Kenney v. The Independent Order of Foresters

Filing 32

MEMORANDUM OPINION AND ORDER Granting 16 Defendant's Motion to Dismiss Based on Virginia Law. Clerk directed to enter judgment on this matter. Signed by District Judge Gina M. Groh on 3/27/2013. (cmd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
MARTINSBURG

AUDREY DIANNE KENNEY,
Plaintiff,
v.

CIVIL ACTION NO. 3:12-CV-123
(JUDGE GROH)

THE INDEPENDENT ORDER OF
FORESTERS,
Defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO
DISMISS BASED ON VIRGINIA LAW
Plaintiff Audrey Dianne Kenney brings a claim under the West Virginia Unfair Trade
Practices Act. This matter is currently before the Court on Defendant The Independent
Order of Foresters’ Motion to Dismiss Based on Virginia Law [Doc. 16], filed on December
20, 2012. Plaintiff filed her Response on December 27, 2012. Defendant filed its Reply
on January 3, 2013.

For the following reasons, this Court GRANTS the Defendant’s

Motion to Dismiss Based on Virginia Law.1

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Defendant also filed a Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure [Doc. 14] and a Motion for Partial Summary Judgment [Doc. 29].
However, the Court does not address the Defendant’s first filed Motion to Dismiss or its
Motion for Partial Summary Judgment because Defendant’s Motion to Dismiss based on
Virginia law is dispositive of all of the issues.
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I. Factual Background
Plaintiff Audrey Dianne Kenney (“Plaintiff”) is a resident of Martinsburg, Berkeley
County, West Virginia. Plaintiff is the widow of Ronald Lee Kenney (“Insured”).
Defendant The Independent Order of Foresters (“Defendant”) is a fraternal insurance
company with its principle place of business at 789 Don Mills Road, Toronto, Canada
M3C 1T9. Defendant has a United States mailing address of P.O. Box 179, Buffalo,
New York 14201-0179. Plaintiff alleges that Defendant was authorized to transact
business in the State of West Virginia, and Plaintiff sold life insurance policies and
collected premiums from the citizens of the State of West Virginia. Plaintiff contends
that Defendant and its employees are responsible for the handling, adjustment, and
settlement of claims presented under insurance policies issued by Defendant and its
affiliated companies to West Virginia residents. Defendant’s employees include sales
agents, which are sometimes referred to as Deputies.
On November 14, 1984, Defendant issued Plaintiff’s late husband, Insured, a
“Forester Flexible Premium Adjustable Life Certificate,” Certificate No. 371033, with a
face amount of $80,000. Plaintiff was the designated beneficiary of the policy. During
1994, Plaintiff alleges that she and her husband were induced by Defendant and its
Deputies to increase the policy’s face value from $80,000 to $130,000. Plaintiff
contends that Defendant and its Deputies represented to Plaintiff and her husband that
an increase in the policy’s face value would be beneficial for tax purposes.
On or about May 25, 1994, Plaintiff’s husband completed an “Application For:
Change” form, which was one of Defendant’s documents. A Defendant’s Deputy filled
out the form, and Plaintiff’s husband signed it. Section II of the form states a “FULI”
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request to increase the Policy’s face amount to $130,000. On or about May 25, 1994,
the form was signed by Defendant’s Deputy Mark Ruth. On May 31, 1994, Defendant
marked the submitted form as received by its underwriting department.
On or about January 3, 1995, Richard J. Lyles, Defendant’s Deputy, presented
Ronald Kenney with a document entitled “Acceptance of Change in Application (Change
#4529),” and Richard Lyles counter-signed the document as a “witness.” The
“Acceptance of Change in Application” indicated that “an additional $50,000.00 (Fifty
Thousand Dollars) is issued on the member [Kenney, Ronald L.] with an extra rate.”
Richard Lyles solicited Plaintiff’s husband’s signature on the “Acceptance of Change in
Application,” and he represented that the documented needed to be signed for the
additional $50,000 coverage to go into effect. Richard Lyles did not advise Plaintiff’s
husband or Plaintiff that the “Acceptance of Change in Application” may be ineffective
because it had not been timely received at Defendant’s headquarters before the
