Hightower et al v. USAA Casualty Insurance Co. et al

Filing 19

OPINION AND ORDER by Judge John E Dowdell ; terminating party Thomas A Fulton (Independent Appraiser) ; granting 9 Motion to Dismiss Party; granting 10 Motion to Dismiss for Failure to State a Claim (lml, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
(1) LANCE W. HIGHTOWER and
(2) SUE I. HIGHTOWER,
Plaintiffs,
v.
(1) USAA CASUALTY INSURANCE
CO., and
(2) THOMAS A. FULTON,
Independent Appraiser,
Defendants.

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Case No. 16-CV-274-JED-FHM

OPINION AND ORDER
Before the Court are defendant Thomas A. Fulton’s Motion to Dismiss and Brief in
Support (Doc. 9) and defendant USAA Casualty Insurance Company’s Partial Motion to Dismiss
and Brief in Support (Doc. 10). Plaintiffs have opposed both motions. (Docs. 15, 16).
I.

Background
Plaintiffs purchased a home insurance policy underwritten by defendant USAA Casualty

Insurance Co. (“USAA CIC”). Plaintiffs allege that they promptly submitted a claim under the
policy after their home incurred wind and roof damage in October 2015. USAA CIC retained
defendant Thomas Fulton to inspect and appraise plaintiffs’ home to evaluate the damage. (Doc.
2, Exh. 3 at 18-25).
Plaintiffs filed this lawsuit in the Tulsa County District Court on April 12, 2016. (Doc. 2,
Exh. 2). Plaintiffs’ Amended Petition alleges claims of bad faith, breach of contract, and
intentional infliction of emotional distress against defendant USAA CIC and a claim of
negligence against defendant Fulton, due to USAA CIC’s alleged refusal to pay plaintiffs the
“proper amount.” (Doc. 2, Exh. 3 at 18-25). Plaintiffs’ Amended Petition attaches as an exhibit

the affidavit of their expert, Mark Pollack, a licensed insurance adjuster. (Id. at 25). Defendants
timely removed the action to this Court on May 16, 2016. (Doc. 2).
II.

Legal Standard
In considering a Rule 12(b)(6) dismissal motion, a court must determine whether the

plaintiff has stated a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). The
Federal Rules of Civil Procedure require “a short and plain statement of the claim to show that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The complaint must provide “more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The standard does “not require a
heightened fact pleading of specifics, but only enough facts to state a claim to relief that is
plausible on its face,” and the factual allegations “must be enough to raise a right to relief above
the speculative level.” Id. at 555-56, 570 (citations omitted). The Twombly pleading standard is
applicable to all civil actions. See Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009). For the purpose
of making the dismissal determination, a court must accept all the well-pleaded factual
allegations of the complaint as true, even if doubtful, and must construe the allegations in the
light most favorable to the plaintiff. See Twombly, 550 U.S. at 555; Alvarado v. KOB–TV,
L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007).
III.

Discussion
A. Defendant Thomas A. Fulton’s Motion to Dismiss and Brief in Support (Doc. 9)
Plaintiffs have asserted one negligence claim against defendant Fulton.

Plaintiffs’

Amended Petition alleges that defendant Fulton was “negligent in that he departed from the
professionally expected standards of care when he deliberately falsified his final findings to

