FERNANDO J. GAITAN, JR., District Judge.
Pending before the Court are (1) State Farm Mutual Automobile Insurance Company's Motion to Dismiss and Motion to Strike and Request for Oral Argument (Doc. No. 21); (2) Plaintiff's Motion for Leave to File Second Amended Complaint and Motion to Stay Ruling on Motion to Dismiss (Doc. No. 25); and (3) State Farm's Motion for Leave to File Sur-Reply in Opposition to Plaintiff's Motion for Leave to File Second Amended Complaint and Motion to Stay Ruling on Motion to Dismiss (Doc. No. 35).
As an initial matter, the request for oral argument will be
On October 11, 2011, plaintiff filed her complaint against State Farm, alleging that she was injured in an automobile accident with an underinsured motorist and made a claim to her insurer, State Farm. Plaintiff alleges that State Farm made an offer to settle plaintiff's claims for $33,000, and plaintiff rejected that offer. Then, plaintiff alleges that on August 26, 2011, State Farm "reduced" its offer to $23,000.
On November 30, 2011, defendant filed a motion to dismiss, indicating (1) plaintiff's allegations of breach and vexatious refusal to pay were contradicted by the exhibits attached to her complaint; (2) plaintiff fails to state a claim for declaratory judgment; (3) plaintiff's class action for unfair claims practices should be dismissed, as there is no cause of action for unfair claims practices under Missouri law; and (4) plaintiff's breach of fiduciary claims fail because there is no fiduciary duty between an insurer and its insured under Missouri law.
Plaintiff did not respond to the motion to dismiss. Instead, plaintiff filed her first amended complaint on December 16, 2011, which she could do as a matter of right. The first amended complaint alleges claims for (1) breach of contract and vexatious refusal to pay; (2) breach of contract (breach of implied covenant of good faith and fair dealing) as to a proposed class, challenging the practice of advancing payment of a lower settlement offer during an impasse in negotiations; and (3) declaratory judgment and equitable relief as to a proposed class. This time, plaintiff did not attach to the complaint the letters from State Farm which indicated that acceptance of the $23,000 advance payment does not prevent plaintiff from negotiating a higher amount of settlement. Defendant's first motion to dismiss was denied as moot by Order dated December 22, 2011 (Doc. No. 20).
Thereafter, defendant filed a motion to dismiss plaintiff's first amended complaint for failure to state a claim (Doc. No. 21, filed on January 3, 2012), making similar arguments as were made in regards to the original complaint, and arguing that plaintiff cannot avoid dismissal by simply not attaching the letters from State Farm to her amended complaint.
After being granted an extension of time to respond to the motion to dismiss, on January 30, 2012, plaintiff filed her motion for leave to file Second Amended Complaint and motion to stay ruling on the motion to dismiss (Doc. No. 25), indicating that plaintiff is removing one count, dividing her previous claims into separate counts, and including additional factual allegations in support of her claims. Plaintiff's proposed class is
Doc. No. 25, Ex. 1, ¶ 91. Plaintiff also seeks injunctive relief, permanently enjoining defendant from engaging in the claims settlement practices described in her second
On February 10, 2012, defendant filed its suggestions in opposition to plaintiff's motion for leave to file second amended complaint. Defendant argues plaintiff's motion for leave to amend is futile as plaintiff's complaints for breach of contract and vexatious refusal to pay remain contradicted by the correspondence attached to the original complaint. Defendant also notes that plaintiff is not a member of the class she seeks to represent, as her class definition includes only people who have been paid "an amount via settlement or judgment which was greater than the lower amount offered after settlement was rejected." Defendant also argues that plaintiff's tactics of not responding to repeat motions to dismiss, but instead seeking to continually amend her complaint, are gamesmanship that should not be rewarded.
When ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations in the complaint. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plaintiff need not provide specific facts in support of his allegations. Erickson v. Pardus, 551 U.S. 89, 93-94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). But the plaintiff "must include sufficient factual information to provide `grounds' on which the claim rests, and to raise a right to relief above a speculative level." Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir.2008). "[A] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). This requires a plaintiff to plead "more than labels and conclusions, and a formulaic recitation of the elements of the cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. A complaint must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory. Id. at 562, 127 S.Ct. 1955 (quoted case omitted). The standard "simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of" the claim. Id. at 556, 127 S.Ct. 1955.
Rule 15 directs courts to grant leave to amend "freely ... when justice so requires." While Rule 15 envisions a liberal amendment policy, justice does not require the filing of a futile amendment. Stricker v. Union Planters Bank, N.A., 436 F.3d 875, 878 (8th Cir.2006). A proposed amendment is futile if it could not withstand a motion to dismiss for failure to state a claim. Zutz v. Nelson, 601 F.3d 842, 850 (8th Cir.2010).
Under Federal Rule of Civil Procedure 12(f), a court may "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). Motions to strike are not favored and are infrequently granted, because they propose a drastic remedy. Stanbury Law Firm, P.A. v. IRS, 221 F.3d 1059, 1063 (8th Cir.2000). Nonetheless, resolution of such a motion lies within the broad discretion of the Court. Id. "[A]llegations may be stricken if they have no real bearing on the case, will likely prejudice the movant, or where they have criminal overtones." Kay v. Sunbeam Prods., Inc., No. 2:09-cv-4065-NKL,
The Court will first consider whether plaintiff's motion for leave to file second amended complaint should be granted. Defendant opposes plaintiff's motion for leave, indicating in part that plaintiff's filing of amended complaints or motions for leave to file amended complaints in response to defendant's motions to dismiss is a "wait and see" approach to litigation that should not be rewarded. Defendant asserts that it would be prejudiced if plaintiff is allowed to file a second amended complaint, as it has "twice filed motions to dismiss Plaintiff's complaint, showing its hand and providing Plaintiff with the opportunity to rectify the defects in her claims." In reply, plaintiff notes that the parties have not yet conducted discovery, and the Court has not yet entered a scheduling order, so that plaintiff is necessarily within the time frame to seek leave to amend. The Court agrees with plaintiff that defendant has not demonstrated prejudice, and so leave to amend will not be denied on this basis.
Defendant also asserts that plaintiff's proposed amendments are futile. The Court will examine each count of plaintiff's proposed second amended complaint.
Defendant asserts that plaintiff's claim for breach of contract, as pled in Count I of her proposed second amended complaint, is futile because (1) any claim of breach based on defendant's advance payment of an amount lower than its earlier settlement offer is contradicted by the correspondence that was attached to plaintiff's original complaint, which indicated that defendant's payment was made "without prejudicing [plaintiff's] right to receive a higher amount in the future through continuing negotiation or alternative means of resolution"; (2) the correspondence attached to the original complaint establishes that defendant has paid under the policy and contemplates future negotiation and payment of a properly valued claim; and (3) any claim that defendant breached its implied covenant of good faith and fair dealing in handling plaintiff's claim fails because an implied covenant claim against an insurer is not cognizable in the first-party insurer-insured context. See Luechtefeld v. Unumprovident Corp., No. 4:06CV1241-HEA, 2006 WL 3257719, at *2 (E.D.Mo. Nov. 9, 2006); Siebert v. State Farm Fire & Cas. Co., No. 1:06CV00174-LMB, 2007 WL 2782418, at *1-2 (E.D.Mo. Sept. 21, 2007); Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62, 67-68 (Mo. banc 2000).
In her reply suggestions to her motion for leave to amend, plaintiff asserts that she has adequately pled facts supporting a claim for breach of contract. In particular, plaintiff asserts that defendant is incorrect in its argument that a plaintiff cannot state a claim for breach of contract where an insurance company offers to pay part, but not all, of plaintiff's claimed damages.
