Elliott et al v. AAA Insurance
Filing
32
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S 24 MOTION TO DISMISS, DENYING 27 30 ALTERNATIVE REQUEST TO STAY AND DENYING AS MOOT ALL OTHER CURRENTLY PENDING MOTIONS. It is further ORDERED that this civil actionbe DISMISSED and STRICKEN from the active docket of this Court. The Clerk is DIRECTED to enter judgment on this matter. Signed by Senior Judge Frederick P. Stamp, Jr. on 5/12/16. (copy counsel via CM/ECF)(lmm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
GLENN F. ELLIOTT and
VIVIAN E. ELLIOTT,
his wife,
Plaintiffs,
v.
Civil Action No. 5:15CV146
(STAMP)
AAA INSURANCE,
Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING DEFENDANT’S MOTION TO DISMISS,
DENYING ALTERNATIVE REQUEST TO STAY AND
DENYING AS MOOT ALL OTHER CURRENTLY PENDING MOTIONS
I.
Procedural History
The plaintiffs initially filed this civil action in the
Circuit Court of Marshall County, West Virginia.
According to
their complaint, the plaintiffs purchased an underinsured motorist
policy from the defendant.
Later, in 2011, plaintiff Glenn F.
Elliott was involved in a serious car accident.
The insurance
carrier for the tortfeasor involved in that car accident paid its
limits of liability coverage.
insurance
carrier
was
The payment by the tortfeasor’s
allegedly
inadequate.
Therefore,
the
plaintiffs filed an action in state court against the defendant,
who is their insurer.
The plaintiffs allege that the defendant
harassed the plaintiffs throughout the state court action.
That
state court action ultimately settled prior to trial. However, the
plaintiffs claim that a dispute arose as to the release language of
the settlement.
More specifically, the plaintiffs claim that the
defendant sought a release of all claims that could be potentially
brought against it, which the parties refer to as a “global
release.”
The plaintiffs believe that the defendant’s insistence
on such a release violates West Virginia law.
The defendant then removed this civil action.
ECF No. 1.
Following removal, the defendant filed a motion to dismiss, or in
the alternative, motion to stay.
ECF No. 2.
This Court then
scheduled a status and scheduling conference as to the defendant’s
motion. ECF No. 4. After scheduling the conference but before the
conference occurred, the plaintiffs filed a motion to remand, to
which the defendant responded.
ECF Nos. 6 and 7.
denied the plaintiffs’ motion to remand.
the plaintiffs filed a
No. 17.
This Court
Following that ruling,
motion to file an amended complaint.
ECF
This Court granted the plaintiffs’ motion to file an
amended complaint, and denied without prejudice the defendant’s
motion
to
Pursuant
dismiss,
to
the
or
alternatively,
amended
complaint,
to
the
stay.
following
ECF
No.
21.
counts
are
asserted: (1) Count I, continuing tortious conduct; (2) Count II,
violation of the West Virginia Unfair Trade Practices Act (“UTPA”),
W. Va. Code § 33-11-4(9); (3) Count III, breach of contract by bad
faith; and (4) Count IV, punitive damages.
At issue now is the defendant’s second motion to dismiss, or
alternatively, to stay.
ECF No. 24.
2
In its motion to dismiss, the
defendant first asserts that the plaintiffs’ extra-contractual
claims,
Counts
limitations.
II
and
III,
are
barred
by
the
statute
of
The defendant points out that claims under the UTPA
and for breach of contract by bad faith have a one-year statute of
limitations, and the claims at issue allegedly arose on October 1,
2014.
However, the plaintiffs filed this civil action on October
16, 2015, which exceeds the one-year limitations period.
As to
Counts I and IV, the defendant contends that the plaintiffs have
failed to adequately plead their claim and that the statute of
limitations has run.
The defendant, alternatively, requests that
this civil action be stayed pending resolution of a current Ohio
civil action involving both parties, which the plaintiffs filed.
According to the defendant, the Ohio court will rule on, among
other issues, the scope of the settlement agreement at issue.
Further, the defendant points out that the presiding judge in Ohio
also presided over the plaintiffs’ previously filed civil actions
regarding the policy and settlement agreement at issue.
Because
the defendant feels that the Ohio court is in a better position to
determine the nature and scope of the settlement agreement, the
defendant alternatively requests that this civil action be stayed
while the Ohio action remains pending.
The plaintiffs filed a response in opposition.