October 18, 1994 expiration date, printed in the lower right corner of the application.
Defendant received the submitted “Acceptance of Change in Application” on January 5,
1995.
Plaintiff contends that in reliance upon Defendant’s Deputies’ “superior
knowledge of the insurance products and the representations made by the Deputies,
Plaintiff alleges she and her husband had a reasonable expectation that the face
amount of his life insurance policy had in fact been increased from $80,000 to
$130,000. Plaintiff also argues that her reasonable expectation was confirmed “by an
increase in the Policy premium that was being directly deducted from the Kenney’s joint
checking account in an amount previously indicated by Deputy Richard J. Lyles as the
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new premium” and the Defendant’s Annual Statements “reflected that premiums which
were being directly deducted from the Kenneys’ joint checking account were being
applied to ‘Premiums Paid.’” Also, Defendant issued a “Specification of Certificate
Changes” to Insured indicating a “Schedule of Benefits of “$130,000 Flexible Premium
Adjustable Li[sic] Effective Date 14 Aug 1994.”
On September 19, 2011, Plaintiff’s husband passed away due to complications
associated with lung cancer. Plaintiff alleges that the policy was in force on September
19, 2011. On September 21, 2011, Plaintiff, as the listed beneficiary, made her claim
under her late husband’s life insurance policy for the $130,000 policy proceeds.
Defendant denied Plaintiff the policy’s full benefits, and Defendant offered her $80,000
of the $130,000 policy in settlement of her claim.
As a result of Defendant’s denial of the $130,000, Plaintiff alleges she had to
obtain a loan to pay for the costs of her husband’s funeral. Also, Plaintiff stated she
filed a complaint with the West Virginia Insurance Commissioners’ Office on November
1, 2011, and she consulted and retained an attorney. Defendant never informed
Plaintiff in any written document of her option to contact the West Virginia Insurance
Commissioners’ Office if she did not agree with Defendant’s coverage decision. On
July 20, 2012, Defendant stated in a letter to Plaintiff that “[T]here were some
inconsistencies within the file that lead us to the conclusion that Mr. Kenney would have
assumed the face amount of the insurance certificate remained at the increases
coverage amount of $130,000.” Thus, Defendant finally paid Plaintiff $130,000. As a
result, Plaintiff argues she substantially prevailed in obtaining all of the coverage to
which she was lawfully entitled to as a beneficiary under the Policy. Plaintiff seeks
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compensatory damages for Defendant’s bad faith conduct, improper denial of Plaintiff’s
claim under the Policy, violations of the West Virginia Unfair Trade Practices Act and
the regulations promulgated by the West Virginia Insurance Commissioner pursuant to
that Act, and breach of the implied covenant of good faith and fair dealing, as well as
punitive damages and attorney’s fees and costs.
II. Procedural Background
Plaintiff filed this action in the Circuit Court of Berkeley County, West Virginia on
September 27, 2012. The West Virginia Secretary of State received a copy of the
Summons and Complaint on September 21, 2012, and Defendant was served on
September 27, 2012. Defendant filed its Notice of Removal on October 16, 2012, within
thirty days of service, pursuant to this Court’s diversity jurisdiction. On October 18, 2012,
Plaintiff filed a Motion to Remand to State Court. On December 11, 2012, this Court denied
Plaintiff’s Motion to Remand after determining that it had jurisdiction over the case.
On December 11, 2012, Defendant filed its Motion to Dismiss pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff filed her Response on December
20, 2012. Defendant filed its Reply on December 27, 2013. On December 20, 2012,
Defendant filed a second Motion to Dismiss Based on Virginia Law. Plaintiff filed her
Response on December 27, 2012. Defendant filed its Reply on January 3, 2013.
Therefore, the Defendant’s motions are ripe for this Court’s review as they have been fully
briefed. Because the second motion to dismiss is dispositive of all the issues, the Court’s
Order addresses only that motion.

