Erbe v. AAA Fire & Casualty Insurance Company et al
OPINION AND ORDER by Judge Terence Kern ; setting/resetting deadline(s)/hearing(s): ( Miscellaneous Deadline set for 2/13/2017, Status Report due by 2/16/2017); granting in part and denying in part 10 Motion to Dismiss (lmc, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
AAA FIRE & CASUALTY INSURANCE
COMPANY; CSAA FIRE & CASUALTY
INSURANCE COMPANY; and ACA
) Case No. 16-CV-596-TCK-PJC
OPINION AND ORDER
Before the Court is Defendant CSAA Fire & Casualty Insurance Company’s Motion to
Dismiss (Doc. 10). For reasons explained below, the motion is granted in part. Plaintiff is permitted
to file an Amended Complaint no later than five days from the date of this Order.
In the Joint Status Report, Defendant CSAA Fire & Casualty Insurance Company asserts that
it is the real party in interest and that the case caption should read: CSAA Fire & Casualty Insurance
Company, f/k/a ACA Insurance Company, d/b/a AAA Fire & Casualty Insurance Company.
Plaintiff does not object to this correction. Accordingly, the Court concludes there is only one
proper Defendant with the name CSAA Fire & Casualty Company, f/k/a ACA Insurance Company,
d/b/a AAA Fire & Casualty Insurance Company (“CSAA”). In his Amended Complaint, Plaintiff
shall amend the case caption accordingly.
Plaintiff entered into a contract with CSAA providing homeowners coverage as described
in policy # H03-003100899 (“Policy”). On January 7, 2014, a pipe in Plaintiff’s upstairs bathroom
exploded and caused a sudden discharge of water into the home, resulting in flooding and property
damage. Plaintiff submitted a claim, which CSAA partially paid.
On August 19, 2016, Plaintiff filed a Petition in state court against CSAA, asserting claims
for breach of contract and breach of the duty of good faith and fair dealing owed to insureds (“bad
faith”). In addition to underpaying amounts owed, CSAA allegedly (1) purposefully, wrongfully,
and repeatedly withheld benefits in violation of the Oklahoma Unfair Claims Settlement Practices
Act (“UCSPA”); (2) failed to communicate all coverages and benefits applicable to the claim; (3)
failed to reasonably and promptly investigate the claim; (4) failed to reasonably and promptly
communicate to Plaintiff the results of any investigation; and (5) forced Plaintiff to retain counsel
to recover benefits. (Compl. ¶ 19.)
Rule 12(b)(6) Standard
In considering a motion to dismiss under Rule 12(b)(6), a court must determine whether a
plaintiff has stated a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to
dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its
face.” Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (internal quotation marks omitted). “[T]he mere
metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded
claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a
reasonable likelihood of mustering factual support for these claims.” Id. (emphasis in original). The
Tenth Circuit has interpreted “plausible,” as used by the United States Supreme Court in Twombly,
to “refer to the scope of the allegations in a complaint” rather than to mean “likely to be true.”
Robbins v. Okla., ex rel. Dep’t of Human Servs., 519 F.3d 1242, 1247 (10th Cir. 2008). “The
allegations must be enough that, if assumed to be true, the plaintiff plausibly (not just speculatively)
has a claim for relief.” Id.
Breach of Contract
CSAA argues the contract claim is untimely based on the following “Suit Against Us” clause
in the Policy: “No action can be brought against us unless there has been full compliance with all
of the terms under Section I of this policy and the action is started within two years after the date
of loss.” (Ex. 1 to Def.’s Mot. to Dismiss.) Plaintiff admits he filed suit more than two years
following January 7, 2014. He contends, however, that CSAA cannot raise this defense because
CSAA failed to comply with Oklahoma law requiring an insurer to provide notice of the contractual
Insurers cannot continue or delay negotiations for settlement of a claim directly with the
claimant who is neither an attorney nor represented by an attorney, for a length of time
which causes a claimant’s right to be affected by a statute limitations, or a policy or contract
time limit, without giving the claimant written notice that the time limit is expiring and may
affect the claimant’s rights. Such notice shall be given to first party claimants thirty (30)
days, and to third-party claimants sixty (60) days, for the date on which such time limit may
Okla. Stat. tit. 36, § 1250.7(E). In reply, CSAA impliedly admits such a failure can negate its
contractual limitations defense but argues Plaintiff failed to allege adequate facts showing that
CSAA continued or delayed settlement negotiations.