Defendant asserts that plaintiff's claim for vexatious refusal to pay fails because the correspondence attached to plaintiff's complaint indicates that State Farm's advance payment of $23,000 in partial settlement of her claims "actually furthers the purpose underlying Missouri's vexatious refusal statute, which is intended to discourage insurance companies from `delaying the plaintiff in the collection of the claim.'" See Doc. No. 38, p. 8, quoting Walker v. Country Mut. Ins. Co., No. 06-00333-CV-W-REL, 2007 WL 2249131, at *11 (W.D.Mo. Aug. 1, 2007). Defendant further asserts that plaintiff's complaint does not show a pattern of delay on the part of defendant, who responded to plaintiff's August 1, 2011 demand by corresponding with plaintiff, extending offers of settlement, and advancing $23,000 toward settlement by letter dated August 26, 2011. Defendant notes this lawsuit was filed less than three months later.
Plaintiff replies that she has pled the necessary elements of a vexatious refusal to pay claim, including (1) plaintiff having an insurance policy with defendant, (2) the defendant insurer's refusal to pay, and (3) that the refusal to pay was "without reasonable cause or excuse." Dhyne v. State Farm Fire and Cas. Co., 188 S.W.3d 454, 457 (Mo. banc 2006); R.S.Mo. § 375.420. Plaintiff indicates that the facts demonstrating the refusal to pay was "without reasonable cause or excuse" are found at paragraph 38-81 (including allegations that defendant failed to properly investigate plaintiff's claims and injuries, never sent plaintiff for an independent medical examination, never contacted plaintiff or asked to contact plaintiff about the nature and extent of her damages or symptoms after cervical surgery, and that defendant instead made plaintiff a low offer).
The Court finds that plaintiff has made a plausible claim for vexatious refusal to pay at this stage of the litigation; to the extent that defendant argues that its advance payment of $23,000 insulates it from litigation, that is a claim that would be better presented at the summary judgment stage, when there has been some development of the record as to plaintiff's injuries. Thus, the Court cannot find plaintiff's vexatious refusal to pay claim as pled in Count II of her complaint to be futile. Therefore, plaintiff's motion for leave to amend is
Count III of plaintiff's proposed second amended complaint is for "Declaratory Judgment as to Class," and plaintiff seeks a declaration that defendant's claims settlement practices are unlawful, illegal and inequitable as to a class of
Doc. No. 25-1, p. 12, ¶ 91.
Count IV of plaintiff's proposed second amended complaint is for "Permanent Injunction as to Class." Doc. No. 25-1, p. 18. Within this claim, plaintiff seeks Court certification of the class described above, and a permanent injunction preventing defendant from engaging in claims settlement practices that plaintiff believes are inequitable. Finally, Count V of plaintiff's proposed second amended complaint is for "Equitable Relief as to Class." Doc. No. 25-1, p. 20. Within this Count, plaintiff seeks the following relief: (1) class certification, (2) injunctive relief preventing defendant from engaging in allegedly unlawful claims settlement practices, (3) creation of a comprehensive, Court-supervised program funded by defendant to oversee defendant's claims settlement practices, (4) disgorgement of all of defendant's "ill-gotten sums or insurance premiums which it has collected," (5) an award of attorneys' fees, expenses, legal interest, and costs, and (6) an imposition of an asset freeze and a constructive trust over all premiums paid by class members. Doc. No. 25-1, p. 22.
Defendant first notes that plaintiff's claim for declaratory relief as stated in Count III fails because the claim against defendant could be more effectively addressed through a properly stated claim for breach of contract damages. See Amerisure Mut. Ins. Co. v. Maschmeyer Landscapers, Inc., No. 4:06-CV-1308 (CEJ), 2007 WL 2811080, at *2 (E.D.Mo. Sept. 24, 2007); Midwest Special Surgery v. Anthem Ins. Companies, No. 4:09-CV-646 TIA, 2010 WL 716105, at *6 (E.D.Mo. Feb. 24, 2010) (finding claim for declaratory judgment duplicative of a breach of contract claim, and therefore dismissing it).