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III. Legal Standard
When reviewing a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules
of Civil Procedure, the Court must assume all of the allegations to be true, must resolve all
doubts and inferences in favor of the plaintiff, and must view the allegations in a light most
favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir.
1999). But, a complaint must be dismissed if it does not allege “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127
S. Ct. 1955, 1974 (2007) (emphasis added). “A complaint need only give ‘a short and plain
statement of the claim showing that the pleader is entitled to relief.’” In re Mills, 287 Fed.
Appx. 273, 280 (4th Cir. 2008) (quoting FED. R. CIV. P. 8(a)(2)). “Specific facts are not
necessary; the statement need only give the defendant fair notice of what the . . . claim is
and the grounds upon which it rests.” Id. (internal quotations and citations omitted).
However, “[t]he pleading standard Rule 8 announces does not require detailed factual
allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation. A pleading that offers labels and conclusions or a formulaic recitation of the
elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked
assertions devoid of further factual enhancements.” Ashcroft v. Iqbal, 556 U.S. 662, 129
S. Ct. 1937, 1949 (2009).
When rendering its decision, the Court may also consider facts derived from sources
beyond the four corners of the complaint, including documents attached to the complaint,
documents attached to the motion to dismiss “so long as they are integral to the complaint
and authentic,” and facts subject to judicial notice under Federal Rule of Evidence 201.

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Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing Blankenship
v. Manchin, 471 F.3d 523, 526 n. 1 (4th Cir. 2006)); see also Katyle v. Penn Nat’l
Gaming, Inc., 637 F.3d 462, 466 (4th Cir. 2011).
IV. Discussion
A. Choice of Law Analysis
Defendant’s second Motion to Dismiss is based on Virginia law. Defendant
argues that West Virginia law does not apply, rather, Virginia law applies to Plaintiff’s
claim under the life insurance contract’s choice of law provision or, alternatively, under a
contract choice of law analysis. ([Doc. 16], p. 1). Defendant argues that Plaintiff’s
Complaint must be dismissed for failure to state a claim upon which relief can be
granted because Virginia law does not recognize Plaintiff’s claim. Id.
Plaintiff argues that her injuries do not sound in contract, but in tort because she
is claiming Defendant engaged in unfair settlement practices. Therefore, Plaintiff
contends that a tort choice of law analysis should apply, which would result in West
Virginia’s law applying to Plaintiff’s claim. Defendant, in its reply, argued that even if the
Court applied a tort choice of law analysis, Virginia’s law would still be the applicable
law.
A federal court sitting in diversity must apply the conflict of laws analysis of the
forum state. Sokolowski v. Flanzer, 769 F.2d 975, 977 (4th Cir. 1985) (citing Klaxon
v. Stentor Elec. Manuf. Co., 313 U.S. 487, 494, 496, 61 S. Ct. 1020, 1020-21 (1941)).
This Court is located in West Virginia and is sitting in diversity; thus, West Virginia’s
conflict of laws analysis applies.

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1. Contracts Choice of Law Analysis
With respect to contract cases, the Supreme Court of Appeals of West Virginia
“has repeatedly recognized that questions of policy coverage as opposed to liability are
governed by conflicts of law principles applicable to contracts.” Howe v. Howe, 625
S.E.2d 716, 721 (W. Va. 2005) (citations omitted). The general rule is insurance
contractual relationships are controlled by the law of the state in which the policy was
issued. Lee v. Saliga, 373 S.E.2d 345, 348 (W. Va. 1988). However, the general rule
does not apply if (1) the parties have made a choice of applicable law in the contract
itself and (2) the law of the other states offends West Virginia’s public policy. Id. at 351.
In this case, the life insurance contract contains a choice of law provision. West
Virginia law generally will enforce the provision “unless the chosen state has no
substantial relationship to the parties to the transaction or unless the application of the
law of the chosen state would be contrary to the fundamental public policy of the state
whose law would apply in the absence of a choice of law provision.” Bryan v. Mass.
Mut. Life. Ins. Co., 364 S.E.2d 786, 790 (W. Va. 1987) (citing Gen. Elec. Co. v.
Keyser, 275 S.E.2d 289, 293 (W. Va. 1981)).
The choice of law provision in the Policy provides:
LAW APPLICABLE– The rights or obligations of the member or anyone
rightfully claiming under this certificate will be governed by the laws of the State
in which this certificate is delivered.
([Doc. 16], p. 1). The certificate of insurance was delivered in the State of Virginia;
therefore, the contract provides that Virginia law governs “[t]he rights or obligations” of
the beneficiary claiming under the policy. ([Doc. 16], Ex. A). Upon review, the Court