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report that the roof damage to Plaintiffs’ home, although clearly caused by the wind, was
somehow a result of a pre-existing condition to the home.” (Doc. 2, Exh. 3, at ¶ 36).
Defendant Fulton’s Motion argues that plaintiffs have failed to state a negligence claim
against him under Fed. R. Civ. P. 12(b)(6) because Oklahoma law does not recognize claims of
negligence against independent insurance adjusters, as set forth in Trinity Baptist Church v.
Brotherhood Mutual Insurance Services, LLC, 341 P.3d 75 (Okla. 2014). (Doc. 9 at 3-4). In
response, plaintiffs assert that Trinity Baptist does not foreclose their negligence claim because
their Amended Petition alleges that defendant Fulton is an insurance appraiser, not an insurance
adjuster. (Doc. 17 at 2-3). Plaintiffs further challenge the Court’s subject-matter jurisdiction
over this case, on the ground that there is no diversity of jurisdiction because a negligence claim
may be brought against defendant Fulton.1 (Id. at 3). In his Reply, defendant Fulton contends
that his Motion should be granted because the reasoning set forth in Trinity Baptist applies
regardless of his status as an insurance adjuster or an insurance appraiser. (Doc. 17 at 1-2). In
the alternative, defendant Fulton argues that plaintiffs’ Amended Complaint falsely alleges that
he is an “independent appraiser” instead of an “independent adjuster.” (Id. at 4-5).
The Court concludes that plaintiffs may not assert a negligence claim against defendant
Fulton based on the reasoning set forth in Trinity Baptist. There, the Oklahoma Supreme Court
adopted the majority view that “an insured cannot maintain a separate tort action for negligence
against an independent insurance adjuster hired by the insurer because the independent adjuster
owes the insured no duty of care.” Trinity Baptist, 341 P.3d at 83. From a policy standpoint, the
court reasoned that “it makes little sense to hold that the adjuster has an independent duty when
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There appears to be no dispute that defendant Fulton is an Oklahoma resident. Defendants’
Notice of Removal asserts that diversity of citizenship should be assessed solely between
plaintiffs and defendant USAA CIC because defendant Fulton was fraudulently joined. (Doc. 2
at 3-4).
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the insurer itself is subject to liability for the adjuster’s mishandling of claims in actions alleging
breach of contract and bad faith.” Id. at 86. The court cautioned that imposing a legal duty upon
an independent adjuster could potentially allow a plaintiff “double recovery,” i.e., recovery from
both the adjuster and the insurance company on the basis of the adjuster’s conduct. Id.
At the outset, the Court notes that plaintiffs’ assertion that defendant Fulton is not an
insurance adjuster is inconsistent with the affidavit of plaintiffs’ expert, which states that
defendant Fulton was defendant USAA CIC’s “appraiser/adjuster.”2 Nonetheless, the Court
agrees with defendant Fulton that it is irrelevant whether he is an insurance appraiser or an
insurance adjuster because the reasoning in Trinity Baptist, although it pertained to an
independent insurance adjuster, is broadly worded and the same policy concerns are applicable
here. Specifically, given the existence of USAA CIC’s legal duty to plaintiffs, it would be
fundamentally unfair to permit plaintiffs to potentially recover from both defendants USAA CIC
and Fulton for defendant Fulton’s allegedly negligent conduct. See Trinity Baptist, 341 P.3d at
86.
The Court’s conclusion is further supported by the fact that the adjuster in Trinity Baptist
and defendant Fulton functioned in essentially identical capacities. Both were third parties
retained by insurance companies to assist in the evaluation of an insured’s claim. Both were also
sued for their conduct in handling the insurance claim. Specifically, the plaintiff in Trinity
Baptist alleged the adjuster’s “handling and investigation” of the insurance claim was negligent.
Id. at 78. In this case, plaintiffs allege that defendant Fulton was negligent in his evaluation and
reporting of their insurance claim. Thus, the reasoning supporting the Oklahoma Supreme
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The affidavit was submitted as an exhibit to plaintiffs’ Amended Petition. (Doc. 2, Exh. 3, at
25). The Court may look to the affidavit because “[a] written document that is attached to the
complaint as an exhibit is considered part of the complaint and may be considered in a Rule
12(b)(6) dismissal.” Hall v. Bellmon, 935 F.2d 1106, 1112 (10th Cir. 1991).
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Court’s conclusion in Trinity Baptist applies with equal force to this case.3 Accordingly, the
Court finds that it would be inconsistent with Oklahoma law to impose a duty of care on
defendant Fulton.
Plaintiffs have thus failed to allege a cognizable claim of negligence against defendant
Fulton. Defendant Thomas A. Fulton’s Motion to Dismiss and Brief in Support (Doc. 9) is
hereby granted and Thomas Fulton is dismissed as a party in this matter. Given the Court’s
ruling, plaintiffs’ challenge to this Court’s subject-matter jurisdiction is no longer at issue.
B. Defendant USAA Casualty Insurance Company’s Partial Motion to Dismiss and
Brief in Support (Doc. 10)
USAA CIC’s Motion seeks dismissal of plaintiffs’ claims of bad faith and intentional
infliction of emotional distress pursuant to Fed. R. Civ. P. 12(b)(6).