Plaintiff replies that "declaratory judgments... are available where appropriate even though other remedies are also available." Davis v. Romney, 490 F.2d 1360, 1370 (3d Cir.1974). Plaintiff further notes that courts routinely hear declaratory judgment actions between insurance companies and their insureds, and this case is no different. See generally Royal Indem. Co. v. Apex Oil Co., 511 F.3d 788 (8th Cir.2008); American Eagle Ins. Co. v. Thompson, 85 F.3d 327 (8th Cir.1996); Broyles v. Commercial Union Ins. Co. of New York, 287 F.Supp. 942 (W.D.Ark. 1968).
Upon consideration, this Court agrees with defendant that plaintiff's claim for declaratory judgment ought to be dismissed. "A declaratory judgment action is not used where an adequate remedy already exists at law." Graham v. Goodman, 850 S.W.2d 351, 356 (Mo.1993) (en banc). Under Missouri law, the absence of an adequate remedy at law is an element of a claim for declaratory relief. Cincinnati Casualty Co. v. GFS Balloons, 168 S.W.3d 523, 525 (Mo.Ct.App.2005). "A petition seeking declaratory judgment that alleges breach of duties and obligations
Accordingly, plaintiff's motion for leave to amend is
Defendant notes that Counts IV and V of plaintiff's complaint do not state a claim; rather, they seek remedies, not independent causes of action. See Goerlitz v. City of Maryville, 333 S.W.3d 450, 455 (Mo. banc 2011)(finding an injunction to be a remedy, and not a cause of action, and that it "must be based on some recognized and pleaded legal theory"); Neher v. eBanker USA.Com, Inc., No. 04-0711-CV-W-ODS, 2005 WL 1006417, at *6 (W.D.Mo. Apr. 1, 2005)(noting constructive trust is not a cause of action, but rather is a remedy); 35 Missouri Prac., Cont., Eq & Stat. Actions Handbook § 44:9 (2011 ed.) (noting restitution is not a cause of action, but rather is a remedy for actions under contract, tort, quasi-contract, or constructive and resultant trusts); S.E.C. v. First Jersey Securities, Inc., 101 F.3d 1450, 1478 (2d Cir.1996)(noting disgorgement is permissible relief in certain claims, but it is not a claim in itself). Further, defendant notes that to obtain an injunction under Missouri law, the moving party must demonstrate that she has no adequate remedy at law
Plaintiff replies, conceding that a permanent injunction is a remedy; however, plaintiff argues that Missouri courts "have long recognized independent actions for permanent injunctions." See, e.g., Drake v. Kansas City Public Service Co., 333 Mo. 520, 63 S.W.2d 75, 78-79 (1933). Plaintiff further argues that her other claims (breach of contract, vexatious refusal, declaratory judgment) could incorporate a permanent injunction as a form of remedy, if plaintiff demonstrated irreparable harm and lack of adequate remedy at law. Plaintiff further replies that the remedies sought in Count V of her complaint could be incorporated as remedies to her claims for breach of contract, vexatious refusal and declaratory judgment.
The Court finds, in regard to plaintiff's claims for injunctive relief in Count IV, that plaintiff has failed to demonstrate that there is not an adequate remedy at law. Plaintiff would be fully compensated for her alleged injuries through damages on
Finally, defendant argues that the putative class, as pled by plaintiff and related to Counts III, IV, and V, is not certifiable in that plaintiff is not a member of the proposed class. "To act as a class representative, a named plaintiff must be a member of the class [she] seeks to represent. If the named plaintiff fails to satisfy this threshold requirement, then a certifiable class does not exist." Georges v. Accutira Mortg., Inc., No. 4:08-cv-201 (JCH), 2008 WL 2079125, at *6 (E.D.Mo. May 15, 2008)(dismissing class allegations). Plaintiff's proposed class is of all persons making underinsured motorist claims to defendant where "State Farm later paid an amount via settlement or judgment which was greater than the lower amount offered after settlement was rejected." Here, plaintiff has only been paid an advance of $23,000, which is "the lower amount" under plaintiff's proposed class definition; plaintiff would not be a member of the putative class unless and until defendant paid plaintiff an additional sum.