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finds that the State of Virginia has a substantial relationship to this case. The insured
and the named beneficiary were residents of the State of Virginia at the time the insured
applied for the insurance coverage in 1984. ([Doc. 16], Ex. B). Also, the certificate of
insurance was issued to the insured in the State of Virginia. Id. The insured lived in
Virginia for seventeen years, until he moved in 2001. ([Doc. 16], Ex. E.). Additionally,
the primary issue of the lawsuit is related to the insured’s application for an increase in
death benefits, which took place in August 1994, while the insured was a resident of the
State of Virginia. Therefore, the State of Virginia has a substantial relationship to the
parties to the transaction.
Moreover, the Court finds that application of Virginia law in this case is not
contrary to a fundamental public policy in West Virginia. The Supreme Court of Appeals
of West Virginia held: “‘The mere fact that the substantive law of another jurisdiction
differs from or is less favorable than the law of the forum state does not, by itself,
demonstrate that application of the foreign law under recognized conflict of laws
principles is contrary to the public policy of the forum state.’” Syl. Pt. 7, Howe, 625
S.E.2d 716 (quoting Syl. Pt. 3, Nadler v. Liberty Mut. Fire Ins. Co., 424 S.E.2d 256
(W. Va. 1992)). The West Virginia courts “adhere to the general principle that a court
should not refuse to apply foreign law, in otherwise proper circumstances, on public
policy grounds unless the foreign law is contrary to pure morals or abstract justice, or
unless enforcement would be of evil example and harmful to its own people.” Howe,
625 S.E.2d at 724-25 (Nadler, 424 S.E.2d at 265). Plaintiff has not demonstrated a
strong public policy necessary to avoid application of Virginia law in this matter.

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Therefore, under a contracts choice of law analysis, Virginia law applies. However,
there is disagreement among the district courts in the Fourth Circuit whether claims
under the WVUTPA are analyzed under contract or tort choice of law analysis. As a
result, this Court will also conduct a tort choice of law analysis.
2. Tort Choice of Law Analysis
Plaintiff argues that a tort choice of law analysis should apply because Plaintiff’s
claims arise under the WVUTPA. Therefore, Plaintiff contends that the court should
apply the law of the place of the wrong (lex loci delicti). See Blais v. Allied
Exterminating Co., 482 S.E.2d 659, 662 (W. Va. 1996). Plaintiff’s claims under the
WVUTPA can be characterized as part-contract and part-tort: “part-contract because
such claims do not arise in the absence of an insurance contract and part-tort because
such claims can be brought by third parties and result in awards of tort-like damages.”
Pen Coal Corp. v. William H. McGee and Co., Inc., 903 F. Supp. 980, 983 (S.D.W.
Va. 1995). The Fourth Circuit, in an unpublished decision, characterized claims brought
under WVUTPA as tort claims. See Yost v. Travelers Ins. Co., 181 F. 3d 95, 1999 WL
409670 (4th Cir. June 21, 1999) (citing Poling v. Motorists Mut. Ins. Co., 450 S.E.2d
635, 638 (W. Va. 1994)). However, district court decisions in the Fourth Circuit have
applied a contract choice of law analysis because “bad faith and unfair trade practices
claims properly should be characterized as contract, not tort, claims.” In re Digitek
Prods. Liability Litig., MDL No. 2:08-md-01968, 2010 WL 2102330 (S.D.W. Va. May
25, 2010) (quoting Pen Coal Corp., 903 F. Supp. at 983).
This Court will also analyze the WVUTPA and bad faith claims as tort claims.

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The analysis begins with the Restatement (Second) of Conflict of Laws’ broad, multifactor test for tort claims. Section 145, General Principles, provides:
(1) The rights and liabilities of the parties with respect to an issue in tort
are determined by the local law of the state which, with respect to that
issue, has the most significant relationship to the occurrence and the
parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the principles of § 6 to
determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicile, residence, nationality, place of incorporation and place of
business of the parties, and
(d) the place where the relationship, if any, between the parties is
centered.
Restatement (Second) of Conflict of Laws § 145 (1971).
Section 6, Choice of Law Principles, provides:
(1) A court, subject to constitutional restrictions, will follow a statutory directive of
its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the
applicable rule of law include
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests
of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.
Id. § 6. The West Virginia Supreme Court of Appeals applies the second Restatement
of Conflict of Laws to address “particularly thorny” conflicts problems. Oakes v.
Oxygen Therapy Servs., 363 S.E.2d 130, 131 (W. Va. 1987). The case before the
Court is sufficiently complex due to the WVUTPA and bad faith claims that have been
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interpreted as quasi-contract and quasi-tort. Therefore, the Court will look to the
Restatement (Second) of Conflicts of Law for guidance.
The Court first examines the contacts listed in § 145. The first contact, the place
where the injury occurred, is West Virginia. Plaintiff lived in West Virginia at the time
her husband, the insured, died. Plaintiff still resides in West Virginia. Therefore, “the
worry, annoyance, and economic hardship of the delay in receiving compensation would
have been suffered there.”

