Browder et al v. State Farm Insurance

Filing 46

ORDER denying 31 Motion for Reconsideration of the 28 Order. Signed by District Judge Max O. Cogburn, Jr. on 4/28/2021. (maf)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
1:20-cv-00026-MOC-WCM
DAVID and LUCILLE BROWDER,

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Plaintiffs,
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vs.
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STATE FARM FIRE AND CASUALTY )
COMPANY,
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Defendant.
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___________________________________ )

ORDER

This matter is before the Court on Defendant’s Motion for Reconsideration, filed
pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. (Doc. No. 31). On December
28, 2020, this Court denied Defendant’s motion for a Judgment on the Pleadings under Federal
Rules of Civil Procedure 12(c) seeking judgment on Plaintiffs’ claims for bad faith, punitive
damages, and unfair and deceptive trade practices. (Doc. Nos. 24, 25). Defendant seeks
reconsideration of the Court’s Order on Plaintiff’s bad faith and punitive damages claims on
grounds that the decision rests upon an error of apprehension of the law governing claims for bad
faith and resulting punitive damages. (Doc. No. 32 at 2).
The Court denies the motion because the Court did not misapprehend the law and simply
denied dismissal of Plaintiff’s claims under the lenient standards of Rule 12(c) motions. As
Defendant notes, the Court cited the correct North Carolina requirements for stating a claim for
bad faith, namely that a complainant must establish there was “1) refusal to pay after recognition
of a valid claim; 2) bad faith; and 3) aggravating or outrageous conduct.” (Doc. No. 28 at 5
(citing Blis Day Spa, LLC v. Hartford Ins. Grp., 427 F. Supp. 2d 621, 631 (W.D.N.C. 2006)

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(internal quotations omitted)). At this early stage without any discovery, it is unclear whether
Plaintiffs would be able to put forth evidence that shows that there was a recognition of a valid
claim and refusal to pay. At this time, Plaintiffs have made several allegations tending to show
that Defendant was acting as if the claim was valid before then deciding to entirely deny the
claim.
Thirdly, North Carolina precedent seems to allow for an alternative means of bringing a
bad faith claim. In addition to bringing a bad faith claim that satisfies the three elements noted
above, claims for bad faith and punitive damages in North Carolina may also be maintained in
breach of contract actions (such as a breach of an insurance contract) when an identifiable tort,
such as bad faith refusal to settle, accompanies a breach of contract that was accomplished by
some element of aggravation. See Dailey v. Integon Gen. Ins. Corp., 75 N.C. App. 387, 396
(1985) (citing Newton v. Standard Fire Ins. Co., 291 N.C. 105, 111, 112 (1976)). Plaintiffs in
this case have alleged facts that may meet this standard for bad faith and punitive damages. At
this early stage, the Court cannot take Defendant’s own claims of good faith as a given. That
proposition must be examined in discovery and either confirmed or refuted at summary judgment
or trial.
Finally, the Court wants to be clear that it is not holding Defendant liable as acting in bad
faith. The burden of proving bad faith lies entirely with Plaintiffs. If after discovery, or even
some measure of discovery, it becomes clear that the elements of bad faith and punitive damages
cannot be met by Plaintiffs, then Defendant is welcome to submit a motion for summary
judgment on those claims at that time.
ORDER
IT IS, THEREFORE, ORDERED that:

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(1) Defendant’s Motion for Reconsideration (Doc. No. 31), is DENIED.

Signed: April 28, 2021

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