For purposes of this motion, the Court assumes without deciding that a violation of §
1250.7(E) can prevent an insurer from raising a contractual limitations defense. The Court rejects
CSAA’s argument that Plaintiff failed to plead conduct by CSAA that could plausibly violate the
notice statute. Plaintiff alleges CSAA purposefully and repeatedly withheld benefits, in violation
of title 36, sections 1250.1-1250.16 of the Oklahoma statutes. (Compl. ¶ 19(c).) This factual
allegations sweeps in conduct that could trigger § 1250.7(E)’s notice requirement. Therefore, the
Court rejects CSAA’s timeliness argument at this stage of the proceedings.
CSAA also urges dismissal based on Plaintiff’s failure to allege a specific amount of
contract-based damages. CSAA argues that an Plaintiff must plead the amount he received from the
insurer and the amount he is still owed in order to state a claim.
Federal pleading standards do not require an insured to plead a precise damage amount in
order to state a claim for breach of an insurance contract. At the pleading stage, an insured has not
conducted discovery and may not know the full extent of his property damages, personal injuries,
or other damage without the benefit of expert or other testimony. Damages on this type of contract
are not always capable of precise calculation at the outset of litigation. It is sufficient that Plaintiff
alleged facts supporting a plausible claim that CSAA underpaid his claim in an unspecified amount.
Breach of Duty of Good Faith and Fair Dealing
CSAA argues Plaintiff failed to allege any non-conclusory facts in support of his bad-faith
claim. The Court agrees. Plaintiff’s Complaint contains only conclusory allegations and does not
allege any specific facts supporting a finding of unreasonable conduct by CSAA. See Scheffler v.
Am. Republic Ins. Co., No. 11-CV-0760-CVE-TLW, 2012 WL 602187, at *3 (N.D. Okla. Feb. 23,
2012) (dismissing bad-faith claim supported solely by laundry list of conclusory allegations). As
explained by Judge Eagan, a plaintiff will generally have “knowledge of certain details” that can
satisfy the plausibility requirement, even without access to the insurance claim file. See id.
(providing examples of such details and permitting amendment). Although these facts need not be
detailed or numerous, they must be enough to state a plausible claim of unreasonable conduct
beyond merely breaching the contract.
In his response brief, Plaintiff explains some of the factual details supporting his bad faith
In the case at bar, Plaintiff’s home suffered damage in a major water loss that
flooded two stories of his residence. Mr. Erbe timely filed a claim under his
homeowner’s policy. CSAA took an unnecessarily large amount of time to respond
to Mr. Erbe, causing additional damage to his residence and only partially paying
portions of his claim, without any explanation. The answer to CSAA’s refusal to pay
is (should be) within its claim file.
(Pl.’s Resp. to Mot. to Dismiss 9.) Although arguments in a response brief cannot cure a defective
pleading, see Bus. Loan Ctr., LLC v. Driskill Indus., Inc., No. CIV-07-1314-HE, 2008 WL 2704390,
at *1 (W.D. Okla. July 3, 2008), Plaintiff’s arguments indicate that his pleading deficiencies can be
easily cured. CSAA causing delays that resulted in additional damage and failing to explain denials
of coverage could, depending on the circumstances, support a finding of unreasonable conduct.
Accordingly, the Court will permit Plaintiff to amend his bad-faith claim. Plaintiff need not include
facts in the sole possession of CSAA but must include facts within his personal knowledge
supporting a plausible bad-faith claim.
Plaintiff mentions violations of the UCSPA in support of its bad-faith claim. In its motion
to dismiss, CSAA argues: (1) the UCSPA does not create a private right of action, and (2) the
UCSPA does not set the standard by which a bad-faith claim is judged. Plaintiff does not dispute
either point, and the Court finds no need to address these arguments at this time.
CSAA Fire & Casualty Insurance Company’s Motion to Dismiss (Doc. 10) is DENIED as
to Plaintiff’s breach of contract claim. It is GRANTED as to Plaintiff’s bad-faith claim. Plaintiff
may file an Amended Complaint with respect to the bad-faith claim no later than five days from the
date of this Order.
The parties are ordered to file a Joint Status Report no later than ten days from the date of
SO ORDERED this 6th day of February, 2017.
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