Yost, 181 F.3d 95, *4. The second contact, the place

where the conduct causing the injury occurred, is not as clear cut. Plaintiff’s husband
applied for the increase in the face amount of the insurance certificate in Virginia.
Defendant’s and its Deputy’s alleged misrepresentations regarding the application
would have taken place in Virginia, as Plaintiff and the insured lived in Virginia when
insured initially applied for and received benefits and when insured applied for an
increase in the policy. However, the adjustment of Plaintiff’s claim and the alleged bad
faith denial would have “occurred mostly in Foresters’ Toronto, Canada office.” ([Doc.
22], p. 7). The third contact, the domicil, residence, nationality, place of incorporation
and place of business of the parties, has numerous results. Plaintiff and Insured lived in
Virginia for seventeen years, and they resided in Virginia when Insured initially applied
for and received the Policy and when Insured applied for an increase in the Policy.
However, Plaintiff and Insured moved to West Virginia in 2011, and Insured passed
away in West Virginia in 2011. Plaintiff continues to reside in West Virginia. Defendant
is headquartered in Toronto, Canada, and it does business nationwide. The fourth
contact, the place where the relationship, if any, between the parties is centered, is
mainly Virginia. The life insurance certificate was applied for, negotiated, entered into,
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issued, and delivered in Virginia.2 The life insurance contract signed by the parties in
Virginia specified that Virginia law should apply to the parties’ rights or obligations under
the contract. Insured lived in Virginia for seventeen years, and he only lived in West
Virginia for one year. Additionally, Insured applied for an increase in the insurance
certificate while he resided in Virginia.
After applying the factors in § 145, the Court now views the contacts in light of
the Restatement’s § 6 factors. Section 6 lists seven factors, however “[t]he meat of the
Restatement test is factors two through five (§ 6(2)(b)-(e)).” Yost, 181 F.3d 95, *4.
Factor (e) addresses the basic policies underlying the particular field of law, in this case,
insurance law. The “purpose of laws like WVUTPA is to ensure fair play by insurance
companies.” Id. West Virginia’s insurance regulations are designed to “protect the
citizens of West Virginia.” Id. (citing Poling v. Motorists Mut. Ins. Co., 450 S.E.2d 635,
637 (W. Va. 1994) (noting that good policy reasons exist for permitting a bad faith
action, such as encouraging quick settlements and discouraging unnecessary litigation).
Next, factor (b) considers the relevant policies of West Virginia, and factor (c)
considers the relevant policies of other interested states, in this case, Virginia. As
discussed above, West Virginia’s policies focus on protecting its citizens and prohibiting
2

