Watson v. National Union Fire Insurance Co. of Pittsburgh, PA et al

Filing 15

MEMORANDUM OPINION AND ORDER: The Court does ORDER that Defendants' 5 MOTION to Dismiss be GRANTED IN PART AND DENIED IN PART; the Court ORDERS that Defendant NUFIC's motion to dismiss Counts 2 and 3 is GRANTED, but Defendant Chartis� 39; motion to dismiss Count 1 is DENIED; the Court ORDERS that Plaintiff's 11 Response to Defendant Chartis Claims Inc.'s Motion to Dismiss and Defendant National Union's Motion to Dismiss Counts 2 and 3 and Defendants National Union Fire Insurance Company of Pittsburgh, PA and Chartis Claims, Inc.'s 12 Reply in Support of Motion to Dismiss be STRICKEN from the record. Signed by Judge Irene C. Berger on 5/13/2013. (cc: attys; any unrepresented party) (slr)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
BECKLEY DIVISION

JOHN D. WATSON,
Plaintiff,
v.

CIVIL ACTION NO. 5:13-cv-01939

NATIONAL UNION FIRE INSURANCE
CO. OF PITTSBURGH, PA and
CHARTIS CLAIMS, INC.,
Defendants.

MEMORANDUM OPINION AND ORDER
The Court has reviewed Defendants’ Motion to Dismiss (“Mot. to Dismiss”) (Document
5) and its supporting memorandum (Document 6). The Court has also reviewed Plaintiff’s
Response to Defendant Chartis Claims Inc.’s Motion to Dismiss and Defendant National Union’s
Motion to Dismiss Counts 2 and 3 (Document 11). After careful consideration of the First
Amended Complaint and Defendant’s challenges thereto, the Court grants in part and denies in
part the Defendants’ motion for the reasons set forth below.

I.

BACKGROUND

In his First Amended Complaint, Plaintiff, John D. Watson, brings an action against
Defendant National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“Defendant
NUFIC”) and NUFIC’s claims administrator Chartis Claims, Inc. (“Defendant Chartis”), in the
Circuit Court of Raleigh County, West Virginia, as a result of a disputed insurance claim.
(Notice of Removal by Defendants (“Notice of Removal”), Ex. A. First Amended Complaint

(Document 1-1) at 72).1
On June 19, 2008, Plaintiff was involved in a motor vehicle accident in Raleigh County,
West Virginia. At the time of the accident, Plaintiff operated a vehicle owned by his employer,
the State of West Virginia / RESA-I.2 Plaintiff initially sought workers’ compensation benefits
as a result of the accident. However, on June 26, 2008, BrickStreet Mutual Insurance Company
denied Plaintiff’s claim because the “disability complained of [was] not . . . due to an injury
received in the course of and resulting from employment.” (First Am. Compl. ¶ 15.) Brickstreet
supported its denial, in part, based on Plaintiff’s statement that “he was enroute [sic] to work that
morning on the date of the subject accident and had not reached the office.” (First Am. Compl. ¶
16.)
Thereafter, on November 3, 2009, Plaintiff sought the benefit of his employer’s
underinsured motorists (“UIM”) coverage. RESA-I is an “insured” under auto insurance Policy
Number RM CA 160-68-53 issued by Defendant NUFIC with an effective date of July 1, 2007 to
July 1, 2008. In his claim, Plaintiff advised the Deputy Director of Claims Management that the
driver of the other vehicle involved in the accident was at fault, that due to the multiple injuries
sustained by Plaintiff and others, the policy limits of that driver’s insurance carrier ($20,000) was
offered in pro-rata share but that the offer was “far less than the extent of damages which [he]
received and was insufficient to compensate [him] for [his sustained] injuries[.]” (First Am.
Compl. ¶¶ 8-12.) On November 11, 2009, Defendant Chartis denied Plaintiff’s UIM claim by
asserting that he was “acting within the course and scope of his employment with RESA-I at the
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Plaintiff initiated this action on October 10, 2012, in the Circuit Court of Raleigh County, West Virginia.
Thereafter, Defendant Chartis moved for dismissal which promoted, among other filings, Plaintiff’s motion for leave
to file first amended complaint. The Circuit Court granted the motion on January 9, 2013. At the time of removal,
the Circuit Court had not issued any ruling on the Defendant’s motion to dismiss.

