American National Property and Casualty Company v. Stutte et al

Filing 13

RESPONSE in Opposition re 10 MOTION to Dismiss TCPA Allegations filed by Carol Ann Stutte, Laura Jean Stutte. (Alliman, Peter)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE

AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY,
Plaintiff, Counter-Defendant,
v.
CAROL ANN STUTTE; LAURA JEAN
STUTTE,
Defendants, Counter-Plaintiffs,
and
CHASE HOME FINANCE, LLC,
Defendant.

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CIVIL ACTION
NO. 3:11-CV-219

MEMORANDUM IN OPPOSITION TO ANPAC’S MOTION TO DISMISS
COUNT THREE OF THE STUTTES’ COUNTERCLAIM
Defendants and Counter-Plaintiffs, Carol Ann Stutte and Laura Jean Stutte (collectively,
the “Stuttes”), by and through counsel, submit this Memorandum in Opposition to Plaintiff and
Counter-Defendant American National Property and Casualty Company’s (“ANPAC’s”) Motion
to Dismiss Count Three of the Stuttes’ Counterclaim. Contrary to ANPAC’s contention in its
motion, Count Three does not rest on the allegation that ANPAC violated the Tennessee
Consumer Protection Act (“TCPA”) by a simple denial of the Stuttes’ insurance claim. Rather,
Count Three alleges that ANPAC accused the Stuttes of committing arson and fraud even though
ANPAC knew its accusations were false, because ANPAC had clear evidence proving that the
Stuttes did not cause the fire that destroyed their home. The Stuttes’ allegations state a claim
under the TCPA, and ANPAC’s motion to dismiss should therefore be DENIED.

Background
On September 4, 2010, the Stuttes’ home and its contents were completely destroyed by
fire. The property, located at 2715 Highway 360, Vonore, Monroe County, Tennessee, was
insured by ANPAC under Special Homeowners Policy No. 41-H-V66-965-7 (the “Policy”). The
Stuttes timely noticed an insurance claim under the Policy.
The Stuttes provided ANPAC with documentary and testimonial evidence from multiple
sources and witnesses, all of which confirm that the Stuttes were present in Nashville,
Tennessee, approximately 200 miles away from their home, at the time of the fire.1 The Stuttes
also furnished ANPAC with a copy of an Incident Report from the Monroe County Sherriff’s
Office dated August 9, 2010, which describes an incident in which the Stuttes’ neighbor
threatened, among other things, to burn down the Stuttes’ home.
ANPAC denied the Stuttes’ claim by letter and the next day filed the present lawsuit,
both of which falsely accuse the Stuttes of intentionally causing the fire and of committing
concealment or fraud relating to their claim. Instead of “provid[ing] a reasonable and accurate
explanation of the basis” for its coverage denial, as required by Tenn. Code Ann. § 56-8-105(12),
ANPAC’s denial letter and lawsuit offered only a boilerplate and conclusory statement that “[i]t
has been determined through investigation that the preponderance of the evidence” supports
ANPAC’s accusations. ANPAC never disputed the fact that the Stuttes were 200 miles away
from their home when it burned down, nor did ANPAC ever explain how – despite this fact – the
Stuttes managed to intentionally cause the fire.
1

The evidence provided to ANPAC included a parking receipt from NCB Garage dated “SEP 4”
and time-stamped “19:30” (7:30 p.m.), receipts for admission to the Wildhorse Saloon dated
“9/4/2010” and time-stamped “19:48” (7:48 p.m.) and “19:49” (7:49 p.m.), and a dinner receipt
from the Wildhorse Saloon dated “9/4/2010” and time-stamped “20:25” (8:25 p.m.). The NCB
Garage and the Wildhorse Saloon are both located in downtown Nashville. (Countercl. ¶ 12.)

2

Standard of Review
To survive ANPAC’s motion to dismiss Count Three for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6), the Stuttes’ counterclaim “need contain only ‘a short
and plain statement of the claim showing that the [Stuttes are] entitled to relief, in order to give
[ANPAC] fair notice of what the . . . claim is and the grounds upon which it rests.’” E.g., Riggs
Drug Co. v. Amerisourcebergen Drug Corp., No. 3:09-CV-538, 2010 WL 3619951, at *3 (E.D.
Tenn. Sept. 13, 2010) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The
Court must construe the counterclaim in the light most favorable to the Stuttes, accept all wellpleaded factual allegations as true, and determine whether Count Three states a plausible claim
for relief. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009).
Argument
The Stuttes’ counterclaim sets forth a plausible claim for relief under the TCPA, because
Count Three contends that ANPAC committed unfair or deceptive acts when it denied coverage,
filed a groundless lawsuit, and accused the Stuttes of arson and fraud, all based on allegations
ANPAC knew to be false.2 As this court has held, “[w]hen an insurance company denies a claim

2

In relevant part, Count Three states:
35. ANPAC has engaged in unfair or deceptive acts or practices by denying
coverage for the Stuttes’ claim, cancelling the Policy, and filing this coverage
action based on allegations ANPAC knows, or should know, to be false, in an
effort to avoid its obligations under the Policy.
36. Specifically, ANPAC accused the Stuttes of destroying their home and
contents, and of committing concealment or fraud relating to their claim, even
though ANPAC knew, or should have known, that these allegations were false
based on evidence in its possession concerning the Stuttes whereabouts at the time
of the fire.