In their
response, they first argue that the statute of limitations has not
run,
because
the
conduct
related
3
to
their
claims
persists.
Moreover, the plaintiffs believe that they have adequately pleaded
all of their claims under the complaint.
As to the request to
stay, the plaintiffs contend that the claims under West Virginia
law must be decided before the Ohio court can properly rule on the
claims before it. Further, the plaintiffs assert that the motion to
dismiss should be converted into a motion for summary judgment, as
provided for under Federal Rule of Civil Procedure 12(d). In
support of that assertion, the plaintiffs point to the exhibits
attached by the defendant to its motion to dismiss.
The defendant filed a reply, wherein it reasserts its initial
arguments.
The defendant also asserts that its motion to dismiss,
whether viewed as a motion for summary judgment or not, is fully
briefed,
and
thus,
no
additional
responses
or
filings
are
necessary.
In addition to its motion to dismiss, the defendant also filed
a motion for protective order. ECF No. 27. The defendant requests
that a protective order and stay be entered, which would prohibit
the plaintiffs’ “bad faith” discovery until the defendant’s pending
motion to dismiss is ruled upon by the Court. The day after the
defendant filed a motion for protective order, the plaintiffs filed
a motion for extension of time to designate experts. ECF No. 30. In
light of the defendant’s motion for a protective order, the
plaintiffs request additional time to allow “the plaintiffs’ expert
to supplement the record and report.” Id.
4
For the reasons set forth below, the defendant’s motion to
dismiss (ECF No. 24) is GRANTED, and the alternative request to
stay is DENIED.
Further, the defendant’s motion for a protective
order (ECF No. 27) and the plaintiffs’ motion for an extension of
time to file a designation of experts (ECF No. 30) are DENIED AS
MOOT.
II.
Applicable Law
In assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
court must accept all well-pled facts contained in the complaint as
true.
Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591 F.3d
250, 255 (4th Cir. 2009). However, “legal conclusions, elements of
a cause of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule 12(b)(6)
purposes.”
(2009)).
Id. (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
This
Court
also
declines
to
consider
“unwarranted
inferences, unreasonable conclusions, or arguments.”
Wahi v.
Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26 (4th Cir.
2009).
It has often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement of the
claim for relief; it is not a procedure for resolving a contest
about the facts or the merits of the case.
5B Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed.
5
1998).
The Rule 12(b)(6) motion also must be distinguished from a
motion for summary judgment under Federal Rule of Civil Procedure
56, which goes to the merits of the claim and is designed to test
whether there is a genuine issue of material fact.
Id.
For
purposes of the motion to dismiss, the complaint is construed in
the
light
essentially
most
the
favorable
court’s
to
the
inquiry
party
is
making
directed
the
to
claim
and
whether
the
allegations constitute a statement of a claim under Federal Rule of
Civil Procedure 8(a).
Id. § 1357.
A complaint should be dismissed “if it does not allege ‘enough
facts to state a claim to relief that is plausible on is face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Facial
plausibility is established once the factual content of a complaint
‘allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Nemet Chevrolet,
591 F.3d at 256 (quoting Iqbal, 129 S. Ct. at 1949).
Detailed
factual allegations are not required, but the facts alleged must be
sufficient “to raise a right to relief above the speculative
level.”
Twombly, 550 U.S. at 555.
III.
Discussion
After reviewing the defendant’s motion to dismiss and the
parties’ filings, the primary issue appears to be whether the
continuous tort doctrine applies to the plaintiffs’ claims.
6
More
specifically, the defendant argues that a one-year statute of
limitations applies to the plaintiffs’ claims.
The plaintiffs’
claims, however, rest upon the assertion that “as a result of the
continuous tortious conduct by the defendant, the plaintiffs have
and continue to suffer and incur damages.” ECF No. 22. Therefore,
based on the so-called “continuing tort doctrine,” the plaintiffs
believe that their claims fall outside of the applicable statute of
limitations period.
West Virginia law provides, and the parties do not appear to
dispute, that a one-year statute of limitations applies to the
claims in this case.
See Syl. Pt. 1, Wilt v. State Auto. Mut. Ins.
Co., 506 S.E.2d 608 (W. Va. 1998) (“Claims involving unfair
settlement practices that arise under the [UTPA] . . . are governed
by the one year statute of limitations set forth in West Virginia
Code § 55-2-12(c) (1994)).”; Noland v. Virginia Ins. Reciprocal,
686 S.E.2d 23, 34-35 (“We find that a common law bad faith action
does not involve property damage, personal injury, or fraud or
deceit.