2

(See Memorandum in Support of Motion to Dismiss (“Defs.’ Mem.”) (Document 6) at 3.) (explaining that
“RESA 1, or Regional Education Service Agency 1 . . . operates under the West Virginia Board of Education. “)

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time of his motor vehicle accident” but the policy excluded “[a]nyone, including but not limited
to an employee of the ‘insured,’ who is injured during the course and scope of employment.”
(First Am. Compl. ¶¶ 13-14.)
As a result of this denial and because he “was not acting within the course of his
employment on the date of the motor vehicle accident,” Plaintiff alleges that he is entitled to
payment under the underinsured/uninsured motorist provision, but that the Defendants have
wrongfully denied the coverage to which he is entitled.

(First Am. Compl. ¶¶ 17-18.)

Consequently, in Count 1, Plaintiff seeks a declaration that Defendants breached its contract by
denying the UIM payment. (First Am. Compl. ¶ 28.)

Additionally, Plaintiff asserts that

Defendants acted in bad faith by failing to perform a proper accident/claim investigation and by
wrongfully denying the UIM coverage (Count 2). Further, Plaintiff claims that Defendants’
actions were in violation of the Unfair Trade Practices Act (“UTPA”) of West Virginia (Count
3). (First Am. Compl. ¶¶ 23-42.)

Plaintiff alleges that he has suffered physical injuries and

mental anguish as a direct and proximate result of the June 19, 2008 accident, that his injuries are
permanent, that he has past medical expenses, lost wages and pain and suffering, that he may
have future medical expenses and lost wages, and that he has suffered property damage as well
as the loss of use and loss of personal property. (First Am. Compl. ¶ 21.) Plaintiff seeks the
policy limit of the underinsured/uninsured motorist coverage, damages incurred due to
Defendants’ bad faith, prejudgment and post judgment interest and the cost of litigation,
including attorney fees, court costs and fees. (First Am. Compl. at 79.)

As it must, the Court

accepts all factual allegations as true at this stage of the litigation.
On February 4, 2013, Defendants removed this action by invoking this Court’s diversity
jurisdiction under 28 U.S.C. § 1332 (Notice of Removal at 1). The following day, Defendants

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filed the pending motion to dismiss. Defendant Chartis argues that any declaratory judgment
claim against it must be dismissed since it did not issue the insurance policy in dispute and is not
the proper party against whom such claim should be brought. (Mot. to Dismiss at 2-3); (Notice
of Removal at 2) (“Plaintiff’s claim against National Union for UIM benefits is a contract action
with the longer ten year statute of limitations period, and is therefore a potentially valid claim.”).
However, both Defendants seek dismissal of Counts 2 and 3 on the ground that Plaintiff’s claims
are time-barred by the applicable statutes of limitation. (Id.).
On April 2, 2013, nearly two months after the filing of the motion to dismiss, Plaintiff
filed an opposition to Defendants’ motion. Rule 7.1 of the Local Rules of Civil Procedure
provides that, “[m]emoranda and other materials in response to motions shall be filed and served
on opposing counsel and unrepresented parties within 14 days from the date of service of the
motion.” LR Civ P. 7.1(a)(7). Consequently, any opposition or other response to Defendants’
motion was due by February 19, 2013. Clearly, Plaintiff’s opposition was filed well-beyond that
date. The record reveals that he did not seek leave of the Court prior to filing his response. The
Court also observes that Plaintiff did not assert any statement of good cause, excusable neglect or
other explanation to support his untimely submission. As a result, the Court ORDERS that
Plaintiff’s Response to Defendant Chartis Claims Inc.’s Motion to Dismiss and Defendant
National Union’s Motion to Dismiss Counts 2 and 3 (Document 11) and Defendants’
corresponding Reply thereto (Document 12) be STRICKEN from the record.
II.

STANDARD OF REVIEW

A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the
legal sufficiency of a complaint. Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009);
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). “[T]he legal sufficiency of a
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complaint is measured by whether it meets the standard stated in Rule 8 [of the Federal Rules of
Civil Procedure] (providing general rules of pleading) . . . and Rule 12(b)(6) (requiring that a
complaint state a claim upon which relief can be granted.)”

