SAB One Inc v. Travelers Indemnity Company of Connecticut The et al
Filing
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ORDER granting in part, stricken in part, denying in part 8 The Travelers Indemnity Company of Connecticut and Dale Michael Kuck's Motion to Dismiss. Signed by Honorable Robin J. Cauthron on 11/19/14. (lg)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
SAB ONE, INC.,
Plaintiff,
vs.
THE TRAVELERS INDEMNITY
COMPANY OF CONNECTICUT;
DALE MICHAEL KUCK; and
METZLER BROS INSURANCE,
Defendants.
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Case Number CIV-14-1094-C
MEMORANDUM OPINION AND ORDER
Plaintiff owns commercial property which is insured by Defendant The Travelers
Indemnity Company (“Travelers”). Plaintiff’s property was damaged by a storm on April
17, 2013, and Plaintiff turned to Defendant Travelers for insurance coverage to address the
storm damage. Dissatisfied with the manner in which Defendant Travelers adjusted the
claim, Plaintiff filed the present action in state court. In bringing its claim, Plaintiff added
as a defendant Travelers’ adjuster, Dale Michael Kuck, and the independent insurance
agency, Metzler Bros Insurance, who had assisted Plaintiff in obtaining its insurance policy.
Against these Defendants, Plaintiff brought claims for (1) breach of contract, (2) bad faith,
(3) breach of fiduciary duty, (4) negligence in procurement of insurance, (5) constructive
fraud and negligent misrepresentation, (6) negligent underwriting, (7) violation of the
Oklahoma Consumer Protection Act, and (8) breach of the common law duty of good faith
and fair dealing. Defendants removed the case to this Court and Defendants Travelers and
Kuck filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6), seeking dismissal of
parts of Plaintiff’s case. During the pendency of the Motion to Dismiss, Plaintiff and
Defendants filed a stipulation of dismissal, dismissing Plaintiff’s claims against Defendants
Dale Michael Kuck and Metzler Bros Insurance. The impact of that stipulation of dismissal
on Plaintiff’s claims will be discussed further herein.
Count one of Plaintiff’s state court Petition alleged a breach of contract claim against
Defendant Travelers. Within that cause of action, however, Plaintiff also alleged that
Travelers’ conduct warranted the imposition of punitive damages. Defendant Travelers now
seeks dismissal of count one to the extent it requests punitive damages, arguing that
Oklahoma law does not permit an award of punitive damages for breach of contract.
Plaintiff’s response is unhelpful. Rather than offering an argument in support of
bringing a punitive damages claim on a breach of contract cause, Plaintiff argues that its
claim for punitive damages is insufficient to support or demonstrate the requisite amount in
controversy necessary for diversity jurisdiction. However, no party has challenged whether
or not the requisite amount in controversy for jurisdiction is present in this case. Indeed, as
Defendant Travelers notes, the substance of Plaintiff’s breach of contract claim, as well as
demand letters by Plaintiff, demonstrate the amount in controversy substantially exceeds the
jurisdictional prerequisite set forth in 28 U.S.C. § 1332. Thus, it is entirely unclear what
purpose Plaintiff’s response serves.
Regardless, after consideration of the arguments and the allegations in Plaintiff’s state
court Petition, the Court finds that the punitive damages claim in count one should be
dismissed. As Defendant Travelers correctly notes, Oklahoma law does not support a claim
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for punitive damages premised on a claim for breach of contract. See Wilspec Techs., Inc.,
2009 OK 12, ¶17, 204 P.3d P.3d 69, 74. Accordingly, Defendant Travelers’ Motion to
Dismiss Plaintiff’s claim for punitive damages in count one will be granted.
Next comes Plaintiff’s bad faith claim against Defendant Kuck. As noted above, the
claims against Defendant Kuck have been dismissed; therefore Defendant Kuck’s request for
dismissal is stricken as moot.
