
any ambiguity.” Id. at 910. Vogt argues that because Section 407.025 gives private citizens the
general right to bring MMPA claims, it qualifies as the “powers” provided to “a private citizen
by statute” that overcome State Farm’s exempt status in Section 407.020.2(2).
The MMPA’s statutory language guides this Court’s analysis. Section 407.025’s plain
language provides a private cause of action for practices “declared unlawful by section 407.020.”
Mo. Rev. Stat. § 407.025.1. Section 407.020.2(2) does not “declare [as] “unlawful” actions
taken by Department of Insurance-licensed companies. Mo. Rev. Stat. § 407.025.1. Instead, this
section outlines certain regulated entities that are exempt from suit under the MMPA. Giving
Section 407.020.2(2) its plain and ordinary meaning, in order for a private citizen to overcome
State Farm’s exemption from suit under the MMPA, Vogt must identify a statute that grants
private citizens the power to enforce Section 407.020 of the MMPA specifically against
insurance companies. This is not what Section 407.025 does. Instead, Section 407.025 provides
a general right to private citizens to bring claims under the MMPA. For these reasons, the Court
finds that the legislature did not intend for Section 407.025’s provision of a general right to
private citizens to sue under the MMPA to also qualify as a statute providing “such powers” to
private citizens like Vogt to sue all entities that would otherwise be exempt under Section
Furthermore, even if the Court were to find this statute to be ambiguous on this point, “a
golden rule of statutory interpretation instructs that, when one of several possible interpretations
of an ambiguous statute produces an unreasonable result, that interpretation should be rejected in
favor of another which produces a reasonable result.” Sutherland Statutes & Statutory
Construction, § 45:12, Reasonable consideration. Taken to its logical conclusion, reading the
statutes according to Vogt’s interpretation would mean that all regulated defendants exempt from
private suit under the MMPA, per Section 407.020.2(2), would, in fact, not be exempt from
private suit under the MMPA due to Section 407.025. This is because Section 407.025 provides
for a general cause of action under the MMPA, which means that it would apply in the same way
to every type of exempt entity specified by Section 407.020.2(2). This argument makes Section
407.020.2(2) meaningless because it negates this provision’s specific exemption of certain
regulated entities from private suit and instead makes them subject to private suit. Such a
It is also telling that Section 407.025 was passed before Section 407.020.2(2) was amended in
1992 to add the exception for otherwise exempt defendants with the new language: “or such
powers are provided to either the attorney general or a private citizen by statute.” Mo. Rev. Stat.
§ 407.020.2(2). Had the Missouri legislature intended for this 1992 amendment to provide
private citizens with the right to bring MMPA claims against exempt entities through the power
of Section 407.025, it could have specifically referenced “Section 407.025” when adding this
exception under Section 407.020.2(2).
circular argument violates well-accepted principles of statutory construction. Accord Rashaw v.
United Consumers Credit Union, 2011 WL 2110806, at *6 (W.D. Mo. May 26, 2011) (same for
credit unions), affirmed by 685 F.3d 739, 745 (8th Cir. 2012) (“The contention that one provision
of the MMPA completely negates another violates well-accepted principles of statutory
construction.”). Thus, even assuming that Vogt’s and the Court’s interpretations are both
possible, Vogt’s interpretation must be rejected in favor of the interpretation that produces a
reasonable result. The Court’s interpretation produces a reasonable result because it construes
Section 407.020.2(2) as permitting a private citizen to bring suit against an otherwise exempt
entity under that Section if another statute grants private citizens the power to enforce Section
407.020 of the MMPA specifically against that type of exempt entity. The Court interprets
Section 407.025 as granting private citizens the general power to bring claims under the MMPA,
which does not satisfy this condition. Because at present, there is no statute authorizing a private
citizen to bring an MMPA claim against exempt insurance companies like State Farm, Vogt’s
MMPA claim is barred by Section 407.020.2(2).