Therefore, we expressly hold that the one-year statute of
limitations contained in W. Va. Code § 55-2-12(c) . . . applies to
a common law bad faith claim.”). Generally speaking, West Virginia
law provides that the statute of limitations for a cause of action
“accrues . . . when a tort occurs.”
Vorholt v. One Valley Bank,
498 S.E.2d 241, 246 (W. Va. 1997) (citing Syl. Pt. 1, Cart v.
7
Marcum, 423 S.E.2d 655 (W. Va. 1992)).1
One relevant exception to
that rule, however, is the continuing tort doctrine, which the
Supreme Court of Appeals of West Virginia has formally adopted.
The continuing tort doctrine states that “[w]here a tort involves
a continuing or repeated injury, the cause of action accrues at and
the statute of limitations begins to run from the date of the last
injury or when the tortious overt acts or omissions cease.”
Syl.
Pt. 11, Graham v. Beverage, 566 S.E.2d 603 (W. Va. 2002); accord
Roberts v. West Virginia American Water Co., 655 S.E.2d 119, 124
(W. Va. 2007).
Such a continuing cause of action has been
described by the Court as “being a situation where events, which
for all practical purposes are identical, occur repeatedly, at
short intervals, in a consistent, connected, rhythmic manner.”
Auber
v.
Jellen,
469
S.E.2d
104,
110
(W.
Va.
1996)
(citing
DeRocchis v. Matlack, Inc., 460 S.E.2d 663, 669 n.4 (W. Va. 1995)).
Examples of situations where the continuing tort doctrine was
applied include when a party faces repeated and successive exposure
1
It should be noted that West Virginia also adopts the
“discovery rule,” which states that the statute of limitations for
claims of fraud or tort do “not begin to run until the injured
person knows, or by the exercise of reasonable diligence should
know, of the nature of his injury [.]” Stemple v. Dobson, 400
S.E.2d 561, 564 (W. Va. 1990).
That rule, however, “is to be
applied with great circumspection on a case-by-case basis only
where there is a strong showing by the plaintiff that he was
prevented from knowing of the claim at the time of the injury.”
Vorholt, 423 S.E.2d at 648. In this case, the discovery rule does
not appear to apply since the plaintiffs do not allege that they
were prevented from knowing about their claims at issue.
8
to fumes, DeRocchis, 460 S.E.2d at 663, or when a party faces
medical examinations that result in a different misdiagnosis each
time, Auber, 469 S.E.2d at 110.
The continuing tort doctrine has
been found to not apply, however, in situations such as when a
party experienced “observable, steady, and more or less continual
leaking of water” that allegedly caused more serious injury over
time to his property, Handley v. Town of Shinnston, 289 S.E.2d 201
(W. Va. 1982), or when a party received separate and continued
refusals by his insurer to provide coverage under an insurance
policy, see Noland, 686 S.E.2d at 38 (citing Adamski v. Allstate
Ins. Co., 738 A.2d 1033 (Pa. Super. Ct. 1999)).
The allegations in this case do not warrant invoking the
continuing tort doctrine.
As stated above, the plaintiffs allege
throughout the complaint that the defendant “continues its breach
of contract and violations of law by refusing to pay the $70,000.00
it has admitted and agreed are due under the insurance contract
unless [Glenn] Elliott waives all of his West Virginia extracontractual claims.”
ECF No. 25 (emphasis in original).
The
record shows, however, that the plaintiffs were informed of the
global release contained in the settlement agreement by receipt of
the actual settlement agreement on October 1, 2014.
ECF No. 1 Ex.
2. The plaintiffs’ claims all stem from the defendant’s refusal to
enforce the settlement unless the plaintiffs agreed to the global
9
release.
That means the statute of limitations began to run on
October 1, 2014.
This case is similar to Adamski, which the Supreme Court of
Appeals of West Virginia not only cited but discussed approvingly
in
Noland.
The
plaintiff
in
Adamski
filed
suit
insured’s insurer for failure to defend and indemnify.
against
an
The trial
court in Adamski dismissed the plaintiff’s action because the
plaintiffs’ claims were barred by the statute of limitations.
On
appeal, the plaintiff argued, in relevant part, that the continuing
tort doctrine applied because the insurer continued to refuse to
defend and indemnify the insured.