Specifically, USAA CIC

argues that plaintiffs’ “generic allegations” fail to satisfy the pleading standard articulated by
Twombly and Iqbal. Plaintiffs’ Response challenges the Court’s subject-matter jurisdiction of
the case because there is no diversity of citizenship, and also argues that the Amended Petition
satisfies the dismissal standard. (Doc. 16 at 1).
As an initial matter, the Court previously rejected plaintiffs’ argument regarding subject
matter jurisdiction given the Court’s dismissal of Thomas Fulton as a defendant in this case.

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The Court’s conclusion is consistent with Wallace v. Allstate Ins. Co., 2012 WL 2060664
(W.D. Okla. June 7, 2012), a pre-Trinity Baptist decision concluding that “the Oklahoma
Supreme Court would follow the majority view and not impose a duty on independent insurance
adjusters that would subject them to negligence actions by insureds as the result of an allegedly
mishandled claim.” Id. at *1. The Oklahoma Supreme Court later agreed with the outcome in
Wallace. Trinity Baptist, 341 P.3d at 85 (“[T]he Wallace court is correct that public policy and
other factors besides foreseeability counsel against imposing a legal duty to the insured with
regards to negligence.”).
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Thus, the Court will evaluate plaintiffs’ claims of bad faith and intentional infliction of
emotional distress under the Fed. R. Civ. P. 12(b)(6) standard.
1. Bad faith
A prima facie case against an insurance company for a bad faith delay in payment
requires plaintiffs to establish the following:
(1) [The] claimant was entitled to coverage under the insurance
policy at issue; (2) the insurer had no reasonable basis for delaying
payment; (3) the insurer did not deal fairly and in good faith with
the claimant; and (4) the insurer’s violation of its duty of good
faith and fair dealing was the direct cause of the claimant’s injury.
The absence of any one of these elements defeats a bad faith claim.
Beers v. Hillory, 241 P.3d 285, 292 (Okla. Ct. Civ. App. 2010) (internal citations omitted).
Plaintiffs allege that USAA CIC’s conduct amounts to bad faith because it “unreasonably
delayed in investigating and processing the claim, without just cause, unduly and unreasonably
failed to settle and pay in full a valid claim under the policy.” (Doc. 2, Exh. 3, ¶ 18). Plaintiffs
further assert that USAA CIC’s “failure to pay and/or refusal to pay had no reasonable basis
and/or the amount offered to Plaintiffs was unreasonably low,” and that defendant “did not deal
fairly and in good faith with Plaintiffs.” (Id., ¶¶ 19-20).