Defendant Travelers argues Plaintiff’s claim for breach of fiduciary duty should be
dismissed, as Oklahoma law does not recognize the existence of a fiduciary duty between an
insured and insurer. In support of its motion, Defendant Travelers directs the Court to
Cosper v. Farmers Insurance Co., 2013 OK CIV APP 78, 309 P.3d 147. Plaintiff argues that
Cosper is not as broad as suggested by Defendant Travelers and should be narrowly
construed. According to Plaintiff, Oklahoma law permits fiduciary relationships to arise any
time the facts and circumstances surrounding a relationship would allow a reasonably
prudent person to repose confidence in another person. Quinlan v. Koch Oil Co., 25 F.3d
936, 942 (10th Cir. 1994).
As Defendant Travelers notes, the allegations brought by
Plaintiff in this case and those by the plaintiff in Cosper are indistinguishable. In rejecting
the claim for fiduciary duty by the plaintiff in Cosper, the Oklahoma Court of Civil Appeals
recognized “‘[t]here are no Oklahoma cases holding that an insurance agent owes a fiduciary
duty to a prospective insured, or to an established customer with respect to procurement of
an additional policy’” (quoting Swickey v. Silvey Cos., 1999 OK CIV APP 48, ¶ 12, 979
P.2d 266, 269). Further, in Silver v. Slusher, 1988 OK 53, ¶ 7, n.11, 770 P.2d 878, 882, n.11,
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the Oklahoma Supreme Court recognized that the relationship between the insured and
insurer was arm’s length, and they did not stand in any recognized form of “special
relationship.” In light of these clear statements from Oklahoma courts, the Court finds that
Oklahoma would not recognize a claim for breach of fiduciary duty under the circumstances
present here. Consequently, Defendant Travelers’ request for dismissal will be granted.
Plaintiff’s claims for negligent procurement of insurance, constructive fraud, negligent
misrepresentation, and negligent underwriting are all dismissed by virtue of Plaintiff’s
stipulation of dismissal. Therefore, Defendant Travelers’ Motion to Dismiss as to these
claims will be stricken as moot.
Defendant Travelers next challenges Plaintiff’s claim for violations of the Oklahoma
Consumer Protection Act (“OCPA”). According to Defendant Travelers, a provision of the
Act, specifically 15 Okla. Stat. § 754(2) (“Actions or transactions regulated under laws
administered by the Corporation Commission or any other regulatory body or officer acting
under statutory authority of this state or the United States, . . .”) exempts any claim here, as
Defendant Travelers is regulated by the Oklahoma Department of Insurance.
In response, Plaintiff does not dispute that Defendant Travelers is regulated by the
Department of Insurance; however, it argues that the specific actions or transactions
challenged here, such as accepting insurance premiums and refusing to pay benefits, offering
a product that provides illusory coverage, or other actions related to the adjustment of
Plaintiff’s claim, are not subject to regulation by the Department of Insurance.
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Contrary to Plaintiff’s arguments, the Oklahoma Department of Insurance does
regulate the very types of claims at issue here: the sale of property insurance and adjustment
activities related to that insurance. Therefore, the exception to the OCPA noted above would
exclude Plaintiff’s claim under that Act. Therefore, Defendant Travelers’ Motion to Dismiss
will be granted on this issue.
Finally, Defendant Travelers challenges as repetitive counts two and eight of
Plaintiff’s state court Petition. According to Defendant Travelers, both counts raise a claim
for breach of the implied covenant of good faith and fair dealing and since Plaintiff is only
entitled to recover one time for that theory, to have the same tort stated twice in the Petition
is redundant and one should be dismissed.
After review of Plaintiff’s state court Petition, the Court agrees that the allegations
raised by Plaintiff in its second cause of action, asserting a claim for bad faith, and its eighth
cause of action, asserting a claim for breach of the common law duty of good faith and fair
dealing, both raise claims under the common law doctrine generally recognized as a claim
for bad faith. Thus, while Defendant Travelers is correct that the claims are redundant, the
Court finds dismissal inappropriate. Both claims fairly state a claim for relief under
Oklahoma law. Certainly, Plaintiff will be entitled to but one recovery for this tort. Thus,
the redundancy causes no harm.
For the reasons set forth herein, The Travelers Indemnity Company of Connecticut
and Dale Michael Kuck’s Motion to Dismiss (Dkt. No. 8) is GRANTED IN PART,
STRICKEN IN PART, and DENIED IN PART.
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IT IS SO ORDERED this 19th day of November, 2014.
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