The Court in Adamski rejected
that argument, pointing out that “the alleged harm occurred when
[the insurer’s] position was made clear by the 1986 letter and [the
insurer] maintained that position by subsequently refusing to
defend or indemnify.”
738 A.2d at 1042.
Therefore, the Court in
Adamski found that the plaintiff could not “now avoid . . . an
applicable statute of limitations by asserting that the continuing
refusal to cover [the insured] was a separate act of bad faith.”
Id. at 1043.
In the instant case, the plaintiffs cannot similarly avoid the
applicable statute of limitations.
The plaintiffs’ harm occurred
upon receipt of the settlement agreement on October 1, 2014.
It
would be quite a stretch for this Court to find that the defendant
is committing a tort every day by requiring the plaintiffs to agree
10
to a global release, especially in light of the above case law.
Such a finding would contradict already existing law, which rejects
“overly broad” applications of the continuing tort doctrine.
e.g., Roberts, 655 S.E.2d at 378.
See,
The continuing tort doctrine is
designed for certain situations, and such a situation does not
exist in this case.
Using the latest date, the plaintiffs had
until October 1, 2015, to file their complaint.
complaint on October 16, 2015.
They filed their
That means the plaintiffs filed
their complaint after the statute of limitations ran, which means
that their claims cannot proceed in this case.
It should be noted that in their response, the plaintiffs
argue that the defendant’s motion to dismiss should be converted
into a motion for summary judgment because it contains additional
exhibits that are not attached to the complaint.
ECF No. 25.
Rule
12(d) of the Federal Rules of Civil Procedure states the following:
If, on a motion under Rule 12(b)(6) or 12(c), matters
outside the pleadings are presented to and not excluded
by the court, the motion must be treated as one for
summary judgment under Rule 56.
All parties must be
given a reasonable opportunity to present all the
material that is pertinent to the motion.
In certain situations, however, “a document that is not formally
incorporated by reference or attached to a complaint may still be
considered part of the pleadings.
Greenberg v. Life Ins. Co. of
Va., 177 F.3d 507, 514 (6th Cir. 1999).
In particular, this is
permitted when “a document is referred to in the complaint and is
central to the plaintiff’s claim . . . .” Id. (internal quotations
11
and citations omitted); see Kaempe v. Myers, 367 F.3d 958, 965
(D.C. Cir. 2004).
The United States Court of Appeals for the
Fourth Circuit has also stated that “[c]onsideration of a document
attached to a motion to dismiss ordinarily is permitted only when
the document is integral to and explicitly relied on in the
complaint,
and
when
the
document’s] authenticity.”
plaintiffs
do
not
challenge
[the
Zak v. Chelsea Therapeutics Intern.,
Ltd., 780 F.3d 597, 606-608 (4th Cir. 2015) (internal citations and
quotations omitted).
In this case, the only extrinsic document considered was the
settlement agreement, including its cover letter.
That settlement
agreement is central to the plaintiffs’ claims, particularly as to
the global release contained therein.
Indeed, the plaintiffs
repeatedly reference the agreement and global release throughout
the amended complaint. The plaintiffs also have not challenged the
provided settlement agreement’s authenticity, as required under
For those reasons, this Court will decline to convert the
Zak.
defendant’s motion to dismiss into a motion for summary judgment.
Therefore, the defendant’s motion to dismiss (ECF No. 24) is
GRANTED, and the alternative request to stay is DENIED.2
Based on
that ruling, the pending motion for protective order (ECF No. 27)
2
Because this Court finds that the plaintiffs’ claims are
barred by the statute of limitations, it is unnecessary to discuss
whether the plaintiffs have adequately pleaded their claims.
12
and motion for extension of time to file designation of experts
(ECF No. 30) are accordingly DENIED AS MOOT.
IV.
Conclusion
For the reasons set forth above, defendant AAA Insurance’s
motion to dismiss (ECF No. 24) is GRANTED, and its request to stay
this civil action is DENIED.
Further, the defendant’s motion for
protective order (ECF No. 27) and the plaintiffs’ motion for
extension of time to file designation of experts (ECF No. 30) are
both DENIED AS MOOT.
It is further ORDERED that this civil action
be DISMISSED and STRICKEN from the active docket of this Court.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein. Pursuant to Federal
Rule of Civil Procedure 58, the Clerk is DIRECTED to enter judgment
on this matter.
DATED:
May 12, 2016
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
13
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