These allegations are largely a

recitation of the elements required for a bad faith insurance claim. The Court can find no fact
alleged by plaintiffs other than defendant USAA CIC’s failure to pay the full amount to which
they allege they were entitled. Under Twombly and Iqbal, these allegations are insufficient to
state a plausible claim for relief under the standard.
Plaintiffs’ conclusory allegations are similar to those alleged in Scheffler v. Am. Republic
Ins. Co., 2012 WL 602187 (N.D. Okla. Feb. 23, 2012), where this Court determined that the
plaintiff’s bad faith insurance claim failed to satisfy the heightened pleading standard. This
Court likewise noted the absence of any facts aside from the insurance company’s alleged failure
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to pay proceeds under the policy. The Court reasoned that the plaintiff “should at least have
knowledge of certain details that she could properly plead to satisfy the plausibility
requirement,” such as the date the claim was filed, the information sent to the insurance company
in support of the claim, the communications that took place with the insurance company, the
basis for the insurance company’s decision, and why the plaintiff believed the basis to be
unreasonable. Id. at *3. The same facts, which the plaintiffs in this case presumably should
have knowledge about, are also absent from their Amended Petition. Although plaintiffs contend
that they, unlike the plaintiff in Scheffler, have “gone to some length to articulate why it is that
USAA’s conduct is unreasonable under the circumstances” (Doc. 16 at 9), plaintiffs neglect to
identify any such purported allegations.

It is thus clear that plaintiffs have failed to state a

plausible bad faith insurance claim.
2. Intentional infliction of emotional distress
Oklahoma law requires a plaintiff’s intentional infliction of emotional distress claim to
allege conduct by the defendant that “has been so outrageous in character, and so extreme in
degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and
utterly intolerable in a civilized community.” Breeden v. League Servs. Corp., 575 P.2d 1374,
1377-78 (Okla. 1978) (quoting Restatement (Second) of Torts, § 46, cmt. d). The plaintiff must
also demonstrate that he suffered distress “of such character that ‘no reasonable person could be
expected to endure it.’” Zeran v. Diamond Broad., Inc., 203 F.3d 714, 721 (10th Cir. 2000)
(quoting Daemi v. Church’s Fried Chicken, Inc., 931 F.2d 1379, 1389 (10th Cir. 1991)).
Plaintiffs have alleged the following with respect to their intentional infliction of
emotional distress claim: that defendant USAA CIC’s conduct “was so extreme and outrageous
as to go beyond all possible bounds of decency and would be considered utterly intolerable in a

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civilized society,” and that USAA CIC “intentionally and/or recklessly caused severe emotional
distress to Plaintiff beyond which a reasonable person expected to endure.” (Doc. 2, Exh. 3, ¶¶
27-28).

Alternatively, plaintiffs allege that defendant USAA CIC’s bad faith caused them

“emotional distress.” (Id., ¶ 29).
Plaintiffs’ allegations are merely a formulaic recitation of the elements required for a
claim of intentional infliction of emotional distress, and cannot defeat dismissal. First, plaintiffs
have failed to allege any particular conduct on USAA CIC’s part that was utterly intolerable or
beyond the bounds of decency. Put simply, plaintiffs’ claim that USAA CIC failed to pay them
the full amount under their insurance policy does not rise to the level of extreme conduct
required under Oklahoma law. Second, plaintiffs have not set forth any details regarding their
mental or emotional state as a result of USAA CIC’s conduct. As a result, the Court is unable to
conclude that there are sufficient facts showing that plaintiffs’ distress was so severe such that no
reasonable person could be expected to endure it. Consequently, the Court finds that plaintiffs
have also failed to allege facts to support the necessary elements of an intentional infliction of
emotional distress claim. Moreover, where “a plaintiff bases his claim for intentional infliction
of emotional distress upon the same allegations as his failed claim for bad faith, the claim fails as
a matter of law.” Robbins Motorsports, L.L.C. v. Nat’l Fire & Marine Ins. Co., 2011 WL
2174911, at *4 (E.D. Okla. June 3, 2011) (dismissing plaintiff’s intentional infliction of
emotional distress claim against insurance company).
Defendant USAA Casualty Insurance Company’s Partial Motion to Dismiss and Brief in
Support (Doc. 10) is thus granted.

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IV.

Conclusion
For the reasons stated herein, defendant Thomas A. Fulton’s Motion to Dismiss and Brief

in Support (Doc. 9) and defendant USAA Casualty Insurance Company’s Partial Motion to
Dismiss and Brief in Support (Doc. 10) are granted.
SO ORDERED this 7th day of April, 2017.

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