Plaintiff responds that, "[a]dmittedly, Plaintiff has not yet received any money from Defendants except for the $23,000.00 payment after settlement was rejected," but "Defendant's correspondence to Plaintiff and pleadings in this case establish that Defendant will, at some later date, make Plaintiff another payment." Doc. No. 33, p. 13. Plaintiff further asserts that even if the Court were to find that she is not a member of the class she seeks to represent, the Court has the discretion to modify the class definition so that plaintiff would be an appropriate class representative.
The Court finds defendant's arguments to be persuasive. In the Court's opinion, it is highly unlikely that defendant will make any more payments to plaintiff unless she agrees to a settlement and dismissal this lawsuit. In other words, plaintiff is not a member of her proposed class currently, and surely could never become a member of the class and have an active claim against defendant for the conduct asserted in this lawsuit. Thus, she could never be a member of the class she seeks to represent, particularly, if as she indicates, her class definition excludes individuals with pending claims against defendant. Further, it is quite likely that the claims of the members of the proposed class have been extinguished through settlements with defendant, and it is unclear how the declaratory, injunctive, and equitable relief sought in Counts III, IV and V would be helpful to persons who have already settled their claims or received a judgment against defendant. All plaintiffs' class action allegations are futile, and leave to amend to incorporate such allegations is
Finally, defendant requests in its opposition to plaintiff's motion for leave to amend that certain allegations in the second amended complaint be stricken pursuant to Rule 12(f). In particular, defendants requests the Court strike paragraphs 45-48, which refer to defendant's handling of property claims following Hurricane Katrina,
As noted above, under Federal Rule of Civil Procedure 12(f), a court may "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." "[A]llegations may be stricken if they have no real bearing on the case, will likely prejudice the movant, or where they have criminal overtones." Kay v. Sunbeam Prods., Inc., No. 2:09-cv-4065-NKL, 2009 WL 1664624, at *1
Plaintiff replies that while defendant claims these allegations are inflammatory, plaintiff argues that they are factually accurate, consistent with her claims against defendant, and are relevant. Plaintiff asserts that defendant just wants these allegations stricken because when they are proven, it will make a substantial verdict for plaintiff more likely. In particular, plaintiff argues that "The allegations regarding Hurricane Katrina establish that Defendant has, in the past, followed a company-wide improper policy of negotiating claims in bad faith. The allegations about the `McKinsey model' provide details about the claims adjustment used by Defendant in Plaintiff's case and support Plaintiff's allegations that the refusal to pay Plaintiff the reasonable value of her claim is vexatious." Doc. No. 33, pp. 16-17.
Upon reviewing the proposed second amended complaint, the Court finds that the contested allegations do not appear to have any real bearing on the case. There is no apparent connection between the State Farm's adjustment of Hurricane Katrina property damages claims and State Farm's evaluation of plaintiff's underinsured motorist claim, other than State Farm's involvement. Plaintiff's proposed second amended complaint does not explain how the two are connected. Further, if defendant "denied, delayed, and then defended" this action, plaintiff can prove that without the need to delve into whether defendant used the "McKinsey model," the adoption of which appears to be only loosely related to the questions at issue in plaintiff's claim for breach of contract and vexatious refusal to pay.
In short, defendant's request to strike paragraphs 45-48, which refer to defendant's handling of property claims following Hurricane Katrina, and paragraphs 56-59 and 63, which refer to defendant's purported adoption of the "McKinsey model" of claims adjustment, is
Given that the Court has granted plaintiff leave to file her Second Amended Complaint in part, the pending motion to dismiss pertaining to the previous complaint (Doc. No. 21) will be
Therefore, for the foregoing reasons, (1) State Farm Mutual Automobile Insurance Company's Motion to Dismiss and Motion to Strike and Request for Oral Argument (Doc. No. 21) is
