Insurance Company of the State of Pennsylvania v. Three Square

Filing 55

ORDER Granting Third-Party Defendant Advantage Workers Compensation Insurance Company's 42 Motion to Dismiss. Third-Party Plaintiff Three Square's claims for breach of fiduciary duty and unjust enrichment are Dismissed with prejudice. Signed by Chief Judge Gloria M. Navarro on 10/18/2016. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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INSURANCE COMPANY OF THE STATE
OF PENNSYLVANIA,

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Plaintiff,
vs.

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THREE SQUARE,

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Defendant.

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THREE SQUARE,

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Third-Party Plaintiff,

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vs.
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ADVANTAGE WORKERS
COMPENSATION INSURANCE
COMPANY,
Defendant.

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Case No.: 2:14-cv-00344-GMN-CWH
ORDER

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Pending before the Court is the Motion to Dismiss, (ECF No. 42), filed by Third-Party

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Defendant Advantage Workers Compensation Insurance Company (“Advantage”). Third-Party

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Plaintiff Three Square (“Three Square”) filed a Response, (ECF No. 44), and Advantage filed a

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Reply, (ECF No. 45). For the reasons discussed below, Defendant’s Motion to Dismiss is

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GRANTED.

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I.

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BACKGROUND
The instant dispute arises from Advantage’s alleged refusal to pay benefits on a workers’

compensation claim pursuant to an insurance policy held by Three Square. Three Square is a

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Nevada non-profit corporation. (Third-Party Compl. ¶ 1, ECF No. 33). Advantage, a Utah

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corporation, insured Three Square’s workers’ compensation claims during the relevant time

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period. (Id. ¶ 8).

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The Third-Party Complaint alleges that an extern for Three Square, Michael Riga

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(“Riga”), injured himself on Three Square’s property. (Id. ¶ 9). Three Square alleges that

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Advantage “refused to pay the medical bills associated with [Riga’s] claim and informally

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denied [Riga’s] claim.” (Id. ¶ 11). Further, Three Square alleges that Advantage failed to

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“issue a formal Notice of Workers’ Compensation Denial to [Riga].” (Id. ¶ 12). As a result,

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Three Square alleges that it has been required to defend itself against Plaintiff Insurance

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Company of the State of Pennsylvania, the workers’ compensation carrier for Riga’s employer.

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(Id. ¶¶ 23–24).

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Based on these allegations, Three Square alleges the following causes of action against

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Advantage: (1) breach of contract; (2) breach of the implied duty of good faith and fair dealing;

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(3) breach of fiduciary duty; (4) unjust enrichment; (5) express and/or equitable indemnity; and

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(6) contribution. (Id. ¶¶ 16–54). In the instant Motion, Advantage requests that the Court

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dismiss Three Square’s claims for breach of fiduciary duty and unjust enrichment. (Mot. to

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Dismiss 2:3, ECF No. 42).

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II.

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LEGAL STANDARD
Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon

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which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

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555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on

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which it rests, and although a court must take all factual allegations as true, legal conclusions

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couched as a factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule

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12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements

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of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain

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sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

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face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A

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claim has facial plausibility when the plaintiff pleads factual content that allows the court to

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draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This

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standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

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If the court grants a motion to dismiss for failure to state a claim, leave to amend should

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be granted unless it is clear that the deficiencies of the complaint cannot be cured by

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amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d655, 658 (9th Cir. 1992). Pursuant to

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Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in the

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absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the

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movant, repeated failure to cure deficiencies by amendments previously allowed, undue

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prejudice to the opposing party by virtue of allowance of the amendment, futility of the

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amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).

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III.

DISCUSSION

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A.

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Three Square’s third cause of action alleges that Advantage “acted in a fiduciary and/or

Breach of Fiduciary Duty

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special relationship” with Three Square, and that Advantage’s actions “constitute a breach of

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[that] fiduciary duty.” (Third-Party Compl. ¶ 38, ECF No. 33). Nevada recognizes that a

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“special relationship” exists between an insurer and its insured, and that “an insurer’s duty to its

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policyholder is . . . ‘akin’ to a fiduciary relationship.” Powers v. United Servs. Auto. Ass’n, 114

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Nev. 690, 700 (Nev. 1998), opinion modified on denial of reh’g, 115 Nev. 38 (1999).

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Nonetheless, the Nevada Supreme Court in Powers declined to “adopt[ ] a new cause of action”

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for breach of fiduciary duty in the insurance context and instead “merely recogniz[ed] that

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breach of the fiduciary nature of the insurer-insured relationship is part of the duty of good faith

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and fair dealing.” Id. at 701–02. Both factually and legally, Three Square’s third cause of

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action is therefore duplicative of its second cause of action and is DISMISSED with prejudice.

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B.

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Next, Three Square’s Third-Party Complaint alleges that Advantage issued an insurance

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policy to Three Square, the “Agreement,” that “was in effect during the time that [Riga] was an

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extern with [Three Square].” (Third Party Compl. ¶ 8). In Nevada, “[a]n action based on a

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theory of unjust enrichment is not available when there is an express, written contract, because

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no agreement can be implied when there is an express agreement.” Leasepartners Corp. v.

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Robert L. Brooks Trust Dated Nov. 12, 1975, 113 Nev. 747, 755 (Nev. 1997). “The doctrine of

Unjust Enrichment

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unjust enrichment or recovery in quasi contract applies to situations where there is no legal

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contract but where the person sought to be charged is in possession of money or property which

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in good conscience and justice he should not retain but should deliver to another [or should pay

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for].” Id. at 756. Because an express, legal contract—the insurance policy—applies to this

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case, the Court grants Advantage’s Motion to Dismiss Three Square’s unjust enrichment claim.

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The Court therefore DISMISSES Three Square’s fourth cause of action with prejudice.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Advantage’s Motion to Dismiss, (ECF No. 42), is

GRANTED.
IT IS FURTHER ORDERED that Three Square’s claims for breach of fiduciary duty

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and unjust enrichment are DISMISSED with prejudice.

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DATED this _____ day of October, 2016.

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___________________________________

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Gloria M. Navarro, Chief Judge
United States District Judge

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