(Id.)

Federal Rule of Civil

Procedure 8(a)(2) requires that a pleading must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Additionally, allegations
“must be simple, concise, and direct.” Fed.R.Civ.P. 8(d)(1). This pleading standard requires that
a complaint must contain “more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell Atlantic Corp v. Twombly, 550 U.S. 544, 555
(2007).
In Ashcroft v. Iqbal, the United States Supreme Court stated that to survive a 12(b)(6)
motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, ‘to state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937,
1949 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when [a party]
pleads factual content that allows the court to draw the reasonable inference that the [opposing
party] is liable for the misconduct alleged.” (Id.) The plausibility standard “asks for more than a
sheer possibility that a [party] has acted unlawfully.” (Id.) Rather, “[i]t requires [a party] to
articulate facts, when accepted as true, that ‘show’ that [the party] has stated a claim entitling
[them] to relief[.]” Francis, 588 F.3d at 193 (quoting Twombly, 550 U.S. at 557). Such “factual
allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555. “Determining whether a complaint states [on its face] a plausible claim for relief
[which can survive a motion to dismiss] will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950.
However, “where the well-pleaded facts do not permit the court to infer more than the mere

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possibility of misconduct, the complaint has alleged–but it has not show[n]”– “that the pleader is
entitled to relief.” (Id.) (quoting Fed.R.Civ.P. 8(a)(2)).

III.

DISCUSSION

Defendant Chartis seeks dismissal of Plaintiff’s First Amended Complaint in its entirety
and Defendant NUFIC moves for dismissal of Counts 2 and 3. In totem, Defendants contend that
facts alleged on the face of the pleading reveal that Plaintiff’s claims fail as a matter of law either
because they are time barred or because Plaintiff has asserted the claims against an improper
party. The Court will review each claim separately.

A. Count 1 – Declaratory Judgment Due to Breach of Contract
Plaintiff alleges that the at-fault driver lacks adequate insurance coverage for his claims
of damages, that at the time of the accident the vehicle he was driving was covered by
Defendants’ policy, that he is an insured under the policy and that it has been determined that he
“had not operated such vehicle within the course and scope of his employment.” (First Am.
Compl. ¶¶ 11-12, 24, 26, 28.) Consequently, Plaintiff alleges that “[D]efendants have breached
its contract with the Plaintiff “by failing to make any payments to [him] under the
Underinsured/Uninsured Motorist provision of the Defendants’ policy in which [he] was a
claimant.” (First Am. Compl. ¶ 28.)
Defendant Chartis argues that the declaratory judgment claim against it for breach of
contract fails as a matter of law because such a claim would involve a contractual relationship
between insurers and insureds. Defendant Chartis argues that it is not a party to the insurance
policy and that it “was only the claims handling entity with regard to [Plaintiff’s] claim, not the
actual insurer” as recognized by Plaintiff. (Defs.’ Mem. at 11.) Accordingly, Chartis argues that