Section 192 of the Restatement (Second) of Conflict of Laws provides that “[t]he
validity of a life insurance contract issued to the insured upon his application and the rights
created thereby are determined, in the absence of an effective choice of law by the insured
in his application, by the local law of the state where the insured was domiciled at the time
the policy was applied for, unless, with respect to the particular issue, some other state has
a more significant relationship under the principles stated in § 6 to the transaction and the
parties, in which event the local law of the other state will be applied.” In this case, even
in the absence of the contract’s Virginia choice of law provision, Virginia law would apply
under this section of the Restatement because Plaintiff’s husband, the insured, was
domiciled in Virginia at the time he applied for the policy.
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bad-faith conduct by insurers. Virginia also has regulations designed to prohibit unfair
trade practices in the business of insurance and prohibit bad-faith conduct by insurers.
See VA. CODE ANN. § 38.2-500.
The last factor, factor (d), is the protection of justified expectations. Defendant
and Plaintiff’s husband entered into the life insurance contract while Plaintiff and Insured
were residents of Virginia. The life insurance certificate had a choice of law provision
that applied Virginia law to the “rights and obligations” of the parties under the life
insurance contract. Although Plaintiff and Insured moved to West Virginia in 2011 and
Insured passed away in West Virginia, there is no evidence or argument that Plaintiff
and Insured moved to West Virginia with the expectation that when Insured passed
away in West Virginia, Plaintiff could sue Defendant under West Virginia’s laws if
Defendant acted unfairly or in bad faith in handling her claim. Additionally, although this
is an alleged tort, the alleged tort could not exist absent a contract governed by another
state’s law. Applying the Restatement (Second) of Conflicts of Law to this case, the
Court finds that Virginia has the most significant relationship to the occurrence and the
parties. Thus, under a tort choice of law analysis, Virginia law applies.3
B. Defendant’s Motion to Dismiss Based on Virginia Law
Virginia’s Unfair Insurance Practices Act does not provide a remedy for a refusal
in bad faith to honor a first-party insurance obligation beyond those described in the

3

As addressed in the contracts choice of law analysis, West Virginia “may decline
to enforce laws it deems repugnant to its own strong public policy.” Nadler, 424 S.E.2d at
262-65. However, Virginia’s law does not offend West Virginia’s public policy merely
because it is less favorable to the Plaintiff than West Virginia law would be. Upon this
Court’s review, the public policy exception does not apply.
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statute. A&E Supply Co., Inc. v. Nationwide Mut. Fire Ins. Co., 798 F.2d 669, 676
(4th Cir. 1986). Additionally, Virginia “would join the jurisdictions that have declined to
recognize a remedy in tort for refusal in bad faith to honor a first-party insurance claim.”
Id. In a first-party Virginia insurance relationship, “liability for bad faith conduct is a
matter of contract rather than tort law. The obligation arises from the agreement and
extends only to situations connected with the agreement.” Id. (quoting Reisen v. Aetna
Life & Cas. Co., 302 S.E.2d 529, 533 (Va. 1983). Therefore, Virginia law does not
recognize a tort claim when an insured or beneficiary charges that an insurer was
actuated by bad faith in breaching the contract of insurance. Because a cause of action
must be brought under breach of contract and not tort, punitive damages are not
available. See Kamler Corp. v. Haley, 299 S.E.2d 514, 518 (W. Va. 1983).
Additionally, bad faith under Virginia Code § 38.2-209 is not an independent cause of
action; rather, it is ancillary to a cause of action for breach of an insurance contract.
See Adolf Jewelers, Inc. v. Jewelers Mut. Ins. Co., 2008 WL 2857191, at *5-6 (E.D.
Va. July 21, 2008) (“Section 38.2-209 does not create an independent cause of
action.’).
In this case, Plaintiff has alleged violations of WVUTPA, and there are similar
provisions under Virginia’s Unfair Trade Practices Act, Va. Code § 38.2-500, et seq.
However, Plaintiff has not alleged a breach of contract. Pursuant to § 38.2-510(B),
unfair claim settlement practices, “[n]o violation of this section shall of itself be deemed
to create any cause of action in favor of any person other than the Commission; but
nothing in this subsection shall impair the right of any person to seek redress at law or

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equity for any conduct for which action may be brought.” VA. CODE ANN. § 38.2-510(B).
Therefore, although the substance of Plaintiff’s Complaint may have alleged some
violation of Virginia’s Unfair Trade Practice Act, Plaintiff has only alleged torts, not a
breach of contract. Because Virginia law does not recognize a tort remedy for bad-faith
refusal to honor a first-party insurance claim and Virginia’s Unfair Trade Practices Act
does not create a private right of action in tort, Plaintiff has failed to state a claim upon
which relief can be granted under Virginia law. Accordingly, Defendant’s Motion to
Dismiss Based on Virginia Law is granted.
V. Conclusion
For the foregoing reasons, this Court hereby GRANTS the Defendant’s Motion to
Dismiss Based on Virginia Law. As this motion was dispositive, the Court did not
consider Defendant’s other pending motions.
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to all counsel of record
herein. Pursuant to Federal Rule of Civil Procedure 58, the Clerk is directed to enter
judgment on this matter.
DATED: March 27, 2013

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