Other court decisions come to the same conclusion. Of the three Missouri state cases
cited by the parties, two of the three, both of which were decided more recently in 2016, rejected
the argument made by Vogt. In Simon v. Blue Cross & Blue Shield of Kansas City, the Circuit
Court of Jackson County considered the private plaintiff’s argument—like that of Vogt—that
Section 407.025 negated the exemption for the defendant insurance company provided in Section
407.020.2(2). Simon, Case No. 1416-CV12765 (Mo. Cir. Ct. Jan 6, 2016). After analyzing the
statututory provisions by applying their plain meaning, the state circuit court rejected this
argument and dismissed the plaintiff’s MMPA claim against the defendant insurance company as
barred by Section 407.020.2(2). Id. The court further expressed that it “[wa]s persuaded by the
reasoning applied [by the Eighth Circuit] in Rashaw v. United Consumers Credit Union . . . that
any other interpretation would be circular and in violation of the statutory rules of construction.”
Id. A second 2016 case by the same judge came to the same conclusion. See Riley v. JCN Inc.
Auto et al., Case No. 1416-CV22896 (Mo. Cir. Ct. Jan. 6, 2016) (setting aside its September 17,
2015 order denying defendant’s motion for judgment on the pleadings on the issue of whether
the MMPA exemption barred plaintiff’s case against it and instead, dismissing the MMPA claim
with prejudice);8 see also Myers v. Sander, 2014 WL 40901, at *7 (E.D. Mo. Feb. 3, 2014)
(interpreting MMPA and rejecting plaintiff’s argument that § 407.025 overcomes the exemption
in § 407.020.2(2) for title insurance companies).
For the previous reasons, the Court is also not persuaded by Vogt’s reliance on Marra v.
Lititz Mut. Ins. Co., the only state court decision cited that accepted Vogt’s argument. Marra,
Case No. 1116-CV20478 (Mo. Cir. Ct. Mar. 29, 2013). Not only was Marra decided in the same
circuit court several years before Simon and Riley, both of which came to the opposite
conclusion, but the Marra opinion also did not provide any statutory analysis or explanation for
its contrary finding. Instead, the five sentence opinion devoted only one sentence to accepting
the argument that Section 407.025 overcame the defendant’s exempt status in Section
407.020.2(2). Compare Marra, Case No. 1116-CV20478 (Mo. Cir. Ct. Mar. 29, 2013) (finding
“that while § 407.020.2(2) specifically excludes application of the MMPA to any institution,
company, or entity subject to chartering, licensing or regulation by the director of the department
of insurance, Plaintiff’s contention that § 407.025 permits a private cause of action against
regulated industries as an exception to § 407.020.2(2) is valid”) with Simon, Case No. 14168
The Simon court specifically acknowledged the decision in Riley and its later reversal upon
reconsideration, stating: “In reaching this decision, the Court acknowledges the ruling is contrary
to the ruling previously entered in Riley v. JCN Inc. Auto et al., Case No. 1416-CV22896. That
ruling has been revisited and contemporaneously with this Judgment, has been reversed.”
CV12765 (Mo. Cir. Ct. Jan 6, 2016) (dedicating one page to interpreting the statutory provisions
and finding this argument to be circular and in violation of the statute’s plain language).
As a company regulated by the director of insurance, State Farm is exempt from Vogt’s
private claim under the MMPA. Because adding this MMPA claim against State Farm would be
futile, Vogt’s motion for leave to amend his Complaint is denied.
For the previous reasons, Defendant State Farm’s motion to dismiss is granted in part and
denied in part.
State Farm’s motion to dismiss is granted for Vogt’s Count III, conversion.
Dismissal is denied for the remainder of Vogt’s claims.
Plaintiff Vogt’s motion for leave to
amend, Doc. 31, is denied.
/s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: February 3, 2017
Jefferson City, Missouri
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