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it is not the proper party against whom such a claim could be asserted. (Id.) In support of this
assertion, Defendant cites Christian v. Sizemore, a West Virginia decision exploring whether a
trial state court abused its discretion in failing to permit the insured plaintiff from naming the atfault driver’s insurance carrier as a party defendant prior to any determination of the at-fault
driver’s liability. Christian v. Sizemore, 383 S.E.2d 810 (W. Va. 1989). Christian is not
factually on point with the issue presented here, that is, whether an insured can properly assert a
breach of contract declaratory judgment claim against an insurer’s claim administrator for the
denial of insurance benefits. This Court’s reading of the First Amended Complaint reveals that
Plaintiff has alleged that Defendant Chartis is a claims administrator for Defendant NUFIC and
acted as an agent for Defendant NUFIC under the applicable policy; that it was Chartis that
considered his claim and denied him the benefit of the UIM coverage; and that this denial was
wrongful. (First Am. Compl. ¶¶ 6, 13, 18). Further, in Count 2, Plaintiff alleges that Defendant
Chartis improperly investigated his accident. (First Am. Compl. ¶¶ 32, 34.) The Court finds that
Plaintiff has sufficiently alleged enough facts, when accepted as true, to plausibly state a claim
against Chartis. Additionally, Plaintiff has alleged that Defendants breached the insurance policy
and that he has suffered damages as a result of the actions of Defendants in the denial of the UIM
benefits. Consequently, the Court finds that Defendant Chartis’ motion to dismiss Count 1 of the
Plaintiff’s First Amended Complaint should be denied.
B. Counts 2 and 3 – Bad Faith and UTPA
Defendants argue that Plaintiff’s claims of Bad Faith and UTPA are barred by the oneyear statute of limitations for these claims. (Defs.’ Mem. at 6-10.) According to Defendants,
Plaintiff was made aware of these causes of action when his UIM coverage claim was denied on
November 11, 2009. Defendants argue that upon Plaintiff’s receipt of the denial letter he
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“discovered” his potential cause of action for that denial and that Plaintiff must have filed his
Complaint by November 11, 2010, to be timely. Defendants argue that Plaintiff’s claims were
filed nearly two years later on October 11, 2012, and are, therefore, time-barred. Defendants
also argue that Plaintiff has not alleged any facts to suggest that the statute of limitations should
be tolled by the discovery rule, any alleged fraudulent concealment of facts preventing the
discovery or pursuit of a cause of action against the Defendants or any other tolling doctrine.
(See Defs.’ Mem. at 8 (citing Dunn v. Rockwell, 689 S.E.2d 255 (W. Va. 2009)). As a result,
Defendants assert that these claims should be dismissed as time barred. Defendant Chartis also
argues that since it was not a party to the insurance contract, but only a claims administrator on
the issued policy, Plaintiff cannot assert a bad faith claim against it. (Id. at 10).
The Court has considered the allegations set forth in Plaintiff’s First Amended Complaint
which clearly establishes the date of Plaintiff’s accident, the date he sought the benefit of the
Defendant NUFIC issued insurance policy and the date of the denial of benefits by Defendant
Chartis on November 11, 2009. The West Virginia Supreme Court of Appeals has established
that the statute of limitations for both a bad faith claim and for violations of the UTPA is one
year. See Wilt v. State Auto Mut. Ins. Co., 506 S.E.2d 608, 614 (W. Va. 1998) (establishing that
the one-year statute of limitations set forth in W. Va. Code § 55-2-12(c) applies to claims
involving unfair settlement practices under the UTPA); Noland v. Virginia Ins. Reciprocal, 686
S.E.2d 23 (W. Va. 2009) (holding that the one-year statute of limitations contained in W. Va.
Code § 55-2-12(c) applies to common law bad faith claims.) As is obvious from the pleading,
Plaintiff became aware of the denial of insurance benefits on November 11, 2009. He has not
stated any reason in the amended pleading to prompt an inquiry regarding whether the statute of
limitations should be tolled. Therefore, a timely claim was required to be filed by November 11,

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2010. Plaintiff’s initial complaint was filed in October, 2012. Therefore, taking Plaintiff’s
allegations as true, Plaintiff’s alleged bad faith and UTPA claims are time-barred by the
applicable one year statute of limitations. Thus, this Court finds that Counts 2 and 3 of the First
Amended Complaint should be dismissed for Plaintiff’s failure to state a claim upon which relief
can be granted.3

IV. CONCLUSION
Wherefore, after careful consideration and for the reasons discussed herein, the Court
does hereby ORDER that Defendants’ Motion to Dismiss (Document 5) be GRANTED IN
PART AND DENIED IN PART. Specifically, the Court ORDERS that Defendant NUFIC’s
motion to dismiss Counts 2 and 3 is GRANTED, but Defendant Chartis’ motion to dismiss
Count 1 is DENIED. The Court further ORDERS that Plaintiff’s Response to Defendant
Chartis Claims Inc.’s Motion to Dismiss and Defendant National Union’s Motion to Dismiss
Counts 2 and 3 (Document 11) and Defendants National Union Fire Insurance Company of
Pittsburgh, PA and Chartis Claims, Inc.’s Reply in Support of Motion to Dismiss (Document 12)
be STRICKEN from the record.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and to
any unrepresented party.

ENTER:

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May 13, 2013

Given this disposition, the Court need not make any finding on Defendant Chartis’ argument that Plaintiff’s bad
faith claim is fatally flawed because it was not a party to the insurance contract.

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