(Countercl. ¶¶ 35-36.)

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based on information it knows to be false, that supports a claim under the TCPA.” Rothberg v.
Cincinnati Ins. Co., No. 1:06-CV-111, 2008 WL 833201, at *8 (E.D. Tenn. Mar. 27, 2008).3
ANPAC’s motion to dismiss attempts to minimize and mischaracterize Count Three by
claiming that it alleges a TCPA violation based only on “the mere denial of an insurance claim.”
(ANPAC’s Mem. of Law in Supp. of Mot. to Dismiss 3.) However, courts in Tennessee have
repeatedly held that allegations similar to the Stuttes’ state a claim for relief under the TCPA
because they entail much more than a routine coverage denial. See, e.g., Nat’l Union Fire Ins.
Co. of Pittsburg, Pa. v. Small Smiles Holding Co., No. 3:10-00742, 2011 WL 662687, at *5
(M.D. Tenn. Feb. 14, 2011) (denying the insurer’s motion to dismiss a TCPA claim where the
policyholder alleged that the insurer “fil[ed] a lawsuit which [it] knew was based upon facts
which are simply untrue”); Rothberg, 2008 WL 833201, at *8 (denying the insurer’s motion for
summary judgment on a TCPA claim where the policyholder alleged that the insurer’s stated
reason for denying coverage was contrary to evidence in its possession); Cowie v. State Farm
Fire & Cas. Co., No. 1:07-CV-63, 2007 WL 2238272, at *7 (E.D. Tenn. Aug. 1, 2007) (granting
leave to amend because the policyholder’s allegation that the insurer “had knowledge that its
arson theory was untrue” stated a claim for relief under the TCPA); Sparks v. Allstate Ins. Co.,
98 F. Supp. 2d 933, 938 (W.D. Tenn. 2000) (denying the insurer’s motion to dismiss a TCPA
claim where the policyholder alleged “that Allstate had clear evidence when it denied [the]
claim” that the policyholder did not commit arson).

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The Tennessee Supreme Court has held that the TCPA applies to the actions of insurance
companies, Myint v. Allstate Ins. Co., 970 S.W.2d 920, 925-26 (Tenn. 1998), including the
handling of a claim, Gaston v. Tenn. Farmers Mut. Ins. Co., 120 S.W.3d 815, 822 (Tenn. 2003).

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Like the policyholders in the above-cited cases, the Stuttes, in their TCPA claim, allege
that ANPAC “knew” its lawsuit “was based upon facts which are simply untrue,” Small Smiles,
2011 WL 662687, at *5, that ANPAC’s stated reason for denying coverage was contrary to
evidence in its possession, Rothberg, 2008 WL 833201, at *8, that ANPAC “had knowledge that
its arson theory was untrue,” Cowie, 2007 WL 2238272, at *7, and that ANPAC “had clear
evidence when it denied [the] claim” that the Stuttes did not burn down their home, Sparks, 98 F.
Supp. 2d at 938. Thus, construing the counterclaim in the light most favorable to the Stuttes, and
accepting the Stuttes’ factual allegations as true, Count Three plainly states a plausible claim for
relief under the TCPA.
Conclusion
For the foregoing reasons, ANPAC’s motion to dismiss Count Three of the Stuttes’
counterclaim should be DENIED.

Dated: July 5, 2011

Respectfully submitted,
/s/ Peter J. Alliman
f
Peter J. Alliman (BPR No. 5984)
WHITE, CARSON & ALLIMAN, P.C.
135 College Street
Madisonville, TN 37354
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Attorney for Defendants Carol Ann Stutte
and Laura Jean Stutte

Seth A. Tucker
Scott J. Levitt
Jonathan G. Hardin
COVINGTON & BURLING LLP
1201 Pennsylvania Avenue NW
Washington, DC 20004-2401

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Tel: [phone]
Fax: [phone]
Email: [e-mail]
[e-mail]
[e-mail]
(Pro Hac Vice Motions to be Filed)
Of Counsel for Defendants Carol Ann Stutte
and Laura Jean Stutte

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CERTIFICATE OF SERVICE
I hereby certify that on this 5th day of July, 2011, a copy of the foregoing
MEMORANDUM IN OPPOSITION TO ANPAC’S MOTION TO DISMISS COUNT
THREE OF THE STUTTES’ COUNTERCLAIM was filed electronically using the Court’s
Electronic Filing System. Notice of this filing will be served through the Electronic Filing
System to parties or counsel who are Filing Users, and by first-class mail to any party or counsel
who is not served through the Electronic Filing System.

/s/ Peter J. Alliman
f
Peter J. Alliman (BPR No. 5984)
WHITE, CARSON & ALLIMAN, P.C.
135 College Street
Madisonville, TN 37354
Tel: [phone]
Fax: [phone]
Email: [e-mail]
Attorney for Defendants Carol Ann Stutte
and Laura Jean Stutte